Xcel’s Revenue Decoupling Program Saves $13 Million for Minnesota Electric Customers

The Minnesota Public Utilities Commission on June 25 approved Xcel Energy Inc.’s 2018 rate adjustments for its revenue decoupling mechanism, which results in bill credits totaling $13 million for residential and small business customers that are subject to the program. The adjustment is calculated to match the actual electric revenue per customer to the level approved by the commission, resulting in a surcharge or credit for customers, with a three-percent cap on surcharges.

The agency allowed the four-year pilot program to lapse at the end of this year as scheduled and directed the company to analyze whether to renew the program considering modifications “to better reflect the value of electric vehicles and potentially beneficial electrification.” Revenue decoupling disconnects sales and profits to minimize the disincentive for utilities to promote conservation measures by allowing them to maintain approved revenue levels to operate their infrastructure.

The company performs the calculations for each calendar year and implements the adjustments the following April to remain in effect for a 12-month period. The 2018 adjustments result in an overall $13 million of revenues above the baseline, due largely to the warmer than normal summer, resulting in credits for customers. The changes will be effective April 1, 2019  through March 31, 2020.

The program is focused on three customer classes for which the largest share of fixed costs are recovered through volumetric rates: residential non-space heating, residential space heating, and small C&I non-demand customers. The three classes represent about 96 percent of Xcel’s customer base and 32 percent of the company’s annual electricity sales.