Minnesota regulators approve Xcel rate hike, order revenue decoupling

Dive Brief:

Minnesota regulators approved a rate increase for Northern States Power Co.'s Xcel Energy, but the Star Tribune reports that due to the complexity of the case it remains unclear just how significant the rate hike will be.
The utility will actually lower rates initially, but a second rate hike going into effect later this year will wipe out any savings for customers, the paper reported.
As part of the rate case, the Public Utilities Commission approved a three-year pilot program of revenue decoupling, the first of its kind in the state.

Dive Insight:

The Minnesota PUC has approved a multi-year rate case for Xcel Energy covering 2014 and 2014, and regulators in a statement point out that it is the first multi-year rate case ever filed with the commission. Xcel was acting on statutory authorization enacted in the 2011 legislative session.

Xcel filed its petition in late 2013, initially asking for an increase in electric rates of $192.7 million, or 6.9%, for 2014 and an additional $98.5 million, or 3.5%, for 2015 resulting in a total of $291.2, or 10.4%, over the two years. An administrative law judge made recommendations for a total increase of $191 million, or about 7%.

Regulators said their decisions would likely will reduce the overall amount of the allowed increase from
recommended levels, but the actual impact remains uncertain. "As commission staff processes the impact of the decisions made today, the commission will be better able to calculate the total dollar amount approved," regulators said.

The PUC approved a 9.72% rate of return, below the 9.77% recommended by the ALJ.

And in a separate decision, the commissioners voted 3-1 approved another rate-related adjustment — one that decouples Xcel's profits from the electricity it sells. The decoupling move, aimed at eliminating utility disincentives toward efficiency programs, will not take effect until 2016.

Regulators also rejected any increase in the monthly service charge for residential and small general customers. Xcel had asked that it be allowed to increase the basic charge to residential customers by $1.25 per month and to small general service customers by $1.50 per month.