Xcel Energy 2009 Annual Report Download - page 99

XCEL ENERGY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Business and System of Accounts — Xcel Energy’s utility subsidiaries are engaged principally in the generation, purchase,
transmission, distribution and sale of electricity and in the purchase, transportation, distribution and sale of natural gas.
The utility subsidiaries are subject to regulation by the FERC and state utility commissions. All of the utility
subsidiaries’ accounting records conform to the FERC uniform system of accounts or to systems required by various
state regulatory commissions, which are the same in all material respects.
Principles of Consolidation — In 2009, Xcel Energy’s continuing operations included the activity of four utility
subsidiaries that serve electric and natural gas customers in eight states. These utility subsidiaries are NSP-Minnesota,
NSP-Wisconsin, PSCo and SPS. These utilities serve customers in portions of Colorado, Michigan, Minnesota, New
Mexico, North Dakota, South Dakota, Texas and Wisconsin. WGI, an interstate natural gas pipeline company, and
Xcel Energy WYCO Inc., a joint venture with CIG to develop and lease natural gas pipeline, storage, and compression
facilities, are also included in continuing regulated utility operations.
Xcel Energy’s nonregulated subsidiary in continuing operations is Eloigne, which invests in rental housing projects that
qualify for low-income housing tax credits. Xcel Energy owns the following additional direct subsidiaries, some of which
are intermediate holding companies with additional subsidiaries: Xcel Energy Wholesale Group Inc., Xcel Energy
Markets Holdings Inc., Xcel Energy Ventures Inc., Xcel Energy Retail Holdings Inc., Xcel Energy Communications
Group Inc., and Xcel Energy Services Inc. Xcel Energy and its subsidiaries collectively are referred to as Xcel Energy.
Xcel Energy in the past had several other subsidiaries, which were sold or divested. For more information, see Note 4 to
the consolidated financial statements.
In 2007, NSP-Minnesota obtained 100 percent ownership in NMC. Accordingly, the results of operations of NMC and
the estimated fair value of assets and liabilities were included in NSP-Minnesota’s consolidated financial statements from
the transaction date. NSP-Minnesota has reintegrated its nuclear operations into its generation operations. The NRC
approved the transfer of the nuclear operating licenses from NMC to NSP-Minnesota on Sept. 22, 2008.
Xcel Energy uses the equity method of accounting for its investments in partnerships, joint ventures and certain projects
for which it does not have a controlling financial interest. Under this method, a proportionate share of pretax income is
recorded as equity earnings of unconsolidated subsidiaries. In the consolidation process, all intercompany transactions
and balances are eliminated. Xcel Energy has investments in several plants and transmission facilities jointly owned with
other utilities. These projects are accounted for on a proportionate consolidation basis, consistent with industry practice.
For more information, see Note 7 to the consolidated financial statements.
Revenue Recognition — Revenues related to the sale of energy are generally recorded when service is rendered or energy
is delivered to customers. However, the determination of the energy sales to individual customers is based on the
reading of their meter, which occurs on a systematic basis throughout the month. At the end of each month, amounts
of energy delivered to customers since the date of the last meter reading are estimated and the corresponding unbilled
revenue is estimated. Xcel Energy presents its revenue net of any excise or other fiduciary-type taxes or fees.
Xcel Energy’s utility subsidiaries have various rate-adjustment mechanisms in place that currently provide for the
recovery of natural gas and electric fuel costs, as well as purchased energy costs. These cost-adjustment tariffs may
increase or decrease the level of costs recovered through base rates and are revised periodically for any difference
between the total amount collected under the clauses and the recoverable costs incurred. Where applicable, under
governing state regulatory commission rate orders, fuel costs over-recoveries (the excess of fuel revenue billed to
customers over fuel costs incurred) are deferred as current regulatory liabilities and under-recoveries (the excess of fuel
costs incurred over fuel revenues billed to customers) are deferred as current regulatory assets. A summary of significant
rate-adjustment mechanisms follows:
• NSP-Minnesota’s rates include a cost-of-fuel-and-purchased-energy and a cost-of-gas recovery mechanism allowing
recovery of the respective costs, which are trued-up on a two-month and annual basis, respectively. The electric
cost-of-fuel-and-purchased-energy mechanism in North Dakota also provides a sharing among shareholders and
customers of certain margins on short-term wholesale and commodity trading. NSP-Minnesota’s rates include a
rider for cost recovery of DSM program costs as well as recovery of a financial incentive for meeting energy
savings goals.
89