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XCEL ENERGY 2011 ANNUAL REPORT
energized

Table of contents

  • Page 1
    energized XCEL ENERGY 2011 ANNUAL REPORT

  • Page 2
    ... in Minneapolis, Minn., Xcel Energy operates in eight states. The company provides a comprehensive portfolio of energy-related products and services to 3.4 million electricity customers and 1.9 million natural gas customers. FINANCIAL HIGHLIGHTS 2011 Ongoing earnings per share Total GAAP earnings...

  • Page 3
    ... BEN FOWKE CHAIRMAN, PRESIDENT AND CEO As your new chairman, president and CEO, I am honored to lead Xcel Energy and will say without hesitation that this is the best energy company in the nation. Our strong financial performance, operational excellence, customer focus and proactive environmental...

  • Page 4
    ...pending all regulatory approvals. Our public safety efforts are another measure of operational excellence. To meet new federal guidelines, we are inspecting natural gas transmission systems across our service territory, paying particular attention to pipelines near public areas. We will invest about...

  • Page 5
    DENVER INTERNATIONAL AIRPORT

  • Page 6
    ...meet the state's Clean Air-Clean Jobs Act requirements represents another investment opportunity with many benefits. Over the next few years, we plan to retire older coal-fired units, add modern emission controls to newer coal-fired units, build new natural gas plants and switch other facilities...

  • Page 7
    ... Monticello plant and plan to complete the upgrade in the spring of 2013 if approved. Meanwhile, we are asking the Minnesota Public Utilities Commission to reconfirm our plan to increase generating capacity at Prairie Island due to recent developments XCEL ENERGY 2011฀ANNUAL฀REPORT฀•฀5

  • Page 8
    MAPLEWOOD MALL ST. PAUL, MINNESOTA

  • Page 9
    ... the Environmental Protection Agency (EPA). The lawsuit challenged and sought a stay of a new Clean Air Act rule called the Cross-State Air Pollution Rule (CSAPR). When it issued CSAPR, the EPA unexpectedly required power plants in Texas to comply with its emission reduction Xcel Energy's Jeremy...

  • Page 10
    ... employees who are committed to operational excellence, their customers, their communities and environmental leadership. The DVD also includes profiles of Chairman, President and CEO Ben Fowke and Senior Vice President and Chief Financial Officer Teresa Madden. XCEL ENERGY 2011฀ANNUAL฀REPORT...

  • Page 11
    ....) 414 Nicollet Mall Minneapolis, MN 55401 (Address of principal executive offices) Registrant's telephone number, including area code: 612-330-5500 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $2.50 par value per share $7.60 Junior Subordinated Notes...

  • Page 12
    ... Item 1 - Business ...DEFINITION OF ABBREVIATIONS AND INDUSTRY TERMS ...COMPANY OVERVIEW ...ELECTRIC UTILITY OPERATIONS ...NSP-Minnesota ...NSP-Wisconsin ...PSCo...SPS ...Electric Operating Statistics ...NATURAL GAS UTILITY OPERATIONS ...NSP-Minnesota ...NSP-Wisconsin ...PSCo...Natural Gas Operating...

  • Page 13
    ... Electric, Purchased Gas and Resource Adjustment Clauses CIP DSM DSMCA Cheyenne Light, Fuel and Power Company Eloigne Company New Century Energies, Inc. Nuclear Management Company, LLC Northern States Power Company, a Minnesota corporation The integrated electric production and transmission system...

  • Page 14
    ... Air Pollution Rule Construction work in progress Direct stock purchase plan Edison Electric Institute Electric generating unit Earnings per share Early retiree reimbursement program Effective tax rate Financial Accounting Standards Board Financial transmission right Generally accepted accounting...

  • Page 15
    ... Fuel Storage, LLC PJM Interconnection, LLC Purchased power agreement Provident Life & Accident Insurance Company Potentially responsible party Performance share plan Photovoltaic Renewable energy credit Regional expansion criteria benefits Return on equity Right of first refusal Renewable portfolio...

  • Page 16
    ... an interstate natural gas pipeline company, these companies comprise the continuing regulated utility operations. Xcel Energy Inc. was incorporated under the laws of Minnesota in 1909. Xcel Energy's executive offices are located at 414 Nicollet Mall, Minneapolis, Minn. 55401. Its website address is...

  • Page 17
    ... former employees' life insurance policies. Following settlement with the IRS during 2007, such policies were terminated. PSCo also holds a controlling interest in several other relatively small ditch and water companies. SPS SPS is an operating utility engaged primarily in the generation, purchase...

  • Page 18
    ...NSP-Minnesota's electric resource plans for meeting customers' future energy needs. The MPUC also certifies the need for generating plants greater than 50 MW and transmission lines greater than 100 KV that will be located within the state. No large power plant or transmission line may be constructed...

  • Page 19
    ... periodic payment to secure the capacity and a charge for the associated energy actually purchased. NSP-Minnesota also makes short-term purchases to meet system load and energy requirements, to replace generation from company-owned units under maintenance or during outages, to meet operating reserve...

  • Page 20
    ...disposal of used nuclear fuel. On Jan. 26, 2012, the Blue Ribbon Commission report was issued. The report provides numerous policy recommendations that will be considered by the Secretary of Energy. In June 2010, the ASLB issued a ruling that the DOE could not withdraw the Yucca Mountain application...

  • Page 21
    ...and licensing processes. In July 2011, the task force released its recommendations. The report confirmed the safety of U.S. nuclear energy facilities and recommends actions to enhance U.S. nuclear plant readiness to safely manage severe events. In October 2011, the NRC Staff identified the near-term...

  • Page 22
    ... for electric generation, the percentage of total fuel requirements represented by each category of fuel and the total weighted average cost of all fuels. Coal* NSP System Generating Plants Cost Percent Cost Nuclear Percent Natural Gas Cost Percent Weighted Average Fuel Cost 2011...2010...2009...

