Minnesota regulators kick Xcel’s electricity price increase down the road
Regulators on the Minnesota Public Utilities Commission (PUC) approved a reduced increase in interim electricity prices than the 9.4 percent price hike sought by Xcel Energy.
In doing so, the regulators simply chose to kick the can of higher electricity prices down the road while simultaneously advocating for energy sources that will make future rate hikes even more expensive.
The rates they are a changin’
Xcel Energy is seeking to raise electricity prices to pay for $677.4 million in spending over three years. The company says this will require electricity prices to increase by 21.2 percent over that three-year span.
Electric companies in Minnesota are not really private companies. They are government-approved monopoly companies with the exclusive right to sell electricity in their service territory. Because they are monopolies, companies like Xcel cannot set the price of electricity. Instead, prices in Minnesota are set by the government using a formula.
This formula, which is sometimes called the revenue requirement formula, allows the utility to charge enough for electricity to recover the costs they incur by providing electricity to customers, plus a profit on the undepreciated portion of the equipment they build, such as wind turbines, solar panels, natural gas plants, or even new corporate offices.
Over the past 15 years, much of Xcel’s spending has been due to its desire to shut down its coal plants and replace them with new wind turbines, solar panels, and natural gas plants. These desires even exceed the amount of “renewable” energy Xcel is mandated to buy by the Next Generation Energy Act.
The PUCs decision to temporarily reduce the amount of money Xcel will be able to charge its customers doesn’t do anything to reduce the amount they will ultimately be forced to pay for. The billions of dollars Xcel is spending on wind turbines, solar panels, new transmission lines, and natural gas plants will still be “recovered” from Minnesota families and businesses who have no choice but to buy their power from Xcel.
Delaying this increase is a political decision by the PUC to kick the can down the road while the same regulatory body urges all Minnesota electric companies to pursue the same misguided energy policies. In other words, the PUC says it is worried about rising electricity prices but then forces utility companies to do things that will continue forcing prices upward. Classic government.