(KNOX) – Today, Attorney General Keith Ellison announced that Xcel Energy will be providing a refund of tens of millions of dollars to Minnesota consumers thanks to a recent ruling by the Public Utilities Commission (PUC). At a hearing on October 15, 2024, the Public Utilities Commission sided with Attorney General Ellison’s Office and the Minnesota Department of Commerce when it voted to refund Xcel Energy customers tens of millions of dollars, with interest, for replacement power costs resulting from a power plant outage occurring in 2011.
In November 2011, a catastrophic failure of a turbine occurred at Xcel’s Sherburne County Generating Station Unit 3 (Sherco Unit 3), causing the power plant to be offline for nearly two years. During that time, Xcel purchased more expensive replacement power from the regional grid to make up for the lost power from the out-of-service power plant. Because utilities must maintain their plants in accordance with good utility practice in order to pass through the costs of any replacement power following outages, the PUC ordered a proceeding to determine whether Xcel had acted imprudently in maintaining and inspecting the power plant.
On October 15, 2024, the PUC determined that Xcel should pay the full amount of replacement power costs with interest—minus the amount of a not public settlement Xcel received from their litigation against the turbine’s manufacturer, because Xcel refunded that amount to ratepayers in 2019. The Commission ordered that Xcel detail the exact amount of the refund in the coming months.
The refund the Commission’s decision requires is significantly more than a previous recommendation in this case and comes as a large victory in Attorney General Ellison’s work protecting ratepayers from unreasonable electric rates.
“It’s hard to afford your life when your utility company is cutting corners, making mistakes as a result, and trying to stick you with the bill,” said Attorney General Ellison. “Utility companies are effectively monopolies, and while that comes with certain benefits, the tradeoff is that we require these companies to use their resources wisely. My Office works hard to prevent utility companies from passing off the cost of their imprudent behavior onto you, and I am pleased we helped put tens of millions of dollars back into ratepayers’ pockets in this case.”
“As the public advocate for Minnesota consumers, the Department of Commerce Division of Energy Resources advocated for Xcel Energy to refund the millions in extra energy costs to Minnesotans,” said Commerce Commissioner Grace Arnold. “We are pleased to have the Public Utilities Commission take this action.”
For the contested case proceeding at Office of Administrative Hearings, the Minnesota Department of Commerce, represented by the Commerce, Elections, and Trades Division of Attorney General Ellison’s Office, hired independent engineers to review Xcel’s maintenance practices. The independent engineers determined that Xcel did not act prudently in maintaining the plant, in particular by delaying an inspection that would have revealed the potential for turbine failure. The Residential Utilities Division of Attorney General Ellison’s Office, which represents the interests of residential and small business ratepayers before the Public Utilities Commission, supported the findings of the independent engineers and opposed several defenses by Xcel, which argued it should not have to issue a refund to customers even if it acted imprudently.
An administrative law judge recommended that the Commission find Xcel acted imprudently, but that Xcel should be required to refund less than half of the replacement power costs because the turbine manufacturer held contributory fault for the outage. The Department of Commerce and Residential Utilities Division took exception to the judge’s findings, arguing that Xcel, not ratepayers, should pay the full amount of replacement power costs with interest—approximately $56 million.
The PUC ruled in favor of the Attorney General’s Office and Department of Commerce, requiring that Xcel pay the full amount of replacement power costs with interest, minus the settlement amount with the turbine manufacturer.
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