Xcel Energy 2006 Annual Report Download - page 71

61
Energy’s capitalization ratio at Dec. 31, 2006, was 81 percent. Therefore, the restrictions do not place any effective limit on Xcel
Energy’s ability to pay dividends.
Capital Sources
Xcel Energy expects to meet future financing requirements by periodically issuing short-term debt, long-term debt, common stock,
preferred securities and hybrid securities to maintain desired capitalization ratios.
Short-Term Funding Sources — Historically, Xcel Energy has used a number of sources to fulfill short-term funding needs,
including operating cash flow, notes payable, commercial paper and bank lines of credit. The amount and timing of short-term funding
needs depend in large part on financing needs for construction expenditures and working capital. Another significant short-term
funding need is the dividend payment.
As of Feb. 20, 2007, Xcel Energy and its utility subsidiaries had the following committed credit facilities available to meet its liquidity
needs:
Facility Drawn* Available Cash Liquidity Maturity
(Millions of Dollars)
NSP-Minnesota...................................... $ 500 $ 178.5 $ 321.5 $ 1.1 $ 322.6 December 2011
PSCo.............................................. 700 237.0 463.0 1.3 464.3 December 2011
SPS ............................................... 250 37.7 212.3 1.1 213.4 December 2011
Xcel Energy — holding company........................ 800 133.7 666.3 2.1 668.4 December 2011
Total ............................................ $ 2,250 $ 586.9 $ 1,663.1 $ 5.6 $ 1,668.7
* Includes outstanding commercial paper and letters of credit.
Operating cash flow as a source of short-term funding is affected by such operating factors as weather; regulatory requirements,
including rate recovery of costs; environmental regulation compliance; changes in the trends for energy prices; and supply and
operational uncertainties, all of which are difficult to predict. See further discussion of such factors under Statement of Operations
Analysis.
Short-term borrowing as a source of funding is affected by regulatory actions and access to reasonably priced capital markets. For
additional information on Xcel Energy’s short-term borrowing arrangements, see Note 3 to the Consolidated Financial Statements.
Access to reasonably priced capital markets is dependent in part on credit agency reviews and ratings. The following ratings reflect the
views of Moody’s, Standard & Poor’s, and Fitch. A security rating is not a recommendation to buy, sell or hold securities, and is
subject to revision or withdrawal at any time by the rating agency. As of Feb. 20, 2007, the following represents the credit ratings
assigned to various Xcel Energy companies:
Company Credit Type Moody’s Standard & Poor’s Fitch
Xcel Energy.............................................. Senior Unsecured Debt Baa1 BBB- BBB+
Xcel Energy.............................................. Commercial Paper P-2 A-2 F2
NSP-Minnesota........................................... Senior Unsecured Debt A3 BBB- A
NSP-Minnesota........................................... Senior Secured Debt A2 A- A+
NSP-Minnesota........................................... Commercial Paper P-2 A-2 F1
NSP-Wisconsin........................................... Senior Unsecured Debt A3 BBB A
NSP-Wisconsin........................................... Senior Secured Debt A2 A- A+
PSCo................................................... Senior Unsecured Debt Baa1 BBB- BBB+
PSCo................................................... Senior Secured Debt A3 A- A-
PSCo................................................... Commercial Paper P-2 A-2 F2
SPS .................................................... Senior Unsecured Debt Baa1 BBB A-
SPS .................................................... Commercial Paper P-2 A-2 F2
Note: Moody’s highest credit rating for debt is Aaa and lowest investment grade rating is Baa3. Both Standard & Poor’s and Fitch’s
highest credit rating for debt are AAA and lowest investment grade rating is BBB-. Moody’s prime ratings for commercial paper
range from P-1 to P-3. Standard & Poor’s ratings for commercial paper range from A-1 to A-3. Fitch’s ratings for commercial paper
range from F1 to F3.
In the event of a downgrade of its credit ratings to below investment grade, Xcel Energy may be required to provide credit
enhancements in the form of cash collateral, letters of credit or other security to satisfy all or a part of its exposures under guarantees
outstanding. See a list of guarantees at Note 12 to the Consolidated Financial Statements. Xcel Energy has no explicit credit rating
requirements in its debt agreements.
Money Pool — Xcel Energy received SEC and the FERC approval to establish a utility money pool arrangement with the utility
subsidiaries, subject to receipt of required state regulatory approvals. The utility money pool allows for short-term loans between the
utility subsidiaries and from the holding company to the utility subsidiaries at market-based interest rates.