Summary
Xcel Energy Inc. (XEL) has filed a Form 8-K detailing significant developments in a North Dakota retail electric rate case initiated by its subsidiary, Northern States Power Company (NSP-Minnesota). NSP-Minnesota had initially requested a $20.5 million increase in rates, or approximately 14 percent, based on an 11.50% return on equity. Interim rates of $17.2 million were implemented in February 2008. A recent stipulation settlement between NSP-Minnesota and NDPSC staff proposed a lower return on equity of 10.75%, including an earnings-sharing mechanism. However, on May 21, 2008, the NDPSC Staff filed testimony recommending an overall base rate decrease of $200,000. This recommendation is driven by proposed disallowances for costs related to environmental mandates, customer refunds for asset retirement obligations, changes in depreciation rates, and the stipulated ROE. These proposed decreases are partially offset by a $2.9 million positive impact from reclassifying wholesale margins and transmission costs.
Key Highlights
- 1NSP-Minnesota initially sought a $20.5 million (14%) increase in North Dakota retail electric rates.
- 2Interim rates totaling $17.2 million became effective in February 2008.
- 3A stipulation settlement proposed a 10.75% return on equity (ROE) with an earnings-sharing mechanism, subject to NDPSC approval.
- 4NDPSC Staff recommended a base rate decrease of $200,000 on May 21, 2008, contrary to the initial request.
- 5Key disallowances proposed by NDPSC Staff include investments for Minnesota environmental mandates and customer refunds for asset retirement obligations.
- 6The NDPSC Staff's recommendation is partially offset by a $2.9 million benefit from reclassifying certain wholesale and transmission costs.
- 7The final order from the NDPSC is expected in August 2008, with new rates anticipated to be effective October 1, 2008.