What is the main outcome of the CPUC's decision on PSCo's natural gas rate case?

The CPUC's preliminary decision, largely following an administrative law judge's recommendation, approves a base rate increase for PSCo totaling $18.8 million for 2015 and $20.0 million for 2016. This represents a moderated increase compared to PSCo's initial request and includes a shift of certain pipeline integrity costs into base rates.

How will the approved Return on Equity (ROE) impact Xcel Energy?

The CPUC has set the ROE at 9.5% and the equity ratio at 56.51%. This is lower than what PSCo had requested, which could lead to slightly lower profitability than originally projected for this segment, but Xcel Energy has reaffirmed its overall 2016 earnings guidance, suggesting the impact is factored in.

What happens with the Pipeline System Integrity Adjustment (PSIA) rider?

The PSIA rider will be extended through 2018. A key aspect of the decision is that a significant portion of PSIA costs, originally intended to be recovered through the rider, will be transferred to and recovered through base rates starting in 2016. This provides a more stable recovery mechanism for these costs.

Are customers likely to receive a refund on their gas bills?

Interim rates went into effect on October 1, 2015, and are subject to refund. The final decision from the CPUC will determine the exact revenue requirement, and if the final rates are lower than the interim rates collected, customers could receive a refund. The potential refund obligation has been estimated by management.

XEL/XELLL 8-K SEC Disclosure

Summary

Xcel Energy Inc.'s subsidiary, Public Service Company of Colorado (PSCo), has reached a preliminary decision with the Colorado Public Utilities Commission (CPUC) regarding its multi-year natural gas rate increase request. The CPUC's decisions, largely aligned with an administrative law judge's recommendation, propose a base rate increase of $18.8 million for 2015 and $20.0 million for 2016, with no base rate increase for 2017. This outcome is generally less than PSCo's initial request and involves shifting certain pipeline integrity costs to base rates and extending the related rider. The decision sets a lower Return on Equity (ROE) of 9.5% and an equity ratio of 56.51%, compared to PSCo's requested ROE. The pipeline system integrity adjustment (PSIA) rider will be extended through 2018, with a significant portion of its costs now integrated into base rates. While interim rates have been in effect since October 2015, subject to refund, a final order is expected in Q1 2016. Xcel Energy has reaffirmed its 2016 ongoing earnings guidance, implying confidence in managing these regulatory outcomes.

Key Highlights

1Public Service Company of Colorado (PSCo), a subsidiary of Xcel Energy, has received preliminary decisions from the Colorado Public Utilities Commission (CPUC) on its natural gas rate case.
2The CPUC's decision generally aligns with the administrative law judge's recommendation, proposing a total base rate increase of $18.8 million for 2015 and $20.0 million for 2016.
3The approved Return on Equity (ROE) is set at 9.5%, with an equity ratio of 56.51%, which is lower than the company's initial request.
4The Pipeline System Integrity Adjustment (PSIA) rider is extended through 2018, with a substantial shift of associated costs into base rates.
5Interim rates, subject to potential customer refunds, have been in effect since October 1, 2015, with a final order anticipated in the first quarter of 2016.
6Xcel Energy reaffirms its 2016 ongoing earnings guidance of $2.12 to $2.27 per share, suggesting these regulatory outcomes are manageable within expectations.
7The final revenue requirement and potential customer refund obligations are still subject to the final written order.

XCEL ENERGY INC 8-K Report, Corporate Update (Feb 1, 2016)

Summary

Key Highlights

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