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CONTACT: Leah Mohr, deputy executive director, South Dakota Public Utilities Commission, (605) 773-3201 or (605) 280-4327

Public Utilities Commission approves Xcel Energy rate increase

PIERRE, S.D. – The South Dakota Public Utilities Commission conditionally approved an approximate 5.5 percent increase over current rates for Xcel Energy this week. In recent years Xcel Energy had received some interim rate recovery from the PUC, but this is the first base rate increase for the company in 17 years.

The application filed by Xcel Energy with the PUC in June 2009 requested a 10.7 percent rate increase to current rates, which would have generated approximately $15.7 million in additional annual revenue. The commission decision increases bills by $8 million, a 5.5 percent increase over current rates. PUC staff and Xcel Energy had previously reached a settlement stipulation for a slightly higher increase, but commissioners unanimously voted to remove costs related to a development fund mandated by the Minnesota Legislature that had been a part of the recommended rate increase.

PUC Chairman Dusty Johnson commended the PUC staff and company representatives for agreeing to a rate increase substantially lower than the company's original request. "These are difficult economic times and I'm glad we've been able to cut this request in half," he said. "It's been 17 years since the last general rate increase and that kind of stability is good for ratepayers."

In presenting its case to the PUC, Xcel Energy noted much of the requested increase stemmed from more than $6 billion of infrastructure investment made by the company in recent years. Additionally, representatives stated their customer base in South Dakota has grown by 44 percent and overall electric use has expanded by 78 percent since 1992. The company's operating costs have risen and infrastructure improvements have been made during the same 17-year period. The company serves about 81,000 customers in southeastern South Dakota.

PUC Vice Chairman Steve Kolbeck pointed out the number of expenses that were reduced during negotiations, resulting in a lower rate increase. "Not only are specific costs related to operating expenses and rate design carefully reviewed, staff looked at accounting methods and management principles when negotiating with the company on the rate increase," he said.

Commissioner Gary Hanson noted the intricate process of reviewing and negotiating the rate case. "The PUC staff clearly identified the potential for reducing costs as they plowed through the hundreds of details of Xcel Energy's application. This due diligence and successful negotiation avoided a lengthy formal hearing thereby saving the ratepayer between $300,000 and $400,000 in costs the company could have incurred as part of that extended process," he said.

A PUC staff team comprised of five analysts and one attorney were supported by a three-member consultant group in analyzing the rate request. The PUC staff engaged in negotiations with Xcel Energy representatives, making formal requests for additional information, holding meetings and discussions before reaching a settlement agreement that was presented to the commission on Dec. 22, 2009, and discussed at the commission Jan. 5, 2010, meeting.

No individuals or organizations formally intervened in the case. The PUC received eight written comments from consumers and organizations about the rate case. 

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Visit South Dakota Public Utilities Commission docket EL09-009 online for more information on the Xcel Energy's rate increase.