Xcel Energy 2008 Annual Report Download - page 153

NSP-Wisconsin has reached settlements with 22 insurers, and these insurers have been dismissed from both the
Minnesota and Wisconsin actions.
In July 2007, the Minnesota state court issued a decision on allocation, reaffirming its prior rulings that Minnesota law
on allocation should apply and ordering the dismissal, without prejudice, of eleven insurers whose coverage would not
be triggered under such an allocation method. In September 2007, NSP-Wisconsin commenced an appeal in the
Minnesota Court of Appeals challenging the dismissal of these carriers. In November 2007, Ranger Insurance Company
(Ranger) and TIG Insurance Company (TIG) filed a motion to dismiss NSP-Wisconsin’s appeal, asserting that
NSP-Wisconsin’s failure to serve Continental Insurance Company, as successor in interest to certain policies issued by
Harbor Insurance Company (Harbor), requires dismissal of NSP-Wisconsin’s appeal. In February 2008, the Court of
Appeals issued an order deferring a decision on the procedural motion filed by Harbor and TIG and referring the
motion to the panel assigned to consider the merits of the appeal.
In April 2008, the Court of Appeals issued an order staying briefing and other appellate proceedings until further order
of the court. The order was issued in response to NSP-Wisconsin’s request that oral argument be deferred pending a
decision by the Wisconsin Supreme Court in Plastics Engineering Co. vs. Liberty Mutual Insurance Co. On Jan. 29, 2009,
the Wisconsin Supreme Court issued its decision in Plastics Engineering Co., adopting an all sums method of allocating
damages when an injury spans multiple, successive policy periods. On Feb. 3, 2009, the Court of Appeals issued an
order dissolving the stay and establishing a briefing schedule. NSP-Wisconsin has until March 9, 2009 to file a
supplemental brief addressing the impact of Plastics Engineering Co. The insurers have until April 9, 2009 to file their
initial briefs on appeal. Thereafter, NSP-Wisconsin will reply to the insurers’ briefs.
The PSCW has established a deferral process whereby clean-up costs associated with the remediation of former MGP
sites are deferred and, if approved by the PSCW, recovered from ratepayers. Carrying charges associated with these
clean-up costs are not subject to the deferral process and are not recoverable from ratepayers. Any insurance proceeds
received by NSP-Wisconsin will be credited to ratepayers. None of the aforementioned lawsuit settlements are expected
to have a material effect on Xcel Energy’s consolidated financial statements.
Nuclear Waste Disposal Litigation — In 1998, NSP-Minnesota filed a complaint in the U.S. Court of Federal Claims
against the United States requesting breach of contract damages for the U.S. Department of Energy’s (DOE) failure to
begin accepting spent nuclear fuel by Jan. 31, 1998, as required by the contract between the DOE and
NSP-Minnesota. At trial, 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, and NSP-Minnesota cross-appealed on the cost of capital issue. In April 2008, the DOE asked the
Court of Appeals to stay briefing until the appeals in several other nuclear waste cases have been decided, and the
Court of Appeals granted the request. In December 2008, NSP-Minnesota made a motion in the Court of Appeals to
lift the stay, which was denied by the Court of Appeals in February 2009. Results of the judgment will not be recorded
in earnings until the appeal and regulatory treatment and amounts to be shared with ratepayers have 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 U.S. 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 will claim damages for the period Jan. 1, 2005 through Dec. 31, 2008, 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, but the stay was lifted in November 2008.
The court’s scheduling order provides that the parties will exchange expert reports in 2009, and that all discovery will
be completed by the end of 2009. Trial is expected to take place in 2010.
Fargo Gas Explosion — In September 2008, an explosion occurred at a duplex in Fargo, N.D. The explosion destroyed
one side of the duplex and resulted in injuries to some of the residents. Xcel Energy subsequently provided a report to
the U.S. Dept. of Transportation Pipeline and Hazardous Materials Safety Administration stating that natural gas
migrated into the house and was ignited by an unknown source. Investigators identified a natural gas leak the size of a
pinhole located 18 inches underground. The property owners and attorneys representing the injured residents have put
Xcel Energy on notice of potential claims. Investigation into the incident is continuing.
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