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United States. Securities and Exchange Commission

Xcel Energy and Southwestern Public Service Company Pursue Electric Rate Increase in New Mexico

Strategic Insights

— 2 min read

Xcel Energy and its subsidiary, Southwestern Public Service Company (SPS), have filed an electric rate case with the New Mexico Public Regulation Commission (NMPRC) seeking a revenue increase of up to $75 million, or 10%. The request is based on a future test year ending June 30, 2024, and includes a return on equity (ROE) of 10.75%, an equity ratio of 54.7%, and a rate base of $2.4 billion. The companies also seek to accelerate the depreciation life of the Tolk coal plant from 2032 to 2028.

In November 2022, SPS initially filed a request for a revenue increase of $78 million, or 10%, but revised it in May 2023 to $75 million. The proposed rate increase is the subject of a contested comprehensive stipulation, which has been filed with the NMPRC. Two intervenors, environmental advocacy organizations, have opposed the stipulation.

A NMPRC decision is anticipated in the fourth quarter of 2023, after hearings scheduled for the second quarter. The proposed rate increase is part of Xcel Energy's 2023 financial guidance, which includes earnings of $3.30 to $3.40 per share, based on several key assumptions, including constructive regulatory outcomes.

Key Takeaways:

  • The proposed rate increase is based on a future test year ending June 30, 2024, with a return on equity (ROE) of 10.75% and an equity ratio of 54.7%.
  • The rate increase is the subject of a contested comprehensive stipulation, with two intervenors opposing the stipulation.
  • The NMPRC decision is anticipated in the fourth quarter of 2023, following hearings in the second quarter.
  • A revenue increase of up to $75 million, or 10%, is sought, with a rate base of $2.4 billion.
  • Xcel Energy's 2023 financial guidance includes earnings of $3.30 to $3.40 per share, based on constructive regulatory outcomes.
  • The proposed rate increase seeks to accelerate the depreciation life of the Tolk coal plant from 2032 to 2028.

Statistics:

  • $75 million: Maximum revenue increase sought
  • 10%: Rate increase as a percentage of revenue
  • June 30, 2024: End date of the future test year
  • 10.75%: Proposed return on equity (ROE)
  • 54.7%: Proposed equity ratio
  • $2.4 billion: Rate base
  • 2032: Current depreciation life of the Tolk coal plant
  • 2028: Proposed depreciation life of the Tolk coal plant
  • $3.30 to $3.40: Xcel Energy's 2023 earnings guidance

Sources:

  • Form 8-K (Current Report), filed by Xcel Energy and Southwestern Public Service Company with the U.S. Securities and Exchange Commission on May 19, 2023.
  • Xcel Energy's and SPS's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2022, and subsequent filings with the Securities and Exchange Commission.

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