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Xcel Energy requests 21% increase in electricity rates

The Minnesota Public Utilities Commission will have the final say on the increase in the next 18 months, but customers should still be ready to pay more by January.

MINNEAPOLIS — Minnesotans are already bracing for big jumps in heating costs this winter, and now the state's largest electricity provider, Xcel Energy, is requesting a rate increase of around 20% over the next three years.

Xcel is requesting an electricity rate increase of 21.2%, or $677.4 million, between 2022-2024. It includes a 12.2% increase in 2022, followed by 4.8% in 2023, and 4.2% in 2024.

For the average residential customer, the increase would amount to a 19% increase in their monthly bill, which would mean an additional $18.50 per month by 2024. 

"Any increase in the area of 20% — that absolutely should get people's attention," said Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, a nonprofit advocate for Minnesota’s utility consumers. "Layer on top of that, about one in eight Xcel customers is already behind on their bills. They're already not able to afford it."

Levenson-Falk says the Citizens Utility Board will argue for smaller rate increases during the upcoming review process by the Minnesota Public Utilities Commission. In the meantime, she says customers shouldn't panic.

"That is a really, really large request, but that's what it is, a request," Levenson-Falk said. "Everybody knows they're not going to get all of what they requested, and so it is going to come in somewhere lower than what they're asking for."

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It will take the Public Utilities Commission the next 10 and 18 months to figure out where the rates are officially set, but for now, Annie says Xcel customers should plan for a 9.4% increase on their January electricity bills.

"That's an interim rate increase, so the utility can raise its rates as its final request is being considered," she said.

In regards to its full, three-year request, Xcel spokesman Matt Lindstrom said in a statement, "We're investing in strengthening the energy grid, enhancing the reliability of the service our customers count on, while expanding clean energy and keeping bills low in the years ahead." 

In 2020, the company claims residential electric bills were 22% below the national average and 15% below the Minnesota average. Even if the full increase is approved, Lindstrom says bills would remain below the national average. 

Levenson-Falk says that alone doesn't justify an increase.

"We need to look under the hood at how Xcel wants to use its customer's money," she said. "In the meantime, make your voice heard if you're an Xcel customer and if you have an opinion about this. There is going to be a public process where anybody can comment. It's useful to do that." 

She says it's also useful for customers of all utilities to pay attention.

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"Quite a few of the big utilities in Minnesota are also going to be requesting to increase their rates this year," Levenson-Falk said. "So even though this case won't have an impact on you if you're not an Xcel electricity customer, your utility might be looking at very similar things."

Xcel has also proposed a lower, alternative interim rate for January that could mean the average customer pays just $1-2 more per month, but that rate would require the Public Utilities Commission to also lock in a larger, interim increase for 2023. It's not clear that will happen.

If you are a Minnesota utility customer with questions about your bill, renewable energy or assistance programs, you can call or email the Citizens Utility Board of Minnesota or access resources through their website.

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