Xcel Energy 2007 Annual Report Download - page 75

Contractual Obligations and Other Commitments — Xcel Energy has contractual obligations and other commitments
that will need to be funded in the future, in addition to its capital expenditure programs. The following is a
summarized table of contractual obligations and other commercial commitments at Dec. 31, 2007. See additional
discussion in the consolidated statements of capitalization and Notes 4, 5, and 15 to the consolidated financial
statements.
Payments Due by Period
Less than After
Total 1 Year 1 to 3 Years 4 to 5 Years 5 Years
(Thousands of Dollars)
Long-term debt, principal and interest
payments .................. $12,599,312 $1,065,530 $1,849,818 $1,760,489 $ 7,923,475
Capital lease obligations .......... 85,951 6,139 11,794 11,139 56,879
Operating leases(a), (b) ............ 1,439,346 104,557 200,000 161,743 973,046
Unconditional purchase obligations . . . 12,047,364 2,448,155 3,321,234 2,247,977 4,029,998
Other long-term obligations — WYCO
investment ................. 121,000 108,000 13,000 — —
Other long-term obligations(c) ...... 165,847 31,589 42,775 38,964 52,519
Payments to vendors in process ..... 145,059 145,059 — — —
Short-term debt ............... 1,088,560 1,088,560 — — —
Total contractual cash obligations(d) . $27,692,439 $4,997,589 $5,438,621 $4,220,312 $13,035,917
(a) Under some leases, Xcel Energy would have to sell or purchase the property that it leases if it chose to terminate before the scheduled lease expiration date. Most of Xcel
Energy’s railcar, vehicle and equipment and aircraft leases have these terms. At Dec. 31, 2006, the amount that Xcel Energy would have to pay if it chose to terminate these
leases was approximately $176.8 million. In addition, at the end of the equipment leases’ terms, each lease must be extended, equipment purchased for the greater of the
fair value or unamortized value or equipment sold to a third party with Xcel Energy making up any deficiency between the sales price and the unamortized value.
(b) Included in operating lease payments are $76.6 million, $151.7 million, $124.5 million and $916.6 million, for the less than 1 year, 1-3 years, 4-5 years and after 5 years
categories, respectively, pertaining to five purchase power agreements that were accounted for as operating leases.
(c) Included in other long-term obligations are tax, penalties and interest related to unrecognized tax benefits recorded according to FIN 48.
(d) Xcel Energy and its subsidiaries have contracts providing for the purchase and delivery of a significant portion of its current coal, nuclear fuel and natural gas requirements.
Additionally, the utility subsidiaries of Xcel Energy have entered into agreements with utilities and other energy suppliers for purchased power to meet system load and
energy requirements, replace generation from company-owned units under maintenance and during outages, and meet operating reserve obligations. Certain contractual
purchase obligations are adjusted based on indices. The effects of price changes are mitigated through cost-of-energy adjustment mechanisms.
(e) Xcel Energy also has outstanding authority under contracts and blanket purchase orders to purchase up to approximately $1.6 billion of goods and services through the year
2050, in addition to the amounts disclosed in this table and in the forecasted capital expenditures.
Xcel Energy has also executed five additional purchase power agreements that are conditional upon achievement of
certain conditions, including becoming operational. Estimated payments under these conditional obligations are
$52.8 million, $165.7 million, $177.9 million and $1.7 billion, respectively, for the less than 1 year, 1-3 years,
4-5 years and after 5 years categories.
Common Stock Dividends — Future dividend levels will be dependent on Xcel Energy’s results of operations, financial
position, cash flows and other factors, and will be evaluated by the Xcel Energy board of directors. Xcel Energy’s
objective is to increase the annual dividend in the range of 2 percent to 4 percent per year. Xcel Energy’s dividend
policy balances:
• Projected cash generation from utility operations;
• Projected capital investment in the utility businesses;
• A reasonable rate of return on shareholder investment; and
• The impact on Xcel Energy’s capital structure and credit ratings.
In addition, there are certain statutory limitations that could affect dividend levels. Federal law places certain limits on
the ability of public utilities within a holding company system to declare dividends.
Specifically, under the Federal Power Act, a public utility may not pay dividends from any funds properly included in a
capital account. The cash to pay dividends to Xcel Energy shareholders is primarily derived from dividends received
from its utility subsidiaries. The utility subsidiaries are generally limited in the amount of dividends allowed by state
regulatory commissions to be paid to the holding company. The limitation is imposed through equity ratio limitations
that range from 30 percent to 60 percent. Some utility subsidiaries must comply with bond indenture covenants or
restrictions under credit agreements for debt to total capitalization ratios.
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