Summary
Xcel Energy Inc. (XEL) filed an 8-K on March 28, 2007, to report on significant developments regarding its wholly-owned subsidiary, Southwestern Public Service Company (SPS), and its Texas retail rate case. The primary focus is a "Unanimous Stipulation" settlement agreement reached on March 26, 2007, between SPS and various intervenors regarding SPS's Texas retail electric rate case and a fuel reconciliation filing for 2004-2005. The settlement provides for a more modest annual base rate increase of $23 million (approximately 3%) compared to the initial request of $48 million. It also addresses fuel cost recovery, disallowing approximately $27 million of the requested fuel expense for 2004-2005, with certain adjustments for expensed amounts and future filings. The agreement brings greater certainty to fuel cost assignment for both wholesale and retail sales and resolves several future fuel-related issues, including coal contract costs and power purchase agreements. Crucially, Xcel Energy reaffirmed its 2007 diluted EPS guidance from continuing operations of $1.35 to $1.45, indicating that this guidance reflects the expected financial impact of the SPS Texas settlement. The company also noted that SPS is seeking an interim base rate increase of $23 million, effective April 1, 2007, pending final Commission approval of the settlement, which is anticipated in the second quarter of 2007.
Key Highlights
- 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, reached a Unanimous Stipulation settlement agreement on March 26, 2007, for its Texas retail electric rate case and fuel reconciliation.
- 2The settlement allows for an annual base rate increase of $23 million (approximately 3%), significantly lower than the initially requested $48 million.
- 3Approximately $27 million of SPS's requested fuel expense for 2004-2005 is disallowed under the settlement, with adjustments for previously expensed amounts and future filings.
- 4The agreement provides increased certainty regarding the assignment of fuel costs between SPS's wholesale and retail sales, resolving several future fuel-related issues.
- 5SPS is seeking to implement the $23 million base rate increase on an interim basis effective April 1, 2007, pending final regulatory approval.
- 6Xcel Energy reaffirmed its 2007 diluted EPS guidance from continuing operations, ranging from $1.35 to $1.45, which incorporates the expected impact of this Texas settlement.
- 7The regulatory commission is expected to consider the settlement in late Q2 2007.