Xcel Energy 2014 Annual Report Download - page 144

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In February 2015, a separate group of customers filed an additional complaint proposing to reduce the MISO region ROE to 8.67
percent, prior to any 50 basis point RTO adder, with a refund effective date of Feb. 12, 2015. Answers to the complaint are to be filed
by March 2015.
NSP-Minnesota recorded a current liability representing the current best estimate of a refund obligation associated with the new ROE
as of Dec. 31, 2014. The new FERC ROE methodology is estimated to reduce transmission revenue, net of expense, between $5
million and $7 million annually for the NSP System.
PSCo
Pending and Recently Concluded Regulatory Proceedings — CPUC
PSCo – Colorado 2014 Electric Rate Case — In 2014, PSCo filed an electric rate case with the CPUC requesting an increase in
annual revenue of approximately $136.0 million, or 4.83 percent. The requested 2015 rate increase reflected approximately $100.9
million (subsequently updated to $98.7 million) for recovery of costs associated with the CACJA project. The case also requested the
initiation of a CACJA rider for 2016 and 2017, which is anticipated to increase revenue recovery by approximately $34.2 million in
2016 and then decline to approximately $29.9 million in 2017. The rate filing was based on a 2015 forecast test year, a requested
ROE of 10.35 percent, an electric rate base of $6.39 billion and an equity ratio of 56 percent. As part of the filing, PSCo would
transfer approximately $19.9 million from the transmission rider to base rates, which would not impact customer bills. The rider
would recover incremental investment and expenses associated with the CACJA project to retire certain coal plants, add pollution
control equipment to other existing coal units and add natural gas generation.
In November 2014, several parties filed answer testimony, including the CPUC Staff (Staff) and the OCC. The Staff’s position was
based on an ROE of 9.11 percent and a 51.24 percent equity ratio. In addition, the Staff proposed that costs associated with the
CACJA project be recovered through a rider mechanism. The OCC recommended an ROE of 9.10 percent, a 52.70 percent equity
ratio and that a portion of the costs associated with the CACJA project be recovered in base rates and the remainder through a rider
mechanism.
In December 2014, PSCo filed rebuttal testimony, revising its requested rate increase to $107.2 million, or 3.79 percent, reflecting an
ROE of 10.25 percent and updated information for both the sales and property tax forecasts. PSCo also proposed to recover all costs
associated with the CACJA project through the rider beginning in 2015.
On Jan. 23, 2015, PSCo and intervenors filed a comprehensive settlement agreement, subject to CPUC approval, which would result
in an overall 2015 revenue increase of approximately $53.3 million, or 1.87 percent. Key terms of the agreement include the
following:
• The settlement is based on a 2013 HTY, an ROE of 9.83 percent and an equity ratio of 56 percent;
• It includes the implementation of a forward-looking CACJA rider, effective Jan. 1, 2015, a forward-looking TCA rider,
effective Feb. 13, 2015 and tracking mechanisms for pension expense and property taxes; and
• The agreement also includes an earnings test for 2015 through 2017, under which PSCo and customers would share in any
earnings on a 50/50 basis if the ROE recognized falls between 9.84 percent and 10.48 percent. The earnings test principles
are based primarily on those established in the previous rate case.