Xcel Energy 2006 Annual Report Download - page 26

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Fuel, Purchased Energy and Conservation Cost Recovery Mechanisms — PSCo has several retail adjustment clauses that recover
fuel, purchased energy and other resource costs:
• ECA — The ECA, effective Jan. 1, 2004, is an incentive adjustment mechanism that compares actual fuel and purchased
energy expense in a calendar year to a benchmark formula. The ECA also provides for an $11.25 million cap on any cost
sharing over or under an allowed ECA formula rate. The current ECA mechanism expired Dec. 31, 2006. Effective Jan. 1,
2007 the ECA has been modified to include an incentive adjustment to encourage efficient operation of base load coal plants
and encourage cost reductions through purchases of economical short-term energy. The total incentive payment to PSCo in any
calendar year will not exceed $11.25 million. The ECA mechanism will be revised quarterly and interest will accrue monthly
on the average deferred balance. The ECA will expire at the earlier of rates taking effect after Comanche 3 is placed in service
or Dec. 31, 2010.
• PCCA — The PCCA, which became effective June 1, 2004, allows for recovery of purchased capacity payments to certain
power suppliers under specifically identified power purchase agreements that are not included in the determination of PSCo’s
base electric rates or other recovery mechanisms. Effective Jan. 1, 2007, all prudently incurred purchased capacity costs will be
recovered through the PCCA. The PCCA will expire at the earlier of rates taking effect after Comanche 3 is placed in service
or Dec. 31, 2010.
• SCA — The SCA allows PSCo to recover the difference between its actual cost of fuel and the amount of these costs recovered
under its base steam service rates. The SCA rate is revised annually on Jan. 1, as well as on an interim basis to coincide with
changes in fuel costs.
• AQIR — The AQIR recovers, over a 15-year period, the incremental cost (including fuel and purchased energy) incurred by
PSCo as a result of a voluntary plan, effective Jan. 1, 2003, to reduce emissions and improve air quality in the Denver metro
area.
• DSMCA — The DSMCA clause permits PSCo to recover DSM costs beginning Jan. 1, 2006 over eight years while non-labor
incremental expenses and carrying costs associated with deferred DSM costs are recovered on an annual basis. DSM costs
incurred prior to Jan. 1, 2006 are recovered over 5 years. PSCo also has a low-income energy assistance program. The costs of
this energy conservation and weatherization program for low-income customers are recovered through the DSMCA.
• Renewable Energy Service Adjustment (RESA) — The RESA recovers costs associated with complying with the provisions of a
citizen referred ballot initiative passed in 2004 that establishes a renewable portfolio standard for PSCo’s electric customers.
Currently, the RESA recovers the incremental costs of compliance with the renewable energy standard and is set at a level of
0.6 percent of the net costs.
• Wind Energy Service Adjustment (WESA) — The WESA provides for the recovery of certain costs associated with the
provision of wind energy resources from those customers subscribed as WindSource renewable energy customers.
PSCo recovers fuel and purchased energy costs from its wholesale electric customers through a fuel cost adjustment clause accepted
for filing by the FERC.
Performance-Based Regulation and Quality of Service Requirements — PSCo currently operates under an electric and natural gas
PBRP. The major components of this regulatory plan include:
• an electric QSP that provides for bill credits to customers if PSCo does not achieve certain performance targets relating to
electric reliability and customer service through 2010; and
• a natural gas QSP that provides for bill credits to customers if PSCo does not achieve certain performance targets relating to
natural gas leak repair time and customer service through 2010.
PSCo regularly monitors and records as necessary an estimated customer refund obligation under the PBRP. In April of each year
following the measurement period, PSCo files its proposed rate adjustment under the PBRP. The CPUC conducts proceedings to
review and approve these rate adjustments annually.
Capacity and Demand
Uninterrupted system peak demand for PSCo’s electric utility for each of the last three years and the forecast for 2007, assuming
normal weather, are listed below.
System Peak Demand (in MW)
2004 2005 2006 2007 Forecast
PSCo..................................................... 6,483 6,975 6,757 6,751