Xcel Energy 2011 Annual Report Download - page 129

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In June 2011, NSP-Minnesota revised its requested rate increase to $122.8 million, reflecting a revised ROE of 10.85 percent and
other adjustments. The DOER revised its recommended rate increase to approximately $84.7 million in 2011 and an additional
rate increase of $34 million in 2012, reflecting an ROE of 10.37 percent. The primary differences between the NSP-Minnesota
requested rate increase and the DOER updated recommendation were associated with ROE and compensation related issues.
In August 2011, NSP-Minnesota submitted supplemental testimony, revising its requested rate increase to approximately $122
million for 2011 and a 2012 step increase of approximately $29 million. The revisions were due to delays in the Monticello
nuclear plant extended power uprate.
In November 2011, NSP-Minnesota reached a settlement agreement with the Xcel Large Industrials, the Minnesota Chamber of
Commerce, the Commercial Group and Verso Paper Corp., which settled all financial issues and several rate design issues
between the signing parties. The settlement includes a rate increase of approximately $58.0 million in 2011 and an incremental
rate increase of $14.8 million in 2012 based on an ROE of 10.37 percent. The settlement agreement reflects a reduction to
depreciation expense and NSP-Minnesota’s rate request by $30 million with an additional adjustment of $7.5 million related to
employee compensation. The settlement also provides NSP-Minnesota the ability to seek deferred accounting for incremental
property tax increases associated with electric and natural gas businesses in 2012, which is currently projected to increase by
approximately $28 million. NSP-Minnesota also agreed to not file an electric rate case prior to Nov. 1, 2012, provided that both
the settlement and the property tax filing are approved by the MPUC. NSP-Minnesota has recorded a provision for revenue
subject to refund of approximately $67.4 million for 2011 and has reduced depreciation expense by $30 million.
In February 2012, the ALJ recommended MPUC approval of the settlement agreement. In addition, NSP-Minnesota filed to
reduce the interim rate request to $72.8 million to align with the settlement agreement. A decision is expected by the MPUC in
the first half of 2012.
Pending 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 in 2011 and a step
increase of $4.2 million, or 2.6 percent in 2012. 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.
The NDPSC approved an interim rate increase of approximately $17.4 million, subject to refund, effective Feb. 18, 2011. NSP-
Minnesota has recorded a provision for revenue subject to refund of approximately $2.4 million for 2011. The interim rates will
remain in effect until the NDPSC makes its final decision on the case.
In May 2011, NSP-Minnesota revised its rate request to approximately $18.0 million, or an increase of 11 percent, for 2011 and
$2.4 million, or 1.4 percent, for the additional step increase in 2012, due to the termination of the Merricourt wind project.
In September 2011, NSP-Minnesota reached a settlement with the NDPSC Advocacy Staff. If approved by the NDPSC, the
settlement would result in a rate increase of $13.7 million in 2011 and an additional step increase of $2.0 million in 2012, based
on a 10.4 percent ROE and black box settlement for all other issues. To address 2011 sales coming in below test year projections,
the settlement includes a true-up to 2012 non-fuel revenues plus the settlement rate increase.
An NDPSC decision is expected in March 2012.
Pending Regulatory Proceedings — SDPUC
NSP-Minnesota – South Dakota Electric Rate Case — In June 2011, NSP-Minnesota filed a request with the SDPUC to increase
South Dakota electric rates by $14.6 million annually, effective in 2012. The proposed increase included $0.7 million in revenues
currently recovered through automatic recovery mechanisms. The request is based on a 2010 historic test year adjusted for known
and measurable changes, a requested ROE of 11 percent, a rate base of $323.4 million and an equity ratio of 52.48 percent. NSP-
Minnesota also requested approval of a nuclear cost recovery rider to recover the actual investment cost of the Monticello nuclear
plant life cycle management and extended power uprate project that is not reflected in the test year.
As a result of delays in the rate case process, interim rates of $12.7 million were implemented Jan. 2, 2012. A final decision is
expected in the first half of 2012.