Home Energy conservation Xcel wants to increase residential electricity bills by nearly 20%

Xcel wants to increase residential electricity bills by nearly 20%


Xcel Energy on Monday proposed an increase in electricity rates of 21.2%, or $ 677.4 million, over three years, of which just over half will reach the Minnesotans wallet in 2022.

With the rate hike, the company’s average residential customers would see their electricity bills increase by 19% from 2022 to 2024, or an average of $ 15 to $ 21 per month cumulatively.

“It’s a pretty straightforward rate case,” said Chris Clark, president of Xcel for Minnesota and the Dakotas. “He’s really focused on the poles and wires of our business and the necessary infrastructure investments.”

Xcel, based in Minneapolis, has filed a request for a rate increase with the Minnesota Public Utilities Commission, which must approve any increase.

Xcel is by far the state’s largest electricity supplier, with 1.3 million customers. Its residential customers have had stable prices for two years. The amount of the proposed rate hike could come as a shock, however.

“Seeing a 20% rate increase – that’s really important,” said Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, a residential taxpayer advocacy group.

She also noted that consumers are already struggling with rising energy costs and escalating inflation in general.

Oil prices have peaked in seven years, driving up fuel costs. Natural gas prices are about 75% higher than a year ago, just at the start of the winter heating season. And the costs of propane are out of the ordinary.

Meanwhile, Minnesota natural gas customers have just started paying a $ 660 million bill caused by historic price hikes after a devastating winter storm in Texas. next week.

“When we talk to the consumer to help them with their overall financial situation, these things all come together,” Levenson-Falk said.

Xcel says its average residential bill – currently $ 86.87 – is lower than the national average.

Tariff cases typically take around 18 months to be adjudicated, although utilities typically seek and receive approval for interim tariff increases.

Xcel is asking the Minnesota Public Utilities Commission (PUC) to approve an interim rate increase of 9.4%, or $ 288.3 million, which would begin Jan. 1. This interim increase would add 4.08 cents to the average customer’s monthly bill.

Customers get refunds if a final rate increase is less than the interim increase authorized by the PUC. The overall tariff increases charged by utilities are often greater than what the PUC ultimately allows.

In its PUC filing on Monday, Xcel also requested an interim rate increase for 2023. It has also done so in the past, but the PUC refused to immediately comply with the request, asking Xcel to return a year later. .

So this time around, Xcel also made an “alternative” interim pricing proposal. It reduces the first year price increase – but only if the PUC at the same time approves an interim second year increase. “We need some certainty for the second year,” Clark said.

Under the alternate proposal, the average residential customer would see $ 1.22 added to their average monthly bill on January 1.

“At the end of the day, we’re asking for the same amount of money for every proposal,” said Amy Liberkowski, director of pricing and regulatory analysis at Xcel.

Xcel is a leading supplier of wind energy and was one of the first U.S. utilities to announce 100% carbon-free electricity targets by 2050.

The company says the tariff increase will allow it to “lead the transition to clean energy” and create an advanced electricity distribution network. “Most of the investments we make are really driven by aging infrastructure,” Clark said.

Levenson-Falk said that while it is good for Xcel to invest in renewables and related infrastructure, it looks like taxpayers would pay a disproportionate share of the bill – compared to the company’s shareholders.

She was also skeptical of Xcel’s tariff case request to increase its authorized return on equity (ROE) from 9.06% to 10.2%.

Clark said the higher ROE “reflects changing market conditions.”

The new tariff case would be Xcel’s second multi-year tariff case since the state legislature authorized it in 2015. In 2017, the PUC approved a four-year tariff agreement for Xcel Energy that increased residential tariffs by 10.6%.

The deal was retroactive to 2016, and it followed five consecutive years of rate hikes for Xcel. In 2019 and 2020, Xcel offered new three-year pricing plans, with the latest calling for a total of $ 597 million in new revenue.

Like this year’s rate hike demand, the 2020 proposal would also have hit consumers harder in the first year.

But due to a crowded file at the PUC in 2019 – which only got worse with COVID-19 restrictions in 2020 – Xcel also offered “withdrawals” of tariff cases for each of those years. The PUC has accepted both.

Base rates for residential and commercial classes have remained unchanged during stays.

However, many commercial customers still saw significant cost increases due to what is known as a “sales reconciliation”: an adjustment of Xcel’s current sales to its sales in 2016, the first year of its last price case. .

Since then, Xcel’s sales, like those of many U.S. electric utilities, have fallen, making it more difficult to cover fixed costs. Sales fell mainly because customers, especially businesses, increased their energy savings.

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