Xcel Energy plans to keep fighting for a much bigger rate hike than what state regulators deemed appropriate earlier this year, extending a debate over how high Minnesota's largest utility can raise power bills.
Xcel still pushing for higher rates in Minnesota despite regulator rejection
Xcel narrowed its financial forecast for the rest of the year.
October 27, 2023 at 8:50PM
The Minneapolis-based company said Friday it expects to appeal a decision of the state Public Utilities Commission (PUC) to the Minnesota Court of Appeals in early November.
"While we disagree with the PUC's decision regarding certain aspects of our case and plan to appeal portions of the decision to the Minnesota Court of Appeals, we respect the regulatory process and appreciate the support of all stakeholders as we go forward with the critical investments we need to make in our energy future," Xcel spokesman Theo Keith said in a statement.
The news drew criticism from a nonprofit ratepayer watchdog organization. Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, said the PUC decision was "very well grounded" and that Xcel continues to "perform strong and perform well for their investors."
"Any rate increase is about balancing the money that a utility company is allowed to earn with affordability for customers," she said.
In June, the PUC approved a three-year, 9% rate increase worth $306 million for Xcel. But that was far less than the $440 million increase Xcel wanted. The company asked the five-member commission to reconsider its decision, but they reaffirmed their choice in a unanimous September vote.
The utility has said the smaller rate hike will limit its ability to invest in energy infrastructure to help it transition away from fossil fuels. Xcel cited that rate case as one reason the company had less revenue than expected earlier this year.
The PUC decision was cheered by ratepayer advocates, however, who said it came while customers are facing rising costs for things like gas and food.
Among its disagreements with the PUC, the utility wants a bigger boost on a key profit measure known as guaranteed return on equity. Xcel asked the PUC to hike its rate from 9.06% to 10.2%, but the commission opted for 9.25%.
Also on Friday, Xcel Energy reported its profit rose 1% year-over-year as the company said it recouped more ratepayer money for infrastructure projects, had lower operations costs and sold more power in the third quarter. But Xcel missed Wall Street forecasts.
The company had earnings of $656 million, which is up slightly from $649 million a year ago. Adjusted earnings came in at $1.23 per share; analysts were expecting an adjusted $1.27 a share.
Xcel also tightened its annual profit forecast to $3.32-$3.37 per share from $3.30-$3.40 per share. The company's stock price fell 2.4% to close at $58.31 on Friday.
Meanwhile, Xcel CEO Bob Frenzel said in a news release the "future is bright" for the company as it continues its clean energy transition plans.
The company's second quarter revenue was $3.6 billion, down from $4.1 billion one year ago.
Frenzel on Friday touted Xcel's massive $15 billion renewable energy plan in Colorado, and promoted the $925 million in federal money that the Midwest hydrogen production hub might receive. The company expects to have multiple "clean" hydrogen projects as part of the initiative.
Xcel is the largest provider of electricity in Minnesota and the second-largest natural gas supplier. The utility's largest markets are Colorado and Minnesota, but it also operates in the Dakotas, Texas, New Mexico, Wisconsin and a small part of Michigan's Upper Peninsula.
The Minnetonka-based health insurer says the new contract “ensures continued, uninterrupted network access” to hospitals and clinics at the Bloomington-based health system.
