Xcel Energy 2014 Annual Report Download - page 146

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SmartGridCity (SGC) Cost Recovery — PSCo requested recovery of $45 million of capital costs and $4 million of annual O&M costs
incurred to develop and operate SGC as part of its 2010 electric rate case. In 2011, the CPUC allowed recovery of approximately $28
million of the capital cost and all of the O&M costs. PSCo subsequently requested recovery of the remaining capital investment in
SGC, which the CPUC denied in April 2013. Based on the ALJ’s previous recommended decision to deny recovery, PSCo recognized
a $10.7 million pre-tax charge in 2012, representing the net book value of the disallowed investment, which was included in O&M
expense.
Electric, Purchased Gas and Resource Adjustment Clauses
DSM and the DSMCA — The CPUC approved higher savings goals and a lower financial incentive mechanism for PSCo’s electric
DSM energy efficiency programs starting in 2015. Energy efficiency and DSM costs are recovered through a combination of the
DSMCA riders and base rates. DSMCA riders are adjusted biannually to capture program costs, performance incentives, and any
over- or under-recoveries are trued-up in the following year. Savings goals were 384 GWh in 2014 and are 400 GWh in 2015 with
incentives awarded in the year following plan achievements. PSCo is able to earn $5 million upon reaching its annual savings goal
along with an incentive on five percent of net economic benefits up to a maximum annual incentive of $30 million.
The CPUC approved the 2014 PSCo electric and gas DSM budget of $87.8 million and $12.3 million, respectively. In October 2014,
PSCo filed its 2015-2016 DSM plan, which proposes a 2015 DSM electric budget of $81.6 million and a gas budget of $13.1 million
and a 2016 DSM electric budget of $78.7 million and gas budget of $13.6 million. A decision by the ALJ is expected in the second
quarter of 2015.
REC Sharing — In 2011, the CPUC approved margin sharing on stand-alone REC transactions at 10 percent to PSCo and 90 percent
to customers for 2014. In 2012, the CPUC approved an annual margin sharing on the first $20 million of margins on hybrid REC
trades of 80 percent to the customers and 20 percent to PSCo. Margins in excess of the $20 million are to be shared 90 percent to the
customers and 10 percent to PSCo. The CPUC authorized PSCo to return to customers unspent carbon offset funds by crediting the
RESA regulatory asset balance. PSCo credited to the RESA regulatory asset balance approximately $0.6 million and $21.7 million in
2014 and 2013, respectively. The cumulative credit to the RESA regulatory asset balance was $105.1 million and $104.5 million at
Dec. 31, 2014 and Dec. 31, 2013, respectively. The credits include the customers’ share of REC trading margins and the unspent share
of carbon offset funds.
In September 2014, an ALJ issued a decision approving a settlement between PSCo, the CPUC Staff, and intervenors to extend the
current sharing mechanism without modification through 2017.
Recently Concluded Regulatory Proceedings — FERC
PSCo Transmission Formula Rate Cases — In April 2012, PSCo filed with the FERC to revise the wholesale transmission formula
rates from an HTY formula rate to a forecast transmission formula rate and to establish formula ancillary services rates. PSCo
proposed that the formula rates be updated annually to reflect changes in costs, subject to a true-up. The request would increase
PSCo’s wholesale transmission and ancillary services revenue by approximately $2.0 million annually.
In June 2012, the FERC issued an order accepting the proposed transmission and ancillary services formula rates, suspending the
increase to November 2012, subject to refund, and setting the case for settlement judge or hearing procedures. Several wholesale
customers then filed a complaint with the FERC seeking to have the transmission formula rate ROE reduced from 10.25 to 9.15
percent effective July 1, 2012.
In September 2014, PSCo and its transmission customers filed a settlement to resolve the ROE issue in the transmission rate filing and
complaint. The FERC approved the settlement in October 2014, providing a 9.72 percent ROE effective retroactive to July 1, 2012 for
the PSCo transmission formula rate. Refunds were provided to customers in December 2014.
PSCo – Production Formula Rate ROE Complaint — In August 2013, PSCo’s wholesale production customers filed a complaint
with the FERC, and requested it reduce the stated ROEs ranging from 10.1 percent through 10.4 percent to 9.04 percent in the PSCo
production sales formula rates effective Sept. 1, 2013. In September 2014, PSCo and its wholesale customers filed a settlement to
resolve the complaint along with the pending transmission formula rate ROE matters. The FERC approved the settlement in October
2014, providing a 9.72 percent ROE effective for the PSCo production formula rate. Refunds were provided to customers in
December 2014.