8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Mar 28, 2007)

Filed March 28, 2007For Securities:XELXELLL

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.

Frequently Asked Questions

This 8-K filing primarily announces a significant settlement agreement reached by Xcel Energy's subsidiary, Southwestern Public Service Company (SPS), with various parties in Texas regarding a retail electric rate case and fuel cost reconciliation. It provides an update on the financial implications of this settlement and reaffirms the company's earnings guidance.

The settlement allows for an annual base rate increase of $23 million, which is less than initially requested. It also results in a disallowance of approximately $27 million in fuel expenses for 2004-2005. Xcel Energy has reaffirmed its 2007 diluted EPS guidance of $1.35 - $1.45, confirming that these figures already account for the expected impact of the settlement.

The Unanimous Stipulation was filed on March 26, 2007. SPS is seeking an interim rate increase of $23 million effective April 1, 2007. The final decision from the Texas Commission is anticipated in late the second quarter of 2007.

Yes, the settlement provides greater certainty on how fuel costs are assigned to wholesale and retail sales. It also resolves several issues related to future fuel costs, including coal contracts and purchased power agreements, establishing standards for future wholesale transactions.