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

The primary reason for the rate case is to recover significant capital investments made in new and upgraded electric facilities since the last rate case in 2019. A major component of this investment is the recently completed 522 megawatt Sagamore wind project.

How will the proposed rate increase affect Xcel Energy's customers in New Mexico?

SPS is requesting an $88 million increase in base rates, but due to offsetting fuel cost reductions and production tax credits (PTCs) associated with the Sagamore wind project, the net rate increase to New Mexico customers is expected to be approximately $48 million, or about 10%.

When can customers expect to see the new rates implemented?

SPS has requested the new rates to be effective February 3, 2021. However, the New Mexico Public Regulation Commission (NMPRC) is expected to suspend these rates for nine months pending a regulatory review. A final decision and implementation of rates are anticipated in the fourth quarter of 2021.

What are the key financial assumptions underlying the rate increase request?

The request is based on a historic test year ending September 30, 2020, with projected capital additions through February 28, 2021. It includes a requested return on equity of 10.35%, an equity ratio of 54.72%, and a retail rate base of approximately $1.9 billion for SPS.

XEL/XELLL 8-K SEC Disclosure

Summary

Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy Inc., has filed an electric rate case with the New Mexico Public Regulation Commission (NMPRC) seeking an $88 million increase in base rates. This filing is primarily driven by significant capital investments, including the recent completion of the Sagamore wind project. Despite the gross request, the net rate increase to New Mexico customers is expected to be approximately $48 million, or 10%, due to offsetting factors such as fuel cost reductions and production tax credits (PTCs) from the new wind project. Investors should note that the requested rates are subject to a nine-month suspension period by the NMPRC, with a final decision anticipated in the fourth quarter of 2021. The request is based on a historic test year and includes specific assumptions regarding return on equity (10.35%) and rate base ($1.9 billion for SPS). The filing also highlights adjustments related to reduced peak load and changes in depreciation rates for certain power plant assets, which will be important factors to monitor during the regulatory review process.

Key Highlights

1SPS is seeking an $88 million increase in base electric rates from the New Mexico Public Regulation Commission (NMPRC).
2The net rate increase to New Mexico customers is projected to be approximately $48 million, representing about a 10% rise.
3Key drivers for the rate increase include capital investments in new and upgraded electric facilities, notably the 522 MW Sagamore wind project.
4Offsetting factors, such as fuel cost reductions and production tax credits from wind energy, will reduce the net rate impact on customers.
5The NMPRC is expected to suspend the new rates for nine months pending a review, with a decision anticipated in Q4 2021.
6The rate request is based on a historic test year, a 10.35% return on equity, and a retail rate base of approximately $1.9 billion for SPS.
7Adjustments include changes to depreciation rates for the Tolk power plant and Harrington facility coal handling assets.

XCEL ENERGY INC 8-K Report, Corporate Update (Jan 4, 2021)

Summary

Key Highlights

Frequently Asked Questions