Minneapolis-based Xcel Energy, Inc., announced Wednesday that its subsidiary, Northern States Power Company Minnesota (NSP), has asked the Minnesota Public Utilities Commission (PUC) for permission to hike electricity rates.

NSP-which provides electric service to 1.2 million Minnesota customers-has requested an increase of about $150 million, or 5.6 percent, in base electric rates for 2011. It also wants to raise rates by an additional $48 million in 2012. In all, the company wants to increase rates by $198 million-7.4 percent-starting in 2012.

Xcel wants to implement interim rates at the beginning of 2011. Under the company's plan, the average monthly bill for residential customers would increase by roughly 5.5 percent, or $4.09. The average small business' monthly bill would go up by about 5.4 percent, or $6, according to Xcel.

“This case is needed to fund important infrastructure improvements, ensure compliance with increasing regulatory requirements, and respond to changes in the economy,” Judy Poferl, president and CEO of NSP, said in a statement. “While we have worked to manage costs and increase our efficiency, we are not able to avoid this rate request. The increase will support our ability to provide our customers high-quality, reliable electric service at a good value, both now and over the long term.”

Xcel said the rate-increase request for 2011 is related to infrastructure investments, compliance with new regulatory measures involving emissions controls, and “various economic trends”-including reduced sales and higher health-care costs.

The utilities provider said the majority of the 2012 increase is needed to make up for costs related to power increases and other changes at its nuclear plant in Monticello.

Xcel said that it has also requested permission to modify customers' bills by transitioning some of the costs that are currently being recovered as surcharges into the base rate. Because customers are already making these payments in a different form, they wouldn't see a change in their overall bill, Xcel said.

Xcel is Minnesota's 10th-largest company based on its 2008 revenue, which totaled $11.2 billion. The company reported revenue of $9.6 billion in 2009.