Summary
Xcel Energy Inc. (XEL) reported on April 3, 2012, through an 8-K filing, significant developments concerning two major rate cases for its subsidiaries, NSP-Minnesota and PSCo (Public Service Company of Colorado). The filing details the progress and outcomes of these rate increase requests, which are crucial for the company's revenue and future investments. Investors should note the approved settlement for NSP-Minnesota, which includes a total rate increase of approximately $72.8 million over 2011 and 2012, based on a 10.37% return on equity. For PSCo, a comprehensive multi-year settlement agreement for 2012 through 2014 was reached, outlining annual electric rate increases totaling $73 million in 2012, with further increases planned for 2013 and 2014. This settlement also introduces an earnings-sharing mechanism between customers and shareholders and restricts PSCo from filing for new electric rate increases before 2015. Furthermore, the filing provides updated 2012 earnings guidance. Xcel Energy anticipates first-quarter 2012 earnings to be significantly lower than the prior year due to warmer weather, expensed incremental property taxes in Minnesota (pending regulatory approval for deferral), higher operating and maintenance (O&M) and depreciation expenses, and delayed rate implementation in Colorado. Despite the lower Q1 results, the company maintains its full-year 2012 earnings per share guidance to be in the lower half of the $1.75 to $1.85 range. The information highlights the company's proactive management of regulatory processes and its commitment to delivering earnings within its projected range, despite near-term challenges.
Key Highlights
- 1NSP-Minnesota reached a settlement agreement for an electric rate increase of approximately $58 million in 2011 and $14.8 million in 2012, with an authorized Return on Equity (ROE) of 10.37%.
- 2PSCo and various parties filed a comprehensive multi-year settlement agreement covering 2012-2014, resolving all financial issues.
- 3PSCo's settlement includes an annual electric rate increase of $73 million effective May 1, 2012, subject to refund, with incremental increases of $16 million in 2013 and $25 million in 2014.
- 4The PSCo settlement sets an authorized ROE of 10% and an equity ratio of 56%, and includes an earnings-sharing mechanism for profits above 10.0% ROE.
- 5Xcel Energy expects first-quarter 2012 earnings to be significantly lower than Q1 2011 due to factors including warmer weather and deferred property tax expenses.
- 6The company reaffirms its full-year 2012 earnings per share guidance in the lower half of the $1.75 to $1.85 range.
- 7PSCo agrees not to file for an electric rate increase effective prior to January 1, 2015, under the terms of the settlement.