Minnesota Electricity Rates: What to Know

Minnesota has long enjoyed some of the most stable electricity prices in the Upper Midwest, anchored by a healthy mix of nuclear, wind, coal, and imported hydropower from Manitoba. But 2025 and 2026 are shaping up to be pivotal years for Minnesota ratepayers. Xcel Energy, which serves about 1.3 million Minnesotans, is pushing a multi-year rate request worth more than $490 million. Minnesota Power and Otter Tail Power are both raising rates. And the state is in the middle of retiring one of the country's largest coal plants while simultaneously building the country's largest solar farm on the same site.

As of early 2026, the average Minnesota household pays somewhere between 15 and 17 cents per kilowatt-hour, which puts the state roughly at or just below the national average. The typical monthly bill runs from about $120 to $195 depending on how you measure it and which utility you are on. Minnesota is not an expensive electricity state — but it is becoming a more expensive one, and the forces driving those increases will keep pushing rates up for at least the next several years. Here is what you need to know to manage your costs.

How Minnesota's Electricity Market Works

Minnesota is a fully regulated electricity market. That means you do not get to shop for an electricity supplier the way you might in Texas, Pennsylvania, or Ohio. Whoever holds the franchise for your area is your utility, full stop.

The Minnesota Public Utilities Commission (MPUC) regulates the state's three investor-owned utilities: Xcel Energy, Minnesota Power, and Otter Tail Power. The Commission approves rate cases, oversees resource planning, sets interconnection standards, and runs the formal review process when a utility wants to raise its rates. The Minnesota Department of Commerce provides analysis and intervenes in proceedings on behalf of consumers, as does the Citizens Utility Board of Minnesota (CUB Minnesota), a ratepayer advocacy nonprofit.

However, the MPUC does not regulate the rates of electric cooperatives or municipal utilities. Minnesota has about 50 electric cooperatives and more than 125 city-owned utilities, and each of those is governed by its own elected board or city council. They set their own rates.

Here is how Minnesota's utility types break down:

Utility Type	Regulation	Examples
Investor-Owned Utilities (IOUs)	MPUC-regulated	Xcel Energy, Minnesota Power, Otter Tail Power
Electric Cooperatives	Self-governing (elected board)	Connexus Energy, Great River Energy, Stearns Electric
Municipal Utilities	Self-governing (city council)	Rochester Public Utilities, Austin Utilities, Moorhead Public Service

Minnesota does not have community choice aggregation, and there is no retail choice for residential customers. Your options for managing your bill come down to how you use electricity, which rate plan you pick, and which state and utility programs you tap into.

What Minnesotans Actually Pay

Here are the real numbers. The average residential electricity rate in Minnesota in early 2026 ranges from about 15 to 17 cents per kWh depending on the data source and time period. The U.S. Energy Information Administration (EIA) put Minnesota's rate at 14.62 cents per kWh in February 2025 and 17.47 cents per kWh in May 2025 — a reminder that rates move with the seasons and fuel costs. EnergySage, which looks at real utility bills from customers who request solar quotes, puts the March 2026 average closer to 17 cents per kWh.

The average monthly electric bill for a Minnesota household runs between $120 and $195. The EIA's most recent estimate is $119.34 per month based on usage of 752 kWh and a rate around 15.87 cents per kWh. EnergySage's real-bill data lands higher — around $194 per month — because it picks up households with above-average usage, including many with EVs, electric water heating, or air conditioning-heavy summers.

Minnesota still sits near the middle of the pack nationally. Rates are the highest in the West North Central region (which includes the Dakotas, Nebraska, Iowa, Kansas, and Missouri), but they are below states like California, Massachusetts, and Hawaii. The important trend is that rates are rising, and the rate cases currently working their way through the MPUC will push them higher over the next year.

Here is a snapshot of the recent rate changes from Minnesota's three investor-owned utilities:

Utility	Recent Action	Rate Impact
Xcel Energy (2025 interim)	+5.7% interim increase	+$5.41/month
Xcel Energy (2025-26 final)	$490M+ total request	Final decision summer 2026
Minnesota Power (Mar 2025)	Settlement: +4.9%	+$5/month
Minnesota Power (Jan 2026)	Slight rate reduction	-$0.00046/kWh
Otter Tail Power (Jan 2026 interim)	+11.3% interim	+$11.82/month
Otter Tail Power (final)	17.69% requested	Final decision Q1 2027

If your bill has been climbing and you are not sure what is driving the increase, our guide on how to read your electric bill and spot overcharges walks through every line item and what it actually pays for.

