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Xcel Energy reaches deal to lower proposed rate increases, refund customers
Company, Public Utilities Commission reach settlement that freezes base electricity rates through 2025
A leading energy provider in South Dakota won’t be hiking electricity rates as high as it had hoped.
That’s the result of a settlement reached between Xcel Energy and the South Dakota Public Utilities Commission, which Tuesday approved an agreement stipulating a lower rate increase than what the Minneapolis-based utility provider had previously proposed.
“The result of the PUC's thorough investigation into Xcel Energy’s request is this settlement that reflects South Dakota principles, fairness and consumer protection,” PUC Chairwoman Kristie Fiegen said in a statement announcing the settlement. “As I considered the request, I focused on how Xcel can provide reliable service to meet the needs of its customers in our state, while respecting South Dakota, not Minnesota, values. Moreover, the agreement struck a strong chord with me by settling on a rate increase that is substantially lower than what the company originally requested.”
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Xcel Energy last year sought to impose increases of nearly 18 percent on its South Dakota customers — of which there are more than 97,000 of, a proposal that would have generated an additional $44.1 million in annual revenue for the company. However, the settlement, agreed to by Xcel, reduces that increase to about 6 percent.
The 6 percent increase will generate about $14.4 million in additional revenue each year. It will result in the average Xcel residential customer in South Dakota seeing about $4.67 more on their monthly electric bill, according to the PUC.
“This has been a year-long process with some hardships,” said Steve Kolbeck, Xcel’s principle manager for South Dakota. “But we’re satisfied with the settlement and appreciate the PUC for its time and leadership.”
Kolbeck is also a state legislator from Brandon and a former Public Utilities Commissioner.
The approved settlement agreement includes terms to refund a portion of interim rates implemented by Xcel in January to customers — with interest. It also allows for the recovery of certain projects and costs Xcel incurred by providing benefits from certain tax credits available to the energy industry.
PUC Vice-Chairman Gary Hanson said reaching the settlement was a laborious process that found an adequate outcome for both Xcel’s customers and the company.
“PUC staff accomplished a bit of magic in reducing the cost to consumers and was able to reach an agreement with Xcel that is nearly $30 million below what was originally requested,” he said.
The settlement also calls for a moratorium on additional base rate increases through 2025.