Another year, and another round of rate increases filed by Minnesota’s largest electricity providers – Xcel Energy and Minnesota Power. And while no rate increase is a good one, the one leading the pack for the most expensive electricity rates in Minnesota is Xcel, and by a large margin.
We’ve gone ahead and compiled data from EIA form 861 on the three leading utilities in Minnesota – Xcel, Minnesota Power, and Otter Tail Power – to bring you a detailed analysis of which provider is giving their customers the best deal.
XCEL: THE MOST EXPENSIVE ELECTRICITY RATES IN MINNESOTA
Before the age of renewable energy dawned upon us, every electric utility company in Minnesota was successful in keeping their electricity rates below the national average. Yes, even Xcel once had 13.5% lower electricity rates than the national average in the year 2006, after adjusting for inflation.
However, Xcel was still an expensive premium in a strictly Minnesota-sense.
Compared to Minnesota Power and Otter Tail Power in 2006, Xcel had 29.5% and 20% higher electricity rates, respectively.
This trend has continued, as the graph below shows.
As you can see, every utility in Minnesota has been increasing electricity rates, but Minnesota Power and Otter Tail Power have managed to do so at a rate closer to that of the national average. Not to mention, the closest either one has come to the national average electricity rate is 18% below.
I’ll take that over what Xcel has managed to do in recent years.
While Xcel was able to maintain its price advantage on the national average until 2012, it has now surpassed it 5 out of the last 6 years thanks to increasing electricity rates by 23.4% since 2001 (inflation-adjusted) – nearly 4 times greater than the national average. In 2018, the most recent year available for utility-specific data, Xcel customers experienced 9% higher electricity rates than the national average, while Minnesota Power and Otter Tail were 18% and 25% lower.
WHAT THIS MEANS FOR XCEL CUSTOMERS AND THEIR ELECTRIC BILLS
What this all means is that today, on average, Xcel customers are paying up to 36% more per kilowatt hour (KWh) of electricity usage than the other two utility electricity providers in Minnesota.
This shows up on monthly electric bills, as the chart below details.
Let’s break it down with the following thought in mind: if you use less electricity, you should pay less per month.
That’s not the case when comparing to Xcel, however, as they have the most expensive electricity rates in Minnesota.
Even though Minnesota Power customers used roughly 11% more electricity every month in 2018 compared to Xcel customers, they paid 15% less per month on average.
Additionally, while Otter Tail Power customers used more than 50% more electricity per month in 2018, Xcel customers only paid $9.09 less per month.
Minnesota Power customers, because their electricity rates were more than 30% lower than Xcel customers in 2018, paid nearly $23 less than Otter Tail customers per month, and almost $14 less than Xcel.
We have been reporting for some time that electricity rates in Minnesota are now surpassing that of the national average. With this new information, it’s now safe to say that as the largest and most expensive electric utility in the state of Minnesota, with the highest rate increases since 1999, Xcel Energy is the prime reason for the loss of the state’s price advantage.
Isn’t it about time we confront the obvious?
Simply put, the combination of irresponsible government policies and regulated utility profit-seeking has increased the cost of electricity for Xcel customers at a rate 4 times greater than the national average.
Due to Minnesota state officials allowing the absurd amount of investments in renewable energy by Xcel – totaling in the tens of billions of dollars, resulting in Xcel padding its rate base and increasing its guaranteed profits (just in case someone is thinking of deploying the “private company” argument) – Xcel customers now pay some of the largest rates in the country. At 14.08 cents per kwh in 2017, Xcel is ranked 10th highest out of all states.
Isn’t it time for some accountability on this? One fact is for sure: while Xcel may be the only utility above the national average in electricity rates, all three have been out-pacing the national average since 2001 and especially in recent years, as the graph below shows. The dotted lines show what each utility expects to raise their rates to in the coming years (Xcel to 16.30 cents/kwh by 2020, Minnesota Power to 12.60 cents/kwh by 2019, and Otter Tail to 10.96 cents/kwh by 2019).
Minnesota needs to change course on its energy policies before every electricity consumer in the state falls victim to the same policies that have harmed Xcel users and everyone in Minnesota winds up paying more than the national average.
Here’s two ideas to start:
- Government policies that increase the cost of electricity should be banned or price capped, as they have done in other states. This would mean placing a pricing limit on any mandate for renewable energy, as incorporating wind and solar energy inherently increases the cost of operating an electrical grid.
- Utility companies and government resources should take down blatant falsities from their websites, such as Xcel’s declarations that “Clean energy is good for the environment, but more importantly, it helps keep costs low,” that its “industry-leading programs give [its] customers affordable, cleaner energy options,” and that “investing in low-cost clean energy now… helps Xcel Energy keep costs low for years to come.”
If any of this were true, why would Xcel customers be experiencing the exact opposite behavior in their electricity rates since renewables and “clean energy” became the number one priority of Xcel?
If renewable energy is so cost-effective, why is Xcel – the utility company implementing the most of it in Minnesota– increasing electricity rates at a rate 4 times greater than the national average?
Maybe because intermittent renewable energy isn’t economical to run an electrical grid on, after all, as we have been pointing out for some time.