UNDERSTANDING THE TRANSITION TO Time of Use (TOU) RATES ON XCEL ENERGY ELECTRIC BILLS
FAQs and Q&As
What is the new Residential Electric rate structure?
Beginning in the Spring of 2022, residential customers will begin to transition onto a seasonal time-of-use (TOU) rate. It is “seasonal” in the sense that the rate is higher during the summer months (June-September) than non-summer months (October-May). It is a “time-of use” rate in the sense that within a season, the price of electricity varies according to the hour of the day.
How does the price of electricity vary according to the time of day?
The day is divided into three periods: on-peak, mid-peak, and off-peak. Those periods are defined as follows:
- On-peak: 3:00 P.M. to 7:00 P.M. on non-holiday weekdays only
- Mid-peak: 1:00 P.M. to 3:00 P.M. on non-holiday weekdays only
- Off-peak: All other hours
The off-peak rate is the same throughout the entire year. During the summer months (June-September), the on-peak rate is 2.7 times the off-peak rate. During the non-summer months (October-May), the on-peak rate is 1.7 times the off-peak rate. The mid-peak rate is always halfway between the on-peak and off-peak rate.
What is the purpose of time-of-use rates?
The purpose of time-of-use rates is to provide rates that more accurately reflect the actual cost of operating the electric system. Xcel has to invest large amounts of money to be able to reliably provide electricity during a relatively small number of hours when its system is under the greatest strain. Those “peak hours” typically occur during hot summer afternoons, which is why the summer on peak rates are the highest. Providing rates that reflect the cost of operating the electric system encourages more efficient use of the system. It also promotes fairness by ensuring that customers pay in proportion to how much they contribute to the costly system peaks.
Is the transition to time-of-use rates an overall rate increase for Xcel?
No. The time-of-use rate is designed to collect the same amount of revenue as the rate it replaces. The average customer will pay the same amount over the course of a year on the time-of-use rate as they do on their existing rate. Whether an individual customer pays more or less on time-of-use depends on the timing and volume of their particular electricity usage.
Why is Xcel transitioning to time-of-use rates at this time?
Only relatively recently have advances in technology enabled utilities to record the timing of their customers’ electricity usage. Previously, a utility knew how much electricity a customer consumed over the course of a month but had no way to determine the timing of that consumption. The development of Advanced Meters (also known as “smart meters”), which record not only the volume but also the timing of electricity consumption, facilitates the use of electric rates that more accurately reflect the cost of providing electric service to customers. Xcel is transitioning to time-of-use rates now because it is in the process of deploying smart meters throughout its service territory. The change is related to development of new metering technology and is in no way related to the pandemic or any other world events.
When will my rate change to the time-of-use rate?
It depends on where you live. Xcel has a plan to install the new smart meters neighborhood-by-neighborhood through the end of 2024. You will receive notice from Xcel when your smart meter installation is upcoming. Generally, your switch to TOU rates will happen between 3 and 9 months after you receive a smart meter. Once your new meter has been installed, the transition from flat Summer/Winter rates to TOU rates will typically occur the following April 1st or October 1st. Xcel’s customer service office at 1-800-895-4999 will have the most helpful information on the date of your transition.
Can I just keep my old meter?
No. Xcel is in the process of replacing all electric meters in Colorado. You can choose to select a new non-communicating meter instead of a smart meter, but you will incur a cost if you decline a smart meter. The smart meter sends billing information directly to Xcel, so Xcel saves money by not having to send technicians to read each customer’s meter. To read each non-communicating meter, it costs Xcel an average of $11.84 per month for customers in the Denver Metro area and $23.64 per month for customers outside of the Denver Metro area. If you choose the non-communicating meter, this monthly cost will be added to your bill. In addition, if you choose to receive a non-communicating meter after a smart meter has been installed, you will be responsible for the one-time cost of sending a technician to exchange the meters. You can request a non-communicating meter through Xcel’s customer service department at 1-800-895-4999. If you opt not to receive a new communicating or “smart” meter, you will still be transitioned onto the new time-of-use rate structure unless you opt out of the rate as well.
Can I opt out of the TOU rate without opting out of receiving a smart meter?
Yes. Any customer can opt out of the TOU rate and instead receive service on a seasonal flat rate. Consumers with a verified medical condition may have a different flat rate available. Please contact Xcel at 1-800-895-4999 to discuss if this applies to you. The seasonal flat rate is higher in the 4-month summer period from June through September and lower the rest of the year, but the electricity rate is the same for all usage regardless of when it occurs and how much is used.
Why would I want a smart meter?
With a smart meter, you will be able to view and understand your own electric use in much greater detail. This information will help you decide if you would like to make changes to your consumption patterns (like running your dishwasher or clothes dryer overnight) and see how it can save you money. If you are able to make such changes, you may see a savings on your bill. Smart meters will also allow Xcel to maintain reliable service more efficiently. Any time there is a power outage, or even the onset of conditions that could potentially lead to a power outage, Xcel will automatically be notified so they can start working to resolve problems faster.
Will Xcel shut off or decrease my power after a new meter is installed?
No, Xcel will not randomly shut off or “throttle” your electricity. You as the consumer control when you use electricity and how much your home consumes. Xcel will only turn off service if there are past due bills and Xcel must provide prior notification to the account holder before this is done. Of course, if there is a safety issue or a power outage you may occasionally lose service for a period of time.