Xcel Energy 2011 Annual Report Download - page 52

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Our operations could be impacted by war, acts of terrorism, threats of terrorism or disruptions in normal operating conditions
due to localized or regional events.
Our generation plants, fuel storage facilities, transmission and distribution facilities and information systems may be targets of
terrorist activities that could disrupt our ability to produce or distribute some portion of our energy products. Any such disruption
could result in a significant decrease in revenues and significant additional costs to repair and insure our assets, which could have
a material impact on our financial condition and results of operations. The potential for terrorism has subjected our operations to
increased risks and could have a material effect on our business. While we have already incurred increased costs for security and
capital expenditures in response to these risks, we may experience additional capital and operating costs to implement security for
our plants, including our nuclear power plants under the NRC’s design basis threat requirements, such as additional physical plant
security and additional security personnel. We have also already incurred increased costs for compliance with NERC reliability
standards associated with critical infrastructure protection, and may experience additional capital and operating costs to comply
with the NERC critical infrastructure protection standards as they are implemented and clarified.
The insurance industry has also been affected by these events and the availability of insurance covering risks we and our
competitors typically insure against may decrease. In addition, the insurance we are able to obtain may have higher deductibles,
higher premiums and more restrictive policy terms. For example, wildfire events, particularly in the geographic areas we serve,
may cause insurance for wildfire losses to become difficult or expensive to obtain.
A disruption of the regional electric transmission grid, interstate natural gas pipeline infrastructure or other fuel sources, could
negatively impact our business. Because our generation, transmission systems and local natural gas distribution companies are
part of an interconnected system, we face the risk of possible loss of business due to a disruption caused by the actions of a
neighboring utility or an event (severe storm, severe temperature extremes, generator or transmission facility outage, pipeline
rupture, railroad disruption, sudden and significant increase or decrease in wind generation, or any disruption of work force such
as may be caused by flu epidemic) within our operating systems or on a neighboring system. Any such disruption could result in a
significant decrease in revenues and significant additional costs to repair assets, which could have a material impact on our
financial condition and results.
The degree to which we are able to maintain day-to-day operations in response to unforeseen events, potentially through the
execution of our business continuity plans, will in part determine the financial impact of certain events on our financial condition
and results. It’s difficult to predict the magnitude of such events and associated impacts.
A cyber incident or cyber security breach could have a material effect on our business.
Our generation, transmission, distribution and fuel storage facilities, information technology systems and other infrastructure or
physical assets could be directly or indirectly affected by unintentional or deliberate cyber incidents. Cyber intrusion or other
similar events could harm our businesses by limiting our generating, transmitting and distributing capabilities or delay our
development and construction of new facilities or capital improvement projects to existing facilities. In addition, as generation
and transmission systems as well as natural gas pipelines are part of an interconnected system, a disruption caused by the impact
of a cyber security event of the regional electric transmission grid, natural gas pipeline infrastructure or other fuel sources could
also negatively impact our business. We are unable to quantify the potential impact of such cyber security threats. These 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 requires the continued operation of sophisticated information technology systems
and network infrastructure. Despite our control environment and security measures, our technology systems may be vulnerable to
disability, failures or unauthorized access due to cyber intrusion. If our technology systems were to fail or be breached, or those of
our third-party service providers, we may be unable to fulfill critical business functions, including effectively maintaining certain
internal controls over financial reporting. In addition, confidential and other data, including sensitive customer or employee
information, could be compromised exposing us to liability and business disruption.
Rising energy prices could negatively impact our business.
Higher fuel costs could significantly impact our results of operations if requests for recovery are unsuccessful. In addition, higher
fuel costs could reduce customer demand and/or increase bad debt expense, which could also have a material impact on our
results of operations. Delays in the timing of the collection of fuel cost recoveries as compared with expenditures for fuel
purchases could have an impact on our cash flows. We are unable to predict future prices or the ultimate impact of such prices on
our results of operations or cash flows.