Xcel Energy wants several more years of rate hikesMINNEAPOLIS (AP) — Xcel Energy plans to ask state regulators to spread a large rate increase in 2014 over several years — a strategy it calls "rate smoothing."
MINNEAPOLIS (AP) — Xcel Energy plans to ask state regulators to spread a large rate increase in 2014 over several years — a strategy it calls "rate smoothing."
The Minneapolis-based utility company says it needs to cover $1 billion worth of investments in its power system that serves 1.2 million Minnesota electric customers.
Despite rate hikes in each of the last three years, executives said Xcel planned to forgo a "significant" increase in 2014 in favor of smaller rate hikes over several years.
"I think you are going to find our rate moderation plans to be in that zone of reasonableness," CEO Ben Fowke said on a conference call with stock analysts about its third-quarter results.
In its most recent Minnesota rate case, Xcel requested a 10.7 percent increase, but regulators cut it to 3.8 percent. That came after two smaller rate increases were approved in 2011 and 2012. The Star Tribune reported that the utility will now ask the state Public Utilities Commission to spread out its 2014-2015 rate hike through 2017.
Xcel's plan to spread rate increases over several years is a first for a Minnesota utility and comes after state law was changed in 2011 allowing multiyear rate cases.
"When you do rate cases under the traditional method, you can get a big jump in one year, and the next year might be much less," said Chris Clark, Xcel regional vice president for rates and regulation. "This actually lets you levelize that to a degree and take some of that off the first year. It is not like it goes away.
"We are not saying these costs are not coming into rates. You are changing how they come into rates. We think that reduces the impact to customers," he said.