Xcel Energy 2007 Annual Report Download - page 116

intervened in the appeal and filed briefs urging the court to uphold the MPUC order. The oral argument in the appeal
is scheduled for Feb. 27, 2008. The date for a court decision in the appeal is not known.
Annual Review of Remaining Lives Depreciation Filing — In September 2007, the MPUC approved NSP-Minnesota’s
remaining lives depreciation filing effective to Jan. 1, 2007, lengthening the life of the Monticello nuclear plant by
20 years to 2030, as well as certain other smaller life adjustments. These adjustments reduced the depreciation expense
of NSP-Minnesota by approximately $41 million for the period ended Dec. 31, 2007. The MPUC also approved an
adjustment to rate base to be used in the next electric rate case that will hold ratepayers indifferent to this change in
remaining lives between rate cases. NSP-Minnesota calculated the revenue requirement associated with this adjustment
to be approximately $1.4 to $2.8 million, depending on the timing of the next electric rate case. In addition, the
lengthening of the remaining life for the Monticello nuclear plant decreased the related ARO by $121 million in the
third quarter of 2007 with no impact to net income in 2007.
Nuclear Refueling Outage Costs — In November 2007, NSP-Minnesota filed a request asking for a change in the
recovery method for costs associated with refueling outages at its nuclear plants. The request seeks approval to amortize
refueling outage costs over the period between refueling outages to better match revenue and expenses. This request, if
approved, would reduce 2008 expenses for NSP-Minnesota jurisdiction by $25 million due to deferral and amortization
over an 18-month period versus expensed as incurred. Comparable filings have been made in North Dakota and South
Dakota.
Pending Regulatory Proceedings — NDPSC and South Dakota Public Utilities Commission
(SDPUC)
NSP-Minnesota North Dakota Electric Rate Case — In December 2007, NSP-Minnesota filed a request with the
NDPSC to increase North Dakota retail electric rates by $20.5 million, or about 14 percent. The request was based on
an 11.50 percent ROE, an equity ratio of 51.77 percent, and a jurisdictional rate base of approximately $242 million.
Interim rates of $17.2 million became effective in February 2008. Hearings are expected to be held in late June, and
final rates are expected to be effective Oct. 1, 2008. NSP-Minnesota and the NDPSC staff reached a stipulation
settlement in the rate case in which both parties recommended an ROE of 10.75 percent, with a sharing mechanism
for earnings about 10.75 percent. This stipulation settlement is subject to approval by the NDPSC.
Pending and Recently Concluded Regulatory Proceedings — FERC
FERC Transmission Rate Case — In September 2007, Xcel Energy and MISO filed proposed changes to the MISO
TEMT to establish a revised formula transmission rate for the integrated NSP System. The rate filing would establish
the transmission service rates for the NSP System based on annual forward looking (rather than historic) transmission
costs; provide more current recovery of NSP System transmission investments, and allow recovery of certain
transmission incentives authorized by the Energy Act and the implementation of FERC rules. Xcel Energy made the
filing in anticipation of significant transmission capital additions by NSP-Minnesota and NSP-Wisconsin. A forward
looking formula rate with a return on construction work in progress for major projects will facilitate the financing and
construction of the new transmission facilities while providing a current return on invested capital for the portion of
the investment subject to FERC rate jurisdiction. In December 2007, the FERC issued an order accepting the rate
change effective Jan. 1, 2008, subject to Xcel Energy and MISO making certain changes to the procedures for pre-filing
notice of the annual formula rate changes. No party filed for rehearing, and Xcel Energy submitted the required
compliance filing on Jan. 22, 2008. The rate change is expected to increase 2008 NSP System transmission revenues by
$2.7 million.
MISO Long-Term Transmission Pricing — In October 2005, MISO filed a proposed change to its Open Access
Transmission and Energy Markets Tariff (TEMT) to regionalize future cost recovery of certain high voltage transmission
projects to be constructed for reliability improvements. The tariff, called the Regional Expansion Criteria Benefits
phase I (RECB I) and a subsequent proposal based on regional economic benefits (RECB II), would recover varying
percentages of eligible reliability transmission costs from all transmission service customers in the MISO 15 state region.
In November 2006, the FERC issued an order accepting the RECB I tariff, including the 20 percent limitation. In
December 2006, the PSCW and other parties filed an appeal of the RECB I order to the federal Court of Appeals for
the District of Columbia. The appeal is pending.
In March 2007, the FERC issued an order approving most aspects of the RECB II proposal. Various parties filed
requests for rehearing, which the FERC subsequently denied.
Transmission service rates in the MISO region presently use a rate design in which the transmission cost depends on
the location of the load being served (referred to as ‘‘license plate’’ rates). Costs of existing transmission facilities are
thus not regionalized. MISO and its transmission owners filed a successor rate methodology in August 2007, to be
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