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Electric utilities

Xcel Energy Legislation Passed, Implications for Company and Sector

Strategic Insights

— 1 min read

The Minnesota omnibus energy and jobs bill has been passed by the legislature, granting the Public Utilities Commission authority to approve and oversee multi-year rate plans, a development viewed positively by Barclays Equity Research for Xcel Energy. The passage of the bill, which is expected to be signed by Governor Dayton, sets the stage for a forward-looking and productive outcome in Xcel Energy's future rate case, scheduled to be filed in November covering a multi-year period beginning in 2016. Barclays reiterates its Overweight rating on Xcel Energy shares and maintains its EPS estimates of $2.10, $2.19, and $2.33 in 2015, 2016, and 2017, respectively.

Key Takeaways:

  • The Minnesota omnibus energy and jobs bill grants the Public Utilities Commission authority to approve and oversee multi-year rate plans, which is seen as a positive development for Xcel Energy.
  • The bill, expected to be signed by Governor Dayton, sets the stage for a forward-looking and productive outcome in Xcel Energy's future rate case.
  • Barclays reiterates its Overweight rating on Xcel Energy shares, maintaining its EPS estimates of $2.10, $2.19, and $2.33 in 2015, 2016, and 2017, respectively.
  • The passage of the bill creates an opportunity for a forward-looking and productive outcome in Northern States Power Minnesota's (NSP-MN) future rate case.
  • NSP-MN is expected to file a rate case around November covering a multi-year period beginning in 2016.
  • Barclays was disappointed in NSP-MN's last rate case, which did not approve parameters allowing the company to avoid a 2016 rate case filing.
  • The legislative provision is consistent with Barclays' outlook for an improving regulatory landscape in MN.

Statistics:

  • The bill includes language that provides the PUC with authority to approve and oversee multi-year rate plans along with formulaic recovery of forecasted rate base over a period of five years.
  • Barclays maintains its EPS estimates of $2.10, $2.19, and $2.33 in 2015, 2016, and 2017, respectively.
  • The passage of the bill is expected to be signed by Governor Dayton within the next few days.

Sources:

  • Xcel Energy Legislation Passed... Again. Barclay's Equity Research. 12 June 2015.
  • Public Service Commission of Wisconsin. Data Request / Response: From: Daniel Ford, CFA To: Norman, Darin Subject: [Marketing Mail] Xcel Energy: Legislation Passed... Again. 12 June 2015.

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