Summary
Xcel Energy Inc. (XEL), through its subsidiary Northern States Power Company Minnesota (NSP-Minnesota), has filed an 8-K report detailing significant developments in its electric rate cases in Minnesota and North Dakota. In Minnesota, the Public Utilities Commission (MPUC) has approved interim electric rates of $127 million, or 4.6%, effective January 3, 2014, subject to refund. This interim approval includes costs for Sherco Unit 3 and an accelerated depreciation reserve amortization, though a final decision on the broader two-year rate case is not expected until Q1 2015. The company's original request for Minnesota was for approximately $193 million (6.9%) in 2014 and an additional $98 million (3.5%) in 2015, driven by investments in carbon-free generation, reliability infrastructure, and recovery of prior case costs. In North Dakota, NSP-Minnesota has reached a settlement agreement with the North Dakota Public Service Commission (NDPSC) Advocacy Staff for a four-year rate plan. This settlement includes a 5% annual increase in retail revenues from February 2013 through 2015, with no increase in 2016. Key terms involve the approval of new rate riders for transmission and renewable costs, a phased authorized Return on Equity (ROE), and a 50% earnings sharing mechanism. The settlement also includes a commitment to develop a generation cost allocation mechanism and to construct up to 400 MW of thermal generation in North Dakota by 2036, subject to planning principles. Investors should monitor the finalization of these rate cases as they will directly impact future revenue and profitability.
Key Highlights
- 1Minnesota Public Utilities Commission (MPUC) approved interim electric rates of $127 million (4.6%) for NSP-Minnesota, effective January 3, 2014, subject to refund.
- 2The Minnesota interim rate approval includes costs for Sherco Unit 3 and an accelerated depreciation reserve amortization.
- 3A final MPUC decision for the Minnesota rate case is anticipated in the first quarter of 2015.
- 4NSP-Minnesota filed a two-year rate case seeking approximately $193 million (6.9%) in 2014 and an additional $98 million (3.5%) in 2015.
- 5NSP-Minnesota reached a settlement agreement with NDPSC Advocacy Staff for a four-year rate plan in North Dakota.
- 6The North Dakota settlement provides for a 5% annual increase in retail revenues from Feb 2013 through 2015 and includes a 50% earnings sharing mechanism.
- 7The North Dakota settlement includes a commitment to construct up to 400 MW of thermal generation by 2036, subject to planning principles.