Electric bills for Xcel Energy customers in Minnesota will be 5.2% higher this year, adding up to an extra $5.39 per month for a typical household.

The Minnesota Public Utilities Commission (PUC) approved the rate hike in December, though the increase is temporary. The PUC is now scrutinizing Xcel's request for a larger increase over two years that would result in an additional $13.79 per month for an average home.

Xcel says it needs the money to help its transition away from fossil fuels. That includes building more wind and solar plants, retiring its coal fleet by 2030, and extending the life of nuclear plants in Red Wing and Monticello.

Xcel also says it needs to upgrade its power distribution system and prepare for the electrification of home appliances and cars.

"The investments will support the economy of the future, meeting the increasing demand from businesses expanding in our region, electric vehicles, and the electrification of homes and businesses," said Xcel spokesman Theo Keith.

If the PUC approves lower rates than the interim 5.2%, customers will get a refund. Minnesota law requires the PUC to grant requests under normal circumstances for interim rates while the overall request is pending.

In this case, Attorney General Keith Ellison said the commission should significantly reduce the amount Xcel can bill customers in 2025.

In a written filing with the PUC, the AG's office said regulators have consistently approved smaller rate hikes than the company's "incessant, overstated rate-hike requests" for more than a decade. Ellison said Xcel has taken in big profits while also disconnecting record numbers of customers from service.

Xcel responded that it did not raise rates in three of the last six years and that a substantial portion of increases over that time were due to energy savings that reduced revenue from customers. Since 2012, Xcel said customer bills have remained relatively flat even as rates increased and that average monthly bills are below national and state averages.

The company also expects to get hundreds of millions in new tax credits for producing carbon-free nuclear power that it can return to customers. That, along with lower fuel costs, "will more than offset the impact" from the temporary rates, Xcel said in regulatory filings.

The PUC approved most of Xcel's $223.8 million request for temporary rates for 2025, though it said the company could not recoup $92.6 million from customers for planned wildfire prevention spending because Xcel hasn't shown the new program justifies higher rates.

Xcel has put extra emphasis on reducing wildfire risk after deadly and devastating blazes in Colorado and Texas that put new financial strain on the company. Xcel has denied accusations of fault in the 2021 Colorado fire but last year acknowledged an Xcel utility pole in rural Texas fell in high winds and sparked the biggest in a series of blazes that became the largest wildfire in Texas history.

The PUC said it would wait to weigh in on Xcel's request for higher interim rates in 2026 until later this year. Xcel's larger overall rate request would amount to a 9.6% increase in 2025, and another 3.6% jump in 2026.

Xcel is still fighting the PUC in court over its last rate request. In June 2023, the commission granted Xcel a 9.6% increase through three years, which was less than half of what the company wanted. In April, Xcel dropped an appeal challenging the PUC's decision to limit a crucial profit measure, which will keep bills lower for customers.

The company is still suing over other aspects of the PUC ruling, including a limit on how much Xcel can make Minnesota customers pay for the salaries of its top executives.