Xcel Energy 2008 Annual Report Download - page 133

indicative tariff revisions that reflect an alternative mechanism for allocating RSG charges and costs. In August 2008,
the FERC rejected this filing and issued an order commencing a hearing.
In November 2008, the FERC issued two orders related to RSG. One order requires the RSG charge allocation to
include virtual supply transactions and requires resettlement of RSG charges retroactive to August 2007. The second
order reversed a prior FERC decision and changed the RSG calculation methodology for the May 2006 to August 2007
retroactive period. Several parties have filed requests for rehearing of the November 2008 FERC orders, arguing that the
change in RSG allocation should be prospective. The RSG-related dockets are pending FERC action.
NSP-Wisconsin
Pending and Recently Concluded Regulatory Proceedings — PSCW
Base Rate
Electric and Gas 2008 Rate Case — In January 2008, the PSCW issued the final written order in NSP-Wisconsin’s
2008 test year rate case, approving an electric rate increase of approximately $39.4 million, or 8.1 percent, and a
natural gas rate increase of $5.3 million, or 3.3 percent. The rate increase was based on a 10.75 percent ROE and a
52.5 percent common equity ratio. New rates went into effect in January 2008.
Electric Limited Reopener 2009 Rate Case — On Aug. 1, 2008, NSP-Wisconsin filed an application with the PSCW
requesting authority to increase retail electric rates by $47.1 million, which represented an overall increase of
8.6 percent. In the application, NSP-Wisconsin requested the PSCW to reopen the 2008 base rate case for the limited
purpose of adjusting 2009 electric rates to reflect forecasted increases in production and transmission costs, as
authorized by the PSCW. No changes were requested to the capital structure or return on equity authorized by the
PSCW in the 2008 base rate case.
NSP-Wisconsin and the intervenors entered into a stipulated agreement and on Dec. 30, 2008, the PSCW issued an
order approving the stipulation and authorizing a $5.6 million rate increase. The original request of $47.1 million was
reduced by $31.6 million due to the decline in market prices for fuel and purchased power, $5.5 million for a change
in nuclear outage accounting and $4.4 million due to other adjustments.
Further, in accordance with the stipulation agreement, an estimated 2008 interim fuel surcharge refund liability of
$9.8 million, recorded in 2008, will be offset by the $5.6 million 2009 rate increase, and the remaining liability will be
refunded to customers in 2009, after the PSCW completes its final review of 2008 actual fuel costs.
Electric, Purchased Gas and Resource Adjustment Clauses
MISO ASM Cost Recovery — In the Dec. 30, 2008 order in NSP-Wisconsin’s 2009 electric rate case, the PSCW
included the costs and benefits associated with the MISO ASM in the fuel monitoring range established for 2009.
Accordingly, ASM costs will flow through NSP-Wisconsin’s fuel cost recovery mechanism in a similar fashion as all
other fuel and purchased power costs. On Jan. 6, 2009, MISO began ASM operations.
Other
Nuclear Refueling Outage Costs — On Sept. 16, 2008, the MPUC approved NSP-Minnesota’s request to adopt the
deferral-and-amortization method of accounting for costs associated with refueling outages at its nuclear plants, effective
Jan. 1, 2008. NSP-Wisconsin’s 2008 Wisconsin retail electric retail rates were set based on the previous direct-expense
accounting method, and recovered costs associated with 2008 refueling outages in 2008. For ratemaking purposes,
NSP-Wisconsin switched to the deferral and amortization method effective Jan. 1, 2009. To reflect timing differences
between when the revenue was received from customers versus when the corresponding expense will be billed through
the interchange agreement, NSP-Wisconsin recorded a liability of $4.8 million. The liability will be fully amortized by
the end of 2010.
2008 Electric Fuel Cost Recovery — On May 2, 2008, the PSCW approved, on an interim basis, NSP-Wisconsin’s
request of a $19.7 million surcharge, or 3.8 percent, on an annual basis, to recover forecast increases in fuel and
purchased power costs. The interim fuel surcharge was in effect from May 6, 2008 to Dec. 31, 2008, and generated
approximately $12.7 million in additional revenue in 2008. The revenues that NSP-Wisconsin collected were subject to
refund with interest at a rate of 10.75 percent, pending PSCW review and final approval. The PSCW will conduct its
final review of the interim fuel surcharge in 2009, after 2008 actual fuel costs are known.
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