Xcel Energy 2014 Annual Report Download - page 148

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Although the parties to the settlement agreement have not prepared a calculation of the $37 million increase and do not agree about
which specific costs are included, or not, in the agreed settlement revenue requirement, SPS’ reconciliation of its original request to
the settlement increase is as follows:
(Millions of Dollars) Settlement Agreement
Base rate increase request, January 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 81.5
Revisions for updated information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4.6)
Revised request, April 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.9
Remove proposed increase in depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16.0)
Remove adjustment allocators for certain wholesale load reduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12.0)
Revised amortizations (rate case expenses, pension and other post-employment benefits expense and gain on
sale to Lubbock). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9.0)
Non-specified settlement adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.9)
Settlement base rate increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37.0
In December 2014, the PUCT approved the settlement and authorized SPS to file to implement the surcharge. In January 2015, SPS
filed an application to implement a surcharge of approximately $15.6 million, including interest, to be recovered from March through
June 2015, subject to a true-up. A hearing was held in February 2015 and a decision is expected in the first quarter of 2015.
Electric, Purchased Gas and Resource Adjustment Clauses
TCRF Rider — In November 2013, SPS filed with the PUCT to implement the TCRF for Texas retail customers. The requested
increase in revenues was $13 million. The PUCT issued an order allowing the TCRF to go into effect on an interim basis effective
Jan. 1, 2014. In May 2014, the ALJ terminated the interim TCRF due to a settlement in principle being reached with intervenors and
the PUCT staff in the pending Texas electric rate case. In July 2014, the PUCT approved the settlement agreement between the parties
allowing SPS to recover $4 million annually through the TCRF. In September 2014, SPS filed a proposal with the PUCT to refund
approximately $3.7 million during November 2014 for interim rates collected in excess of the final rates approved. Under a settlement
among the parties, SPS implemented the refund in November 2014, pending PUCT approval. The PUCT approved the refund on Dec.
18, 2014.
Pending Regulatory Proceedings — NMPRC
SPS – New Mexico 2014 Electric Rate Case — In December 2012, SPS filed an electric rate case in New Mexico with the NMPRC
for an increase in annual revenue of approximately $45.9 million effective in 2014. The rate filing was based on a 2014 FTY, a
requested ROE of 10.65 percent, an electric rate base of $479.8 million and an equity ratio of 53.89 percent.
In September 2013, SPS filed rebuttal testimony, revising its requested rate increase to $32.5 million, based on updated information
and an ROE of 10.25 percent. The request reflected a base and fuel increase of $20.9 million, an increase of rider revenue of $12.1
million and a decrease to other of $0.5 million.
In March 2014, the NMPRC approved an overall increase of approximately $33.1 million. The increase reflects a base rate increase of
$12.7 million and rider recovery of $18.1 million for renewable energy costs, both based on an ROE of 9.96 percent and an equity
ratio of 53.89 percent. Final rates were effective April 5, 2014. In April 2014, the NMAG filed a request for rehearing. The rehearing
request was denied by the NMPRC. In June 2014, the NMAG filed an appeal of the NMPRC’s denial to the New Mexico Supreme
Court. A decision is expected by the second quarter of 2016.
Pending and Recently Concluded Regulatory Proceedings — FERC
SPS – Wholesale Rate Complaints — In April 2012, Golden Spread, a wholesale cooperative customer, filed a rate complaint alleging
that the base ROE included in the SPS production formula rate of 10.25 percent, and the SPS transmission base formula rate ROE of
10.77 percent, are unjust and unreasonable. In July 2013, Golden Spread filed a second complaint, again asking that the base ROE in
the SPS production and transmission formula rates be reduced to 9.15 and 9.65 percent, respectively.
In June 2014, the FERC issued orders consolidating the Golden Spread ROE complaints and setting them for settlement judge
procedures and hearings and indicated the parties should apply the new two-step discounted cash flow ROE methodology to the
proceedings. The FERC established effective dates for the refunds as April 20, 2012 and July 19, 2013. Settlement judge procedures
were unsuccessful and the complaints were set for hearing procedures, with an initial ALJ decision to be issued by Nov. 25, 2015 and
a final FERC order to be issued no earlier than 2016. In January 2015, Golden Spread filed testimony requesting that wholesale
production and transmission formula rates be reduced to 8.78 percent and 9.28 percent, respectively, for the period April 20, 2012 to
July 18, 2013, and reduced to 8.51 percent and 9.01 percent, respectively, for the period July 19, 2013 to Oct. 19, 2014.