Xcel Energy Requests Rate Increase
Citing as key factors investments to preserve and expand operations of its nuclear plants and electricity grid, Xcel Energy today asked the Minnesota Public Utilities Commission to authorize an increase in base electricity rates.
“Our customers expect safe, reliable and clean electricity service, and we have been investing more than $1 billion a year to meet those expectations,” said Judy Poferl, president and CEO of Northern States Power Co.-Minnesota, an Xcel Energy company that serves 1.2 million electricity customers in Minnesota. “This case is largely driven by these investments, which provide great value to our customers over the long term.”
Investments that allow continued operation of the Monticello and Prairie Island nuclear plants, expand the output of the Monticello plant and refresh and upgrade the transmission and distribution system -- much of which was built more than 50 years ago -- are the primary drivers of the company's $285 million request. The total includes approximately $40 million in higher property taxes associated with these and other investments in the electricity system.
“We sought and obtained approval to continue operation of our nuclear plants because they provide some of our lowest-cost, environmentally sound electricity,” said Poferl. “As a condition of that approval, we need to invest now in our nuclear plants to keep them operating safely and reliably over the next 20 years.”
The request represents a 10.7 percent increase in customer rates overall. As part of the filing, Xcel Energy seeks implementation of interim rates effective Jan. 1. Under the interim rate proposal, a typical residential customer's monthly bill would increase by approximately 10 percent, or about $8.
Even with the proposed rate increase, Xcel Energy rates will remain competitive, Poferl said.
“Nonetheless, we understand the impact of this proposed increase on our customers, and we offer an extensive suite of programs to help manage and lower bills,” she said. “While all customers contribute to the costs of keeping our system safe and reliable, customers can reduce their individual costs by participating in these successful programs.
“Combined, these efforts help us strike a reasonable balance between the need to invest in our system and the need to ensure competitive rates and bills.”
As part of the process, rates will be reset to reflect customers' current usage levels. While growth typically reduces the size of a rate increase, the company's filing notes that's not the case now. Poferl pointed out that in this filing, Xcel Energy is also proposing ways to help encourage efficient business growth and jobs to benefit all customers over the long term.
The Minnesota commission is expected to hold public hearings in spring, and a decision is expected in fall, with final rates effective in the first quarter of 2014. More information can be found online at www.xcelenergy.com. A copy of the rate case filing will be available on the commission's website at www.puc.state.mn.us.
“As always, we plan to work throughout the proceeding with our stakeholders and customers,” Poferl said.
Xcel Energy (NYSE: XEL) is a major U.S. electricity and natural gas company with regulated operations in eight Western and Midwestern states. Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.4 million electricity customers and 1.9 million natural gas customers through its regulated operating companies. Company headquarters are located in Minneapolis.
2013 Xcel Energy Electricity Rate Case Filing Fact Sheet
- $285 million, a 10.7 percent increase in overall rates
- A typical residential customer's monthly bill would increase by approximately 12 percent, or about $9, based on use of 675 kilowatt-hours.
- A typical small business customer's monthly bill would increase by approximately 10.6 percent, or $11.30, based on use of 976 kilowatt-hours.
- A typical large business customer's monthly bill would increase by approximately 9.5 percent, or $309, based on use of 40,000 kilowatt-hours.
- 10.6 percent rate of return on equity (currently 10.37 percent)
- Investments and costs to extend the lives of and operate the Prairie Island and Monticello nuclear plants and to expand power output at the Monticello plant ($114 million or 40 percent of total increase and nearly 60 percent of new investment)
- Investments and costs to refresh, upgrade and operate the electricity grid and other power plants ($56 million or 20 percent of total increase and about 40 percent of new investment)
- Increases in property taxes due primarily to increased investments ($40 million or 14 percent of the total increase)
- Rates will also be reset to reflect current customer usage and wholesale sales, which are lower than the level in Xcel Energy's last rate case ($75 million or 26 percent of total increase)
- Extending the lives of the Prairie Island and Monticello nuclear plants and expanding output at Monticello offer the low-cost options for customers and a resource for the future that produces no greenhouse gases or emissions associated with acid raid or smog. Investments are required now as a condition for extending the lives of these plants for another 20 years.
- Electricity is an essential service and needs to be available 24/7. Unlike other companies, Xcel Energy cannot eliminate a third shift or parts of our operations in response to changed demand.
- While all customers share in the costs of keeping the electricity system dependable and safe, Xcel Energy can help manage the impact of this increase through its extensive suite of programs to manage and reduce bills.
- Jan. 1, 2013: Interim rates take effect (see below)
- Spring-Summer 2013: Public hearings
- Fall-Winter 2013: Minnesota Public Utilities Commission consideration and final action
- First Quarter 2014: New rates take effect
Xcel Energy is requesting an interim increase during the time the case is under review, as allowed under Minnesota statute:
- $251 million, a 9.4 percent increase in overall rates, effective Jan. 1, 2013
- A typical residential customer's monthly bill would increase by approximately 10 percent, or about $8, based on use of 675 kilowatt-hours.
- A typical small business customer's monthly bill would increase by approximately 10.2 percent, or $10.80, based on use of 976 kilowatt-hours.
- A typical large business customer's monthly bill would increase by approximately 9 percent, or $262, based on use of 40,000 kilowatt-hours.
Xcel Energy Media Relations, 612-215-5300