New rate cases: Xcel Gas and Otter Tail Power

Two new requests to increase rates for utility service were submitted to the PUC at the end of October. Xcel Energy seeks to increase rates for gas service, and Otter Tail Power seeks to increase rates for electric service.  

Rate cases are complicated processes, and these initial requests are spread out across hundreds of pages and dozens of documents. CUB’s policy team is continuing to comb through the requests. Find out the basics below. 

Xcel Energy – Gas 

Docket # 25-356 

Xcel's Request

Who: Xcel Energy is one of the largest providers of electricity in Minnesota, but the company also provides gas service to communities throughout the state. For example, the majority of the city of St. Paul receives gas service from Xcel. Xcel last increased its gas rates in 2024. 

The request: Xcel wants to increase rates for gas service by 8.2%, or a little over $63 million.  

The result: If approved as is, the typical residential customer’s bill would go up by $7 a month, or $85 a year. 

The interim rates: The PUC will hold a hearing in December to decide how much customer rates should be temporarily increased while the request is under review. Following that decision, customers should anticipate an interim rate increase starting January 1, 2026. If approved as requested, the typical residential customer’s bill will go up nearly $6 a month, or $70 a year.  

As an alternative to going through a full rate case, Xcel has also proposed a different, faster procedure that would instead increase rates by $46 million annually, and result in a lower rate increase beginning January 1. Whichever pathways is approved, customers can expect gas rates to increase beginning January 1. 

The why: At the very beginning of Xcel’s request, Xcel makes clear that investments in infrastructure – both old and new – are a key driver.  

For years CUB has been sounding the alarm on increased investment in gas infrastructure. Beyond just paying for the cost of gas used each month, a large portion of customers’ bills goes toward paying the fixed costs of the gas system (in essence, the physical stuff gas utilities build and pipes they put in the ground). These costs are paid by customers over many years, so investments made today will still be recovered through customer bills decades down the road. Minnesota needs to take a hard look at requests to increase gas rates and make sure that proposed investments are as cost-effective as possible. This is especially important in light of forecasts projecting a colder-than-normal winter and rising natural gas prices.  

Like in its electric rate case, Xcel is seeking to increase its authorized return on equity (ROE), this time to 10.65%, up from its currently approved ROE of 9.6%. A higher ROE means collecting more money from Minnesotans to cover the company’s cost of capital and to provide a return to shareholders. While outside analysis is needed to determine a reasonable ROE, we know that ROEs broadly are far too high. A 10.65% ROE would result in millions of dollars being charged to ratepayers to increase corporate profits. 

Other reasons Xcel gave for the increase include rises in inflation, higher labor costs, and increased capital investments needed to serve existing and new customers reliably. 

Next steps: Interim rates will likely go into effect on January 1, 2026. A public hearing schedule will be announced some time in early 2026. You can submit a public comment on Xcel’s proposal by emailing consumer.puc@state.mn.us and mentioning Docket #25-356. Your comment—including your name, email address, and any other information you share—will become a part of the public record. 

Otter Tail Power Company 

Docket #25-359 

Otter Tail's Request

Who: Otter Tail Power Company provides electricity to communities in western Minnesota, including Bemidji, Crookston, Fergus Falls, and Morris. Otter Tail last requested increases to electric rates in 2021. 

The request: Otter Tail wants to increase rates for electric service by 17.69%, or nearly $45 million. 

The result: If approved as is, the typical residential customer’s bill would go up by $18 a month, or $216 a year. 

The interim rates: Customers should anticipate an interim rate increase starting January 1, 2026. If Otter Tail’s request is approved as is, the typical residential customer’s bill will go up $13 a month, or over $150 a year. CUB is advocating to reduce the interim rate increase by over 50%. The PUC will make its decision on the matter on December 4.    

The why: Similar to other recent rate increases, one part of Otter Tail’s increase comes from a request to increase its return on equity (ROE). Otter Tail seeks to raise its ROE from 9.48% to 10.65%. A higher ROE means more money collected from Minnesota ratepayers to increase corporate profits. We think ROEs should come down, not up. 

Other reasons Otter Tail says it’s asking for the increase include costs to keep up with inflation, infrastructure investments to replace aging infrastructure, costs associated with undergrounding lines and increased vegetation management to increase grid resilience, and the addition of renewable energy generation to replace power from Otter Tail’s North Dakota coal plant. 

Next steps: Interim rates will likely go into effect on January 1, 2026. A public hearing schedule will be announced some time in early 2026. You can submit a comment on Otter Tail’s proposal by emailing consumer.puc@state.mn.us and mentioning Docket #25-359. Your comment—including your name, email address, and any other information you share—will become a part of the public record.