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Xcel Energy announces rate case settlement in Colorado

DENVER - Xcel Energy announced today that it has reached a comprehensive settlement regarding all issues raised in its 2002 general rate case filing in Colorado. After taking into account all aspects of the rate structure, electricity base rates will decrease $230,000, natural gas base rates will decrease $33.3 million and steam base rates will decrease $26,000. 

The reduction in electricity base rates, which includes the costs of operating the utility business and a return on the company’s investment, will be offset by higher expenses for generation fuel and purchased energy. Base rates and energy costs comprise the two most significant portions of the typical customer bill. The settlement would result in an additional $93.1 million in energy costs currently being charged to electricity customers through the end of 2003; this does not result in any additional profit for the company.  The company intends to file next week to request Commission authorization to begin recovering the higher energy costs beginning May 1st.

The company is asking the commission to authorize the settlement base rates to become effective on July 1, 2003. The settlement agreement is subject to CPUC approval. The commission has scheduled a hearing beginning April 28, 2003 to discuss the agreement.  The Commission will also take public comment about the settlement on April 28th from 4 to 7 p.m., in the CPUC hearing room, 1580 Logan St. in Denver.

Typical residential customers will therefore see an increase of $3.32 on their monthly electricity bills, while typical small business electricity customers will see an increase of $6.74 per month. Typical residential customers will see a decrease of $1.74 on monthly natural gas bills, while typical small business natural gas customers will see a decrease of $5.55 a month. Typical residential customers receiving both natural gas and electricity from Xcel Energy will therefore experience a net increase of $1.58 on their monthly utility bills; typical small business with combined services will have a monthly increase of just $1.19.

The settlement is a culmination of discussions with the staff of the Colorado Public Utilities Commission, the Office of Consumer Counsel, certain large customers, the City and County of Denver, the Land and Water Fund, the Governor’s Office of Energy Management and Conservation, the Colorado Energy Assistance Foundation, the Federal Executive Agencies and the Colorado Business Alliance for Cooperative Utility Practices.

“Over the last three months, all parties have diligently worked to resolve this complicated rate case,” said Fred Stoffel, vice president of regulatory policy. “We have talked through all of the issues, and believe the end result is fair to all parties and will continue providing reasonable energy prices to our customers. While we have been successful holding costs down and increasing efficiencies since the last electricity rate case, which took place 10 years ago, there were many changes within the company that needed to be reviewed.

“The outcome of this case has many intertwined parts. On the electricity side, the final result is that our base utility rates are essentially going to remain flat.  However, because of increases in the cost of the fuel used to generate power and increases in the cost to purchase electricity, there will be an increase in the fuel component of our rates,” Stoffel said. “On the natural gas side, there will be an annual decrease in base utility rates.”

The major aspects of the settlement include a reduction to the profit component of the rates, lower depreciation rates, and an increase in costs assigned to non-regulated products and services. The authorized rate of return on equity for the electricity business would decrease from 11 percent to 10.75 percent. The authorized rate of return on equity for the natural gas business would decrease from 11.25 percent to 11 percent. The settlement also would provide Xcel Energy the ability to continue its electricity trading operations and for the sharing of trading profits between customers and the company. Xcel Energy’s customers are protected from paying the costs of energy trading losses. The settlement also provides for the commission to conduct a proceeding in 2004 to determine whether energy trading should continued in its present form.

Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. Formed by the merger of Denver-based New Century Energies and Minneapolis-based Northern States Power Co., Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth-largest combination natural gas and electricity company in the nation. Company headquarters are located in Minneapolis. More information is available at www.xcelenergy.com.