Xcel Energy claims Minnesota utility regulators erred legally and showed "unreasonableness" when they recently granted the company a considerably smaller electricity rate increase than it requested.

Minneapolis-based Xcel late Monday petitioned the Minnesota Public Utilities Commission (PUC) to reconsider its June 1 decision to increase rates by $306 million, or 9%, over three years. Xcel had been asking for an increase of $440 million.

If the PUC rejects Xcel's petition, the utility can take its rate case complaint to the Minnesota Court of Appeals.

The PUC usually rejects requests to reconsider its decisions, including for rate cases. It declined rate case reconsideration petitions from Minnesota Power in 2021 and Otter Tail Power in 2015.

Xcel said in a PUC filing on Monday the commission's rate case decision "is inconsistent with the law, the facts and public policy."

That runs counter to the PUC's written rate case ruling, released last month, and its June 1 verbal decision. "I wasn't convinced they needed as big an increase as they were proposing," PUC Chair Katie Sieben said after the vote. "The commission struck a good balance."

Xcel wants the PUC to reconsider its denial of certain Xcel costs related to insurance and management compensation. It wants the PUC, too, to reverse its decision to slash the utility's monthly service charge from $8 to $6 for residential customers.

Most important, Xcel wants the PUC to redo its decision on the company's guaranteed return on equity (ROE) — a key profit measure. Xcel asked the PUC to increase its ROE from 9.06% to 10.2%.

A state administrative law judge concluded in April that 9.87 % would be a "reasonable" ROE for Xcel. Earlier, the Minnesota Department of Commerce found that Xcel had been "flourishing" at its 9.06 % ROE — but an increase to 9.25% was merited.

The PUC voted 3-2 to set Xcel's ROE at 9.25%. The two commissioners who voted against that ruling wanted an ROE of 9.38%.

Xcel said in Monday's filing that the PUC's determination on ROE was not "fair and reasonable." It's the lowest guaranteed rate of return for a vertically integrated utility set by regulators anywhere in the U.S. since Jan. 1, 2022, Xcel claims.

The PUC's ROE decision has led to a "dramatic drop" in Xcel's stock price relative to its electric utility peers, Xcel said. Xcel shares have trailed an index of utility stocks by roughly 2% since early June.

But Xcel's stock fluctuations could also be caused by other factors, including blowback from a huge wildfire in Xcel's Colorado service territory, said Brian Edstrom, senior regulatory advocate for the Citizens Utility Board of Minnesota.

In early June, the Boulder County Sheriff's Office concluded that the December 2021 Marshall Fire, which scorched over 6,000 acres, was partially caused by a storm-damaged Xcel power line. Xcel rejects the conclusion, but in July, a large group of insurers sued the company for fire damages.

Edstrom said it's "frustrating" that Xcel wants a big ROE hike "to maintain financial integrity and be in line with its peers when the record shows the company has been able to do that in recent years at a lower ROE of 9.06."