Xcel Energy says it will ask state regulators to reconsider their decision to grant a far-smaller increase in electric rates than the utility requested.
On Thursday, the Minnesota Public Utilities Commission approved a rate increase for Xcel of 9 percent over three years. The Minneapolis-based utility had originally sought more than twice that amount.
In a statement company representative Theo Keith said Xcel is "extremely disappointed" with the commission's decision, which the company says will limit its ability to lead in the transition to clean energy.
"Yesterday's decision will require us to evaluate our planned investments in a cleaner, more reliable system for our customers to determine which investments we are able to continue to make," Keith stated.
As an example, Keith said Xcel is withdrawing a proposal to build its own network of more than 700 electric vehicle charging stations around the state. It filed a withdrawal petition with the PUC on Thursday.
Larger increase sought
Xcel is Minnesota's largest electric utility, serving about 1.3 million customers in the state. The company originally sought to increase its electric rates by 21 percent, or $677 million, over three years.
Xcel later reduced its request to $440 million over three years. The Minnesota Department of Commerce and an administrative law judge recommended a smaller amount.
After several days of hearings, the state Public Utilities Commission approved a rate increase of 9.6 percent over three years, or $306 million.
Xcel has said it needs the increase to cover the costs of replacing an aging electrical system as it transitions to more renewable energy. But it comes at a time when many Minnesotans are struggling to pay rising utility costs and consumer advocates argued the increase was too high.
Initial estimates indicate Xcel's final rates will be lower than the interim rates it's currently charging, meaning most customers will receive a refund.
Company profits, executive pay
The PUC also set a higher return on equity for Xcel of 9.25 percent, but which was less than what the utility requested. Return on equity is the measure of a company's net income divided by its shareholders' equity and is a gauge of its profitability.
The commission also reduced the monthly basic charge for residential and small business customers and limited the amount Xcel can recover from ratepayers for executive pay.
Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, which advocates for utility customers, said her organization is pleased with the PUC decision. She said denying Xcel's request for a larger return on equity hike saved ratepayers tens of millions of dollars each year.
"Of course, any rate increase is difficult for many households," she said. "But the PUC was careful to make sure that ratepayers don't pay more than they should to support the company's profits and executive pay."