Minnesota regulators blast Xcel for halting projects after rate case decision

Minnesota utility regulators on Thursday blasted Xcel Energy for backtracking on clean energy proposals after the company's request for a 21% rate increase was denied.

On June 1, several hours after regulators allowed Xcel to increase rates by only 9%, the company said it would reassess its investments in Minnesota — starting with the withdrawal of a $330 million electric vehicle (EV) charging program.

"It's so childish and ridiculous," Katie Sieben, head of the Public Utilities Commission, said at the Thursday meeting. The PUC is not a "punching bag" for Xcel, and the utility, she added, is sending "mixed messages" to the commission and the public on its commitment to clean energy.

Nine days after the rate case decision, Xcel withdrew a petition to increase funding for three clean energy projects serving Black and Indigenous communities in Minneapolis. Those projects, which would cost more than $10 million, are in limbo and community groups are trying to hold Xcel accountable.

PUC Commissioner Joe Sullivan said that Xcel's backtracking on community projects didn't "appear to be made in good faith."

"Coming on the heels of the rate case, this looked like it was part of Xcel's statement it would [reassess] investing in Minnesota," he said.

Ian Dobson, an Xcel attorney, told the PUC the rate case did not affect the company's decision on the Minneapolis clean power proposal. The projects — two in south Minneapolis and one on the North Side — involve grid batteries paired with solar panels.

As for the EV charging plan, "when the rate case decision happened and it was below expectations, we had to pull back on some things, and this was an obvious choice," Dobson said.

The centerpiece of the EV plan — a $192 million buildout of 730 Xcel-owned fast-charging stations — ran into significant opposition, including from two state agencies, privately owned charging companies and some ratepayers who would've paid for the program.

"We had encountered levels of opposition that we had not expected," Dobson said.

The Minnesota Department of Commerce and the Attorney General's Office opposed Xcel's fast-charger plan, reiterating their stance recently after Xcel acknowledged it had encountered significant problems with some of its EV charging programs.

The PUC voted unanimously to accept the withdrawal of Xcel's entire $330 million Clean Transportation Plan. But it required the company to revisit some parts of that plan — and evaluate its current charging programs — in a report to the PUC later this year.

The commission Thursday also took up the fate of the three "resilience hubs," which would create "microgrids" using batteries and solar panels in lower-income, mostly non-white communities. The hubs would provide backup power during outages, as well as address economic development and energy equity.

In July 2022, the PUC approved the $9 million Resilient Minneapolis Project, which ratepayers would have funded.

Xcel planned to work with Renewable Energy Partners, a north Minneapolis firm, on a microgrid for city school properties on the North Side. The utility would partner with Sabathani Community Center and the Minneapolis American Indian Center on the South Side.

In April, Xcel filed a petition with the PUC to increase the budget to $17.7 million, saying costs had climbed due to inflation and industry-wide increases in equipment and labor expenses.

But less than two months later, Xcel told the PUC it was withdrawing that request, saying "we have determined that now is not the right time to proceed" with the hubs.

Several PUC commissioners lit into Xcel with their frustrations over the company's handling of the project.

Commissioner Valerie Means said Xcel's "good will" in diversity and energy equity matters is "in jeopardy" with its petition to at least temporarily shelve the resilience hubs.

"This is very troubling," she said. "When I saw this, I couldn't believe it."

Shubha Harris, an Xcel attorney, acknowledged that the resiliency project's lack of progress has hurt relations with community groups, saying Xcel "will try to make things right."

She said the company recently calculated a possible solution that would cost less than $17.7 million. "The company is trying to find a way to do these projects," Harris said.

Representatives from community organizations say they are frustrated the project has stalled and want it to continue.

"We want to ensure Xcel remains fully accountable to communities it has [historically] underinvested in," said Scott Redd, Sabathani's CEO.

Jamez Staples, CEO of Renewable Energy Partners, told the PUC, "There was not much transparency in Xcel's process and its selection of a battery vendor."

Renewable Energy Partners concluded that Xcel's battery choice for the north Minneapolis project may rely on inaccurate cost forecasts and may be inappropriately designed for community needs.

Specifically, the battery would have only a 44% probability of coping with a 48-hour power outage. Also, the solar panels would be too small to produce excess energy to be stored in the battery, Renewable Energy Partners found.