Xcel cuts its electricity rate hike request for Minnesota

Xcel Energy on Monday scaled back its electricity rate-hike request for Minnesota, but not enough to make customers cheer.

The company said it will accept an 8.2 percent, or $220 million, increase compared with the 10.7 percent, or $285 million, hike proposed last November. The revised request is slightly less than what Xcel is getting now under an interim rate hike that took effect in January.

Xcel still wants to boost the basic residential customer charge 40 percent to $10 per month — a fee that is the same no matter how much power is used.

"Do I think any kind of increase is justified? No," Xcel customer Gerald Hanson of Albertville, Minn., said Monday in an interview.

He is among Xcel ratepayers who complained about a double-digit increase — in person at public hearings or by e-mail and letter. "In this tough economy I'm barely making it," he wrote last month to regulators. Shaving off a few percent, he said, doesn't offer much comfort.

This increase is the fifth for Xcel since 2006, and the combined effect is what bothers Craig Stowell, director of operations for medical device maker Access Point Technologies of Rogers, one of many businesses that have expressed concern about the increase.

"At some point it has an impact," Stowell said in an interview. "Every year or two there is an increase, basically. That is just ridiculous.''

Xcel, which services 1.2 million electricity customers in Minnesota, has said much of the increase will be used to pay off investments in power plants and infrastructure to ensure safe, reliable electricity.

The company also has cited slack demand for power, including the loss of two big industrial customers, for its weak revenue forecast. On Monday, Xcel slightly revised the forecast upward, and offered a consolation prize to customers — if sales exceed the forecast this year, the utility would offer refunds.

Laura McCarten, regional vice president for Xcel, said it is the first time the utility has offered such a concession.

"We are putting our money where our mouth is," McCarten said. "We are confident our forecast is accurate."

Xcel submitted the revised request to regulators one month after the Minnesota Commerce Department, which represents ratepayers in utility cases, urged them to slash it even more. The department also said Xcel hadn't submitted clear information to back up its revenue numbers.

"We have had people at our public meetings who have expressed concerns," she added. "What we have tried to do is to talk to them about where this money goes."

The state Public Utilities Commission, which sets rates for investor-owned utilities, is still reviewing the case. An administrative law judge is examining the financial details and will issue a report in July, followed by a PUC decision in the fall.

In regulatory filings Monday, Xcel said it seeks a return on equity of 10.6 percent, which still is higher than the Commerce Department suggested. Some groups have pushed for an even lower return.

One of Xcel's major revisions, worth $35 million in savings, reduces costs and defers depreciation on its largest coal-burning generator in Becker, Minn. It also deferred some nuclear and other power plant costs, totaling $16.4 million, and reduced $16.7 million in expenses related to employee incentives and pension plan costs. It corrected errors and made other adjustments that saved $4.3 million, but it added another $7.4 million for higher-than-expected property taxes.