Xcel Energy 2015 Annual Report Download - page 134
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The following table details the gross notional amounts of commodity forwards, options and FTRs at Dec. 31:
(Amounts in Thousands) (a)(b) 2015 2014
MWh of electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,487 56,361
MMBtu of natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,874 927
Gallons of vehicle fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 282
(a) Amounts are not reflective of net positions in the underlying commodities.
(b) Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise.
Consideration of Credit Risk and Concentrations — Xcel Energy continuously monitors the creditworthiness of the counterparties to
its interest rate derivatives and commodity derivative contracts prior to settlement, and assesses each counterparty’s ability to perform
on the transactions set forth in the contracts. Given this assessment, as well as an assessment of the impact of Xcel Energy’s own
credit risk when determining the fair value of derivative liabilities, the impact of considering credit risk was immaterial to the fair
value of unsettled commodity derivatives presented in the consolidated balance sheets.
Xcel Energy Inc. and its subsidiaries employ additional credit risk control mechanisms when appropriate, such as letters of credit,
parental guarantees, standardized master netting agreements and termination provisions that allow for offsetting of positive and
negative exposures. Credit exposure is monitored and, when necessary, the activity with a specific counterparty is limited until credit
enhancement is provided.
Xcel Energy’s utility subsidiaries’ most significant concentrations of credit risk with particular entities or industries are contracts with
counterparties to their wholesale, trading and non-trading commodity activities. At Dec. 31, 2015, two of Xcel Energy’s 10 most
significant counterparties for these activities, comprising $18.8 million or 9 percent of this credit exposure, had investment grade
credit ratings from S&P’s, Moody’s or Fitch Ratings. Six of the 10 most significant counterparties, comprising $66.3 million or 30
percent of this credit exposure, were not rated by these external agencies, but based on Xcel Energy’s internal analysis, had credit
quality consistent with investment grade. The remaining two most significant counterparties, comprising $11.3 million or 5 percent of
this credit exposure, had credit quality less than investment grade, based on ratings from external and internal analysis. Nine of these
significant counterparties are municipal or cooperative electric entities or other utilities.
Financial Impact of Qualifying Cash Flow Hedges — The impact of qualifying interest rate and vehicle fuel cash flow hedges on
Xcel Energy’s accumulated other comprehensive loss, included in the consolidated statements of common stockholders’ equity and in
the consolidated statements of comprehensive income, is detailed in the following table:
(Thousands of Dollars) 2015 2014 2013
Accumulated other comprehensive loss related to cash flow hedges at Jan. 1 . . . . . . . . . . . . $ (57,628) $ (59,753) $ (61,241)
After-tax net unrealized (losses) gains related to derivatives accounted for as hedges . . . . . . (70)(163) 12
After-tax net realized losses on derivative transactions reclassified into earnings . . . . . . . . . 2,836 2,288 1,476
Accumulated other comprehensive loss related to cash flow hedges at Dec. 31. . . . . . . . . . . $ (54,862) $ (57,628) $ (59,753)
The following tables detail the impact of derivative activity during the years ended Dec. 31, 2015, 2014 and 2013, on accumulated
other comprehensive loss, regulatory assets and liabilities, and income:
Year Ended Dec. 31, 2015
Pre-Tax Fair Value
Losses Recognized
During the Period in:
Pre-Tax Losses
Reclassified into Income
During the Period from:
Pre-Tax Losses
Recognized
During the Period
in Income(Thousands of Dollars)
Accumulated
Other
Comprehensive
Loss
Regulatory
(Assets) and
Liabilities
Accumulated
Other
Comprehensive
Loss
Regulatory
Assets and
(Liabilities)
Derivatives designated as cash
flow hedges
Interest rate . . . . . . . . . . . . . . . . . $ — $ — $ 4,515 (a) $ — $ —
Vehicle fuel and other
commodity. . . . . . . . . . . . . . . . (116) — 131 (b) — —
Total . . . . . . . . . . . . . . . . . . . . $ (116) $ — $ 4,646 $ — $ —
Other derivative instruments
Commodity trading . . . . . . . . . . . $ — $ — $ — $ — $ (7,286) (c)
Electric commodity. . . . . . . . . . . — (18,543) — 16,338 (d) —
Natural gas commodity. . . . . . . . — (16,163) — 15,694 (e) (11,840) (e)
Total . . . . . . . . . . . . . . . . . . . . $ — $ (34,706) $ — $ 32,032 $ (19,126)