Xcel Energy 2006 Annual Report Download - page 103

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On Dec. 31, 2006, Xcel Energy had the following amount of guarantees and exposure under these guarantees, including those related
to Seren, UE, Quixx and Xcel Energy Argentina, which are components of discontinued operations:
Nature of Guarantee Guarantor
Guarantee
Amount
Current
Exposure
Term or
Expiration Date
Triggering
Event
Requiring
Performance
Assets
Held as
Collateral
(Millions of Dollars)
Guarantee performance and
payment of surety bonds for
itself and its subsidiaries(f) Xcel Energy $ 118.6 (a)
2007- 2009,
2012, 2014,
2015 and 2022 (d) N/A
Guarantee the indemnification
obligations of Xcel Energy
Wholesale Group Inc. under a
stock purchase agreement Xcel Energy $ 17.5 (g) 2010 (c) N/A
Guarantee the indemnification
obligations of Xcel Energy
Argentina under a stock
purchase agreement Xcel Energy $ 14.7 $
—
Continuing (c) N/A
Guarantee the indemnification
obligations of Seren under an
asset purchase agreement Xcel Energy $ 12.5 $
—
Continuing (c) N/A
Guarantee the indemnification
obligations of Seren under an
asset purchase agreement Xcel Energy $ 20.0 $
—
Continuing (c) N/A
Guarantee of customer loans for the
Farm Rewiring Program NSP-Wisconsin $ 1.0 $
—
Continuing (e) N/A
Combination of guarantees
benefiting various Xcel Energy
subsidiaries Xcel Energy $ 10.5 $
—
Continuing (b)(c) 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) 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.
(e) The debtor becomes the subject of bankruptcy or other insolvency proceedings.
(f) 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.
(g) See Note 14 to the Consolidated Financial Statements for further discussion of Fru-Con Construction Corporation vs. Utility Engineering et al.
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, 2006, there was $43.8 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.
13. Rate Matters
NSP-Minnesota
Pending and Recently Concluded Regulatory Proceedings — FERC
MISO Operations — NSP-Minnesota and NSP-Wisconsin are members of the MISO. The MISO is a FERC-regulated RTO that
provides regional transmission tariff administration services for electric transmission systems, including those of NSP-Minnesota and
NSP-Wisconsin. MISO also operates a regional wholesale energy market using Locational Marginal Pricing and financial congestion
relief which is also known as a Day 2 market. NSP-Minnesota recovers most MISO regional market charges through the FCA. NSP-
Wisconsin currently has requested recovery of these costs within its jurisdiction. For further discussion, see Pending and Recently
Concluded Regulatory Proceedings — MPUC and Pending and Recently Concluded Regulatory Proceedings — PSCW.