The Colorado Public Utilities Commission (PUC) announced that on Feb. 19, it finalized deliberations on the Xcel Energy Time of Use Rate Case Proposal, Proceeding No. 24AL-0377E. Utilities use Time of Use (TOU) rates to vary the cost of electricity during the day to more accurately reflect the actual cost of operating a utility’s electric system. TOU rates are the default for all residential customers, but consumers can choose to opt out for a flat rate structure.
TOU rates are designed to give electric utility customers the option to save money by lowering electricity bills by adjusting when they use electricity (e.g. by running high-energy use appliances) to when the rate is reduced and by using less during on-peak hours. Analysis shows that the rates approved by the Commission should result in either no change or a slight savings for the majority of customers, even if they are unable to shift when they use most of their electricity. Additionally, as utilities must build their system around delivering electricity when demand is at its highest, reducing peak demand results in fewer costs and lower bills for consumers over the long term.
The Commission approved a new TOU structure for Xcel Energy customers based on addressing the most expensive times for the electric system. The effective date of these new rates will be no earlier than October 2025 in order to provide Xcel Energy time to educate and inform its customers about how to use the new TOU periods before they become effective.
New TOU Times:
- On-Peak: 5PM to 9PM on non-holiday weekdays, year-round
- Off-Peak: all other hours
TOU on-peak periods are set when demand is highest and costs are greater to generate and deliver energy. When demand is low, the cost of electricity is generally lower because there is less stress on the electricity grid and cheaper energy sources are available.
“Time of Use rates are an important tool to keep energy bills affordable. By making small changes, like using a high-energy appliance when the rate is low, consumers can save money on their electric bill. These modest changes, in aggregate, will help reduce demand during high peak times and costs of generating and delivering additional power,” said PUC Director Rebecca White. “Perhaps most importantly, customers have a choice to opt out if they believe these rates don’t make sense for their household.”
Since the introduction of TOU in 2022 by Xcel Energy, consumers have had overall electric bills savings compared to a non-TOU scenario. This impact is partially offset due to the impact of increased infrastructure investment, inflation, changes in fuel prices, and, for some customers, higher electric usage (for example, electric vehicles or conversion to electric water heating and space heating). However, without TOU rates, there is a high likelihood that future bills will be more expensive, as more usage across the system at the peak time contributes to the need to build bigger and more expensive infrastructure.
Xcel Energy customers can opt out of Xcel Energy’s TOU rates and elect to take electric service on a flat rate. The flat rate is higher than the TOU off-peak rate and lower than the TOU on-peak rate. The Commission also directed Xcel to develop an online calculator so that customers can compare their bill under TOU rates to a flat rate to allow them to make a more informed decision based on their actual usage. Additionally, Xcel Energy must provide a way for customers to opt-out online through the “my-account” portal. To learn more, visit https://puc.colorado.gov/time-of-use-rates.