8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Sep 27, 2006)

Filed September 27, 2006For Securities:XELXELLL

Summary

This 8-K filing from Xcel Energy Inc. on September 27, 2006, primarily reports on updates to two key regulatory proceedings for its subsidiary, Southwestern Public Service Company (SPS), in Texas. The most significant update concerns the Texas retail electric rate case, where SPS initially sought an approximate $48 million annual revenue increase. SPS subsequently filed modifications to support an additional $15 million, bringing the total requested increase to approximately $63 million. However, due to procedural limitations, SPS may be restricted to the originally requested $48 million increase. The effectiveness of new rates is now anticipated in the second quarter of 2007. Additionally, the filing addresses a Texas retail fuel surcharge case. The Public Utility Commission of Texas (PUCT) ruled that an existing wholesale firm sales contract with El Paso Electric Company (EPE) did not conform to prior stipulations and orders, disallowing approximately $1.8 million in fuel costs for the period of October 2005 through March 2006. This disallowance could approximate $8 million for 2006, and Xcel Energy is considering steps to mitigate this impact. Investors should monitor the final outcome of these rate cases, as they will directly affect SPS's future revenue and profitability.

Key Highlights

  • 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, modified its Texas retail electric rate case to request an additional $15 million in annual revenue, increasing the total request to approximately $63 million.
  • 2Due to procedural constraints, SPS may be limited to the original $48 million revenue increase sought in the Texas retail rate case.
  • 3The expected effective date for new rates in the Texas retail rate case has been pushed to the second quarter of 2007.
  • 4The PUCT ruled against SPS in a fuel surcharge case, disallowing approximately $1.8 million in fuel costs related to an El Paso Electric Company (EPE) contract.
  • 5The disallowance in the fuel surcharge case could amount to an estimated $8 million for the 2006 calendar year.
  • 6Xcel Energy is exploring options to mitigate the financial impact of the PUCT's decision on the fuel surcharge case.

Frequently Asked Questions

SPS modified its rate case to support an additional $15 million in annual revenue, primarily due to revisions in its jurisdictional allocator and an overstatement of wholesale transmission revenue credits. However, due to procedural limitations, the company may ultimately be restricted to the original $48 million increase.

The final rates for the Texas retail electric rate case are now expected to be effective in the second quarter of 2007, a delay from previous expectations.

The Public Utility Commission of Texas (PUCT) disallowed approximately $1.8 million in fuel costs for the period of October 2005 through March 2006. The PUCT determined that an existing wholesale firm sales contract between SPS and El Paso Electric Company did not meet the terms of a prior stipulation and order.

While the initial disallowance was $1.8 million, a preliminary estimate suggests the impact could approximate $8 million for the 2006 calendar year. Xcel Energy is investigating ways to lessen this financial effect.