What is the main reason for Southwestern Public Service (SPS) filing this rate case?

SPS is filing this rate case to recover approximately $1.4 billion in capital investments and operating costs incurred since its last rate case in 2017. This includes investments in new and upgraded electric facilities, such as its allocated portion of the Hale Wind Project.

How much will this rate increase ultimately affect customers in New Mexico?

While SPS is requesting a total revenue increase of $51 million, the net impact on New Mexico consumers is expected to be approximately $26 million, or 5.7%. This reduction is due to fuel cost savings and production tax credits associated with the Hale Wind Project, which are being passed through to customers.

When can customers expect to see the new rates implemented?

SPS requested the new rates to be effective July 31, 2019. However, the New Mexico Public Regulation Commission (NMPRC) is expected to suspend the rates for review for about nine months. A final decision and implementation of new rates is anticipated in the second or third quarter of 2020.

What factors beyond new investments are influencing this rate case?

The rate case also accounts for a decrease in contracted sales from certain wholesale customers and includes a request to adjust depreciation rates on SPS' generation assets, notably shortening the service life of its Tolk power plant units. These factors contribute to the overall revenue requirement.

XEL/XELLL 8-K SEC Disclosure

Summary

On July 1, 2019, Xcel Energy's wholly-owned subsidiary, Southwestern Public Service Company (SPS), filed an electric rate case with the New Mexico Public Regulation Commission (NMPRC). SPS is seeking an approximate $51 million increase in its retail electric base rates. The primary drivers for this request include recovering substantial capital investments totaling approximately $1.4 billion in new and upgraded electric facilities, as well as operating costs incurred since the last rate case in 2017. Notably, this includes New Mexico's share of the 478-megawatt Hale Wind Project. The rate case is based on a historic test year ending March 31, 2019, and proposes a return on equity of 10.35%. SPS also seeks to account for a decline in contracted sales from wholesale customers and adjust depreciation rates on its generation assets, specifically impacting the Tolk power plant. While the requested increase is $51 million, the net impact to New Mexico consumers is anticipated to be around $26 million, or 5.7%, due to fuel cost reductions and production tax credits from the Hale Wind Project. A final decision from the NMPRC is expected in the second or third quarter of 2020, with potential rate implementation following thereafter.

Key Highlights

1Southwestern Public Service (SPS), a subsidiary of Xcel Energy, filed an electric rate case seeking a $51 million increase in retail electric base rates in New Mexico.
2The requested increase is driven by approximately $1.4 billion in new and upgraded electric facilities and operating costs since 2017, including the Hale Wind Project.
3SPS is requesting a return on equity of 10.35% and assumes an equity ratio of 54.77%.
4The filing also addresses a decline in contracted wholesale sales and proposes changes to depreciation rates for generation assets, including the Tolk power plant.
5Despite the $51 million revenue request, the net increase to New Mexico consumers is projected to be approximately $26 million (5.7%) due to wind energy tax credits and fuel cost reductions.
6The NMPRC is expected to suspend the proposed rates for nine months, with a final decision and rate implementation anticipated in Q2 or Q3 2020.

XCEL ENERGY INC 8-K Report, Corporate Update (Jul 1, 2019)

Summary

Key Highlights

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