Summary
Xcel Energy Inc. (XEL) has filed an 8-K report on July 8, 2013, detailing the progress and recommendations from the Minnesota electric rate case initiated by its subsidiary, Northern States Power Company (NSP-Minnesota). The report outlines the ongoing proceedings before the Minnesota Public Utilities Commission (MPUC), including initial revenue increase requests, subsequent revisions, and the testimony of various intervenors such as the Department of Commerce (DOC) and the Office of Attorney General (OAG). The most significant development reported is the Minnesota Administrative Law Judge's (ALJ) recommendation issued on July 3, 2013. The ALJ proposed a rate increase of approximately $127 million, a reduction from NSP-Minnesota's initial request of $285 million and its revised request of $209 million. The ALJ's recommendation also includes approximately $51 million in deferrals, with an estimated $34 million impacting net income. Key areas of contention and recommendation include the Sherco Unit 3, Monticello LCM/EPU project, and the cancelled Prairie Island EPU project. The MPUC is expected to issue its final order in September 2013. Despite the lower recommendation, Xcel Energy reaffirms its 2013 earnings guidance, contingent on constructive regulatory outcomes.
Key Highlights
- 1NSP-Minnesota, a subsidiary of Xcel Energy, filed for an approximate $285 million (10.7%) annual revenue increase in November 2012, based on a 2013 forecast test year.
- 2The revenue request was revised to approximately $219.7 million (8.23%) in March 2013, reflecting various adjustments and proposals related to plant operations and expenses.
- 3Intervenors, including the DOC and OAG, presented their own recommendations, with the DOC initially suggesting an $89.6 million increase and later revising it to approximately $98.6 million.
- 4On July 3, 2013, the Minnesota ALJ recommended a rate increase of approximately $127 million, based on a 9.83% ROE and an electric rate base of $6.233 billion.
- 5The ALJ's recommendation includes approximately $51 million in deferrals, estimated to impact net income by $34 million, primarily related to Sherco Unit 3 and pension costs.
- 6Key projects like Sherco Unit 3 and Monticello LCM/EPU have been addressed, with the ALJ suggesting Sherco Unit 3 is 'used and useful' but deferring the prudency of Monticello costs and the recovery of cancelled Prairie Island EPU project costs to the next rate case.
- 7Xcel Energy reaffirms its 2013 earnings guidance of $1.85 to $1.95 per share, assuming constructive outcomes in regulatory proceedings, including the final MPUC decision expected in September 2013.