Electric Rate Increases in Colorado and What to Do About Them in 2026
The Colorado Sun’s Mark Jaffe recently wrote an excellent article on Xcel Energy’s requested $356M rate increase that will come into effect in August of 2026. In it Jaffe and the Sun outline the stark contrast between regulator’s concerns about affordability and spiraling electricity costs. Although it focused on residential bills, the landscape remains similar for small-commercial and large-commercial ratepayers. According to the estimates of the Public Utilities Commission’s (“PUC”) Chairperson, Eric Blank, the average cost of a kilowatt-hour (“kWh”) across all rate classes will rise a minimum of 55% by 2029, from its ¢13.82 per kWh baseline in 2024. This rise may end up being closer to 72% based on the PUC’s own projections. This recently proposed rate increase only compounds the fast growing utility costs for Xcel Energy customers. In early 2022, the Colorado Sun’s Jaffe also reported that Xcel’s utility rates were scheduled to increase more than 6.5% in 2023. Understandably, many are concerned with the rapid rise of utility prices in Colorado.
One might naturally ask why electricity rates are rising so much. In it’s request, Xcel Energy rightfully pointed out that electricity delivery (or services) costs are rising all across the country, with 57 utilities proposing rate increases nationwide. In Colorado, the number stands at four (4) with United Power, Colorado Springs Utilities and the CORE Electric Cooperative also announcing rate increases. Steven Berman, Xcel’s regional vice president of regulatory and pricing offered the following explanation for their increased costs: “These filings reflect the same underlying realities that we face — aging systems, rising costs for labor and materials, and evolving reliability and sustainability expectations”. While utility stock prices have also increased in recent years, largely driven by the AI boom but also by rising peak demand, it appears that electricity prices are facing a perfect storm for increased costs.
So, what can CO electricity ratepayers do to combat this rapid increase in prices? In Peak Utility Advisor’s professional opinion, always start with a utility bill audit. In our first year of business, we’ve been surprised by the types and scale of electric bill overcharges. Some common ones are listed below:
Incorrect Rate Schedules: Customers are often paying for a rate schedule that is not the least cost option. We’ve also seen that utility rate estimation tools quote incorrect costs/savings when compared to historical models.
Billing Errors & Miscalculations: While most utilities use software to automate the millions of bills that they calculate monthly, we’ve noticed that their internal quality assurance/quality control (“QA/QC”) often miss automated calculations that do not meet the billing practices required by their tariff (governing document for utility rates).
Demand Charge Errors: Most commonly, PUA has noticed that “demand rachets”, or a utility clause that sets your minimum billed power demand for several months based on a percentage of your highest peak demand from a previous period, can be incorrect—often leading to increased costs.
Incorrect Sales Tax and Franchise Fees: Occasionally, we’ll notice that clients who are typically exempt from sales tax are paying it on their utility bills, their tax rate is incorrect for their jurisdiction, or there may be a problem with the franchise fee rate.
Third-Party Energy Charges: Mostly for natural gas supply in Colorado but with consolidated billing, there can be utility charge mistakes on your consolidated third-party bill. Similarly, even third-party supply bills (dual billing) can contain mistakes. The same can apply for customers in deregulated electricity states.
Pre-mature Rider Charges, Riders Not Removed: Riders may have effective dates or price changes that are not correctly reflected on the bills.
The costs associated with these mistakes will only continue to increase with utility rate increases, greatly increasing the importance of expert auditing.
After recovering any and all overcharges, the newly found cash-flow can be snowballed, or utilized to invest into even greater savings through energy efficiency. As the saying goes, “The cheapest kilowatt-hour is the one that's never used”. Starting with an energy audit at your facility can provide fantastic insights into how to most wisely invest and compund any capital into building and/or process improvements that save valuable utility expenses.
Last but not least, you’ve heard about it for years now but even without valuable federal incentives (the ITC ends such as the Investment Tax Credit (“ITC”), on-site solar may be more valuable than ever. In previous years (pre-2024 AI boom), Commercial real estate and solar professionals often assumed utility power price increases of 2-4% annually (with some regional variations). In a world where Public Utility Commissions are forecasting a compound annual growth rate of at least 9%, it can be extremely beneficial to lock in prices for electricity now. Net-Energy Metering programs are largely intact in Colorado and Battery Energy Storage Systems (BESS) continue to come down in price and still receive an ITC credit in 2026.
At Peak Utility Advisors, we are extremely knowledgeable in auditing bills, planning, and decision analysis for energy system improvements. We provide professional second opinions on supplier and/or installer proposals ensuring that you aren’t overpaying for stated benefits. Lastly, we work closely with our clients and can offer alternative share-of-savings pricing models (as opposed to project-based flat fees) to ensure that our interest is aligned with your business or commercial facility while remaining cash-flow positive.
Contact Information
Matt Jochym
Advisor/Founder
(M): 970-235-1098
(E): matt.jochym@peakutilityadvisors.com
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