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NSP-Minnesota Gas Rate Case — In November 2009, NSP-Minnesota filed a request with the MPUC to increase Minnesota
natural gas rates by $16.2 million for 2010, based on an ROE of 11 percent, an equity ratio of 52.46 percent and a rate base of
$441 million. In December 2009, the MPUC approved an interim rate increase of $11.1 million, subject to refund. Interim rates
went into effect on Jan. 11, 2010.
In June 2010, NSP-Minnesota revised its request to an increase of $10.0 million based on an ROE of 10.6 percent. In November
2010, the MPUC authorized a rate increase of approximately $7 million based on an ROE of 10.0 percent.
Electric, Purchased Gas and Resource Adjustment Clauses
TCR Rider — The MPUC has approved a TCR rider that allows annual adjustments to retail electric rates to provide recovery of
certain incremental transmission investments between rate cases. In 2010, the MPUC approved a TCR rider that recovered
approximately $10.8 million during 2010. In October 2010, NSP-Minnesota filed its 2011 rider recovery request, seeking
approval to recover approximately $12.9 million during 2011. The request is pending MPUC action.
RES Rider — The MPUC has approved a RES rider to recover the costs for utility-owned projects implemented in compliance
with the Minnesota RES. In 2010, the MPUC approved a RES rider that resulted in $38.4 million in revenue recovery during
2010. In October 2010, NSP-Minnesota filed its 2011 rider recovery request, seeking approval to recover approximately $67.8
million during 2011.
MERP Rider — In December 2009, the MPUC authorized NSP-Minnesota to recover revenue requirements related to
environmental improvement projects of approximately $116.7 million during 2010 through the MERP rider. In October 2010,
NSP-Minnesota filed a request to recover approximately $111.4 million during 2011. Final MPUC action is pending; however,
NSP-Minnesota is allowed to implement the 2011 adjustment prior to MPUC approval. If the approval is for a different amount,
any under- or over- collections would be trued up in the next annual period.
CIP Rider — CIP expenses are recovered through a charge embedded in base rates and a rider that is adjusted annually. In April
2010, NSP-Minnesota filed its annual rider petitions requesting recovery of approximately $45 million of electric CIP expenses
and financial incentives and $10.2 million of natural gas CIP expenses and financial incentives. These amounts correspond to the
forecasted unrecovered year-end balances. During the proceedings, the OES recommended that cost recovery be accelerated and
increased to reduce the unrecovered balances and the associated carrying charges assessed to customers on the balances. This
would result in higher rider rates in the short-term, but future rates would be lower as the unrecovered balance was lowered.
In October 2010, the MPUC approved an increase to the electric CIP rider rate to increase cost recovery and reduce the
unrecovered CIP balance to approximately zero by the end of 2012. Based on the higher rate, NSP-Minnesota estimates recovery
of $66.7 million through the rider during the November 2010 to September 2011 timeframe. This is in addition to an expected
$48.1 million through the conservation cost recovery charge component of base rates.
In November 2010, the MPUC approved the natural gas CIP rider to bring the tracker balance to approximately zero by the end of
2011. NSP-Minnesota estimates recovery of approximately $18.6 million through the natural gas CIP rider during the December
2010 to September 2011 timeframe. This is in addition to an expected $3.0 million through the conservation cost recovery charge
component of base rates.
Pending and Recently Concluded Regulatory Proceedings — NDPSC
NSP-Minnesota North Dakota Electric Rate Case — In December 2010, NSP-Minnesota filed a request with the NDPSC to
increase 2011 electric rates in North Dakota by approximately $19.8 million, or an increase of 12 percent. The rate filing is based
on a 2011 forecast test year and includes a requested ROE of 11.25 percent, an electric rate base of approximately $328 million
and an equity ratio of 52.56 percent. NSP-Minnesota requested an additional increase of $4.2 million, or 2.6 percent, effective
Jan. 1, 2012, to address certain known and measurable cost increases in 2012.
The NDPSC approved an interim rate increase of approximately $17.4 million, subject to refund, effective Feb. 18, 2011. The
interim rates would remain in effect until the NDPSC makes its final decision on the case, which is anticipated in the fourth
quarter of 2011.