8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Dec 9, 2014)

Filed December 9, 2014For Securities:XELXELLL

Summary

Xcel Energy Inc.'s wholly owned subsidiary, Southwestern Public Service Company (SPS), has filed a retail electric rate case in Texas seeking an annual revenue increase of approximately $64.75 million, representing a 6.7% rise. This filing is based on a historic test year ending June 2014 and includes requests for a 10.25% return on equity and an electric rate base of $1.56 billion. Key drivers for the requested increase include investments in capital expenditures, revised depreciation expenses, reduced wholesale load, and incremental purchased power costs. Investors should note that the Public Utility Commission of Texas (PUCT) has the authority to suspend the rate increase until June 11, 2015. SPS has requested that current rates be made temporary starting January 12, 2015, with final rates to be effective retroactively from that date. This would allow SPS to collect any difference between temporary and final rates through a surcharge. A decision from the PUCT is anticipated in mid-2015.

Key Highlights

  • 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, filed a Texas rate case seeking a $64.75 million (6.7%) annual revenue increase.
  • 2The filing is based on a historic test year ending June 2014, with a requested return on equity of 10.25%.
  • 3SPS is requesting inclusion of $442 million in additional capital investment for the period July 1, 2014, through December 31, 2014, which requires a waiver of a PUCT rule.
  • 4Key factors driving the rate increase request include capital expenditures, depreciation expense changes, wholesale load reductions, and purchased power costs.
  • 5The PUCT can suspend the proposed rate increase until June 11, 2015.
  • 6SPS has requested temporary rates be effective from January 12, 2015, with the possibility of retroactive rate adjustments and surcharges.
  • 7A decision from the PUCT is expected in mid-2015.

Frequently Asked Questions

This 8-K filing announces that Xcel Energy's subsidiary, Southwestern Public Service Company (SPS), has filed a rate case in Texas seeking to increase its annual retail electric revenues by approximately $64.75 million (6.7%).

The increase is driven by several factors including investments in capital expenditures (including a request to include post-test year investments), revised depreciation expenses based on a new study, reduced wholesale load, and incremental purchased power capacity costs.

The Public Utility Commission of Texas (PUCT) can suspend the proposed increase through June 11, 2015. SPS has requested temporary rates effective January 12, 2015, with a final decision anticipated in mid-2015. If approved, the final rates could be retroactive to January 12, 2015, potentially resulting in a surcharge for customers.

SPS is seeking a waiver to include approximately $442 million in additional capital investment made after the standard test year ended June 2014. Approving this waiver would allow these investments to be factored into the rate calculation, potentially supporting a higher rate base and thus the requested revenue increase.