Major Utilities: Who Serves Minnesota

Minnesota is served by three investor-owned utilities, a large network of cooperatives, and more than 125 municipal utilities. Most residential customers are served by one of these four categories.

Xcel Energy (Northern States Power - Minnesota)

Xcel is the big one. Its Minnesota subsidiary — formally called Northern States Power Company - Minnesota — serves about 1.3 million electric customers across the Twin Cities metro, Rochester, St. Cloud, Mankato, and dozens of smaller communities. If you live in the Minneapolis or St. Paul area, you almost certainly have Xcel.

Xcel filed a massive multi-year electric rate case in November 2024 covering 2025 and 2026. The request: $353.3 million (9.6%) for 2025 plus another $137.5 million (3.6%) for 2026, for a cumulative increase of roughly 15.3% over three years. The MPUC approved interim rates beginning January 1, 2025 — an interim bump of about 5.7% adding $5.41 per month to a typical residential bill. The final decision on the full case is expected by the end of July 2026. If the Commission approves less than Xcel requested, customers receive refunds with interest.

Xcel's justifications for the increase include retiring Sherco coal units, building the massive Sherco Solar replacement project, extending the lives of the Monticello and Prairie Island nuclear plants, major transmission investments, and general grid modernization. CUB Minnesota and other consumer advocates have been pushing back on the full amount, arguing the increase is too large given affordability pressures.

Minnesota Power (ALLETE)

Minnesota Power, a subsidiary of Duluth-based ALLETE Inc., serves about 150,000 customers in northeastern Minnesota — Duluth, the Iron Range, and surrounding communities. Its territory is unusual: a huge share of Minnesota Power's load comes from industrial customers, especially taconite mines and paper mills. The MinnTac iron mine in Mountain Iron alone reportedly uses more electricity and natural gas than the entire city of Minneapolis.

Minnesota Power's residential rates were adjusted in early 2025 under a settlement approved by the MPUC: about 4.9% over 2023 rates, or $5 per month for the average residential customer. Effective March 1, 2025, the residential flat rate rose to $0.10818 per kWh. In January 2026, the rate nudged down slightly to $0.10772 per kWh — a rare small decrease reflecting finalized numbers from the settlement.

Minnesota Power also offers one of the strongest low-income rate discounts in the state. Income-qualified customers receive a credit of $0.04311 per kWh on the first 600 kWh of monthly usage, effectively lowering their rate to about 6.5 cents per kWh for that baseline block.

Otter Tail Power

Otter Tail Power serves about 60,000 Minnesota customers across the west-central part of the state, plus customers in the Dakotas. Parent company Otter Tail Corporation is based in Fergus Falls.

Otter Tail is in the middle of a significant rate case. In October 2025, the company filed a request for a $44.8 million increase — roughly 17.69% for Minnesota customers. On December 4, 2025, the MPUC approved an interim rate increase of 11.3% effective January 1, 2026, adding approximately $11.82 per month to a typical residential bill. The final decision is expected in Q1 2027. As with Xcel, if the final approved amount is lower than the interim, customers will get refunds with interest.

Otter Tail's increase is driven by transmission investments, grid reliability upgrades, and the ongoing shift from coal to renewable generation.

Cooperatives and Municipal Utilities

If you live outside the service territories of Minnesota's investor-owned utilities, you are most likely served by a cooperative or a municipal utility. Connexus Energy is the state's largest co-op, serving about 147,000 members in the northern Twin Cities suburbs (Ramsey, Blaine, Andover, Cambridge, and so on). Connexus is also a major player in battery storage — it operates roughly 93% of Minnesota's installed battery storage capacity, which is remarkable for a distribution cooperative.