  • Page 23
    ...portfolio includes wind, biomass, solar and hydroelectric power from both owned generating facilities and purchased power agreements. Renewable energy comprised 19.7 percent and 18.3 percent of the NSP System's total owned and purchased energy for 2011 and 2010, respectively. Biomass and solar power...

  • Page 24
    ... the facilities may be sited and built. NSPWisconsin is subject to the jurisdiction of the FERC with respect to its wholesale electric operations, hydroelectric generation licensing, accounting practices, wholesale sales for resale, the transmission of electricity in interstate commerce, compliance...

  • Page 25
    ...'s total bill. Wind Energy Service - Wind Energy Service is a premium service for those customers who voluntarily choose to pay an additional charge to increase the level of renewable resource generation used to meet the customer's load requirements. TCA - The TCA recovers transmission plant revenue...

  • Page 26
    ... the non-PSCo joint owners of Comanche Unit 3, which was offline when the peak demand occurred. Energy Sources and Related Transmission Initiatives PSCo expects to meet its system capacity requirements through existing electric generating stations, power purchases, new generation facilities, DSM...

  • Page 27
    ... solar power in the San Luis Valley to customers. The line was originally expected to be placed in-service in 2013; however, due to delays in the siting and permitting of the line, the in-service date was delayed. In October 2011, in conjunction with the filing of the electric resource plan, PSCo...

  • Page 28
    ... Energy Sources PSCo's renewable energy portfolio includes wind, biomass, solar, and hydroelectric power from both owned generating facilities and purchased power agreements. Renewable energy comprised 14.6 percent and 11.7 percent of PSCo's total owned and purchased energy for 2011 and 2010...

  • Page 29
    ...of aggregate capacity have been installed in Colorado under this program as of Dec. 31, 2011 and Dec. 31, 2010, respectively. Wholesale Commodity Marketing Operations PSCo conducts various wholesale marketing operations, including the purchase and sale of electric capacity, energy and energy related...

  • Page 30
    ... peak demand for SPS occurred on Aug. 2, 2011. Energy Sources and Related Transmission Initiatives SPS expects to use existing electric generating stations, power purchases and DSM options to meet its net dependable system capacity requirements. Purchased Power - SPS has contracts to purchase power...

  • Page 31
    ..., Xcel Energy believes that the CSAPR could ultimately require the installation of additional emission controls on some of SPS' coal-fired electric generating units. If compliance is required in a short time frame, SPS may be required to redispatch its system to reduce coal plant operating hours...

  • Page 32
    ...price and credit risk and hedge sales and purchases. See Item 7 for further discussion. Summary of Recent Federal Regulatory Developments The FERC has jurisdiction over rates for electric transmission service in interstate commerce and electricity sold at wholesale, hydro facility licensing, natural...

  • Page 33
    ... Order 1000 compliance filings due in October 2012. Order 1000 will require significant changes in transmission planning and cost allocation mechanisms in the WestConnect where PSCo is located. The impacts of the provisions of Order 1000 regarding transmission planning and cost allocation on SPS and...

  • Page 34
    ... million civil penalty. The FERC contemporaneously issued an order approving changes to the Xcel Energy OATT to allow continued network service arrangements under the tariff. NERC Compliance Audits and Self-Reports - In 2010 and 2011, the NSP System, PSCo and SPS filed self-reports with the MRO, the...

  • Page 35
    ... power review rules effective Jan. 1, 2012. The request is pending FERC action. SPS was reauthorized to sell at market-based rate rules outside its service territory by the FERC in 2010. PSCo was reauthorized to sell at market-based rates outside its service territory in 2011. Presently, Xcel Energy...

  • Page 36
    ... Operating Statistics Electric Sales Statistics 2011 Year Ended Dec. 31 2010 2009 Electric sales (Millions of KWh) Residential ...Large commercial and industrial ...Small commercial and industrial ...Public authorities and other ...Total retail ...Sales for resale ...Total energy sold ...Number...

  • Page 37
    ...Windsource RECs. Xcel Energy uses RECs to meet or exceed state resource requirements and may sell surplus RECs. Includes energy from other sources, including solar, biomass, oil and waste. Distributed generation from the Solar*Rewards program is not included. NATURAL GAS UTILITY OPERATIONS Overview...

  • Page 38
    ... propane-air plants provide a cost-effective alternative to annual fixed pipeline transportation charges to meet the peaks caused by firm space heating demand on extremely cold winter days. NSP-Minnesota is required to file for a change in natural gas supply contract levels to meet peak demand, to...

  • Page 39
    ...propane-air plants provide a cost-effective alternative to annual fixed pipeline transportation charges to meet the peaks caused by firm space heating demand on extremely cold winter days. NSP-Wisconsin is required to file a natural gas supply plan with the PSCW annually to change natural gas supply...

  • Page 40
    ... and distribution pipeline integrity management programs and two projects to replace large transmission pipelines. • • 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...

  • Page 41
    ...During 2011, PSCo purchased natural gas from approximately 41 suppliers. See Items 1A and 7 for further discussion of natural gas supply and costs. SPS Natural Gas Facilities Used for Electric Generation SPS does not provide natural gas service at retail, but purchases and transports natural gas for...

  • Page 42
    ...consideration to encourage the use of clean energy technologies and regulate emissions of GHGs to address climate change. While environmental regulations related to climate change and clean energy continue to evolve, Xcel Energy has undertaken a number of initiatives to meet current requirements and...

  • Page 43
    ..., Xcel Energy Services Inc., September 2011 to present. Previously, Vice President and Chief Nuclear Officer, NSP-Minnesota, September 2007 to September 2011; Site Vice President, NMC Point Beach Nuclear Plant, June 2004 to September 2007; Engineering and Site Support Manager, Tennessee Valley...

