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Southwestern Public Services Files for $72M Base Rate Increase

February 24, 2016 By Cheryl Kaften

Southwestern Public Service (SPS), a wholly owned subsidiary of Xcel Energy, filed with the Public Utility Commission of Texas (PUCT) on February 16 (Docket No. 45524), seeking approval to increase its base rate charges in the Texas retail service area by nearly $72 million, effective August 1.

SPS serves approximately 381,000 retail electric customers in the Lone Star State, as well as in eastern and southern New Mexico. Residential customers comprise 74.5 percent of this total; commercial and industrial customers,  17.4 percent; and municipal and wholesale customers, 8.1 percent. SPS’s New Mexico customers will not see an increase on their bills.

Interestingly enough, the utility just completed a rate change process on February 1. “But because rates are based on costs from a[n] historic test period,” Xcel Energy spokesman Wes Reeves told the Amarillo Globe News, “we still have a significant amount of investment that is not accounted for in our rates.”

The February 1 increase for a typical residential bill was $1.11, while fuel decreased by $2.51, Reeves said, noting that total reductions for fuel and purchased power costs over the past 12 months come to more than $9 per typical residential bill.

Now, if the new rate is accepted, the average residential service customer using 1,000 kilowatt-hours (kWh) of energy per month will see an overall bill increase of $9.56 on his or her bill – which the utility believes is nearly a wash.

Indeed, the utility expects, “Impacts vary for customer classes, but bills for all classes combined are expected to be 7.6 percent lower than January 2015 bills.”

The application covers investments made from July 1, 2014, through December 31, 2015. During that time period, the company claims to have spent $1 billion on new and upgraded power lines, substations and generating plant improvements.

“The investments we’ve made in the grid were made to support the region’s growing economy, and have also made our system more efficient and more flexible,” SPS President David Hudson said. “We’ve also built in permanent cost savings by tapping into a more diverse power market that also includes additional low-cost wind-generated energy. While these investments come with higher up-front costs, customers enjoy the benefits long-term in the same way that a new, more efficient car saves us money on fuel and maintenance.

A great example of efficiency-driven savings, Hudson pointed out, was the utility’s cooperation with Oklahoma Gas and Electric  (OG&E) to complete two 345-kilovolt (kV) transmission lines to Woodward, Oklahoma, a power hub within the Southwest Power Pool. These investments, alone, he said, totaled almost $270 million, but are delivering about $60 million in energy savings each year by allowing the company to tap a wider power market where cheaper power is available.

The company also has brought on 750 additional megawatts (MW) of wind energy and will add 140 additional MW of solar energy capacity by the end of the year – all made possible by a more robust transmission network.

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