Other significant co-ops include Dakota Electric (southern Twin Cities suburbs), Stearns Electric, Lake Country Power, and East Central Energy. These distribution co-ops typically buy wholesale power from generation and transmission (G&T) co-ops like Great River Energy, Dairyland Power Cooperative, Minnkota Power, or Basin Electric.

Municipal utilities include Rochester Public Utilities (serving about 60,000 customers in Rochester), Austin Utilities, Moorhead Public Service, Willmar Municipal Utilities, and Owatonna Public Utilities, among many others. Co-ops and munis often — but not always — have rates competitive with or lower than the investor-owned utilities because they operate on a not-for-profit basis.

Why Minnesota Electricity Rates Are Rising

Minnesota rates are climbing for a long list of reasons that will not resolve quickly. Here are the main drivers.

The Sherco Coal Plant Retirement

The Sherburne County Generating Station in Becker — known universally as Sherco — has been Minnesota's largest coal plant for decades. Xcel is retiring it in stages. Unit 2 retired on December 31, 2023. Unit 1 is scheduled to retire in 2026. Unit 3 is scheduled to retire in 2030, ending coal generation at the site entirely.

Retiring a major coal plant is expensive. Stranded asset write-downs, decommissioning costs, and replacement power procurement all flow through rates. At the same time, Xcel is building the country's largest solar farm on the same site. The Sherco Solar project will have 710 megawatts of capacity when fully complete and reuses the coal plant's transmission interconnection — cutting the normal interconnection wait from about five years to less than one. It will provide about 400 union construction jobs, 18 permanent operations jobs, and an estimated $350 million in local economic benefits. Xcel has pledged that no Sherco employees will be laid off.

This is a big deal for the country's clean energy transition. It is also a big deal for your bill. Replacing coal capacity with solar and batteries means significant capital investment upfront that gets recovered from ratepayers over decades.

Nuclear Life Extensions

Xcel operates Minnesota's only two nuclear plants: Monticello (one reactor, ~671 MW) and Prairie Island (two reactors, ~1,100 MW combined). Both are critical to meeting the state's carbon-free electricity goals because nuclear counts as carbon-free under Minnesota law.

On December 30, 2024, the U.S. Nuclear Regulatory Commission renewed Monticello's operating license to expire on September 8, 2050 — a 20-year extension. The MPUC approved the state-level extension as well. Xcel is now planning to seek similar 20-year extensions for Prairie Island in 2026; the current licenses expire in 2033 and 2034.

Extending a nuclear plant is not free. Refurbishments, spent fuel storage expansions, safety upgrades, and equipment replacements run into the billions. Those costs become rate base, which customers pay back with a return on investment over time.

Transmission Expansion

Minnesota is smack in the middle of the MISO transmission grid, and MISO has approved tens of billions of dollars in new transmission projects to move renewable energy from wind-rich areas of the Dakotas, western Minnesota, Iowa, and Nebraska into load centers like the Twin Cities. Minnesota utilities share in those costs, and the investments flow into rates.

Natural Gas Price Volatility and Other Factors

The 2022 natural gas price spike flowed through to wholesale electricity costs, and gas price volatility remains a source of year-to-year rate pressure. Grid modernization — smart meters, distribution automation, and voltage optimization — is another steady cost. And the Conservation Improvement Program (now modernized as the ECO Act) adds a small surcharge that funds efficiency rebates you can claim back (more on that later).

The cumulative effect is meaningful rate pressure, but nothing like the 50% jumps seen in some wildfire-hit western states. Minnesota rate increases have been steady rather than shocking — which is both good news and a warning that the trend is not about to reverse.

The 100% Clean Energy Law: What It Means for Your Bill

On February 7, 2023, Governor Tim Walz signed Minnesota's 100 Percent Carbon-Free Electricity by 2040 Act. It is one of the most aggressive state-level clean energy laws in the country, and it applies to every electric utility in Minnesota — investor-owned utilities, cooperatives, and municipal utilities alike.

The law requires utilities to hit these benchmarks:

Year	Carbon-Free Requirement
2030	80% carbon-free electricity
2035	90% carbon-free electricity
2040	100% carbon-free electricity

Eligible technologies include solar, wind, hydropower (small-scale, plus existing large-scale facilities like Manitoba Hydro imports), biomass, hydrogen produced from eligible sources, and nuclear. Minnesota's inclusion of nuclear as carbon-free is a key distinction from some other state clean energy laws — it gives utilities a lot more flexibility because Xcel's Monticello and Prairie Island plants already contribute about 20-25% of the state's electricity generation.

