Xcel Energy 2011 Annual Report Download - page 41

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31
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 1,847,668 MMBtu per day, which includes 853,453 MMBtu of natural gas held under third-party
underground storage agreements. In addition, PSCo operates three company-owned underground storage facilities, which provide
about 22,400 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.
Natural Gas Supply and Costs
PSCo actively seeks natural gas supply, transportation and storage alternatives to yield a diversified portfolio that provides
increased flexibility, decreased interruption and financial risk, and economical rates. In addition, PSCo conducts natural gas price
hedging activities that have been approved by the CPUC. This diversification involves numerous supply sources with varied
contract lengths.
The following table summarizes the average delivered cost per MMBtu of natural gas purchased for resale by PSCo’s regulated
retail natural gas distribution business:
2011................................................................
.....................
$
4.99
2010................................................................
.....................
5.10
2009................................................................
.....................
5.13
PSCo has 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, 2011, PSCo was committed to
approximately $1.1 billion in such obligations under these contracts, which expire in various years from 2012 through 2029.
PSCo purchases natural gas by optimizing a balance of long-term and short-term natural gas purchases, firm transportation and
natural gas storage contracts. 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 certain of its generation facilities
and operates natural gas pipeline facilities connecting the generation facilities to interstate natural gas pipelines. SPS is subject to
the jurisdiction of the FERC with respect to certain natural gas transactions in interstate commerce; and to the jurisdiction of the
DOT and the PUCT for pipeline safety compliance.
See Items 1A and 7 for further discussion of natural gas costs.