Xcel Energy 2007 Annual Report Download - page 114

Xcel Energy provides guarantees and bond indemnities supporting certain of its subsidiaries. The guarantees issued by
Xcel Energy guarantee payment or performance by its subsidiaries under specified agreements or transactions. As a
result, Xcel Energy’s exposure under the guarantees is based upon the net liability of the relevant subsidiary under the
specified agreements or transactions. Most of the guarantees issued by Xcel Energy limit the exposure of Xcel Energy to
a maximum amount stated in the guarantee. Unless otherwise indicated below, the guarantees require no liability to be
recorded, contain no recourse provisions and require no collateral.
On Dec. 31, 2007, Xcel Energy had the following amount of guarantees and exposure under these guarantees,
including those related to Seren, UE, Quixx and Xcel Energy Argentina, which are components of discontinued
operations:
Triggering
Event Assets
Guarantee Current Term or Requiring Held as
Nature of Guarantee Guarantor Amount Exposure Expiration Date Performance Collateral
(Millions of Dollars)
2008-2010,
Guarantee performance and payment of surety 2012, 2014,
bonds for itself and its subsidiaries(f) ..... Xcel Energy $31.6 (a) 2015 and 2022 (d) N/A
Guarantee the indemnification obligations of
Xcel Energy Wholesale Group Inc. under a
stock purchase agreement ............ Xcel Energy 17.5 (g) 2010 (c) N/A
Guarantee the indemnification obligations of
Xcel Energy Argentina under a stock
purchase agreement ................ Xcel Energy 14.7 $— Continuing (c) N/A
Guarantee the indemnification obligations of
Seren under an asset purchase agreement . . Xcel Energy 12.5 — 2010 (c) N/A
Guarantee the indemnification obligations of
Seren under an asset purchase agreement . . Xcel Energy 20.0 — Continuing (c) N/A
Guarantee of customer loans for the Farm
Rewiring Program ................ NSP-Wisconsin 1.0 0.1 Continuing (e) N/A
Combination of guarantees benefiting various
Xcel Energy subsidiaries ............. Xcel Energy 10.5 — Continuing (b)(c) N/A
(a) The total exposure of this indemnification cannot be determined. Xcel Energy believes the exposure to be significantly less than the total amount of the outstanding bonds.
(b) Nonperformance and/or nonpayment.
(c) Losses caused by default in performance of covenants or breach of any warranty or representation in the purchase agreement.
(d) Failure of Xcel Energy or one of its subsidiaries to perform under the agreement that is the subject of the relevant bond. In addition, per the indemnity agreement between
Xcel Energy and the various surety companies, the surety companies have the discretion to demand that collateral be posted.
(e) The debtor becomes the subject of bankruptcy or other insolvency proceedings.
(f) Xcel Energy agreed to indemnify an insurance company in connection with surety bonds they may issue or have issued for Utility Engineering up to $80 million. The Xcel
Energy indemnification will be triggered only in the event that Utility Engineering has failed to meet its obligations to the surety company.
(g) See Note 15 to the consolidated financial statements for further discussion of Fru-Con Construction Corporation vs. Utility Engineering et al.
Letters of Credit
Xcel Energy and its subsidiaries use letters of credit, generally with terms of one year, to provide financial guarantees for
certain operating obligations. At Dec. 31, 2007 and 2006, there were $20.1 million and $43.8 million of letters of
credit outstanding. The contract amounts of these letters of credit approximate their fair value and are subject to fees
determined in the marketplace.
14. Rate Matters
NSP-Minnesota
Pending and Recently Concluded Regulatory Proceedings — MPUC
Base Rate
NSP-Minnesota Natural Gas Rate Case — In November 2006, NSP-Minnesota filed a request with the MPUC to
increase Minnesota natural gas rates by $18.5 million annually, or 2.4 percent. The request was based on an
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