Xcel expansion means small rate increases

Xcel Energy's grid expansion in southeastern New Mexico is costing the company a total $630 million — which means small rate increases may have been seen on your electric bill.

“If you look at your bill, there are two main parts,” said Wes Reeves, media relations director for Xcel Energy. “One is what we call energy charges, and that revenue covers the cost of business and capital costs. Another part covers fuel for power plants and the purchase of power off of our system.”

The latter part, Reeves said, is what has been increased to pay for grid expansion. But before getting in a tiff about your electric bill being higher, Reeves said it could be worse.

Thanks to lower oil prices, he said, rate increases aren't as high as they would have been.

“It doesn't necessarily mean an overall decrease, but it helps keep it from going as high as it would have,” he said. “Really, that's an investment. It's the old 'spend money to save money' strategy. So we're hoping to keep prices down by being more efficient.”

Reeves said consumers would see an increase before a decrease in their monthly bills, but the increases are helping to pay for an improved electricity grid, which will provide an overall improvement for the region.

“You have to spend a little money to get better efficiency out of the system,” Reeves said.

So what's the reason for the grid expansions, in the first place? According to Reeves, it's an increase in both demand and supply.

“We are in a situation similar to what happened after WWII when industry picked up and the system grew very fast, the demand grew fast,” Reeves said. “We've seen in our New Mexico and Texas service areas a lot of industrial and agricultural growth.”

Reeves said he predicts growing demand in agriculture since farmers are switching their irrigation systems over to being run by electricity, and improving commodity prices that influence farmers to grow more crops that need water.

“At the same time, we've had an aging system that needed to be upgraded,” Reeves said.

Xcel, he said, plans to do that by adding more lines and upgrading existing ones so that they can better serve growing agricultural, industrial and commercial communities. By doing so, Reeves said, the electric grid will be more reliable and bring power back on quicker should a storm knock any of it out.

“In southeastern New Mexico, some of this oil and gas activity is taking place, and a lot of it's happening where there wasn't an infrastructure at first,” Reeves said. “Some places are building systems from scratch. Clovis has an existing system, but it didn't have the capacity to move forward.”