EAU CLAIRE — Xcel Energy is preparing to raise electricity and natural gas rates for its Wisconsin customers during the next two years.

Increases planned in 2022 and ‘23 are on the path to approval later this year so Xcel can pay for a variety of projects, including new solar power arrays and wind farms.

“We’re making investments now for the long-term,” Julie McCrea, rates and regulatory manager for Xcel in Wisconsin and Upper Michigan.

As a result of the proposed increases, the average residential customer will see monthly electric bills increase by $5.50 in 2022 and then another $4.25 in 2023, according to Xcel.

Average household natural gas customers will see $4.65 more on their monthly bills in 2022 and then another $1.20 in 2023.

If the state Public Service Commission approves the proposed rates, it will be the first increases Xcel customers have had in four years.

“Rates haven’t increased since Jan. 1 of 2018,” McCrea said.

In recent years bills had even shrunk at times due to tax reform legislation, but those benefits have run out.

While bills overall will be rising due to customers paying more per kilowatt of electricity, a fixed charge will decrease. Typical households currently pay a $17 monthly charge for electrical service, but that will drop by $1 in each of the next two years, reaching $15 in 2023.

McCrea attributed the reduction in the fixed monthly charge to the “give-and-take” with stakeholder groups that signed in agreement to the proposed rate increase.

RENEW Wisconsin, an environmental group that advocates for clean energy, said lowering the monthly charge helps customers who make their own efforts to lower their power use.

“Keeping customer fixed charges low should encourage customers to better manage their utility bills through energy efficiency measures, conservation and customer-owned renewable energy installations,” the group’s executive director, Heather Allen, wrote on Aug. 9 to state regulators. “Lower fixed charges also reduce utility bill impacts to customers who use less energy, including low-income customers within the utility’s service territory.”

The Citizens Utility Board, which advocates for residential and small business customers, also stated in a letter to the Wisconsin Public Service Commission that the decreased monthly charge was among the reasons why it signed in agreement to the rate settlement.

Xcel estimates it will get $34.6 million from electric rate increases in 2022 and $17.8 million more in 2023. Higher natural gas rates are projected to provide $10 million next year and then another $3 million in 2023.

Higher electric rates will be used to pay for new clean energy projects, improving hydroelectric dams, bolstering transmission lines and making small investments in Xcel’s Eau Claire facilities, according to the company’s application.

Among those projects is the 74-megawatt Western Mustang Solar Project in Pierce County, which is anticipated to begin construction this year and join the grid in 2022. Xcel also has 1,300 megawatts of energy from new wind turbines built in Minnesota and the Dakotas coming online.

Those clean energy projects helped win the approval of RENEW Wisconsin.

“In RENEW’s view, the settlement agreement provides a solid foundation for implementing (Xcel Energy’s) renewable resource plans and bringing Wisconsin closer to a zero-carbon electricity future,” Allen wrote to the state Public Service Commission.

Also included in the higher rates is money to prepare for “smart meters.” That technology continues to boost the automation and accuracy of meter-reading for Xcel, but also will let customers see data about their own household energy usage.

Natural gas rate increases will help pay off borrowing Xcel used for cleaning up after a defunct manufactured gas plant in Ashland. That remediation work has been completed, McCrea said, but Xcel will have ongoing water treatment at the site.

Another project that will get funding from the natural gas increase is installation of a new gas main to increase capacity on Eau Claire’s growing west side.

A new economic development program is also being proposed, which would have Xcel help incentivize large businesses to stay or relocate to Wisconsin.

In addition to gaining approval from groups advocating for renewable energy and small customers, the proposed rate settlement also got signatures from a few industrial power users. Wisconsin Industrial Energy Group, Hewlett Packard Enterprises and the Wisconsin Paper Council all agreed with the rate increases.

The general public can weigh in on the proposed rates at a public hearing on Sept. 21, which will be held online via Zoom. Written comments also are being accepted until Sept. 23 through the Wisconsin Public Service Commission’s website or mail.

As of Monday, two public comments already had been submitted to the PSC’s website, both from people opposed to the rate increases.

“The increase in rates, regardless of whether it coincides with inflation or not, doesn’t help a person’s budget, especially as we navigate through uncertain times like the ones we are in,” wrote Brian Bauer of Eau Claire.

Contact: 715-833-9204, andrew.dowd@ecpc.com, @ADowd_LT on Twitter