8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (May 26, 2011)

Filed May 26, 2011For Securities:XELXELLL

Summary

This Form 8-K filing by Xcel Energy Inc. (XEL) on May 26, 2011, primarily concerns a significant development in a retail gas rate case for its subsidiary, Public Service Company of Colorado (PSCo). PSCo had initially requested a $27.5 million rate increase, later revised to $25.6 million. Following extensive proceedings involving intervenors, CPUC Staff, and the Office of Consumer Counsel (OCC), a settlement has been reached. The proposed settlement, filed on May 25, 2011, calls for a $10.9 million increase in base rates. Importantly, it also includes provisions to recover future pipeline integrity management costs through a rider starting in 2012, estimated to generate around $14 million annually. Furthermore, underground gas storage costs will be removed from base rates and recovered through the Gas Cost Adjustment (GCA) rider, expected to generate an additional $10 million in annual incremental revenue. The Colorado Public Utilities Commission (CPUC) is expected to make a decision on this settlement in June 2011.

Key Highlights

  • 1Public Service Company of Colorado (PSCo), a subsidiary of Xcel Energy, reached a settlement for a gas rate increase.
  • 2The settlement proposes a $10.9 million increase in base retail gas rates.
  • 3Future pipeline integrity management costs will be recovered through a new rider, estimated at $14 million annually starting January 1, 2012.
  • 4Underground gas storage costs will be removed from base rates and recovered via the Gas Cost Adjustment (GCA) rider, expected to yield $10 million annually.
  • 5The settlement was filed on May 25, 2011, with the Colorado Public Utilities Commission (CPUC).
  • 6A decision from the CPUC on the settlement is anticipated in June 2011.
  • 7The proposed new base rates and GCA recovery are expected to go into effect on September 5, 2011.

Frequently Asked Questions

The main purpose of this 8-K filing is to report a significant development in a gas rate case for Xcel Energy's subsidiary, Public Service Company of Colorado (PSCo). Specifically, it announces a comprehensive settlement reached with the Colorado Public Utilities Commission (CPUC) Staff and the Office of Consumer Counsel (OCC) regarding proposed changes to retail gas rates.

The proposed settlement includes a $10.9 million increase in base rates. Additionally, the recovery of pipeline integrity costs through a rider is estimated to generate $14 million in 2012, and the recovery of underground storage costs through the Gas Cost Adjustment (GCA) rider is expected to generate $10 million annually. The total incremental revenue from these components is significant, though the exact combined impact will depend on the CPUC's final decision and actual cost recovery.

If the settlement is approved, the new base rates and the Gas Cost Adjustment (GCA) rider for underground storage costs are expected to go into effect on September 5, 2011. The rider for pipeline integrity management costs is scheduled to become effective on January 1, 2012.

PSCo initially filed a request to increase Colorado retail gas rates by $27.5 million in December 2010. This was revised in March 2011 to $25.6 million. The settlement reached in May 2011 proposes a base rate increase of $10.9 million, which is substantially lower than the initial requests, along with the new rider mechanisms for specific cost recoveries.