Xcel Energy 2012 Annual Report Download - page 28

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PSCo has received CPCNs for the following:
• Conversion of Cherokee Unit 2 to a synchronous condenser;
• Decommissioning of Cherokee Unit 1 and Unit 2;
• Installing Pawnee emissions controls;
• Installing SCRs on the Hayden units;
• Shutdown Arapahoe 3 at the end of 2013; and
• Constructing a new natural gas combined-cycle unit at Cherokee Station.
PSCo is in the process of decommissioning Cherokee Units 1 and 2.
Steam System Package Boilers and Regulatory Plan — In December 2012, PSCo filed for a CPCN to construct two packaged
boilers for its steam utility. The application also sought approval for PSCo’s regulatory plan affecting rates for natural gas and
steam services effective after the boilers have been placed in service. The proposed regulatory plan would combine the gas and
steam revenue requirements for purposes of setting rates for retail gas and steam customers beginning January 2016. PSCo
estimates that the impact of its proposed regulatory plan will be a reduction in the revenue requirement for steam of
approximately $3.2 million and a corresponding $3.2 million increase in the revenue requirement for natural gas. A CPUC
decision is expected in late 2013.
San Luis Valley-Calumet-Comanche Transmission Project — In May 2009, PSCo and Tri-State Generation and Transmission
Association filed a joint application with the CPUC for a 230 KV and 345 KV line and substation construction project. The line
was intended to assist in bringing solar power in the San Luis Valley to customers. In March 2011, the CPUC granted a CPCN for
this project. The CPUC’s decisions have been appealed to the Costilla County District Court by Blanca Ranch Holdings, LLC and
Trinchera Ranch Holdings, LLC, and are pending before the Court.
In October 2011, PSCo determined that due to lower projected load growth, lower gas prices and the higher cost of solar thermal
generation, it was unlikely to need the transmission line in the foreseeable future. PSCo is awaiting a final Phase I decision in its
2011 resource plan before making a final determination. A CPUC decision on the resource plan is anticipated in the first quarter
of 2013.
SmartGridCity™ (SGC) Cost Recovery — PSCo requested recovery of the revenue requirements associated with $45 million of
capital and $4 million of annual O&M costs incurred to develop and operate SGC as part of its 2010 electric rate case. In
February 2011, the CPUC allowed recovery of approximately $28 million of the capital cost and all of the O&M costs. In
December 2011, PSCo requested CPUC approval for the recovery of the remaining capital investment in SGC and also provided
the additional information requested. On Jan. 17, 2013, the ALJ recommended denial of PSCo’s request for recovery of the
remaining portion of the SGC investment. On Feb. 6, 2013, PSCo filed exceptions to the ALJ recommendation requesting that the
CPUC grant recovery of its investment. However, as a result of the ALJ’s recommended decision denying recovery, PSCo
recognized a $10.7 million pre-tax charge in 2012, representing the net book value of the disallowed investment, which is
included in O&M expense.
Boulder, Colo. Franchise Agreement — In November 2011, two ballot measures were passed by the citizens of Boulder. The
first measure increased the occupation tax to raise an additional $1.9 million annually for a limited duration with the stated
purpose of funding the exploration costs of forming a municipal utility and acquiring the PSCo electric distribution system in
Boulder. The second measure authorized the formation and operation of a municipal light and power utility and the issuance of
enterprise revenue bonds, subject to certain restrictions, including the level of initial rates and debt service coverage. Boulder has
retained multiple legal firms that specialize in condemnation and FERC matters, as well as several other consultants.
The City Council has not yet decided whether it will proceed with the formation of a municipal electric utility or with the
commencement of a condemnation or FERC stranded cost proceeding. In December 2012, Boulder issued a white paper exploring
opportunities for reaching its energy goals with PSCo, in lieu of condemnation. PSCo has advised Boulder that it is willing to
discuss many of these opportunities. Boulder has announced that the City Council will decide whether to proceed with the
formation of a municipal electric utility in April 2013. Should Boulder attempt to condemn PSCo facilities, PSCo would seek to
obtain full compensation for the property and business taken by Boulder and for all damages resulting to PSCo and its system.
PSCo would also seek appropriate compensation for stranded costs with the FERC.