Advocates for Xcel N.D. customers say disallow electric rate increase
BISMARCK -- Xcel Energy's North Dakota electric customers shouldn't be socked with a 14 percent rate increase and instead the Public Service Commission should order a slight decrease in the company's rates, two experts will tell the PSC at a rate hearing that begins Monday in the Capitol.
The experts, hired by the PSC to advocate for North Dakota customers, say in pre-filed testimony that the company wants North Dakotans to pay for the cost of Xcel's compliance with Minnesota programs and pollution laws.
But Xcel officials will tell the commission that the customer advocates' recommendations are "drastic" and "lack a solid factual basis."
If the PSC adopts the two experts' conclusion, "they would impair the financial viability of our North Dakota electric business operations," Xcel Regional Vice President Kent Larson of Minneapolis says in pre-filed testimony.
Xcel, based in Minneapolis, serves 87,000 North Dakota customers, including in Fargo, Grand Forks and Minot. In PSC documents, it's still referred to by its legal corporate name, Northern States Power or NSP.
In December, the company filed a 13.95 percent rate increase with the PSC, which would raise an additional $20.5 million for the company. The effect on a residential customer using 750 kilowatt-hours a month would be an increase of $7.59 per month, the company estimates.
The company hasn't had a rate increase in North Dakota in 15 years.
It says it has the lowest rates in the Midwest.
The company is already earning below its authorized level, Larson says.
The PSC must approve the increase. In January, it granted an 11.5 percent interim increase effective Feb. 5, though one commissioner, Tony Clark, cautioned that "It's not an editorial comment on the (validity of) the rate itself."
Experts the PSC hired to advocate for customers are from a Washington, D.C., firm specializing in analyzing rate cases. Michael Majoros and Charles King say the company shouldn't get a $20.5 million increase. Instead, the PSC should order a rate cut worth $200,000.
"In my opinion, this is no time to increase ratepayers' bills for unnecessary policy changes and the like," Majoros said.
He criticizes Xcel's depreciation plans for plants and other facilities, saying it puts too much financial burden on North Dakota customers and could forever lock up money in company coffers that may rightfully belong to customers as future refunds.
Charles King said the PSC should exclude costs Xcel includes for compliance with a Minnesota emission reduction program, renewable energy standard and depreciation rates.
Xcel needs to show a plan specific to North Dakota, he said.
In an interview Friday, Xcel senior consultant David Sederquist of Fargo said the company is "disappointed with (Majoros and King's) recommendations and a little confused. We think we've put a good case together."
The increase is necessary for the company to meet upcoming demand, he said.
"We're undertaking some significant projects to meet energy needs in the future," Sederquist said, and the company can't do that without rates that allow reasonable recovery of costs.
Sederquist said the depreciation accounting Majoros suggest the company use is "not normal" and "out of bounds" of traditional accounting methods.
For more information
All pre-filed testimony and documents related to the Xcel rate case are available on line at www.psc.state.nd.us. Click on the link "Case PU-07-776."
If you go
The PSC hearing on Xcel Energy's electric rate increase is open to the public. It will be held all day Monday through Wednesday, beginning at 8 a.m. each day, in the PSC's hearing room on the Capitol's 12th Floor.
As with all PSC meetings, the Xcel hearing will be broadcast over the Internet via www.psc.state.nd.us/media/comm-live.html. You will need to have Real Player audio installed on your computer, which is available at the commission site.
Janell Cole works for Forum Communications Co., which owns The Dickinson Press.