Xcel Energy 2006 Annual Report Download - page 117

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arising from a nuclear incident at any licensed nuclear facility in the United States. The maximum funding requirement is $15 million
per reactor during any one year.
NSP-Minnesota purchases insurance for property damage and site decontamination cleanup costs from Nuclear Electric Insurance Ltd.
(NEIL). The coverage limits are $2.1 billion for each of NSP-Minnesota’s two nuclear plant sites. NEIL also provides business
interruption insurance coverage, including the cost of replacement power obtained during certain prolonged accidental outages of
nuclear generating units. Premiums are expensed over the policy term. All companies insured with NEIL are subject to retroactive
premium adjustments if losses exceed accumulated reserve funds. Capital has been accumulated in the reserve funds of NEIL to the
extent that NSP-Minnesota would have no exposure for retroactive premium assessments in case of a single incident under the
business interruption and the property damage insurance coverage. However, in each calendar year, NSP-Minnesota could be subject
to maximum assessments of approximately $16.1 million for business interruption insurance and $26.1 million for property damage
insurance if losses exceed accumulated reserve funds.
Legal Contingencies
In the normal course of business, Xcel Energy is subject to claims and litigation arising from prior and current operations. Xcel
Energy is actively defending these matters and has recorded a reasonable liability related to the probable cost of settlement or other
disposition when it can be reasonably estimated. The ultimate outcome of these matters cannot presently be determined. Accordingly,
the ultimate resolution of these matters could have a material adverse effect on Xcel Energy’s financial position and results of
operations.
Bender et al. vs. Xcel Energy — On July 2, 2004, five former NRG officers filed a lawsuit against Xcel Energy in the U.S. District
Court for the District of Minnesota. The lawsuit alleges, among other things, that Xcel Energy violated the ERISA by refusing to make
certain deferred compensation payments to the plaintiffs. The complaint also alleges interference with ERISA benefits, breach of
contract related to the nonpayment of certain stock options and unjust enrichment. The complaint alleges damages of approximately
$6 million. Xcel Energy believes the suit is without merit. On Jan. 19, 2005, Xcel Energy filed a motion for summary judgment. On
July 26, 2005, the court issued an order granting Xcel Energy’s motion for summary judgment in part with respect to claims for
interference with ERISA benefits, breach of contract for nonpayment of stock options and unjust enrichment. The court denied Xcel
Energy’s motion in part with respect to the allegations of nonpayment of deferred compensation benefits. Plaintiffs and Xcel Energy
filed additional cross motions for summary judgment, with oral arguments presented on Feb. 24, 2006.
On May 17, 2006, the court granted Xcel Energy’s motion for summary judgment in full and denied the plaintiff’s motion for
summary judgment in full. Plaintiffs have appealed to the Eighth Circuit Court of Appeals. Oral arguments were presented Jan. 11,
2007.
Carbon Dioxide Emissions Lawsuit — On July 21, 2004, the attorneys general of eight states and New York City, as well as several
environmental groups, filed lawsuits in U.S. District Court for the Southern District of New York against five utilities, including Xcel
Energy, to force reductions in carbon dioxide (CO2) emissions. The other utilities include American Electric Power Co., Southern Co.,
Cinergy Corp. and Tennessee Valley Authority. CO2 is emitted whenever fossil fuel is combusted, such as in automobiles, industrial
operations and coal- or natural gas-fired power plants. The lawsuits allege that CO2 emitted by each company is a public nuisance as
defined under state and federal common law because it has contributed to global warming. The lawsuits do not demand monetary
damages. Instead, the lawsuits ask the court to order each utility to cap and reduce its CO2 emissions. In October 2004, Xcel Energy
and four other utility companies filed a motion to dismiss the lawsuit, contending, among other reasons, that the lawsuit is an attempt
to usurp the policy-setting role of the U.S. Congress and the president. On Sept. 19, 2005, the judge granted the defendants’ motion to
dismiss on constitutional grounds. Plaintiffs filed an appeal to the Second Circuit Court of Appeals. Oral arguments were presented on
June 7, 2006 and a decision on the appeal is pending.
Texas-Ohio Energy, Inc. vs. Centerpoint Energy et al. — On Nov. 19, 2003, a class action complaint filed in the U.S. District Court
for the Eastern District of California by Texas-Ohio Energy, Inc. was served on Xcel Energy naming e prime as a defendant. The
lawsuit, filed on behalf of a purported class of large wholesale natural gas purchasers, alleges that e prime falsely reported natural gas
trades to market trade publications in an effort to artificially raise natural gas prices in California. The case has been conditionally
transferred by the Multi-District Litigation (MDL) Panel to U.S. District Judge Pro, in Nevada, who is the judge assigned to western
area wholesale natural gas marketing litigation. In an order entered April 8, 2005, Judge Pro granted the defendants’ motion to dismiss
based on the filed rate doctrine. On May 9, 2005, plaintiffs filed an appeal of this decision to the 9th Circuit Court of Appeals and oral
arguments on the appeal were heard on Feb. 13, 2007.
Fairhaven Power Company vs. Encana Corporation et al. — On Sept. 14, 2004, a class action complaint was filed in the U.S.
District Court for the Eastern District of California by Fairhaven Power Co. and subsequently served on Xcel Energy. The lawsuit,
filed on behalf of a purported class of natural gas purchasers, alleges that Xcel Energy falsely reported natural gas trades to market
trade publications in an effort to artificially raise natural gas prices in California and engaged in a conspiracy with other sellers of
natural gas to inflate prices. This case has been consolidated with Texas-Ohio Energy, Inc. vs. Centerpoint Energy et al. and assigned