(The Center Square) — Xcel Energy filed a proposal Monday with the Minnesota Public Utilities Commission to increase electric rates over the next three years.
The company requested an increase of $677.3 million, or 21.2%, in its present revenues for the next three years. That would be $396 million (approximately 12.2%) for the 2022 test year, $150.2 million (4.8%) in 2023, and $131.2 million (4.2%) in 2024.
The proposed rate increase would impact basic service charge, energy charge and any demand charge. The proposed 2024 monthly increase (cumulative 2022-2024) would be $14.75 for residential overhead line service, up from a current monthly cost of $77.57. Monthly residential underground line service cost would experience a $20.87 increase from the current monthly cost ($111.78).
The rate increase request does not affect the fuel cost charge, the company said in the proposal.
“The [plan] will allow the Company to continue providing leadership on a number of key initiatives, including (1) expanding our renewable energy portfolio and further transforming our generation fleet, as we lead the clean energy transition; (2) creating an advanced distribution grid to better serve our customers and enable further transformation of our overall energy delivery system; and (3) assisting in continued beneficial electrification,” the proposal said.
The company said its multi-year proposal enables it to “continue furthering State policy” through reducing its greenhouse gas emissions, “making the necessary investments in our system” and “affording all stakeholders the ability to continue to work together on these important policy objectives and address emerging issues during these years.”
Xcel’s backup proposal is an interim rate package that would lower its requirement for 2022 to $190.3 million instead of $288.3 million and its 2023 interim rate increase from $423 million to $306 million. If the commission grants rate relief for 2023, Xcel would use a sales true-up for 2022 and 2023, deferring collection of “any lost sales revenues by a year.”
“However, given the investments needed to be made in 2022 and 2023, the Company cannot agree to these reduced interim rate levels without certainty that it will gain additional revenue relief beginning January 1, 2023,” the company said. “Therefore, if the Commission chooses to defer a decision on 2023 interim rates at this time, the Company requests approval of its full interim rate revenue requirement of $288.3 million.”
The rate increases would apply to all retail electrical customers in Minnesota.
The commission voted Dec. 17, 2020, to keep electric rates the same in 2021. The company said it would dedicate $17.5 million to its Payment Plan Credit Program to provide direct relief to customers who couldn’t pay their bills.
“Any over-collection under interim rates will be refunded with interest to customers in a manner determined by the Commission,” the company said.
The commission typically allows increases that are lower than those that utilities ask for, the Star Tribune reported.
Center of the American Experiment Policy Fellow Isaac Orr, who specializes in energy and environmental issues, told The Center Square in a phone interview Oct. 26 that because Xcel’s profits are regulated through a cost-in-service model, it doesn’t require permission to increase the fuel clause of a customer’s bill. He added the increase is “a pass-through” cost and noted the rate increase is an attempt to recoup the expenses incurred by “building new things.”
“The fact that natural gas prices are rising will eventually harm electricity customers because Xcel generates more electricity with natural gas today than they did 10 years ago,” he said.
Those costs will be “blunted to some extent” because Xcel owns nuclear power plants and coal power plants, Orr said.
“But we’re already seeing inflationary pressure everywhere,” he said. “Gasoline prices are high because we have a federal administration that seems to think that restricting the supply of something that people want is a good way to build back better … This is just going to be adding one more straw on the backs of working Minnesotans who are already struggling to pay their bills.”