Summary
Xcel Energy Inc. (XEL) subsidiary, Northern States Power Company (NSP-Minnesota), has reached an uncontested settlement agreement regarding its North Dakota rate case. The agreement, filed on July 1, 2021, proposes a base rate revenue increase of $7 million, a reduction from the initial request of approximately $19 million. Key terms include a 9.5% allowed return on equity (ROE), down from the requested 10.2%, and a 52.5% equity ratio. Further investor considerations from the settlement include the deferral of advanced grid intelligence and security (AGIS) initiative capital and O&M expenses, which could impact near-term expense recognition. Importantly, an earnings cap mechanism is proposed, whereby any earnings exceeding a 9.75% ROE would be returned to customers. The North Dakota Public Service Commission's decision on this settlement is anticipated in the fourth quarter of 2021, which will determine the final impact on NSP-Minnesota's revenues and profitability.
Key Highlights
- 1NSP-Minnesota reached an uncontested settlement agreement for its North Dakota rate case.
- 2The settlement proposes a base rate revenue increase of $7 million, significantly lower than the initial $19 million request.
- 3The agreed-upon return on equity (ROE) is 9.5%, a reduction from the previously requested 10.2%.
- 4An earnings cap mechanism is included, requiring customer refunds for earnings above 9.75% ROE.
- 5Capital and O&M expenses for the AGIS initiative will be deferred.
- 6The final decision from the NDPSC is expected in Q4 2021.