Xcel Energy has a plan for fire mitigation in Colorado -- at a cost

Xcel Energy submitted its long-awaited wildfire mitigation plan Thursday, seeking approval for $1.9 billion for work to protect Colorado from wildfires ignited by power equipment. Xcel says evolving risk creates a need for new technology, investments and improvements, along with maintenance. 

"This risk is evolving rapidly. And what we're seeing is that it's not just a California risk," said Xcel's Colorado President Robert Kenney. "This plan is intended to mitigate to the greatest extent possible the risk of our equipment igniting a wildfire."

It comes at a sensitive time for the power company, Xcel faces hundreds of lawsuits in the aftermath of the 2021 Marshall Fire. Investigators determined a downed line was one of the sources of ignition of the fire, although not the initial one. It also admits its equipment likely had a role in the ignition of the one million-plus acre Smokehouse Creek Fire in Texas in February.

But the company denies the work is to protect it from legal exposure.  

"Absolutely not. We've been working on this plan for many, many months," said Anne Sherwood, Xcel's area vice president of wildfire mitigation.

"The nature of the risk has changed. Our obligation to provide that safe and reliable service has not changed," said Kenny.

The list of work and improvements is long, including adding hundreds of weather stations and artificial intelligence cameras for early smoke detection. It wants more pole and equipment inspections in wildfire-prone areas and 3D mapping of equipment and terrain. It may bury some lines and wrap other unprotected lines. Xcel also wants to add more switching ability to de-energize lines in a more targeted fashion.

The company took a great deal of criticism when it de-energized lines in a high wind event in April for the way it was handled as well as communication. Kenney said it would allow more targeted moves to de-energize lines in affected areas.

The ask is large and the company knows it. Consumer advocates are already looking at the request with suspicion.

"What's interesting is wildfire mitigation is part and parcel of the normal business operations of a utility. It's part of the basis for them being granted a monopoly," said Joseph Pereira, deputy director of the Colorado Office of Utility Consumer Advocate. "I think that's inherent in the monopoly business model which is to invest in capital, which then leads to shareholder returns." 

Pereira wondered why Xcel customers would be asked to pay the cost. Rates have risen by about a third in the past five years. This would mean an increase of 9.56% by January of 2028 in a series of increases. That would cost the average customer about $8.88 more per month.

"If you look at each of these cases on their own. You know, you see, a 2% rate impact here, 2% rate impact there, 3% in another case. But ratepayers only feel the aggregate," said Pereira.

Xcel cites the increasing risk caused by climate change. Pereira notes that would mean helping the company pay the cost of the effects of climate change that it historically has had a role in causing. 

"The question needs to be asked, does the company and its shareholders also have a responsibility to make these investments and to kick in due to their role and responsibility on why we're needing to mitigate wildfire today?" said Pereira.

"The consumer advocates will have an opportunity to scrutinize those investments and the commission will render a decision," said Kenney. 

The three-member Public Utilities Commission is tasked with looking at and approving or denying rate hikes. There will be an opportunity for public input. The process will likely take about four to six months before a vote. 

"I'm confident that the commissioners recognize the evolving nature of wildfire risk," said Kenney.