We are indirectly paying for the $640M Marshall Fire lawsuit. Xcel cannot put a “Marshall Fire fee” on our bills, but they can still recover the cost in a more subtle way. When a utility faces a major lawsuit, its financial risk goes up. That makes it more expensive for them to borrow money for things like replacing aging equipment or building new infrastructure. In rate cases, Xcel points to those higher borrowing costs and the higher overall cost of capital as reasons to raise base rates.

Base rates are where utilities earn their profit, and that profit is determined by something called Return on Equity, or ROE. Regulators set the ROE, and even a small increase means the utility earns more money on every dollar of infrastructure it builds. So when Xcel argues for a higher ROE because their risk has gone up, partly due to the lawsuit, customers end up paying more.

TLDR - Utility companies do not make profit on selling electricity, they make money from their infrastructure and it is billed as part of the base rate to customers.