Administrative Law Judge Recommends 4.7 Percent Increase for Xcel Energy's Minnesota Customers


On July 8, 2013, Xcel Energy Inc., submitted a filing with the SEC detailing an Administrative Law Judge’s decision in a pending electric rate case in Minnesota and calculating the decision’s impact on one of its subsidiaries. In November 2012, Northern States Power Company (NSP), a wholly owned subsidiary of Xcel Energy Inc., petitioned the Minnesota Public Utilities Commission (MPUC) for authority to increase electric rates by $285 million, or 10.7 %. This request was referred to the Minnesota Office of Administrative Hearings for review as a contested case. Government agencies, business and industry representatives, and low income advocates intervened in the case to contest NSP’s request. These intervenors raised a number of concerns with NSP’s request, including NSP’s proposed level of recovery for investments in nuclear facilities, depreciation expense, sales forecast, incentive compensation, property taxes, and rate of return. After reviewing multiple rounds of written testimony and overseeing an evidentiary hearing, the ALJ concluded in a written opinion dated July 3, 2013, that NSP’s request should be reduced, based largely on a lower return on equity of 9.83%, reduced recovery for nuclear plants, and increased sales forecast. According the SEC filing, the ALJ’s decision limits NSP’s request to $127 million, or 4.7%. This revised increase is based on an equity ratio of 52.56% and an electric rate base of $6.233 billion. The ALJ’s decision will be reviewed by the MPUC, which will reach a final decision in early September 2013.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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