8-KOther Events

XCEL ENERGY INC 8-K Report, Corporate Update (Jun 5, 2023)

Filed June 5, 2023For Securities:XELXELLL

Summary

Xcel Energy Inc. (XEL) subsidiary Northern States Power Company (NSP-Minnesota) received a verbal order on June 1, 2023, from the Minnesota Public Utilities Commission (MPUC) regarding its 2022 electric rate case. The MPUC's final order, expected by June 30, 2023, is estimated to result in an annual incremental revenue increase of approximately $101 million in 2022, $89 million in 2023, and $121 million in 2024, totaling $311 million over three years. This is lower than the initial requested increase and reflects a reduced authorized Return on Equity (ROE) of 9.25% compared to the company's request. In response to the lower-than-anticipated ROE and disallowed expenses, Xcel Energy has reaffirmed its 2023 GAAP and ongoing earnings guidance of $3.30 to $3.40 per share. However, the company will need to implement management actions, including evaluating programs, staffing levels, and operating expenses, to offset the impact of the regulatory decision.

Key Highlights

  • 1MPUC issued a verbal order on the NSP-Minnesota electric rate case, with a final written order expected June 30, 2023.
  • 2Estimated annual incremental revenue increase of $311 million over three years (2022-2024) from the MPUC final order.
  • 3Authorized Return on Equity (ROE) set at 9.25% by the MPUC, lower than the company's request.
  • 4Specific revenue adjustments were made, including for Sherco 3 and A.S. King, property tax, ROE changes, operating expenses, and tax credits.
  • 5Xcel Energy reaffirms its 2023 GAAP and ongoing earnings per share guidance of $3.30 to $3.40.
  • 6Company will undertake management actions to offset the financial impact of the lower ROE and disallowed expenses.
  • 7Interim rates approved in December 2021 remain subject to refund.

Frequently Asked Questions

The MPUC's final order is estimated to result in an annual incremental revenue increase of approximately $311 million over three years (2022-2024). While this is a revenue increase, the authorized Return on Equity (ROE) of 9.25% is lower than what NSP-Minnesota had requested. Xcel Energy expects to offset the impact of the lower ROE and certain disallowed expenses through management actions.

The filing details that the MPUC's verbal order reflects a ROE of 9.25%, which is lower than the 10.2% initially requested by NSP-Minnesota. The document does not explicitly state the MPUC's reasoning for this specific ROE level, but it was part of the modifications leading to the final estimated revenue increase.

Xcel Energy has reaffirmed its 2023 earnings guidance of $3.30 to $3.40 per share. To achieve this, the company plans to implement 'management actions' which include evaluating programs, staffing levels, and operating expenses to offset the financial impact stemming from the lower authorized ROE and the disallowance of certain requested expenses.

A final written order from the Minnesota Public Utilities Commission (MPUC) is expected by June 30, 2023.