By Chris Duffrin
EnergyCents Coalition

This fall, the Minnesota Public Utilities Commission approved rate increases for the state's largest electric utility and largest gas utility. However, neither utility received the entire increase that it requested.

Xcel Energy, the state's largest electric company, requested an annual increase of $168 million but the commission limited their 2007 increase to $114.9 million. The commission approved an increase from $4.59 to $6 in the monthly customer service charge, a fixed fee regardless of energy usage.  The company had requested an increase to $7. The final per kilowatt increase will be released once the company updates all its rates and charges based on the commission's decision.

Several formal parties to the rate case played a role in limiting the increase including Energy CENTS Coalition, a coalition of citizen groups including the Minnesota Senior Federation. Other parties included the Minnesota Office of the Attorney General, the Minnesota Department of Commerce, the Minnesota Chamber of Commerce, attorneys representing large commercial customers in Minnesota and attorneys representing large industrial customers in Minnesota.

CenterPoint Energy, the state's largest natural gas utility, requested a $40.8 million increase in rates. Natural gas rate cases generally require less money than electric rate cases because gas utilities simply pass through their cost of purchasing natural gas from suppliers. Electric companies in Minnesota own the generating plants and must receive regulatory approval for all their costs: generation of power, transmission, distribution and other customer service costs.

The commission limited CenterPoint's increase to $25.9 million.  The Commission agreed with several of the Energy CENTS Coalition's proposals including a freeze on CenterPoint's customer charge at $6.50 and a new $5 million affordability program for income-eligible customers. The commission issued its order on Nov. 2. As this article goes to press, parties still have an opportunity to appeal the decision.

After a relatively calm decade in the 1990s, utility customers should expect significant price increases in the coming years. A return to the relatively cheap natural gas of ten years ago is unlikely and as gas prices increase, utility companies have to write off more uncollected bills. Electric prices increase as fuel costs increased. Coal, for instance, becomes more expensive as transportation fuels increase because it must travel a great distance to reach Minnesota. In addition, utilities face the same pressure other businesses face of increased health care and pension costs for their employees.

The answer to controlling utility costs is the combination of strong regulation to prevent utility over earning and encouraging conservation to reduce our dependence on these increasingly expensive fossil fuels. The Minnesota Senior Federation has a utility committee that remains active on these issues. Call the Federation office if you are interested in getting involved.