Xcel Energy Inc.'s recent profits rose 15 percent thanks largely to rate increases in several states, and the Minneapolis-based utility says its next request to raise electric rates in Minnesota will be filed with state regulators next week.
The utility said it earned $426 million, or 84 cents per share, in the three months ended in September. That's 4 cents per share more than analysts projected, according to Thomson Reuters. In the same period last year, Xcel earned $369 million, or 73 cents per share.
CEO Ben Fowke said Xcel will seek rate increases for three years in a row under a new Minnesota law that allows such multiyear requests. He told analysts that Xcel will ask for unspecified interim rate hikes for 2016 and 2017.
"The rate case is driven by capital investment," he said on an analyst conference call.
The utility, which supplies electricity to 1.2 million customers in Minnesota, has said previously that it would seek multiyear rate hikes. If Xcel wins approval for three years of increases, ratepayers in 2018 will see their tenth rate hike in 12 years. State review of the request will take a year or more.
In its most recent rate hike, for 2014-15, the Minnesota residential rate went up about 5.5 percent.
John Bartlett, an electric utility analyst for Reaves Asset Management, said multiyear rate cases benefit utilities by offering saving on legal expenses while giving investors greater certainty.
"These are all very capital-intensive companies," he said of utilities. "Everything that a big company like Xcel does requires a long lead time. So if they can put these things into a multiyear perspective, they can time things and schedule things in the most efficient way possible."