There is also a separate renewable energy standard requiring 55% renewable generation by 2035, up from the previous 25% by 2025 target. "Renewable" is a narrower category than "carbon-free" because it excludes nuclear.

The Cost Side

Meeting these targets requires enormous capital investment. The good news: wind and solar have become the cheapest forms of new generation in most parts of the Upper Midwest, so the long-term operating costs are lower than running coal or gas plants. The bad news: you have to build and pay for the new resources before the old ones fully retire, and those capital costs flow into rates.

Unlike Oregon's HB 2021, which explicitly caps clean energy compliance costs at 6% of annual revenue requirements, Minnesota's law does not have an explicit rate impact cap. However, the MPUC must consider affordability in utility resource plans and rate cases, and utilities can request modifications if compliance would cause undue cost pressure.

For most Minnesota customers, the clean energy law is one of several factors pushing rates up, not the single biggest driver. Xcel's rate case filings typically cite clean energy investments alongside transmission, nuclear extensions, and general infrastructure.

Understanding Minnesota's Rate Structures

Minnesota utilities mostly use simpler rate structures than some neighboring states. Here is what you need to know.

Flat-Rate Residential Pricing

Most residential customers of Xcel, Minnesota Power, and Otter Tail Power are on a flat-rate plan where every kWh costs the same regardless of time or tier. Xcel does apply different summer and winter rates — summer (June through September) is higher because air conditioning drives up demand. The summer rate is approximately $0.13069 per kWh for the energy charge alone, and the all-in residential rate runs about 17-18 cents per kWh after service fees, fuel clause riders, and other charges.

Minnesota Power's current residential flat rate is $0.10772 per kWh as of January 2026, before riders and service fees. That is relatively low because a substantial share of Minnesota Power's costs are spread across large industrial loads on the Iron Range.

Time-of-Use Options

Xcel Energy launched a voluntary time-of-use rate for residential customers in early 2026. This was a significant shift from Xcel's original proposal to make TOU the default for all customers — after customer and regulator pushback, the Commission approved a scaled-back opt-in version.

Here is how Xcel's new TOU rate works:

• Cheapest rates: Midnight to 6 AM
• Most expensive rates: 6 PM to 9 PM on weekdays
• Mid-tier rates: All other hours and all weekend
• Seasonal variation: The gap between peak and off-peak is largest in summer (June-September) and smaller in winter (October-May)

TOU plans work well if you can shift significant usage to off-peak hours — overnight EV charging is the classic example. If you run an electric dryer in the middle of the night, pre-cool your house before 6 PM, delay your dishwasher until after 9 PM, and charge your EV from midnight to 6 AM, you can save real money on a TOU rate. If your usage is fairly constant across the day, a flat-rate plan is probably better.

Minnesota Power offers its own Time-of-Day option for residential customers who want to manage their usage around peak and off-peak pricing.

What's on Your Bill

A typical Minnesota electric bill includes several line items beyond the energy charge:

• Energy charge — per kWh, the largest component
• Basic service charge — fixed monthly connection fee
• Fuel clause adjustment — passes through changes in fuel costs
• Resource adjustment — passes through capital investment recovery
• Conservation Improvement Program / ECO charge — funds efficiency rebates
• Renewable energy riders — funds solar, wind, and other clean energy
• State sales tax and local taxes

Understanding these line items matters because some of them — like the ECO charge — fund programs you are paying for whether you use them or not. Ignoring those programs means leaving money on the table.

Solar Energy in Minnesota

Despite its northern latitude and famously cold winters, Minnesota is a real solar state. Long summer days in the North Star State yield strong solar production from April through September, and the state's net metering rules and community solar program are among the best-structured in the country.

Net Metering

Minnesota has had net metering since 1983 — one of the first states to enact such a law. The legal basis is Minnesota Statute 216B.164, the Cogeneration and Small Power Production rules, which implement parts of the federal Public Utility Regulatory Policies Act (PURPA).

