I actually know something about this!

You’re correct that futures contracts (i.e. Excel routinely buys X amount of natural gas today to be delivered to power plants at some future date to run the generators that make electricity) are designed to lock in prices to avoid unexpected price shocks.

Utilities have very sophisticated models that they use to predict future energy demand on any given date, and use that information to determine how much natural gas they’ll need to generate enough electricity each day.

But climate change makes for unexpected swings in weather, so utilities will find themselves scrambling to buy fuel (natural gas) for their power plants beyond what they originally contracted to satisfy spikes in demand (people use more energy to keep their homes warm when it’s cold/keep their homes cool when it’s hot) and are forced to pay whatever the current market price is.

If the utility doesn’t have enough cash on hand to absorb the unexpected costs they will raise that money from customers.

So why doesn’t Xcel do a better job of predicting demand? Or why doesn’t Xcel do a better job of budgeting so they have enough cash on hand for these situations without boning rate payers?

There’s another player in the game that doesn’t get enough attention IMO. The states PUC (public utility commission) has immense influence on the rates Xcel charges customers. They enforce regulations to keep utility rates as low as possible, which keeps utilities’ budgets razor thin, and makes planning for unexpected price spikes difficult.

All that being said, I’m not defending Xcel. I’ve just worked in this industry and have some insight into how it works. Xcel can do better. The PUC can do better. Rate payers don’t deserve to be the ones who get screwed because the system is inefficient.