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Why are electricity bills going up in Colorado?

Unless you’ve been living under a rock, or let's say a Boulder, the cost of living increases in Colorado have been impossible to ignore in 2022.


As part of a national and global trend, the Consumer Price Index in the Denver-Lakewood metro area rose by 6.9% in the last year, including an 8.2% increase in the costs of electricity… and people are really starting to notice.


In December of 2022, Colorado-centric social media sites and online communities like Nextdoor, Facebook, and Reddit have been flooded with local electricity bill outrage with many unhappy customers reporting the skyrocketing costs of energy at home.



So… what’s causing electricity bills to go up?

While we previously covered Colorado electricity rate increases in 2021, this trend is, unfortunately, continuing its path upwards. The leading influences for higher bills as of late include increased energy prices, changes in local electricity production, supply & demand, and new billing structures.


Natural Gas Prices & New Technology

Across the state and region, local and major utilities are continuing to raise rates largely as a response to increased wholesale natural gas prices. With utilities like Xcel Energy using a significant amount of natural gas to produce electricity amid labor and supply shortages in the coal industry, increased supply costs are driving up both gas and electric utility bills.

After a natural gas rate hike was approved by the Colorado Public Utilities Commission, Xcel is now seeking a similar increase in electricity prices that would raise residential bills by roughly 8% on average. In addition to the rising costs of natural gas, Xcel has cited that the rate increase would be used to fund new technologies, such as those used to protect the electric grid and customer information from cyber attacks.


Local Energy Production Changes

In Colorado specifically, the accelerated decommissioning of the State's largest coal power plant (the Comanche Generating Station), also clues us into why electricity rates have increased specifically for CORE (formerly IREA) and Xcel customers. Earlier this year, CORE gave up its ownership stake in the power plant, reporting "mismanagement and incompetence” from Xcel who denies claims of dysfunction.


Now planning to close 9 years ahead of schedule, the Comanche 3 experienced more than 700 unplanned shutdowns in its lifetime, according to a 2021 Colorado Public Utilities report. As a result, both operating expenses and the cost of electricity generated onsite are reported to have been 44% more than originally forecasted.


As Colorado’s largest producer of greenhouse gas emissions, pressures to meet climate change goals have served to be the final nail in the coffin for the Comanche 3 Generating Station. Now that solar is the cheapest form of new electricity ever, we hope that utility shifts to PV power can help mitigate some of the excessive expenses associated with today’s coal and natural gas-fired power plants.


Supply and Demand

It’s no secret that Colorado's population is growing, which is also driving up electricity costs through simple supply and demand. With housing developments sprawling out of every major Front Range metro area, an increased number of Colorado residents require that extra power is produced each year, in addition to the new infrastructure necessary to reach new homes and neighborhoods.


Although Colorado's growth rate has declined in recent years, the Centennial State is still trending upwards after over 15 years of annual population increases greater than 1%.


Changes in Billing Structure

In an even more localized version of supply and demand, your electricity bills may have also increased due to “demand-response” pricing from your utility. Also known as time-of-use rates (TOU) or time-variable pricing, a demand-response structure increases the costs of electricity during the parts of the day when it is being used the most in a utility’s service area.


Sort of like “surge pricing” for a car-share service, TOU rates can dramatically drive up bills for those powering high-energy devices at home during peak hours. Here, smart energy management can help you avoid high time-variable costs, and solar customers can usually save the most in a TOU pricing structure.


Go Solar to Reduce Your Electricity Bills

By replacing utility-supplied power with your own rooftop generation, you can increase your energy independence and reduce your future electricity bills by going solar today. For home and business owners in the Front Range of Colorado and Wyoming, including Denver, Colorado Springs, Cheyenne, and Fort Collins, Apollo Energy is here to help.


To see how much you can save by switching to solar, contact Apollo Energy for a free consultation.


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