Minnesota utilities seek rate increases for power, natural gas

MINNEAPOLIS-ST. PAUL, MINNESOTA - Minnesota's biggest utilities filed requests to charge consumers even higher energy rates for electricity and natural gas.

CenterPoint Energy and Xcel Energy said the proposed rate hikes are spurred by rising wholesale prices for natural gas, higher operating costs, capital investments and other factors.

CenterPoint Energy asked the Minnesota Public Utilities Commission to raise natural gas distribution rates, a move that would, if approved, raise the average residential customer's bill about $3 a month. Interim rates will appear on bills beginning in January.

The request is to pay for rising distribution costs, rather than wholesale gas prices, which already are passed on to consumers and are driving bills up the most, CenterPoint regulatory specialist Joe Klenken said.

Wholesale costs account for about 80 percent of a customer's bill, and those costs are expected to rise by 40 percent this season.

The distribution hike request would generate $40.9 million yearly, or 2.4 percent of CenterPoint revenue.

Xcel Energy asked the commission to increase electric base rates so the average residential electric customer would be billed $6.78 more per month, based on a monthly use of 675 kilowatt-hours.

That would be an annual increase in revenue of 8.05 percent, or $168 million. Until the commission decides the case in early fall 2006, the interim rate increase will be $3.87 a month, beginning in January.

The rate-increase request is the first in 13 years for Xcel, which said it must continue to invest in infrastructure - from transmission towers to wires to generating plants, said Scott Wilensky, executive director for Xcel state public affairs.

Xcel has gained about 180,000 customers during those 13 years, particularly in the metro area, he said, and residential and commercial customers are using more electricity, from air conditioning to laptops to high-definition TVs.

Consumers can ward off higher energy bills with conservation measures. And a warm October and early November also could help ease the pain. On the evening of November 2, for example, the temperature in Minneapolis was in the upper 60s.

CenterPoint spokesman Rolf Lund said that even though gas prices are at a record high of $1.39 per therm, consumption is lower - partly because people aren't running their furnaces as much because of the warm weather.

"That is going to lower their consumption and lower their October bills," Lund said, "and it's a good start for November."

CenterPoint also cited, in seeking higher rates, bad debts and the $38 million cost of replacing potentially flawed gas service lines in 34 Minnesota communities this year.

Because cost-conscious consumers have conserved energy as natural gas prices rose, use has declined, affecting CenterPoint's ability to recover distribution costs.