Xcel Energy Inc Seeks $171 Million Rate Increase in Colorado - What Investors Need to Know
Xcel Energy Inc (NASDAQ:) and its subsidiary, Public Service Company of Colorado (PSCo), have filed a request with the Colorado Public Utilities Commission (CPUC) for a $171 million increase in retail rates. This move, aimed at raising the average residential customer bill by approximately 9.5%, is based on a 2023 test year, a 10.25% return on equity (ROE), and a $4.2 billion retail rate base that includes projected capital additions through December 31, 2023.
The proposed effective date for the rate increase is November 1, 2024, with a suggestion to defer the collection of increased rates until February 15, 2025. However, CPUC Staff and the Utility Consumer Advocate (UCA) have filed testimonies challenging the proposed hike, recommending adjustments that would reduce the increase to $72 million and $91 million, respectively. They also propose an 8.89% and 9.20% ROE and oppose the deferral of collections, suggesting the new rates take effect on November 1, 2024.
Despite the ongoing proceedings, Xcel Energy has reaffirmed its 2024 earnings guidance of $3.50 to $3.60 per share, contingent on favorable regulatory outcomes. The company has also announced a comprehensive Wildfire Mitigation Plan valued at approximately $1.9 billion and reached a settlement in its Minnesota natural gas rate case resulting in a 7.5% rate increase.
Investors are closely monitoring Xcel Energy's financial health and market performance as it navigates through the rate increase proposal with the CPUC. With a market capitalization of $30.19 billion and a P/E ratio of 15.56 as of Q1 2024, Xcel Energy remains a significant player in the energy sector. The company's commitment to shareholder returns, demonstrated by 20 consecutive years of dividend increases and 53 consecutive years of dividend payments, makes it an attractive option for income-focused investors.
While Xcel Energy operates with a significant debt burden, it offers stability with low price volatility. Investors can access further insights on Xcel Energy through InvestingPro, with a coupon code PRONEWS24 for up to 10% off a yearly Pro or Pro+ subscription, unlocking additional tips for a comprehensive investment perspective.
In conclusion, Xcel Energy's proposed rate increase in Colorado could impact its financial performance and market value. Investors should stay informed about regulatory developments and company updates to make informed investment decisions.