Xcel Energy 2010 Annual Report Download - page 153

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The external funds are held in trust and in escrow. The portion in escrow is subject to refund if approved by the various
commissions. The MPUC authorized the return of $23.5 million of funds associated with the Monticello plant for the Minnesota
retail jurisdictions. This amount was withdrawn in December 2009 and was refunded on customers’ bills in February 2010. An
amount of approximately $5.9 million was also withdrawn from the Monticello plant portion of the escrow fund in March of 2010
in preparation for a refund to Wisconsin and Michigan retail customers. The funds have not yet been refunded as of Dec. 31,
2010, and the timing of the refunds will be determined in future rate cases in each jurisdiction.
At Dec. 31, 2010, NSP-Minnesota recorded and recovered in rates cumulative decommissioning expense of $1.4 billion. The
following table summarizes the funded status of NSP-Minnesota’s decommissioning obligation based on approved regulatory
recovery parameters from the most recently approved decommissioning study. Xcel Energy believes future decommissioning cost
expense, if necessary, will continue to be recovered in customer rates. These amounts are not those recorded in the financial
statements for the ARO.
(Thousands of Dollars) 2010 2009
Estimated decommissioning cost obligation (2008 dollars) ................................. $ 2,308,196 $ 2,308,196
Effect of escalating costs (to 2010 and 2009 dollars, respectively, at 2.89 percent per year) ... 135,342 66,707
Estimated decommissioning cost obligation (in current dollars) ............................ 2,443,538 2,374,903
Effect of escalating costs to payment date (2.89 percent per year) .......................... 2,672,825 2,741,460
Estimated future decommissioning costs (undiscounted) .................................. 5,116,363 5,116,363
Effect of discounting obligation (using risk-free interest rate) .............................. (3,856,516) (3,973,493)
Discounted decommissioning cost obligation ............................................. 1,259,847 1,142,870
Assets held in external decommissioning trust ............................................. 1,350,630 1,248,739
Excess assets in external trust compared to discounted decommissioning obligation .......... $ (90,783) $ (105,869)
Decommissioning expenses recognized include the following components:
(Thousands of Dollars) 2010 2009 2008
Annual decommissioning cost expense reported as depreciation expense:
Externally funded .......................................................... $ 934 $ 2,849 $ 43,239
Internally funded (including interest costs) .................................. (777) (884) (819)
N
et decommissioning expense recorde
d
....................................... $ 157 $ 1,965 $ 42,420
Reductions to expense for internally-funded portions in 2010, 2009 and 2008 are a direct result of the 2008 decommissioning
study jurisdictional allocation and 100 percent external funding approval, effectively unwinding the remaining internal fund over
the remaining operating life of the unit. The 2008 nuclear decommissioning filing approved in 2009 has been used for the
regulatory presentation. The change in estimated decommissioning obligations was calculated using a cost estimate for
Monticello assuming a 60-year operating life.
Nuclear Decommissioning Fund — The NRC requires NSP-Minnesota to maintain a portfolio of investments to fund the costs
of decommissioning its nuclear generating plants. Together with all accumulated earnings or losses, the assets of the nuclear
decommissioning fund are legally restricted for the purpose of decommissioning the Monticello and Prairie Island nuclear
generating plants. The fund contains cash equivalents, debt securities, equity securities, and other funds - all classified as
available-for-sale securities under the applicable accounting guidance. NSP-Minnesota plans to reinvest matured securities until
decommissioning begins.
NSP-Minnesota recognizes the costs of funding the decommissioning of its nuclear generating plants over the lives of the plants,
assuming rate recovery of all costs. Given the purpose and legal restrictions on the use of nuclear decommissioning fund assets,
realized and unrealized gains on fund investments over the life of the fund are deferred as an offset of NSP-Minnesota’s
regulatory asset for nuclear decommissioning costs. Consequently, any realized and unrealized gains and losses on securities in
the nuclear decommissioning fund, including any other-than-temporary impairments, are deferred as a component of the
regulatory asset for nuclear decommissioning. Deferred unrealized gains for the decommissioning fund were $82.5 million and
$74.4 million at Dec. 31, 2010 and 2009, respectively, and unrealized losses and amounts recorded as other than temporary
impairments were $65.2 million and $138.7 million at Dec. 31, 2010 and 2009, respectively.