Xcel Energy 2009 Annual Report Download - page 138

In November 2009, PSCo reached a settlement agreement with certain intervenors. The settlement included an electric
rate increase of approximately $136 million, effective Jan. 1, 2010. The settlement was based on a 10.5 percent ROE
and reflects PSCo’s actual capital structure. The settlement was based on an historic test year, adjusted for 2010 known
and measurable changes related to plant investment as well as certain operating costs.
In December 2009, the CPUC approved a rate increase of approximately $128.3 million. The difference between the
settlement rate increase and the approved amount was primarily related to adjustments related to rate base for
non-major projects and an adjustment to interest on long-term debt.
In December 2009, due to the delay in Comanche Unit 3 coming online, the CPUC approved PSCo’s proposal to
phase in the approved electric rate increase to reflect the actual cost of service. This decision is not expected to have a
material impact on PSCo or Xcel Energy’s financial results. Under the plan the following increases will be implemented:
• A rate increase of $67 million was implemented on Jan. 1, 2010. The adjustments to the rate increase, as a
result of the delay of the in-service date of Comanche Unit 3, include reduced O&M, property taxes, the impact
of a delay in changes to jurisdictional allocators and depreciation expenses.
• Base rates will increase to $121 million, once Comanche Unit 3 goes into service (currently expected by the end
of the first quarter of 2010).
• Finally, base rates will increase to $128.3 million on Jan. 1, 2011 to reflect 2011 property taxes.
Several parties, including the Office of Consumer Counsel, have filed motions for reconsideration. The CPUC has
denied those requests that would change the initial order approving the rate increase, with the exception of PSCo’s
request to not include long-term debt interest in the working capital calculation. The CPUC will reconsider PSCo’s
request after parties have filed additional comments. A written order is pending.
Unreasonable Rates for Natural Gas Formal Complaint — In July 2009, the trial advocacy staff of the CPUC proposed
a formal draft complaint against PSCo for unjust and unreasonable rates for natural gas service associated with earnings
in excess of PSCo’s authorized return that occurred in 2008. In January 2010, the CPUC opened a proceeding and
assigned this matter to an ALJ.
The procedural schedule in the case has been set as follows:
• Direct testimony of CPUC staff on May 10, 2009;
• PSCo answer testimony on June 28, 2010;
• Staff rebuttal testimony on July 19, 2010;
• Surrebuttal testimony on Aug. 9, 2010; and
• Hearings on Aug. 23 - 27, 2010.
TCA Rider — PSCo filed its annual update to the TCA rider in November 2008, and new rates went into effect on
Jan. 1, 2009, to recover approximately $18.0 million on an annual basis until the rates in the 2009 rate case take effect.
Coincident with the implementation of new electric rates on July 1, 2009, approximately $16.0 million from the TCA
rider were included in base rates with a corresponding reduction in the TCA rider.
Renewable Energy Credit (REC) Sharing Settlement — In August 2009, PSCo filed an application seeking approval of
treatment of margins associated with certain sales of Colorado RECs bundled with energy into California. PSCo’s
request sought 45 percent of the margins on these specific transactions for both the customers and PSCo with the
remaining ten percent being used to fund a program to develop carbon offset projects and expertise. On Jan. 20, 2010,
PSCo, the Office of Consumer Council, the CPUC staff, the Colorado governor’s energy office and Western Resource
Advocates entered into a unanimous settlement in this case. The settlement establishes a pilot program and defines
certain margin splits during this pilot period. The settlement provides that 10 percent of margins will go to carbon
offsets, 40 percent of the first $10 million in margins, 35 percent of the next $20 million and 30 percent of all
remaining margins will go to PSCo with all remaining margins going to Colorado retail customers as a credit toward
renewable energy projects. The unanimous settlement also clarified that margins associated with RECs bundled with
Colorado energy would be shared 20 percent to PSCo and 80 percent to customers and margins associated with sales of
stand-alone renewable energy credits without energy would be credited 100 percent to customers. It is expected that
PSCo will file an application by Aug. 31, 2010 for future treatment of margins from transactions for RECs bundled
with energy after the end of the pilot program. On Feb. 18, 2010, the CPUC approved the settlement.
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