8-KOther Events

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

Filed February 8, 2021For Securities:XELXELLL

Summary

Xcel Energy's wholly-owned subsidiary, Southwestern Public Service Company (SPS), has filed an electric rate case with the Public Utility Commission of Texas (PUCT) seeking a base rate increase of approximately $143 million. This filing is primarily driven by significant capital investments in new and upgraded electric facilities, most notably the 522-megawatt Sagamore wind farm. Despite the overall rate request, the net increase to Texas customers is projected to be around $74 million, or 9.2%, due to offsetting factors including fuel cost savings and production tax credits from the Sagamore project. Investors should note that the requested increase is based on specific financial parameters, including a return on equity of 10.35% and a Texas retail rate base of approximately $3.3 billion. The filing also incorporates other factors such as the loss of a wholesale transmission customer and changes to depreciation rates for certain power plants. A decision from the PUCT is anticipated in the first quarter of 2022, with potential for temporary rates to be set in March 2021.

Key Highlights

  • 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, seeks a $143 million increase in base electric rates in Texas.
  • 2The net rate increase to Texas customers is estimated at $74 million (9.2%) after accounting for $69 million in fuel cost savings and production tax credits from the Sagamore wind project.
  • 3Key drivers for the rate increase include capital investments, particularly the new 522-megawatt Sagamore wind farm, and other facility upgrades.
  • 4The request is based on a 10.35% return on equity and a Texas retail rate base of approximately $3.3 billion.
  • 5Other factors influencing the request include the loss of a wholesale transmission customer and revised depreciation rates for the Tolk power plant and Harrington facility coal handling assets.
  • 6SPS is requesting temporary rates be set in March 2021, with a final decision from the PUCT expected in Q1 2022.

Frequently Asked Questions

The primary reason is to recover significant capital investments made in new and upgraded electric facilities, including the substantial investment in the 522-megawatt Sagamore wind farm, and to reflect changes in operating costs and other factors since the last rate case in 2019.

While the total rate request is approximately $143 million, the net increase to Texas customers is expected to be around $74 million, or 9.2%. This is largely due to $69 million in anticipated savings from fuel costs and production tax credits associated with the Sagamore wind project.

SPS is requesting that current rates be set as temporary starting March 15, 2021. A final decision from the Public Utility Commission of Texas (PUCT) is expected in the first quarter of 2022.

Yes, the rate request also takes into account the loss of a wholesale transmission customer and changes to depreciation rates, which reduce the service lives of the Tolk power plant and the coal handling assets at the Harrington facility.