Colorado Springs Utilities this week sent out its third notice this year that it’s reducing natural gas rates. But it’s important to point out that those reductions are actually refunds owed customers for the $20.6 million that the utility over-collected last winter.

The City Auditor’s Office noted in a March 17 report that the over-collection was due to colder-than-normal weather during the months of October, November and December. Natural gas prices were also lower than expected, contributing to the over-collection.

(Over-collections and under-collections are quite common in utilities because it’s difficult to forecast in advance the price of commodities, such as natural gas and coal, and it’s also impossible to forecast the weather).

Utility spokesman Dave Grossman said all the money owed customers should be returned by December.

Customers have seen their natural gas bills decline three times this year.  Bills  dropped by $8 on Jan. 1, 2010,  $2 in April, and  $3 in May.

Due to an unusually cold winter, Colorado Springs Utilities over-collected $20.6 million from its natural gas customers.

The city-owned utility has already begun refunding customers for that amount by reducing natural gas bills by roughly $2 a month beginning in April 1.

Spokesman David Grossman said the utility occasionally over-collects – and under-collects – on its gas bills  because the price for natural gas is based on some unpredictable factors, including the weather and customer usage.

The $20.6 million, which was described in a March 17 city auditor memo,  was “probably a larger amount that what is typical,” Grossman acknowledged. But on the other hand, natural gas prices were lower than what was typical  and customers were using more natural gas to heat their homes, he pointed out.

Mark Stutz, a spokesman for Xcel Energy, said it is not uncommon for the investor-owned utility to over-collect in the “eight figure range.” 

When that happens, Xcel also makes adjustments to customer accounts. “It’s the nature of the market,” he said. “You can’t predict the future.”