Xcel Energy offers to freeze Minnesota rates through 2028, paying with five battery projects' tax credits

The offer lands mid-fight

Minnesota electricity customers have just absorbed two years of contested increases. On October 9, Xcel Energy's▲+0.57% — Xcel Energy, up 0.57 percent today home-state utility answered with a trade: NSP-Minnesota filed an Electric Customer Rate Stability Plan↗ with the state commission that would freeze customer base rates for 2027 and 2028, in place of the rate case it had planned ¹. The filing asks for a decision by January 2027 and names the alternative itself: if the plan is refused, the utility expects to file a rate case in early 2027, with increases back on the table ¹.

The credits do the paying

The freeze has a funding mechanism, and it is the whole story. NSP-Minnesota would accelerate recognition of federal Investment Tax Credit benefits from five battery storage projects over two years, using them to offset the revenue requirement of ongoing capital improvements ¹. The filing does not state the credits' dollar value. Tax credits recognized in 2027 and 2028 will not still be in the drawer in 2029, and a rate freeze paid for with the future is a loan ratepayers make to themselves. True-up and tracker mechanisms from the last approved case continue, so bills can still move inside a frozen base rate ¹.

A commission with two hot files

The offer lands on a regulator already busy. In July the Minnesota Public Utilities Commission allowed increases of 2.3% for 2025 and 3.4% for 2026↗, far under the 13.2% over two years Xcel had sought, and lifted the utility's authorized return on equity to 9.60% from 9.25% ². Consumer advocates put that equity bump at $34 million to $35 million a year, and Attorney General Keith Ellison and the Citizens Utility Board have petitioned to reconsider it↗; the commission's deadline is October 19 ³. The case drew roughly 8,600 public comments ⁴.

The build does not pause

Nothing in the plan slows the capital program the freeze has to cover. Xcel targets $70 billion of investment through 2030 and about 11% annual rate-base growth↗, with 1 gigawatt of data centers operating or under construction, 1 gigawatt under signed agreements and a pipeline above 20 gigawatts ⁵⁶.

Quarterly capital spending has climbed from $1.64 billion in late 2023 to $2.95 billion in the second quarter of 2026, peaking at $3.44 billion ⁷. Three days before the filing, Xcel announced the sale of its 15,000 Michigan customers to concentrate capital on core states, closing expected in 2027 ⁸.

Who holds the deferral

Xcel says its Minnesota residential bills ran 31% below the national average in 2025 and that federal credits already offset its final rates ²⁴. The other end of the trade: if the freeze holds, new base rates in the company's flagship electric state slide toward 2029, and credits spent now cannot soften that later bill. Two dates price it, October 19 for the equity rehearing and January 2027 for the choice between the freeze and the fight ¹³.