Xcel’s energy plan follows monopoly logic

Advocates push for energy democratization during hearing on Xcel’s Integrated Resource Plan

Testifiers gathered outside the Sabathani Community Center
Testifiers gathered outside the Sabathani Community Center for a rally before a public hearing on Xcel’s Integrated Resource Plan. Photo by Mira Klein

“Integrated Resource Plan” is just a fancy term to describe something that impacts all Minnesotans: how we get our energy. This technical language didn’t get in the way of dozens of metro area residents who showed up to a recent public hearing at Sabathani Community Center, where attendees logged two hours worth of public comment on Xcel Energy’s Upper Midwest Integrated Resource Plan (IRP). 

The IRP, which lays out a framework for Xcel’s energy generation over the next 15 years, is currently under state-mandated review by the Minnesota Public Utilities Commission (PUC). While the PUC conducts its own internal analysis on the merits and limitations of Xcel’s proposed plan, a simultaneous public comment process is also underway. The recent hearing at Sabathani was just one of many in-person hearings that happened around the state during the month of October. 

Emily Christopher and her mother, Theresa Palmer, arrived at Sabathani on a tight timeline. With public comment starting just after 7 p.m., they were keen to make it home by 8 p.m. for Christopher’s bedtime. Christopher, 10 years old and already a committed member of the global youth climate movement, recently moved to the Twin Cities with her family from Albuquerque, New Mexico. “In New Mexico there’s a lot of fracking going on,” Christopher said. “It made me really angry.” 

Christopher was mobilized into climate action through the harm she saw from fracking in her home state, testifying twice in front of the New Mexico Legislature on behalf of a proposed fracking moratorium. She and her mother were hopeful that Minnesota would be different. “We thought we were leaving that issue behind us,” Palmer said. 

But while Xcel’s IRP proposes to retire all coal generation by 2030, it also includes a proposal to build a new natural gas facility in Becker, Minnesota, using fracked gas. Making the capital investments into natural gas infrastructure would lock Minnesotan Xcel customers into fracked electricity for decades to come. The natural gas facility was a major component of Xcel’s IRP that came under fire during public testimony, receiving an “F” from a coalition of Minnesotan clean energy organizations. 

Hearings like the one at Sabathani provide a rare opportunity for the public to weigh in on PUC decision-making. The five-person commission is composed of members appointed by the governor and confirmed by the state Senate. (No more than three members may belong to a single political party.) It is a regulatory body with significant power but little oversight. (Readers may be familiar with the PUC because of its recent role in approving Enbridge’s controversial Line 3 pipeline expansion in Northern Minnesota.)

In compliance with PUC regulations, Xcel’s IRP was first released over the summer. This release came just months after its industry-jolting declaration that the company would be totally carbon free by the year 2050, hitting 80% renewable energy sourcing by 2030. The announcement was widely lauded and positioned Xcel as a national leader in renewable energy among major utilities. It also sets Xcel ahead of state energy goals, as analyzed in a recent study from GridLab. As Xcel wrote in a press release, “The new goals are the most ambitious announced to date within the electric power industry.”

A document like Xcel’s IRP has implications for all Xcel customers. In Minnesota, where Xcel has a de facto monopoly on the electricity utility market, decisions that impact Xcel customers in practice impact everyone. As one public commenter stated, “Unfortunately, when it comes to where I get my energy, I don’t have a choice.”

“Xcel is a massive, investor-owned monopoly,” said Timothy Schaefer, executive director of Environment Minnesota. Schaefer commended the PUC for holding a public hearing while emphasizing the need for more public comment opportunities. “Xcel has very few checks on its political power,” he said. “And this is one of them.”

Investor-owned utility companies like Xcel serve the majority of electricity customers in the United States. And in Minnesota, like two thirds of states nationally, these utilities are essentially state-sanctioned monopolies. 

As Joe Daniel, a Boston-based senior energy analyst with the Union of Concerned Scientists, explained, Minnesota is a “vertically integrated state.” Under this system, customers have no choice over energy providers in a given coverage area. The utilities are regulated by public utility commissions which determine energy rates and thus lock in how much money utility companies make for themselves and their shareholders. Rates are calculated by not only considering operational costs, but also the capital investments made in utility infrastructure. Thus, utilities stand to profit from infrastructure investments because the cost is passed through to energy customers. As Kevin Ridder explained for The Appalachian Voice, “This incentivizes utilities to spend as much money as possible on new projects, whether or not those projects are of value to the public.”

“Monopoly structure can create certain inefficiencies, particularly with how utilities recover costs and how risks are shared,” Daniel explained. But he pointed towards the PUC’s recent and unanimous rejection of Xcel’s proposal to buy a gas plant in Mankato as an indication of good regulatory practice. “When the utility regulator does their job well and acts in the consumer interest, you can have a lot of efficiency,” he said.

Still, there are a lot of additional infrastructure investments on the table in Xcel’s IRP, including closing the last two coal plants in the Upper Midwest, opening a new natural gas plant in Becker and extending the life of Xcel’s nuclear power plant in Monticello.  

About 70% of all power that Xcel provides comes from power plants that are scheduled to retire in the next 15 years, said Timothy Den-Herder Thomas, general manager of Cooperative Energy Futures. This is why this IRP is particularly impactful. “Xcel profits from every investment it makes,” Den-Herder Thomas said. And so, when it comes to replacing energy capacity from aging infrastructure, Xcel has a lot of money on the line. 

Addressing a crowd in a pre-hearing rally, Den-Herder Thomas called the state’s rate-setting system itself into question. “When there’s infrastructure being built in our system that’s no longer needed, who picks up the cost?” Den-Herder Thomas asked. “What is the distribution of that risk, and, to what extent should it be shareholders?”

This is an anti-monopoly question, Den-Herder Thomas explained. “Under a monopoly, one company is not only controlling all the wealth but also all the information,” he said. “It makes the utility the sole source of truth.” By decentralizing and localizing control over energy production, he continued, “we can show that communities can do it different and better.” 

The conflict between centralization and distribution is particularly stark when it comes to Xcel’s solar power plans. The IRP proposes a massive decease in distributed community solar while adding 3,000 megawatts of utility-scale solar. 

For community solar advocates, this sudden turn was appalling, particularly because solar gardens have had so much success over the last few years. “In the last three years, we’ve installed 20 times more solar than the last 40 years combined,” Den-Herder Thomas said. This solar explosion is largely credited to Minnesota’s community solar program. 

While utility-scale solar is more profitable for Xcel, it leaves the grid more vulnerable to localized solar fluctuations and means that electricity must travel longer distances from generation to customers. Solar centralization, Den-Herder Thomas argued, simply “continues to develop renewable energy in the way we develop dirty energy,” prioritizing shareholder returns over energy efficiency. 

 As the future of Minnesotan solar brings to the fore, the question of how best to provide energy is one of ownership and access to what is ultimately a basic human need. As Den-Herder Thomas said, “The fight that is just getting started here is: Who gets to share in the benefits?” This tension is playing out in states around the country, including in Xcel’s recent IRP in Colorado. 

There are still opportunities to make your voice heard about Xcel’s Upper Midwest IRP. In mid-October, the PUC requested additional analysis and modeling from Xcel after the commission’s Mankato gas plant ruling. While Xcel complies with this request, the public comment period has been extended several months. Visit the PUC website to find an upcoming hearing or to log your comments online.

Correction: A previous version of this story erroneously described the composition of the Minnesota Public Utilities Commission. It is a five-person commission composed of members appointed by the governor and confirmed by the state Senate. No more than three members may belong to a single political party.