Summary
This 8-K filing from Xcel Energy Inc. (XEL) on August 12, 2016, provides an update on the electric rate case for its subsidiary, Southwestern Public Service Company (SPS), in New Mexico. Following a settlement (stipulation) reached by all parties, the New Mexico Public Regulatory Commission (NMPRC) approved a non-fuel base rate increase of $23.5 million for SPS. Importantly, the decrease in base fuel revenue of approximately $21.1 million will be recovered through the fuel and purchased power cost adjustment clause (FPPCAC), meaning the net revenue impact from the rate case is neutral, although the structure of revenue recovery has been adjusted. The decision also allows SPS to file its next base rate case without restriction. Furthermore, Xcel Energy is reaffirming its 2016 ongoing earnings guidance of $2.12 to $2.27 per diluted share. This guidance is contingent upon constructive outcomes in all ongoing rate cases and regulatory proceedings, including the SPS case that has now been resolved as detailed in this report. Investors should note that while the net revenue impact of the SPS rate case is neutral, the approved rate structure and the lack of restrictions on future filings are key takeaways.
Key Highlights
- 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, will implement a non-fuel base rate increase of $23.5 million, as approved by the New Mexico Public Regulatory Commission (NMPRC).
- 2A decrease in base fuel revenue of approximately $21.1 million will be offset by adjustments through the fuel and purchased power cost adjustment clause (FPPCAC), resulting in no net revenue change from the rate case settlement.
- 3The NMPRC approved a unanimous black-box stipulation resolving all issues in the SPS electric rate case.
- 4The hearing examiner recommended, and the NMPRC approved, removing all fuel and purchased power costs from base rates, with recovery solely through the FPPCAC.
- 5The stipulation places no restrictions on when SPS may file its next base rate case.
- 6Xcel Energy is reaffirming its 2016 ongoing earnings guidance of $2.12 to $2.27 per diluted share.
- 7The reaffirmation of earnings guidance assumes constructive outcomes in all rate case and regulatory proceedings, including the now-resolved SPS case.