Terry Pearson could never figure out why her electric bill was higher than her three neighbors' in their Eden Prairie twin home.

It wasn't until her neighbor Dick Lux inquired about his bill this summer that they discovered they'd been paying for each other's electricity for years. Xcel Energy had mixed up their meter numbers in its billing system.

At first, Pearson thought she would get a refund from Xcel Energy for her years of overpayment -- possibly several thousand dollars, because she was told the error likely occurred in 1997 when new meters were installed. But she learned that a state rule required Xcel to pay her back only for the past three years plus interest -- in her case $1,049.10.

The rule also required Lux, her neighbor, to repay Xcel for the past year. Lux and Pearson said they don't think the rule is fair to customers and they think they shouldn't be punished for Xcel's mistake.

"It's not my fault," Lux said. "I pay my bills. I don't feel I should have to pay you something for your mistake."

Pearson said she asked Xcel to do a review of her account from 1997 to the present, but she hasn't heard back about whether the utility would do the analysis.

"I am asking that they do the right thing and be responsible," said Pearson, who pointed to the utility company's slogan "Responsible by Nature."

Pat Boland, Xcel Energy's manager of customer policy and assistance, said he couldn't talk about an individual customer's account. But he told Whistleblower that even if the company wanted to refund more than three years' of overcharges, it couldn't do so without a variance from the Minnesota Public Utilities Commission.

"If there is a rule in place, we do not have any power to vary from those rules unless we have permission," Boland said.

Until recently, companies like Xcel had even less liability for overcharging customers. Prior to 2008, electric utility customers could get their money back only for one year of overcharges, and the utilities didn't have to pay interest.

The commission was granting so many variances that extended the refunds to three years that it decided to change the rules for everyone.

In a 2007 report to the commission, staff wrote that the refund period should be extended because "utilities are more likely than customers to cause the circumstances that result in the customer being undercharged or overcharged. And utilities, through their expertise and access to data, are in a better position than customers to detect an undercharge or overcharge."

The commission staff also looked at other states, some of which require utilities to refund customers for six years or longer, according to the report to the commission. But a consideration in limiting the refund period to three years was the concern that "both utilities and ratepayers would suffer from the financial risk that a long-term billing error might cause a large liability to accrue. Over time records become harder to retrieve and memories fade." The commission requires utilities to maintain customer records for only three years.

Pearson appealed to the Public Utilities Commission, which sent her a letter at the end of August that said the commission "can only enforce what the law says. We are not allowed to act outside of the law or require a company to do so."

Pearson said she was never told that there is a variance process until Whistleblower inquired about her situation. When she contacted the commission again last week, she was told that a variance could only be initiated by the utility.

"I think that it's not looking after the best interest of the consumer," she said.

Lora Pabst • 612-916-7212