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CUB fights Xcel’s request to raise electric rates… again 

November 14, 2024

Published November 14, 2024 

On November 1, 2024, Xcel Energy filed another request to increase rates for its Minnesota electric customers. The increase would add an additional $491 million to customers’ tab over the next two years—a 13.2 percent increase over that time period.  

If this sounds familiar, it should. Xcel just requested a 21.2 percent electric rate increase in 2021 and a 10.3 percent natural gas rate increase in 2023. Thankfully, the Minnesota Public Utilities Commission (“PUC”) rejected Xcel’s full 2021 electric rate increase request, instead approving a 9.6 percent increase that went into effect incrementally in 2024 and 2025. And, earlier this year, parties to Xcel’s 2023 natural gas rate case reached a settlement agreement that included a lower, 6.3 percent increase for Xcel’s residential natural gas customers that went into effect in January 2024. Still, Xcel’s latest request comes at a tough time for customers already struggling to make ends meet. 

In its filing, Xcel claims this 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 system. There is some truth to this: demand for electricity is on the rise as artificial intelligence drives demand for heavy electric-consuming data centers, and as more customers shift away from natural gas to electric appliances. Maintaining and modernizing transmission lines is also important in ensuring our access to electricity remains safe and reliable.  

However, there is more to the story in Xcel’s latest request, and CUB believes the rate increase exceeds what is needed for the Company to provide safe and reliable service.  


Xcel again seeks to raise rates to increase shareholder profits. 


We are frustrated to see Xcel, again, try to dramatically increase its authorized return on equity (“ROE”) in order to maximize shareholder profits at customers’ expense. Authorized ROE helps determine how much money the utility is permitted to collect from its customers in order to distribute profits to its shareholders. At a simple level, the higher the authorized ROE, the more customers pay, and the more shareholders profit.  Xcel seeks to increase its authorized ROE from 9.25 percent to 10.3 percent—a significant request that, if approved, would require collecting tens of millions more per year from Minnesota customers. 

This aspect of Xcel’s rate increase is unsupported and unrealistic. The PUC has not approved an authorized ROE over 10 percent for any regulated Minnesota utility in at least a decade. Our initial review of Xcel's filing reveals insufficient evidence to support this level of increase. Under Minnesota law, the burden is on Xcel to prove its request balances shareholders' right to a reasonable (but not excessive) return against ratepayers' right to pay rates that are just and reasonable, with doubt as to reasonableness resolved in favor of the consumer.  Xcel just requested a 10.2 percent ROE in a rate case that concluded last year, and the Commission determined a 9.25 percent ROE was adequate. 

Xcel’s suggestion that a 10.3 percent ROE is necessary now for Xcel to be able to attract investment capital, maintain financial integrity, and compete with its peers does not align with observable data about Xcel’s actual financial performance. Xcel Energy, Inc.’s securities filings and press releases show Xcel has had little trouble attracting capital and maintaining healthy earnings, despite Xcel’s Minnesota electric utility currently operating with a 9.25 percent authorized ROE.  

For all of these reasons, CUB will again be challenging Xcel’s unreasonable request to increase its authorized ROE to 10.3 percent. 


Xcel seeks to charge ratepayers for compensation paid to its senior executives. 


In Xcel’s last rate case, the PUC capped the amount of money Xcel can collect from Minnesotans to cover compensation paid to its top ten highest paid executives. Pursuant to that cap, Xcel cannot collect more than $150,000 per executive through Minnesota rates. This does not mean Xcel cannot pay its executives whatever it wants; it just means that Xcel’s shareholders must foot more of the bill for that compensation. (Xcel also recovers some of its compensation costs from customers in other states it serves.)   

Xcel appealed the PUC’s salary cap in a lawsuit filed with the Minnesota Court of Appeals. As of the date this article was published, this lawsuit remains ongoing. 

