Xcel Energy Seeks Increase in New Mexico Base Rates

For the first time since 1986, Xcel Energy’s regional operating company, Southwestern Public Service Company (SPS), is proposing to raise its base electricity rates for retail electric service in New Mexico as it seeks to invest in generation, transmission and environmental improvements. The overall increase for all customer classes, including residential, commercial and industrial, is 6.6 percent, or $17.3 million. The residential rate would rise by 7.3 percent, or $6.12 per month for an average household using 1,000 kilowatt-hours (kWh). Other rate classes would see different percentage increases. The proposal was filed today with the New Mexico Public Regulation Commission (NMPRC) in Santa Fe. If approved, new base rates - the rates the company charges for depreciation, operations and maintenance, expenses of electrical generation, transmission and distribution systems - could take effect in 30 days or be suspended for about one year. Between 1986 and 2007, the only changes in pricing have been three decreases in the base rates, plus many changes both up and down in the cost of fuel and purchased power used to generate power in area generating facilities. Fuel costs are passed from the suppliers through to customers without any markup for the company. These costs are adjusted monthly based on current prices for coal and natural gas. Consumer prices over the past 21 years have risen 84 percent, even as Xcel Energy lowered New Mexico base rates three times. Accounting for the increases in fuel prices, the total amount customers pay has risen only about 16 percent since 1986. Adjusted for inflation, today’s total electric bill is about 37 percent lower than it was in 1986. "We have worked hard to keep prices down, in spite of inflation, because our low costs are a chief economic driver in this region,” said David Eves, president and CEO of Southwestern Public Service Company, an Xcel Energy company. "But in order to fund capital improvements to our system, we must take a step toward offsetting increased costs and focus on the needs of a growing customer base.” Electric usage in the Texas and New Mexico territory Xcel Energy serves has risen by more than 56 percent since 1986, Eves pointed out, and the company must keep up with this growth by investing in more power generation, transmission capacity and a host of other system-wide improvements that include a stronger emphasis on renewable energy in New Mexico. Xcel Energy already is the nation’s No. 1 wind power provider, and wind accounts for more than 10 percent of the generating capacity in Texas and New Mexico. Xcel Energy buys power from three wind facilities in New Mexico, including the 80-megawatt Caprock Wind Ranch near Tucumcari and the 120-megawatt San Juan Mesa wind project near Elida. Xcel Energy also will focus on developing a new generation of power plants that burn fuel more efficiently while better protecting the environment. The 550-megawatt Hobbs Generating Station will be ready to provide the region with power in June 2008, and it will use only 10 percent of the water needed to power an older generating plant. Another aspect of the upcoming rate filing is the simplification and consolidation of more than 40 rate structures into eight well-defined classes of service that include a residential lighting rate and a residential heating rate. To help customers manage costs, Xcel Energy is publicizing energy saving tips through a brochure called "60 Simple Ways” that details simple and mostly inexpensive steps customers can take to boost the efficiency of home appliances. The brochure can be downloaded at www.xcelenergy.com, or customers may request copies by contacting customer service at 1-800-895-4999. Xcel Energy will continue to work with customers who need extra time in paying bills, and also will continue working with area nonprofit agencies in finding assistance for customers who cannot pay their bills. Customers who need payment arrangements or help in paying bills should contact Xcel Energy at 1-800-895-4999. Xcel Energy (NYSE:XEL) is a major U.S. electricity and natural gas company with regulated operations in eight Western and Midwestern states. Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.3 million electricity customers and 1.8 million natural gas customers through its regulated operating companies. Company headquarters are located in Minneapolis. More information is available at www.xcelenergy.com. This news release includes forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate,” "estimate,” "expect,” "projected,” "objective,” "outlook,” "possible,” "potential” and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including their impact on capital expenditures; business conditions in the energy industry; competitive factors; unusual weather; changes in federal or state legislation; regulation; risks associated with the California power market; currency translation and transaction adjustments; the higher degree of risk associated with Xcel Energy’s non-regulated businesses compared with Xcel Energy’s regulated business; and the other risk factors listed from time to time by Xcel Energy in reports filed with the Securities and Exchange Commission.