8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Jun 10, 2015)

Filed June 10, 2015For Securities:XELXELLL

Summary

This 8-K filing from Xcel Energy Inc. (XEL) on June 10, 2015, details the ongoing retail electric rate case for its wholly-owned subsidiary, Southwestern Public Service Company (SPS), in Texas. Initially seeking an increase of $64.8 million, SPS revised its request to $58.9 million. Several intervenors, including the Alliance of Xcel Municipalities (AXM) and the Office of Public Utility Counsel (OPUC), along with the Public Utility Commission of Texas (PUCT) Staff, have filed testimony recommending rate decreases ranging from $13.6 million to $2.6 million, primarily due to lower proposed returns on equity and various expense adjustments. SPS has filed rebuttal testimony, revising its requested revenue increase to $42.1 million, indicating a willingness to concede on certain points like pension and property tax expenses, but maintaining its request for post-test year plant additions and agreeing to some Staff positions. Investors should note the significant divergence between SPS's revised request and the recommendations of intervenors and staff. The key points of contention appear to be the inclusion of certain capital investments made after the test year and the authorized rate of return on equity (ROE). The PUCT is expected to issue an order in the fourth quarter of 2015, which will determine the final rates. The outcome of this rate case is crucial for SPS's future revenue and profitability, and therefore for Xcel Energy's overall financial performance.

Key Highlights

  • 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, is involved in a Texas retail electric rate case.
  • 2SPS initially requested a $64.8 million annual revenue increase, later revised to $58.9 million.
  • 3Intervenors and PUCT Staff have recommended rate decreases, citing lower ROE and various adjustments.
  • 4SPS filed rebuttal testimony proposing a revised revenue increase of $42.1 million, accepting some intervenor positions.
  • 5A key disagreement remains over the inclusion of post-test year capital investments and the ROE.
  • 6An evidentiary hearing is scheduled for June 24, 2015.
  • 7A final PUCT order is expected in the fourth quarter of 2015, with new rates potentially effective June 11, 2015.

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