Minnesota customers of Xcel Energy may soon pay more for electricity -- and one reason, the utility contends, is that they're using less of it.
The state's largest power company, which serves 1.2 million Minnesota customers, told regulators Friday that it needs an additional $285 million, a 10.7 percent increase, in revenue starting next year.
For a typical residential customer, the proposed rate hike would be 12 percent -- or $9 on a monthly bill, Xcel said. Small businesses would see a 10.6 percent increase and large businesses a 9.5 percent boost, the utility said.
Xcel officials said the biggest factor driving the rate request is the $114 million the utility is spending to keep its two Minnesota nuclear power plants operating and boosting the output at one of them. But the No. 2 reason is that electricity sales have fallen nearly 4 percent since its 2011 rate hike.
With less revenue coming in, Xcel wants everyone to pay more to cover costs.
"It's a simple equation of cost-of-doing-business divided by the base amount of energy being used," said Laura McCarten, a regional vice president for Xcel's Minnesota operations. "When that base reduces, then the cost goes up."
McCarten attributed the drop in power sales to the lingering effects of the recession and the loss of large customers like the Ford plant in St. Paul, which closed last December, and the Verso paper mill in Sartell, Minn., which shut down after a fire on Memorial Day.
If approved by the state Public Utilities Commission (PUC), this will be the fifth rate increase since 2005, including one earlier this year and another in 2011. In all of those cases, the approved rate hike ended up being less than Xcel requested.