November 4, 2013
Seeking to balance the costs of improving the environment and enhancing long-term service reliability with customer bill impacts, Xcel Energy (NYSE:XEL) asked the Minnesota Public Utilities Commission to authorize increases in base electricity rates over a two-year period.
“Our customers expect safe, reliable and clean energy at an affordable price, and this request supports the investments needed to deliver on those expectations,” said Dave Sparby, president and CEO of Northern States Power Co.-Minnesota, an Xcel Energy company. “Our proposal provides more manageable and predictable bills while allowing us to provide high-quality service and customer value.”
The company proposes prices for a two-year period, during which investments in carbon-free energy sources, a diverse supply mix and service reliability improvements are at their peak. Average customer rates would increase by 4.6 percent effective Jan. 3, 2014, when interim rates would take effect. A typical residential customer’s monthly bill would increase by about $4. Average customer rates would increase an additional 5.6 percent during 2015.
These rates are based on the company’s increased cost of providing service of $193 million in 2014 and $98 million in 2015. “Our objective is to moderate our request and keep the annual rate increase between 4 and 6 percent as we complete major improvements to our electric system,” Sparby said. “Post-2016, we believe our costs will be at or below the rate of inflation, and customers will have the benefit of a healthy, diverse system for well into the future.”
Approximately 45 percent of the increase is for investments that allow continued operation and increased output at Xcel Energy’s nuclear plants for an additional 20 years, and new wind resources. “Our portfolio of nuclear plants and new wind power will allow us to avoid carbon emissions by more than 200 million tons over their lives,” Sparby said. “These investments help keep customer costs low and are essential to achieving state energy policy goals calling for a 30 percent reduction in carbon emissions by 2025.”
Approximately 25 percent of the increase stems from the company’s efforts to strengthen refresh and modernize the electricity grid and implement technology improvements to ensure a safe and reliable system for customers.
“We saw first hand the importance of a resilient electric grid during the devastating June 2013 storms that resulted in half of our Minnesota customers being without power,” Sparby said. “Our investments and preparation allowed us to restore service far more quickly than utilities in other parts of the country have been able to do after similar events. Minimizing the number and duration of future power outages is one of our top priorities.”
Much of the remainder of the request stems from the cost of other power plants, including the return to service of Sherco 3 after an extended outage. The company’s diverse supply mix provides important benefits for customers, including offering a hedge to rising and volatile fuel costs.
Even with the proposed increase, Xcel Energy expects rates will remain below the national average. The company also offers extensive programs to help customers manage their energy use and reduce their bills.
“We are committed to making sound investments that balance the desire for clean and reliable energy with low costs,” Sparby said. “We look forward to a thorough review and to working with regulators and customers on our plan.”
The Minnesota commission will schedule public hearings, which are expected to be held in the spring or summer of 2014. A decision is expected in early 2015. More information can be found online at www.xcelenergy.com. A copy of the rate case filing will be available on the commission’s website at www.puc.state.mn.us.
Xcel Energy (NYSE: XEL) is a major U.S. electricity and natural gas company with regulated operations in eight Western and Midwestern states. Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.3 million electricity customers and 1.8 million natural gas customers through its regulated operating companies. Company headquarters are located in Minneapolis. More information is available at www.xcelenergy.com.
This news release includes forward-looking statements, such as statements about future rates, investments, and emissions reductions, that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words “anticipate,” “estimate,” “expect,” “projected,” “objective,” “outlook,” “possible,” “potential,” “should” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including their impact on capital expenditures; customer business conditions and business conditions in the energy industry; competitive conditions in the marketplace; fiscal, taxation and environmental policies; unusual weather; legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rates or have an impact on asset operation or ownership or impose environmental compliance conditions; changes in competition in the electric and natural gas markets; costs and other effects of legal and administrative proceedings, settlements, investigations and claims; actions by regulatory bodies impacting our nuclear operations; financial or regulatory accounting policies imposed by regulatory bodies; and the other risk factors listed from time to time by Xcel Energy Inc. in reports filed with the Securities and Exchange Commission, including Risk Factors in Item 1A and Exhibit 99.01 of Xcel Energy Inc.’s Annual Reports on Form 10-K for the year ended Dec. 31, 2012, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2013, and June 30, 2013, and Sept. 30, 2013.
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