Kim Lysobey typically wears three layers and thick boots while at home during the winter. She keeps her thermostat at 60 degrees during the day and turns it down to 50 degrees overnight. She keeps the house dark during the day. Even her dog, Boo, wears a sweater in the house.
Despite these efforts to conserve energy, her Xcel Energy bill — like so many other customers around the state — still saw a sharp increase at the end of 2022. In Lysobey’s case, her bill nearly doubled during the course of a few months.
At the same time, Xcel’s top brass boasted of record profits at a recent shareholders meeting and its executives took home millions of dollars in salaries and bonuses, according to Xcel data that is filed annually with the Securities and Exchange Commission.
“How much money is enough?” Lysobey said. “I mean, really.”
At a recent shareholders, Xcel reported $1.7 billion in profits, including $727 million from Colorado, while many local residents struggled to afford their skyrocketing bills late in the year.
“Have a heart,” Lysobey said.
Xcel is overseen in Colorado by the state’s Public Utilities Commission, which must approve any rate hikes requested by the energy company. Xcel is a regulated monopoly, meaning that the company has to follow certain guidelines to exist in its current form.
As natural gas prices hit record highs last year, Xcel applied for and was approved for a rate hike, but maintains it does not make extra profit off of the increased commodity cost of natural gas.
PUC Chief Economist Erin O’Neill said the commission likely could not tell Xcel that it can’t raise rates when the price of gas increases. She called it a cost of doing business and said Xcel could take the PUC to court and would likely win, based on previous cases.
“I am not sure that would be legal,” O’Neill said. “I think we would be open to a challenge that that is not just and reasonable.”
Despite that, the PUC does decide how much of Xcel’s executives’ salaries come from Colorado customers and how much ratepayers chip in for bonuses.
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“Xcel can pay their employees what they think is necessary,” O’Neill said. “What we look at is what are you recovering from the citizens of the state of Colorado.”
Salary information for 2022 is not yet available, but Xcel’s latest filing with the SEC shows that former Xcel CEO Ben Fowke was paid more than $12 million in 2021, which includes a $1.7 million bonus and $9 million in stock awards.
Fowke retired in August of 2021 and was replaced by Bob Frenzel, who was president and chief operating officer. He was paid $8.3 million after receiving a bonus that was more than 100% of his base salary.
“The question of exactly how much they need compensation for is absolutely a legitimate question,” O’Neill said.
She said Colorado customers pay roughly 50 percent the base salary of the company’s executives through energy bills. Colorado accounts for around 48% of Xcel’s business.
The PUC caps the amount of bonus money that Colorado ratepayers can contribute at 15% of the executive’s base salary. This means Colorado Xcel customers paid $202,500 toward Fowke’s $1.7 million bonus.
Those numbers did not sit well with Lysobey, who said she wants to see the PUC put more pressure on Xcel.
“It’s not right,” she said. “They’re not supposed to be serving Xcel. They’re supposed to be protecting us.”
In Minnesota, where a majority of the remainder of Xcel’s business comes from, state law requires the utility to disclose compensation paid to top employees. Minnesota’s utilities commission also caps executive bonuses at 15% of base pay. Xcel asked to increase that cap to 20% of base pay, but regulators there have not approved that hike.
In a statement, Xcel said its executive compensation is directly tied to reaching corporate business goals and is in line with peer companies to help them “attract and retain top talent.”
The company also said it does not plan to ask for a cap increase in Colorado.
Below is the full Xcel Energy statement:
“Our executive compensation is directly tied to our executives’ ability to reach corporate business goals and achievements, including reaching our clean energy goals. Our compensation program is in line with our peer companies, and we consult with independent third parties and our Board of Directors annually to review executive pay and benefits.
Competitive compensation packages help us attract and retain top talent, to achieve our clean energy goals and continue to serve customers with reliable and affordable energy across the United States. Incentives are tied to several significant achievements, including carbon reductions.
The 15% cap applies to the total pool of incentive pay for all employees. Some employees get more and some less than 15%. This has been the result of several rate cases and has become our standard proposal based on historic outcomes. We are unable to break out employee compensation at any level by state.”