Xcel Energy 2007 Annual Report Download - page 136

NSP-Minnesota claimed damages in excess of $100 million through Dec. 31, 2004. On Sept. 26, 2007, the court
awarded NSP-Minnesota $116.5 million in damages. In December 2007, the court denied the DOE’s motion for
reconsideration. In February 2008, the DOE filed an appeal to the U.S. Court of Appeals for the Federal Circuit.
Results of the judgment will not be recorded in earnings until the appeal and regulatory treatment and amounts to be
shared with rate payers has been resolved. Given the uncertainties, it is unclear as to how much, if any, of this
judgment will ultimately have a net impact on earnings.
In August 2007, NSP-Minnesota filed a second complaint against the DOE in the Court of Federal Claims (NSP II),
again claiming breach of contract damages for the DOE’s continuing failure to abide by the terms of the contract. This
lawsuit claims damages for the period Jan. 1, 2005 through June 30, 2007, which includes costs associated with the
storage of spent nuclear fuel at Prairie Island and Monticello, as well as the costs of complying with state regulation
relating to the storage of spent nuclear fuel. The amount of such damages is expected to exceed $40 million. In January
2008, the court granted the DOE’s motion to stay, subject to reevaluation after a decision has been filed in any one of
the five pending appeals of nuclear waste storage cases.
Mallon vs. Xcel Energy Inc. — In July 2007 Theodore Mallon and TransFinancial Corporation filed a declaratory
judgment action against Xcel Energy in U. S. District Court in Colorado (Mallon Federal Action). In this lawsuit,
plaintiffs seek a determination that Xcel Energy is not entitled to assert claims against plaintiffs related to the 1984 and
1985 sale of COLI to PSCo, a predecessor of Xcel Energy. In August 2007, Xcel Energy, PSCo and PSRI commenced
a lawsuit in Colorado state court against Mallon and TransFinancial Corporation (Mallon State Action). In the Mallon
State Action, Xcel Energy, PSCo and PSRI seek damages against Mallon and TransFinancial for, among other things,
breach of contract and breach of fiduciary duties associated with the sale of the COLI policies. In August 2007, Xcel
Energy also filed a motion to stay or, in the alternative, to dismiss the Mallon Federal Action. In September 2007, a
motion to stay the Mallon State Court action was subsequently filed by Mallon and TransFinancial. In November 2007,
the U.S. District Court in Colorado dismissed the complaint in the Mallon Federal Action and Mallon and
TransFinancial subsequently withdrew their motion to stay the Mallon State Court Action.
Fru-Con Construction Corporation vs. Utility Engineering (UE) et al. — In March 2005, Fru-Con Construction
Corporation (Fru-Con) commenced a lawsuit in U.S. District Court in the Eastern District of California against UE
and the Sacramento Municipal Utility District (SMUD) for damages allegedly suffered during the construction of a
natural gas-fired, combined-cycle power plant in Sacramento County. Fru-Con’s complaint alleges that it entered into a
contract with SMUD to construct the power plant and further alleges that UE was negligent with regard to the design
services it furnished to SMUD. In August 2005, the court granted UE’s motion to dismiss. Because SMUD remains a
defendant in this action, the court has not entered a final judgment subject to an appeal with respect to its order to
dismiss UE from the lawsuit. Because this lawsuit was commenced prior to the April 2005, closing of the sale of UE to
Zachry, Xcel Energy is obligated to indemnify Zachry for damages related to this case up to $17.5 million. Pursuant to
the terms of its professional liability policy, UE is insured up to $35 million.
Lamb County Electric Cooperative (LCEC) — In 1995, LCEC petitioned the PUCT for a cease and desist order
against SPS alleging SPS was unlawfully providing service to oil field customers in LCEC’s certificated area. In May
2003, the PUCT issued an order denying LCEC’s petition based on its determination that SPS in 1976 was granted a
certificate to serve the disputed customers. LCEC appealed the decision to the District Court in Travis County, Texas.
In August 2004, the court affirmed the decision of the PUCT. In September 2004, LCEC appealed the District Court’s
decision to the Court of Appeals for the Third Supreme Judicial District of the state of Texas. This appeal is currently
pending.
In 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 of the legality of SPS providing electric service to the disputed customers. The PUCT
order from May 2003, which found SPS was legally serving the disputed customers, collaterally determines the issue of
liability contrary to LCEC’s position in the suit. An adverse ruling on the appeal of May 2003 PUCT order could
result in a different determination of the legality of SPS’ service to the disputed customers.
Other Contingencies
See Note 14 to the consolidated financial statements.
16. Nuclear Obligations
Fuel Disposal — NSP-Minnesota is responsible for temporarily storing used or spent nuclear fuel from its nuclear
plants. The DOE is responsible for permanently storing spent fuel from NSP-Minnesota’s nuclear plants as well as from
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