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ACTION NEEDED!
You might have seen the recent headline in the Star Tribune:
“Xcel will reassess investments in Minnesota after
regulators’ rate hike decision”
That same day, because of the Public Utilities Commission’s (PUC) decision, two financial analysts downgraded Xcel Energy - after “disappointing Minnesota rate case outcome”.
As Xcel Energy shareholders these are very alarming headlines.
The PUC is an appointed regulatory body of five people. Their charge is to ensure that the utilities provide safe, adequate and reliable service at fair, reasonable rates. As part of this balancing act, the Commission needs to consider the shareholder/long-term value of the utility company. They have forgotten that tenet in their recent decisions with Xcel Energy’s rate case.
MUI members have a two-fold interest in the rate case because you are not only shareholders but many of you are ratepayers. In this unique capacity, it is important to emphasize to the PUC the importance of balancing shareholder and ratepayer interests.
Regulatory Process:
Xcel Energy filed a docket with the PUC three years ago with a proposal to increase their electric rates and how much they are able to earn on investments to their system.
That information was sent to an Administrative Law Judge (ALJ) to begin the rate scrutiny process. Various intervening groups (i.e. Attorney General’s office, Dept. of Commerce, environmental & low-income groups) reviewed Xcel Energy’s proposals and presented their opinions before the ALJ. The ALJ took all of that information under advisement and made a recommendation to the PUC.
Last week, the PUC reviewed the Administrative Law Judge’s findings and made final determinations on Xcel Energy’s electric rate proposals. They approved a rate increase of 9% which was lower than what the ALJ and the Dept. of Commerce suggested and lower what Xcel proposed.
But the greatest concern to shareholders was the PUC, on a split 3-2 decision, voted to reduce Xcel’s return-on-equity (ROE) to 9.25% – lower than what the ALJ recommended (9.87%), significantly lower than what Xcel requested (10.2%) and is now one of the lowest ROE for a utility in the country. ROE is a key measure of profitability. It is a signal to the financial markets of the viability, strength and potential of a company. It is not a guaranteed return, but it is a level that Xcel could strive to achieve on their capital investments.
ACTION NEEDED by JULY 1st!
We encourage you to send a letter or email to the PUC asking them to reconsider their decisions on Xcel Energy’s electric rate case - specifically the ROE rate.
You must include the Docket number on your communication to the PUC: Docket: E002/GRE-21-630.
Send a Letter to: MN Public Utilities Commission
121 Seventh Place East #350
St. Paul, MN 55101
Docket: E002/GR-21-630
Send an Email to: Consumer.puc@state.mn.us
MUI’s Perspective:
- The Commission needs to balance the needs of the shareholders and rate payers….without the stable investments of its shareholders, the ability of the Xcel Energy to offer consistently reliable service and make investments in “clean energy” would be lost.
- The company’s allowed rate of return needs to be competitive with investment opportunities of comparable risk if it is going to attract and retain the interest of investors. And Xcel Energy needs investors to have the resources to be a leader in the clean energy movement that Minnesota wants to lead.
- Minnesota has chosen a 100% carbon-free goal as a state policy. This can’t be done without investments of significant capital. The PUC's decision has already negatively impacted the flow of capital and the stock price for tens of thousands of shareholders. If the state is serious about 2040, they need to be serious about attracting capital to support those investments.
Tips for Writing
1. Identify yourself and personalize the letter with something specific about you – for example, where you are employed or retired from, etc. You may indicate you are a customer and a shareholder of Xcel Energy. Or if you a retiree of Xcel Energy and receive a pension.
2. Close the letter/email by signing your name. Also include your address.
3. Keep your letter brief and non-threatening.
Listed below are a number of points that could be included in your letter. Feel free to change the wording to best express your own personal thoughts:
Because …
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Xcel Energy is investing in their infrastructure to meet carbon-free mandates/initiatives and to ensure reliability of their system thus they need to be able to attract capital to fund these projects.
- The onerous decision by the PUC on Xcel Energy’s REO has triggered negative actions by the Financial Markets which will financially harm the company, their shareholders and their ratepayers by increasing the cost to raise capital.
SAMPLE LETTER/EMAIL
Docket E002/GR-21-630
Dear Chair Seiben and members of the PUC:
My name is Lyle Smith and my wife, Bernice, and I have lived in the Minneapolis area for 20 years. As a shareholder of Xcel Energy, their dividend is important to our livelihood.
We are writing to encourage you to reconsider the PUC’s position on Xcel Energy’s ROE in their recent rate case. The importance of a strong power company that provides good service and is an attractive investment, is crucial to our state, our local economy and our livelihood.
The Commission needs to balance the needs of the shareholders and rate payers - without the stable investments of its shareholders, the ability of the Xcel Energy to offer consistently reliable service and make investments in “clean energy” could be lost.
Thank you for considering our perspective.
Sincerely,
Lyle Smith
1234 First Street
Minneapolis, MN xxx
If you have any questions, please let me know.
Annette Henkel
ahenkel@mnutilityinvestors.org
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