What is our PUC smoking?

2006SRC_turtle

The SD PUC approved a rate increase for Xcel Energy;

The South Dakota Public Utilities Commission on Tuesday approved a settlement allowing Xcel Energy to increase its overall electric rates by about 5.5 percent for residential and commercial customers in the state.

The settlement would allow Xcel to earn about $8 million a year more from its 81,000 South Dakota customers in 36 communities in the Sioux Falls area. The company said the rates, to take effect Jan. 18, would raise the electric bill of the average South Dakota residential customer by about $5.55 a month, from $65.80 to $71.35, based on winter rates.

That’s right, during the middle of a recession the PUC thought it was a good idea to raise rates on electricity. While people’s wages have remained stagnant (for those of us who have jobs) why would the PUC approve a gigantic rate increase like this? Should they be allowed an increase? Sure. But 5.5%? Once again, even our PUC has proven the SD motto to be true, “Business first, citizens second.”

It also bothers me that a company who gives thousands of dollars a year to community programs (SculptureWalk comes to mind) needs to have rate increases. It seems a little odd that Xcel would ‘need’ this extra revenue since they all kinds of dough to throw at sculptures of turtles reading books. If you need this extra revenue, fine, but spend it on improving service.



13 comments ↓

#1 John-John on 01.06.10 at 8:43 am

Base rates hadn’t gone up in 17 years. Ratepayers don’t pay for any of Xcel’s community service donations. Xcel has to use stockholder money for that stuff.

#2 l3wis on 01.06.10 at 9:04 am

1) If rates have not gone up in 17 years, why do we all of sudden need to raise them now? Seems Xcel is getting by just fine.

2) Where does the stockholder’s money come from?

#3 Costner on 01.06.10 at 9:40 am

Do you seriously have to ask why they need to raise rates when they haven’t done so for years?

You do realize that Xcel has to purchase electricity right? It isn’t as if they have their own coal burning power plant or their own nuclear reactor sitting out by Renner.

This doesn’t have jack to do with the economy. Costs go up and those costs need to be transferred to the customers like it or not. Do you think Xcel employees like lineman should just go without any pay raises because you don’t want them to be able to increase revenue? Should Xcel just ignore aging equipment and cancel plans to increase capacity because they don’t have the funds?

This isn’t like the city raising water rates every year – this is simply a company doing what it has to in order to continue to survive and be profitable as well as being able to give employees cost of living increases etc.

#4 l3wis on 01.06.10 at 9:47 am

But how have they gotten by for 17 years? Seriously? Why all of a sudden they need to raise rates? I don’t believe the bullshit for one second. These companies can make money without raising rates (they have done so for 17 years).

#5 Costner on 01.06.10 at 10:18 am

Again their costs continue to go up – how hard is that to understand?

Xcel purchases electricity, and then sells it to you. The cost to purchase that electricity has continued to rise.

They also have thousands of employees to pay… do you think those employees are making the same incomes as they were 17 years ago? Benefits like health insurance continue to rise – guess where the costs need to be passed onto?

Raw materials like copper wire are skyrocketing yet electrical rates remain the same… how long do you think this formula is sustainable?

This is basic economics – just because we are in a recession does not mean we don’t still experience inflation, just as we have for the past 17 years.

When you compare our electrical rates to that of most of the nation you would be amazed. We pay half of what some parts of the country do – and yet here you are complaining about a 5.5% rate increase when the reality is that percentage barely covers two years of inflation.

Frankly I cannot understand how they get by with not raising rates on an annual basis. This is one of those times when you should just be saying “wow I’m amazed they held out for so long and thankfully they aren’t raising rates by 30%”, but instead somehow you find a way to complain? I just don’t get it.

#6 John2 on 01.06.10 at 10:46 am

Inflation? What world are you living in? The suspect 17-year argument portends there was no inflation for 17-years, or rates were significantly over-priced, or that Xcel is the model of cost-cutting efficiency (unlikely). Now costs, wages, benefits are coming down because this economy is in deflation, and has been for two years.
Furthermore, energy is in deflation, and it’s accelerating.
http://www.groundreport.com/Business/Energy-Deflation-Cometh-CheaPiling-On-Shale-Gas-LN/2913527

#7 Costner on 01.06.10 at 11:52 am

Are you honestly suggesting we haven’t had any inflation for the past 17 years or that Xcel’s costs haven’t increased?

Perhaps I should ask you what world you’re living in.

I don’t claim to know why Xcel hasn’t raised rates in so long (but then again I’m not the one who declared the 17 year figure either) but it is a well known fact that costs continue to rise – yes even in a recession.

