Summary
Xcel Energy Inc. (XEL), through its wholly owned subsidiary Southwestern Public Service Company (SPS), has filed a significant retail electric rate increase case in Texas. The filing seeks a $66.4 million, or 7.1 percent, increase in non-fuel base rates from Texas municipalities and the Public Utility Commission of Texas (PUCT). This request is primarily to recover an additional $758 million in new and upgraded electric facilities and equipment that have been invested in from January 1, 2016, through June 30, 2017. The case is based on a 12-month period ending June 30, 2017, with estimated data for the last three months. SPS is requesting a 10.25 percent rate of return on equity and has outlined its proposed rate base and equity ratio. Notably, under Texas legislation, the final approved rates are expected to be effective retroactively to January 2018, with SPS eligible to collect a surcharge for usage from January 2018 until final rates are implemented. A PUCT decision is anticipated in the second quarter of 2018. Investors should monitor this regulatory proceeding as it directly impacts revenue and profitability in SPS's Texas service territory.
Key Highlights
- 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, filed for a $66.4 million (7.1%) retail electric non-fuel base rate increase in Texas.
- 2The rate increase aims to recover $758 million in capital investments for new and upgraded electric facilities and equipment made between January 1, 2016, and June 30, 2017.
- 3The request is based on a 12-month period ending June 30, 2017, with estimates for the final three months.
- 4SPS is seeking a rate of return on equity of 10.25 percent, with a Texas retail electric rate base of approximately $1.9 billion.
- 5Approved rates are expected to be effective retroactively to January 2018, with a surcharge for the interim period.
- 6A decision from the Public Utility Commission of Texas (PUCT) is anticipated in the second quarter of 2018.
- 7The filing includes a conversion of the Transmission Cost Recovery Factor (TCRF) into base rates, which is stated to have no immediate impact on customer bills or total revenue.