Xcel Energy 2007 Annual Report Download - page 58

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Statement of Operations Analysis — Continuing Operations
The following discussion summarizes the items that affected the individual revenue and expense items reported in the
consolidated statements of income.
Electric Utility, Short-Term Wholesale and Commodity Trading Margins
Electric fuel and purchased power expenses tend to vary with changing retail and wholesale sales requirements and cost
changes in fuel and purchased power. Due to fuel and purchased energy cost-recovery mechanisms for customers in
most states, the fluctuations in these costs do not materially affect electric utility margin.
Xcel Energy has two distinct forms of wholesale sales: short-term wholesale and commodity trading. Short-term
wholesale refers to energy-related purchase and sales activity, and the use of financial instruments associated with the
fuel required for, and energy produced from, Xcel Energy’s generation assets or the energy and capacity purchased to
serve native load. Commodity trading is not associated with Xcel Energy’s generation assets or the energy and capacity
purchased to serve native load. Short-term wholesale and commodity trading activities are considered part of the electric
utility segment.
Short-term wholesale and commodity trading margins reflect the estimated impact of regulatory sharing of margins, if
applicable. Commodity trading revenues are reported net of related costs (i.e., on a margin basis) in the consolidated
statements of income. Commodity trading costs include purchased power, transmission, broker fees and other related
costs.
The following table details the revenue and margin for base electric utility, short-term wholesale and commodity trading
activities:
Base
Electric Short-Term Commodity Consolidated
Utility Wholesale Trading Totals
(Millions of Dollars)
2007
Electric utility revenues (excluding commodity trading) ............ $7,611 $ 227 $ — $ 7,838
Electric fuel and purchased power-utility ..................... (3,930) (207) — (4,137)
Commodity trading revenues ............................ — — 289 289
Commodity trading expenses ............................ — — (279) (279)
Gross margin before operating expenses ...................... $3,681 $ 20 $ 10 $ 3,711
Margin as a percentage of revenues ......................... 48.4% 8.8% 3.5% 45.7%
2006
Electric utility revenues (excluding commodity trading) ............ $7,387 $ 201 $ — $ 7,588
Electric fuel and purchased power-utility ..................... (3,925) (178) — (4,103)
Commodity trading revenues ............................ — — 610 610
Commodity trading expenses ............................ — — (590) (590)
Gross margin before operating expenses ...................... $3,462 $ 23 $ 20 $ 3,505
Margin as a percentage of revenues ......................... 46.9% 11.4% 3.3% 42.8%
2005
Electric utility revenues (excluding commodity trading) ............ $7,038 $ 196 $ — $ 7,234
Electric fuel and purchased power-utility ..................... (3,802) (120) — (3,922)
Commodity trading revenues ............................ — — 730 730
Commodity trading expenses ............................ — — (720) (720)
Gross margin before operating expenses ...................... $3,236 $ 76 $ 10 $ 3,322
Margin as a percentage of revenues ......................... 46.0% 38.8% 1.4% 41.7%
48