Summary
Xcel Energy Inc.'s subsidiary, Southwestern Public Service Company (SPS), has received final approval from the Public Utility Commission of Texas (PUCT) for a settlement regarding its electric rate case. The settlement, initially agreed upon in December 2023, was unanimously approved without modification on April 11, 2024. This approval allows for a $65 million increase in base rate revenue, effective retroactively to July 13, 2023. This outcome represents a significant reduction from SPS's original request of $158 million, reflecting a negotiated settlement. The settlement also establishes key financial parameters for SPS, including a 9.55% return on equity (ROE) and a 7.11% weighted average cost of capital (WACC). Importantly, the approved settlement incorporates the accelerated retirement of the Tolk Generation Station, moving its depreciation life from 2034 to 2028. Additionally, a rate rider of approximately $18 million will be implemented over three years to recover deferred expenses. Interim rates reflecting this settlement had already gone into effect on February 1, 2024, and the PUCT's final approval provides regulatory certainty for these adjusted rates.
Key Highlights
- 1Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, received unanimous approval from the Public Utility Commission of Texas (PUCT) for its electric rate case settlement on April 11, 2024.
- 2The approved base rate increase is $65 million, which is less than the originally requested $158 million, reflecting a negotiated settlement.
- 3The $65 million rate increase is effective retroactively to July 13, 2023.
- 4The settlement sets a Return on Equity (ROE) at 9.55% and a Weighted Average Cost of Capital (WACC) at 7.11%.
- 5The approved rates reflect the accelerated retirement of the Tolk Generation Station, changing its depreciation life from 2034 to 2028.
- 6A rate rider of approximately $18 million will be recovered over three years for various deferred expenses.
- 7Interim rates reflecting the settlement terms became effective on February 1, 2024, and the PUCT's final approval provides regulatory finality.