Xcel Energy 2006 Annual Report Download - page 46

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LCEC appealed the decision to the District Court in Travis County, Texas and on Aug. 12, 2004, the District Court affirmed the
decision of the PUCT. On Sept. 9, 2004, LCEC appealed the District Court’s decision to the Court of Appeals for the Third Supreme
Judicial District of the state of Texas, which appeal is currently pending. Oral arguments in the case were heard March 23, 2005. SPS
is awaiting the Court of Appeals decision.
On Oct. 18, 1996, LCEC filed a suit for damages against SPS in the District Court in Lamb County, Texas, based on the same facts
alleged in the petition for a cease and desist order at the PUCT. This suit has been dormant since it was filed, awaiting a final
determination at the PUCT of the legality of SPS providing electric service to the disputed customers. The PUCT order of May 23,
2003, found that SPS was legally serving the disputed customers, thus collaterally determining the issue of liability contrary to
LCEC’s position in the suit. An adverse ruling on the appeal of May 23, 2003 PUCT order could result in a re-determination of the
legality of SPS’ service to the disputed customers.
Manufactured Gas Plant Insurance Coverage Litigation — In October 2003, NSP-Wisconsin initiated discussions with its insurers
regarding the availability of insurance coverage for costs associated with the remediation of four former MGP sites located in
Ashland, Chippewa Falls, Eau Claire, and LaCrosse, Wis. In lieu of participating in discussions, on Oct. 28, 2003, two of NSP-
Wisconsin’s insurers, St. Paul Fire & Marine Insurance Co. and St. Paul Mercury Insurance Co., commenced litigation against NSP-
Wisconsin in Minnesota state district court. On Nov. 12, 2003, NSP-Wisconsin commenced suit in Wisconsin state circuit court
against St. Paul Fire & Marine Insurance Co. and its other insurers. Subsequently, the Minnesota court enjoined NSP-Wisconsin from
pursuing the Wisconsin litigation. Although the Wisconsin action has not been dismissed, the January 2007 trial date was adjourned
and has not been rescheduled.
NSP-Wisconsin has entered into confidential settlements with St. Paul Mercury Insurance Company, St. Paul Fire and Marine
Insurance Company and the Phoenix Insurance Company (“St. Paul Companies”), Associated Electric & Gas Insurance Services
Limited, Fireman’s Fund Insurance Company, INSCO, Ltd. (on its own behalf and on behalf of the insurance companies subscribing
per Britamco, Ltd.), Allstate Insurance Company and Compagnie Europeene D’ Assurances Industrielles S.A. and these insurers have
been dismissed from the Minnesota and Wisconsin actions. These settlements are not expected to have a material effect on Xcel
Energy’s financial results.
NSP-Wisconsin has reached settlements in principle with Admiral Insurance Company; certain underwriters at Lloyd’s, London and
certain London Market Insurance Companies (“London Market Insurers”), General Reinsurance Corporation and First State and Twin
City Fire Insurance Companies. These settlements are not expected to have a material effect on Xcel Energy’s financial results.
On Oct. 6, 2006, the trial court issued a memorandum and order on various summary judgment motions. The court ruled that
Minnesota law on allocation applies and ordered dismissal, without prejudice, of 15 carriers whose coverage would not be triggered
under such an allocation method. The court denied the insurers’ motions for summary judgment on the sudden and accidental and
absolute pollution exclusions; late notice; legal expenses and costs; certain specific lost policies; and miscellaneous coverage issues
under several individual policies. The court granted the motions of Fidelity and Casualty Insurance Company and Continental
Insurance Company related to certain specific lost policies. On Oct. 13, 2006, the trial court denied NSP-Wisconsin’s request for leave
to file a motion for reconsideration of the court’s allocation decision. The Nov. 6, 2006 trial date was also adjourned to allow for
additional discovery and potential motions in light of the Minnesota Supreme Court’s recent allocation decision in Wooddale Builders,
Inc. v. Maryland Casualty Company, 722 N. W.2d 283 (Minn. 2006). The trial has been set for a four-week period commencing on
July 16, 2007.
The PSCW has established a deferral process whereby clean-up costs associated with the remediation of former MGP sites are
deferred and, if approved by the PSCW, recovered from ratepayers. Carrying charges associated with these clean-up costs are not
subject to the deferral process and are not recoverable from ratepayers. Any insurance proceeds received by NSP-Wisconsin will
operate as a credit to ratepayers, therefore, these lawsuits are not expected to have a material effect on Xcel Energy’s financial results.
Polychlorinated Biphenyl (PCB) Storage and Disposal — In August 2004, Xcel Energy received notice from the EPA contending
SPS violated PCB storage and disposal regulations with respect to storage of a drained transformer and related solids. The EPA
contended the fine for the alleged violation was approximately $1.2 million. Xcel Energy contested the fine and submitted a voluntary
disclosure to the EPA. On April 17, 2006, SPS received a notice of determination from the EPA stating that the voluntary disclosure
had been reviewed and that SPS had met all conditions of the EPA’s audit policy. Accordingly, the EPA will mitigate 100 percent of
the gravity-based penalty for the disclosed violation, and no economic penalty will be assessed.
Cornerstone Propane Partners, L.P. et al. vs. e prime, inc. et al. — On Feb. 2, 2004, a purported class action complaint was filed in
the U.S. District Court for the Southern District of New York against e prime and three other defendants by Cornerstone Propane
Partners, L.P., Robert Calle Gracey and Dominick Viola on behalf of a class who purchased or sold one or more New York Mercantile
Exchange natural gas futures and/or options contracts during the period from Jan. 1, 2000, to Dec. 31, 2002. The complaint alleges
that defendants manipulated the price of natural gas futures and options and/or the price of natural gas underlying those contracts in
violation of the Commodities Exchange Act. In February 2004, the plaintiff requested that this action be consolidated with a similar
suit involving Reliant Energy Services. In February 2004, defendants, including e prime, filed motions to dismiss. In September 2004,
the U.S. District Court denied the motions to dismiss. On Jan. 25, 2005, plaintiffs filed a motion for class certification, which