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30
PSCo purchases natural gas from independent suppliers, generally based on market indices that reflect current prices. The natural gas
is delivered under transportation agreements with interstate pipelines. These agreements provide for firm deliverable pipeline capacity
of approximately 1,814,265 MMBtu per day, which includes 850,840 MMBtu of natural gas held under third-party underground
storage agreements. In addition, PSCo operates three company-owned underground storage facilities, which provide approximately
41,000 MMBtu of natural gas supplies on a peak day. The balance of the quantities required to meet firm peak day sales obligations
are primarily purchased at PSCo’s city gate meter stations.
PSCo is required by CPUC regulations to file a natural gas purchase plan each year projecting and describing the quantities of natural
gas supplies, upstream services and the costs of those supplies and services for the 12-month period of the following year. PSCo is
also required to file a natural gas purchase report by October of each year reporting actual quantities and costs incurred for natural gas
supplies and upstream services for the previous 12-month period.
Natural Gas Supply and Costs
PSCo actively seeks natural gas supply, transportation and storage alternatives to yield a diversified portfolio that provides increased
flexibility, decreased interruption and financial risk and economical rates. In addition, PSCo conducts natural gas price hedging
activities that have been approved by the CPUC.
The following table summarizes the average delivered cost per MMBtu of natural gas purchased for resale by PSCo’s regulated retail
natural gas distribution business:
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.91
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.20
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28
The higher cost of natural gas was primarily due to higher at market prices from increased demand because of cold weather in early
2014.
PSCo has natural gas supply, transportation and storage agreements that include obligations for the purchase and/or delivery of
specified volumes of natural gas or to make payments in lieu of delivery. At Dec. 31, 2014, PSCo was committed to approximately
$1.4 billion in such obligations under these contracts, which expire in various years from 2015 through 2029.
PSCo purchases natural gas by optimizing a balance of long-term and short-term natural gas purchases, firm transportation and natural
gas storage contracts. During 2014, PSCo purchased natural gas from approximately 34 suppliers.
See Items 1A and 7 for further discussion of natural gas supply and costs.
SPS
Natural Gas Facilities Used for Electric Generation
SPS does not provide retail natural gas service, but purchases and transports natural gas for certain of its generation facilities and
operates natural gas pipeline facilities connecting the generation facilities to interstate natural gas pipelines. SPS is subject to the
jurisdiction of the FERC with respect to certain natural gas transactions in interstate commerce; and to the jurisdiction of the DOT and
the PUCT for pipeline safety compliance.
See Items 1A and 7 for further discussion of natural gas supply and costs.