Xcel Energy 2012 Annual Report Download - page 150

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NSP-Minnesota purchases insurance for property damage and site decontamination cleanup costs from Nuclear Electric Insurance
Ltd. (NEIL). The coverage limits are $2.25 billion for each of NSP-Minnesota’s two nuclear plant sites. NEIL also provides
business interruption insurance coverage, including the cost of replacement power obtained during certain prolonged accidental
outages of nuclear generating units. Premiums are expensed over the policy term. All companies insured with NEIL are subject to
retroactive premium adjustments if losses exceed accumulated reserve funds. Capital has been accumulated in the reserve funds
of NEIL to the extent that NSP-Minnesota would have no exposure for retroactive premium assessments in case of a single
incident under the business interruption and the property damage insurance coverage. However, in each calendar year, NSP-
Minnesota could be subject to maximum assessments of approximately $16.5 million for business interruption insurance and
$35.8 million for property damage insurance if losses exceed accumulated reserve funds.
Legal Contingencies
Xcel Energy is involved in various litigation matters that are being defended and handled in the ordinary course of business. The
assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves
a series of complex judgments about future events. Management maintains accruals for such losses that are probable of being incurred
and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in
certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages,
or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding the timing or
ultimate resolution of such matters, including a possible eventual loss. For current proceedings not specifically reported herein,
management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings would have a material effect on
Xcel Energy’s financial statements. Unless otherwise required by GAAP, legal fees are expensed as incurred.
Environmental Litigation
Native Village of Kivalina vs. Xcel Energy Inc. et al. — In February 2008, the City and Native Village of Kivalina, Alaska, filed
a lawsuit in the U.S. District Court for the Northern District of California against Xcel Energy and 23 other utility, oil, gas and
coal companies. Plaintiffs claim that defendants’ emission of CO2 and other GHGs contribute to global warming, which is
harming their village. Xcel Energy believes the claims asserted in this lawsuit are without merit and joined with other utility
defendants in filing a motion to dismiss in June 2008. In October 2009, the U.S. District Court dismissed the lawsuit on
constitutional grounds. In November 2009, plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit
(Ninth Circuit). In October 2012, the Ninth Circuit affirmed the U.S. District Court’s dismissal and subsequently rejected
plaintiffs’ request for rehearing. The amount of damages claimed by plaintiffs is unknown, but likely includes the cost of
relocating the village of Kivalina. Plaintiffs’ alleged relocation is estimated to cost between $95 million to $400 million. Although
Xcel Energy believes the likelihood of loss is remote based primarily on existing case law, it is not possible to estimate the
amount or range of reasonably possible loss in the event of an adverse outcome of this matter. No accrual has been recorded for
this matter.
Comer vs. Xcel Energy Inc. et al. — In May 2011, less than a year after their initial lawsuit was dismissed, plaintiffs in this
purported class action lawsuit filed a second lawsuit against more than 85 utility, oil, chemical and coal companies in the U.S.
District Court in Mississippi. The complaint alleges defendants’ CO2 emissions intensified the strength of Hurricane Katrina and
increased the damage plaintiffs purportedly sustained to their property. Plaintiffs base their claims on public and private nuisance,
trespass and negligence. Among the defendants named in the complaint are Xcel Energy Inc., SPS, PSCo, NSP-Wisconsin and
NSP-Minnesota. The amount of damages claimed by plaintiffs is unknown. The defendants believe this lawsuit is without merit
and filed a motion to dismiss the lawsuit. In March 2012, the U.S. District Court granted this motion for dismissal. In April 2012,
plaintiffs appealed this decision to the U.S. Court of Appeals for the Fifth Circuit. Although Xcel Energy believes the likelihood
of loss is remote based primarily on existing case law, it is not possible to estimate the amount or range of reasonably possible
loss in the event of an adverse outcome of this matter. No accrual has been recorded for this matter.