Under Minnesota's net metering rules:

• Customers of any investor-owned utility, municipal utility, or rural electric cooperative can net meter
• For IOUs, systems up to 1 megawatt can participate
• For munis and co-ops, the limit is 100 kilowatts
• Systems 40 kW or smaller are credited at the full retail rate
• Systems between 40 kW and 1 MW are credited at the utility's avoided cost rate (lower than retail)

For almost any residential solar system, you fall into the "40 kW or smaller" category and get full retail credit — a strong policy that keeps solar economics favorable. Excess credits roll over month to month; any remaining credits at year-end are typically cashed out at avoided cost.

What Solar Costs in Minnesota

The average installed cost of residential solar in Minnesota as of April 2026 is approximately $2.95 to $3.05 per watt. A typical 11.94 kW system (the average size in Minnesota) runs from about $30,683 to $41,513, averaging around $36,098 before any incentives.

The federal Investment Tax Credit for residential solar expired at the end of 2025, which makes the economics harder than they were a year ago. However, Minnesota's strong net metering, continued utility rebate programs, and rising electricity rates all work in your favor. Payback periods run about 10 to 13 years for most homes — longer than sunnier states, but still within the lifetime of modern panels (25+ years).

For a detailed walkthrough of system sizing, equipment choices, and installer selection, see our guide on choosing the best solar panels for your home.

Community Solar Gardens

Here is where Minnesota really shines. Minnesota has one of the largest community solar garden (CSG) programs in the United States. The program was the biggest in the country for years before New York overtook it in 2022, and it remains a national leader in scale and equity design.

Community solar lets you subscribe to a share of a local solar project — hosted on an open field, warehouse roof, or parking lot — and receive credits on your utility bill for the electricity your share produces. It is perfect for renters, condo owners, and anyone with a shaded roof. You do not own or maintain anything; you just pay a subscription that is less than the bill credit you receive, so you save money.

In 2024, Minnesota transitioned to a new Low- and Moderate-Income Accessible Community Solar Garden Program. Key features:

• 10-year, 800 MW program cap — a strictly regulated sandbox
• 100 MW/year approved capacity for 2024 and 2025
• 179 MW approved across 133 gardens as of December 2025
• 30% low-income carve-out — at least 30% of each garden's capacity must be reserved for households at or below 150% of area median income
• Serves mostly Xcel Energy customers (though other utilities can participate)

Community solar is one of the fastest, easiest ways to cut your electric bill without any upfront investment. Our guide on community solar explains how subscriptions work, what savings to expect, and how to evaluate developers.

Xcel Solar*Rewards

Xcel Energy customers have access to the Solar*Rewards program, which pays a performance-based incentive for energy produced by rooftop solar systems. Payments run for up to 10 years, calculated per kWh generated. The program is a valuable complement to net metering and can substantially improve system payback.

Strategies to Lower Your Minnesota Electricity Bill

Minnesota rates are moderate, but they are climbing. Here are the highest-impact strategies for reducing your bill.

1. Take Advantage of Utility Rebates

Minnesota's Conservation Improvement Program (now modernized as the ECO Act) has saved Minnesotans more than $8.2 billion over four decades. The program requires utilities to invest a portion of their revenues in rebates and efficiency programs — and every utility customer pays a small surcharge that funds those programs. If you are not claiming rebates, you are leaving money on the table.

Xcel Energy's Home Energy Squad program (run in partnership with the nonprofit Center for Energy and Environment) provides in-home energy assessments at a heavily subsidized price. The visit includes direct installation of efficient light bulbs, faucet aerators, and smart power strips, plus a customized report on other upgrades you should consider. Xcel also offers rebates on HVAC equipment, water heaters, insulation, windows, and appliances.

Minnesota Power runs Power of One and Triple E programs with rebates for efficient equipment. Otter Tail Power has its own portfolio of rebate programs. Whichever utility you are on, check its website for current rebates before you replace any major appliance.

2. Consider an Opt-In Time-of-Use Rate

If you have an EV, an electric water heater on a timer, a heat pump, or any other flexible load, Xcel's new voluntary TOU plan can save you money. The cheapest rates run from midnight to 6 AM, which covers overnight EV charging perfectly. Even shifting your dishwasher and laundry to the overnight window adds up over the course of a year.

