Xcel Energy 2012 Annual Report Download - page 140

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Future commitments under operating and capital leases are:
PPA Total
Operating Operating Operating
(Millions of Dollars)
Leases Leases (a) (b) Leases Capital Leases
2013................................
..........................
$ 27.1 $
181.4
$ 208.5 $ 18.0
2014................................
..........................
26.3
186.0
212.3 18.0
2015................................
..........................
25.2
182.0
207.2 17.9
2016................................
..........................
22.2
173.9
196.1 17.2
2017................................
..........................
17.1
170.7
187.8 15.2
Thereafter................................
.....................
159.4
1,738.0
1,897.4 292.3
Total minimum obligation................................
....
378.6
Interest component of obligation
................................
(267.2)
Present value of minimum obligation
........................
$ 111.4
(c)
(a) Amounts do not include PPAs accounted for as executory contracts.
(b) PPA operating leases contractually expire through 2033.
(c) Future commitments exclude certain amounts related to Xcel Energy’s 50 percent ownership interest in WYCO.
Variable Interest Entities — The accounting guidance for consolidation of variable interest entities requires enterprises to
consider the activities that most significantly impact an entity’s financial performance, and power to direct those activities, when
determining whether an enterprise is a variable interest entity’s primary beneficiary.
PPAs — Under certain PPAs, NSP-Minnesota, PSCo and SPS purchase power from independent power producing entities that
own natural gas or biomass fueled power plants for which the utility subsidiaries are required to reimburse natural gas or biomass
fuel costs, or to participate in tolling arrangements under which the subsidiaries procure the natural gas required to produce the
energy that they purchase. These specific PPAs create a variable interest in the associated independent power producing entity.
Xcel Energy has determined that certain independent power producing entities are variable interest entities. Xcel Energy is not
subject to risk of loss from the operations of these entities, and no significant financial support has been, or is in the future
required to be provided other than contractual payments for energy and capacity set forth in the PPAs.
Xcel Energy has evaluated each of these variable interest entities for possible consolidation, including review of qualitative
factors such as the length and terms of the contract, control over O&M, control over dispatch of electricity, historical and
estimated future fuel and electricity prices, and financing activities. Xcel Energy has concluded that these entities are not required
to be consolidated in its consolidated financial statements because it does not have the power to direct the activities that most
significantly impact the entities’ economic performance. Xcel Energy had approximately 3,324 MW and 3,773 MW of capacity
under long-term PPAs as of Dec. 31, 2012 and 2011, respectively, with entities that have been determined to be variable interest
entities. These agreements have expiration dates through the year 2033.
Fuel Contracts — SPS purchases all of its coal requirements for its Harrington and Tolk electric generating stations from TUCO
under contracts for those facilities that expire in 2016 and 2017, respectively. TUCO arranges for the purchase, receiving,
transporting, unloading, handling, crushing, weighing, and delivery of coal to meet SPS’ requirements. TUCO is responsible for
negotiating and administering contracts with coal suppliers, transporters and handlers.
No significant financial support has been, or is in the future, required to be provided to TUCO by SPS, other than contractual
payments for delivered coal. However, the fuel contracts create a variable interest in TUCO due to SPS’ reimbursement of certain
fuel procurement costs. SPS has determined that TUCO is a variable interest entity. SPS has concluded that it is not the primary
beneficiary of TUCO because SPS does not have the power to direct the activities that most significantly impact TUCO’s
economic performance.
Low-Income Housing Limited Partnerships — Eloigne and NSP-Wisconsin have entered into limited partnerships for the
construction and operation of affordable rental housing developments which qualify for low-income housing tax credits. Xcel
Energy Inc. has determined Eloigne and NSP-Wisconsin’s low-income housing limited partnerships to be variable interest entities
primarily due to contractual arrangements within each limited partnership that establish sharing of ongoing voting control and
profits and losses that does not consistently align with the partners’ proportional equity ownership. These limited partnerships are
designed to qualify for low-income housing tax credits, and Eloigne and NSP-Wisconsin generally receive a larger allocation of
the tax credits than the general partners at inception of the arrangements. Xcel Energy Inc. has determined that Eloigne and NSP-
Wisconsin have the power to direct the activities that most significantly impact these entities’ economic performance, and
therefore Xcel Energy Inc. consolidates these limited partnerships in its consolidated financial statements.