  • Page 44
    ... and Controller, Xcel Energy Inc., January 2004 to September 2011; Vice President of Finance, Customer and Field Operations Business Unit, Xcel Energy Inc., August 2003 to January 2004; Interim Chief Financial Officer, Rogue Wave Software, Inc., February 2003 to July 2003; and Corporate Controller...

  • Page 45
    ...more fully below, Xcel Energy is faced with a number of different types of risk. Xcel Energy confronts legislative and regulatory policy and compliance risks, including risks related to climate change and emission of CO2; risks for recovery of capital and operating costs; resource planning and other...

  • Page 46
    ... to increased system stress, including service interruptions. Weather conditions outside of our service territory could also have an impact on our revenues. We buy and sell electricity depending upon system needs and market opportunities. Extreme weather conditions creating high energy demand on...

  • Page 47
    ... operations, including siting and construction of facilities, customer service and the rates that we can charge customers. The FERC has jurisdiction, among other things, over wholesale rates for electric transmission service, the sale of electric energy in interstate commerce and certain natural gas...

  • Page 48
    ...October 2010, the FERC finalized its Order 741 rulemaking addressing the credit policies of organized electric markets, such as MISO and SPP. FERC Order 741 limits the amount of overall credit available to entities operating within organized markets and places restrictions on netting of transactions...

  • Page 49
    ... operating conditions such as generation fuels mix, availability of water for cooling, availability of fuel transportation, electric generation capacity, transmission, etc. Our subsidiary, NSP-Minnesota, is subject to the risks of nuclear generation. NSP-Minnesota's two nuclear stations, Prairie...

  • Page 50
    ... not fully covered by insurance could have a material effect on our financial position and results of operations. For our natural gas transmission or distribution lines located near populated areas, including residential areas, commercial business centers, industrial sites and other public gathering...

  • Page 51
    ...GHG regulations applicable to emissions from existing power plants, although the EPA announced in late September 2011 that this proposed rule will be delayed. We are also currently a party to climate change lawsuits and may be subject to additional climate change lawsuits, including lawsuits similar...

  • Page 52
    ...events and corresponding regulatory action, if any, could result in a material decrease in revenues and may cause significant additional costs (e.g., repairs/insurance) and potentially disrupt our supply and markets for natural gas, oil and other fuels. We operate in a highly regulated industry that...

  • Page 53
    ... of the electric utility plant property of PSCo and SPS is subject to the lien of their first mortgage bond indentures. Electric Utility Generating Stations: NSP-Minnesota Summer 2011 Net Dependable Capability (MW) Station, Location and Unit Fuel Installed Steam: A.S. King-Bayport, Minn., 1 Unit...

  • Page 54
    ..., Wis., 6 Units ...Hydro: Various locations, 63 Units ... Coal/Wood/Natural Gas Wood/Refuse-derived fuel Natural Gas Natural Gas Natural Gas Hydro 1948-1956 1940-1948 1969 1974 1973 Various Total 56 17 13 122 300 135 643 PSCo Summer 2011 Net Dependable Capability (MW) Station, Location and Unit...

  • Page 55
    SPS Summer 2011 Net Dependable Capability (MW) Station, Location and Unit Fuel Installed Steam: Harrington-Amarillo, Texas, 3 Units ...Tolk-Muleshoe, Texas, 2 Units ...Cunningham-Hobbs, N.M., 2 Units ...Jones-Lubbock, Texas, 2 Units ...Maddox-Hobbs, N.M., 1 Unit ...Moore County-Amarillo, Texas, ...

  • Page 56
    ...dividends. Fiscal years ending Dec. 31. 2006 2007 2008 2009 2010 2011 Xcel Energy Inc...EEI Investor-Owned Electrics ...S&P 500 ... $ 100 100 100 $ 102 117 105 $ 88 86 66 $ 106 96 84 $ 123 102 97 $ 150 123 99 Securities Authorized for Issuance Under Equity Compensation Plans Information...

  • Page 57
    ... provides information about our purchases of equity securities that are registered by Xcel Energy Inc. pursuant to Section 12 of the Exchange Act for the year ended Dec. 31, 2011: Issuer Purchases of Equity Securities Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs...

  • Page 58
    ... company. In 2011, Xcel Energy's continuing operations included the activity of four utility subsidiaries that serve electric and natural gas customers in eight states. These utility subsidiaries are NSP-Minnesota, NSP-Wisconsin, PSCo and SPS. These utilities serve customers in portions of Colorado...

  • Page 59
    ... and customer satisfaction; Proactively taking actions to ensure public and employee safety related to our power plants, natural gas pipelines, and our transmission and distribution system; Pursuing environmental leadership by reducing emissions, and expanding renewable energy in a cost-effective...

  • Page 60
    ...to a dispute associated with its COLI program. These COLI policies were owned and managed by PSRI. As a follow on to the 2007 IRS COLI settlement, during 2010, they reached an agreement in principle of Xcel Energy Inc.'s and PSCo's statements of account, dating back to tax year 1993. Upon completion...

  • Page 61
    In 2010, Xcel Energy Inc., PSCo and PSRI entered into a settlement agreement with Provident Life & Accident Insurance Company (Provident) related to all claims asserted by Xcel Energy Inc., PSCo and PSRI against Provident in a lawsuit associated with the discontinued COLI program. Under the terms of...

  • Page 62
    ... continuing operations ...COLI settlement and Medicare Part D ...2010 ongoing diluted earnings per share ...Components of change - 2011 vs. 2010 Higher electric margins ...Higher natural gas margins ...Higher operating and maintenance expenses ...Dilution from DSPP, benefit plans and the 2010 common...

  • Page 63
    ... of Dollars) 2011 Contributions to Income 2010 2009 GAAP income (loss) by segment Regulated electric income ...$ Regulated natural gas income ...Other income (a) ...Segment income - continuing operations ...Xcel Energy Inc. and other costs (a) ...Total income - continuing operations ...Income (loss...

