8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Apr 22, 2009)

Filed April 22, 2009For Securities:XELXELLL

Summary

Xcel Energy Inc. (XEL) filed an 8-K on April 22, 2009, primarily detailing a settlement agreement reached by its subsidiary, Public Service Company of Colorado (PSCo), with the Colorado Public Utilities Commission (CPUC) and other intervenors regarding a proposed electric rate increase. The original request by PSCo for a $174.7 million annual rate increase was significantly revised through negotiations. The settlement, filed on April 10, 2009, and finalized on April 22, 2009, proposes an overall increase in base rates of $112.2 million. This is substantially lower than the initial request and the CPUC staff's recommendation of $132.9 million. While the settlement resolves the overall revenue deficiency, specific contentious issues such as the authorized return on equity (ROE) and capital structure remain undecided. Notably, the settlement addresses the treatment of Construction Work in Progress (CWIP) for the Comanche Unit 3, removing incremental CWIP not in existing rates from the rate base, but allowing Xcel Energy to continue recording Allowance for Funds Used During Construction (AFDC) income on this balance until the unit is operational. The company is reaffirming its 2009 earnings guidance.

Key Highlights

  • 1Xcel Energy's subsidiary, Public Service Company of Colorado (PSCo), reached a settlement agreement regarding a proposed electric rate increase.
  • 2The settlement proposes an overall increase in base rates of $112.2 million annually, a reduction from the initial request of $174.7 million.
  • 3Key issues such as Return on Equity (ROE) and capital structure were not definitively resolved in the settlement, but the case is progressing.
  • 4The treatment of Construction Work in Progress (CWIP) for the Comanche Unit 3 is addressed, with incremental CWIP removed from rate base but AFDC income allowed until completion.
  • 5The CPUC staff's recommendation for the rate increase was $132.9 million, indicating the settlement is a compromise.
  • 6Hearings on the settlement are scheduled to begin April 24, 2009, with a final decision anticipated in summer 2009.
  • 7New rates under the settlement are expected to be effective July 1, 2009.
  • 8Xcel Energy reaffirmed its 2009 earnings per share (EPS) guidance of $1.45 to $1.55.

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