Before enrolling, look at your actual usage patterns. Xcel's online tools let you compare your current bill against what you would pay on the TOU plan given your existing usage. If the savings are slim, you can always stay on the flat rate.

3. Invest in Weatherization

Minnesota winters are brutal, and heating costs are a big chunk of a typical household's energy bill. Most Minnesota homes heat with natural gas (not electricity), but electric bills also take a hit from space heating, heat lamps, and electric furnaces. Adding insulation, sealing air leaks, and upgrading windows all pay back fast. The Energy Assistance Program's Weatherization Assistance Program (WAP) provides free weatherization for income-eligible households. Our guide on how to cut your electric bill in half walks through the highest-impact efficiency upgrades.

4. Install a Smart Thermostat

A good smart thermostat is one of the cheapest energy upgrades you can make, and utility rebates often cover a large chunk of the cost. Xcel's Saver's Switch program rewards customers who let the utility briefly cycle their AC during peak demand events in exchange for a bill credit. Our 2026 smart thermostat guide covers the top models and which ones integrate with utility rebate programs.

5. Go Solar, or Go Community Solar

With retail-rate net metering for systems under 40 kW, rising electricity rates, and Solar*Rewards payments for Xcel customers, rooftop solar remains economically viable in Minnesota even without the expired federal tax credit. If your roof is not a good candidate — shaded, oriented wrong, or structurally questionable — or if you rent, subscribing to a community solar garden is a near-zero-effort way to lock in savings.

6. Electrify Strategically

Heat pumps have come a long way, and modern cold-climate heat pumps work effectively in Minnesota winters down to -15°F or below. Replacing a furnace with a heat pump can lower your total energy costs, especially as electricity gets cleaner and gas prices stay volatile. Xcel and other utilities offer rebates on heat pumps, and Minnesota Power has been particularly aggressive in promoting cold-climate heat pumps. Our heat pump buyers guide covers what to look for, and our whole-home electrification guide walks through the full process.

7. Monitor Your Usage

You cannot manage what you do not measure. A home energy monitor shows you exactly where your electricity is going, often surfacing surprises like a basement freezer with a failing seal, a well pump cycling too often, or phantom loads from electronics. Once you know what you are using, the path to lower bills is much clearer.

Low-Income Assistance and the Cold Weather Rule

Minnesota has some of the strongest consumer protections in the country for households struggling with utility bills. Here are the key programs.

Energy Assistance Program (EAP / LIHEAP)

Minnesota's Energy Assistance Program distributes federal Low Income Home Energy Assistance Program (LIHEAP) funds to help income-eligible households pay for heating. The program is administered by the Minnesota Department of Commerce through a network of local community action agencies and nonprofit partners (including Lutheran Social Service of Minnesota).

Key details:

• Eligibility: 50% of State Median Income (household sizes 1-16) or 110% of Federal Poverty Guidelines for larger households
• Application period: October 1, 2025 through May 31, 2026 (for FFY26)
• Benefits: Heating bill assistance, emergency crisis funds, furnace repair/replacement through the Energy Related Repair (ERR) program
• Eligible households: Both renters and homeowners; assets such as your home are not counted
• How to apply: Contact your local community action agency, call 1-800-657-3710, or visit the Minnesota Department of Commerce EAP website

If you think you might qualify, apply early in the season — funding is finite and distributed on a first-come, first-served basis in most years.

The Cold Weather Rule

The Minnesota Cold Weather Rule is one of the strongest winter utility protections in the United States. Under Minnesota Statute 216B.097, utilities are prohibited from disconnecting eligible residential customers' heat-source service between October 1 and April 30 if specific conditions are met.

To be protected, a household must:

• Have household income at or below 50% of State Median Income
• Have a primary heat source (electric or gas) that would be affected by disconnection
• Enter into a payment arrangement with the utility — the utility is required to consider the household's financial resources when setting terms

Before any disconnection between October 1 and April 30, the utility must provide notice, present payment plan options, explain the appeal process, and provide a list of local energy assistance providers. Utilities cannot disconnect on Fridays, weekends, holidays, the day before a holiday, after business hours, or when offices are closed.

