Xcel Energy 2010 Annual Report Download - page 143

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133
WYCO was formed as a joint venture with CIG to develop and lease natural gas pipeline, storage, and compression facilities.
Xcel Energy has a 50 percent ownership interest in WYCO. In 2009, WYCO’s Totem gas storage facilities were placed in
service. WYCO leases the facilities to CIG, and CIG operates the facilities, providing natural gas storage services to PSCo under
a service arrangement that commenced on July 1, 2009.
PSCo accounts for its Totem natural gas storage service arrangement with CIG as a capital lease in accordance with the
authoritative guidance on lease accounting. As a result, PSCo has a $149.9 million capital lease obligation recorded for the
arrangement as of Dec. 31, 2010. WYCO is expected to incur approximately $4.4 million of additional construction costs, 50
percent of which will be paid by Xcel Energy, to finalize construction and make Totem operational at full storage capacity. Xcel
Energy eliminates 50 percent of the capital lease obligation related to WYCO in the consolidated balance sheet along with an
equal amount of Xcel Energy’s equity investment in WYCO.
Following is a summary of property held under capital leases:
(Millions of Dollars) 2010 2009
Storage, leaseholds and rights .............................................................. $ 196.1 $ 183.6
Gas pipeline .............................................................................. 20.7 20.7
Property held under capital lease ........................................................... 216.8 204.3
Accumulated depreciation ................................................................. (26.6) (21.3)
Total property held under capital leases, net ................................................. $ 190.2 $ 183.0
The remainder of the leases, primarily for office space, railcars, generating facilities, trucks, aircraft, cars and power-operated
equipment, are accounted for as operating leases. Total expenses under operating lease obligations for Xcel Energy and its
subsidiaries was approximately $197.4 million, $209.5 million, and $176.9 million for 2010, 2009 and 2008, respectively. These
expenses include payments for capacity recorded to electric fuel and purchased power expenses for purchase power agreements
accounted for as operating leases of $163.7 million, $171.3 million, and $130.3 million in 2010, 2009 and 2008, respectively.
Included in the future commitments under operating leases are estimated future payments under purchase power agreements that
have been accounted for as operating leases in accordance with the applicable accounting guidance. Future commitments under
operating and capital leases are:
(Millions of Dollars)
Other
Operating
Leases
Purchase
Power
Agreement
Operating
Leases (a) (b)
Total
Operating
Leases Capital
Leases
2011 ........................................................ $ 28.4 $ 148.9 $ 177.3 $ 18.5
2012 ........................................................ 24.1 159.0 183.1 17.6
2013 ........................................................ 22.8 173.4 196.2 17.4
2014 ........................................................ 22.6 180.6 203.2 17.3
2015 ........................................................ 21.5 182.0 203.5 16.1
Thereafter ................................................... 104.1 2,082.6 2,186.7 330.2
Total minimum obligation .................................. 417.1
Interest component of obligation .............................. (301.8)
Present value of minimum obligation ...................... $ 115.3
(a) Amounts do not include purchase power agreements accounted for as executory contracts.
(b) Purchase power agreement operating leases contractually expire through 2033.
Technology Agreements — Xcel Energy has a contract that extends through 2015 with International Business Machines Corp.
(IBM) for information technology services. The contract is cancelable at Xcel Energy’s option, although there are financial
penalties for early termination. In 2010, Xcel Energy paid IBM $93.6 million under the contract and $2.0 million for other project
business. In 2009, Xcel Energy paid IBM $96.6 million under the contract and $1.2 million for other project business. The
contract also has a committed minimum payment each year from 2011 through September 2015.