Summary
Xcel Energy Inc.'s wholly-owned subsidiary, Public Service Company of Colorado (PSCo), filed a multi-year request with the Colorado Public Utilities Commission (CPUC) on June 27, 2017, to increase retail natural gas rates. The filing seeks to recover approximately $139 million in new revenue over three years (2018-2020), with an initial increase of $63.2 million in 2018. The request is based on a forecast test year, a 10.0% return on equity (ROE), and a 55.25% equity ratio. Notably, PSCo also proposed to convert pipeline system integrity adjustment (PSIA) revenue into base rates, which is expected to be revenue neutral initially but will incorporate future investments into base rates for recovery.
Key Highlights
- 1PSCo is seeking an increase in natural gas rates, with a total new revenue request of $139 million over three years (2018-2020), starting with $63.2 million in 2018.
- 2The rate increase request is based on a forecast test year (FTY) and proposes a 10.0% return on equity (ROE) and a 55.25% equity ratio.
- 3A significant portion of the proposed revenue includes the conversion of Pipeline System Integrity Adjustment (PSIA) revenue into base rates, impacting future recovery mechanisms.
- 4Regulatory bodies, including the CPUC Staff and Office of Consumer Counsel, have filed answer testimony, recommending a historic test year (HTY) and opposing the multi-year plan.
- 5Staff and OCC proposed lower ROE (9.0%) and different capital structures, leading to significantly reduced recommended rate increases ($23.5 million and $36.3 million, respectively) compared to PSCo's filing.
- 6Interim rates, subject to refund, are expected to be effective January 1, 2018, with a final CPUC decision anticipated in March 2018.
Frequently Asked Questions
The primary purpose of this filing is for Xcel Energy's subsidiary, Public Service Company of Colorado (PSCo), to request an increase in its retail natural gas rates from the Colorado Public Utilities Commission (CPUC) to recover past capital investments and higher operating costs.
PSCo is requesting approximately $63.2 million in new revenue for 2018, with a total multi-year request of $139 million through 2020. A key component of this is the conversion of existing Pipeline System Integrity Adjustment (PSIA) rider revenue into base rates, which will include recovery of future investments in subsequent years.
The CPUC Staff and the Office of Consumer Counsel (OCC) oppose PSCo's multi-year plan and forecast test year. They recommend using a historic test year, propose a lower return on equity (9.0% versus PSCo's 10.0%), and suggest different capital structures, resulting in significantly lower recommended rate increases.
Interim rates, subject to refund, are scheduled to become effective on January 1, 2018. A final decision from the CPUC is anticipated in March 2018.