Summary
Xcel Energy Inc. (XEL) disclosed a significant regulatory setback for its subsidiary, Public Service Company of Colorado (PSCo). On January 11, 2012, the Colorado Public Utilities Commission (CPUC) denied PSCo's request for an interim electric rate increase of $100 million, which was intended to be effective in January 2012. The CPUC cited PSCo's strong financial condition and a lack of demonstrated extraordinary drivers for the revenue deficiency. This decision is expected to increase regulatory lag in Colorado and negatively impact Xcel Energy's 2012 financial results. In addition to the regulatory challenge, Xcel Energy cited sluggish sales, warmer-than-normal winter weather, and higher property taxes as headwinds. Consequently, the company now anticipates its 2012 earnings will be at the lower end of its previously stated guidance range of $1.75 to $1.85 per share. Management is committed to implementing cost reductions to mitigate these impacts and plans to provide further details during its fourth-quarter earnings call on February 2, 2012.
Key Highlights
- 1Colorado Public Utilities Commission (CPUC) denied PSCo's request for a $100 million interim electric rate increase.
- 2The denial was based on PSCo's perceived strong financial condition and insufficient evidence of extraordinary revenue deficiency drivers.
- 3Xcel Energy anticipates this decision will increase regulatory lag and negatively impact 2012 financial results.
- 4The company is experiencing additional headwinds including sluggish sales, warm weather, and higher property taxes.
- 5Xcel Energy now forecasts its 2012 earnings per share to be at the lower end of the $1.75 to $1.85 guidance range.
- 6Management plans to implement cost reduction measures to offset negative impacts.
- 7Further details on these developments will be provided during the Q4/year-end earnings call on February 2, 2012.