Xcel Energy 2006 Annual Report Download - page 105

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NSP-Minnesota Natural Gas Rate Case — On Nov. 9, 2006, NSP-Minnesota filed a request with MPUC to increase Minnesota
natural gas rates by $18.5 million annually, which represents an increase of 2.4 percent. The request was based on 11.0 percent ROE, a
projected equity ratio of 51.98 percent and a natural gas rate base of $439 million. Interim rates, subject to refund, were set at a $15.9
million annual increase and went into effect on Jan. 8, 2007. A final decision is expected in the third quarter of 2007.
North Dakota Gas Rate Case — On Dec. 15, 2006, NSP-Minnesota filed a notice of rate change with the NDPSC requesting an
increase of natural gas distribution rates of $2.8 million annually, or 3 percent. In February 2007, the NDPSC approved interim rates
of $2.2 million. Interim rates would remain in effect until the NDPSC makes its final determination in the summer of 2007. Final
natural gas rates will be put into place after the decision.
Renewable Transmission Cost Recovery — Since December 2004, NSP-Minnesota has recovered certain transmission costs related to
wind generation projects through a RCR rider. In November 2006, the MPUC approved the replacement of the RCR rider with a TCR
rider pursuant to 2005 legislation. The TCR mechanism would allow recovery of incremental transmission investments between rate
cases. On Oct. 27, 2006, NSP-Minnesota filed for approval of recovery of $14.8 million in 2007 revenue requirements under the TCR
tariff. Final MPUC action is expected later in the first quarter of 2007. The RCR rate factors will remain in effect until the TCR factors
are implemented.
MISO Day 2 Market Cost Recovery — On Dec. 18, 2004, NSP-Minnesota filed with the MPUC a petition to seek recovery of the
Minnesota jurisdictional portion of all net costs associated with the implementation of the MISO Day 2 market through its FCA. A
Dec. 21, 2006 MPUC order ruled that all MISO costs, except Schedule 16 and 17, can be recovered through the FCA. Schedules 16
and 17 costs were recovered through the FCA in 2005. However, the MPUC’s Dec. 21, 2006 order requires NSP-Minnesota to refund
these costs to customers through the FCA in equal monthly installments beginning March 2007. It also provided the opportunity to
defer 100 percent of the 2005 costs for a three-year period before starting the amortization. A refund liability was recorded for $4.4
million.
In March 2005, NSP-Minnesota filed petitions similar to the December 2004 Minnesota filing with the NDPSC and the SDPUC
proposing changes to allow recovery of the applicable North Dakota and South Dakota jurisdictional portions of the MISO Day 2
market costs. The SDPUC approved the proposed tariff changes, effective April 1, 2005, as requested. The NDPSC granted interim
recovery through the FCA beginning April 1, 2005, but conditioned the relief as being subject to refund until the merits of the case are
determined. Since April 1, 2005, NSP-Minnesota has collected approximately $28 million of MISO Day 2 charges through its North
Dakota FCA.
NSP-Wisconsin
Pending and Recently Concluded Regulatory Proceedings — FERC
Wholesale Rate Case Application — On July 31, 2006, NSP-Wisconsin filed a rate case at the FERC requesting a base rate increase
of approximately $4 million, or 15 percent, for its ten wholesale municipal electric sales customers. NSP-Wisconsin’s wholesale
customers are currently served under a bundled full requirements tariff, with rates based on embedded costs, and a monthly fuel cost
adjustment clause (FCAC). NSP-Wisconsin proposes to unbundle transmission service and revise the FCAC to reflect current FERC
regulatory policies, the advent of MISO operations and the MISO Day 2 energy market. In August 2006, ten customers filed a joint
protest of the rate case, requesting the increase be suspended until March 1, 2007 and the request be set for litigated hearings. On Sept.
28, 2006, the FERC issued an order accepting the filing, suspending the effective date of the rates to March 1, 2007, and setting the
filing for hearing and settlement judge procedures. In February 2007, NSP-Wisconsin reached a settlement with customers that
provides for full cost recovery of MISO Day 2 and renewable energy costs through the FCA and a $2.4 million base rate increase.
Pending and Recently Concluded Regulatory Proceedings — PSCW
MISO Cost Recovery — On March 29, 2005, NSP-Wisconsin received an order from the PSCW granting its request to defer the costs
and benefits attributable to the start-up of the MISO Day 2 energy market.
On June 16, 2006, the PSCW issued its written order regarding the joint request for escrow accounting treatment of MISO Day 2 costs
made by NSP-Wisconsin and other Wisconsin utilities. The order confirms continued deferred accounting treatment for congestion
costs, net line losses, and costs of acquiring FTRs not received in the MISO allocation process, as previously authorized by the PSCW.
The order also clarifies that deferral is authorized for several additional MISO Day 2 cost and revenue types not explicitly addressed
in the original PSCW order issued March 29, 2005.
On June 29, 2006, the PSCW opened a proceeding to address the proper amount of MISO Day 2 deferrals that the state’s utilities
should be allowed to recover and the proper method of rate recovery.
On Sept. 1, 2006, NSP-Wisconsin detailed its calculation methodology and reported that, as of June 30, 2006, it had deferred
approximately $6.2 million. PSCW staff and intervenors filed testimony in December 2006, arguing that the various methodologies
used by the utilities to calculate the deferrals were inconsistent, and to varying degrees incorrect. Further, the testimony argued that
some or all of the deferred costs are being recovered in current rates and were, therefore, inappropriately deferred and the utilities
should be required to write off balances that were inappropriately deferred. The potential impact of PSCW Staff recommendations on