Xcel Energy 2006 Annual Report Download - page 25

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NSP-Minnesota expects sufficient uranium, conversion and enrichment to be available for the total fuel requirements of its nuclear
generating plants. Contracts for additional uranium are currently being negotiated that would provide additional supply requirements
through 2016. Some exposure to price volatility will remain, due to index-based pricing structures on the contracts.
The NSP System uses both firm and interruptible natural gas and standby oil in combustion turbines and certain boilers. Natural gas
supplies for power plants are procured under short-, intermediate- and long-term contracts at liquid trading hubs that expire in various
years from 2007 through 2027 in order to provide an adequate supply of fuel. Certain natural gas supply and transportation agreements
include obligations for the purchase and/or delivery of specified volumes of natural gas or to make payments in lieu of delivery. At
Dec. 31, 2006, NSP-Minnesota’s commitments related to these contracts were approximately $128 million. The NSP System has
limited on-site fuel oil storage facilities and relies on the spot market for incremental supplies, if needed.
Commodity Marketing Operations
NSP-Minnesota conducts various wholesale marketing operations, including the purchase and sale of electric capacity, energy and
energy related products. NSP-Minnesota uses physical and financial instruments to minimize commodity price and credit risk and
hedge supplies and purchases. See additional discussion under Item 7A — Quantitative and Qualitative Disclosures About Market
Risk.
NSP-Wisconsin
Ratemaking Principles
Summary of Regulatory Agencies and Areas of Jurisdiction — Retail rates, services and other aspects of NSP-Wisconsin’s
operations are regulated by the PSCW and the MPSC, within their respective states. In addition, each of the state commissions
certifies the need for new generating plants and electric transmission lines before the facilities may be sited and built. NSP-Wisconsin
is subject to the jurisdiction of the FERC with respect to its wholesale electric operations, accounting practices, wholesale sales for
resale and the transmission of electricity in interstate commerce. NSP-Wisconsin has received authorization from the FERC to make
wholesale electric sales at market-based prices (see market-based rate authority discussion).
The PSCW has a biennial base-rate filing requirement. By June of each odd-numbered year, NSP-Wisconsin must submit a rate filing
for the test year beginning the following January.
Fuel and Purchased Energy Cost Recovery Mechanisms — NSP-Wisconsin does not have an automatic electric fuel adjustment
clause for Wisconsin retail customers. Instead, it has a procedure that compares actual monthly and anticipated annual fuel costs with
those costs that were included in the latest retail electric rates. If the comparison results in a difference of 2 percent above or below
base rates, the PSCW may hold hearings limited to fuel costs and revise rates upward or downward. In 2006 only, the bandwidth was
2 percent above and 0.5 percent below base rates. Any revised rates would remain in effect until the next rate change. The adjustment
approved is calculated on an annual basis, but applied prospectively. NSP-Wisconsin’s wholesale electric rate schedules provide for
adjustments to billings and revenues for changes in the cost of fuel and purchased energy.
NSP-Wisconsin’s retail electric rate schedules for Michigan customers include power supply cost recovery factors, which are based on
12-month projections. After each 12-month period, a reconciliation is submitted whereby over-collections are refunded and any under-
collections are collected from the customers over the subsequent 12-month period.
Capacity and Demand
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See discussion of the system capacity and demand under NSP-
Minnesota Capacity and Demand discussed previously.
Energy Sources and Related Initiatives
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See a discussion of the system energy sources under NSP-
Minnesota Energy Sources and Related Initiatives discussed previously.
Fuel Supply and Costs
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See a discussion of the system energy sources under NSP-
Minnesota Fuel Supply and Costs discussed previously.
PSCo
Ratemaking Principles
Summary of Regulatory Agencies and Areas of Jurisdiction — PSCo is regulated by the CPUC with respect to its facilities, rates,
accounts, services and issuance of securities. PSCo is regulated by the FERC with respect to its wholesale electric operations,
accounting practices, wholesale sales for resale and the transmission of electricity in interstate commerce.