Xcel rate increase smaller than sought

The state Public Utilities Commission (PUC) on Tuesday granted Xcel Energy Inc. a rate increase considerably less than the utility was seeking -- meaning most customers will see a refund on their electric bills early next year.

Xcel's Minnesota customers have been paying an interim rate increase totaling $132 million a year that was granted in December, but on Tuesday the final increase was set at $91 million. The PUC won't have specifics on the refund for several weeks.

Minneapolis-based Xcel, which serves 1.2 million electric customers in Minnesota, originally was seeking an annual increase of $156 million, or 6 percent.

The $65 million the PUC shaved from that original request included about $31 million Xcel was requesting for future expenses associated with the Prairie Island nuclear plant in Red Wing.

"What they were asking was for ratepayers to prepay some of the expenses associated with the extension of the plant's life," said Bill Glahn, director of the Office of Energy Security, which represents ratepayers for the state. "What the commission decided to do was more of a pay-as-you-go. Recover the money for those costs but more at the time that they occurred."

Asked to comment on the PUC's decision, Xcel spokesman Steve Roalstad said: "We appreciate the commission's fair and thorough review of our request and look forward to reviewing the written order."

Xcel made its rate request in November, citing the need to maintain a safe and reliable electricity system in the face of escalating costs.

In the course of those negotiations, some items were shaved off the original request, bringing it down to $138 million. The utility trimmed some costs and state consumer-protection agencies objected to some expenses coming out of ratepayers' pockets.

In particular, the state attorney general's office criticized Xcel for lavish trips for some of its executives and board members, so Xcel agreed to remove nearly $3.9 million from its rate request that had been allocated toward employee and board directors' expenses.

The PUC made its final decision Tuesday but won't have a final written order for several weeks.