What is the impact of the Texas rate case settlement on Xcel Energy's revenue?

The settlement in the Texas rate case results in no overall change to SPS' revenues. This is achieved through a balance of factors including lower costs of long-term debt and new infrastructure investments offsetting each other, along with the impact of the TCJA and the continued recovery of TCRF charges.

What is the outlook for the New Mexico rate case?

The New Mexico Hearing Examiner's recommended decision proposes a $12 million increase, which is substantially less than the $27 million revised request by SPS. SPS will file exceptions to this recommendation, and a final decision from the New Mexico Public Regulation Commission (NMPRC) is anticipated in the third quarter of 2018. Investors should note the potential for a significantly lower approved rate increase than initially sought.

How did the Tax Cuts and Jobs Act (TCJA) affect these rate cases?

The TCJA reduced the revenue requirements for SPS in both Texas and New Mexico. In Texas, this reduction of approximately $32 million was factored into the settlement. In New Mexico, the TCJA was estimated to reduce revenue requirements by $11 million, also impacting the final recommended increase.

When can investors expect final decisions on these rate cases?

A decision from the Public Utility Commission of Texas (PUCT) regarding the Texas rate case settlement is expected in the third quarter of 2018. Similarly, a final decision and implementation of rates from the New Mexico Public Regulation Commission (NMPRC) for the New Mexico rate case is also anticipated in the third quarter of 2018.

XEL/XELLL 8-K SEC Disclosure

Summary

This 8-K filing from Xcel Energy Inc. (XEL) details significant developments in two major rate cases for its subsidiary, Southwestern Public Service Company (SPS), in Texas and New Mexico. In Texas, following a proposed $54 million retail electric, non-fuel base rate increase and subsequent adjustments for the Tax Cuts and Jobs Act (TCJA), SPS reached a settlement on June 29, 2018. This settlement results in no overall change to SPS' revenues, with lower costs of long-term debt and infrastructure investments offsetting each other, and certain TCRF charges being recoverable. A Public Utility Commission of Texas (PUCT) decision is anticipated in Q3 2018. In New Mexico, SPS had sought an increase of approximately $43 million. After adjustments for the TCJA and further testimony, SPS revised its request to $27 million. However, on June 29, 2018, the New Mexico Hearing Examiner recommended a more modest increase of $12 million, proposing a lower Return on Equity (ROE) and denying requests for accelerated depreciation. SPS will file exceptions to this recommendation, with a final decision and rate implementation expected in Q3 2018. Investors should monitor the final PUCT and New Mexico Public Regulation Commission (NMPRC) decisions.

Key Highlights

1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, reached a settlement in its Texas rate case, resulting in no net change to overall revenues.
2The Texas settlement allows for the recovery of unbilled Transmission Cost Recovery Factor (TCRF) charges from a specific period.
3In New Mexico, the Hearing Examiner recommended a rate increase of $12 million, significantly lower than SPS' revised request of $27 million.
4The New Mexico Hearing Examiner proposed a lower ROE of 9.4% and denied accelerated depreciation for certain plant units.
5Both the Texas and New Mexico regulatory decisions are expected in the third quarter of 2018.
6The Tax Cuts and Jobs Act (TCJA) had a significant impact on revenue requirements in both states, necessitating adjustments to rate increase requests.
7SPS agreed to file its next Texas base rate case no later than December 31, 2019.

XCEL ENERGY INC 8-K Report, Corporate Update (Jul 3, 2018)

Summary

Key Highlights

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