8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Dec 18, 2020)

Filed December 18, 2020For Securities:XELXELLL

Summary

Xcel Energy Inc. (XEL) subsidiary, Northern States Power Company-Minnesota (NSP-Minnesota), filed a three-year electric rate case on November 2020 with the Minnesota Public Utilities Commission (MPUC) requesting a total rate increase of $597 million (19.7%) over 2021-2023. This request was primarily driven by investments in carbon-free generation and infrastructure upgrades. NSP-Minnesota also sought interim rate increases of $309 million for January 2021 and an additional $96 million for January 2022, subject to refund. However, on December 17, 2020, the MPUC verbally approved a "stay-out alternative" petition. This agreement means NSP-Minnesota will withdraw its rate case filing. Key terms include the extension of certain tax true-up mechanisms, a delay in Nuclear Decommissioning Trust accrual increases until 2022, and an agreement not to recover incremental COVID-19 bad debt expenses. Additionally, NSP-Minnesota will fund $17.5 million for customer relief programs and will refund customers for any earnings above a 9.06% Return on Equity (ROE) in 2021. A final written order is anticipated in Q1 2021.

Key Highlights

  • 1NSP-Minnesota filed a multi-year electric rate case in November 2020 seeking $597 million in rate increases.
  • 2The rate case was driven by investments in clean energy generation and infrastructure.
  • 3MPUC verbally approved a "stay-out alternative" on December 17, 2020, leading to the withdrawal of the rate case filing.
  • 4The approved alternative avoids immediate rate increases sought in the original filing.
  • 5NSP-Minnesota agreed not to recover COVID-19 related bad debt expenses.
  • 6The company committed to a $17.5 million customer relief fund and an earnings cap with customer refunds above 9.06% ROE for 2021.
  • 7A final written order from the MPUC is expected by the end of Q1 2021.

Frequently Asked Questions

On December 17, 2020, the Minnesota Public Utilities Commission (MPUC) verbally approved a 'stay-out alternative' petition, leading to the withdrawal of NSP-Minnesota's rate case filing. This means the substantial rate increases initially requested will not be implemented as filed.

The 'stay-out alternative' implies that Xcel Energy will not immediately recover costs associated with its requested rate increases. However, it also avoids the uncertainty of the full rate case process and includes agreements on tax mechanisms and customer relief that, while impacting near-term cash flow, provide a more defined regulatory path. The company will also refund earnings above 9.06% ROE in 2021 and forgo recovery of COVID-19 bad debt.

A final written order from the MPUC regarding the 'stay-out alternative' is expected by the end of the first quarter of 2021.

The 'stay-out alternative' means the large interim rate increases initially requested for January 2021 and January 2022 will not proceed as filed. However, the agreement does involve commitments to customer relief programs, and future rate adjustments will be subject to the final written order.