Xcel Energy filed a request for a $285 million rate increase on Friday with the Minnesota Public Utilities Commission.
The 10.7 percent rate increase would go largely toward extending the lives of the Monticello and Prairie Island nuclear power plants by 20 years.
Xcel says the average residential customer's monthly bill would go up $9, while a typical small business could see an $11.30 increase.
Laura McCarten, regional vice president with Xcel, said a drop in energy demand prompted the request.
"A portion of that total rate increase is related to that economic downturn," McCarten said. "We've also lost a couple of major customers [that have ceased operation], and we also lost what we call some municipal customers. Those are municipal utilities that used to purchase power from us and no longer do."
The PUC would need to approve an interim rate increase of 9.4 percent, or $251 million, that would go into effect Jan. 1. If approved, a permanent rate increase would go into effect in 2014.
McCarten noted that Xcel will also increase the power output of the Monticello plant.
"In 2013 we have a lot of the investments that we're making into our nuclear plants coming into service," she said. "So those investments are increasing our costs of doing business in 2013, and so that's what we have to ask for this rate (increase)."
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