Xcel Energy 2011 Annual Report Download - page 135

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Leases — Xcel Energy leases a variety of equipment and facilities used in the normal course of business. Three of these leases
qualify as capital leases and are accounted for accordingly. The assets and liabilities at the inception of the capital leases are
recorded at the lower of fair market value or the present value of future lease payments and are amortized over their actual
contract term.
WYCO was formed as a joint venture with CIG to develop and lease natural gas pipeline, storage, and compression facilities.
Xcel Energy Inc. has a 50 percent ownership interest in WYCO. WYCO leases the facilities to CIG, and CIG operates the
facilities, providing natural gas storage services to PSCo under a service arrangement.
PSCo accounts for its Totem natural gas storage service arrangement with CIG as a capital lease. As a result, PSCo had $152.7
million and $149.9 million of capital lease obligations recorded for the arrangement as of Dec. 31, 2011 and 2010, respectively.
Xcel Energy Inc. eliminates 50 percent of the capital lease obligation related to WYCO in the consolidated balance sheet along
with an equal amount of Xcel Energy Inc.’s equity investment in WYCO.
PSCo records amortization for its capital leases as cost of natural gas sold and transported on the consolidated statements of
income. Total amortization expenses under capital lease assets were approximately $3.2 million, $5.3 million, and $3.5 million
for 2011, 2010 and 2009, respectively. Following is a summary of property held under capital leases:
(Millions of Dollars) 2011 2010
Storage, leaseholds and rights................................
.............................
$
200.5
$ 196.1
Gas pipeline................................................................
.............
20.7
20.7
Property held under capital lease ................................
..........................
221.2
216.8
Accumulated depreciation ................................
................................
(29.8
) (26.6)
Total property held under capital leases, net................................
................
$
191.4
$ 190.2
The remainder of the leases, primarily for office space, railcars, generating facilities, trucks, aircraft, cars and power-operated
equipment, are 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 expenses for purchased power agreements accounted for as
operating leases of $160.5 million, $163.7 million, and $171.3 million in 2011, 2010 and 2009, respectively.
Included in the future commitments under operating leases are estimated future payments under purchased power agreements that
have been accounted for as operating leases in accordance with the applicable accounting guidance. Future commitments under
operating and capital leases are:
(Millions of Dollars)
Other
Operating
Leases
Purchased
Power Agreement
Operating Leases (a) (b)
Total
Operating
Leases Capital Leases
2012................................
...........
$ 26.6 $ 159.0 $ 185.6 $ 18.2
2013................................
...........
24.8 173.5 198.3 18.0
2014................................
...........
24.3 180.6 204.9 18.0
2015................................
...........
23.2 182.0 205.2 17.9
2016................................
...........
18.2 173.9 192.1 17.2
Thereafter................................
......
89.6 1,908.7 1,998.3 306.2
Total minimum obligation
.....................
395.5
Interest component of obligation
.................
(280.5)
Present value of minimum obligation
.........
$ 115.0(c)
(a) Amounts do not include purchased power agreements accounted for as other commitments, which are recorded to O&M as executed.
(b) Purchased power agreement operating leases contractually expire through 2033.
(c) Future commitments exclude certain amounts related to Xcel Energy’s 50 percent ownership interest in WYCO.
Technology Agreements — Xcel Energy has a contract that extends through Sept. 30, 2015 with IBM for information technology
services. The contract is cancelable at Xcel Energy’s option, although there are financial penalties for early termination. In 2011,
Xcel Energy paid IBM $93.6 million under the contract which included $1.4 million for other project business. In 2010, Xcel
Energy paid IBM $95.6 million under the contract which included $2.0 million for other project business.
Xcel Energy’s contract with Accenture for information technology services extends through Jan. 31, 2017. It is cancelable at Xcel
Energy’s option, although Xcel Energy would be obligated to pay 50 percent of the contract value for early termination. In 2011,
Xcel Energy paid Accenture $15.2 million under the contract which included $5.6 million for other project business. In 2010,
Xcel Energy paid Accenture $22.7 million under the contract which included $8.4 million for other project business.