South Dakota PUC Approves Lower-Than-Requested Rate Increase for Xcel Energy; Refunds Coming for Customers

Northeast Radio SD News – South Dakota - South Dakota electricity customers will see a smaller rate hike than originally proposed following a vote by the Public Utilities Commission (PUC) on Friday.

The commission approved a settlement stipulation between Xcel Energy and PUC staff, authorizing a $25.6 million (9.5%) annual increase in electric rates. The decision significantly scales back Xcel’s initial June 2025 request, which sought a $43.6 million (16.2%) increase. The new rates are scheduled to take effect on July 1, 2026.

Impact on Residential Bills

For a typical residential customer using 750 kilowatt hours per month, the decision translates to an estimated increase of $13.48 per month.

However, many customers will see a temporary credit later this year. Because Xcel Energy has been collecting higher “interim rates” since January 1, 2026, the company is now required to refund the difference to its approximately 107,000 customers in South Dakota. These refunds, which include interest, will be applied to August and September bills. The PUC estimates the average residential refund will be approximately $43.52.

Accountability and Vetting

PUC Chairman Chris Nelson emphasized that the commission acted as a watchdog for the public throughout the year-long process.

“Our staff and the experts they brought in to assist have gone through this rate case with the finest tooth comb you can imagine,” Nelson stated. “Today, I can confidently tell South Dakota’s Xcel ratepayers that we have acted in their best interest.”

Vice Chairperson Kristie Fiegen noted that the auditing process successfully cut millions in costs that Xcel originally intended to pass on to consumers. Commissioner Gary Hanson added that while the public rarely sees the hundreds of data requests and the hours of behind-the-scenes investigation, the filing was “thoroughly vetted” to ensure safe and reliable service at the most affordable rate possible.

Why the Increase?

Xcel Energy, which last saw a base rate increase in June 2023, cited significant infrastructure investments as the primary driver for the request. The company pointed to necessary upgrades in the generation, transmission, and distribution systems, alongside rising inflation costs, as reasons for the required revenue.

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Future Rate Stability

As part of the approved settlement, Xcel Energy has agreed to a rate moratorium. This prevents the company from requesting any additional base rate increases that would take effect before January 1, 2029, offering customers nearly three years of price stability.

The settlement also includes adjustments to residential customer service charges and late payment fees.

For More Information: The full docket (EL25-024) is available on the PUC website at puc.sd.gov. Residents with questions can contact the South Dakota Public Utilities Commission at (605) 773-3201.