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 18, 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. 18, 1999, the Minnesota Public Utilities Commission (MPUC) voted three
to two to reaffirm their denial of lost margins, load management discounts and
incentives related to NSP's 1998 Conservation Improvement Program (CIP), a
state-mandated program for electric energy conservation.
NSP has not yet decided whether or not to seek court review of the MPUC's
decision on 1998 CIP incentives.
Also, the MPUC's decision on 1998 CIP incentive recovery did not address or
affect the proposals under consideration by the MPUC for 1999 CIP incentive
recovery.
Background
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State law requires Minnesota utilities to fund and participate in various energy
conservation programs and initiatives. After NSP's last electric rate case in
1993, NSP incurred higher levels of conservation program expenditures, and in
1994 requested MPUC approval of a rate recovery mechanism to avoid a significant
delay between the incurring of CIP costs and their recovery in rates. Since
1995, the MPUC has approved the use of this 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.
MPUC procedures require an annual filing by each utility for MPUC approval
before implementing the new conservation rate adjustment. For NSP, this annual
filing has typically occurred in the second quarter of the year, and the rate
recovery levels have been adjusted each July 1 and then continued until the
following June 30. The requested recovery levels approved for NSP since 1995
have included recovery of budgeted levels of conservation related items
recoverable in the current year.
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.
On June 24, 1999, the MPUC held a hearing to consider NSP's April 1999
conservation rate adjustment filing. The MPUC voted three to two 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. On July 27, 1999, the MPUC issued an order formalizing its
conservation decision. The MPUC decision did not affect the recovery of CIP
program expenditures.
NSP requested reconsideration of the MPUC decision. However, due to the
uncertainty of the challenge, NSP established a regulatory reserve of $35
million (before tax) in the second quarter of 1999 for all income recorded for
1998 accruals of lost margins, load management discounts and performance
incentives. 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.
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 Sept. 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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David M. Sparby
Vice President, Regulatory Services
Dated: November 18, 1999
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