  • Page 64
    ...Total retail electric sales ...Firm natural gas sales ...(a) 0.5% 0.3 0.4 0.9 (0.5)% 0.0 (0.1) (2.5) 0.2% 0.7 0.6 N/A 4.6% 2.6 3.1 (2.9) 0.7% 1.4 1.2 (0.2) 0.9% 1.6 1.4 N/A Adjusted for the October 2010 sale of SPS electric distribution assets to the city of Lubbock, Texas. During 2010, Xcel...

  • Page 65
    ... PSCo renewable energy credit sales ...Other, net ...Total increase in electric revenue ...(a) $ $ 124 102 45 31 19 18 14 (19) (19) 315 The increase in revenue requirements for PSCo generation reflects the acquisition of the Rocky Mountain and Blue Spruce natural gas facilities in late 2010...

  • Page 66
    ...Blue Spruce natural gas facilities at PSCo and retail rate increases in Minnesota, Wisconsin, Texas, North Dakota and Michigan. Electric Revenues (Millions of Dollars) 2010 vs. 2009 Fuel and purchased power cost recovery ...Retail rate increases, including seasonal rates (Colorado, Wisconsin, South...

  • Page 67
    ... PSCo gas in storage ...Retail rate increase (Colorado) ...Purchased natural gas adjustment clause recovery ...Retail sales decrease (excluding weather impact) ...Conservation and DSM incentive ...Other, net ...Total increase in natural gas revenues ... $ $ 13 9 4 3 3 (5) (2) 4 29 2011 Comparison...

  • Page 68
    ... and base rates. Overall, the programs are designed to encourage the operating companies and their retail customers to conserve energy or change energy usage patterns in order to reduce peak demand on the gas or electric system. This, in turn, reduces the need for additional plant capacity, reduces...

  • Page 69
    ...Nobles wind project commencing commercial operations in late 2010, the acquisition of two PSCo gas generation facilities in December 2010, Jones Unit 3 going into service in June 2011 and normal system expansion. The increase was partially offset due to NSP-Minnesota reducing depreciation expense by...

  • Page 70
    ... slowdown in economic growth or a significant increase in interest rates. Fuel Supply and Costs Xcel Energy's operating utilities have varying dependence on coal, natural gas and uranium. Changes in commodity prices are generally recovered through fuel recovery mechanisms and have very little impact...

  • Page 71
    ... on changing energy market and general economic conditions. The electric and natural gas rates charged to customers of Xcel Energy Inc.'s utility subsidiaries are approved by the FERC or the regulatory commissions in the states in which they operate. The rates are generally designed to recover plant...

  • Page 72
    ..., generating facilities throughout the Xcel Energy territory are subject to mercury reduction requirements at the state level. In December 2011, the EPA adopted a regulation setting national emission limits for electric generating units for mercury, certain metals, and acid gas emissions. See Note...

  • Page 73
    .... Employee Benefits Xcel Energy's pension costs are based on an actuarial calculation that includes a number of key assumptions, most notably the annual return level that pension investment assets will earn in the future and the interest rate used to discount future pension benefit payments to...

  • Page 74
    ... and $48.4 million during 2011 and 2010, respectively, to the postretirement health care plans. Xcel Energy expects to contribute approximately $39.1 million during 2012. Xcel Energy recovers employee benefits costs in its regulated utility operations consistent with accounting guidance with the...

  • Page 75
    ... of operating costs related to interim dry cask storage of spent nuclear fuel and site restoration. Discount Rates - Changes in timing or estimated expected cash flows that result in upward revisions to the ARO are calculated using the then-current credit-adjusted risk-free interest rate. The credit...

  • Page 76
    ... products and for various fuels used in generation and distribution activities. Commodity price risk is also managed through the use of financial derivative instruments. Xcel Energy's risk management policy allows it to manage commodity price risk within each rate-regulated operation to the extent...

  • Page 77
    ...obligations. Xcel Energy Inc. and its subsidiaries maintain credit policies intended to minimize overall credit risk and actively monitor these policies to reflect changes and scope of operations. At Dec. 31, 2011, a 10 percent increase in prices would have resulted in an increase in credit exposure...

  • Page 78
    ... was primarily due to the acquisition of two natural-gas fired generation facilities and increased investment in utility operations primarily at PSCo, including the completion of Comanche Unit 3. (Millions of Dollars) 2011 2010 2009 Net cash (used in) provided by financing activities ... $ (205...

  • Page 79
    ... changes in electric and natural gas projected load growth, regulatory decisions, legislative initiatives, reserve margins, the availability of purchased power, alternative plans for meeting long-term energy needs, compliance with future environmental requirements and RPS to install emission-control...

  • Page 80
    ... coal, nuclear fuel and natural gas requirements. Additionally, the utility subsidiaries of Xcel Energy Inc. have entered into agreements with utilities and other energy suppliers for purchased power to meet system load and energy requirements, replace generation from company-owned units under...

  • Page 81
    ..., notes payable, commercial paper and bank lines of credit. The amount and timing of short-term funding needs depend in large part on financing needs for construction expenditures, working capital and dividend payments. Short-Term Investments - Xcel Energy Inc., NSP-Minnesota, NSP-Wisconsin, PSCo...

  • Page 82
    ... of preferred stock and timing differences between debt maturities and refinancings. Credit Facilities - During 2011, NSP-Minnesota, NSP-Wisconsin, PSCo, SPS and Xcel Energy Inc. executed new four-year credit agreements. The total capacity of the credit facilities increased approximately $273...

  • Page 83
    ... of 2012. NSP-Wisconsin may issue approximately $100 million of first mortgage bonds in the second half of 2012. Financing plans are subject to change, depending on capital expenditures, internal cash generation, market conditions and other factors. Off-Balance-Sheet Arrangements Xcel Energy does...

  • Page 84
    ..., consistent with the settlement agreement in the Minnesota electric rate case, which is pending a MPUC decision. Property taxes are projected to increase by $20 million to $25 million over 2011 levels, net of NSP-Minnesota's request for deferred accounting for 2012 property tax increases, which is...

