Xcel Energy 2010 Annual Report Download - page 150

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NSP-Minnesota purchases insurance for property damage and site decontamination cleanup costs from Nuclear Electric Insurance
Ltd. (NEIL). The coverage limits are $2.3 billion for each of NSP-Minnesota’s two nuclear plant sites. NEIL also provides
business interruption insurance coverage, including the cost of replacement power obtained during certain prolonged accidental
outages of nuclear generating units. Premiums are expensed over the policy term. All companies insured with NEIL are subject to
retroactive premium adjustments if losses exceed accumulated reserve funds. Capital has been accumulated in the reserve funds
of NEIL to the extent that NSP-Minnesota would have no exposure for retroactive premium assessments in case of a single
incident under the business interruption and the property damage insurance coverage. However, in each calendar year, NSP-
Minnesota could be subject to maximum assessments of approximately $15.8 million for business interruption insurance and
$32.6 million for property damage insurance if losses exceed accumulated reserve funds.
Legal Contingencies
Lawsuits and claims arise in the normal course of business. Management, after consultation with legal counsel, has recorded an
estimate of the probable cost of settlement or other disposition of them. The ultimate outcome of these matters cannot presently be
determined. Accordingly, the ultimate resolution of these matters could have a material adverse effect on Xcel Energy’s financial
position and results of operations.
Environmental Litigation
State of Connecticut vs. Xcel Energy Inc. et al. — In 2004, the attorneys general of eight states and New York City, as well as
several environmental groups, filed lawsuits in U.S. District Court in the Southern District of New York against five utilities,
including Xcel Energy, to force reductions in CO2 emissions. The other utilities include American Electric Power Co., Southern
Co., Cinergy Corp. (merged into Duke Energy Corporation) and Tennessee Valley Authority. The lawsuits allege that CO2
emitted by each company is a public nuisance. The lawsuits do not demand monetary damages. Instead, the lawsuits ask the court
to order each utility to cap and reduce its CO2 emissions. In September 2005, the court granted plaintiffs’ motion to dismiss on
constitutional grounds. In August 2010, this decision was reversed by the Second Circuit and is currently on appeal before the
United States Supreme Court. Oral arguments will be presented to the Supreme Court on April 19, 2011 and a decision is
expected in the summer of 2011.
Comer vs. Xcel Energy Inc. et al. — In 2006, Xcel Energy received notice of a purported class action lawsuit filed in U.S.
District Court in the Southern District of Mississippi. The lawsuit names more than 45 oil, chemical and utility companies,
including Xcel Energy, as defendants and alleges that defendants’ CO2 emissions “were a proximate and direct cause of the
increase in the destructive capacity of Hurricane Katrina.” Plaintiffs allege negligence and public and private nuisance and seek
damages related to the loss resulting from the hurricane. Xcel Energy believes this lawsuit is without merit. In August 2007, the
court dismissed the lawsuit in its entirety against all defendants on constitutional grounds. Plaintiffs’ subsequent appeals of this
decision were unsuccessful, rendering the District Court’s dismissal the final determination.
Native Village of Kivalina vs. Xcel Energy Inc. et al. — In 2008, the City and Native Village of Kivalina, Alaska, filed a lawsuit
in U.S. District Court for the Northern District of California against Xcel Energy and 23 other utilities, oil, gas and coal
companies. Plaintiffs claim that defendants’ emission of CO2 and other GHGs contribute to global warming, which is harming
their village. Xcel Energy believes the claims asserted in this lawsuit are without merit and joined with other utility defendants in
filing a motion to dismiss in June 2008. In October 2009, the U.S. District Court dismissed the lawsuit on constitutional grounds.
In November 2009, plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. It is unknown when the
Ninth Circuit will render a final opinion. The amount of damages claimed by plaintiffs is unknown, but likely includes the cost of
relocating the village of Kivalina. Plaintiffs’ alleged relocation is estimated to cost between $95 million to $400 million. No
accrual has been recorded for this matter.
Employment, Tort and Commercial Litigation
Qwest vs. Xcel Energy Inc. — In 2004, an employee of PSCo was seriously injured when a pole owned by Qwest malfunctioned.
In September 2005, the employee commenced an action against Qwest in Colorado state court in Denver. In April 2006, Qwest
filed a third party complaint against PSCo based on terms in a joint pole use agreement between Qwest and PSCo. In May 2007,
the matter was tried and the jury found Qwest solely liable for the accident and this determination resulted in an award of
damages in the amount of approximately $90 million. In April 2009, the Colorado Court of Appeals affirmed the jury verdict
insofar as it relates to claims asserted by Qwest against PSCo. In February 2010, the Colorado Supreme Court agreed to review
the Court of Appeals’ decision as to the punitive damages issue but will not review the Court of Appeals’ decision as it relates to
PSCo. Oral arguments were presented in December 2010. It is unknown when the Colorado Supreme Court will render a
decision. No accrual has been recorded for this matter.