Ten things you should know about Xcel's electric rate increase
Xcel is back at the Minnesota Public Utilities Commission (PUC) asking to increase rates for electric service in Minnesota. Keep reading to learn more about what Xcel is asking for, the impact a rate increase will have on consumers, and how you can make your voice heard.
1) What’s a rate case?
Most of the largest utilities in the state are investor-owned utilities (IOUs) – public corporations with shareholders who are allowed to earn a reasonable return on investments. IOUs, like Xcel, are regulated by the PUC, a board of five commissioners appointed by the governor to ensure “safe, reliable, and sustainable utility services at just and reasonable rates.”
When an IOU wants to increase rates for service, it must request the PUC's approval. To assist in the PUC’s review of the request, stakeholders like CUB examine the utility’s proposal to see how customers will be affected.
CUB is formally intervening in Xcel’s rate case. That means we will dive deep into the weeds of Xcel’s request, and advocate in filings and before the PUC on behalf of Minnesota ratepayers.
Minnesotans have the opportunity to make their voice heard before the PUC, too. Through the end of 2025, you can submit a comment to the PUC by emailing consumer.puc@state.mn.us and referencing Docket 24-320. There’s also an online comment form. If you submit a comment, everything in your comment (including your name, email, or address) will become part of the public record.
2) Xcel is asking for about a 10% increase in rates over 2025 and 2026.
In November 2024, Xcel Energy filed a request at the Public Utilities Commission to increase rates for electric service. Xcel’s original request would have increased rates by $474 million (over 13%) between 2025 and 2026, but they have reduced that ask after identifying errors, updating projections, and including various other adjustments.
Now, Xcel is asking to raise rates by $365 million annually by 2026. This amounts to an average 10% increase to customer bills beginning in 2026. This would be the fourth and fifth years in a row the utility has increased rates.
3) If approved as is, the typical residential customer's bill will go up by $10.27/month, or about $123/year.
Xcel customers have already been paying higher rates on their bills since January 1, 2025. While the rate case is being reviewed, customers are being charged "interim," or temporary rates that are 5 percent higher than before. This amounts to about $5.39 per month for the average residential household. If the final rate approved is lower than the interim rate, Xcel must refund the difference to customers, with interest.
4) Xcel’s requested increase to its return is driving its rate request.
So what’s Xcel’s reasoning behind the request to increase rates? We all know inflation is on the rise – and both households and businesses are feeling the crunch. Also, it’s true that utility infrastructure is expensive, and maintaining it even more so.
However, nearly a third of Xcel’s request is for a requested increase to the company’s return on equity (ROE). Put simply, a higher ROE means collecting more money from customers to cover the company’s cost of capital and to provide a return to its shareholders. CUB’s expert witness initially estimated that Xcel’s requested ROE increase would cost Minnesota ratepayers as much as $144 million more each year.
Because Xcel is granted monopoly service territory in Minnesota, Xcel is required by law to provide reliable service. In exchange, the company is provided an opportunity to earn a fair return for its shareholders. The PUC decides if a utility’s return is reasonable and balanced. As a consumer advocate, we don’t think the increase is reasonable or balanced. In fact, we think Xcel’s ROE should be lower, not higher (more on that below). Xcel also wants to increase the amount it can collect from Minnesota customers to compensate its top executives. Keep in mind that Xcel’s CEO already makes over $12 million annually, or 152 times the median Minnesota salary.
5) Minnesota utility customers, and Xcel’s customers in particular, are already struggling.
As you’re probably experiencing, everything is getting more expensive—increased costs for groceries, insurance, and rent are putting a strain on Minnesotans’ budgets. Last year, 59% of Minnesota households had difficulties paying for their usual household expenses.
For Xcel customers, the situation is made clear in the data. Xcel’s total arrears (customers’ past-due balances) have almost doubled, from a monthly average of about $45 million in 2019 to $90 million in 2024. Xcel also set a record for its number of shutoffs – over 50,000 households were disconnected from service in 2024.
And anecdotally, we’ve seen an increase in Minnesota ratepayers – including Xcel customers – coming to CUB seeking advice on their high electric bills. It’s clear that many Minnesotans already have difficulty paying their monthly power bills and aren’t prepared to pay even more.
Xcel's Electric Rate Increase
Everything you need to know about Xcel Energy's request to increase rates for electric service. The typical customer would see their bills increase by about 10% by 2026.
6) Federal changes and national trends will also impact Xcel’s customers.
