Minnesota utility regulators soften rate increases sought by Xcel

Recognizing Minnesota residents are "under financial distress," state regulators slashed a proposed Xcel Energy electric rate increase. Interim residential rates will still rise, but only about $5.50 a month instead of about $8.50.

The Minnesota Public Utilities Commission (PUC) on Thursday approved a total interim rate increase of $79.8 million, which was about $41 million less than what the utility had requested, for residential customers. It also approved an interim increase for natural gas customers.

"The commission is very concerned about affordability for consumers, and they're asking all the right questions," said Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, an advocacy group for residential ratepayers.

For Xcel, which provides power to 1.3 million Minnesota customers, that number is a "substantial cut," the utility's attorney, Matt Harris, told the commission.

It likely means Xcel, the state's largest electricity provider, will come back next year to ask for another interim rate increase for 2023 as the full review of Xcel's request plays out. The utility wants to raise rates by $677.4 million over the next three years — a 19% increase for residential customers — to pay for infrastructure investments.

The interim rate increase approved Thursday is a 6.4% bump for residential bills that will go into effect Jan. 1 while the rate case is adjudicated, a process that typically takes about 18 months.

"Our electric rate proposal enables us to deliver a better product for our customers, maintaining and enhancing our infrastructure to ensure reliable service while supporting our efforts to give customers more of what they want — cleaner energy, more ways to manage their energy use, and bills that stay low now and over the long-term," company spokesman Matt Lindstrom said.

Xcel's gas customers will be paying for last winter's extreme spike in gas prices for years to come after the PUC extended the amount of time Xcel Energy can recoup those costs.

That will keep monthly bills lower and help offset an interim rate increase approved Thursday for gas customers. Residential customers, on average, will see their monthly bills rise about 60 cents beginning in January.

Xcel had proposed delaying its $35.6 million, 6.6% rate increase, which would have lowered bills for 2022 but likely caused a backlog of costs to be recouped on bills later on.

"It's a good path we're headed on," said Katie Sieben, the PUC's chair. "We're just kicking the can down the road if we go the way of the [rate increase deferral] right now."

The company has not undergone a full gas rate case since 2009. The review for the gas rate request also will take about 18 months.

Last week, the PUC approved an interim rate for CenterPoint Energy natural gas customers that will go into effect Jan. 1. The average CenterPoint customer will pay about $2.40 more per month.

As with Xcel's electric case, commissioners took the unusual step of declaring "exigent circumstances" in order to reduce the interim rate due to the pandemic's ongoing impact to the economy.

CenterPoint is the state's largest natural gas provider, with 884,000 customers. Xcel is the second largest, with 480,000 gas customers in Minnesota.