SIOUX FALLS, S.D. (KELO) — If you live in South Dakota and use Xcel Energy, you’ll soon be getting refund money. 

Xcel Energy users in South Dakota have been paying nearly $20 more on each bill since January 2023 when interim rate prices went into effect. On Tuesday, the South Dakota Public Utilities Commission voted 3-0 to accept a settlement with Xcel Energy for a much lower rate increase.   

“They’re going from 18% down to 6% and that’s huge,” PUC Commission Gary Hanson told KELOLAND News. “A real, real big win for the consumers of South Dakota.” 

Xcel Energy’s new rate increase will be 5.85% and takes effect July 1. That’s an estimated average increase of $4.67 per month instead of the $19.58 per month that took effect January 1. 

According to a summary of the refund from Xcel Energy, the estimated interim refund factor is 48% and the average residential customer will receive $90.30. The refund will come from Xcel Energy and officials said they don’t expect refunds to start until after the new rates start July 1. 

Each customer will be different depending on electricity usage, but the refund includes money spent by Xcel Energy customers on the interim rate increase from January 2023 through June 2023 plus interest.   

“I hate to use averages because some people receive more and some less, but the average will be about $90,” Hanson said. “That’s a pretty good deal.” 

Xcel Energy, not the South Dakota PUC, will be in charge of the refund process and the refunds for the more than 97,000 customers in South Dakota.

The company’s interim refund calculator lists more than 12 different factors into the refund calculator and officials with Xcel Energy admitted the process can become confusing during Tuesday’s PUC meeting in Pierre. 

Lisa Peterson, with Xcel Energy, told commissioners the first thing the company needs to do is put the new rates into the system so no one is paying the interim rate anymore. She said the company runs a refund program tracking each case with each customer. 

The estimate is 48%, which includes the interest that occurred, and each customer will get 48% in refund dollars previously collected by Xcel Energy. 

Hanson pointed out South Dakota’s PUC staff is one of the smallest in the country, but praised the work staff members did on the Xcel Energy rate settlement. 

“It is magical, from my standpoint, just incredibly pleased with the very few staff members that we have available to work on something of this nature,” Hanson said. “They’re all South Dakota grown folks. For the most part, graduates of universities in South Dakota and they did a wonderful job.” 

In June 2022, Xcel Energy, also known as Northern States Power Company, filed the increase request with the PU — seeking an increase of $44.1 million or 17.9%. Since that initial request, 11 months worth of back-and-forth communication between PUC staff and Xcel Energy occurred before Tuesday’s settlement was approved. 

“This is definitely a protracted process,” Hanson said. “The application itself is enormous. These are not small companies by any means and so there’s a lot to look at. It’s very complex.” 

The settlement is for $14 million instead of $44.1 million. For a residential customer using 750 kilowatt-hours per month, that equates to a $4.67 increase.

Hanson pointed out the PUC docket includes details on how the company advertises, the compensation for executives, methods of depreciation that are used, the reserves for depreciation of assets, employee benefits, scheduled purchases, infrastructure purchases and more and more detailed items. 

State law gives the PUC regulatory authority over the six investor-owned utility companies in South Dakota – Black Hills Energy, MidAmerican Energy Co., Montana-Dakota Utilities Co., NorthWestern Energy, Otter Tail Power Co. and Xcel Energy. 

The PUC does have rate-making authority, but the PUC must ensure utility companies in South Dakota provide safe and reliable service at fair and reasonable rates.   

In a public meeting held in Sioux Falls in November, which Hanson said was not required by state law, Xcel Energy pointed out the changing landscape in generating electric energy. 

In 2005, Xcel Energy was receiving 51% of its energy from burning coal, 28% from nuclear, 13% from other renewable energy, 5% from natural gas and 3% from wind energy. By 2021, Xcel Energy gets only 18% from coal. Nuclear is at 27%, while wind energy increased to 23%, natural gas increased to 22%, solar energy is at 4% and other renewables are at 6%. 

Xcel Energy has plans to close all its coal-burning plants in the Upper Midwest by 2030 by looking to become carbon-free.

Ian Dobson, an Xcel attorney, represented the company Tuesday before the South Dakota Public Utilities Commission.

At Tuesday’s meeting, Hanson asked whether South Dakota customers will be paying for anything that Minnesota’s government requires from Xcel.

“No, there’s no politically induced expenses that South Dakota is picking up,” Ian Dobson, an attorney with Xcel Energy, replied during the meeting. 

Hanson said citizens were very engaged with Xcel Energy’s rate increase request. He said everyone should be looking for ways to conserve energy especially with the drier, hot weather most of South Dakota has been experiencing in May and early June. 

“I think that everybody’s going to take a good close look at their air conditioning systems and make sure they’re working properly and that they have enough insulation,” Hanson said. “If people keep conserving electricity and are careful with it. Then we don’t have to see so much newer infrastructure built.”