PUC affirms decision to increase Xcel’s authorized return

The PUC today decided not to reverse its earlier decision to increase Xcel’s authorized return on equity. Return on equity (ROE) is a key determinant of utility company profits and is part of the rate Xcel charges to its customers. The PUC authorized Xcel to increase its electric company ROE from 9.25% to 9.6%, which is a significant factor in the rate increase ultimately approved.  Attorney General Keith Ellison and CUB petitioned the PUC to reconsider this decision, petitions that were supported by the Minnesota Department of Commerce, a large industry group, and others. Today, the PUC denied our petitions.   

CUB is disappointed by today's decision, and we will continue to advocate for affordable service and fairness between utility corporations and their ratepayers.   

If you or someone you know is struggling to keep up with their utility bills, take a look at CUB’s Shutoff Guide, or contact us at 651-300-4701, ext. 9 or contact@cubminnesota.org.  

CUB's Statement

Below is the oral statement provided at today’s hearing by CUB Senior Regulatory Advocate, Brian Edstrom, summarizing CUB's position.

To begin, I want to say CUB understands that rate increases are inherently challenging and unpopular with utility customers—even when they are necessary for utilities to cover reasonable costs incurred to provide safe and reliable service. We appreciate that the Commission took several actions to help mitigate the impacts of this latest rate increase—including by approving some of CUB’s recommendations.  

We disagree, however, with the Commission’s decision to increase Xcel’s authorized return on equity from 9.25 to 9.6 percent. 

The record in this case shows that Xcel customers are incredibly concerned about this rate increase, and are particularly upset by watching Xcel's corporate profits increase, while everyday Minnesotans have difficulty in this economy. Thousands of Minnesotans filed public comments that mention Xcel's profits, wondering why another rate increase is needed. Customers are intuiting something that is confirmed by substantial evidence in the record: Xcel's existing ROE is more than adequate to ensure the Company is able to make the investments needed to maintain safe and reliable service with the opportunity to earn a reasonable return. Xcel Energy, Inc., has reported growing earnings year-over-year, with its Minnesota utility steadily contributing to those earnings. The company also affirmatively acknowledged it has had no trouble attracting capital at 9.25 percent ROE.  

Though the Company relied on the testimony of Mr. Nowak to suggest an ROE increase is needed, that testimony is countered by the testimonies of three other credible, highly experienced finance experts who recommended that Xcel’s ROE remain flat or decrease.

Xcel's own actions immediately prior to the Commission's decision showed even more clearly that Mr. Nowak’s analysis produced inflated results—and that the Commission should not rely on those results to support its decision. For 19 months, Xcel cited Mr. Nowak’s testimony to suggest a 10.3 percent ROE was conservative—or on the low end of what the Company needed. Then, two days before the Commission met to make its final decisions, Xcel abruptly stated, without offering any explanation, that a 9.6% ROE was sufficient.  Neither parties nor the Commission had sufficient time to fully consider the implications of this new position prior to the June 18 hearing. We appreciate that the Commission is taking time now to consider this issue again, and we respectfully recommend that the Commission approve an ROE of no more than 9.25%—a result that is well supported by substantial evidence on the record.