Xcel Energy 2012 Annual Report Download - page 106

96
Construction
Plant in Accumulated Work in
(Thousands of Dollars)
Service Depreciation Progress Ownership %
PSCo
Electric Generation:
Hayden Unit 1 ................................
....
$ 94,977 $ 61,576 $ - 75.5%
Hayden Unit 2 ................................
....
119,752 55,806 258 37.4
Hayden Common Facilities
........................
34,876 15,132 162 53.1
Craig Units 1 and 2
...............................
56,091 33,800 1,507 9.7
Craig Common Facilities 1, 2 and 3
................
35,921 16,655 510 6.5 - 9.7
Comanche Unit 3 ................................
.
875,745 46,609 890 66.7
Comanche Common Facilities
.....................
17,127 401 573 82.0
Electric Transmission:
Transmission and other facilities, including
substations................................
......
149,624 58,657 1,759 Various
Gas Transportation:
Rifle to Avon ................................
.....
16,278 6,324 - 60.0
Total PSCo ................................
.....
$ 1,400,391 $ 294,960 $ 5,659
NSP-Minnesota and PSCo have approximately 500 MW and 830 MW of jointly owned generating capacity, respectively. NSP-
Minnesota’s and PSCo’s share of operating expenses and construction expenditures are included in the applicable utility accounts.
Each of the respective owners is responsible for providing its own financing.
NSP-Minnesota is part owner of Sherco Unit 3, an 860 MW, coal – fueled electric generating unit. NSP-Minnesota is the operating
agent under the joint ownership agreement. In November 2011, Sherco Unit 3 experienced a significant failure of its turbine,
generator, and exciter systems. Repairs to Sherco Unit 3 are expected to be substantially complete in 2013, followed by an extended
period of commissioning and testing. NSP-Minnesota maintains insurance policies for the entire unit, inclusive of the other joint
owner’s proportionate share. Replacement and repair of damaged systems, and other significant costs of the failure in excess of a
$1.5 million deductible are expected to be recovered through these insurance policies. For its proportionate share of expenditures in
excess of insurance recoveries for components of the jointly owned facility, NSP-Minnesota will recognize additions to property,
plant and equipment and O&M. Sherco Units 1 and 2, wholly owned by NSP-Minnesota, continue to operate.
6. Income Taxes
American Taxpayer Relief Act of 2012 — On Jan. 2, 2013, President Obama signed into law the American Taxpayer Relief Act
of 2012 (the “Act”). The Act provides for the following:
• The top tax rate for dividends increased from 15 percent to 20 percent. The 20 percent dividend rate is now linked with
the tax rates for capital gains;
• The research and experimentation (R&E) credit was extended for 2012 and 2013;
• PTCs were extended for projects that begin construction before the end of 2013; and
• 50 percent bonus depreciation was extended one year through 2013. Additionally, some longer production period
property placed in service in 2014 is also eligible for 50 percent bonus depreciation.
Because a change in tax law is accounted for in the period of enactment, the accounting related to the Act, including the
provisions related to 2012, will be recorded beginning in the first quarter of 2013. Xcel Energy estimates that an R&E benefit of
$4 million will be recorded in the first quarter of 2013. Additionally, Xcel Energy expects the Act’s extension of R&E through
2013 will reduce Xcel Energy’s 2013 estimated annual ETR by approximately 0.4 percent.
Prescription drug tax benefit — In the third quarter of 2012, Xcel Energy implemented a tax strategy related to the allocation of
funding of Xcel Energy’s retiree prescription drug plan. This strategy restored a portion of the tax benefit associated with federal
subsidies for prescription drug plans that had been accrued since 2004 and was expensed in 2010. As a result, Xcel Energy
recognized approximately $17 million of income tax benefit.
Medicare Part D — In March 2010, the Patient Protection and Affordable Care Act was signed into law. The law includes
provisions to generate tax revenue to help offset the cost of the new legislation. One of these provisions reduces the deductibility
of retiree health care costs to the extent of federal subsidies received by plan sponsors that provide retiree prescription drug
benefits equivalent to Medicare Part D coverage, beginning in 2013. Xcel Energy expensed approximately $17 million of
previously recognized tax benefits relating to the federal subsidies during the first quarter of 2010.