  • Page 85
    ... audit report on the Xcel Energy Inc.'s internal control over financial reporting. Their report appears herein. /S/ BENJAMIN G.S. FOWKE III Benjamin G.S. Fowke III Chairman, President and Chief Executive Officer February 24, 2012 /S/ TERESA S. MADDEN Teresa S. Madden Senior Vice President and Chief...

  • Page 86
    ..., in all material respects, the information set forth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2011, based on the criteria established...

  • Page 87
    ...Management Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United...

  • Page 88
    ... except per share data) 2011 Year Ended Dec. 31 2010 2009 Operating revenues Electric ...Natural gas ...Other ...Total operating revenues ...Operating expenses Electric fuel and purchased power...Cost of natural gas sold and transported ...Cost of sales - other ...Operating and maintenance expenses...

  • Page 89
    ... net income to cash provided by operating activities: Depreciation and amortization ...Conservation and demand side management program amortization ...Nuclear fuel amortization ...Deferred income taxes ...Amortization of investment tax credits ...Allowance for equity funds used during construction...

  • Page 90
    ... data) Dec. 31 2011 Assets Current assets Cash and cash equivalents ...Restricted cash ...Accounts receivable, net ...Accrued unbilled revenues ...Inventories ...Regulatory assets ...Derivative instruments ...Deferred income taxes ...Prepayments and other ...Total current assets ...Property, plant...

  • Page 91
    ...income for 2010 ...Dividends declared: Cumulative preferred stock ...Common stock ...Issuances of common stock ...Share-based compensation ...Balance at Dec. 31, 2010 ...Net income ...Pension and retiree medical benefit adjustments, net of tax of $(2,247) ...Net derivative instrument changes, net of...

  • Page 92
    ..., due Oct. 1, 2033, 6% ...Unsecured Senior F Notes, due Oct. 1, 2036, 6%...Pollution control obligations, securing pollution control revenue bonds, due: July 1, 2011, 5.2%...Sept. 1, 2016, 5.75% ...Unamortized discount ...Total ...Less current maturities ...Total SPS long-term debt ... $ $ 450,000...

  • Page 93
    ...Sept. 15, 2041, 4.8% ...Junior Subordinated Notes, Series due: Jan. 1, 2068, 7.6% ...Elimination of PSCo capital lease obligation with affiliates ...Unamortized discount ...Total ...Less current maturities (including elimination of PSCo capital lease obligation) ...Total Xcel Energy Inc. long-term...

  • Page 94
    ..., NSP-Wisconsin, PSCo and SPS. These utility subsidiaries serve electric and natural gas customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Also included in Xcel Energy's operations are WGI, an interstate natural gas pipeline company...

  • Page 95
    ... to assist customers in conserving energy and reducing peak demand on the electric and natural gas systems. These programs include, but are not limited to, efficiency and redesign programs and rebates for the purchase of items such as compact fluorescent bulbs, saver switches and energy-efficient...

  • Page 96
    ...be storing spent fuel on site pending removal to a U.S. government facility. For rate making purposes, NSP-Minnesota recovers the total decommissioning costs related to its nuclear power plants, including operating costs associated with spent fuel, over each facility's expected service life based on...

  • Page 97
    ... tax benefits to its direct subsidiaries based on the relative positive tax liabilities of the subsidiaries. See Note 6 for further discussion of income taxes. Types of and Accounting for Derivative Instruments - Xcel Energy uses derivative instruments in connection with its interest rate, utility...

  • Page 98
    ...generation or purchased as a result of meeting load obligations are recorded in electric utility operating revenues on a gross basis. The cost of these RECs, related transaction costs, and amounts credited to customers under margin-sharing mechanisms are recorded in electric fuel and purchased power...

  • Page 99
    .... Benefit Plans and Other Postretirement Benefits - Xcel Energy maintains pension and postretirement benefit plans for eligible employees. Recognizing the cost of providing benefits and measuring the projected benefit obligation of these plans under applicable accounting guidance requires management...

  • Page 100
    ... Balance Sheet Data (Thousands of Dollars) Dec. 31, 2011 Dec. 31, 2010 Accounts receivable, net Accounts receivable ...Less allowance for bad debts ...Inventories Materials and supplies ...Fuel ...Natural gas ...Property, plant and equipment, net Electric plant ...Natural gas plant ...Common and...

  • Page 101
    ...limits and cannot issue commercial paper in an aggregate amount exceeding available capacity under these credit agreements. During 2011, NSP-Minnesota, NSP-Wisconsin, PSCo, SPS and Xcel Energy Inc. executed new four-year credit agreements. The total size of the credit facilities is $2.45 billion and...

  • Page 102
    ... paper reduce the available capacity under the respective credit facilities. Xcel Energy Inc. and its subsidiaries had no direct advances on the credit facilities outstanding at Dec. 31, 2011 and 2010. Letters of Credit - Xcel Energy Inc. and its subsidiaries use letters of credit, generally...

  • Page 103
    ... to pay dividends at Dec. 31, 2011. All of Xcel Energy's utility subsidiaries' dividends are subject to the FERC's jurisdiction under the Federal Power Act, which prohibits the payment of dividends out of capital accounts; payment of dividends is allowed out of retained earnings only. NSP-Minnesota...

  • Page 104
    ... by Xcel Energy Inc.'s utility subsidiaries in jointly owned generation, transmission and gas facilities and the related ownership percentages as of Dec. 31, 2011: Plant in Service Accumulated Depreciation Construction Work in Progress (Thousands of Dollars) Ownership % NSP-Minnesota Electric...

  • Page 105
    ... interest expense on policy loans related to its COLI program that insured lives of certain PSCo employees. These COLI policies were owned and managed by PSRI. Xcel Energy Inc. and PSCo paid the U.S. government a total of $64.4 million in settlement of the U.S. government's claims for tax, penalty...

