Xcel Energy 2011 Annual Report Download - page 134

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Xcel Energy has determined that certain independent power producing entities are variable interest entities. Xcel Energy is not
subject to risk of loss from the operations of these entities, and no significant financial support has been, or is in the future
required to be provided other than contractual payments for energy and capacity set forth in the purchased power agreements.
Xcel Energy has evaluated each of these variable interest entities for possible consolidation, including review of qualitative
factors such as the length and terms of the contract, control over O&M, control over dispatch of electricity, historical and
estimated future fuel and electricity prices, and financing activities. Xcel Energy has concluded that these entities are not required
to be consolidated in its consolidated financial statements because it does not have the power to direct the activities that most
significantly impact the entities’ economic performance. Xcel Energy had approximately 3,773 MW and 4,101 MW of capacity
under long-term purchased power agreements as of 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 contracts for those facilities that expire in 2016 and 2017, respectively. TUCO arranges for the purchase, receiving,
transporting, unloading, handling, crushing weighing, and delivery of coal to meet SPS’ requirements. TUCO is responsible for
negotiating and administering contracts with coal suppliers, transporters and handlers.
No significant financial support has been, or is in the future, required to be provided to TUCO by SPS, other than contractual
payments for delivered coal. However, the fuel contracts create a variable interest in TUCO due to SPS’ reimbursement of certain
fuel procurement costs. SPS has determined that TUCO is a variable interest entity. SPS has concluded that it is not the primary
beneficiary of TUCO because SPS does not have the power to direct the activities that most significantly impact TUCO’s
economic performance.
Low-Income Housing Limited Partnerships — Eloigne and NSP-Wisconsin have entered into limited partnerships for the
construction and operation of affordable rental housing developments which qualify for low-income housing tax credits. Xcel
Energy Inc. has determined Eloigne and NSP-Wisconsin’s low-income housing limited partnerships to be variable interest entities
primarily due to contractual arrangements within each limited partnership that establish sharing of ongoing voting control and
profits and losses that does not consistently align with the partners’ proportional equity ownership. These limited partnerships are
designed to qualify for low-income housing tax credits, and Eloigne and NSP-Wisconsin generally receive a larger allocation of
the tax credits than the general partners at inception of the arrangements. Xcel Energy Inc. has determined that Eloigne and NSP-
Wisconsin have the power to direct the activities that most significantly impact these entities’ economic performance, and
therefore Xcel Energy Inc. consolidates these limited partnerships in its consolidated financial statements.
Equity financing for these entities has been provided by Eloigne and NSP-Wisconsin and the general partner of each limited
partnership, and Xcel Energy’s risk of loss is limited to its capital contributions, adjusted for any distributions and its share of
undistributed profits and losses; no significant additional financial support has been, or is in the future, required to be provided to
the limited partnerships by Eloigne or NSP-Wisconsin. Mortgage-backed debt typically comprises the majority of the financing at
inception of each limited partnership and is paid over the life of the limited partnership arrangement. Obligations of the limited
partnerships are generally secured by the housing properties of each limited partnership, and the creditors of each limited
partnership have no significant recourse to Xcel Energy Inc. or its subsidiaries. Likewise, the assets of the limited partnerships
may only be used to settle obligations of the limited partnerships, and not those of Xcel Energy Inc. or its subsidiaries.
Amounts reflected in Xcel Energy’s consolidated balance sheets for the Eloigne and NSP-Wisconsin low-income housing limited
partnerships include the following:
(Thousands of Dollars) Dec. 31, 2011
Dec. 31, 2010
Current assets ......................................................................... $ 4,0
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$ 3,794
Property, plant and equipment, net ......................................................
90,914
97,602
Other noncurrent assets ................................................................
8,053
8,236
Total assets .........................................................................
$
103,001
$ 109,632
Current liabilities ...................................................................... $
12,297
$ 11,884
Mortgages and other long-term debt payable .............................................
48,863
53,195
Other noncurrent liabilities .............................................................
8,278
8,333
Total liabilities ......................................................................
$
69,438
$ 73,412