Xcel Energy 2009 Annual Report Download - page 153

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 11 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.
On Aug. 25, 2009, the Minnesota Court of Appeals affirmed the district court decision. NSP-Wisconsin subsequently
filed a petition for review of this decision with the Minnesota Supreme Court. On Nov. 17, 2009 the Minnesota
Supreme Court issued an order denying the petition. Defendants subsequently filed in the Wisconsin state court action
a motion to dismiss, which NSP-Wisconsin intends to oppose. Oral arguments are set for March 5, 2010. It is
unknown when the court will rule on this motion.
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 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,
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. Per the court’s scheduling order, NSP-Minnesota’s expert
report on damages was submitted on April 15, 2009, and asserts damages in excess of $250 million. In November
2009, the Court ordered the DOE to submit its expert report by May 17, 2010. Trial is expected to take place in mid
to late 2010.
Mallon vs. Xcel Energy Inc. — In August 2007, Xcel Energy, PSCo and PSRI (hereafter ‘‘Plaintiffs’’) commenced a
lawsuit in Colorado state court against Theodore Mallon and TransFinancial Corporation seeking damages for, among
other things, breach of contract and breach of fiduciary duties associated with the sale of COLI policies. In May 2008,
Plaintiffs filed an amended complaint that, among other things, adds Provident Life & Accident Insurance Company
(Provident) as a defendant and asserts claims for breach of contract, unjust enrichment and fraudulent concealment
against the insurance company. On June 23, 2008, Provident filed a motion to dismiss the complaint. On Oct. 22,
2008, the court granted Provident’s motion in part, but denied the motion with respect to a majority of the core causes
of action asserted by Plaintiffs. In September 2009, Plaintiffs reached a settlement with Mallon and TransFinancial
Corporation. Pursuant to the terms of the agreement, Mallon agreed to pay Plaintiffs a specified amount and the parties
agreed to mutually release each other from all claims. Plaintiffs continue to prosecute their claims against Provident. In
November 2009, Plaintiffs and Provident filed motions for partial summary judgment, which the court subsequently
granted in part in favor of Plaintiffs with respect to an interpretation of the policies. On Feb. 11, 2010, the court
denied Provident’s motion for partial summary judgment. Trial for this lawsuit was continued to Aug. 16, 2010.
Cabin Creek Hydro Generating Station Accident — In October 2007, employees of RPI Coatings Inc. (RPI), a
contractor retained by PSCo, were applying an epoxy coating to the inside of a penstock at PSCo’s Cabin Creek Hydro
Generating Station near Georgetown, Colo. A fire occurred inside a pipe used to deliver water from a reservoir to the
hydro facility. Five RPI employees were unable to exit the pipe and rescue crews confirmed their deaths. The accident
was investigated by several state and federal agencies, including the federal Occupational Safety and Health
Administration (OSHA) and the U. S. Chemical Safety Board and the Colorado Bureau of Investigations.
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