Minnesota’s attorney general and the state’s main consumer utility watchdog are pushing regulators to reverse a decision that handed Xcel Energy one of the most significant gains in its recent rate case: a boost to the authorized return on equity it can earn on infrastructure investments. The fight is now before the Minnesota Public Utilities Commission, which faces a legal deadline to act.
What the PUC approved
The PUC heard the rate case on June 11, 2026, and issued its verbal decision on June 18, 2026. Final approval was given by the commission in a written order on July 31, 2026. The final rate increases allowed by the PUC were 2.3% for 2025 and 3.4% for 2026.
Within that order was a separate, contested decision on return on equity. The MPUC set the allowed return on equity at 9.60%, an increase from the previous 9.25%. Return on equity determines the profit utilities may collect on qualifying infrastructure investments. When Xcel builds infrastructure, it generally recovers the project’s costs from customers, along with an authorized return. A higher ROE allows the company to collect more profit through customer rates.
Consumer advocates estimated the bump could cost Xcel customers an extra $34 million to $35 million per year. Minnesota’s Department of Commerce noted in a letter to the PUC that the 35-basis-point increase will increase rates by tens of millions of dollars every year.
Petitions filed, deadline set
On August 20, CUB and the Office of the Attorney General each filed petitions with the PUC, requesting it reconsider its decision to allow Xcel to substantially increase the amount it charges to ratepayers to fund the company’s return.
Attorney General Keith Ellison and CUB are arguing specifically that the PUC erred in allowing Xcel to earn a greater share of profits on infrastructure investments. In his filing, Ellison wrote that the move “was not supported by the record and lacked sufficient explanation.”
Minnesota’s Department of Commerce sided with both petitioners in a separate letter to the commission.
The PUC must accept or deny the petition for reconsideration within 60 days of its filing. The PUC has until Oct. 19 to decide whether it will take up those official petitions. If the petition is denied, Ellison and CUB can bring the issue to the Minnesota Court of Appeals.
What Xcel says
Xcel said in a statement that “a competitive return on equity helps attract the investment needed to build and maintain critical infrastructure at the lowest, reasonable cost.” In arguing for recent rate increases, Xcel Energy has said the higher prices reflect rising inflation in global supply chains and efforts to maintain a reliable grid and support Minnesota’s clean energy goals.
Xcel filed its own petition asking the PUC to clarify parts of its order, including new oversight requirements for employee pay and pension asset tracking.
Critics, including CUB and Ellison, have pushed back, noting that the utility reported $2 billion in profits last year.
Broader context for ratepayers
The rate case proceeding began in November 2024. Xcel filed a formal request to increase rates with the PUC on November 1, 2024. Customers submitted comments in large numbers during the proceeding.
Because final rates are lower than the 5.2% interim rate set by the PUC, Xcel customers will receive a refund on a future bill. Unless any party appeals the PUC’s decision to the Court of Appeals, the final rate increase could go onto customers’ bills this fall.
The Minnesota dispute is particularly focused on return-on-equity methodology, a technical but high-stakes question that determines shareholder profitability for years into the future. Separate rate battles have been active across the region: regulators in neighboring states have faced similar grid-investment-driven rate requests from utilities citing capital spending as the primary driver.
The question of how generously to reward utility shareholders sits at the center of multiple ongoing cases, including a multi-year Washington state rate plan that still lifted residential bills despite carrying hundreds of millions in federal tax credits.
The Minnesota PUC’s October 19 deadline will be the next significant marker in the case. If commissioners accept the petitions, a further hearing process would follow before any revised order could be issued.
