SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) NOVEMBER 8, 1999
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NORTHERN STATES POWER COMPANY
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(Exact name of registrant as specified in its charter)
MINNESOTA
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(State or other jurisdiction of incorporation)
1-3034 41-0448030
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(Commission File Number) (IRS Employer
Identification No.)
414 NICOLLET MALL, MPLS, MN 55401
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 612-330-5500
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
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On Nov. 8, 1999, Northern States Power Company (NSP) filed a proposal with the
Minnesota Public Utilities Commission (MPUC) for revised rate recovery of
certain 1999 electric conservation program incentives, effective Jan. 1, 1999.
NSP has been working with the Minnesota Department of Commerce and other parties
(the Parties) to address the MPUC's concerns for conservation program
incentives for 1999 and subsequent years. On Nov. 1, 1999, the Parties filed a
proposal which would replace the current rate recovery of lost margins, load
management discounts and performance incentives with a new shared savings
incentive process, including a maximum payment cap of 30 percent of
expenditures, effective Jan. 1, 1999. On Nov. 8, 1999, NSP filed its proposal
to accept the Parties' recommendation with a revision to continue recovery of
load management discounts offered to customers. The MPUC is expected to consider
these proposals for NSP's 1999 conservation program recovery and reach a final
decision later this year.
Under the Parties' proposal NSP's conservation incentive recovery for 1999 would
be based on performance with a maximum potential recovery of about $9 million
for the year. NSP's proposal, which adds to the Parties' proposal the recovery
of $6 million of load management discounts, would result in a maximum
potential conservation incentive recovery of about $15 million for 1999.
NSP is currently accruing income for 1999 conservation program incentives at the
$27 million annual level proposed in a filing earlier this year. Although the
MPUC has not approved any proposals, NSP intends to adjust the amount of
conservation incentives accrued for 1999 to the level likely to be recovered
under the NSP proposal. If the NSP proposal is approved by the MPUC, 1999
conservation incentive recovery is estimated to be in the range of $9 million
to $13 million, depending on the ultimate performance of NSP's conservation
programs for the year. If the Parties' proposal is approved, 1999 conservation
incentive recovery is estimated to be in the range of $3 million to $7 million,
again dependent on performance.
Depending on the MPUC's decision and the level of program performance vs.
targets, the adjustment to accrued conservation incentives for 1999 is expected
to result in a reduction in NSP's earnings for the fourth quarter of 1999 of 5
cents to 9 cents per share. Approximately three-fourths of this reduction
relates to conservation incentives accrued during the first nine months of 1999.
The ultimate decision by the MPUC on the conservation incentive proposals being
filed will define the process to establish performance targets and potential
incentives for 2000 and beyond. Targets for 2000 have not yet been determined by
the MPUC.
On Oct. 4, 1999, the MPUC granted NSP's request for reconsideration for the
purpose of more fully reviewing its decision on disallowance of 1998
conservation incentive recovery. A final decision on 1998 conservation incentive
recovery is possible at a MPUC meeting currently scheduled for Nov. 18, 1999.
Background
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State law requires Minnesota utilities to fund and participate in various energy
conservation programs and initiatives. Since 1995, the MPUC has approved the use
of a special rate recovery mechanism to provide timely recovery (for NSP and
other Minnesota public utilities) of CIP costs and also to provide conservation
program incentives, including: reimbursement of a portion of electric margins
lost due to energy conservation, reimbursement of certain load management
discounts provided to customers under CIP programs, and performance incentives
based on the success of NSP's conservation programs.
In late 1998, the MPUC considered a proposal to discontinue recovery of lost
margins and load management discounts related to conservation programs for NSP
and other Minnesota public utilities. The MPUC declined to take such action,
but put Minnesota utilities on notice that there may be significant changes,
including elimination of lost margin and load management discount recovery for
programs, beginning January 1999. The MPUC established a roundtable to study
the issue.
In the summer of 1999, the MPUC voted to deny NSP recovery of its lost margins,
load management discounts and incentives related to 1998 that were associated
with state-mandated programs for electric energy conservation. NSP filed a
request for reconsideration of this decision. On Oct. 4, 1999, the MPUC granted
NSP's request for reconsideration for the purpose of more fully reviewing
its decision on disallowance of 1998 conservation incentive recovery. A final
decision on 1998 conservation incentive recovery is possible at a MPUC meeting
currently scheduled for Nov. 18, 1999.
Forward Looking Statements
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This document 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," "objective," "outlook," "projection," "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;
- - availability or cost of capital such as changes in: interest rates;
market perceptions of the power generation industry, NSP or any of
its subsidiaries; or security ratings;
- - business conditions in the energy industry;
- - competitive factors;
- - unusual weather;
- - changes in federal or state legislation;
- - regulation;
- - issues relating to Year 2000 remediation efforts;
- - currency translation and transaction adjustments;
- - regulatory delays or conditions imposed by regulatory agencies in
approving the proposed merger with New Century Energies, Inc.;
- - the higher degree of risk associated with NSP's nonregulated
businesses as compared to NSP's regulated business;
- - volatility of energy prices in a deregulated market environment;
- - the lack of operating history at NRG's development projects, the lack
of NRG operating history at the projects not yet owned and the
limited operating history at the remaining NRG projects provide
only a limited basis for management to project the results of
future operations;
- - risks associated with timely completion of NRG projects, including
obtaining competitive contracts, obtaining regulatory and permitting
approvals, local opposition, construction delays and other factors
beyond NRG's control;
- - the failure to timely satisfy the closing conditions contained in the
definitive agreements for the acquisitions of projects by NRG
subject to definitive agreements but not yet closed, many of
which are beyond NRG's control;
- - factors challenging the successful integration of projects not
previously owned or operated by NRG, including the ability to obtain
operating synergies;
- - factors associated with operating in foreign countries including:
delays in permitting and licensing, construction delays and
interruption of business, political instability, risk of war,
expropriation, nationalization, renegotiation, or nullification of
existing contracts, changes in law, and the ability to convert
foreign currency into United States dollars;
- - and the other risk factors listed from time to time by NSP in reports
filed with the Securities and Exchange Commission, including Exhibit
99.01 to NSP's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999.
NSP undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
The foregoing review of factors pursuant to the Act should not be construed as
exhaustive.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Northern States Power Company
(a Minnesota Corporation)
By /s/
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Edward J. McIntyre
Vice President and Chief Financial Officer
Dated: November 8, 1999
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