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Xcel Requests Rate Increase in Minnesota, Citing Costs of Carbon-Free Energy

Linda Hardesty

Energy Manage XcelXcel Energy asked the Minnesota Public Utilities Commission to authorize increases in base electricity rates over a two-year period, saying it needs to pay for the costs of renewable energy and enhancing long-term service reliability. The company proposes prices for a two-year period, during which investments in carbon-free energy sources, a diverse supply mix and service reliability improvements are at their peak.

Average customer rates would increase by 4.6 percent effective Jan. 3, 2014, when interim rates would take effect. Average customer rates would increase an additional 5.6 percent during 2015. These rates are based on the company’s increased cost of providing service of $193 million in 2014 and $98 million in 2015.

Xcel says its objective is to keep the annual rate increase between 4 and 6 percent as it completes major improvements to its electric system. Post-2016, Xcel expects its costs will be at or below the rate of inflation.

About 45 percent of the increase is for investments that allow continued operation and increased output at Xcel’s nuclear plants for an additional 20 years, and new wind resources. The company says its portfolio of nuclear plants and new wind power will allow it to avoid carbon emissions by more than 200 million tons over their lives and are essential to achieving state energy policy goals calling for a 30 percent reduction in carbon emissions by 2025.

Another 25 percent of the increase stems from the company’s efforts to strengthen, refresh and modernize the electricity grid and implement technology improvements to ensure grid reliability.

Much of the remainder of the request stems from the cost of other power plants, including the return to service of Sherco 3 after an extended outage.



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