Colorado regulators upset about Xcel executives' expensive, high-flying ways

Colorado regulations don't believe ratepayers should pay the tab for Xcel's private jet use.
Colorado regulations don't believe ratepayers should pay the tab for Xcel's private jet use.

Minneapolis-based Xcel Energy is the largest electrical utility in Colorado, with about 1.4 million customers. Xcel is currently seeking a $142 million electricity-rate increase in Colorado to cover the rising costs of pensions and operations.

The utility's "operations" include use of two corporate jets that cost more than $4,600 an hour. Xcel hopes to stick Colorado ratepayers with a tab of $1.1 million for the private flights, and officials aren't happy about it.

Says a review of the rate-increase request put together by the Colorado Public Utilities Commission staff: "The Company's ratepayers do not benefit by these [employees] commuting via the two corporate jets to their primary place of employment... The Company has not demonstrated that its corporate aircraft costs are reasonable and necessary."

The controversy harkens back to the winter of 2009, when Xcel was seeking a $132 million electricity rate hike in Minnesota. While the state was considering Xcel's request, the Star Tribune wrote a scathing editorial criticizing Xcel's leadership for being "shockingly out of touch with the tough times in the region the utility serves."

Said the editorial:

Last week, Xcel defended its use of private jets as making the best use of time as employees manage a business across eight states and 100,000 square miles -- and, yes, they also rely on videoconferencing. And what do those European trips have to do with providing power in Minnesota and elsewhere? Travel there is periodically required to "meet with current and potential institutional investors to ensure the company has access to capital markets ...,'' Xcel said in a statement Wednesday. The utility also wanted to set the record straight about an executive's much-publicized $1,699-a-night stay at London's Mandarin Oriental hotel. The bill was actually for two nights, so the nightly rate was about $849.

Really? Just $849 a night? What a bargain when joblessness is soaring and 26,979 of Xcel's residential customers in Minnesota have had their service shut off this year because they couldn't pay their bills.

Keep in mind that Xcel is a regulated monopoly. Its customers have no choice but to buy its electricity or natural gas, and sometimes both. In return for that privilege, Xcel is expected to spend judiciously and modestly. It also has the option of asking its shareholders to solely shoulder the costs of luxurious travel and private jets -- and should have. That it was planning to stick customers with a good chunk of the bill for both as it asked for a $132 million electricity rate hike suggests its leadership is shockingly out of touch with the tough times in the region the utility serves.

Ultimately, the Minnesota Public Utilities Commission end up cutting about $4 million in un-judicious funds from Xcel's request, though those cuts didn't include the private jet bill. And now that a similar controversy has arisen in Colorado, the utility is again arguing that private jet access is necessary for Xcel executives.

According to the Denver Post, two Xcel executives use the jets to commute weekly between Denver and and Xcel headquarters in Minneapolis. Some Colorado officials are wondering why the executives can't just live in Minneapolis, cut out the weekly round trips and save ratepayers $1.1 million, but Xcel says the private jet request only covers "the value of regained employee productivity and effectiveness from shorter travel times."

Hearings about Xcel's Colorado rate increase request begin April 11.

The controversy serves as more evidence that just because Xcel isn't purely a private sector entity doesn't mean the utility is particularly capable of policing itself against corporate excesses.

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