South Dakota utilities regulators approve electric rate increase for Xcel Energy

SD regulators OK rate increase for Xcel Energy

PIERRE, S.D. — The South Dakota Public Utilities Commission on Tuesday approved a settlement allowing Xcel Energy Inc. to increase its overall electric rates by about 5.5 percent for residential and commercial customers in the state.

The settlement would allow Xcel to earn about $8 million a year more from its 81,000 South Dakota customers in 36 communities in the Sioux Falls area. The company said the rates, to take effect Jan. 18, would raise the electric bill of the average South Dakota residential customer by about $5.55 a month, from $65.80 to $71.35, based on winter rates.

The settlement formally allows Xcel to boost rates by 7.4 percent to increase revenue by $11 million a year, but the PUC said the actual increase is 5.5 percent because $3 million in extra revenue had been allowed in interim rate increases approved earlier.

The commission made one change to the settlement to prevent Xcel from charging customers in South Dakota for a development fund required by Minnesota law. Xcel has yet to say if it will accept that amendment.

Under the terms of the settlement, which was negotiated by Xcel and the commission’s staff, the company has the option to withdraw from the deal because the PUC made a change. Al Krug, Xcel’s managing director of regulatory administration, said the company also could ask the commission to reconsider, but that no decision had been made on the issue Tuesday.

Xcel wants to add a small charge to South Dakota customers’ bills for its Renewable Development Fund, which provides grants for research and construction of wind farms, solar energy and other projects using renewable energy. The Minnesota Legislature required the fund under a deal that permitted spent fuel to be stored at the Prairie Island Nuclear Generating Plant in Minnesota, Krug said.

The three commissioners who approved the settlement voted to prevent Xcel from recovering money in South Dakota to support the fund.

Commissioner Gary Hanson said South Dakota customers should not have to pay for another state’s requirements.

The commission’s chairman, Dusty Johnson, said he could not see any benefit to South Dakotans from the Minnesota law that requires the fund. Many wind farms have been built in both states without getting any grants from the fund, he said.

The three commissioners said the negotiated settlement avoided a costly, lengthy formal hearing in Xcel’s request for a rate increase.

Johnson said the settlement cut the original request by almost half. “That is a big deal.”

Northern States Power Co. of Minnesota, which operates in South Dakota as Xcel Energy, had not sought an increase in its base South Dakota rates since 1992.

Xcel lawyer Kari Valley told the commission the company needs to increase its revenue to cover its investments in generation, transmission and distribution systems. The settlement also takes into account increased fuel costs for power plants, she said.

“It provides just and reasonable rates for our South Dakota rate payers,” Valley said.