Xcel seeks to raise rates - and bolster shareholder profits
Last year, Xcel filed a request to increase electric rates for Minnesota customers. If the request is approved as is, the typical customer's bill will go up by $10.27 per month, or $123.37 per year.
Xcel's Electric Rate Increase
Affordability has been in the news a lot lately, and rising energy costs is often a part of that discussion. Against this backdrop, CUB continues to push back on Xcel Energy’s latest request to raise electric rates – particularly its request to increase profits at ratepayers’ expense. This article provides an update on our involvement in Xcel’s ongoing electric rate case—and specifically our efforts to push back on Xcel’s request to grow its authorized return.
Why is Xcel raising rates?
Xcel says the rate increase is necessary to support additional capital investments to keep up with growing demand for electricity and to modernize and strengthen Xcel’s transmission and distribution systems. There is certainly some truth to this: building infrastructure to meet growing demand costs money, as does maintaining and modernizing the transmission lines needed to ensure Minnesotans' access to electricity remains safe and reliable.
However, there is more to the story in Xcel’s latest request. One of the biggest drivers of Xcel’s proposed rate increase is its request to increase its authorized return on equity (“ROE”) from 9.25 percent to 10.3 percent—a significant request that, if approved, would allow Xcel to collect around $100 million more in revenue per year from Minnesota customers. At a simple level, the higher the authorized ROE, the more customers pay, and the more shareholders are likely to profit.
But isn’t Xcel already earning reasonable profits?
Both Xcel’s Minnesota utility (Northern States Power Company) and the parent company of that utility (Xcel Energy, Inc.) are doing well financially.
After the Minnesota Public Utilities Commission approved a much lower ROE (9.25 percent) than Xcel requested in its last electric rate case (10.20 percent), Xcel suggested the decision would “limit Xcel’s ability to continue to lead the clean energy transition for [its] customers.” However, Xcel Energy, Inc.’s stock price has generally increased since that decision was made and even hit an all time high on October 16, 2025. In the chart below, the red line marks the date the PUC approved final rates in Xcel’s last rate case. The fluctuations in Xcel’s stock price after that date are more likely attributable to a June 2023 announcement finding Xcel powerlines sparked a major wildfire in Colorado and a subsequent September 2025 settlement resolving lawsuits stemming from that incident.
Meanwhile, Xcel’s earnings reports continue to show that the earnings per share (EPS) produced by Xcel’s Minnesota utility is rising more quickly than earnings produced by Xcel’s utilities in other states. In other words, Xcel’s Minnesota utility has performed relatively strong recently in terms of generating net revenue for Xcel Energy, Inc.’s shareholders. By comparison, Xcel’s most recent quarterly report shows decreased earnings in Xcel’s Colorado and Southwestern service territories and flat earnings in Wisconsin.
What is the public reaction to Xcel’s latest request to increase its ROE?
By our last count, over 7,000 public comments have been filed, the vast majority of which oppose the rate increase. By comparison, around 500 public comments were filed in Xcel’s last electric rate case. CUB’s staff reviewed over 4,000 of these public comments. Over half of those we reviewed express frustration with Xcel’s ROE or corporate profits, specifically.
Who is opposing Xcel’s requested ROE?
Three parties to the rate case—the Department of Commerce, CUB, and a consortium of Xcel’s large industrial customers (XLI)—filed expert witness testimony analyzing and responding to Xcel’s ROE request. In direct testimony filed on August 22, 2025, each of those experts determined Xcel’s proposed ROE increase was unsupported and unrealistic. In each instance, the experts concluded that a much lower ROE than Xcel requested would allow the company to earn a reasonable—but not excessive—return. The Department’s witness recommended Xcel’s ROE remain flat at 9.25%, CUB’s witness recommended it be reduced to 9.0%, and XLI’s witness recommended it be reduced to 8.96%.
In his direct testimony, CUB’s witness, Dr. Steve Kihm, also emphasized that “[t]he issue before the Commission when setting the ROE is one of fairness, reflecting a balance between . . . shareholder interests vs. consumer (ratepayers) interests.” On one hand, the law protects Xcel’s right to earn a reasonable return; on the other, the law requires Xcel’s rates to be just and reasonable, with doubt as to reasonableness resolved in favor of the consumer. Dr. Kihm noted that Xcel’s witness provided zero analysis in his initial testimony of the financial impact his proposed ROE increase would have on ratepayers’ ability to pay their electric bills. In contrast, Dr. Kihm highlighted testimony filed by CUB’s Executive Director, Annie Levenson-Falk, who introduced substantial evidence of financial hardships Xcel customers have faced recently.
How did Xcel respond to other parties’ ROE recommendations in rebuttal testimony?
Xcel’s ROE expert filed rebuttal testimony on October 10, 2025, responding to the ROE testimony offered by the Department, CUB, and XLI. His rebuttal focused mainly on technical aspects of the financial modeling used by the experts in their testimony. He completely ignored Dr. Kihm’s comments about affordability and accounting for ratepayers’ ability to pay. The word “affordable” or “affordability” appears nowhere in his rebuttal testimony.
How did other parties respond in surrebuttal testimony?
On November 25, 2025, ROE witnesses from the Department, CUB, and XLI filed surrebuttal testimony (which is a legalese way of saying they filed an additional response to Xcel’s rebuttal testimony). These witnesses reiterated their initial recommendations that Xcel’s ROE either remain flat (the Department) or be lowered (CUB and XLI). Dr. Kihm again emphasized that the Commission must consider fairness when balancing shareholder and ratepayer interests surrounding ROE. He also highlighted how Xcel’s witness continued to ignore one half of that equation (the ratepayer interest) when recommending a dramatic increase to the company’s authorized return.
What happens next?
On December 17th -19th, parties to the rate case will be involved in an evidentiary hearing before an administrative law judge. In that hearing, attorneys will have the opportunity to cross examine other parties’ witnesses. In early 2026, parties will then file two rounds of legal briefs laying out their arguments and recommendations on the rate case. The judge will review all the evidence presented in the case and the legal briefs and produce a report and recommendation to the PUC. We expect the judge’s report to be published on April 30, 2026, and the Commission’s order setting final rates to be published by July 31, 2026.
Get involved
If you are an Xcel customer and are concerned about this proposed rate hike, let the PUC know. Public comments will be helpful to bolster the case made by CUB and other parties.
Click the button below for a quick and easy comment form. Or you can send an email to consumer.puc@state.mn.us and be sure to reference Docket 24-320. 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 to make your comment as effective as possible.