8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Mar 4, 2015)

Filed March 4, 2015For Securities:XELXELLL

Summary

Xcel Energy Inc.'s subsidiary, Public Service Company of Colorado (PSCo), has filed a multi-year request with the Colorado Public Utilities Commission (CPUC) seeking an increase in natural gas base rates. The initial request for 2015 is for a $40.5 million (3.5%) increase, followed by step increases of $7.6 million (0.7%) in 2016 and $18.1 million (1.5%) in 2017. This filing outlines the proposed rate base, return on equity (ROE) targets (ranging from 10.1% to 10.3%), and includes an earnings test mechanism for 2016-2017 where both PSCo and customers would share in excess earnings.

Key Highlights

  • 1PSCo filed a multi-year rate increase request with the CPUC totaling $40.5 million for 2015, with subsequent annual increases planned for 2016 and 2017.
  • 2The proposed rate increases are driven by historic test year data adjusted for known expenses and capital additions.
  • 3PSCo is requesting ROE targets between 10.1% and 10.3% for the period.
  • 4A new earnings sharing mechanism is proposed for 2016-2017, where PSCo and customers would split earnings if ROE falls within specified ranges.
  • 5The company also seeks to extend its pipeline system integrity adjustment (PSIA) rider through 2020 to recover pipeline renewal costs.
  • 6The PSIA rider extension is expected to have a negative revenue impact of $0.1 million in 2015 but generate incremental revenues of $21.7 million in 2016 and $21.2 million in 2017.
  • 7A decision from the CPUC and implementation of final rates are anticipated in Q4 2015.

Frequently Asked Questions

This 8-K filing announces that Xcel Energy's subsidiary, Public Service Company of Colorado (PSCo), has filed a request with the Colorado Public Utilities Commission (CPUC) to increase its retail natural gas base rates over a multi-year period and extend a pipeline integrity cost recovery rider.

PSCo is requesting a $40.5 million increase (3.5%) in 2015, followed by step increases of $7.6 million (0.7%) in 2016 and $18.1 million (1.5%) in 2017. A decision is expected in the fourth quarter of 2015.

The PSIA rider allows PSCo to recover costs associated with its pipeline integrity efforts and accelerated system renewal projects. An extension through 2020 is requested to continue recovering these specific costs. If not extended, these costs would be incorporated into base rates.

For 2016 and 2017, PSCo is proposing an earnings test where if the realized Return on Equity (ROE) falls within a specific range (10.2%-10.6% for 2016 and 10.4%-10.8% for 2017), PSCo and its customers would share any earnings above the allowed ROE on a 50/50 basis.