Xcel Energy 2005 Annual Report Download - page 69

On Dec. 31, 2005, Xcel Energy had the following amount of guarantees and exposure under these guarantees, including those related to
Seren and Xcel Energy Argentina, which are components of discontinued operations:
Triggering
Event Assets
(Millions of dollars) Guarantee Current Term or Requiring Held as
Nature of Guarantee Guarantor Amount Exposure Expiration Date Performance Collateral
Guarantee performance and payment of surety 2006–2008, 2012,
bonds for itself and its subsidiaries (d) (h) Xcel Energy $132.9 (a) 2014, 2015 and 2022 (e) N/A
Guarantee performance and payment of
surety bonds PSCo $ 0.50 (a) 2006 (e) N/A
Guarantee the indemnification obligations of
Xcel Energy Wholesale Group Inc. under a
stock purchase agreement Xcel Energy $ 17.50 $ – 2010 (c) N/A
Guarantee the indemnification obligations of
Xcel Energy Argentina under a stock
purchase agreement Xcel Energy $14.70 $ – Continuing (c) N/A
Guarantee the indemnification obligations of
Seren under an asset purchase agreement Xcel Energy $12.50 $ – Continuing (c) N/A
Guarantee of customer loans to encourage
business growth and expansion NSP-Wisconsin $ 0.20 $0.20 2006 (f) N/A
Guarantee of collection of receivables sold
to a third party NSP-Minnesota $ 0.12 $0.12 2006 (b) (g)
Combination of guarantees benefiting
various Xcel Energy subsidiaries Xcel Energy $ 7.65 $ – Continuing (b) N/A
(a) The total exposure of this indemnification cannot be determined. Xcel Energy believes the exposure to be significantly less than the total amount of
the outstanding bonds.
(b) Nonperformance and/or nonpayment.
(c) Losses caused by default in performance of covenants or breach of any warranty or representation in the purchase agreement.
(d) Includes one performance bond with a notional amount of $11.1 million that guarantees the performance of Planergy Housing Inc., a subsidiary of
Xcel Energy that was sold to Ameresco Inc. on Dec. 12, 2003. Ameresco Inc. has agreed to indemnify Xcel Energy for any liability arising out of any
surety bond.
(e) Failure of Xcel Energy or one of its subsidiaries to perform under the agreement that is the subject of the relevant bond. In addition, per the indemnity
agreement between Xcel Energy and the various surety companies, the surety companies have the discretion to demand that collateral be posted.
(f) Non-timely payment of the obligations or at the time the debtor becomes the subject of bankruptcy or other insolvency proceedings.
(g) Security interest in underlying receivable agreements.
(h) Xcel Energy agreed to indemnify an insurance company in connection with surety bonds they may issue or have issued for Utility Engineering up
to $80 million. The Xcel Energy indemnification will be triggered only in the event that Utility Engineering has failed to meet its obligations to the
surety company.
LETTERS OF CREDIT
Xcel Energy and its subsidiaries use letters of credit, generally with terms of one year, to provide financial guarantees for certain operating
obligations. At Dec. 31, 2005, there was $35.2 million of letters of credit outstanding. The contract amounts of these letters of credit approximate
their fair value and are subject to fees determined in the marketplace.
14. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
Legislative Resource Commitments In 1994, NSP-Minnesota received Minnesota legislative approval for on-site temporary spent-fuel
storage facilities at its Prairie Island nuclear power plant, provided NSP-Minnesota satisfies certain requirements. Commitments related to
the 17 dry cask storage containers approved in 1994 have been fulfilled. As a result of legislative amendments in 2003, NSP-Minnesota is
authorized to use as many dry cask storage containers as necessary to operate the plant through 2014. Current estimates indicate that this
will require 29 dry cask storage containers. As of Dec. 31, 2005, NSP-Minnesota had filled and placed 20 dry cask containers in storage at
Prairie Island.
The 2003 legislation transfers the primary authority concerning future spent-fuel storage issues from the Legislature to the MPUC. In
January 2005, NSP-Minnesota filed an application with the MPUC for a certificate of need for up to 30 dry cask storage containers at the
Monticello nuclear plant so that it can continue to operate beyond 2010. Xcel Energy expects a decision from the MPUC later this year.
NSP-Minnesota also filed its request with the NRC on March 24, 2005, for a 20-year extension to Monticello’s operating license. If a certificate
of need is granted, it is stayed until the following June to provide the Minnesota Legislature the opportunity to review the MPUC’s action if
it is determined appropriate. The 2003 legislation also requires NSP-Minnesota to add at least 300 megawatts of additional wind power
by 2010, with an option to own 100 megawatts of this power.
XCEL ENERGY 2005 ANNUAL REPORT 67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS