Item 8.01. Other Events
On Nov. 18, 2022, Southwestern Public Service Company (SPS), a New Mexico
corporation, and a wholly owned subsidiary of Xcel Energy Inc., filed an
electric rate case with the New Mexico Public Regulation Commission (NMPRC)
seeking an increase in base rate revenue of $78 million. The impact to overall
customer bills is expected to be approximately 10%. The request is based on a
future test year period ending June 30, 2024, a return on equity (ROE) of
10.75%, an equity ratio of 54.70% and retail rate base of $2.4 billion.
SPS' New Mexico customers will continue to benefit from fuel cost savings and
production tax credits (PTCs) attributable to wind energy provided by the
Sagamore and Hale wind projects. PTCs are being credited to customers through
the fuel clause. We anticipate the value of PTCs credited to our New Mexico
customers to increase approximately $30 million due primarily to various
allocation changes.
Additionally, the request reflects:
•Significant retail revenue growth.
•Continued capital investment primarily to support the clean energy transition
and load growth.
•Planned roll-off of 225 megawatts (MW) of wholesale load in 2022 and 2024.
•Further acceleration of the Tolk coal plant depreciation life from 2032 to
2028.
SPS' base rate request (millions of dollars):
Retail revenue growth $ (88)
Increase in allocation of assets and costs to New Mexico retail, including
impact of wholesale load roll-off
69
Capital investment primarily to support the clean energy transition and
load growth
35
Increase in requested ROE 22
Non-labor O&M 18
Depreciation rate changes, excluding Tolk plant 10
Change in Tolk plant depreciation life 6
Other 6
Total rate request $ 78
A NMPRC decision and implementation of final rates is anticipated in the fourth
quarter of 2023.
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Certain information discussed in this Current Report on Form 8-K is
forward-looking information that involves risks, uncertainties and assumptions.
Such forward-looking statements, including our expectations regarding the
regulatory proceedings and the effective date of the rates, as well as
assumptions and other statements are intended to be identified in this document
by the words "anticipate," "believe," "could," "estimate," "expect," "intend,"
"may," "objective," "outlook," "plan," "project," "possible," "potential,"
"should," "will," "would," and similar expressions. Actual results may vary
materially. Forward-looking statements speak only as of the date they are made,
and we expressly disclaim any obligation to update any forward-looking
information. The following factors, in addition to those discussed in Xcel
Energy's and SPS' Annual Report on Form 10-K for the fiscal year ended Dec. 31,
2021, and subsequent filings with the Securities and Exchange Commission, could
cause actual results to differ materially from management expectations as
suggested by such forward-looking information: uncertainty around the impacts
and duration of the COVID-19 pandemic, including potential workforce impacts
resulting from vaccination requirements, quarantine policies or government
restrictions, and sales volatility; operational safety; successful long-term
operational planning; commodity risks associated with energy markets and
production; rising energy prices and fuel costs; qualified employee work force
and third-party contractor factors; violations of our Codes of Conduct; ability
to recover costs, changes in regulation; reductions in our credit ratings and
the cost of maintaining certain contractual relationships; general economic
conditions, including recessionary conditions, inflation rates, monetary
fluctuations; supply chain constraints and their impact on capital expenditures
and/or the ability of SPS to obtain financing on favorable terms; availability
or cost of capital; our customers' and counterparties' ability to pay their
debts to us; assumptions and costs relating to funding our employee benefit
plans and health care benefits; tax laws; effects of geopolitical events,
including war and acts of terrorism; cyber security threats and data security
breaches; seasonal weather patterns; changes in environmental laws and
regulations; climate change and other weather; natural disaster and resource
depletion, including compliance with any accompanying legislative and regulatory
changes; and costs of potential regulatory penalties; regulatory changes and/or
limitations related to the use of natural gas as an energy source; and our
ability to execute on our strategies or achieve expectations related to
environmental, social and governance matters, including as a result of evolving
legal, regulatory and other standards, processes, and assumptions, the pace of
scientific and technological developments, increased costs, the availability of
requisite financing, and changes in carbon markets.
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