Xcel Energy 2009 Annual Report Download - page 140

requests a declaration that the PUCT’s order does not implement PURPA and FERC PURPA rules and is preempted
by federal law. The complaint also requests that the PUCT be required to revise its order and be enjoined from
enforcing its current order. SPS intends to intervene in this case and defend the PUCT’s order. On Jan. 28, 2010, JD
Wind filed a damage suit against SPS in Texas state district court to toll the statute of limitations while the above cases
are being decided.
Texas Jurisdictional Fuel Allocation Methodology — In May 2009, SPS filed an application to revise the calculation of
Texas retail jurisdictional fuel and purchased power expense, effective in January 2008. SPS has determined that its
current method results in a material amount of unrecovered fuel and purchased power expense. The application seeks
approval for a revised methodology, which matches the fuel and purchased power expenses in a month with the fuel
factor revenue received from each kilowatt hour used that month.
In November 2009, the PUCT issued a final order approving a unanimous settlement that would allow for the change
in the calculation of deferred fuel consistent with the approach proposed by SPS. The estimated impact is expected to
result in an approximate $6.5 million increase to fuel and purchased power expenses for the Texas retail jurisdiction for
Jan. 1, 2008 to Dec. 31, 2009. SPS has agreed to reduce the new allocated portion by $3 million subsequent to
adopting the new methodology going forward.
Texas Transmission Cost Recovery Factor (TCRF) — In 2007, the PUCT implemented rules allowing utilities to request
a TCRF in between rate cases for recovery of new transmission investment costs. In June 2009, SPS filed a request to
implement a TCRF with proposed revenues of $7.4 million annually. This is SPS’ first filing under that rule.
In November 2009, the parties filed a unanimous stipulation, which allows SPS to recover $4.5 million annually, and
the ALJ issued an order approving interim TCRF rates beginning Jan. 1, 2010. In January 2010, the PUCT approved
the unanimous stipulation.
Pending and Recently Concluded Regulatory Proceedings — NMPRC
Base Rate
2008 New Mexico Retail Electric Rate Case — In December 2008, SPS filed with the NMPRC a request to increase
electric rates in New Mexico by approximately $24.6 million, or 6.2 percent. The request was based on a historic test
year (split year based on the year ending June 30, 2008), an electric rate base of $321 million, and an equity ratio of
50.0 percent and a requested ROE of 12.0 percent. SPS also requested interim rates of $7.6 million per year to recover
capacity costs of the Lea Power facility, which became operational in September 2008.
In March 2009, the NMPRC approved a partial stipulated settlement between the parties that allows SPS to recover
approximately $5.7 million of interim rates, effective May 1, 2009, through an LPP cost rider until the final rates from
the remainder of the case are effective.
In July 2009, the NMPRC issued an order approving the stipulation settlement agreement. Under the stipulation, SPS
receives a base rate increase of $14.2 million, effective July 1, 2009. SPS has agreed that Dec. 1, 2010 is the earliest
date it will file its next base rate case, subject to a force majeure provision triggered by additional environmental
compliance costs. SPS implemented the new rates on July 15, 2009.
Pending and Recently Concluded Regulatory Proceedings — FERC
Wholesale Rate Complaints — In November 2004, Golden Spread Electric, Lyntegar Electric, Farmer’s Electric, Lea
County Electric, Central Valley Electric and Roosevelt County Electric, all wholesale cooperative customers of SPS, filed
a rate complaint with the FERC alleging that SPS’ rates for wholesale service were excessive and that SPS had
incorrectly calculated monthly fuel cost adjustment charges to such customers (the Complaint). Among other things,
the complainants asserted that SPS had inappropriately allocated average fuel and purchased power costs to other
wholesale customers, effectively raising the fuel cost charges to the complainants. Cap Rock Energy Corporation (Cap
Rock), another full-requirements customer of SPS, Public Service Company of New Mexico (PNM) and Occidental
Permian Ltd. and Occidental Power Marketing, L.P. (Occidental), SPS’ largest retail customer, intervened in the
proceeding.
Golden Spread Complaint Settlement — In December 2007, SPS reached a settlement with Golden Spread (which now
includes Lyntegar Electric) and Occidental regarding base rate and fuel issues raised in the complaint described above as
well as a subsequent rate proceeding. In April 2008, the FERC approved the settlement, which resolved all issues
pertaining to Golden Spread that were the subject of the Complaint; implemented a formula rate and extended the
130