Xcel Energy 2007 Annual Report Download - page 111

A 1-percent change in the assumed health care cost trend rate would have the following effects:
(Thousands of Dollars)
1-percent increase in APBO components at Dec. 31, 2007 ....................... $89,985
1-percent decrease in APBO components at Dec. 31, 2007 ....................... (75,284)
1-percent increase in service and interest components of the net periodic cost ........... 7,402
1-percent decrease in service and interest components of the net periodic cost ........... (6,064)
Cash Flows — The postretirement health care plans have no funding requirements under income tax and other
retirement-related regulations other than fulfilling benefit payment obligations, when claims are presented and approved
under the plans. Additional cash funding requirements are prescribed by certain state and federal rate regulatory
authorities, as discussed previously. Xcel Energy expects to contribute approximately $49 million during 2008.
Benefit Costs — The components of net periodic postretirement benefit costs are:
2007 2006 2005
(Thousands of Dollars)
Service cost .................................... $ 5,813 $ 6,633 $ 6,684
Interest cost .................................... 50,475 52,939 55,060
Expected return on plan assets ......................... (30,401) (26,757) (25,700)
Amortization of transition obligation ..................... 14,577 14,444 14,578
Amortization of prior service credit ...................... (2,178) (2,178) (2,178)
Amortization of net loss gain .......................... 14,198 24,797 26,246
Net periodic postretirement benefit cost under SFAS No. 106 ..... 52,484 69,878 74,690
Additional cost recognized due to effects of regulation .......... 3,891 3,891 3,891
Net cost recognized for financial reporting ................. $56,375 $ 73,769 $ 78,581
Significant assumptions used to measure costs (income)
Discount rate ................................... 6.00% 5.75% 6.00%
Expected average long-term rate of return on assets (pretax) ....... 7.50 7.50 5.50-8.50
Projected Benefit Payments
The following table lists Xcel Energy’s projected benefit payments for the pension and postretirement benefit plans:
Gross Projected Net Projected
Projected Postretirement Expected Postretirement
Pension Benefit Health Care Benefit Medicare Part D Health Care Benefit
Payments Payments Subsidies Payments
(Thousands of Dollars)
2008 .............................. $ 215,127 $ 60,706 $ 5,841 $ 54,865
2009 .............................. 215,407 62,674 6,280 56,394
2010 .............................. 222,771 64,508 6,693 57,815
2011 .............................. 222,743 66,428 7,031 59,397
2012 .............................. 227,616 67,497 7,415 60,082
2013-2017 .......................... 1,196,905 348,035 40,849 307,186
11. Detail of Interest and Other Income (Expense), Net
Interest and other income, net of nonoperating expenses, for the years ended Dec. 31 consisted of the following:
2007 2006 2005
(Thousands of Dollars)
Interest income .................................. $24,093 $ 20,317 $ 14,886
Equity income in unconsolidated affiliates .................. 3,459 4,450 2,511
Other nonoperating income .......................... 4,352 5,253 8,251
Minority interest income ............................ 599 2,361 827
Interest expense on corporate-owned life insurance and other
insurance policies ............................... (21,548) (27,637) (25,000)
Other nonoperating expense .......................... (7) (659) (618)
Total interest and other income, net ..................... $10,948 $ 4,085 $ 857
12. Derivative Instruments
In the normal course of business, Xcel Energy and its subsidiaries are exposed to a variety of market risks. Market risk
is the potential loss or gain that may occur as a result of changes in the market or fair value of a particular instrument
or commodity. Xcel Energy and its subsidiaries utilize, in accordance with approved risk management policies, a variety
of derivative instruments to mitigate market risk and to enhance its operations.
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