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Xcel seeks rate hikes

posted May 29, 2015 12:00 a.m. (CDT)
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by / Liam Marlaire. bio | email

Infrastructure needs and renewable investments could fuel a rise in consumers’ energy bills next year.

Xcel Energy has filed a rate request with the Public Service Commission of Wisconsin looking to raise electrical rates 3.9 percent and natural gas rates 5 percent. The former is roughly in line with past requests, while the latter is significantly higher than in recent years.

A typical residential electricity customer would pay $4.73 a month more, or an increase of 4.8 percent. A typical residential natural gas customer would pay $3.02 more a month, an increase of 6.2 percent.    

If approved, the hikes would be effective Jan. 1.

“We continue our focus on nation-leading carbon emission reductions and renewable energy integration,” said Mark Stoering, president of Northern States Power Co.-Wisconsin, an Xcel company, in a news release, “as well as significant electric and natural gas infrastructure improvements that bring economic benefit and jobs to local communities.”

A segment of the request regarding billing policies, however, has drawn the most attention from the Citizens Utility Board of Wisconsin, a nonprofit that advocates for residential and small business energy customers.

Xcel is looking to increase its monthly fixed charge for the typical residential customer by $10. The variable energy charge would decrease about $5.27 for a net monthly bump of $4.73.

“CUB is most concerned about the proposed increase in fixed charges,” said Kira Loehr, executive director and general counsel for the organization. “If approved, they will result in considerably higher bills for residential and small business customers who use the least amount of electricity. That means that people living alone, living in small apartments or on fixed incomes trying to conserve electricity will see their bills go up proportionally higher than those who waste electricity and use more.

“Utilities do incur costs, and they should be compensated for costs that are reasonably incurred to provide reliable service.”

Donald Reck, regional vice president-rates and regulatory affairs for Xcel, said even with the changes about 17 percent of charges would be fixed, while customer use would determine the remainder of the bill.

“This is an unfortunate trend in Wisconsin,” Loehr countered. “However, next door in Minnesota, Xcel tried to increase fixed charges and the Minnesota Public Service Commission flatly rejected their proposal, noting that it would ‘further burden low-income, low-usage customers, who are unable to absorb or avoid the increased cost.’ ”

Funds earmarked

Nearly three-quarters of the electrical hike would be for capital investment in energy generation, transmission and distribution. Costs outside of that group include the administrative side of the business, building improvements at a site in Ironwood, Mich., new software and continued remodeling of the utility’s Wisconsin headquarters in Eau Claire’s Sky Park at 1414 W. Hamilton Ave. The latter location has around 400 employees and provides customer service to all eight states in which Xcel provides service.

Transmission investments include $150 million for the CapX2020 line, a joint project involving 11 utilities, and an $11 million rebuild of the Cedar Falls-Clear Lake line.

Substation upgrades are being conducted at Gravel Island north of Eau Claire and Tremval in Blair. “Both are driven in large part by increased sand mining and processing,” Reck said.

Generation investments include $60 million to replace an electric generator at its Prairie Island nuclear plant near Red Wing, Minn. Smaller projects are at a natural gas plant in the town of Wheaton and the French Island Plant in La Crosse. There also is $4 million earmarked for replacing original concrete work at the utility’s St. Croix Falls and Dells hydro plants.

“We’ve continued to invest in the hydro plants,” Reck said. “They’re worth maintaining.”

Xcel Energy is down to two active coal plants — one near Hudson and the other near St. Cloud, Minn. — Reck said. The utility’s customers receive about 25 percent of their energy through renewable sources. Fifty-four percent of Xcel’s energy is carbon-free, according to the utility, compared with 15 percent for all Wisconsin utilities.

“They’re ... getting industry-leading environmental performance,” Reck said of Xcel customers. “And we’re not really dependent on any one fuel source.”

Wind energy projects in Austin, Minn., and North Dakota's Rolette and Towner counties will come online later this year. An uncertain tax climate makes their timing key, Reck said.

“There’s a huge advantage to getting these projects done now when there’s still a tax advantage,” he said.

Xcel also continues to generate renewable energy in Wisconsin through its hydro and biomass facilities.

About 30 percent of the natural gas increase will be used in an ongoing effort to clean up a lakefront manufactured gas plant in Ashland that Xcel inherited in the 1980s. In remediation efforts, the utility has treated 70,000 tons of soil, hauled away 17,000 tons of material and treated 11 million gallons of water.

The first phase — primiarily consisting of land cleanup — has been completed. The next stage will involve the cleanup of Chequamegon Bay.

As far as the rate request, Stoering said “any increase can be difficult.”

“Conservation is the easiest way to manage your energy budget,” he said.

Marlaire can be reached at 715-833-9215, 800-236-7077 or liam.marlaire@ecpc.com.