Minnesota utility regulators approve refunds averaging $25 for Xcel residential customers

Xcel Energy customers will get modest refunds starting no later than Feb. 3 after Minnesota utility regulators granted the company lower power rates than what Xcel had requested.

In total, the Minneapolis-based company will dole out nearly $187 million in the form of one-time bill credits. The average residential customer is expected to get $24.81, a smaller amount than what Xcel and other state officials pushed for but more than some large industrial customers wanted.

When regulated utility companies ask for higher rates, the Minnesota Public Utilities Commission (PUC) typically grants a temporary increase while the case is being debated. If the five-member commission ends up later approving power rates that are lower than interim ones, the utility must issue a refund with interest.

In this case, Xcel asked for higher rates in 2021, and the PUC approved an interim rate increase of $247 million per year that took effect Jan. 1, 2022. But the final rate hike was $117.4 million in 2022 and $207.8 million in 2023.

The commission chose between a few options on how to distribute the refund. Xcel, the Department of Commerce and the Attorney General's Office argued residential customers should have received nearly $50.

A coalition of large industrial power customers pushed for a bigger share of the cash since the PUC had limited utility bill increases for residential customers during the pandemic. Under that option, residential customers would have received average refund of about $16.58.

In a 3-0 vote last week, the PUC went with a refund somewhere in the middle, arguing it was consistent with an earlier Minnesota Power case and state law. Xcel had to calculate the final refund amounts, which the company released Friday afternoon.

"The refund should reflect the lower amount that residential customers have paid in interim rates," PUC Vice Chairman Joseph Sullivan said during the Dec. 21 hearing.

While Xcel is issuing the refund, the company has appealed the PUC's decision to grant a lower rate increase than the company had wanted. Earlier in December, the PUC approved a separate temporary rate increase for Xcel's natural gas system.