Colorado Springs residents can likely expect to pay more for electric and natural gas services in coming months, but Colorado Springs Utilities officials forecasted Wednesday the average residential customer will pay less in January than at the same time in 2023.

“That’s something to really be proud of while we’re actually adding some very key and critical positions,” Colorado Springs Utilities Board Member and Utilities Finance Committee Chairwoman Nancy Henjum said during the board’s regular meeting Wednesday.

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Natural gas and electricity rates are expected to go up to cover increased labor, maintenance and construction costs, Financial Planning and Risk Manager John Hunter said.

The agency anticipates saving about $102 million in fuel costs next year, making the proposed average residential bill about 8.5% lower in January 2024 than it was in January this year – even as Colorado Springs Utilities plans to add 70 new positions to support growth, changes in regulation and other business needs, a staff presentation showed.

Beginning Jan. 1 the average residential customer’s bill is proposed to be about $254 a month, up from around $246 a month currently. In January 2023, customers paid about $277 a month.

The proposed bills will be about 7% less than what other utilities customers are paying on average along the Front Range, said Scott Shirola, pricing and rates manager.

Rates have been affected in part by the ongoing war in Ukraine and general market volatility, Chief Planning and Financial Officer Tristan Gearhart said. Colorado Springs Utilities also paid off increased costs associated with the winter storm that froze the central part of the U.S. in February 2021 quicker than some other utilities have, he said.

“We’re comparing a bill that doesn’t have winter storm area effects in it compared to one that does,” he said. 

Colorado Springs Utilities residential electric rates could increase from the current $92.52 a month up to $98.45 a month. Gas rates are expected to go from $39 a month up to $41.10 per month, Shirola said.

The proposed gas rate increase includes an anticipated new charge, which officials plan to list as a separate line item on customers’ bills, that will allow the utility to “transparently recover costs associated with” the state’s Clean Heat Plan requirements, he said. 

In 2021, state legislators passed a law requiring gas distribution utilities with more than 90,000 customers to submit a Clean Heat Plan to the state’s Air Pollution and Control Division by Aug. 1. The plan must show how the utility proposes to work with its residential and business customers to reduce carbon emissions generated from natural gas-based appliances and heating equipment 4% below 2015 levels by 2025 and 22% below 2015 levels by 2030.

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Utilities uses a tiered-rate structure, so those who use more pay more. For a typical residential or small commercial customer, officials propose charging a fraction of a cent per month per hundred cubic feet of natural gas usage. That works out to about 75 cents per month for the Clean Heat Plan charge, Shirola said.

Colorado Springs Utilities plans to use those revenues to expand and fund energy-efficient programs that will help reduce greenhouse gas emissions, he said.

Even with the anticipated rate increases, the agency’s proposed 2024 budget is lower than 2023’s actual budget, decreasing from $1.56 billion in 2023 to a projected $1.50 billion in 2024. Utilities budgeted $141 million in potential increased fuel costs it could have to spend depending on the unstable market. For 2023, the agency broke out $197 million in potential increased fuel costs; it did not break out this expense in the 2022 budget.

Utilities expects to spend $228 million on labor in 2024, up from $210 million, an increase of 8%.

The budget is not final. The Colorado Springs City Council, whose members also serve as the Utilities board, will review it in October and November.

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