  • Page 106
    ... audits resume. At this time, due to the uncertain nature of the audit process, it is not reasonably possible to estimate an overall range of possible change. However, Xcel Energy does not anticipate total unrecognized tax benefits will significantly change within the next 12 months. The payable...

  • Page 107
    ...expense ...Regulatory differences - utility plant items ...Change in unrecognized tax benefits ...Life insurance policies ...Previously recognized Medicare Part D subsidies ...Other, net ...Effective income tax rate from continuing operations ...The components of Xcel Energy's income tax expense for...

  • Page 108
    ...with these awards. Restricted stock, granted to settle amounts due certain employees under the Xcel Energy Inc. Executive Annual Incentive Award Plan, is included in common shares outstanding when granted, pending remaining service conditions. Share-based compensation arrangements for which there is...

  • Page 109
    ... employee is not entitled to the dividends on those shares. Restricted stock has a fair value equal to the market trading price of Xcel Energy Inc.'s stock at the grant date. Xcel Energy Inc. granted shares of restricted stock for the years ended Dec. 31 as follows: (Shares in Thousands) 2011 2010...

  • Page 110
    ... annual dividend paid on its common stock remains at a specified amount per share or greater. RSUs issued in 2009 and 2010, plus associated dividend equivalents, will be settled and the restricted period will lapse after Xcel Energy Inc. achieves a specified level of EPS growth. RSUs issued in 2011...

  • Page 111
    ... dividend date. The stock equivalent units are payable as a distribution of Xcel Energy Inc.'s common stock upon a director's termination of service. The stock equivalent units granted for the years ended Dec. 31 were as follows: (Units in Thousands) 2011 2010 2009 Granted units ...Grant date fair...

  • Page 112
    ... directly or indirectly observable as of the reporting date. The types of assets included in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs, such as corporate bonds with pricing based on market interest rate...

  • Page 113
    ... investments ...Cash...Total ... 27% 31 12 27 3 100% 24% 41 11 17 7 100% Xcel Energy's ongoing investment strategy is based on plan-specific investment recommendations that seek to minimize potential investment and interest rate risk as a plan's funded status increases over time. The investment...

  • Page 114
    ...tables present the changes in Xcel Energy's Level 3 pension plan assets for the years ended Dec. 31, 2011, 2010 and 2009: Net Realized Gains (Losses) Net Unrealized Gains (Losses) Purchases, Issuances, and Settlements, Net (Thousands of Dollars) Jan. 1, 2011 Dec. 31, 2011 Asset-backed securities...

  • Page 115
    ... require cash funding for 2008 through 2010 for Xcel Energy's pension plans. Required contributions were made in 2011 and 2012 to meet minimum funding requirements. The Pension Protection Act changed the minimum funding requirements for defined benefit pension plans beginning in 2008. The following...

  • Page 116
    ... on plan assets ...Amortization of prior service cost ...Amortization of net loss ...Net periodic pension cost ...Costs not recognized due to effects of regulation ...Net benefit cost recognized for financial reporting ...$ Significant Assumptions Used to Measure Costs: Discount rate ...Expected...

  • Page 117
    ... present the changes in Xcel Energy's Level 3 postretirement benefit plan assets for the years ended Dec. 31, 2011, 2010 and 2009: Net Realized Gains (Losses) Net Unrealized Gains (Losses) Purchases, Issuances, and Settlements, Net (Thousands of Dollars) Jan. 1, 2011 Dec. 31, 2011 Asset-backed...

  • Page 118
    ... of Dollars) 2011 2010 Change in Projected Benefit Obligation: Obligation at Jan. 1 ...Service cost ...Interest cost ...Medicare subsidy reimbursements ...ERRP proceeds shared with retirees ...Plan amendments ...Plan participants' contributions ...Actuarial loss ...Benefit payments ...Obligation at...

  • Page 119
    ... during 2010 and expects to contribute approximately $39.1 million during 2012. Plan Amendments - The 2011 decrease of the projected Xcel Energy postretirement health and welfare benefit obligation for plan amendments is due to changes in the participant co-pay structure for certain retiree groups...

  • Page 120
    ... facilities workers who may perform services for more than one employer during a given period and do not participate in the NSP-Minnesota and NSP-Wisconsin sponsored pension and postretirement health care plans. Contributing to these types of plans creates risk that differs from providing benefits...

  • Page 121
    ...-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...

  • Page 122
    ... tables present the cost and fair value of Xcel Energy's non-derivative instruments with recurring fair value measurements in the nuclear decommissioning fund at Dec. 31, 2011 and 2010: Dec. 31, 2011 Fair Value (Thousands of Dollars) Cost Level 1 Level 2 Level 3 Total Nuclear decommissioning fund...

  • Page 123
    ...manage variability of future cash flows from changes in commodity prices in its electric and natural gas operations, as well as for trading purposes. This could include the purchase or sale of energy or energy-related products, natural gas to generate electric energy, gas for resale and vehicle fuel...

  • Page 124
    ... instruments for trading purposes not directly related to commodity price risks associated with serving its electric and natural gas customers. Changes in the fair value of these commodity derivatives are recorded in electric operating revenues, net of amounts credited to customers under margin...

  • Page 125
    ... charges. Recorded to electric operating revenues. Portions of these total gains and losses are subject to sharing with electric customers through margin-sharing mechanisms and deducted from gross revenue, as appropriate. Recorded to electric fuel and purchased power. These derivative settlement...

  • Page 126
    ...Dec. 31, 2011 Fair Value Level 3 Total Counterparty Netting (b) Total Current derivative liabilities Derivatives designated as cash flow hedges: Interest rate ...Other derivative instruments: Trading commodity ...Electric commodity ...Natural gas commodity ...Total current derivative liabilities...

