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Xcel's Situation Illustrates Energy Sector Challenge: Reinvestment in Energy Grid Upgrades, Conservation & Outage Problems

|Includes: Xcel Energy Inc (XEL)

In Texas, the company many Texans pay to supply them with electricity has asked them to cut back on usage, including air conditioner use. According to the report, increased electricity use by the oil and gas industry has in part prompted Xcel's plea (the company excepts those needing air conditioning for health reasons).

Energy demand increases are seasonably and demographically predictable. Same with industry spikes.

However, in Colorado there have already been outages this summer, although at least one of them was tied to an explosion at a station in Denver. The company has predicted more outages.

To cope with the incapacity of the grid during peak usage, Xcel is asking Colorado residential customers to allow installation of a Saver's Switch on their breaker boxes that "cycle off" supply to a home's air conditioner for what the company claims are very short periods 10-15 times per summer.

For their trouble, customers get a $40 per year discount from their electricity bills. Whether smart grids will change the face of electricity usage or merely benefit utilities with public grant monies is apparently at issue.

Who is budgeting for upgrades to handle increased demand? Perhaps Xcel's response highlights that many customers are captive, while investors are not, and investors are reportedly wary of flagging utility profits.

For the consumer, maybe it is time to take another look at saving up for those solar panels. If Xcel is not investing in infrastructure, or cannot, maybe we can.

Disclosure: No positions.