Xcel Energy 2014 Annual Report Download - page 151

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PSCo records amortization for its capital leases as cost of natural gas sold and transported on the consolidated statements of income.
Total amortization expenses under capital lease assets were approximately $7.2 million, $6.3 million and $5.7 million for 2014, 2013
and 2012, respectively. Following is a summary of property held under capital leases:
(Millions of Dollars) 2014 2013
Gas storage facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200.5 $ 200.5
Gas pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7 20.7
Property held under capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221.2 221.2
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49.0) (41.8)
Total property held under capital leases, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 172.2 $ 179.4
The remainder of the leases, primarily for office space, railcars, generating facilities, trucks, aircraft, cars and power-operated
equipment, are accounted for as operating leases. Total expenses under operating lease obligations for Xcel Energy were
approximately $271.9 million, $242.1 million and $217.8 million for 2014, 2013 and 2012, respectively. These expenses include
capacity payments for PPAs accounted for as operating leases of $228.2 million, $197.7 million and $174.4 million in 2014, 2013 and
2012, respectively, recorded to electric fuel and purchased power expenses.
Included in the future commitments under operating leases are estimated future capacity payments under PPAs that have been
accounted for as operating leases in accordance with the applicable accounting guidance.
Future commitments under operating and capital leases are:
(Millions of Dollars) Operating Leases
PPA (a) (b)
Operating
Leases
Total
Operating
Leases Capital Leases
2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26.2 $ 228.3 $ 254.5 $ 17.8
2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.6 215.4 239.0 17.1
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4 210.0 228.4 15.0
2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 211.3 228.6 14.7
2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.8 213.3 235.1 14.5
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132.9 1,785.1 1,918.0 273.1
Total minimum obligation. . . . . . . . . . . . . . . . . . . . . . . 352.2
Interest component of obligation. . . . . . . . . . . . . . . . . . . (249.5)
Present value of minimum obligation . . . . . . . . . . . $ 102.7 (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 for which
the utility subsidiaries are required to reimburse natural gas or biomass fuel costs, or to participate in tolling arrangements under
which the utility 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. The Xcel Energy utility subsidiaries had approximately 3,698 MW and 3,338 MW of capacity under long-
term PPAs as of Dec. 31, 2014, and 2013, respectively, with entities that have been determined to be variable interest entities. These
agreements have expiration dates through the year 2033.