Summary
Xcel Energy Inc.'s subsidiary, Public Service Company of Colorado (PSCo), filed an 8-K on March 5, 2012, to report on the progress of its electric rate increase request with the Colorado Public Utilities Commission (CPUC). PSCo initially requested a $141.9 million increase for 2012, citing increased operational costs, depreciation, property taxes, and pension expenses, as well as the impact of expiring contracts. The company sought interim rates to mitigate these impacts, but these requests were denied by the CPUC, with a partial allowance for deferred accounting of specific contract-related costs. The filing details that PSCo updated its revenue deficiency to $153.2 million, though the requested amount remains $141.9 million due to notice requirements. Various parties, including the CPUC Staff and the Office of Consumer Counsel, have filed answer testimony recommending significantly lower rate increases, ranging from $7.3 million to $9.4 million, and proposing lower returns on equity and adjustments to costs. PSCo is currently engaged in settlement discussions and expects final rates to be determined in the summer of 2012. Investors should monitor the outcome of these settlement discussions and the final CPUC decision, as the proposed rate increase and recommended outcomes vary substantially.
Key Highlights
- 1Public Service Company of Colorado (PSCo), a subsidiary of Xcel Energy, filed for a $141.9 million retail electric rate increase with the Colorado Public Utilities Commission (CPUC).
- 2The primary drivers for the requested rate increase include higher depreciation expense, property taxes, distribution operating and maintenance costs, and pension expenses, alongside impacts from expiring contracts.
- 3PSCo's requests for interim rate increases totaling $100 million and later $42 million were denied by the CPUC, although the CPUC approved deferred accounting for $42 million in annual revenue requirements related to an expiring contract.
- 4PSCo later updated its cost of service, indicating a revenue deficiency of $153.2 million, although the rate case request remains at $141.9 million.
- 5Several parties, including CPUC Staff and the Office of Consumer Counsel, recommended much lower rate increases (e.g., $7.3 million to $9.4 million) and proposed lower returns on equity.
- 6PSCo is involved in settlement discussions with various parties as an alternative to a full rate case proceeding.
- 7Final rates are anticipated to be effective in the summer of 2012.