Xcel execs fly high, at ratepayers' expense
- Article by: JENNIFER BJORHUS and SUZANNE ZIEGLER
- Star Tribune staff writers
- November 19, 2009 - 5:41 AM
Xcel Energy Inc. has taken heat for charging Minnesota ratepayers for lavish entertainment expenses, but it also operates costly airplanes that ferry around top brass and other employees almost daily, primarily between Denver and St. Paul -- with ratepayers picking up the tab.
The Minneapolis-based utility leases two eight-seat Learjets that cost about $1,200 an hour to fly. The near-daily weekday flights -- with the two planes even passing each other in the air -- have attracted attention as the Minneapolis-based utility seeks to raise utility rates in Minnesota and Colorado.
Almost all of Xcel's $5.8 million annual corporate aviation budget for operating and maintaining the two planes is charged back to ratepayers in the eight states where it does business. About $2.2 million of that gets charged back to Xcel's electricity customers in Minnesota, with about $150,000 of it rolled into the rates it charges for gas, according to Judy Poferl, president and CEO of subsidiary Northern States Power Co.-Minnesota. That's about 4.5 cents out of the typical monthly residential electric bill of $77.23 going to cover Xcel's business aircraft, she said.
The corporate shuttles help Xcel operate efficiently, she said. Xcel has major operations in Colorado, and the money the utility has saved by merging with Denver's New Century Energies in 1999 has more than offset the aircraft costs, she said.
But at least one Minnesotan on the ground isn't so sure.
Spotted from backyard
Dan Pomrenke, who described himself as an aviation buff, said he's been tracking Xcel's flights on an Internet-based service called FlightAware for about a year. He and his son first spotted the jets from their backyard in Lakeville. They looked up the planes on FlightAware to see where they were coming from or who owned them. Pomrenke was struck by the frequency of Xcel's flights, and alerted reporters.
Pomrenke isn't an Xcel customer. But he's outraged over what he considers wasteful spending by the utility.
"I don't care what level of executive you are, the frequency of flights is either poor management or abuse," Pomrenke said. "As far as I'm concerned, it's subsidized by their Minnesota customers."
He also said the flights clash with the company's ballyhooed environmental initiatives, such as wind and solar power.
Many Minnesota corporations operate their own aircraft, but because Xcel provides a basic public service -- heat and light for homes -- it's expected to operate modestly.
Poferl said Xcel is serious about keeping costs low. The planes "make the most effective use of our managerial talent's time," she said. Xcel cut back on flights last year, she said, but the company encourages employees to use the planes so they aren't carrying just one or two people. One is stationed at Centennial Airport in Denver, the other in St. Paul. Flights average about five people, she said.
Xcel's executive officers and their families can use the aircraft for personal travel only when the aircraft is already scheduled to a destination on company business and seats are available, according to documents Xcel filed with the Securities and Exchange Commission. The company's executives are split between Minnesota and Colorado, with about 20 living in each state. CEO Richard Kelly keeps homes in both Denver and Minneapolis. But Poferl said the bulk of the 650 people who flew on the Learjets last year were not executives.
FlightAware records show one of Xcel's planes was in the air for 193 hours between July 20 and Wednesday, when it left Denver at 7:58 a.m. and arrived in St. Paul at 9:46 a.m. It flew back to Denver later in the day. It was in the air three times a day on seven days during that time frame, most recently on Oct. 27, when it left Denver at 7:27 a.m. for Amarillo, Texas, then went to St. Paul before returning to Denver at 6:23 p.m.
Poferl said the planes fit the company's green focus because they improve productivity, enabling it to tackle environmental goals.
Lavish trips scrutinized
In September, Minnesota utility regulators granted Xcel a $91 million electricity rate increase -- short of the $132 million it wanted. Xcel shaved about $3.9 million off that rate hike request after the attorney general's office testified about over-the-top travel and entertainment expenses that Xcel had charged back to Minnesota ratepayers.
Minnesota electric ratepayers picked up $663 of the $1,699 Xcel's chief financial officer spent for one night at the Mandarin Oriental Hotel in London and paid $36,149 of the $113,753 Xcel spent for a retreat for the board of directors at the luxury Ritz Carlton Bachelor's Gulch in Beaver Creek, Colo., according to the attorney general's review. Minnesota ratepayers also picked up the tab for more than $200,000 in perks that didn't require receipts, it said.
One of the biggest expenditures: $45,000 for a trip to Europe in 2008 by Xcel's chief executive officer and chief financial officer. That cost Minnesota electric ratepayers about $18,000.
In its review, the attorney general's office noted that "certain exorbitant spending by highly compensated, high-ranking individuals in the company should be excluded from rates. To the extent the company wishes to engage in such spending, it should be borne by shareholders."
The attorney general didn't challenge Xcel on its corporate aviation budget. In an interview, spokesman Ben Wogslund said the office didn't study the matter closely enough to reach conclusions.
Burl Harr, executive director of the Minnesota Public Utilities Commission, couldn't recall how the money for the corporate shuttles was handled in Xcel's recent rate case.
Xcel is seeking more rate hikes. It recently finished a hearing in Colorado, where it wants to raise electric rates by $177 million. It also wants to raise gas rates in Minnesota by nearly $20 million. Regulators are considering those requests.
Xcel Energy, one of the country's largest utilities, provides gas and electricity to more than 5 million customers.
Jennifer Bjorhus • 612-673-4683 Suzanne Ziegler • 612-673-1707
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