PIERRE, S.D. (KELO) — The 17.9% rate increase that Xcel Energy wanted to charge its 97,500 South Dakota electricity customers will instead average 5.85%, the state Public Utilities Commission has decided.

The commission voted 3-0 Tuesday afternoon to accept the settlement reached between its staff and the Minneapolis-based utility company. The new rates take effect July 1.

Customers have been paying higher interim rates for much of the past year while the commission’s staff processed the company’s application. Customers will see refunds, most likely in August.

Commissioner Chris Nelson told Xcel officials they should prepare a one-page explanation of the refund process. “It’s got to be crystal clear. I’m going to task the company with that,” he said.

Nelson also asked the commission’s consumer-affairs manager to check a sampling of customers’ bills to ensure that the refunds are properly calculated.

Xcel originally requested a $44.1 million increase in annual revenue on June 30, 2022. The settlement allows $14 million. For a residential customer using 750 kilowatt-hours per month, that equates to a $4.67 increase.

“That is what the citizens are looking at. That is what they need to understand,” said Commissioner Gary Hanson, who is an Xcel customer.

The settlement states that Xcel “shall not file any petition to increase base rates for electric
service, for rates proposed to be in effect prior to January 1, 2026.” However, the rate moratorium doesn’t apply to any rider or cost adjustment for purposes such as transmission, environment, infrastructure, fuel cost or demand-side management.

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,” one of Xcel’s attorneys, Ian Dobson, answered.

All three commissioners praised the PUC staff for its work on the settlement during the past 11 months that included 13 sets of data requests to the company.

Hanson said there initially was “shock” among the public about the proposed rate increase. “I’m an Xcel customer and I got to hear what my wife said about it, and ex parte rules do not allow me to say what my wife said,” Hanson said, half-kidding.

Ex parte refers to an oral or written communication made without proper legal notice and not on the public record.

Commission chair Kristie Fiegen of Sioux Falls, also an Xcel customer, said her husband brought up the proposed rate increase to her. Fiegan said she put up her hands and told him to stop.

Replied Hanson, “In my defense, that’s something that a wife can pull that a husband cannot.”

The commission issued a news release afterward on Tuesday evening.