Xcel Energy 2014 Annual Report Download - page 163

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In April 2013, the FERC issued an order on rehearing. The FERC confirmed that the City of Seattle would be able to attempt to obtain
refunds back from January 2000, but reaffirmed the transaction-specific standard that the City of Seattle and other complainants would
have to comply with to obtain refunds. In addition, the FERC rejected the imposition of any market-wide remedies. Although the
FERC order on rehearing established the period for which the City of Seattle could seek refunds as January 2000 through June 2001, it
is unclear what claim the City of Seattle has against PSCo prior to June 2000. In the proceeding, the City of Seattle does not allege
specific misconduct or tariff violations by PSCo but instead asserts generally that the rates charged by PSCo and other sellers were
excessive.
A hearing in this case was held before a FERC ALJ and concluded in October 2013. In March 2014, the FERC ALJ issued an initial
decision which rejected all of the City of Seattle’s claims against PSCo and other respondents. With respect to the period Jan. 1, 2000
through Dec. 24, 2000, the FERC ALJ rejected the City of Seattle’s assertion that any of the sales made to the City of Seattle resulted
in an excessive burden to the City of Seattle, the applicable legal standard for the City of Seattle’s challenges during this period. With
respect to the period Dec. 25, 2000 through June 20, 2001, the FERC ALJ concluded that the City of Seattle had failed to establish a
causal link between any contracts and any claimed unlawful market activity, the standard required by the FERC in its remand order.
The City of Seattle contested the FERC ALJ’s initial decision by filing a brief on exceptions to the FERC. PSCo filed a brief
answering the City of Seattle’s exception. This matter is now pending a decision by the FERC.
Preliminary calculations of the City of Seattle’s claim for refunds from PSCo are approximately $28 million excluding interest. PSCo
has concluded that a loss is reasonably possible with respect to this matter; however, given the surrounding uncertainties, PSCo is
currently unable to estimate the amount or range of reasonably possible loss in the event of an adverse outcome of this matter. In
making this assessment, PSCo considered two factors. First, notwithstanding PSCo’s view that the City of Seattle has failed to apply
the standard that the FERC has established in this proceeding, and the recognition that this case raises a novel issue and the FERC’s
standard has been challenged on appeal to the Ninth Circuit, the outcome of such an appeal cannot be predicted with any certainty.
Second, PSCo would expect to make equitable arguments against refunds even if the City of Seattle were to establish that it was
overcharged for transactions. If a loss were sustained, PSCo would attempt to recover those losses from other PRPs. No accrual has
been recorded for this matter.
Biomass Fuel Handling Reimbursement — NSP-Minnesota has a PPA through which it procures energy from Fibrominn, LLC
(Fibrominn). Under this agreement, NSP-Minnesota is charged for certain costs of transporting biomass fuels that are delivered to
Fibrominn’s generation facility. Fibrominn has demanded additional cost reimbursement for certain transportation costs incurred since
2007, as well as reimbursement for similar costs in future periods. Fibrominn claims that it is entitled to reimbursement from NSP-
Minnesota for past transportation costs of approximately $20 million. NSP-Minnesota has evaluated Fibrominn’s claim and based on
the terms of the PPA with Fibrominn and its current understanding of the facts, NSP-Minnesota disputes the validity of Fibrominn’s
claim, on the ground that, among other things, it seeks to impose contractual obligations on NSP-Minnesota that are neither supported
by the terms nor the intent of the PPA. NSP-Minnesota has concluded that a loss is reasonably possible with respect to this matter;
however, given the surrounding uncertainties, NSP-Minnesota is currently unable to determine the amount of reasonably possible loss.
If a loss were sustained, NSP-Minnesota would attempt to recover these fuel-related costs in rates. No accrual has been recorded for
this matter.
Nuclear Power Operations and Waste Disposal
Nuclear Waste Disposal Litigation — In 1998, NSP-Minnesota filed a complaint in the U.S. Court of Federal Claims against the
United States requesting breach of contract damages for the DOE’s failure to begin accepting spent nuclear fuel by Jan. 31, 1998, as
required by the contract between the United States and NSP-Minnesota. NSP-Minnesota sought contract damages in this lawsuit
through Dec. 31, 2004. In September 2007, the Court awarded NSP-Minnesota $116.5 million in damages. In August 2007, NSP-
Minnesota filed a second complaint; this lawsuit claimed damages for the period Jan. 1, 2005 through Dec. 31, 2008.
In July 2011, the United States and NSP-Minnesota executed a settlement agreement resolving both lawsuits, providing an initial $100
million payment from the United States to NSP-Minnesota, and providing a method by which NSP-Minnesota can recover its spent
fuel storage costs through 2013, estimated to be an additional $100 million. In January 2014, the United States proposed, and NSP-
Minnesota accepted, an extension to the settlement agreement which will allow NSP-Minnesota to recover spent fuel storage costs
through 2016. The extension does not address costs for used fuel storage after 2016; such costs could be the subject of future
litigation. In December 2014, NSP-Minnesota received a settlement payment of $32.8 million. NSP-Minnesota has received a total
of $214.7 million of settlement proceeds as of Dec. 31, 2014. Amounts received from the installments, except for approved reductions
such as legal costs, will be subsequently returned to customers through a reduction of future rate increases or credited through another
regulatory mechanism.
Other Contingencies
See Note 12 for further discussion.