The break that natural gas customers in Minnesota are getting because of lower gas prices took a bit of a hit Thursday.
Xcel Energy Inc. asked the Minnesota Public Utilities Commission (PUC) for a rate increase that would push a typical customer's bill up by $2.71 a month, or 3.9 percent.
The Minneapolis-based company, which serves 433,000 natural gas customers in Minnesota, said the increase is needed to pay for improvements and costs for distribution facilities and network. It has requested an overall increase in natural gas rates of $16.2 million, or 2.8 percent, for 2010. Its last increase request for natural gas was in 2006.
Al Krug, managing director of regulatory affairs, emphasized that the utility is already passing along to customers the savings from lower commodity costs.
"The case we're filing now is for the distribution side of that -- basically addressing the noncommodity costs," he said. "We've invested about $70 million in infrastructure since our last rate case. And we've experienced some increases in our operating and maintenance expenses as well."
Some of those costs, he said, include replacement of about 115 miles of gas lines and burial of a gas main under the Mississippi River. The line used to run across the DeSoto Bridge in St. Cloud, which was replaced this year.
"The cost increases that we're seeing, and that we unfortunately have to seek recovery from our customers, are unavoidable costs for us that really aren't related at all to the changes in commodity prices," Krug said.
The proposed rate increase affects only customer and distribution charges for delivering natural gas, which is about 30 percent of an average residential customer's total bill -- and not the wholesale cost of natural gas. Xcel said it does not profit on the price of natural gas itself.
Meanwhile, the PUC is still considering a natural gas rate increase for CenterPoint Energy Inc., which has about 800,000 gas customers in Minnesota. Last year, it filed a request to raise its annual revenue by $59.8 million, a 3.9 percent average increase that would mean $5.50 more per month for homeowners.
This fall, CenterPoint and Xcel predicted bills for average residential gas customers could be down as much as 20 percent from what they were a year ago, barring an unusually cold winter or an event that cuts gas supplies, because of low gas prices and increased supply.
As part of its request, Xcel proposed an interim increase that would go into effect Jan. 11, 2010, increasing customers' bills by $1.53 a month, or 2.2 percent. The interim rates would remain in effect until the PUC makes a final decision.
This fall, the PUC granted Xcel a rate increase considerably less than the utility was seeking for its electricity customers. Xcel was seeking an annual increase of $156 million, or 6 percent, but the PUC cut it back to $91 million.
Asked to comment, Krug said: "The electric and gas costs are completely separate. We've certainly taken a hard look at our costs, and we think that our request is justified."
Suzanne Ziegler • 612-673-1707