8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (May 4, 2018)

Filed May 4, 2018For Securities:XELXELLL

Summary

Xcel Energy Inc. (XEL) subsidiary Southwestern Public Service Company (SPS) has updated investors on two significant electric rate cases in Texas and New Mexico. In Texas, SPS initially sought a $55 million base rate increase, but subsequent filings related to the Tax Cuts and Jobs Act (TCJA) and various stakeholder testimonies have led to revised proposals ranging from a $7 million increase to a $39 million decrease. The Public Utility Commission of Texas (PUCT) is expected to issue a decision in the fourth quarter of 2018, with final rates potentially effective retroactively to January 23, 2018. In New Mexico, SPS initially requested a $43 million rate increase. Following the TCJA impact and further testimony, SPS has revised its request down to $27 million. Other parties have proposed even lower increases, with some suggesting as little as $7 million. Hearings are underway, and a decision is anticipated in the second half of 2018. These rate cases are crucial for Xcel Energy as they will impact the revenue and profitability of its SPS subsidiary.

Key Highlights

  • 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, is undergoing two major electric rate case proceedings in Texas and New Mexico.
  • 2The Texas rate case began with a $55 million requested increase, but testimony from intervenors and PUCT Staff, considering the Tax Cuts and Jobs Act (TCJA), has led to a wide range of proposed outcomes, including potential revenue reductions.
  • 3In New Mexico, SPS has reduced its initial $43 million rate increase request to $27 million, with other parties proposing even lower figures.
  • 4The TCJA has a significant impact on revenue requirements in both states, necessitating adjustments to the proposed rate increases.
  • 5The PUCT is expected to make a decision on the Texas rate case in Q4 2018, while New Mexico's decision is anticipated in the second half of 2018.
  • 6Key procedural milestones, including cross-rebuttal testimony and hearings, are scheduled for May and June 2018 for both states.
  • 7Final rates, if approved, may be effective retroactively for the Texas case.

Frequently Asked Questions

This 8-K filing provides an update on the ongoing electric rate cases for Xcel Energy's subsidiary, Southwestern Public Service Company (SPS), in Texas and New Mexico, detailing the progress, stakeholder positions, and potential impacts on future rates.

The TCJA has reduced revenue requirements for SPS in both Texas (approximately $32 million) and New Mexico (approximately $11 million). This has led SPS to adjust its requested rate increases and propose an increase in its equity ratio to mitigate negative impacts on its credit metrics.

The Texas rate case is complex, with the initial $55 million request being significantly debated. Intervenor and PUCT Staff testimony suggests potential outcomes ranging from a $39 million reduction to a $7 million increase in incremental revenue, depending on various factors including ROE, capital structure, and expense adjustments. A final decision is expected in Q4 2018.

In New Mexico, SPS has revised its rate increase request from $43 million down to $27 million, taking into account the TCJA and a proposed higher equity ratio. Other parties have proposed even lower increases, with some suggesting as little as $7 million. Hearings are ongoing, with a decision expected in the latter half of 2018.