Summary
Xcel Energy's subsidiary, Public Service Company of Colorado (PSCo), has entered into a comprehensive settlement agreement with the Colorado Public Utilities Commission (CPUC) Staff and the Colorado Energy Office. This settlement addresses four significant regulatory matters, including the recovery of costs associated with Winter Storm Uri, disputed revenue from a 2020 electric decoupling pilot program, replacement power costs from an extended outage at Comanche Unit 3, and deferred customer bad debt due to COVID-19. While the Office of the Utility Consumer Advocate has not yet signed the settlement, a decision from the CPUC is anticipated in the first quarter of 2022. The key terms of the settlement outline PSCo's ability to recover substantial costs, specifically $263 million in electric and $287 million in natural gas fuel and purchased energy costs related to Winter Storm Uri, over 24 and 30 months respectively, beginning in early 2022. This recovery will occur without carrying charges through a rider mechanism. However, PSCo will refund $41 million to electric customers from the 2020 decoupling program and forego recovery of $14 million in replacement power costs. Additionally, PSCo will absorb an incremental $11 million in COVID-19 related bad debt expense. Importantly, Xcel Energy has reaffirmed its 2021 GAAP and ongoing earnings guidance of $2.90 to $3.00 per share, indicating that this settlement, while impacting cost recovery and refunds, is not expected to deviate from their previously issued financial outlook for the current year. Investors should monitor the CPUC's decision in early 2022 for final confirmation of these arrangements.
Key Highlights
- 1PSCo filed a comprehensive settlement with CPUC Staff and Colorado Energy Office addressing Winter Storm Uri costs, electric decoupling program revenue, Comanche Unit 3 outage costs, and COVID-19 bad debt.
- 2The settlement allows PSCo to recover $263 million in electric and $287 million in natural gas costs related to Winter Storm Uri over 24 and 30 months, starting Jan 1, 2022 (electric) and April 1, 2022 (natural gas), without carrying charges.
- 3PSCo will refund $41 million to electric customers related to the 2020 electric decoupling pilot program.
- 4PSCo will forego recovery of $14 million in replacement power costs due to the Comanche Unit 3 outage in 2020.
- 5PSCo will not seek recovery of COVID-19 related bad debt and will record an additional $11 million in incremental bad debt expense for Q3 2021.
- 6A CPUC decision on the settlement is expected in the first quarter of 2022.
- 7Xcel Energy reaffirms its 2021 GAAP and ongoing earnings guidance of $2.90 to $3.00 per share.