Rate Matters

Pending Regulatory Proceedings — CPUC

Annual Electric Earnings Test — As part of an annual earnings test, PSCo must share with customers earnings that exceed the authorized ROE threshold of 9.83 percent for 2015 through 2017. The 2016 earnings test did not result in a material customer refund obligation as of Dec. 31, 2016. PSCo will file its 2016 earnings test with the CPUC in April 2017. The final sharing obligation will be based on the CPUC approved tariff and could vary from the current estimate.

Electric, Purchased Gas and Resource Adjustment Clauses

DSM and the DSMCA — Energy efficiency and DSM costs are recovered through a combination of the DSMCA riders and base rates. DSMCA riders are adjusted biannually to capture program costs, performance incentives, and any over- or under-recoveries are trued-up in the following year. Savings goals were 400 GWh in 2015 and 2016 with incentives awarded in the year following plan achievements. PSCo is able to earn $5 million upon reaching its annual savings goal along with an incentive on five percent of net economic benefits up to a maximum annual incentive of $30 million. For the years 2017 through 2020, the annual electric energy savings goal is 400 GWh per year with an annual spending limit of $84.3 million.

In February 2017, the CPUC approved PSCo’s 2017-2018 DSM plan:


•	A 2017 DSM electric budget of $80.4 million and a natural gas budget of $13.1 million; and


•	A 2018 DSM electric budget of $77.7 million and a natural gas budget of $12.8 million.

REC Sharing — In 2011, the CPUC approved margin sharing on stand-alone REC transactions at 10 percent to PSCo and 90 percent to customers for 2014. In 2012, the CPUC approved an annual margin sharing on the first $20 million of margins on hybrid REC trades of 80 percent to the customers and 20 percent to PSCo. Margins in excess of the $20 million are to be shared 90 percent to the customers and 10 percent to PSCo. The CPUC authorized PSCo to return to customers unspent carbon offset funds by crediting the RESA regulatory asset balance. PSCo credited to the RESA regulatory liability balance approximately $5.8 million and $5.5 million in 2016 and 2015, respectively. The cumulative credit to the RESA regulatory liability balance was $116.3 million and $110.6 million at Dec. 31, 2016 and Dec. 31, 2015, respectively. The credits include the customers’ share of REC trading margins and the unspent share of carbon offset funds. The current sharing mechanism, without modification, extends through Dec. 31, 2017.