Will Xcel’s electric rates go up on Jan. 1? Yes.

All signs point to “yes.” The question comes before the state Public Utilities Commission (PUC) tomorrow.

We reported last month on the recent rate case filed by the state’s largest electric utility. A “rate case” is very much like a lawsuit, where the utility is asking the Commission for permission to increase the prices it charges to retail customers.

Like most lawsuits, it will play out over months, if not years. Because a utility still has to run a business while the lawyers hash it out, the utility is still allowed to increase prices on an “interim” basis, almost immediately.

Immediately being a relative term. Xcel filed its electric rate case on November 1. In broad strokes, it asked for a more than nine percent increase in calendar year 2025 with another four percent increase in 2026, for a total of 13 percent over the two years.

The current case represents the 8th electric rate case filed by Xcel in the past 20 years. Depending on the year and the case, Xcel has received between 30 percent and 80 percent of its original request.

In the interim, Xcel is asking for a 6 percent increase on January 1, with another 4 percent increase on January 1, 2026, should the case still be unresolved at that point. Those amounts are subject to a later true-up (refund), should Xcel not prevail in the case. The Commission has some latitude to adjust the interim rate request downward.

If Xcel Energy is the plaintiff in my “lawsuit” analogy, then who are the defendants? We’ll you, the energy consumer, are the defendants being asked to pay higher prices. You are represented in the case by the state’s Department of Commerce (DOC), and the state Office of the Attorney General (OAG). On a case-by-case basis, nonprofits and other organizations will intervene, purporting to represent the interests of consumers or subsets of consumers.

As an energy consumer and a taxpayer, you get to pay for the whole process. The Commission will decide tomorrow to forward the case to an administrative law judge, who will hold courtroom-style hearings over the next year. There will also be public hearings held around the state.

Then, at some point, the five Commissioners will vote on the size of the final rate increase.

To greatly oversimplify the process, utility rates are set on a “cost-plus” basis. The utilities must prove up their reasonable costs of doing business, then they are allowed to earn a “fair” profit on top of that.

The state government has granted Xcel (and the other electric utilities) a monopoly within specified geographic boundaries. No other suppliers are allowed to compete directly with Xcel. The point of utility regulation is to reproduce, through bureaucracy, the result that a free market would obtain automatically.

Over the next year or so, we will be following the process closely.