What is the main outcome of the Joint Motion filed on February 15, 2019?

The Joint Motion filed by SPS and the NMPRC requests that the case be sent back to the NMPRC to revise its September 2018 rate case order. The proposed revision eliminates the retroactive TCJA refund, adjusts the ROE and equity ratio, and results in a net annual revenue increase of $12.5 million, with new rates expected in Q2 2019.

Will SPS have to refund money to customers due to the TCJA?

Under the terms of the proposed Joint Motion, the retroactive refund of $10.2 million associated with the Tax Cuts and Jobs Act (TCJA), which was ordered by the NMPRC in September 2018, will be eliminated. This means SPS will not have to issue the retroactive refund.

How does the proposed revenue increase compare to the original NMPRC order?

The NMPRC's September 2018 order resulted in an $8 million annual revenue increase, but also mandated the $10.2 million TCJA refund. The proposed settlement from the Joint Motion would lead to an annual revenue increase of approximately $12.5 million ($8 million plus an additional $4.5 million for changes in ROE and equity ratio). Crucially, this $12.5 million increase is not expected to be retroactive, unlike the initial $8 million increase which was effective September 26, 2018.

What are the key financial metrics (ROE and equity ratio) in the proposed settlement?

The Joint Motion proposes approving a Return on Equity (ROE) of 9.56% and an equity ratio of 53.97%. These are slight adjustments from the NMPRC's September 2018 order, which had approved an ROE of 9.1% and an equity ratio of 51%.

XEL/XELLL 8-K SEC Disclosure

Summary

Xcel Energy Inc.'s subsidiary, Southwestern Public Service Company (SPS), has reached a joint motion to dismiss with the New Mexico Public Regulation Commission (NMPRC) concerning a 2017 electric rate case. The initial request for a $43 million rate increase was significantly reduced through various adjustments and commission decisions. A key development was the NMPRC's September 2018 order, which approved an $8 million revenue increase but mandated a $10.2 million refund related to the Tax Cuts and Jobs Act (TCJA), effective retroactively from January 1, 2018. This order was appealed by SPS. The February 15, 2019, joint motion seeks to remand the case back to the NMPRC for revision. The proposed settlement eliminates the retroactive TCJA refund, approves a slightly higher Return on Equity (ROE) of 9.56% and an equity ratio of 53.97%, and would result in an annual revenue increase of approximately $12.5 million. This revised increase, unlike the previous order, is not expected to be retroactive, with new rates anticipated in the second quarter of 2019.

Key Highlights

1SPS and NMPRC filed a Joint Motion to Dismiss with the New Mexico Supreme Court to revise the 2018 rate case order.
2The proposed settlement eliminates the retroactive refund of $10.2 million related to the Tax Cuts and Jobs Act (TCJA).
3The settlement approves a revised Return on Equity (ROE) of 9.56% and an equity ratio of 53.97%.
4The annual revenue increase under the settlement is estimated at $12.5 million, an increase of $4.5 million from the original $8 million approved in September 2018.
5New rates are expected to be effective in the second quarter of 2019, rather than retrospectively.
6The original NMPRC order had mandated a retroactive TCJA refund and a lower ROE of 9.1% with a 51% equity ratio.

XCEL ENERGY INC 8-K Report, Corporate Update (Feb 15, 2019)

Summary

Key Highlights

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