Xcel Energy 2012 Annual Report Download - page 142

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132
Guarantees and Surety Bonds
The following table presents guarantees and bond indemnities issued and outstanding, including those guarantees related to Xcel
Energy Wholesale Group Inc., Seren Innovations, Inc., Utility Engineering Corporation, Viking Gas Transmission Co., and Xcel
Energy Argentina Inc., which are components of discontinued operations, as of Dec. 31, 2012:
(Millions of Dollars)
Guarantor
Guarantee
Amount
Current
Exposure
Triggering
Event
Guarantee of the indemnification obligations of Xcel
Energy Wholesale Group Inc. under a stock purchase
agreement (e) ................................
..........
Xcel Energy Inc.
$
17.5
$
17.5
(b)
Guarantee of the indemnification obligations of Xcel Energy
Argentina Inc. under a stock purchase agreement (f)
........
Xcel Energy Inc.
14.7
-
(b)
Guarantee of the indemnification obligations of various
Xcel Energy Inc subsidiaries under different asset
purchase agreements (d)
................................
Xcel Energy Inc.
25.5
-
(b)
Guarantee of customer loans for the Farm Rewiring
Program (g) ................................
............
NSP-Wisconsin
1.0
0.4
(c)
Guarantee of the indemnification obligations of Xcel
Energy Services Inc. under the aircraft leases (h)
..........
Xcel Energy Inc.
10.3
-
(a)
Guarantee benefiting Young Gas Storage Company Ltd. (d)
..
Xcel Energy Inc.
0.5
-
(a)
Total guarantees issued ................................
..
$
69.5
$
17.9
Guarantee performance and payment of surety bonds for
Xcel Energy Inc. and its subsidiaries (k)
..................
Xcel Energy Inc.
$
29.6
(i)
(j)
(a) Nonperformance and/or nonpayment.
(b) Losses caused by default in performance of covenants or breach of any warranty or representation in the purchase agreement.
(c) The debtor becomes the subject of bankruptcy or other insolvency proceedings.
(d) The terms of these guarantees are continuing. Certain representations and warranties relating to corporate existence, transaction authorization and/or tax
matters survive indefinitely. As of Dec. 31, 2012, no claims had been made.
(e) The indemnification provisions of the guarantee expired in 2010. As of Dec. 31, 2012, there is a pending indemnification claim causing the guarantee
liability to remain outstanding until the final resolution. Pursuant to the terms of its professional liability policy, Utility Engineering Corporation is insured
up to $35 million.
(f) Certain representations and warranties relating to tax matters survive until the expiration of their respective statutes of limitations. As of Dec. 31, 2012, no
claims had been made.
(g) The term of this guarantee expires in 2017, which is the final scheduled repayment date for the loans. As of Dec. 31, 2012, no claims had been made by the
lender.
(h) The term of this guarantee expires in 2017 when the associated leases expire.
(i) Due to the magnitude of projects associated with the surety bonds, the total current exposure of this indemnification cannot be determined. Xcel Energy Inc.
believes the exposure to be significantly less than the total amount of the outstanding bonds.
(j) Failure of Xcel Energy Inc. or one of its subsidiaries to perform under the agreement that is the subject of the relevant bond. In addition, per the indemnity
agreement between Xcel Energy Inc. and the various surety companies, the surety companies have the discretion to demand that collateral be posted.
(k) The surety bonds primarily relate to workers compensation benefits and utility projects. The workers compensation bonds are renewed annually and the
project based bonds expire in conjunction with the completion of the related projects.
Indemnification Agreements
In connection with the acquisition of the 201 MW Nobles wind project in 2011, NSP-Minnesota agreed to indemnify the seller for
losses arising out of a breach of certain representations and warranties. NSP-Minnesota’s indemnification obligation is capped at
$20 million, in the aggregate, at Dec. 31, 2012 and Dec. 31, 2011. The indemnification obligation expires in March 2013. NSP-
Minnesota has not recorded a liability related to this indemnity at Dec. 31, 2012 or 2011.