8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Nov 2, 2016)

Filed November 2, 2016For Securities:XELXELLL

Summary

Xcel Energy Inc. (XEL) announced on November 2, 2016, that its wholly-owned subsidiary, Southwestern Public Service Company (SPS), filed an electric rate case with the New Mexico Public Regulation Commission (NMPRC). SPS is seeking an approximate $41.4 million increase in base rates, which represents a 10.9% rise in total revenue. This filing is based on a future test year ending June 30, 2018, and requests a 10.1% return on equity. The rate increase is driven by several factors including capital expenditures, adjustments for declining wholesale sales, transmission expenses, and depreciation, particularly an adjustment to the service life of the Tolk generating station. SPS has excluded fuel and purchased power costs from base rates as previously ordered by the NMPRC. While SPS aims for new rates to be effective December 1, 2016, it anticipates the NMPRC will suspend them pending review. A final decision and implementation of rates are expected in the second half of 2017. Investors should monitor the NMPRC's review process and the final outcome, as this rate increase could impact Xcel Energy's future revenues and profitability in its New Mexico operations.

Key Highlights

  • 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, filed for a $41.4 million (10.9%) increase in electric base rates in New Mexico.
  • 2The requested rate increase is based on a future test year ending June 30, 2018, and includes a requested return on equity of 10.1%.
  • 3Key drivers for the rate increase include capital expenditures ($20.1 million), allocator changes due to wholesale load reductions ($11.5 million), transmission expenses ($4.7 million), and depreciation adjustments for the Tolk generating station ($3.6 million).
  • 4Fuel and purchased power costs remain excluded from base rates, per previous NMPRC orders.
  • 5SPS requested the new rates to take effect on December 1, 2016.
  • 6The NMPRC is expected to suspend the proposed rates and a decision is anticipated in the second half of 2017.
  • 7The filing includes forward-looking statements with associated risks and uncertainties that could impact actual outcomes.

Frequently Asked Questions

The primary purpose of this 8-K filing is to inform investors that Xcel Energy's subsidiary, Southwestern Public Service Company (SPS), has filed for an electric rate increase with the New Mexico Public Regulation Commission (NMPRC). This could impact the company's future revenues and profitability in New Mexico.

SPS is requesting an increase in base rates of approximately $41.4 million, which represents a total revenue increase of approximately 10.9 percent.

SPS has requested that the new rates go into effect on December 1, 2016. However, the company expects the NMPRC to suspend these rates pending review, with a final decision and implementation of rates anticipated in the second half of 2017.

The major components contributing to the requested rate increase include capital expenditures ($20.1 million), allocator changes due to wholesale load reductions ($11.5 million), transmission expenses ($4.7 million), and depreciation, including an adjustment to the service life of the Tolk generating station ($3.6 million).