Xcel Energy 2015 Annual Report Download - page 146
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In February 2015, certain intervenors filed a second complaint to reduce the MISO region ROE to 8.67 percent, prior to an adder.
FERC set the second complaint for hearings, and established a refund effective date of Feb. 12, 2015. The complainants and
intervenors filed direct testimony in September 2015, the MISO TOs filed answering testimony in October 2015 and FERC staff filed
testimony in November 2015. In January 2016, all parties updated their ROE analyses. The complainants and intervenors
recommended ROEs between 8.72 percent and 9.32 percent while FERC staff recommended a ROE of 8.78 percent. The MISO TOs
recommended a ROE of 10.96 percent. Hearings were held before an ALJ in February 2016. An ALJ initial decision is expected in
June 2016 with a FERC decision expected in late 2016 or 2017.
NSP-Minnesota recorded a current liability representing the current best estimate of a refund obligation associated with the new ROE,
including the RTO membership adder, as of Dec. 31, 2015. The new FERC ROE methodology is estimated to reduce transmission
revenue, net of expense, between $8 million and $10 million annually for the NSP System.
SPS – Global Settlement Agreement — In August 2015, SPS, Golden Spread, four New Mexico Cooperatives, West Texas Municipal
Power Agency, Public Service Company of New Mexico (PNM) and Tri-County Electric Cooperative, Inc. filed a settlement
agreement with the FERC that would provide a comprehensive resolution of nine pending matters in dispute between SPS and these
wholesale production and transmission customers, including the 2013 SPS complaint orders and three pending ROE complaints. In
October 2015, the FERC issued an order approving the settlement agreement. As a result of the settlement, SPS issued refunds to
Golden Spread and PNM of $49.1 million, but recognized a reversal of previously recorded reductions in revenue of approximately
$7.9 million in the fourth quarter of 2015. The settlement provides a ROE for production services of 10.0 percent and transmission
services of 10.5 percent, beginning Oct. 20, 2014, and subject to a moratorium on filings for ROE changes, effective prior to Jan. 1,
2020. On Jan. 29, 2016, the FERC approved the SPS compliance filings required by the settlement and FERC order.
Sale of Texas Transmission Assets — In March 2015, SPS reached an agreement to sell certain segments of SPS’ transmission lines
to Oncor Electric Delivery Company LLC. In November 2015, the transaction closed with the required regulatory approvals and SPS
recognized a $3.9 million pre-tax gain after the impacts of sharing with Texas retail customers.
SPP Open Access Transmission Tariff (OATT) Upgrade Costs — Under the SPP OATT, costs of participant-funded transmission
upgrades may be recovered, in part, from other SPP customers whose transmission service is dependent upon capacity enabled by the
upgrades. To date, SPP has not charged its customers any amounts attributable to these upgrades. SPP recently indicated it may
attempt to quantify and assess charges beginning in late 2016, including amounts for prior periods. Due to the limited information
available and lack of historical precedent, the potential loss, if any, is not currently estimable. No accrual has been recorded for this
matter.
13. Commitments and Contingencies
Commitments
Capital Commitments — Xcel Energy has made commitments in connection with a portion of its projected capital expenditures. Xcel
Energy’s capital commitments primarily relate to the following major projects:
PSCo Gas Transmission Integrity Management Programs — PSCo is proactively identifying and addressing the safety and reliability
of natural gas transmission pipelines. The pipeline integrity efforts include primarily pipeline assessment and maintenance projects.
PSCo Electric Distribution Integrity Management Programs — PSCo is assessing aging infrastructure for distribution assets and
replacing worn components to increase system performance.
SPS Transmission NTC — SPS has accepted NTCs for several hundred miles of transmission line and related substation projects based
on needs identified through SPP’s various planning processes, including those associated with economics, reliability, generator
interconnection or the load addition processes. Most significant are the 345 KV transmission line from TUCO to Yoakum County to
Hobbs Plant and the Hobbs Plant to China Draw 345 KV transmission line.
Fuel Contracts — Xcel Energy has entered into various long-term commitments for the purchase and delivery of a significant portion
of its current coal, nuclear fuel and natural gas requirements. These contracts expire in various years between 2016 and 2060. Xcel
Energy is required to pay additional amounts depending on actual quantities shipped under these agreements.