EAU CLAIRE — Xcel Energy is seeking electric and natural gas rate increases next year for its Wisconsin customers to pay for projects that will add power to its grid and update aging infrastructure.
The proposed rate increases would raise a typical household’s monthly electric bills by $9.54 and add $4.54 monthly to bills for those who get natural gas service through Xcel Energy, based on documents the company filed with state regulators.
Those amount to a 7.9% increase on electric bills and 6.8% more for natural gas for the average residential customer.
Xcel Energy filed its request earlier this year with the Wisconsin Public Service Commission, a state regulatory body to ask that regulatory group to approve rate increases for 2024. That case is still pending as officials and stakeholders scrutinize the volumes of financial data and projections the power utility submitted to back its assertions for raising rates. A public hearing is yet to be scheduled, but is expected to happen in fall. Then the state Public Service Commission is expected to decide the case late this year.
If approved, the proposed rate hikes would generate $40.3 million in new revenue from electricity and $9 million from natural gas service. Both increases are tied to projects for their respective customers.
One of those is a solar farm being built at a retired Xcel Energy coal plant outside of Becker, Minn. — a project that broke ground last week.
“While that solar facility is in Minnesota, our Wisconsin customers will benefit from it,” said Mara Ascheman, Xcel’s regional vice president of rates and regulatory affairs, who works out of the company’s Eau Claire offices.
Likewise, the electric rate increase is also paying for new wind energy projects.
Several key transmission lines will also be rebuilt, including one that connects Xcel’s power plant outside of Stillwater, Minn. to Eau Claire. Other lines to be rebuilt are in the La Crosse and Baldwin areas, Ascheman said.
Another upgrade funded by the rate hikes will be happening right outside of customers’ homes with the installation of new smart electric meters.
“These new meters will help our customers better manage their energy use,” Ascheman said.
Xcel’s website states the new electric meters will send detailed information about your home’s electrical use to your Xcel account that can be accessed online and through an app. Whereas customers currently only see their energy use on monthly bills, the new meters will allow people to see more frequent and detailed information.
The new meters have already been rolling out in Xcel’s territory in Colorado and Minnesota. Installation is slated to begin in western Wisconsin this summer, taking months to reach all customers and is expected to finish in 2025.
Natural gas meters are also going to get an upgrade, but not the entire unit. Due to a contract Xcel has with a vendor reaching its expiration date, the company will be installing a new component that will allow for meter-reading.
“We need to replace a module on nearly every natural gas customer’s meter so they can continue to be read electronically,” Ascheman said.
Rising rates tied to natural gas service will also be used to replacing aging underground gas lines.
Since Xcel filed its request to raise rates, groups who advocate on behalf of customers have filed to submit their opinions on the proposal.
Citizens Utility Board — an independent state group that represents individual citizens and small businesses in utility issues — is scrutinizing Xcel’s request and plans to publish its official stance in late summer. But the group has already voiced its problem with one aspect of the power utility’s proposal.
“In particular we do have concerns because they’re looking to increase the profit rate,” Tom Content, Citizens Utility Board executive director, said in a phone interview with the Leader-Telegram.
Currently allowed a 10% profit margin, Xcel could go up to 10.25% as part of next year’s planned rate increase. Content said that would be the highest margin of any power company operating in the state.
As his organization combs through the many details within Xcel’s proposal for 2024, Content said they will seek out other areas that could be pared back.
“We’re trying to see what other opportunities for savings can be found,” he said.
While the Citizens Utility Board scrutinizes rising rates, it is at the same time championing an Xcel initiative that will provide additional financial help to low income customers in Wisconsin.
Xcel has a proposal pending with the state Public Service Commission to create a residential affordability program.
“Xcel is really bringing to Wisconsin something it has had success with in other states for many years,” Content said. He noted Xcel has similar programs already in place in Colorado and Minnesota.
Intended to go into effect this coming winter, the Wisconsin program would provide an estimated $5 million annually in assistance to low income customers struggling to pay bills.
The most cost-burdened of households that already get public assistance through the Wisconsin Home Energy Assistance Program for help with electric or gas bills would be automatically enrolled.
Xcel estimates that about 9,000 of its Wisconsin customers — about 56% of those who currently get WIHEAP assistance — would qualify for the additional aid proposed by the power company.
To those households, Xcel would provide between $5 and $50 in monthly bill credits — the amount depending on their income levels — based on the proposal submitted to state regulators early this year.
Creating an affordability program was spurred on by the settlement Xcel Energy made with the Public Service Commission in 2021 for setting its energy rates for ‘22 and ‘23.
