Xcel Energy 2011 Annual Report Download - page 68

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2010 Comparison to 2009 — Natural gas margins increased mainly due to higher conservation and DSM rates in 2010.
Non-Fuel Operating Expenses and Other Items
O&M Expenses — O&M expenses increased $83.0 million, or 4.0 percent for 2011, compared with 2010, and by $149.2 million,
or 7.8 percent for 2010, compared with 2009. The following tables summarize the changes in O&M expenses:
(Millions of Dollars) 2011 vs. 2010
Higher plant generation costs ................................................................
.............
$ 22
Higher labor and contract labor costs ................................................................
......
18
Higher employee benefit expense ................................................................
.........
13
Higher nuclear plant operation costs................................................................
.......
12
Higher insurance costs ................................................................
...................
4
Other, net ................................................................
...............................
14
Total increase in O&M expenses................................................................
........
$ 83
2011 Comparison to 2010 — The increase in O&M expenses for 2011 was largely driven by the following:
• Higher plant generation costs are attributable to incremental costs associated with new generation placed in service and a
higher level of scheduled maintenance and overhaul work.
• Higher labor and contract labor costs are primarily due to maintenance on our distribution facilities and the impact of
annual wage increases.
• Higher employee benefit costs are largely driven by higher pension expense.
• Higher nuclear plant operation costs were largely driven by outages.
(Millions of Dollars) 2010 vs. 2009
Higher plant generation costs ................................................................
..............
$ 47
Higher labor costs ................................................................
........................
24
Higher nuclear plant operation costs................................................................
........
20
Higher contract labor costs ................................................................
................
18
Higher employee benefit expense ................................................................
..........
15
Higher nuclear outage costs, net of deferral ................................
................................
10
Other, net ................................................................
................................
15
Total increase in O&M expenses................................................................
.........
$ 149
2010 Comparison to 2009 — The increase in O&M expenses for 2010 was largely driven by the following:
• Higher plant generation costs are primarily attributable to the timing of planned maintenance and overhaul work as well
as incremental operating costs associated with new generation facilities placed in service in 2010.
• Higher contract labor is primarily related to maintenance on our distribution facilities.
• Higher nuclear plant operation costs are mainly due to increased labor and security expenses.
• Higher labor costs are primarily due to higher overtime for storm restoration work and a shift in labor resources from
capital to O&M projects.
• Higher nuclear outage costs are due to the timing and higher cost of nuclear refueling outages.
• Higher employee benefit costs for the year are primarily due to increased pension costs partially offset by lower health
care costs.
Conservation and DSM Program Expenses — Conservation and DSM program expenses increased $41.6 million, or 17.3
percent for 2011, compared with 2010. The higher expense is primarily attributable to an increase in the rider rates used to
recover the program expenses. Conservation and DSM program expenses are generally recovered in our major jurisdictions
concurrently through riders and base rates. Overall, the programs are designed to encourage the operating companies and their
retail customers to conserve energy or change energy usage patterns in order to reduce peak demand on the gas or electric system.
This, in turn, reduces the need for additional plant capacity, reduces emissions, serves to achieve other environmental goals as
well as reduces energy costs to participating customers.
Conservation and DSM program expenses increased $57.7 million for 2010, compared with 2009. The higher expense was
attributable to the continued expansion of programs and regulatory commitments.