Xcel Energy's $136 million windfall from last year's federal tax act will be passed directly to its Minnesota customers through refunds, state utility regulators ruled Thursday.
Customers of Minnesota's other investor-owned utilities will also receive refunds — or smaller rate increases — due to the 2017 tax law, which slashed the U.S. corporate income tax rate from 35 percent to 21 percent.
Xcel's average residential electricity customer — someone who pays $85 to $90 per month — will get a refund of about $45 as a one-time bill credit. The company's average residential gas customer — who pays around $48 a month — will get a one-time bill credit of about $8. Xcel said it expects the refunds will be made by year's end.
Utilities are essentially monopolies, so their profits are regulated. Minnesota is one of many states where regulators are ordering utilities to fully or at least partly refund gains realized from the federal tax cut.
"It's money ratepayers paid that they should not have had to pay," said Dan Lipschultz, a member of the Minnesota Public Utilities Commission (PUC).
The PUC voted 5-0 to distribute all but $2 million of Xcel's $136 million tax benefit directly to ratepayers. The $2 million carve-out will go to Power On, a program that helps low-income people pay their electricity bills.
The PUC rejected a proposal from Xcel to directly refund ratepayers about half of the $136 million but use the rest of the money to benefit ratepayers in indirect ways.
Of Xcel's $136 million in Minnesota savings from the tax cut, just short of $130 million came from its electricity business, and the rest from gas. Minneapolis-based Xcel is by far Minnesota's largest electric utility.
