Xcel Energy Inc would offer incentives for Minnesota customers who take steps to conserve energy, which could include installation of solar panels on homes and businesses, under a $280 million plan filed this week with regulators, the state's biggest power company said on Thursday.

The company said in a release the plan would save money for customers and conserve enough energy to eliminate the need for a medium-sized power plant that would emit 1 million metric tons of carbon dioxide.

The company did not estimate in its release how much the program would change an average residential customer's monthly bill.

Power companies across the United States are developing plans to reduce greenhouse gas emissions by using more renewable power and energy efficiency.

Xcel, which serves more than 1.2 million customers in Minnesota, expects its proposed plan to save about 320 megawatts of power demand and more than 2.4 million dekatherms of natural gas over three years.

One megawatt powers about 1,000 homes in Minnesota.

As a regulated utility, Xcel would seek to recover its costs from customers.

The plan's scope is significant, saving enough energy in three years to avoid the need to build one medium-sized power plant and its associated 1-million metric tons of carbon dioxide while saving our customers money, Judy Poferl, Xcel Energy regional vice president, said in the release.

Under the proposed solar rewards program, Xcel would provide rebates to customers who install solar photovoltaic systems of up to 40 kilowatts on their premises. Xcel said it would purchase Renewable Energy Credits (REC) generated by customers' solar systems.

We believe solar can be a viable resource in Minnesota for meeting our customers' energy needs, Poferl said.

Xcel said its proposal complies with the state's Next Generation Energy Act of 2007, designed to bolster investments in renewable power, increase energy conservation and decrease Minnesota's contribution to global warming.

Xcel, based in Minneapolis, Minnesota, owns and operates more than 15,000 MW of generating capacity, markets energy commodities, and transmits and distributes electricity to 3.3 million customers and natural gas to 1.8 million customers in 10 U.S. western and Midwestern states.

(Reporting by Scott DiSavino; Editing by David Gregorio)

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