Rate Riders

Fuel Cost Charge

All fuel costs are separated from the Energy Charge. A separate line item, the total Fuel Cost Charge, replaces the Fuel Cost Adjustment line on your bill. The total FCC recovers total fuel costs. The Energy Charge will be lower as a result because it no longer includes any fuel costs.

This table shows the Fuel Cost Charges by class category for the previous and current month:

¹ The Fuel Cost Charge is prorated by billing cycle using the calendar month factors shown. A monthly prorate schedule is available on request.

² Time of Day (TOD)

³ Off-Peak hours are 9 p.m. to 9 a.m. weekdays, weekends and federally observed holidays.

Customer Class Fuel Cost Charges

Fuel costs, which include purchased power costs, vary by hour throughout the year. And because each customer class has a different hourly load profile, there is a slight difference in average fuel costs for each, which is represented by a different FCC for each customer class.

Time of Day Customers

For Time of Day customers, the class average Fuel Cost Charge is further divided into on-peak and off-peak charges, to more accurately represent time of day differences in fuel costs.

Monthly Fuel Cost Charges

The fuel cost charge is designed to recover the costs of fuel used to generate electricity, the cost of energy purchased on the wholesale electricity market and other fuel-related expenses. These fuel costs are simply passed through to customers. Xcel Energy does not make a profit on them. The fuel cost charge changes monthly as the cost of fuel and purchased energy fluctuates throughout the year.

Fuel Cost Charge Better Reflects Cost of Fuel Consumption

The monthly Fuel Cost Charge reflects the expected, or forecasted, costs of providing electricity in a given month. By using forecasted costs, the monthly Fuel Cost Charge means your bill closely reflects the actual cost of the energy use for that month. This allows you to make more informed choices regarding your energy use. To ensure complete accuracy, the forecasted costs are trued-up with actual costs in a subsequent month.

Fuel Cost Charge is Pro-rated

The electric charges usage period on your bill typically spans parts of two calendar months according to the billing cycle. The Fuel Cost Charge line item reflects a pro-rated or blended charge to match this usage period. The amount is based on the number of billed days and the corresponding effective fuel cost charges for each calendar month. For example, a metered customer's bill with usage period from June 15 to July 15, this customer is billed 15 days for June fuel cost charge and 15 days for July fuel cost charge.

Each month, the Minnesota Department of Commerce monitors Xcel Energy’s Minnesota fuel clause adjustment. The Minnesota Public Utilities Commission thoroughly reviews it each year.

Trends in fuels and purchased power, and how they affect the FCC

• An electricity price, like other commodities, is based on supply and demand. When the demand for electricity is high, the price for purchasing power also increases. This causes the FCC to be higher in the months of July through September.
• To minimize the costs of purchased power, power plant maintenance is performed at times when the demand for electricity is expected to be low.
• If an outage occurred at a time when electricity use is high, our fuel expenses tend to increase and the corresponding fuel cost adjustment would likely be higher.
• Increased demand for electricity increases the cost to generate and purchase power to meet customer needs.
• When winter use is at it highest, and the weather is coldest, there is an increased need for oil and gas. This increases the likelihood that electricity may be purchased, and directly affects the FCC.
• When weather is much warmer than normal and the demand for summer electricity to cool increases, the FCC will also increase.
• Weather also plays a significant role in hydro plant output and wind generation. Water level can affect how much energy a hydro plant can generate. Similarly, wind output varies according the wind speed.
• Thunderstorms in the summer and winter ice storms can damage our transmission system and disrupt energy delivery. This can impact the FCC.
• Xcel Energy’s fuel cost forecast is based on normal weather. When weather deviates substantially from normal there is a direct impacts on the FCC.

Purchased Gas Adjustment

Base Cost of Gas

One component of the Cost of Gas is the Base Cost of Gas. The Base Cost of Gas is an estimate of the Total Cost of Gas that is calculated for and only changed as part of a general rate case.

Cost of Gas Sheet (PDF)

The other component of the Cost of Gas is the PGA. The PGA is a mechanism designed to recover the current cost of gas supply. The PGA factor is equal to the current wholesale delivered cost of the natural gas supply purchased by Xcel Energy less the Base Cost of Gas. The current cost of gas supply includes supply, transportation, peak shaving and other costs, which the Minnesota Public Utilities Commission (MPUC) determines from time to time. Because of the volatility in the cost of gas supply, a monthly adjustment is needed to raise or lower rates to reflect current market prices. At the close of each month the cost of gas supply for the next month is estimated. This estimated cost of gas supply is then divided by the forecasted retail sales for the month. This $/therm result is compared to the $/therm Base Cost of Gas, and the difference is the PGA factor.

The PGA also includes a true-up factor. Every September, Xcel Energy determines how much gas expense was incurred for the previous July - June compared to the amount Xcel Energy collected from customers. Any over- or under-recovery is divided by the customer class’s forecasted sales to develop the true-up factor. The MPUC approves the true-up factor annually. The true-up ensures that Xcel Energy collects the actual cost of gas supply, no more and no less.

Trends in cost of gas and how they affect the PGA

Natural gas, like other commodities, is based on supply and demand.

• When the demand for gas is high, the price also increases.
• This causes the PGA to be higher in the winter months and lower in the summer months. However, as natural gas is used more for generation, this trend could change.
• As was seen in late 2005, severe weather can have significant effects on natural gas supply.

Xcel Energy’s fuel cost forecast is based on “normal” weather. When weather deviates substantially from “normal” there is a direct impact on the PGA.

• “Normal” weather is defined as actual ambient air temperature that deviates from the 30-year average for the month.