Xcel Energy 2003 Annual Report Download - page 37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
XCEL ENERGY 2003 ANNUAL REPORT 53
Reclassifications Certain items in the statements of operations and balance sheets have been reclassified from prior period presentation to conform to
the 2003 presentation. These reclassifications had no effect on net income or earnings per share. The reclassifications were primarily related to organizational
changes, such as the divestiture of NRG, and the reclassification of asset retirement obligations from Accumulated Depreciation to a liability account.
2. SPECIAL CHARGES
Special charges included in Operating Expenses for the years ended Dec. 31, 2003, 2002 and 2001, include the following:
(Millions of dollars) 2003 2002 2001
Regulated utility special charges:
Regulatory recovery adjustment (SPS) (see Note 14) $ – $ 5 $ –
Restaffing (utility and service companies) –939
Post-employment benefits (PSCo) ––23
Total regulated utility special charges –14 62
Other nonregulated special charges:
Holding company NRG restructuring charges 12 5–
TRANSLink Transmission Co. 7––
Total nonregulated special charges 19 5–
Total special charges $19 $19 $62
2003 TRANSLink Transmission Co., LLC In 2003, Xcel Energy recorded a $7 million pretax charge in connection with the suspension of the activities
related to the formation of TRANSLink Transmission Co., LLC (TRANSLink). The charge was recorded as a reserve against loans made by Xcel
Energy Transco Inc., a subsidiary of Xcel Energy, to TRANSLink Development Company, LLC, an interim start-up company. TRANSLink was a
for-profit independent transmission-only company proposed to be formed by Xcel Energy and several other utilities to integrate the operations of
their electric transmission systems into a single system. The formation activity was suspended due to continued market and regulatory uncertainty.
2003 and 2002 Holding Company NRG Restructuring Charges In 2003 and 2002, the Xcel Energy holding company incurred approximately
$12 million and $5 million, respectively, for charges related to NRG’s financial restructuring. Costs in 2003 included approximately $32 million of
financial advisor fees, legal costs and consulting costs related to the NRG bankruptcy transaction. These charges were partially offset by a $20 million
pension curtailment gain related to the termination of NRG employees from Xcel Energy’s pension plan, as discussed in Note 12 to the Consolidated
Financial Statements.
2002 Regulatory Recovery Adjustment – SPS In late 2001, SPS filed an application requesting recovery of costs incurred to comply with transition
to retail-competition legislation in Texas and New Mexico. During 2002, SPS entered into a settlement agreement with intervenors regarding the recovery
of industry restructuring costs in Texas, which was approved by the state regulatory commission in May 2002. Based on the settlement agreement, SPS
wrote off pretax restructuring costs of approximately $5 million.
2002 and 2001 – Utility Restaffing During 2001, Xcel Energy expensed pretax special charges of $39 million for expected staff consolidation
costs for an estimated 500 employees in several utility-operating and corporate-support areas of Xcel Energy. In 2002, the identification of affected
employees was completed and additional pretax special charges of $9 million were expensed for the final costs of staff consolidations. Approximately
$6 million of these restaffing costs were allocated to Xcel Energy’s utility subsidiaries. All 564 of accrued staff terminations have occurred. See the
summary of costs below.
2001 – Post-employment Benefits PSCo adopted accrual accounting for post-employment benefits under SFAS No. 112 – “Employers Accounting
for Postemployment Benefits” in 1994. The costs of these benefits had been recorded on a pay-as-you-go basis and, accordingly, PSCo recorded a regulatory
asset in anticipation of obtaining future rate recovery of these transition costs. PSCo recovered its FERC jurisdictional portion of these costs. PSCo
requested approval to recover its Colorado retail natural gas jurisdictional portion in a 1996 retail-rate case, and its retail electric jurisdictional portion
in the electric-earnings test filing for 1997. In the 1996 rate case, the CPUC allowed recovery of post-employment benefit costs on an accrual basis,
but denied PSCo’s request to amortize the transition costs’ regulatory asset. Following various appeals, which proved unsuccessful, PSCo wrote off
$23 million pretax of regulatory assets related to deferred post-employment benefit costs as of June 30, 2001.