North Dakota pays for Minnesota’s coal plant closures
Northern States Power Co., part of Minnesota’s Xcel Energy, has asked the North Dakota Public Service Commission for an unusually large rate increase, of 19.34 percent. If the rate increase were to be approved in full, the average Northern States Power residential customer would pay an extra $22.34 per month over last year.
The rate case was filed in December 2024. If Xcel Energy receives what it asked for, the company’s net annual revenue would increase by $44.556 million in North Dakota. Xcel’s 97,000 North Dakota customers have already seen an interim rate increase of nearly 12 percent, or $11.36 per average residential customer per month, while the full rate case is pending.
Xcel Energy justifies the rate increase as a result “of the Company’s capital investments, including in the electric generation, transmission, and distribution systems, increased operation and maintenance expenses, and increased depreciation.” The NDPSC held public input sessions with Xcel Energy officials yesterday in Bismarck, Fargo, Grand Forks, and Minot.
The North Dakota Monitor reports that a representative of North Dakota State University (NDSU) anticipates the rate increase to lead to increased tuition and fees for students:
A proposed electric rate increase would cost North Dakota State University about $1 million a year, a representative of the college told utility regulators Monday…
Xcel Energy’s requested rate increase would affect parts of Fargo, including the NDSU campus.
“NDSU projects that our annual electrical costs would rise by over $1 million,” Brent DeKrey, director of facilities management at NDSU, testified from Fargo at a PSC hearing Monday.
DeKrey said such a large increase could mean increased tuition and fees for students, reduced resources for research at NDSU and additional costs passed along to the state’s taxpayers.
A key issue in the rate case is Xcel’s premature closure of coal-fired generation in Minnesota, which has been done to comply with the state’s mandate for 100 percent carbon-free energy by 2040. One of three coal units at Sherco near Monticello, Minnesota was retired on New Year’s Eve, 2023, and Xcel Energy plans to close the other two units in 2026 and 2030.
The Monitor reports comments of Victor Schock, director of utilities for the North Dakota PSC:
Schock said Minnesota public policy, which tends to favor green energy much more than North Dakota policy, is a driver behind the change.
“We’re close geographically; policy wise, we’re pretty different,” Schock said.
He said North Dakota views the Sherco coal facility as an asset that should keep producing coal instead of one that should be retired with costs passed on to North Dakota customers.
“That is, in my opinion, one thing that is driving their large requested increase,” Schock said.
Schock is right to be concerned. Xcel’s closure of coal-fired power plants will mean higher electricity prices because new wind and new solar construction cost twice and three times the cost of continuing to operate Sherco. To maintain reliability, Xcel will need to build a lot of wind and solar to compensate. These costs will almost certainly spill over into North Dakota because the company operates in multiple states and is within the same regional transmission organization, MISO.
Xcel Energy is also petitioning for a rate increase in Minnesota, which ratepayers can learn about here.
Written comments can be submitted via email to [email protected] or by mail to: Public Service Commission, 600 E. Boulevard Ave., Dept. 408, Bismarck, ND 58505. The formal hearing will begin December 1, 2025.