Public Utilities Commission approves refunds to Xcel customers

On Thursday, September 19, the Minnesota Public Utilities Commission (Commission) approved a series of refunds that will result in Xcel’s residential electricity customers receiving monthly fuel credits and a one-time bill reduction of approximately $20 on average.

Each year, utilities recover forecasted expenses from customers. Certain costs are “trued-up” to actual spending if actual costs are higher or lower than anticipated. This can either result in a refund for customers (if actual costs are lower) or additional charges (if actual costs are higher). 

One-time bill credits

Xcel over-recovered $49.1 million related to property taxes, incentive compensation plans, capital investments, and other expenses throughout 2023. In addition, Minnesota customers can anticipate receiving $5.6 million associated with the sale of 348 acres of land at Xcel’s Sherburne County Generating Station. Ultimately, the Commission approved a combined refund of $54.7 million, which will be provided to customers via a one-time bill credit based on 2023 usage. Residential customers will see an average refund of approximately $20. 

Monthly fuel credits

In addition to these refunds, Xcel customers will continue to see monthly fuel credits on their bills throughout the remainder of the year. Xcel anticipated spending nearly $1.1 billion on fuel in 2023 but total costs ended up being closer to $935 million—$134 million less than expected. A mid-year refund was issued in 2023 for $30.5 million, which was distributed to customers from July through September. Even after that refund, Xcel still over-collected fuel expenses by approximately $126 million. 

In recognition of this substantial over-recovery, Xcel implemented a series of adjustments prior to Commission approval. Approximately $5 million per month was refunded from January to August 2024 by reducing fuel clause rates on monthly bills. A second adjustment was made in April 2024 and will continue through December. In its September 19, 2024 hearing, the Commission confirmed these costs should be refunded to ratepayers and approved Xcel’s methodology. 
 

Prairie Island outage costs

Apart from this $126 million refund, several of the fuel costs incurred throughout 2023 and 2024 are still in dispute. In October 2023, Xcel’s contractors caused an unplanned outage at the company’s Prairie Island nuclear facility that led the utility to purchase energy from other sources at substantial cost. CUB and other parties argued that Xcel failed to act prudently throughout this process and that ratepayers should not be required to pay for replacement power costs. The Commission ultimately agreed Xcel acted imprudently, but the amount to be refunded to customers has yet to be determined. You can read more about the Commission’s decision here.