Xcel Energy 2010 Annual Report Download - page 41

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NSP-Wisconsin has certain natural gas supply, transportation and storage agreements that include obligations for the purchase
and/or delivery of specified volumes of natural gas or to make payments in lieu of delivery. At Dec. 31, 2010, NSP-Wisconsin
was committed to approximately $114 million in such obligations under these contracts.
NSP-Wisconsin purchased firm natural gas supply utilizing short-term agreements from approximately 12 domestic and Canadian
suppliers. This diversity of suppliers and contract lengths allows NSP-Wisconsin to maintain competition from suppliers and
minimize supply costs.
See Item 7 for further discussion of natural gas costs.
PSCo
Public Utility Regulation
Summary of Regulatory Agencies and Areas of Jurisdiction — PSCo is regulated by the CPUC with respect to its facilities,
rates, accounts, services and issuance of securities. PSCo holds a FERC certificate that allows it to transport natural gas in
interstate commerce without PSCo becoming subject to full FERC jurisdiction under the federal Natural Gas Act. PSCo is also
subject to the jurisdiction of the FERC with respect to certain natural gas transactions in interstate commerce. PSCo is subject to
the DOT and CPUC with regards to pipeline safety compliance.
Purchased Gas and Conservation Cost-Recovery Mechanisms — PSCo has two retail adjustment clauses that recover purchased
gas and other resource costs:
● GCA — The GCA mechanism allows PSCo to recover its actual costs of purchased gas and transportation to meet the
requirements of its customers. The GCA is revised quarterly to allow for changes in gas rates.
● DSMCA — PSCo has a low-income energy assistance program. The costs of this energy conservation and weatherization
program are recovered through the gas DSMCA.
● PDRA — The PDRA recovers revenue lost to decreasing use per customer beyond a threshold. No revenue is currently
recovered through this clause.
PBRP and QSP Requirements — The CPUC established a natural gas QSP. This regulatory plan includes a natural gas QSP that
provides for bill credits to customers if PSCo does not achieve certain performance targets relating to natural gas leak repair time
and customer service through 2012. PSCo regularly monitors and records as necessary an estimated customer refund obligation
under the PBRP. In April of each year following the measurement period, PSCo files its proposed rate adjustment under the
PBRP. The CPUC conducts proceedings to review and approve these rate adjustments annually.
Capability and Demand
PSCo projects peak day natural gas supply requirements for firm sales and backup transportation, which include transportation
customers contracting for firm supply backup, to be 1,908,006 MMBtu. In addition, firm transportation customers hold 562,175
MMBtu of capacity for PSCo without supply backup. Total firm delivery obligation for PSCo is 2,470,181 MMBtu per day. The
maximum daily deliveries for PSCo in 2010 for firm and interruptible services were 1,820,806 MMBtu on Jan. 7, 2010.
PSCo purchases natural gas from independent suppliers, generally based on market indices that reflect current prices. The natural
gas is delivered under transportation agreements with interstate pipelines. These agreements provide for firm deliverable pipeline
capacity of approximately 1,838,824 MMBtu per day, which includes 849,568 MMBtu of supplies held under third-party
underground storage agreements. In addition, PSCo operates three company-owned underground storage facilities, which provide
about 41,000 MMBtu of natural gas supplies on a peak day. The balance of the quantities required to meet firm peak day sales
obligations are primarily purchased at PSCo’s city gate meter stations and a small amount is received directly from wellhead
sources.
PSCo is required by CPUC regulations to file a natural gas purchase plan by June of each year projecting and describing the
quantities of natural gas supplies, upstream services and the costs of those supplies and services for the 12-month period of the
following year. PSCo is also required to file a natural gas purchase report by October of each year reporting actual quantities and
costs incurred for natural gas supplies and upstream services for the previous 12-month period.