SIOUX FALLS, S.D. (KELO) — For Xcel Energy customers in South Dakota, higher energy bills will start in January.
Xcel Energy, also known as Northern States Power Company, filed for the electric rate request with the South Dakota Public Utilities Commission on June 30. In that public rate increase notice, Xcel Energy said it was seeking an increase of $44.1 million or 17.9% that would go into effect no earlier than Jan. 1, 2023.
In general, Xcel Energy said its rate hike in South Dakota would cost a typical residential customer (with 750 kWh per month) $19.58 per month, or a nearly 20% increase on the monthly bill.
“There’s no single sort of cost element that is exacerbating the need for this rate case, it’s really investments kind of across our system,” Xcel Energy regulatory policy manager Chris Shaw said during a Nov. 28 PUC meeting in Sioux Falls. “The cost of doing business has increased overall since our last rate increase and so all of that’s kind of been kept encapsulated in our rate increase request.”
For the average Xcel Energy customer, the increase will be roughly $20 more a month. A final decision on the rate increase from the PUC has not been made, but that doesn’t stop Xcel Energy from implementing its new rate requests by January 2023.
However, if by June 30, 2023, the PUC finds Xcel Energy’s rate increase is greater than what the PUC determines as a fair rate increase, that amount of money is subject as a refund for Xcel Energy customers.
Xcel Energy says it serves 99,000 customers in eastern South Dakota with 99.9% electric reliability.
PUC commissioner Gary Hanson told KELOLAND News he could not comment on the Xcel Energy rate increase because it remains an open docket with the PUC.
“Commissioners have a decision-making role in docket matters, so any discussion with a commissioner about an open or imminent docket must take place in an open forum, such as a public meeting, with notice given to all parties,” Hanson said in an email to KELOLAND News.
PUC Deputy Executive Director Leah Mohr told KELOLAND News the PUC’s decision will be based on whether the rate is just and reasonable and the PUC could only suspend the imposition of the rate for six months.
“After that period, the company may impose the requested rate as an interim rate, subject to refund with interest,” Mohr said, adding the company must refund the interim amount paid above the final rate approved by the PUC.
PUC process playing out, refunds still possible
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 not have ratemaking authority, but the PUC must ensure utility companies in South Dakota provide safe and reliable service at fair and reasonable rates.
According to state law, “Upon completion of the hearings and decision, the commission may by further order require the public utility to refund, with interest, to customers, the portion of the increased rates found to be unjust, unreasonable, or discriminatory.”
Xcel Energy’s last request for a rate increase was in 2014 and the nearly 18% increase varies depending on customer classification and energy usage patterns.
“The actual amount of any rate adjustments will be determined by the SDPUC and such amounts could be greater or less than initially requested,” Xcel Energy’s rate increase notice stated.
South Dakota’s three PUC commissioners – Chris Nelson, Kristie Fiegen and Gary Hanson – will vote on that decision after public input, research and information gathering by staff before June 30, 2023.
In the Nov. 28 public meeting in Sioux Falls, PUC Chairman Chris Nelson laid out the timeline while adding no action would be taken during that specific meeting or in the near future.
“Xcel bears the burden to show that the underlying costs of any rates are prudent, efficient and are economical and are reasonable and necessary to provide service to its customers,” Nelson said. “The commission will decide whether the proposed rate increase should be granted, denied or decide, based on evidence through a evendice hearing, that there should be a different rate that should be approved.”
Xcel’s reasons for rate raises
There’s hundred and hundreds of documents for public view on the PUC’s website on the topic of the increased electric rates.
In a presentation at the Nov. 28 meeting, 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.
More than 15 years later in 2021, Xcel Energy gets only 18% from coal. Nucrelar is at 27%, while wind energy increased to 23%, natural gas increased to 22%, solar energy is 4% and other renewables is 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. Xcel Energy said its average monthly bills in South Dakota have been under or nearly $100 from 2013 to 2021 which is below the national average.
“We don’t have the future national average but we can project our bill,” Shaw said during the Nov. 28 meeting. “We anticipate there’ll be upward pressure on the national average as well and that our rates will continue to be below the national average.”
Steve Kolbeck, a former PUC commissioner and state Senator-elect from District 2, is the project manager for Xcel Energy in South Dakota. He noted Xcel Energy had a tough spring with the severe weather and two derecho storms.
“We did bring in over 2,000 linemen and staff to get those repaired,” Kolbeck said, while pointing out Xcel Energy’s reliability rate is for 24/7, 365 days a year.
Xcel Energy sent KELOLAND News an emailed statement on the rate increase starting January 2023.
“At Xcel Energy, we work every day to provide the reliable energy that our customers depend on, delivering increasingly clean energy at an affordable price,” Xcel spokesman Lacey Nygard said in an email. “Our rate proposal to the South Dakota Public Utilities Commission focuses on strengthening the energy grid and enhancing the reliability of the service our customers count on while keeping bills low.”
Nygard said the part of South Dakota Xcel provides service too has seen a lot of growth.
“As a company we need to keep up with this growth to ensure economic development opportunities can be met and we are prepared for future consumer demands of our system including but not limited to new generation,” Nygard said.
Nygard noted the interim rates won’t become permanent until the final decision from the PUC.
“We look forward to continuing to work with the Public Utilities Commission, stakeholders and our customers as our proposal is reviewed in the coming months,” Nygard said.