Bill aims to tighten rules on utility rate hikes

  • Article by: SUZANNE ZIEGLER , Star Tribune
  • Updated: January 13, 2010 - 11:42 PM

Minnesota's Attorney General and some lawmakers seek more accountability from utilities.

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Lori Swanson

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State officials, seeking tighter oversight of utilities' rate increase requests, are proposing legislation that would put an end to automatic interim increases and require utilities to provide details of travel and entertainment costs.

The stakes are high, according to Attorney General Lori Swanson: Since 2006, six utilities in Minnesota have been allowed to raise rates by more than $188 million annually, and four pending cases are seeking annual increases totaling more than $104 million.

"Ordinary people are struggling to pay their bills; they shouldn't have to front the tab for corporate lobbyists and executive perks," she said Wednesday at a Capitol news conference, where she was joined by the bills' sponsors, state Rep. Debra Hilstrom, DFL-Brooklyn Center, and state Sen. Ellen Anderson, DFL-St. Paul.

Under one bill, utilities would be granted an interim rate increase while they await permanent approval only if the state Public Utilities Commission (PUC), which regulates them, finds there is an "immediate and compelling necessity" for it. The other bill would require utilities to submit to the PUC a separate filing itemizing travel and entertainment costs that they want a rate increase request to cover.

In recent years, Swanson said, utilities have sought to recover expenses for extravagant travel and entertainment costs, including retreats, sporting events and private aircraft.

"The issue here is whether ratepayers should be forced to pick up the tab for executive perks at a public utility that's a regulated monopoly," she said. "We think the answer is no."

Xcel Energy Inc., the state's largest utility, cut nearly $3.9 million in executive perks from its electric rate increase request last year. The PUC ultimately allowed Xcel to raise electricity rates by $91 million per year -- less than the $132 million annual increase it had been given earlier and short of the $156 million Xcel originally asked for last year.

And Swanson said CenterPoint Energy recently included $117,000 in lobbying costs in a rate hike request, but the PUC nixed that amount after Swanson's office objected. And in a similar case, Swanson said the PUC halved Duluth-based Minnesota Power's $1.2 million in expenses for a corporate jet that the utility wanted to pass along to ratepayers as part of a 2008 rate increase that was originally $45 million but was cut to $20.4 million.

The bill would require utilities seeking a rate increase to file itemized expenditures in seven areas, including travel and lodging; owned, leased or chartered aircraft; those related to its board of directors; and lobbying.

Scott Wilensky, vice president of regulatory affairs for Xcel, said the utility agrees transparency is important but is less certain about whether it needs to go into law. "We think the regulatory process works pretty well in achieving that same result," he said.

CenterPoint spokeswoman Becca Virden said the lobbying costs, which she said were closer to $100,000, were for efforts on behalf of its customers, such as increased energy assistance for those with low incomes.

Minnesota Power spokeswoman Amy Rutledge said it made changes in the wake of criticism of the 2008 rate case and "scrutinized" each trip when it filed its most recent request for an annual $81 million increase. In the 2009 request, it is seeking about $600,000 for the costs of a corporate jet, which includes maintenance, she said.

Suzanne Ziegler • 612-673-1707

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