  • Page 127
    ... Counterparty Netting (b) Total Current derivative assets Derivatives designated as cash flow hedges: Vehicle fuel and other commodity ...Other derivative instruments: Trading commodity ...Electric commodity ...Natural gas commodity ...Total current derivative assets ...Purchased power agreements...

  • Page 128
    ... of Xcel Energy's long-term debt is estimated based on the quoted market prices for the same or similar issues, or the current rates for debt of the same remaining maturities and credit quality. The fair value estimates presented are based on information available to management as of Dec. 31, 2011...

  • Page 129
    ... address 2011 sales coming in below test year projections, the settlement includes a true-up to 2012 non-fuel revenues plus the settlement rate increase. An NDPSC decision is expected in March 2012. Pending Regulatory Proceedings - SDPUC NSP-Minnesota - South Dakota Electric Rate Case - In June 2011...

  • Page 130
    ...-Wisconsin's proposal to pre-collect certain manufactured gas plant remediation costs. The primary reasons for the electric rate reduction were updated 2012 electric fuel costs and the delays in the Monticello nuclear plant extended life cycle management and power uprate project. The rate increases...

  • Page 131
    ...27, 2012, the CPUC approved PSCo's request for deferred accounting of the $42 million annual revenue requirement associated with the Black Hills contract. Pending Regulatory Proceedings - FERC Base Rate PSCo Wholesale Electric Rate Case - In February 2011, PSCo filed with the FERC to change Colorado...

  • Page 132
    ...In November 2010, SPS filed an update to the cost of service to reflect the sale of Lubbock facilities which reduced the total request to approximately $63.7 million. Effective Feb. 16, 2011, the parties reached an unopposed settlement to resolve all issues in the case and increase base rates by $39...

  • Page 133
    ... - Xcel Energy has entered into agreements with other utilities and energy suppliers for purchased power to meet system load and energy requirements, replace generation from company-owned units under maintenance or during outages, and meet operating reserve obligations. NSP-Minnesota, PSCo and SPS...

  • Page 134
    ...Dec. 31, 2011 and Dec. 31, 2010 with entities that have been determined to be variable interest entities. These agreements have expiration dates through the year 2033. Fuel Contracts - SPS purchases all of its coal requirements for its Harrington and Tolk electric generating stations from TUCO under...

  • Page 135
    ... accounted for as operating leases. Total expenses under operating lease obligations for Xcel Energy were approximately $204.8 million, $197.4 million, and $209.5 million for 2011, 2010 and 2009, respectively. These expenses include payments for capacity recorded to electric fuel and purchased power...

  • Page 136
    ... Xcel Energy Inc. subsidiaries under different asset purchase agreements (d) ...Guarantee of customer loans for the Farm Rewiring Program (f) ...Guarantee of the indemnification obligations of Xcel Energy Services Inc. under the aircraft leases (g) ...Guarantee benefiting Young Gas Storage Company...

  • Page 137
    ... at a site in Ashland, Wis. The Ashland/Northern States Power Lakefront Superfund Site (the Ashland site) includes property owned by NSP-Wisconsin, which was a site previously operated by a predecessor company as a MGP facility (the Upper Bluff), and two other properties: an adjacent city lakeshore...

  • Page 138
    ... that increase emissions above a certain threshold. Xcel Energy is unable to determine what the cost of compliance with these new EPA requirements will be as it is not clear whether these requirements will apply to futures changes at Xcel Energy's power plants. New Mexico GHG Regulations - In 2010...

  • Page 139
    ..., Xcel Energy believes that the CSAPR could ultimately require the installation of additional emission controls on some of SPS' coal-fired electric generating units. If compliance is required in a short time frame, SPS may be required to redispatch its system to reduce coal plant operating hours...

  • Page 140
    ... installed at the Pawnee Generating Station by the end of 2011. The cost for the Pawnee Generating Station mercury controls was $1.1 million for capital costs with an annual estimate of $0.5 million for sorbent expense. PSCo has evaluated the Colorado mercury control requirements for its other units...

  • Page 141
    ...as hazardous waste, Xcel Energy's costs associated with the management and disposal of coal ash would significantly increase and the beneficial reuse of coal ash would be negatively impacted. The EPA has not announced a planned date for a final rule. The timing, scope and potential cost of any final...

  • Page 142
    ... of the NSP-Minnesota nuclear generating plants, Monticello and Prairie Island, originated with the in-service date of the facility. See Note 14 for further discussion of nuclear obligations. A reconciliation of the beginning and ending aggregate carrying amounts of Xcel Energy's AROs is shown...

  • Page 143
    ... at Dec. 31: (Millions of Dollars) 2011 2010 NSP-Minnesota ...NSP-Wisconsin ...PSCo ...SPS ...Total Xcel Energy ...Nuclear Insurance $ $ 382 109 380 74 945 $ $ 400 107 385 88 980 NSP-Minnesota's public liability for claims resulting from any nuclear incident is limited to $12.6 billion under...

  • Page 144
    ... 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...

  • Page 145
    ... disposal program since 1981. The fuel disposal fees are based on a charge of 0.1 cent per KWh sold to customers from nuclear generation. Fuel expense includes the DOE fuel disposal assessments of approximately $11 million in 2011, $13 million in 2010 and $12 million in 2009. In total, NSP-Minnesota...

  • Page 146
    ... of spent nuclear fuel from the sites. A decision on this filing is expected either in late 2012 or the beginning of 2013. Consistent with cost-recovery in utility customer rates, NSP-Minnesota previously recorded annual decommissioning accruals based on periodic site-specific cost studies and...

  • Page 147
    ... rate case Recoverable purchased natural gas and electric energy costs ...1 One to two years State commission adjustments (b) ...1 Plant lives Other ...Various Total regulatory assets ...Regulatory Liabilities Plant removal costs ...Deferred electric, gas and steam production costs ...DOE settlement...

  • Page 148
    ... Information The regulated electric utility operating results of NSP-Minnesota, NSP-Wisconsin, PSCo and SPS, as well as the regulated natural gas utility operating results of NSP-Minnesota, NSP-Wisconsin and PSCo are each separately and regularly reviewed by Xcel Energy's chief operating decision...

