Xcel Energy has dropped a controversial request for a $122 million electric rate increase next year.
Minnesota's largest electric utility, which serves 1.3 million customers in Minnesota, requested to raise rates about 21 percent over three years.
Last year, the state Public Utilities Commission granted Xcel an interim rate increase — although less than Xcel wanted — while it considers the broader request.
Consumer advocates opposed Xcel's request to raise interim rates again next year, which would have increased residential customers' bills another 6 percent.
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That increase would be worrisome given the financial pressures Minnesotans are under, said Annie Levenson-Falk, executive director of the nonprofit Citizens Utilities Board of Minnesota.
"We were really concerned about that particularly from an affordability standpoint, given the economic situation — especially inflation — in all areas of the budget that households are facing,” she said.
The Minnesota Department of Commerce and the state Attorney General’s Office also opposed the request.
Xcel withdrew its request and offered an alternative plan, saying it expects to get additional revenue from other sources. Along with an accounting adjustment, the revenue could cover almost all of the utility’s proposed increase next year, eliminating the short-term rate hike. The Public Utilities Commission unanimously approved the plan on Tuesday.
Broader request still on table
While Xcel's customers will get relief next year, the utility's full request remains on the table, said Jenna Warmuth, Midwest regional director for Vote Solar, a national nonprofit that works toward a just and equitable transition to clean power.
"This is just really a delay in the inevitable of a rate increase,” Warmuth said. “We're hoping it's not as much as the full ask, but this is truly just a reprieve."
The Public Utilities Commission is expected to decide on Xcel's overall request next summer.
Xcel has said the rate increase is needed to help it replace aging infrastructure and help with its transition to cleaner power. The utility has said it wants to provide 100 percent carbon-free electricity by 2050.
There will be more public hearings and opportunities to comment next year, Warmuth said. She said the rate approval process can get very technical, which often keeps members of the public, especially underserved communities, from taking part.
“We're really concerned with making sure that the way that the rates are designed helps to alleviate some of those systemic disparities that we've seen in the past,” Warmuth said.