Xcel Energy 2008 Annual Report Download - page 137

• Allows SPS to implement the transmission cost recovery factor in 2009;
• Precludes SPS from filing to seek any other change in base rates until Feb. 15, 2010; and
• Resolves all fuel reconciliation issues for 2006-07 with one adjustment for $0.6 million related to the sharing of
certain wholesale sales revenues.
The case and settlement will be remanded to the PUCT with action on the settlement expected later this spring.
John Deere Wind Complaint — In June 2007, several John Deere Wind Energy subsidiaries (JD Wind) filed a
complaint against SPS disputing SPS’ payments to JD Wind for energy produced from the JD Wind projects. SPS
responded that the payments to JD Wind for energy produced from its QF is appropriate and in accordance with SPS’
filed tariffs with the PUCT. The PUCT referred the complaint to the State Office of Administrative Hearings. On
Aug. 14, 2008, JD Wind filed testimony claiming SPS has been underpaying JD Wind for its energy. Testimony has
been filed and hearings were held. The ALJ will then recommend to the PUCT on how the dispute should be ruled.
There is no deadline for the PUCT to take action.
Electric and Resource Adjustment Clauses
TCR Factor Rulemaking — In November 2007, the PUCT adopted new rules relating to TCR factor outside of a base
rate case. The rule establishes the mechanism by which SPS can request annual recovery of its reasonable and necessary
expenditures for transmission infrastructure improvement costs and changes in wholesale transmission charges that are
not included in existing rates. This new rule allows SPS more timely recovery of transmission cost increases between
base rate cases.
Pending and Recently Concluded Regulatory Proceedings — NMPRC
Base Rate
2007 New Mexico Retail Electric Rate Case — In July 2007, SPS filed with the NMPRC requesting a New Mexico
retail electric general rate increase of $17.3 million annually, or 6.6 percent. The rate filing was based on a 2006 test
year adjusted for known and measurable changes and included a requested ROE of 11.0 percent, an electric rate base of
approximately $307.3 million and an equity ratio of 51.2 percent.
In August 2008, the NMPRC issued its final order authorizing an overall rate increase of $10.8 million based on a
10.18 percent ROE. This increase is based on a $7 million electric base rate increase and a rider to recover $3.8 million
of restructuring costs. The NMPRC disallowed $3.5 million in rate base for historical DSM expenditures and certain
rate case and prepaid pension expenses.
SPS implemented the base rates on Sept. 14, 2008.
2008 New Mexico Retail Electric Rate Case — On Dec. 18, 2008, SPS filed with the NMPRC a request to increase
electric rates in New Mexico by approximately $24.6 million, or 5.1 percent. The request is based on a historic test
year (split year based on year-ending June 30, 2008), an electric rate base of $321 million, an equity ratio of 50 percent
and a requested ROE of 12 percent. SPS also requested interim rates to allow it to begin recovering the cost of the LPP
facility of approximately $7.6 million per year. The NMPRC has suspended the proposed rate request until Oct. 17,
2009, and has set the interim rate request for hearing on March 19, 2009. The NMPRC has assigned the main part of
the case to a hearing examiner and has set a mandatory mediation with a settlement judge for March 12, 2009. The
following procedural schedule has been established:
• Staff and intervenor direct testimony on May 8, 2009;
• SPS rebuttal testimony on May 29, 2009; and
• The hearing on the merits is expected to begin on June 8, 2009.
On Jan. 12, 2009, the NMPRC staff and the attorney general (AG) requested that the NMPRC suspend SPS’ advice
notice and deny the request for interim relief. The staff stated that the standard for interim relief requires clear and
convincing evidence of a financial emergency, which SPS has failed to provide and stated that the proposal entails
piecemeal and retroactive ratemaking. The AG stated that SPS’ testimony does not rise to the level required for the
NMPRC to grant interim relief.
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