Dive Brief:
- Consumer and environmental groups proposed a new Xcel Energy Minnesota multi-tiered billing plan that would charge lower electricity prices to the utility’s one million residential ratepayers who keep their usage below average and higher prices for above average use.
- The plan, which does not include commercial/industrial customers, is based on a 1983 Minnesota law requiring the Public Utilities Commission to set conservation-driving rates and is intended to reward those that (1) conserve, (2) implement energy efficiency upgrades, or (3) install distributed energy but would also reward big electricity users who reduce consumption.
- Xcel Minnesota is studying the proposal, which will be considered by the PUC during the upcoming rate case in which it will also decide on Xcel’s request for a 10.4% ($291 million) rate increase over the next two years.
Dive Insight:
Minnesota Power, a smaller utility that serves northern and central Minnesota consumers, went from two tiers to five in 2011 and ratepayers’ electricity use dropped 2.5% in 2013. Xcel Energy Colorado went to tiered rates in 2010 and, according to its report, summer energy consumption dropped by 1.9% to 4.3% through 2013.
In the proposed Xcel Minnesota four-tiered plan, “inclining block rates” or “tiered rates” increase with each additional block of electricity consumed, with summer kilowatt-hour prices that start at a tier of $0.061 per kilowatt-hour and rise to a tier of $0.127 per kilowatt-hour. Advocates say most Xcel Minnesota residential customers are in the two lower tiers and would save money even with the proposed rate increase.
A two-year trial tiered gas rate program was terminated in 2012 by CenterPoint Energy because of a customer backlash against unexpected price hikes. Advocates for the rate plan, which include the Sierra Club, the Minnesota Center for Environmental Advocacy, and the Natural Resources Defense Council, say it will help the state meet EPA regulations requiring greenhouse gas and power plant pollution reductions.
