Xcel Energy 2002 Annual Report Download - page 37

1. summary of significant accounting policies
Merger and Basis of Presentation On Aug. 18, 2000, Northern States Power Co. (NSP) and New Century Energies, Inc. (NCE) merged
and formed Xcel Energy Inc. Each share of NCE common stock was exchanged for 1.55 shares of Xcel Energy common stock. NSP
shares became Xcel Energy shares on a one-for-one basis. Cash was paid in lieu of any fractional shares of Xcel Energy common stock.
The merger was structured as a tax-free, stock-for-stock exchange for shareholders of both companies, except for fractional shares, and
accounted for as a pooling-of-interests. At the time of the merger, Xcel Energy registered as a holding company under the PUHCA.
References herein to Xcel Energy relates to Xcel Energy, Inc. and its consolidated subsidiaries.
Pursuant to the merger agreement, NCE was merged with and into NSP. NSP, as the surviving legal corporation, changed its name to
Xcel Energy. Also, as part of the merger, NSP transferred its existing utility operations that were being conducted directly by NSP at the
parent company level to a newly formed, wholly owned subsidiary of Xcel Energy, which was renamed NSP-Minnesota.
Consistent with pooling accounting requirements, results and disclosures for all periods prior to the merger have been restated for
consistent reporting with post-merger organization and operations. All earnings-per-share amounts previously reported for NSP
and NCE have been restated for presentation on an Xcel Energy share basis.
Business and System of Accounts Xcel Energy’s domestic utility subsidiaries are engaged principally in the generation, purchase, transmission,
distribution and sale of electricity and in the purchase, transportation, distribution and sale of natural gas. Xcel Energy and its subsidiaries
are subject to the regulatory provisions of the PUHCA. The utility subsidiaries are subject to regulation by the FERC and state utility
commissions. All of the utility companies’ accounting records conform to the FERC uniform system of accounts or to systems required
by various state regulatory commissions, which are the same in all material aspects.
Principles of Consolidation Xcel Energy directly owns six utility subsidiaries that serve electric and natural gas customers in 12 states.
These six utility subsidiaries are NSP-Minnesota, NSP-Wisconsin, PSCo, SPS, BMG and Cheyenne. Their service territories include
portions of Arizona, Colorado, Kansas, Michigan, Minnesota, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin
and Wyoming. During the period covered by this report, Xcel Energy’s regulated businesses also included Viking, which was sold in
January 2003, and WGI.
Xcel Energy also owns or has an interest in a number of nonregulated businesses, the largest of which is NRG Energy, Inc., an independent
power producer. Xcel Energy owned 100 percent of NRG until the second quarter of 2000, when NRG completed its initial public offering,
and 82 percent until a secondary offering was completed in March 2001. At Dec. 31, 2001, Xcel Energy indirectly owned approximately
74 percent of NRG. During the second quarter of 2002, Xcel Energy acquired the 26 percent of NRG shares that it did not own through
a tender offer and merger. See Note 4 to the Consolidated Financial Statements for further discussion of the acquisition of minority
NRG common shares.
In addition to NRG, Xcel Energy’s nonregulated subsidiaries include Utility Engineering Corp. (engineering, construction and design),
Seren Innovations, Inc. (broadband telecommunications services), e prime inc. (natural gas marketing and trading), Planergy International,
Inc. (enterprise energy management solutions), Eloigne Co. (investments in rental housing projects that qualify for low-income housing tax
credits) and Xcel Energy International Inc. (an international independent power producer).
Xcel Energy owns the following additional direct subsidiaries, some of which are intermediate holding companies with additional
subsidiaries: Xcel Energy Wholesale Energy Group Inc., Xcel Energy Markets Holdings Inc., Xcel Energy Ventures Inc., Xcel Energy
Retail Holdings Inc., Xcel Energy Communications Group Inc., Xcel Energy WYCO Inc. and Xcel Energy O & M Services Inc.
Xcel Energy and its subsidiaries collectively are referred to as Xcel Energy.
Xcel Energy uses the equity method of accounting for its investments in partnerships, joint ventures and certain projects. Under this
method, we record our proportionate share of pretax income as equity earnings from investments in affiliates. We record our portion of
earnings from international investments after subtracting foreign income taxes, if applicable. In the consolidation process, we eliminate
all significant intercompany transactions and balances.
Revenue Recognition Revenues related to the sale of energy are generally recorded when service is rendered or energy is delivered to
customers. However, the determination of the energy sales to individual customers is based on the reading of their meters, which occurs
on a systematic basis throughout the month. At the end of each month, amounts of energy delivered to customers since the date of the
last meter reading are estimated and the corresponding unbilled revenue is estimated.
Xcel Energy’s utility subsidiaries have various rate adjustment mechanisms in place that currently provide for the recovery of certain
purchased natural gas and electric energy costs. These cost adjustment tariffs may increase or decrease the level of costs recovered
through base rates and are revised periodically, as prescribed by the appropriate regulatory agencies, for any difference between the total
amount collected under the clauses and the recoverable costs incurred. In addition Xcel Energy presents its revenue net of any excise or
other fiduciary-type taxes or fees.
notes to consolidated financial statements
xcel energy inc. and subsidiaries page 51