Colorado utility rate hikes are coming as the state’s energy landscape undergoes a historic transformation–from aging infrastructure upgrades to booming economic growth like data centers driving up demand to supply chain challenges affecting all construction projects. At the same time, Colorado is making smart investments in clean energy that deliver cleaner air for families and real health benefits for our communities. When utility companies roll out new infrastructure plans, those costs typically end up coming out of homeowners’ and businesses’ pockets.
At Solar Power Pros, we don’t leave any Coloradan behind when it comes to protecting your family or business from rising costs. Here’s what’s driving utility rate increases and how solar energy helps you take command of your energy expenses.
Colorado is making smart investments in clean energy infrastructure that will benefit our communities for generations. Xcel Energy is set to invest $22.3 billion in Colorado by 2032, retiring dirty coal plants and replacing them with modern, efficient renewable energy systems.
This transition isn’t just good policy, it’s good economics. While coal plants require expensive upgrades and ongoing fuel costs, renewables use free, readily available fuel (sunshine and wind) once installed. What’s the challenge? These infrastructure investments require upfront capital, much like renovating your home or upgrading your business facility–it costs money now but delivers long-term benefits.
However, it’s important to note that watchdog groups keep a close eye on utility proposals to ensure they’re right-sized for Colorado’s actual needs. Some proposals, like Xcel’s plan to replace the Comanche 3 coal plant, have drawn criticism for potentially being oversized and including untested technologies that could result in unnecessary costs for customers. This highlights why owning your own solar energy system becomes even more valuable, you’re not dependent on every utility decision!
It’s no secret that the demand for energy is increasing in Colorado and across the country.
This growth is positive for our state, but it puts pressure on the grid that requires investment in generation or upgrades to meet demand reliably.
Because utilities are regulated monopolies, much of their spending (capital investments) must be recovered by rates set by the Public Utilities Commission (PUC). Here’s how it works in Colorado: When a utility, like Xcel Energy, builds new infrastructure like power plants or transmission lines, they get to recover those costs from customers through rate increases, plus earn a guaranteed profit margin on top of those investments. This regulated utility model ensures reliable service, but it also creates a built-in incentive for utilities to build more infrastructure. Essentially, the more they build, the more profit they’re allowed to earn from customers.
The Colorado utility rate hike numbers are not small. Even Xcel Energy’s own forecast has the basic electric charge for residential customers increasing 30% by 2032 to about 21 cents per kilowatt-hour (kWh). Some projections suggest even steeper increases–environmental groups estimate the increase by 2031 at 50%! Colorado Springs Utilities electric rate hikes are set to jump 6.5% annually.
For commercial customers, increases could significantly impact operating costs and bottom lines, making energy efficiency and solar investments more critical than ever.
When you install solar, you’re essentially deploying your own power plant. Sunshine is free! Once your system is installed, your panels generate electricity for you at a fixed cost for 25+ years. This shields you from factors like:
Xcel announced that new time-of-use rates will charge more for power during peak hours beginning October 2025, with on-peak hours shifting to 5 – 9 PM on non-holiday weekdays, year-round, with rates during on-peak hours 2.7 times higher than off-peak. Solar + battery systems help shift your consumption to cheaper times, allowing you to use your own stored energy instead of electricity from the grid when rates are highest. Learn more about time-of-use rates and how battery storage protects against time-of-use rates.
Solar + battery provides energy security that no utility rate increase can touch. During outages or grid stress events, you can maintain power for essential operations.
This adds peace of mind and avoids the hassle and expense of dealing with power outages.
Here’s what’s often missed in discussions about rate increases: renewable energy, like solar, remains the most cost-effective way to generate electricity. Unlike fossil fuel plants that require continuously purchasing coal, natural gas, or oil to keep running, clean energy systems pull from free sources, like sunshine and wind, making them less expensive to operate long-term. The infrastructure investments happening now are replacing expensive, polluting coal plants with clean energy that costs less to operate over time. The cost pressures come from:
These are growing pains in a transition that ultimately saves money and delivers cleaner air for our families today.
Business owners face unique challenges with Colorado utility rate hikes, but solar can help address these concerns:
While some federal incentives may be winding down for residential (tax credit still available for commercial projects for a limited time), many local, state, and utility incentives remain strong. By moving forward with solar today, you can:
At Solar Power Pros, we’re committed to helping Coloradans understand the changing energy landscape. Our local, veteran-owned team provides residential solar and commercial solar solutions that protect your wallet and quality of life. How much can you save with solar? Find out with a complimentary consultation.
Colorado utility rates could rise 30-50% by 2031. Find out how residential and commercial solar energy helps you lock in lower costs and take command of your energy future.
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