Xcel Gas Rate Settlement Would Cut Proposed Increase Nearly in Half, Bring Refunds to Customers

(KNSI) – Xcel Energy customers in St. Cloud and across central Minnesota could see a smaller bump in their natural gas bills than originally feared, along with refunds, under a settlement filed Tuesday with state regulators.

Xcel, the Minnesota Department of Commerce, the Citizens Utility Board of Minnesota, the Suburban Rate Authority and the Laborers’ International Union of North America filed the agreement with the Minnesota Public Utilities Commission, resolving most of the issues in Xcel’s pending gas rate case.

If approved, the settlement would raise Xcel’s overall gas revenue by 4.88%, well below the 8.2% increase, or roughly $63 million per year, that the company requested last fall. Residential customers would see an even smaller increase of 4.1%.

That matters for ratepayers’ wallets right now. Since January, Xcel gas customers have been paying an interim rate increase of 6.8% while the case has been under review. If the final approved rate comes in lower than that interim amount, as the settlement proposes, customers would receive refunds with interest.

A major piece of the settlement involves how much profit Xcel is allowed to make. The company had asked to raise its authorized return on equity, which determines how much customers pay toward shareholder profits, from 9.6% to 10.65%. The Citizens Utility Board said that single change would have added more than $11 million in annual costs to ratepayers. The settlement doesn’t set a specific return on equity, but the agreed-upon cost of capital figures imply a rate of 9.55%, slightly below Xcel’s current authorized level.

The settlement also requires Xcel to provide more information about how proposed expansions to its gas system would affect Minnesota’s climate goals, including projected greenhouse gas emissions from new infrastructure investments. State regulators would convene a public stakeholder process by January 1st, 2027 to develop a standard method for estimating those emissions.

Other provisions include no increase to customers’ monthly fixed charges, reduced recovery of executive compensation expenses, and reductions or eliminations of customer-paid dues to organizations like the American Gas Association.

The question of late payment fees, which Xcel currently charges at 1.5% per month, will be decided based on the outcome of Xcel’s separate electric rate case. The Public Utilities Commission is expected to rule on that issue at a hearing in June. Whatever the commission decides for electric service will apply to gas service as well.

Not everyone signed on to the deal. The Minnesota Office of the Attorney General did not join the settlement and will continue to litigate the case, meaning the final outcome could still shift.
The administrative law judge overseeing the case will issue a recommendation by September 1st, and the Public Utilities Commission is expected to make a final decision this fall.

Members of the public can weigh in by filing a public comment by June 12th at mn.gov/puc.

This rate case affects only the cost of delivering natural gas. The cost of the gas itself is passed through directly to customers with no markup from Xcel.

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