8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Mar 18, 2008)

Filed March 18, 2008For Securities:XELXELLL

Summary

This Form 8-K filing by Xcel Energy Inc. reports on the latest developments in a retail electric general rate case for its wholly owned subsidiary, Southwestern Public Service Company (SPS), in New Mexico. On March 6, 2008, intervenor and NMPRC staff testimony was filed, presenting significantly lower rate increase recommendations than what SPS originally requested. Key parties, including the NMPRC staff and the Attorney General, have recommended a much smaller annual increase, ranging from approximately $8 million down to a $2 million decrease, with lower rates of return on equity (ROE) compared to SPS's request. Concerns were also raised regarding the disallowance of prepaid pension from rate base and the recovery mechanism for future purchased capacity costs related to the Lea Power Partner project. The proceedings are advancing with rebuttal testimony due and a hearing scheduled in April 2008.

Key Highlights

  • 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, requested a 6.6% ($17.3 million annually) retail electric rate increase in New Mexico.
  • 2NMPRC staff recommended a substantially lower increase of approximately $8 million annually, with a 9.1% ROE, and proposed disallowing prepaid pension from rate base.
  • 3The New Mexico Attorney General recommended a rate decrease of $2 million annually, citing a 9.2% ROE and additional tax adjustments.
  • 4NMPRC staff questioned SPS's proposed recovery method for future purchased capacity costs from the Lea Power Partner project, suggesting it should be addressed in the next general rate case.
  • 5Occidental Permian, a major customer, recommended a 9.9% ROE and did not oppose the Lea Power cost recovery rider.
  • 6Rebuttal testimony is due on March 28, 2008, and a hearing is scheduled for April 9-23, 2008, indicating continued progress in the rate case.

Frequently Asked Questions

The main event is the filing of intervenor and NMPRC staff testimony in the Southwestern Public Service Company (SPS) New Mexico retail electric general rate case. This testimony provides recommendations on the requested rate increase, which are notably lower than what SPS originally proposed.

Xcel Energy's subsidiary, SPS, requested an annual increase of $17.3 million (6.6%). However, the NMPRC staff recommended an increase of approximately $8 million, and the Attorney General recommended a decrease of $2 million. These recommendations are significantly lower than SPS's request.

Key concerns raised by intervenors include the recommended disallowance of prepaid pension from the rate base, and questions about the appropriateness of the proposed rider for recovering future purchased capacity costs for the Lea Power Partner project. The recommended rates of return on equity (ROE) are also lower than what SPS requested.

The next steps involve the filing of rebuttal testimony by March 28, 2008, followed by a hearing scheduled from April 9 to April 23, 2008. These proceedings will further develop the arguments before a final decision is made by the NMPRC.