Xcel Energy 2015 Annual Report Download - page 33
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NSP-Wisconsin
Public Utility Regulation
Summary of Regulatory Agencies and Areas of Jurisdiction — Retail rates, services and other aspects of NSP-Wisconsin’s
operations are regulated by the PSCW and the MPSC, within their respective states. In addition, each of the state commissions
certifies the need for new generating plants and electric transmission lines before the facilities may be sited and built. NSP-Wisconsin
is subject to the jurisdiction of the FERC with respect to its wholesale electric operations, hydroelectric generation licensing,
accounting practices, wholesale sales for resale, the transmission of electricity in interstate commerce, compliance with the NERC
electric reliability standards, asset transactions and mergers, and natural gas transactions in interstate commerce. NSP-Wisconsin and
NSP-Minnesota have been granted continued joint authorization from the FERC to make wholesale electric sales at market-based
prices. NSP-Wisconsin is a transmission owning member of the MISO RTO.
The PSCW has a biennial base rate filing requirement. By June of each odd numbered year, NSP-Wisconsin must submit a rate filing
for the test year beginning the following January. In recent years, NSP-Wisconsin has been submitting rate filings each year.
Fuel and Purchased Energy Cost Recovery Mechanisms — NSP-Wisconsin does not have an automatic electric fuel adjustment
clause for Wisconsin retail customers. Instead, under Wisconsin rules, utilities submit a forward-looking annual fuel cost plan to the
PSCW for approval. Once the PSCW approves the fuel cost plan, utilities defer the amount of any fuel cost under-collection or over-
collection in excess of a two percent annual tolerance band, for future rate recovery or refund. Approval of a fuel cost plan and any
rate adjustment for refund or recovery of deferred costs is determined by the PSCW after an opportunity for a hearing. Rate recovery
of deferred fuel cost is subject to an earnings test based on the utility’s most recently authorized ROE. Fuel cost under-collections that
exceed the two percent annual tolerance band for a calendar year may not be recovered if the utility earnings for that year exceed the
authorized ROE.
NSP-Wisconsin’s retail electric rate schedules for Michigan customers include power supply cost recovery factors, which are based on
12-month projections. After each 12-month period, a reconciliation is submitted whereby over-collections are refunded and any
under-collections are collected from the customers over the subsequent 12-month period.
Wisconsin Energy Efficiency Program — In Wisconsin, the primary energy efficiency program is funded by the state’s utilities, but
operated by independent contractors subject to oversight by the PSCW and the utilities. NSP-Wisconsin recovers these costs in rates
charged to Wisconsin retail customers.
Capacity and Demand
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See NSP-Minnesota Capacity and Demand.
Energy Sources and Related Transmission Initiatives
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See NSP-Minnesota Energy Sources and Related Transmission
Initiatives.
NSP-Wisconsin / American Transmission Company, LLC (ATC) - La Crosse, Wis. to Madison, Wis. Transmission Line — In
October 2013, NSP-Wisconsin and ATC jointly filed an application with the PSCW for a Certificate of Public Convenience and
Necessity (CPCN) for a new 345 KV transmission line that would extend from La Crosse, Wis. to Madison, Wis. NSP-Wisconsin’s
half of the line will be shared with three co-owners, Dairyland Power Cooperative, WPPI Energy and Southern Minnesota Municipal
Power Agency-Wisconsin.
In April 2015, the PSCW issued its order approving a CPCN and route for the project. In June 2015, the PSCW denied two requests
for rehearing. Two groups have appealed the CPCN Order to county circuit court. Court action is pending and the CPCN remains in
full effect unless one of the parties seeks and receives a stay from the court and posts a bond to cover damages the utilities may incur
due to delay. The 180-mile project is expected to cost approximately $580 million. NSP-Wisconsin’s portion of the investment is
estimated to be approximately $207 million. Construction on the line began in January 2016, with completion anticipated by late
2018.
2015 Electric Fuel Cost Recovery — NSP-Wisconsin’s electric fuel costs for the year ended Dec. 31, 2015 were lower than
authorized in rates and outside the two percent annual tolerance band established in the Wisconsin fuel cost recovery rules, primarily
due to lower load as a result of mild weather, lower natural gas prices and lower purchased power prices in the MISO market.
Accordingly, NSP-Wisconsin recorded a deferral of approximately $9.2 million through Dec. 31, 2015. In the first quarter of 2016,
NSP-Wisconsin will file a reconciliation of 2015 fuel costs with the PSCW. The amount of any potential refund is subject to review
and approval by the PSCW, which is not expected until mid-2016.