I’m not saying employees are all getting huge raises this year or the past couple, but most employers are still giving small adjustments even if it is only a percent or two… and those costs add up.

Look at benefits – health insurnance premiums have outpaced inflationary measurements for at least the past decade, and unless Xcel passes along 100% of those increased costs to their employees, they share the burden.

Then look at the equipment Xcel needs – they need trucks and heavy equiopment to install and maintain their grid. Do you think that equipment never needs replacing or that it costs as much to buy a bucket truck today as it did a decade ago?

What about the fuel to operate their equipment – do you know where you can buy gas for a buck a gallon like you could 17 years ago?

What about copper prices – they are near record highs and are vital to Xcel’s grid.

As far as your link about “energy” in deflation… that isn’t exactly relevant in this case because Xcel cannot easily switch from obtaining their power from a coal burning plant to one that burns natural gas overnight. I imagine some of Xcel’s energy may also come from hydro-electric plants which aren’t impacted with falling or rising costs of fossil fuels.

Last I checked, there are no power plants in this region that are nuclear, nor do any of them produce electricity from ethanol or oil shale, so the fact that some of those costs may be in decline is of no relevance.

If you are really going to complain about Xcel’s rate increase, perhaps it would be a wise idea to research it to determine why the cost is increasing, what their historical rate increases have been, and whether or not such a rate increase is justified in comparison to their local competitors.

I can tell you this much – Xcel’s rate is still on par with the local Electric Cooperatives in our area, and actually slightly lower than some. Unless you see Xcel executives writing themselves million dollar bonuses while asking for a rate increase I really fail to see any justification for the complaint.

If you don’t like it – you can always install some solar panels and a wind turbine and disconnect yourself from the grid, but as far as I know I don’t believe Xcel requires people to purchase electricity from them.

#8 owk on 01.06.10 at 1:23 pm

Maybe Xcel is going to pay their workers a living wage, to do so they need to raise rates to be able to do so.

#9 l3wis on 01.06.10 at 2:01 pm

Owk – They already do, that is why I can’t understand the sudden interest in a rate increase.

Costner – I’m not buying it. I still don’t understand how a company can continue to expand, buy up smaller cooperatives, give raises, and operate for 17 years without a rate increase. I believe the increase request had to do with the MN law that requires them to re-invest. They didn’t want to pay for it, so the figured while they were asking, they might as well as for a rate increase to. I would understand if this was something they do every 2-4 years, but 17 years? C’mon.

#10 Costner on 01.06.10 at 3:39 pm

l3wis: I still don’t understand how a company can continue to expand, buy up smaller cooperatives, give raises, and operate for 17 years without a rate increase.

EXACTLY! They should have been raising rates 15 years go! And yet… somehow you find room to complain about this? Amazing.

How about this l3wis…go to your employer and ask them to pay you the rate they would have been paying you in 1992. Then report back and tell me that makes sense when everything else around you had increase in cost since then.

l3wis: believe the increase request had to do with the MN law that requires them to re-invest. They didn’t want to pay for it, so the figured while they were asking, they might as well as for a rate increase to.

Might as well? Do you know how closely monitored the utility companies are? If the PUC finds any excuse to deny them… they will do so. Xcel would have a better chance of smuggling a dozen cherry glazed donuts out of Rush Limbaugh’s kitchen than they would sliding a rate increase past the PUC without due diligence from the Commissioners.

l3wis:I would understand if this was something they do every 2-4 years, but 17 years? C’mon.

Keep in mind this is only their “base” rate. They have other fees and rates that most certainly have changed in the past 17 years.

However – I still cannot understand how you (or anyone else) can complain that they are asking for rate increase when they haven’t done so for so long! Your logic would be the equivalent of suggesting that a worker who hasn’t asked for a raise in the last four years will never deserve one in the future… because they are obviously able to survive and pay their bills, and they seem to be able to manage just fine – so why give them a raise?

Get real l3wis – if anything Xcel should be commended for NOT raising prices every other year. Instead we have armchair economists ready to protest outside of their offices?

What is this… bizzaro world?

#11 Helga on 01.06.10 at 5:48 pm

Xcel workers need a raise???!!! I can’t figure that out since previous comments about unions and wages comments were that people don’t need no stinkin’ raises or minimum rates. Heck go back to $5.50 an hour.
It sounded a lot like I got mine and to heck with the rest of you.

#12 owk on 01.06.10 at 6:17 pm

Proof on that l3wis that they pay all their workers a living wage. Easy to say, hard to prove?

#13 Costner on 01.07.10 at 6:37 am

Helga try to focus on one thing at a time. This discussion has zero to do with paying a living wage, unions, or minimum wage. Your comments are nothing more than a red herring and add nothing to the discussion.