Xcel Energy 2011 Annual Report Download - page 144

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NSP-Minnesota purchases insurance for property damage and site decontamination cleanup costs from Nuclear Electric
Insurance Ltd. (NEIL). The coverage limits are $2.25 billion for each 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 NEIL are
subject to retroactive premium adjustments if losses exceed accumulated reserve funds. Capital has been accumulated in the
reserve funds of NEIL to the extent that NSP-Minnesota would have no exposure for retroactive premium assessments in case of
a single incident under the business interruption and the property damage insurance coverage. However, in each calendar year,
NSP-Minnesota could be subject to maximum assessments of approximately $15.7 million for business interruption insurance and
$33.6 million for property damage insurance if losses exceed accumulated reserve funds.
Legal Contingencies
Lawsuits and claims arise in the normal course of business. Management, after consultation with legal counsel, has recorded an
estimate of the probable cost of settlement or other disposition. The ultimate outcome of these matters cannot presently be
determined. Accordingly, the ultimate resolution of these matters could have a material effect on Xcel Energy’s financial position
and results of operations.
Environmental Litigation
State of Connecticut vs. Xcel Energy Inc. et al. — In July 2004, the attorneys general of eight states and New York City, as well
as several environmental groups, filed lawsuits in U.S. District Court for the Southern District of New York against the following
utilities, including Xcel Energy, to force reductions in CO2 emissions: American Electric Power Co., Southern Co., Cinergy Corp.
(merged into Duke Energy Corporation) and Tennessee Valley Authority. The lawsuits alleged that CO2 emitted by each company
is a public nuisance and asked the court to order each utility to cap and reduce its CO2 emissions. The lawsuits did not demand
monetary damages. In December 2011, the U.S. District Court entered an order dismissing this lawsuit, bringing a close to this
litigation.
Native Village of Kivalina vs. Xcel Energy Inc. et al. — In February 2008, the City and Native Village of Kivalina, Alaska, filed
a lawsuit in U.S. District Court for the Northern District of California against Xcel Energy and 23 other utility, oil, gas and coal
companies. Plaintiffs claim that defendants’ emission of CO2 and other GHGs contribute to global warming, which is harming
their village. Xcel Energy believes the claims asserted in this lawsuit are without merit and joined with other utility defendants in
filing a motion to dismiss in June 2008. In October 2009, the U.S. District Court dismissed the lawsuit on constitutional grounds.
In November 2009, plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. In November 2011, oral
arguments were presented. It is unknown when the Ninth Circuit will render a final opinion. The amount of damages claimed by
plaintiffs is unknown, but likely includes the cost of relocating the village of Kivalina. Plaintiffs’ alleged relocation is estimated to
cost between $95 million to $400 million. While Xcel Energy believes the likelihood of loss is remote, given the nature of this
case and any surrounding uncertainty, it may have a material impact on Xcel Energy’s consolidated results of operations, cash
flows or financial position. No accrual has been recorded for this matter.
Comer vs. Xcel Energy Inc. et al. — On May 27, 2011, less than a year after their initial lawsuit was dismissed, plaintiffs in this
purported class action lawsuit filed a second lawsuit against more than 85 utility, oil, chemical and coal companies in U.S.
District Court in Mississippi. The complaint alleges defendants’ CO2 emissions intensified the strength of Hurricane Katrina and
increased the damage plaintiffs purportedly sustained to their property. Plaintiffs base their claims on public and private nuisance,
trespass and negligence. Among the defendants named in the complaint are Xcel Energy Inc., SPS, PSCo, NSP-Wisconsin and
NSP-Minnesota. The amount of damages claimed by plaintiffs is unknown. The defendants, including Xcel Energy Inc., believe
this lawsuit is without merit and have filed a motion to dismiss the lawsuit. It is uncertain when the court will rule on this motion.
While Xcel Energy believes the likelihood of loss is remote, given the nature of this case and any surrounding uncertainty, it may
have a material impact on Xcel Energy’s consolidated results of operations, cash flows or financial position. No accrual has been
recorded for this matter.
Employment, Tort and Commercial Litigation
Stone & Webster, Inc. vs. PSCo — In July 2009, Stone & Webster, Inc. (Shaw) filed a complaint against PSCo in State District
Court in Denver, Colo. for damages allegedly arising out of its construction work on the Comanche Unit 3 coal-fired plant. Shaw,
a contractor retained to perform certain engineering, procurement and construction work on Comanche Unit 3, alleged, among
other things, that PSCo mismanaged the construction of Comanche Unit 3. Shaw further claimed that this alleged mismanagement
caused delays and damages. The complaint also alleged that Xcel Energy Inc. and related entities guaranteed Shaw $10 million in
future profits under the terms of a 2003 settlement agreement. In total, Shaw sought approximately $144 million in damages.