Electric rates to decrease, natural gas to increase

Today, the Colorado Springs City Council approved a decrease in the electric cost adjustment (ECA) and an increase in the natural gas cost adjustment (GCA) to be effective August 1, 2007.

Springs Utilities’ costs to generate and provide electricity have decreased, and the resulting savings will be passed along to customers with a lower ECA. The electric portion of residential bills will decrease by about $2.76 per month, based on typical residential customer use of 600 kWh per month. Customer savings could be greater in the summer months due to higher electric consumption.

A revised GCA will result in about a $6.16 monthly increase in the natural gas portion of a typical residential bill based on 93 ccf per month use. The increase could be less during the summer months due to lower natural gas usage.

Due to the intense volatility of market prices for natural gas and electricity, utilities across the United States incur under-collection or over-collection of expenses from customers. During a portion of 2005 and 2006, Springs Utilities over-collected expenses for natural gas fuel costs and thusly passed along a 13 percent decrease in the GCA in June 2006 to refund customers for the over-collection. The refund to customers was completed as of June 30, 2007. Therefore, the GCA must be restored to its pre-refund level, which has resulted in the adjustment passed today by City Council.

Energy cost adjustments reflect Colorado Springs Utilities’ cost for natural gas, fuel for power plants and for power that the community-owned utility purchases. The adjustments generate only enough revenue to cover the changing cost of fuel and purchased power. As costs for purchasing energy increase or decrease, Springs Utilities may ask City Council to adjust customers’ bills accordingly.

Wholesale costs for natural gas and purchased power can fluctuate dramatically from month to month. Springs Utilities has programs in place to protect customers from steep rate changes and keep rates among the lowest in the nation.