Even households above the 50% SMI threshold have some Cold Weather Rule protections — utilities must still offer payment plans, and the strict disconnection windows still apply. The practical upshot: if you are behind on your bill during winter, call your utility immediately. You likely have more options and more time than you think.

Minnesota Power's Low-Income Discount

Minnesota Power offers one of the best utility-level low-income rate discounts in the state. Qualifying customers receive a credit of $0.04311 per kWh on the first 600 kWh of monthly usage, which drops the effective rate on that baseline block to about 6.5 cents per kWh — well below the standard flat rate of 10.77 cents per kWh.

Utility-Specific Assistance

Most Minnesota utilities also run customer-funded charitable programs. Xcel has Gas Affordability Program (GAP) for natural gas customers. Minnesota Power runs Project Care. Otter Tail Power has Operation Round-Up. Cooperatives and municipal utilities typically run their own assistance programs as well. These programs are funded by voluntary customer donations and typically provide one-time grants for households facing disconnection.

Frequently Asked Questions

What is the average electricity rate in Minnesota?

As of early 2026, Minnesota's average residential electricity rate ranges from about 15 to 17 cents per kWh depending on the source and season. The state sits roughly at the national average (~17 cents/kWh). Minnesota has the highest rates in the West North Central region but is still well below high-cost states like California, Massachusetts, and Hawaii.

Can I choose my electricity provider in Minnesota?

No. Minnesota is a regulated electricity market. Residential customers are served by the utility that holds the franchise for their area — Xcel Energy, Minnesota Power, Otter Tail Power, or a cooperative or municipal utility. You cannot shop for a different electricity supplier, and Minnesota does not have community choice aggregation. What you can do is manage your usage, choose the right rate plan where options exist, and take advantage of rebates and incentives.

Why are my rates going up?

Minnesota rates are rising for several overlapping reasons. Xcel Energy is in the middle of a massive multi-year rate case worth more than $490 million covering 2025 and 2026. The company is retiring the Sherco coal plant in stages and replacing it with the country's largest solar farm — a transition that costs money up front. Xcel is also extending the operating lives of its Monticello and Prairie Island nuclear plants, investing in major new transmission, and modernizing its distribution grid. Minnesota Power and Otter Tail Power face similar pressures. The state's 100% clean energy law adds modest additional pressure, but it is not the single biggest driver.

What is the 100% clean energy law?

Signed by Governor Tim Walz on February 7, 2023, the 100 Percent Carbon-Free Electricity by 2040 Act requires all Minnesota electric utilities to reach 80% carbon-free electricity by 2030, 90% by 2035, and 100% by 2040. Unlike some states, Minnesota's law counts nuclear as carbon-free, which gives utilities significant flexibility because Xcel's two nuclear plants already provide 20-25% of Minnesota's electricity. Eligible resources include solar, wind, nuclear, most hydropower, biomass, and hydrogen from eligible sources.

Is solar worth it in Minnesota?

For many Minnesota homeowners, yes — even after the federal tax credit expired at the end of 2025. Payback periods run about 10 to 13 years, which is longer than sunnier states but still well within the 25+ year lifespan of modern panels. Minnesota's net metering rules give full retail credit for systems under 40 kW, and Xcel customers can layer on Solar*Rewards production incentives. If rooftop is not a fit, community solar is a near-zero-effort way to capture savings without owning or maintaining anything.

What is community solar and how do I sign up?

Community solar gardens let you subscribe to a share of a local solar project and receive credits on your monthly utility bill for the clean energy your share produces. Minnesota's program is one of the largest in the country, with 179 MW approved as of December 2025 and a 30% low-income carve-out requirement. To sign up, find a community solar developer serving your utility territory, compare subscription terms, and enroll. You do not own any hardware — you are just buying into the project. Most subscriptions save you about 5-15% on your electricity costs.

What happens if I cannot pay my electricity bill?

