Item 8.01. Other Events
On July 2, 2021, Northern States Power Company, a Wisconsin corporation (NSP-Wisconsin), and a 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 increase (2.5%) for 2023. For the natural gas utility, base rates increase by $10 million (8.4%) for 2022, and an incremental $3.0 million (2.3%) increase for 2023.
Electric base rate increases are attributable to significant capital investments in renewable energy, and other generation, transmission and distribution system infrastructure planned for 2021-2023. In addition, NSP-Wisconsin is making considerable natural gas distribution investments to ensure safe and reliable service.
Key elements of the settlement include:
•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.
•Address 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.
A PSCW decision is anticipated in the fourth quarter of 2021.
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 net rate increases to consumers and regarding the regulatory proceedings, 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 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, including our nuclear generation facilities; 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 and subsidiaries’ ability to recover costs from customers; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of Xcel Energy Inc. 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; our subsidiaries’ ability to make dividend payments; 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.