We've previously reported on how the Trump Administration's Big Beautiful Bill could impact Minnesotans, and it's not pretty. According to a recent analysis, electric rates for Minnesotans could increase anywhere from 25 to 42% over the next decade. That’s an annual increase of $400 by 2035. The loss of tax credits for cheap energy generation projects like wind and solar will drive up the cost of electricity, which will be passed onto customers.
Further, Congress is eliminating tax credits for home energy projects that could potentially reduce household utility bills. The tax credit for electric vehicles is already gone, and tax credits for efficiency improvements, energy audits, and efficient heating systems will only be available through December 31, 2025. After that, households looking to upgrade their home energy systems will have to pay more to make the change.
Meanwhile, the U.S. Department of Energy has cancelled hundreds of millions of dollars in grants, and some of those costs will end up being covered by utility ratepayers. Households throughout the Midwest are also expected to cover the cost of keeping an unneeded Michigan coal plant online in response to a federal order. And efforts from outside Minnesota to cancel new transmission lines threaten to increase energy costs.
All of these factors point to the potential for even higher increases on Minnesotans’ energy bills, beyond Xcel’s request to increase rates.
7) Xcel has taken some steps to address affordability, but more is needed.
CUB has worked directly with Xcel in the past to ensure it is providing the best service to its customers. Just last year, we were able to secure real and meaningful improvements to Xcel’s shutoff practices – including lower down payments, flexible payment arrangements, and clearly written, more transparent policies.
By law, Xcel offers affordability programs to income-qualified households. The company has also undertaken an Automatic Bill Credit pilot program to better reach and support energy-burdened customers.
However, as described above, many thousands of households served by Xcel are still unable to afford their service.
More on our advocacy for Xcel’s customers here.
8) CUB has three priorities in Xcel's rate case.
Keep rates as low as possible. Xcel customers are facing substantial affordability challenges, which may worsen in coming years. In this context, the PUC must be especially careful not to allow Xcel to raise rates more than necessary. While some rate increase may be unavoidable, any rate increase is going to be difficult for many Minnesotans.
Eliminate reconnection and late fees. Xcel customers who have been disconnected for nonpayment are charged reconnection fees when their service is turned back on. And Xcel charges late fees on customers’ past-due balances. CUB recommends that both of these fees be eliminated.
Reduce Xcel’s ROE. Investor-owned utilities like Xcel are entitled to an opportunity to earn a reasonable financial return. This “return on equity” (ROE) is applied to infrastructure investments the utility makes. Very simply, the higher the authorized ROE, the more customers pay, and the more utility shareholders profit. Xcel's currently has an authorized ROE of 9.25%. In the current case, Xcel is requesting an increase to a 10.3% ROE—higher than any other Minnesota utility. CUB is recommending that Xcel’s ROE be reduced to 9.0% in this rate case, saving ratepayer about $34 million each year.
9) You can make your voice heard at the PUC.
The PUC has final say on how much Xcel can increase its rates for electric service, and you can tell them what you think. To do so, submit a comment to the PUC online or by sending an email to consumer.puc@state.mn.us. Make sure to reference Docket 24-320 so your submission can be considered. Your comment— including your name, email address, and any other information you share—will become a part of the public record. Here are some tips for making a strong, effective public comment:
Identify your relation to the issue. Are you a customer of Xcel? Are you a business owner in the area, or do you depend on the cities and businesses that are?
Be specific about your concerns. In this article and on our Xcel Electric Rate Increase hub, CUB outlines the concerns we have with Xcel’s proposed rate increase. If you share the same concerns, feel free to include them in your comment. We encourage you to think about other ways this rate increase could impact you and your household. Providing examples that are specific to your experience can help the PUC understand how rate increases affect customers on an individual basis.
Be yourself. You do not need to have special training or understand every detail of the rate case to write an effective comment. (It is up to the parties to the case—and ultimately the PUC—to dig further into those details and understand how they relate to specific aspects of Xcel’s proposal.) Public comments are useful because they share the individual concerns, values, and perspectives of Minnesotans who will be affected by the end result of a rate increase.
10) What comes next?
The deadline to submit public comments on Xcel’s rate case is December 30, 2025 at 4:30 p.m. In late February 2026, intervening parties like CUB will file their final legal briefs in the case. In late April 2026, an administrative law judge will issue his findings and recommendation to the PUC. The PUC will issue its final decision on the rate increase by July 31, 2026.
If you have questions about Xcel’s request, are looking for ways to get involved, or need help to make your bills more affordable, contact CUB today at 651-300-4701 or using the form below.