Xcel Energy 2015 Annual Report Download - page 138
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The following table presents the changes in Level 3 commodity derivatives for the years ended Dec. 31, 2015, 2014 and 2013:
Year Ended Dec. 31
(Thousands of Dollars) 2015 2014 2013
Balance at Jan. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,155 $ 41,660 $ 16,649
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,712 135,008 61,474
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (69,754)(145,974) (45,199)
Transfers out of Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1,093) —
Net transactions recorded during the period:
Gains recognized in earnings (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,533 10,692 3,947
(Losses) gains recognized as regulatory assets and liabilities . . . . . . . . . . . . . . . (33,618) 15,862 4,789
Balance at Dec. 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,028 $ 56,155 $ 41,660
(a) These amounts relate to commodity derivatives held at the end of the period.
Xcel Energy recognizes transfers between levels as of the beginning of each period. There were no transfers of amounts between
levels for derivative instruments for the years ended Dec. 31, 2015 and 2013. The transfer of amounts from Level 3 to Level 2 in the
year ended Dec. 31, 2014 was due to the valuation of certain long-term derivative contracts for which observable commodity pricing
forecasts became a more significant input during the period.
Fair Value of Long-Term Debt
As of Dec. 31, 2015 and 2014, other financial instruments for which the carrying amount did not equal fair value were as follows:
2015 2014
(Thousands of Dollars) Carrying
Amount Fair Value Carrying
Amount Fair Value
Long-term debt, including current portion . . . . . . . . . . . . . . . . . . $ 13,147,740 $ 14,094,744 $ 11,757,360 $ 13,360,236
The fair value of Xcel Energy’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest
rates for similar securities. The fair value estimates are based on information available to management as of Dec. 31, 2015 and 2014,
and given the observability of the inputs to these estimates, the fair values presented for long-term debt have been assigned a Level 2.
12. Rate Matters
NSP-Minnesota
Pending and Recently Concluded Regulatory Proceedings — MPUC
NSP-Minnesota – Minnesota 2014 Multi-Year Electric Rate Case — In November 2013, NSP-Minnesota filed a two-year electric
rate case with the MPUC. The rate case was based on a ROE of 10.25 percent, a 52.5 percent equity ratio, a 2014 average electric rate
base of $6.67 billion and an additional average rate base of $412 million in 2015. The NSP-Minnesota electric rate case initially
reflected a requested increase in revenues of approximately $193 million, or 6.9 percent, in 2014 and an additional $98 million, or 3.5
percent, in 2015. The request included a proposed rate moderation plan. In December 2013, the MPUC approved interim rates of
$127 million, effective Jan. 3, 2014, subject to refund. In 2014, NSP-Minnesota revised its requested rate increase to $115.3 million
for 2014 and to $106.0 million for 2015, for a total combined unadjusted increase of $221.3 million.
In May 2015, the MPUC ordered a total increase of $166.1 million, or 5.9 percent, consisting of $58.9 million and $125.2 million in
2014 and 2015, respectively, and an $18.0 million adjustment related to disallowance of certain Monticello LCM/EPU costs. The
MPUC also approved a three-year, decoupling pilot with a 3 percent cap on base revenue for the residential and small commercial and
industrial classes, based on actual sales, effective Jan. 1, 2016. The decoupling mechanism would eliminate the impact of changes in
electric sales due to conservation and weather variability for these classes.
In July 2015, the MPUC deliberated on requests for reconsideration and determined the Monticello EPU project was not yet used-and-
useful, as final approval related to the full EPU uprate condition had not been received from the NRC as of June 30, 2015. As a result,
$13.8 million was excluded from final rates. Monticello subsequently received final NRC compliance approval in July 2015. The
MPUC also approved 2015 interim rates effective March 3, 2015 and stated that the 2014 interim rate refund obligation be netted
against the 2015 interim rate revenue under-collections.
The MPUC’s decisions resulted in a total estimated 2014 and 2015 annual rate increase of $149.4 million, or 5.3 percent.