In Xcel’s latest rate case, Xcel hired an outside expert to discuss and support Xcel's compensation philosophy—a signal that Xcel will continue to fight against the PUC-imposed cap on recovering executive compensation through Minnesota rates. We plan to support the continuation of a reasonable cap, similar to what the PUC previously imposed, to help ensure Minnesotans aren’t paying more than necessary to support high executive compensation.  


Xcel seeks to recover dues paid to membership organizations. 


Xcel again seeks to recover from customers the dues payments it pays to various membership organizations, including chambers of commerce, rotary clubs, research institutes, and the Edison Electric Institute (a trade association that represents most U.S. investor-owned electric utilities). Though utilities are permitted to recover some of these dues through rates, they are not permitted to recover dues paid to support industry lobbying and/or activities that are not in customers’ interests. In other recent rate cases, CUB has successfully fought to lower the amount of organizational dues Xcel and other utilities have recovered through rates, and we intend to continue that fight in this rate case.   

We are pleased to note that, in this case, Xcel is not seeking recovery of organizational dues Xcel pays to the American Gas Association and Minnesota Utility Investors—two organizations whose dues Xcel and other Minnesota utilities have sought to recover through rates in prior rate cases. 


Xcel seeks to raise rates to pay for additional wildfire risk mitigation efforts. 


Xcel has also proposed several new investments and costs related to its efforts to mitigate wildfire-related risks. These costs are significant: Xcel estimates it will incur $64.3 million in wildfire-related capital additions and $28.3 million in wildfire-related operations and maintenance (O&M) expenses in 2025. These number are even higher in 2026, when Xcel estimates the Company will incur $111 million in wildfire-related capital additions and $48.4 million in wildfire-related O&M expenses. 

CUB has not yet closely reviewed these proposals. On one hand, we understand why Xcel is interested in proactively addressing wildfire risk in Minnesota, as Xcel has faced significant liabilities for wildfire-related losses in Colorado and Texas in recent years. On the other hand, wildfire risk and management strategies may be different in Minnesota than in those states. We look forward to investigating this issue further and to reviewing other parties’ analysis of the reasonableness of these costs. 


What comes next? 


The PUC will soon refer the rate case to the Minnesota Office of Administrative Hearings (OAH) for a contested case before a judge. CUB intends to be a party to that contested case, which may last for a year or more. Once the case is referred to the OAH, the assigned judge will consult with parties to the case to establish a procedural schedule. Included in that schedule will be a deadline for submitting public comments and a period where public hearings will be held to solicit feedback and input on Xcel’s filing.  

In the meantime, the PUC will likely permit Xcel to raise rates on an interim (temporary) basis, beginning on January 1, 2025. The exact amount of that interim rate increase is yet to be decided. CUB recently filed comments recommending that these interim rates consider customers’ struggles in continuing to pay rate increases. We also recommended that the PUC not permit Xcel to collect wildfire-related costs through interim rates. These costs fall within a new category of costs the PUC has not previously considered. Minnesota law prohibits Xcel from recovering through interim rates costs that are not the “same in nature and kind as those allowed by a currently effective order of the commission in the utility's most recent rate proceeding.”  

Keep an eye on our website and social media pages for updates on these developments. 


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 being made by CUB and other parties.  

You can write a comment online or send an email to consumer.puc@state.mn.us, and reference Docket No. 24-320. (Please note that everything in your comment will become part of the public record.) You can also participate in one of several public hearings that will be scheduled in the future.  


Struggling with energy bills? 


In the meantime, here are some immediate resources that can help with your home energy bills: 

  • Energy Assistance provides grants toward past-due and future energy costs. If you qualify for Energy Assistance, you can also have future utility bills capped at a certain portion of your income through affordability programs offered by some utilities, including Xcel Energy.   
  • Weatherization Assistance and low-income conservation programs provided through the utility offer free or low-cost efficiency improvements and appliances to qualifying households.  

If you have questions, concerns, or would just like to talk with someone to see if there are ways to reduce your own energy costs, contact us at 651-300-4701 or info@cubminnesota.org.