Xcel Energy 2009 Annual Report Download - page 40

Capability and Demand
PSCo projects peak day natural gas supply requirements for firm sales and backup transportation, which include
transportation customers contracting for firm supply backup, to be 1,897,604 MMBtu. In addition, firm transportation
customers hold 574,910 MMBtu of capacity for PSCo without supply backup. Total firm delivery obligation for PSCo
is 2,472,514 MMBtu per day. The maximum daily deliveries for PSCo in 2009 for firm and interruptible services were
1,873,412 MMBtu on Dec. 8, 2009.
PSCo purchases natural gas from independent suppliers. These purchases are generally priced based on market indices
that reflect current prices. The natural gas is delivered under transportation agreements with interstate pipelines. These
agreements provide for firm deliverable pipeline capacity of approximately 1,829,862 MMBtu per day, which includes
834,277 MMBtu of supplies held under third-party underground storage agreements. During 2009, a capacity release
contract of 30,000 MMBtu per day of firm pipeline capacity expired, and another 33,850 MMBtu per day was released
to PSCo electric operations, resulting in a net reduction of 63,850 MMBtu per day in pipeline capacity. Also during
2009, 165,521 MMBtu of storage capacity was converted to firm transportation with balancing service attached. In
addition, PSCo operates three company-owned underground storage facilities, which provide about 41,000 MMBtu of
natural gas supplies on a peak day. The balance of the quantities required to meet firm peak day sales obligations are
primarily purchased at PSCo’s city gate meter stations and a small amount is received directly from wellhead sources.
PSCo is required by CPUC regulations to file a natural gas purchase plan by June of each year projecting and
describing the quantities of natural gas supplies, upstream services and the costs of those supplies and services for the
12-month period of the following year. PSCo is also required to file a natural gas purchase report by October of each
year reporting actual quantities and costs incurred for natural gas supplies and upstream services for the previous
12-month period.
Natural Gas Supply and Costs
PSCo actively seeks natural gas supply, transportation and storage alternatives to yield a diversified portfolio that
provides increased flexibility, decreased interruption and financial risk, and economical rates. In addition, PSCo
conducts natural gas price hedging activities that have been approved by the CPUC. This diversification involves
numerous supply sources with varied contract lengths.
The following table summarizes the average delivered cost per MMBtu of natural gas purchased for resale by PSCo’s
regulated retail natural gas distribution business:
2009 .................................................................. $5.13
2008 .................................................................. 7.04
2007 .................................................................. 5.87
PSCo has natural gas supply, transportation and storage agreements that include obligations for the purchase and/or
delivery of specified volumes of natural gas or to make payments in lieu of delivery. At Dec. 31, 2009, PSCo was
committed to approximately $1.5 billion in such obligations under these contracts, which expire in various years from
2010 through 2029.
PSCo purchases natural gas by optimizing a balance of long-term and short-term natural gas purchases, firm
transportation and natural gas storage contracts. During 2009, PSCo purchased natural gas from approximately 38
suppliers.
See additional discussion of natural gas costs under Factors Affecting Results of Continuing Operations in Item 7 —
Management’s Discussion and Analysis.
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