Xcel Energy 2010 Annual Report Download - page 142

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Xcel Energy has evaluated each of these variable interest entities for possible consolidation, including review of qualitative
factors such as the length and terms of the contract, control over O&M, historical and estimated future fuel and electricity prices,
and financing activities. Xcel Energy has concluded that these entities are not required to be consolidated in its consolidated
financial statements because it does not have the power to direct the activities that most significantly impact the entities’
economic performance. Xcel Energy had approximately 5,012 MW of capacity under long-term purchased power agreements as
of Dec. 31, 2010 and Dec. 31, 2009 with entities that have been determined to be variable interest entities.
Fuel Contracts — SPS purchases all of its coal requirements for its Harrington and Tolk electric generating stations from TUCO
under contracts for those facilities that expire in 2016 and 2017, respectively. TUCO arranges for the purchase, receiving,
transporting, unloading, handling, crushing, weighing, and delivery of coal to meet SPS’ requirements. TUCO is responsible for
negotiating and administering contracts with coal suppliers, transporters and handlers.
No significant financial support has been, or is in the future, required to be provided to TUCO by SPS, other than contractual
payments for delivered coal. However, the fuel contracts have been determined to create a variable interest in TUCO due to SPS’
reimbursement of certain fuel procurement costs, and therefore TUCO is a variable interest entity. SPS has concluded that it is not
the primary beneficiary of TUCO because SPS does not have the power to direct the activities that most significantly impact
TUCO’s economic performance.
Low-Income Housing Limited Partnerships — Eloigne and NSP-Wisconsin have entered into limited partnerships for the
construction and operation of affordable rental housing developments which qualify for low-income housing tax credits. Xcel
Energy has determined Eloigne and NSP-Wisconsin’s low-income housing limited partnerships to be variable interest entities
primarily due to contractual arrangements within each limited partnership that establish sharing of ongoing voting control and
profits and losses that does not consistently align with the partners’ proportional equity ownership. These limited partnerships are
designed to qualify for low-income housing tax credits, and Eloigne and NSP-Wisconsin generally receive a larger allocation of
the tax credits than the general partners at inception of the arrangements. Xcel Energy has determined that Eloigne and NSP-
Wisconsin have the power to direct the activities that most significantly impact these entities’ economic performance, and
therefore Xcel Energy consolidates these limited partnerships in its consolidated financial statements.
Equity financing for these entities has been provided by Eloigne and NSP-Wisconsin and the general partner of each limited
partnership, and Xcel Energy’s risk of loss is limited to its capital contributions, adjusted for any distributions and its share of
undistributed profits and losses; no significant additional financial support has been, or is in the future, required to be provided to
the limited partnerships by Eloigne or NSP-Wisconsin. Mortgage-backed debt typically comprises the majority of the financing at
inception of each limited partnership and is paid over the life of the limited partnership arrangement. Obligations of the limited
partnerships are generally secured by the housing properties of each limited partnership, and the creditors of each limited
partnership have no significant recourse to Xcel Energy or its subsidiaries. Likewise, the assets of the limited partnerships may
only be used to settle obligations of the limited partnerships, and not those of Xcel Energy or its subsidiaries.
Amounts reflected in Xcel Energy’s consolidated balance sheets for the Eloigne and NSP-Wisconsin low-income housing limited
partnerships include the following:
(Thousands of Dollars) Dec. 31, 2010 Dec. 31, 2009
Current assets ............................................................................. $ 3,794 $ 3,674
Property, plant and equipment, net .......................................................... 97,602 103,552
Other noncurrent assets .................................................................... 8,236 7,577
Total assets ............................................................................. $ 109,632 $ 114,803
Current liabilities ......................................................................... $ 11,884 $ 12,315
Mortgages and other long-term debt payable ................................................ 53,195 54,927
Other noncurrent liabilities ................................................................. 8,333 8,250
Total liabilities .......................................................................... $ 73,412 $ 75,492
Leases — Xcel Energy and its subsidiaries lease a variety of equipment and facilities used in the normal course of business. Three
of these leases qualify as capital leases and are accounted for accordingly. The assets and liabilities acquired under capital leases
are recorded at the lower of fair market value or the present value of future lease payments and are amortized over their actual
contract term in accordance with practices allowed by regulators.