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OES Recommends Significantly Smaller Rate Increases for Xcel Energy

April 06, 2011

OES Recommends Significantly Smaller Rate Increases for Xcel Energy

For Immediate Release: Wednesday, April 6, 2011

Minnesota Department of Commerce Recommends Significantly Smaller Rate Increases for Xcel Energy

(ST. PAUL, MN) The Minnesota Department of Commerce, Office of Energy Security (OES) yesterday recommended reducing Xcel Energy's proposed rate increase for electric service in 2011 by more than $93 million, or 62 percent of the request.  In addition, the OES recommended decreasing Xcel's proposed rate increase for 2012 by more than $107 million, or 54 percent. Xcel Energy, Minnesota's largest utility, had originally requested rate increases of $150 million in 2011, and an additional $48 million for 2012, for a total of $198 million.

"We believe the considerably smaller rate increases recommended by our staff will protect ratepayers from undue burden but still allow Xcel Energy to provide safe, reliable service and make needed improvements to distribution, transmission and generation facilities," said Commerce Commissioner Mike Rothman.

OES, which provides recommendations to the Minnesota Public Utilities Commission (PUC) in rate cases, took into consideration a number of factors while analyzing Xcel's rate increase request. Those factors included cost of capital, costs related to employee compensation, income taxes, legal costs and numerous other costs - all of which OES determined would be lower than Xcel had estimated.  In addition, OES concluded that Xcel's revenues will be higher, diminishing the need to increase rates.

Xcel's unusual proposal for rate increases for both 2011 and 2012 is based on the utility's estimated costs for improvements to Xcel's Monticello nuclear power facility and "other costs."  OES does not support Xcel's proposal to increase rates in 2012 for those other costs; however, since the PUC and the Nuclear Regulatory Commission have already approved improvements to the Monticello nuclear power facility, OES does not have an objection to recovery of those costs in this proceeding. Combining the two rate increases into a single proceeding reduces the costs that would be associated with a second rate case and limits increases in rates for 2012 for other reasons.

After written testimony, public hearings and evidentiary hearings are completed, Administrative Law Judge Beverly Jones Heydinger will present her recommendations to the PUC. The PUC is expected to decide this matter before the end of 2011.

Xcel provides electric service to more than 1.2 million customers largely in the southern half of Minnesota.

Comments filed by OES and other parties can be viewed at: .  The docket number is E002/GR-10-971, or 10-971 for short.