Xcel Energy 2005 Annual Report Download - page 53

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was recorded in 2004. Based on the sales agreements entered into in 2005, the estimate was adjusted in 2005 to reflect a total asset impairment
of $140 million.
Xcel Energy International and e prime
In December 2003, the board of directors of Xcel Energy approved management’s plan to exit the
businesses conducted by its nonregulated subsidiaries Xcel Energy International and e prime. The exit of all business conducted by e prime
was completed in 2004.
Results of discontinued nonregulated operations in 2004 include the impact of the sale of the Argentina subsidiaries of Xcel Energy International.
The sales took place in a series of three transactions, with a total sales price of approximately $31 million. In addition to the sales price, Xcel
Energy also received approximately $21 million at the closing of one transaction as redemption of its capital investment. The sales resulted
in a gain of approximately $8 million, including the realization of approximately $7 million of income tax benefits realizable upon the sale of
the Xcel Energy International assets.
Results of discontinued nonregulated operations in 2003, other than NRG, include an after-tax loss expected on the disposal of all Xcel Energy
International assets of $59 million, based on the estimated fair value of such assets. The fair value represents a market bid or appraisal received
that is believed to best reflect the assets’ fair value at Dec. 31, 2003. Xcel Energy’s remaining investment in Xcel Energy International at
Dec. 31, 2003, was approximately $39 million. Losses from discontinued nonregulated operations in 2003 also include a charge of $16 million
for costs of settling a Commodity Futures Trading Commission trading investigation of e prime.
Tax Benefits Related to Investment in NRG
With NRG’s emergence from bankruptcy in December 2003, Xcel Energy divested its ownership
interest in NRG. Xcel Energy has recognized tax benefits related to the divestiture. These tax benefits, since related to Xcel Energy’s investment
in discontinued NRG operations, also are reported as discontinued operations.
During 2002, Xcel Energy recognized an initial estimate of the expected tax benefits of $706 million. Based on the results of a 2003 preliminary
tax basis study of NRG, Xcel Energy recorded $404 million of additional tax benefits in 2003. In 2004, the NRG basis study was updated and
previously recognized tax benefits were reduced by $13 million. In 2005, a $17 million tax benefit was recorded to reflect the final federal income
tax resolution of Xcel Energy’s divested interest in NRG.
XCEL ENERGY 2005 ANNUAL REPORT 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS