MINNEAPOLIS (WCCO) — For the sixth time in the last eight years, Xcel Energy customers will be paying more for their monthly electricity.
On Thursday, the Minnesota Public Utility Commission (PUC) approved the company’s interim rate request, which will increase the cost of electricity by 4.6 percent beginning Jan. 3, 2014.
That increase could still be trimmed by the PUC after public hearings are held next spring. In addition to the 2014 increase, electric rates would jump another 5.6 percent in 2015.
The utility says the money is needed for costly repairs and improvements. But clean energy advocates say the money would be better spent advancing renewable energy.
Still, it’s the cost we pay to live in a modern world, where the source of most of our electricity is still generated using nuclear and coal. And that has opponents of the rate increase calling for change.
“We don’t think those are the right priorities for investments here in Minnesota,” said Joshua Winters, the executive director of the Minnesota Public Interest Research Group.
He says the increase would be more palatable if it was being spent to further expand green energy sources such as solar and wind power.
Xcel has based its case for rate hikes on one simple fact – the utility’s infrastructure is aging. The company’s coal and nuclear generating stations have undergone costly upgrades to keep them viable for decades to come. In addition, the power distribution system to transmit the electricity throughout the state is also in need of updating to efficiently handle the larger loads.
Xcel says the average residential customer using 675 kilowatts per month will see their average bill jump $4, to $84.39 in January. Then, with the 2015 rate hike, another $6.25 per month.
“This is something that for some consumers they might be able to bear a modest increase on the bill, but for low-income communities this is going to end up being a hardship and it’s not going to end here,” Winters said.
Xcel plans subsequent rate hikes ranging between 4 and 6 percent to stretch through 2018.
The utility says it has made significant investments in wind already and is in fact ahead of state mandates for wind generation. In a written statement, the president and CEO of Northern States Power, Dave Sparby, explained the increase is needed “to maintain a diverse energy supply and deliver safe, reliable and clean energy at an affordable price.”
After $525 million in rate hikes over the span of eight years, others are urging the utilities commission to be more critical.
“They also probably need some more support from the Legislature in having a critical eye,” said John Farrell, head of the Minneapolis office of the Institute for Local Self-Reliance. “I think the laws that they operate under don’t give them a lot of flexibility to question…the base assumptions that Xcel is bringing to the table.”
In 2013, Xcel requested a significantly higher rate hike, which was later trimmed by the PUC to just 3.8 percent for 2013.
Because of that, Xcel customers will see credits on their bills this month refunding the difference that has been collected under the interim rate hike.
Public hearings on the latest request will be held in the spring or early summer of 2014.