PIERRE, S.D. - The South Dakota Public Utilities Commission approved a settlement stipulation lowering Xcel Energy’s requested increase to the company’s electric service rates. The action was at the PUC’s regular commission meeting today, June 6, 2023, and affects Xcel Energy customers in its South Dakota retail service territory.
The approved electric rate represents an increase that is approximately 67.5% lower than the company originally requested. This was achieved through negotiations that led to a settlement agreement on all issues between PUC staff and Xcel Energy. In its original filing, the company requested a rate increase to generate an additional $44.1 million in annual revenues. The approved rates will allow an estimated overall revenue increase of just under $14.4 million. A typical residential electric customer using 750 kWh per month will see an average bill increase of approximately $4.67 per month.
“The PUC team is a watchdog on behalf of South Dakota consumers, while ensuring state law is followed and applied through the process of setting just and reasonable utility rates. The result of the PUC's thorough investigation into Xcel Energy’s request is this settlement that reflects South Dakota principles, fairness and consumer protection,” said Chairperson Kristie Fiegen. “As I considered the request, I focused on how Xcel can provide reliable service to meet the needs of its customers in our state, while respecting South Dakota, not Minnesota, values. Moreover, the agreement struck a strong chord with me by settling on a rate increase that is substantially lower than what the company originally requested,” she continued.
The approved settlement agreement includes terms that balance the interests of Xcel Energy and the approximately 97,500 South Dakota customers they serve. The settlement includes a plan to refund a portion of the interim rates, implemented in January, to customers with interest. It also allows for the recovery of numerous projects and costs Xcel has incurred to provide safe, adequate and reliable service to customers in the state and provides customers with benefits from certain credits available to Xcel, like production tax credits related to wind and nuclear generation.
PUC Vice Chairman Gary Hanson commented: “Rate dockets are extremely complex and require significant research. PUC staff accomplished a bit of magic in reducing the cost to consumers and was able to reach an agreement with Xcel that is nearly $30 million below what was originally requested. An individual with utility regulatory experience obtained party status, participated in the docket and in the end, approved of the settlement reached. His independent analysis confirms the due diligence and exceptional investigation accomplished by the PUC staff members.”
As part of the settlement, the company also agreed to a moratorium on additional base rate increases that will prevent Xcel from requesting an increase in base rates that would be effective prior to Jan. 1, 2026. This moratorium will help ensure base rate stability to customers over the next few years and encourages Xcel Energy to make prudent decisions in the operation of the company. In exchange for agreeing to a moratorium, PUC staff agreed to a continuance of the company’s Infrastructure Rider, which allows for the recovery of specific capital additions with an opportunity to request inclusion of additional projects annually. Together, those components reduce frequent base rate filings and reduce rate case expenses that would likely be passed onto customers.
This action by the PUC came after a nearly year-long review and in-depth analysis of Xcel’s request by PUC staff that included 13 sets of formal discovery requests containing nearly 350 total individual discovery requests and over 130 sub-parts, along with numerous informal requests, phone calls and meetings to clarify and seek additional information, and several settlement negotiation sessions.
“I give great credit to the staff of the PUC who over the last 11 months has painstakingly reviewed the fine details of the large rate increase request and pared it back to only what is required to be increased by law. Their attention to the needs of Xcel customers while providing the utility with just and reasonable rates is highly commendable. In particular, this settlement rejects a request from Xcel to increase rates while compromising reliability through the premature closure of baseload dispatchable generation sources,” stated Commissioner Chris Nelson.
Xcel Energy submitted its application to the PUC on June 30, 2022. Due to the public interest in this docket, the PUC held a public input meeting in Sioux Falls in November 2022. Interim rates were implemented in January 2023, as allowed by state law. The company cited significant investments in infrastructure, including new wind generation, technology, and distribution investments, along with nuclear decommissioning funding and other cost pressures, as the basis for requiring increased rates. Xcel Energy’s most recent base rate increase was approved by the PUC in June of 2015 – also at a lower rate than was requested by the company.
The full docket can be viewed on the PUC’s website at puc.sd.gov, Commission Actions, Electric Dockets, 2022 Electric Dockets, EL22-017 - In the Matter of the Application of Northern States Power Company dba Xcel Energy for Authority to Increase its Electric Rates.
