Xcel announces rate increase for Texas customers to begin Oct. 1

The growing costs of improving the regional power grid to sustain the region's growing economy, along with higher fuel costs, will cause an increase in bills for Texas customers starting Oct. 1.

The growing costs of improving the regional power grid to sustain the region's growing economy, along with higher fuel costs, will cause an increase in bills for Texas customers starting Oct. 1.

Xcel Energy, Public Utility Commission staff and key customer groups have reached an agreement in Xcel Energy's pending Texas rate case that allows Xcel Energy to raise its overall Texas retail revenues starting in October by $37 million on an annual basis, or 3.5 percent. This increase is less than the $52.7 million, or 5.8 percent, revenue increase Xcel Energy originally sought in a January 2014 proposal to the Public Utility Commission and 80 Texas municipalities in which the company provides electric services.

Under the settlement rates filed today, the typical 1,000 kilowatt-hour residential bill will rise on Oct. 1 by approximately 6.3 percent, or $6.58 per month. The rates will be implemented on an interim basis until a final order is issued by the PUCT and the municipalities take final action on the rate settlement. The settlement also allows for collection of the new rates retroactively to June 1, the original effective date of the rate change. Xcel Energy will file a temporary surcharge in the fall that will recover the difference between the old and new rates for the period of June 1 through Sept. 30.

Also today, Xcel Energy asked the Public Utility Commission for authority to add a temporary surcharge on Texas bills to recover past under-collections of fuel costs. If approved, the surcharge would increase a typical 1,000 kilowatt-hour bill by $2.70 per month, or 2.4 percent, starting Nov.1. The surcharge is planned to expire on April 30, 2015. Fuel costs are pass-through charges that rise and fall based on the cost of coal and natural gas used to generate power at area generating stations. Xcel Energy does not earn profit on fuel costs.

"These two increases are unrelated, but necessary changes to allow us to recover the higher costs of capital investment and fuel," said David Hudson, president and CEO of Southwestern Public Service Company, an Xcel Energy company. "The fuel cost surcharge is temporary, but the base rate increase is to pay for increased costs associated with investment in the regional power grid."

Xcel Energy launched a Texas-New Mexico capital expansion project in 2010 to update aging power facilities and build new infrastructure to accommodate rising growth in customer demand. Between now and 2019, $3.2 billion in new power lines, substations and power generating facilities will be added to the regional system. As in past growth cycles, large amounts of capital are invested in a short timeframe, followed by changes in rates to recover the new investments over many years. Between June 2012 and June 2013 - the test year for the current rate case - Xcel Energy invested $386 million in additional improvements that are the primary drivers behind the current rate changes, Hudson said.

"These capital projects ensure a reliable flow of power to a growing economy that has been boosted immensely by new developments in agriculture and energy-related industries," Hudson said. "In order to access low-cost capital to build the new power lines, substations and generating plants to meet the growing demand, we must be able to recover our costs through an updated rate structure."

Even with the increases, electricity costs in the Texas Panhandle-South Plains region served by Xcel Energy remain below the national average, Hudson said. Customers can manage the higher costs by taking advantage of energy efficiency programs offered by Xcel Energy. Information and tips on efficiency can be found at {<}

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Xcel Energy (NYSE: XEL) is a major U.S. electricity and natural gas company with regulated operations in eight Western and Midwestern states. Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.5 million electricity customers and 1.9 million natural gas customers through its regulated operating companies. Company headquarters are located in Minneapolis. More information is available at {<}{>}