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Xcel Energy Third Quarter 2013 Earnings Report

Financing — Xcel Energy issues debt and equity securities to refinance retiring maturities, reduce short-term debt, fund construction programs, infuse equity in subsidiaries, fund asset acquisitions and for other general corporate purposes.

During 2013, Xcel Energy Inc. and its utility subsidiaries completed the following financings:
  • PSCo issued $250 million of 2.50 percent first mortgage bonds due March 15, 2023 and $250 million of 3.95 percent first mortgage bonds due March 15, 2043;
  • Xcel Energy Inc. issued $450 million of 0.75 percent senior unsecured notes due May 9, 2016;
  • NSP-Minnesota issued $400 million of 2.60 percent first mortgage bonds due May 15, 2023; and
  • SPS issued $100 million of 4.50 percent first mortgage bonds due Aug. 15, 2041.

In March 2013, Xcel Energy Inc. filed a prospectus supplement under which it may sell up to $400 million of its common stock through an at-the-market offering program. No shares of common stock were issued through this program during the third quarter of 2013. As of Sept. 30, 2013, Xcel Energy Inc. sold 7.7 million shares of common stock with net proceeds of $223 million.

On May 31, 2013, Xcel Energy Inc. redeemed the entire $400 million principal amount of its 7.60 percent junior subordinated notes. Upon redemption, Xcel Energy Inc. recognized $6.3 million of related unamortized debt issuance costs as interest charges.

Financing plans are subject to change, depending on capital expenditures, internal cash generation, market conditions and other factors.

Note 4. Rates and Regulation

NSP-Minnesota – Minnesota 2014 Multi-Year Electric Rate Case — In November 2013, NSP-Minnesota expects to file a multi-year rate plan for its Minnesota retail electric jurisdiction. The case will be based on a 2014 forecast test year (FTY) and will include a request for incremental rate recovery for certain capital related costs in 2015. The case is driven by substantial investment in our system – including the replacement of the steam generator at Prairie Island; the life extension at our nuclear plants, the return to service of our Sherco Unit 3 and additional owned wind generation. The rate case also will reflect higher property taxes and other general business costs. Interim rates, subject to refund, are expected to take effect in January 2014. NSP-Minnesota also anticipates introducing a mitigation plan, as part of the rate case, to lessen the impact on the customer bill. NSP-Minnesota’s mitigation plan could include further accelerating a theoretical depreciation reserve and/or utilizing expected Department of Energy refunds in excess of amounts needed to fund its decommissioning expense.

NSP-Minnesota – Minnesota 2013 Electric Rate Case — In November 2012, NSP-Minnesota filed a request with the Minnesota Public Utilities Commission (MPUC) for an increase in annual revenues of approximately $285 million, or 10.7 percent. The rate filing was based on a 2013 forecast test year, a requested return on equity (ROE) of 10.6 percent, an average electric rate base of approximately $6.3 billion and an equity ratio of 52.56 percent. In January 2013, interim rates of approximately $251 million became effective, subject to refund.

NSP-Minnesota subsequently revised the requested annual revenue increase to approximately $209 million, or 7.8 percent, based on an ROE of 10.6 percent, a rate base of approximately $6.3 billion an equity ratio of 52.56 percent. The revenue requirement reflected a requested deficiency of $259 million combined with $50 million of rate mitigation through deferral mechanisms.

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