Xcel to refund customers over $300 million starting in April

Starting in April, Xcel Energy will begin refunding customers $318 million related to over-collected fuel costs, nuclear tax credits, and replacement power expenses. These refunds will not show up as a separate line-item on utility bills, but instead will be reflected in lower fuel costs charged to customers during the 12 months following April 1, 2025. Residential households with average electricity usage are expected to pay approximately $81 less than usual for electricity over that time as a result of the adjustments. 

The Minnesota Public Utilities Commission (PUC) will review Xcel’s refund request in the coming months. If the PUC finds any changes are necessary, they will be implemented through a subsequent adjustment starting on September 1.

Over-collected fuel costs

Each year, electric utilities forecast the amount of electricity expected to be used by customers and how much that energy will cost to generate. This includes fuel cost estimates for coal, natural gas, and nuclear plants, as well as renewable energy that is purchased from third-party generators. If these estimates are higher than the expenses actually incurred by the utility, then customers will receive a refund for the difference.

Although Xcel originally estimated its 2024 fuel expenses would exceed $1.02 billion, actual costs came in at $895 million, or 12.3 percent lower than expected. These reductions in fuel expenses were driven by several different factors, including improvements in transmission, lower natural gas costs, and less coal generation than anticipated. In recognition of these changes, Xcel implemented a mid-year adjustment and refunded $30 million in November 2024. The remaining $94 million in fuel over-collections will be returned to customers as part of the refunds beginning on April 1.

Nuclear tax credits

Xcel received tax credits totaling $176 million related to the generation of energy at its two nuclear facilities. As passed in 2022, the Inflation Reduction Act (IRA) provides production tax credits (PTCs) to utilities for each unit of nuclear electricity produced. The amount paid increases if prevailing wage requirements are met. Xcel is currently in the process of reviewing and selling these PTCs, which it expects to complete by May 2025. 

Replacement power expenses

Lastly, Xcel will be returning $48 million in replacement power costs to customers associated with the 2011 outage of Unit 3 at the Sherburne County Generating Station (Sherco). In November 2011, Unit 3 had a catastrophic failure which caused it to remain offline until October 2013. During this time, Xcel purchased power from the market to replace what would have been generated by the facility. After years-long legal battles and regulatory proceedings, the PUC issued an Order in December 2024 that found Xcel failed to operate Unit 3 in a reasonable manner and directed the company to pay customers back for replacement power costs, with interest.