Item 8.01. Other Events
On July 2, 2021, Northern States Power Company, a Wisconsin corporation
(NSP-Wisconsin) and wholly owned subsidiary of Xcel Energy Inc., filed an
application with the Public Service Commission of Wisconsin (PSCW) seeking
approval of a rate case settlement with various intervenors for 2022-2023.
The settlement agreement increases electric base rates by $35 million (4.9%) for
2022 and an incremental $18 million (2.5%) for 2023. For the natural gas
utility, base rates increase by $10 million (8.4%) for 2022 and an incremental
$3 million (2.3%) for 2023.
Additionally, the PSCW considered NSP-Wisconsin's 2022 fuel cost plan as part of
the same proceeding. The fuel cost proceeding results in increases in electric
rates of $24 million (5.2%) for 2022. Increased fuel costs are driven by higher
natural gas prices coupled with increases in projected Midcontinent Independent
System Operator congestion costs.
Key elements of the settlement:
•Return on equity (ROE) of 9.80% for 2022 and 10.00% for 2023.
•Equity ratio of 52.5% for both 2022 and 2023.
•Returning $9 million in net regulatory liability to offset customer impacts in
2023.
•Deferral of certain pension and other post-employment benefit expense in 2021
through 2023.
•Addressing COVID-19 deferral recovery in the next rate case proceeding.
•Deferral of potential changes in tax expenses due to changes in federal or
state tax law in 2021 through 2023.
•Earnings sharing mechanism for 2022 and 2023, which would return to customers
50% of earnings between 50 to 75 basis points over authorized ROE and 100% of
earnings equal to or in excess of 75 basis points over authorized ROE.
On Nov. 18, 2021, the PSCW approved both the settlement agreement and 2022 fuel
cost plan without modification. New rates and tariffs are expected to be
effective Jan. 1, 2022.
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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 NSP-Wisconsin's Annual Report on Form 10-K for the fiscal year
ended Dec. 31, 2020, 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; 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; ability to recover
costs; changes in regulation; reductions in our credit ratings and the cost of
maintaining certain contractual relationships; general economic conditions,
including inflation rates, monetary fluctuations, supply chain constraints and
their impact on capital expenditures and/or the ability of NSP-Wisconsin and its
subsidiaries 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.
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