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Xcel Asking to Hike Electric Rates

August 1, 2008

By Steve Cahalan, La Crosse Tribune, Wis.

Aug. 1–Electric rates would increase about 7.9 percent or $6.47 per month for its typical residential customer, under an electric rate request Xcel Energy is filing today with the Public Service Commission of Wisconsin.

Xcel asks that the increase in electric base rates take effect Jan. 1. It says the increase is needed because of ongoing investments in cleaner sources of energy, transmission lines and rising costs of fuel and purchased power. It also says the request doesn’t include an increase in returns for the company.

Xcel is asking for an overall increase of 8.6 percent or $47.1 million a year in electric revenue. While the average residential customer would see a 7.9 percent increase from current prices, commercial and industrial customers would see increases ranging from 7 percent to 10 percent.

Last year, the company asked for a 14.3 percent increase in electric rates. In December, the commission instead approved an overall 8.17 percent increase, which took effect Jan. 9.

In April, Xcel applied for an electric fuel surcharge to cover higher-than-expected costs of generating and purchasing electricity. The commission authorized an interim 3.7 percent overall surcharge, which took effect May 6. Final commission action on the surcharge request will come later.

“This is what we would call a cost-recovery case,” Donald Reck, Xcel Energy of Wisconsin director of regulatory and government affairs, said of today’s request. Xcel is seeking to recover costs of capital, operating and maintenance expenses, and the rising prices of purchased power and of fuel used to generate electricity, he said.

He said 40 percent of the proposed increase in revenues is for electric generation and transmission costs, including voluntary emission reduction projects at three Xcel fossil-fuel power plants in Minneapolis, St. Paul and near Stillwater, Minn. The investments also include increasing the output at Xcel’s nuclear and hydroelectric power plants, a 100-megawatt wind farm that’s under construction near Austin, Minn., and transmission lines.

Reck said the emission reduction projects will create about 400 megawatts of new generating capacity and reduce emissions by more than 90 percent.

About 48 percent of the increase is for fuel and purchased-power expenses, Reck said. And the other 12 percent is for increases in various operating and maintenance expenses associated with generation and transmission, he said.

The commission will schedule public hearings on Xcel’s request. If it is approved, Reck said, Xcel will continue to have the lowest residential electric rates of any major electric utility in Wisconsin.

He acknowledged increasing electric rates may create financial hardships and encourages people to check the Web site www.xcelenergy.com for tips on conserving energy.

Steve Cahalan can be reached at scahalan@lacrossetribune.com or (608) 791-8229.

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Copyright (c) 2008, La Crosse Tribune, Wis.

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