Minnesota has several safety nets. The Cold Weather Rule protects eligible low-income households from disconnection between October 1 and April 30. The Energy Assistance Program (EAP/LIHEAP) helps pay heating bills for households at or below 50% of State Median Income; apply before May 31 each year. Minnesota Power customers may qualify for the utility's low-income rate discount. Every Minnesota utility also runs some form of customer-funded charitable assistance program. If you are struggling, contact your utility immediately — the earlier you reach out, the more options are available. You can also call 211 to connect with local assistance agencies.

What is the Cold Weather Rule?

The Cold Weather Rule is a Minnesota law (Statute 216B.097) that prohibits utilities from disconnecting heat-source service for eligible low-income customers between October 1 and April 30. To qualify for full protection, a household's income must be at or below 50% of State Median Income and the customer must enter into a payment arrangement with the utility (the utility must consider the household's ability to pay). Even customers above the income threshold have some protections — utilities cannot disconnect on weekends, holidays, or outside business hours during the Cold Weather Rule period. If you are behind on your bill during the winter, call your utility right away to set up a payment plan.

What is the Conservation Improvement Program?

The Conservation Improvement Program (CIP) is Minnesota's longstanding utility-funded energy efficiency program. It dates back to 1982 and has saved Minnesotans more than $8.2 billion cumulatively. Every utility customer pays a small surcharge that funds rebates for efficiency upgrades like insulation, heat pumps, efficient appliances, and smart thermostats. CIP was modernized and strengthened by the 2021 Energy Conservation and Optimization (ECO) Act, which raised the annual energy savings goal from 1.5% to 2.5% and doubled the low-income spending requirement for investor-owned utilities. To take advantage, check your utility's rebate page before replacing any major equipment.

Your Minnesota Electricity Action Plan

Here is a concrete plan to take control of your electricity costs:

This week:

1. Pull up your most recent utility bill and identify your current rate, monthly kWh usage, and all the line items you are paying. If anything is unfamiliar, our bill reading guide walks through every component.
2. Log into your utility's website (xcelenergy.com, mnpower.com, or otpco.com) and review your usage history for the past 12 months. Note your seasonal highs and lows.
3. If you are an Xcel customer, run the numbers on the new opt-in time-of-use rate. The Xcel TOU calculator compares your current bill against what you would pay on TOU based on your actual usage. If you have an EV or are considering one, TOU is likely a no-brainer.

This month:

4. Visit your utility's rebate page and see what is available. Xcel customers should specifically check out the Home Energy Squad program — a subsidized in-home assessment that can surface upgrades you did not know you needed. Focus your attention on the biggest energy users: heating and cooling systems, water heaters, and insulation.
5. If you are in Xcel territory (or any eligible utility), evaluate community solar subscriptions. The new LMI-accessible program is adding capacity, and low-income households in particular can get priority access. Our guide on community solar walks through the subscription process.
6. If you own your home and have a reasonable south-facing roof, get at least three rooftop solar quotes. Even without the federal tax credit, net metering and Solar*Rewards can make the numbers work on a 10-13 year payback window.

If you are struggling to pay your bill:

7. Call your utility immediately and ask about payment plans. Do not wait for a disconnection notice — the earlier you reach out, the more options are available.
8. Apply for the Energy Assistance Program (EAP/LIHEAP) through your local community action agency, or call 1-800-657-3710. The application deadline for FFY26 is May 31, 2026.
9. If you are a Minnesota Power customer, ask about the low-income rate discount, which cuts your effective rate on the first 600 kWh nearly in half.
10. Call 211 to connect with local charitable assistance programs funded by your utility and community partners.

For the long term:

11. Budget for continued rate increases of 3-6% per year. Every efficiency improvement you make today compounds in value as rates climb.
12. Consider a home energy monitor to identify hidden waste and track the impact of the changes you make.
13. If you are planning a home renovation or equipment replacement, use it as an opportunity to electrify and weatherize — stacking utility rebates, ECO Act incentives, and any remaining federal programs to minimize out-of-pocket costs.

Minnesota has one of the most stable and well-run electricity systems in the country, but stability does not mean cheap. Xcel's pending rate case, the Sherco coal retirement, nuclear life extensions, and the 100% clean energy law are all pushing rates upward, and that pressure is not going to reverse. The Minnesotans who will pay the least over the next decade are the ones who start using the state's considerable toolkit of rebates, programs, and protections now.