Xcel Energy 8-K 2012
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 2, 2012
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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In November 2011, Public Service Company of Colorado (PSCo), a Colorado Corporation and a wholly owned subsidiary of Xcel Energy Inc., filed a request with the Colorado Public Utilities Commission (CPUC) to increase Colorado retail electric rates by $141.9 million. The request was based on a 2012 forecast test year, a 10.75 percent return on equity (ROE), a rate base of $5.4 billion and an equity ratio of 56 percent.
PSCo proposed transferring the revenue requirements from several riders to base rates, which will have no impact on the overall customer bills. The amounts transferring from riders to base rates include $110.7 million of revenue requirements associated with the acquisition of the Rocky Mountain and Blue Spruce natural gas facilities currently recovered through the purchased capacity cost adjustment, $11 million from the transmission cost adjustment, and $17 million from the demand side management cost adjustment.
The primary drivers of the revenue deficiency are a change in the jurisdictional allocator between wholesale and retail jurisdictions due to the expiration of the Black Hills contract, increases in depreciation expense, including changes in depreciation rates, increases in property taxes, increases in distribution operating and maintenance (O&M) expenses, as well as increases in pension expense.
In November 2011, PSCo filed a petition to implement interim rates, subject to refund, of $100 million to be effective in January 2012. In January 2012, the CPUC denied PSCo’s request to implement an interim electric rate increase of $100 million on the basis that it had not demonstrated adverse financial impacts. PSCo filed for reconsideration of the CPUC’s decision to deny interim rates, and requested that the CPUC authorize interim rates of approximately $42 million, specifically related to the impacts resulting from the expiration of the Black Hills contract. The CPUC denied the request for reconsideration. However, the CPUC approved PSCo’s request for deferred accounting of the $42 million annual revenue requirement associated with the Black Hills contract.
In February 2012, PSCo filed supplemental direct testimony updating and correcting its cost of service to reflect a revenue deficiency of $153.2 million, although its request in this case remained at $141.9 million due to noticing requirements.
On March 2, 2012, seven parties filed answer testimony in the case. Recommendations included the following:
The CPUC Staff recommended a $7.3 million rate increase, based on an ROE of 9.09 percent, an equity ratio of 51.62 percent, a historic test year, an adjustment to reflect expected interest savings from a $600 million bond maturing in 2012, an adjustment to plant held for future use and other smaller adjustments. The Office of Consumer Counsel recommended a $9.4 million rate increase, based on an ROE of 9.25 percent, an equity ratio of 50.5 percent and other similar adjustments. Other intervenors recommended ROEs ranging from 9.20 to 9.60 percent, proposed changes to depreciation rates as well as decreases in pension and retiree medical benefits. These recommended deficiencies do not reflect the amortization of costs associated with the expiration of the Black Hills contract that are being deferred for accounting purposes.
PSCo has been involved in settlement discussions with parties on a multi-year plan as an alternative to the rate case. PSCo’s rebuttal testimony is due March 28, 2012 and the matter will be heard before an administrative law judge in April 2012. Final rates are expected to be effective in the summer of 2012.
Except for the historical statements contained in this 8-K, the matters discussed herein, including the expected impact of rate cases, are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of Xcel Energy Inc. and its subsidiaries (collectively, Xcel Energy) to obtain financing on favorable terms; business conditions in the energy industry; including the risk of a slow down in the U.S. economy or delay in growth recovery; trade, fiscal, taxation and environmental policies in areas where Xcel Energy Inc. and PSCo have a financial interest; customer business conditions; actions of credit rating agencies; competitive factors including the extent and timing of the entry of additional competition in the markets served by Xcel Energy Inc. and its subsidiaries; unusual weather; effects of geopolitical events, including war and acts of terrorism; state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rates or have an impact on asset operation or ownership or impose environmental compliance conditions; structures that affect the speed and degree to which competition enters the electric and natural gas markets; costs and other effects of legal and administrative proceedings, settlements, investigations and claims; financial or regulatory accounting policies imposed by regulatory bodies; availability of cost of capital; employee work force factors; and the other risk factors listed from time to time by Xcel Energy Inc. and PSCo in reports filed with the Securities and Exchange Commission, including Risk Factors in Item 1A and Exhibit 99.01 of Xcel Energy Inc.’s and PSCo’s Annual Reports on Form 10-K for the year ended Dec. 31, 2011.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.