Xcel customers will see no rate increase in 2020

Xcel Energy's customers won't see rate hikes on their bills in 2020 after Minnesota utility regulators voted Thursday to postpone by one year a rate request sought by the state's largest electricity provider.

Last month, Minneapolis-based Xcel proposed a 15.2% rate hike — or $466 million — for all customers combined over three years. Residential customers would pay an estimated $110 more per year for electricity by 2022 under Xcel's proposal. The biggest impact was targeted for 2020, the plan's first year.

But Xcel at the same time also proposed that the Minnesota Public Utilities Commission (PUC) extend components of its current rate plan through 2020; the utility would then file a new rate case next November. Xcel offered the alternative because the PUC's docket is particularly crowded now, and it will continue to be through 2020.

"The stay-out request that Xcel has made is a reasonable one," said PUC Commissioner Dan Lipschultz at a meeting Thursday.

The PUC voted 5-0 for the rate case alternative, which calls for no increases in 2020 but does allow Xcel to raise prices in 2021 based on annual adjustments — called "true-ups" — to sales forecasts and other financial projections for 2020. Costs to ratepayers would rise if electricity sales fall, and that's what's expected.

Xcel said that costs to ratepayers in 2021 for the sales true-ups would be an estimated $94 million, PUC records show. That's below the $122 million — or 4.1% — interim rate increase for 2020 that Xcel had requested as part of its rate case.

Utilities commonly ask the PUC for interim rate hikes because rate cases can take 18 months or more to adjudicate, The PUC usually at least partly obliges such requests. But with Xcel's rate case now pulled for a year, there will be no interim increase on Jan. 1.

"Ratepayers should be better off with the sales true-up compared to the interim rate increase," Nancy Campbell, a senior financial analyst for the Minnesota Department of Commerce, said at Thursday's PUC meeting.

But two business groups contested the department's and Xcel's contentions, asking instead for the full rate case to go forward. "Historically, Xcel gets nowhere near the interim rate increase they ask for," said Richard Savelkoul, an attorney representing the Minnesota Chamber of Commerce.

Minnesota's largest retail gas provider and second-largest electric utility, CenterPoint Energy and Minnesota Power respectively, also filed for rate increases. The PUC last week approved an interim increase of 5.8% for each of them and now must study the full requests. Two other rates cases are also pending.

Plus, the PUC has just begun wrestling with Xcel's "integrated resource plan," an important long-term outlook that Minnesota utilities must file every few years. Xcel's plan includes early closings for two more coal power plants; a big addition of solar power; and an extended life — by at least 10 years — for one of its three nuclear generators.

Mike Hughlett • 612-673-7003