  • Page 149
    ... of Dollars) Regulated Electric Regulated Natural Gas All Other Reconciling Eliminations Consolidated Total 2010 Operating revenues from external customers ...Intersegment revenues ...Total revenues ...Depreciation and amortization ...Interest charges and financing costs ...Income tax expense...

  • Page 150
    ... cycle natural gas-fired power plant that began commercial operations in 2003. The Rocky Mountain Energy Center is a 652 MW combined-cycle natural gas-fired power plant that began commercial operations in 2004. Both power plants previously provided energy and capacity to PSCo under purchased power...

  • Page 151
    ... standards and rules issued by the Public Company Accounting Oversight Board and as approved by the SEC and as indicated in Management Report on Internal Controls herein. Item 9B - Other Information None. PART III Item 10 - Directors, Executive Officers and Corporate Governance Information required...

  • Page 152
    ..., by and between Xcel Energy Inc. and Wells Fargo Bank, Minnesota, NA, as Trustee, creating $400 million principal amount of 7.6 percent Junior Subordinated Notes, Series due 2068 (Exhibit 4.02 to Form 8-K (file no. 001-03034) dated Jan. 16, 2008). Replacement Capital Covenant, dated Jan. 16, 2008...

  • Page 153
    ..., Series due Sept. 1, 2039 (Exhibit 4.01 of Form 8-K of NSP-Minnesota dated Nov. 16, 2009 (file no. 001-31387)). Supplemental Indenture dated as of Aug. 1, 2010 between NSP-Minnesota and The Bank of New York Mellon Trust Company, NA, as successor Trustee, creating $250 million principal amount of...

  • Page 154
    ... to $129.5 million Adams County, Colorado Pollution Control Refunding Revenue Bonds, 2005 Series A. (Exhibit 4.01 to PSCo Current Report on Form 8-K, dated Aug. 18, 2005, file number 001-3280). Supplemental Indenture, dated Aug. 1, 2007, between PSCo and U.S. Bank Trust NA, as successor Trustee...

  • Page 155
    ...). Amendment dated Aug. 26, 2009 to the Xcel Energy Senior Executive Severance and Change-in-Control Policy (Exhibit 10.06 to Form 10-Q of Xcel Energy (file no. 001-03034) for the quarter ended Sept. 30, 2009). Xcel Energy Inc. Executive Annual Incentive Award Plan Form of Restricted Stock Agreement...

  • Page 156
    ...2011). Second Amendment dated Oct. 26, 2011 to the Xcel Energy Senior Executive Severance and Change-in-Control Policy. NSP-Minnesota 10.19* Ownership and Operating Agreement, dated March 11, 1982, between NSP-Minnesota, Southern Minnesota Municipal Power Agency and United Minnesota Municipal Power...

  • Page 157
    ... - Exhibit 10I). Power Purchase Agreement dated May 23, 1997 between Borger Energy Associates, L.P, and SPS. Credit Agreement, dated as of March 17, 2011 among SPS, as Borrower, the several lenders from time to time parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America...

  • Page 158
    ...I XCEL ENERGY INC. CONDENSED STATEMENTS OF INCOME (amounts in thousands, except per share data) 2011 Year Ended Dec. 31 2010 2009 Income Equity earnings of subsidiaries...Total income ...Expenses and other deductions Operating expenses ...Other income...Interest charges and financing costs ...Total...

  • Page 159
    XCEL ENERGY INC. CONDENSED STATEMENTS OF CASH FLOWS (amounts in thousands) 2011 Year Ended Dec. 31 2010 2009 Operating activities Net cash provided by operating activities ... $ 595,732 $ 537,840 $ 627,013 Investing activities Capital contributions to subsidiaries ...Net cash used in investing ...

  • Page 160
    ... thousands) Dec. 31 2011 2010 Assets Cash and cash equivalents ...Accounts receivable from subsidiaries ...Other current assets ...Total current assets ...Investment in subsidiaries ...Other assets ...Total other assets ...Total assets ...Liabilities and Equity Dividends payable ...Short-term debt...

  • Page 161
    ... party receivables net of payables. Accounts receivable and payable with affiliates at Dec. 31 were: 2011 (Thousands of Dollars) Accounts Receivable Accounts Payable Accounts Receivable 2010 Accounts Payable NSP-Minnesota ...NSP-Wisconsin ...PSCo ...SPS ...Xcel Energy Services Inc...Xcel Energy...

  • Page 162
    .... 31, 2011, 2010 AND 2009 (amounts in thousands) Additions Charged to Charged to Costs and Other Accounts (a) Expenses Balance at Jan. 1 Deductions from Reserves (b) (c) Balance at Dec. 31 Allowance for bad debts: 2011...2010...2009...NOL and tax credit valuation allowances: 2011...2010...2009...

  • Page 163
    ... has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. XCEL ENERGY INC. Feb. 24, 2012 By: /s/ TERESA S. MADDEN Teresa S. Madden Senior Vice President and Chief Financial Officer (Principal Financial Officer) Pursuant to the requirements...

  • Page 164
    Shareholder Information HEADQUARTERS 414 Nicollet Mall, Minneapolis, Minnesota 55401 Xcel Energy Directors Gail Koziara-Boudreaux 1,4 Executive Vice President of United Health Group CEO, United Healthcare Fredric W. Corrigan 2, 4 Retired CEO and President The Mosaic Company Richard K. Davis 3, 4 ...

  • Page 165
    ...resources/calculator.html 414 Nicollet Mall Minneapolis, MN 55401 xcelenergy.com © 2012 Xcel Energy Inc. | Xcel Energy is a registered trademark of Xcel Energy Inc. | 12-01-014 Northern States Power Company - Minnesota; Northern States Power Company - Wisconsin; Public Service Company of Colorado...