Xcel Energy 2015 Annual Report Download - page 149
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Fuel Contracts — SPS purchases all of its coal requirements for its Harrington and Tolk electric generating stations from TUCO under
contracts for those facilities that expire in December 2016 and December 2017, respectively. TUCO arranges for the purchase,
receiving, transporting, unloading, handling, crushing, weighing, and delivery of coal to meet SPS’ requirements. TUCO is
responsible for negotiating and administering contracts with coal suppliers, transporters and handlers.
No significant financial support has been, or is required to be provided to TUCO by SPS, other than contractual payments for
delivered coal. However, the fuel contracts create a variable interest in TUCO due to SPS’ reimbursement of certain fuel procurement
costs. SPS has determined that TUCO is a variable interest entity. SPS has concluded that it is not the primary beneficiary of TUCO
because SPS does not have the power to direct the activities that most significantly impact TUCO’s economic performance.
Low-Income Housing Limited Partnerships — Eloigne and NSP-Wisconsin have entered into limited partnerships for the construction
and operation of affordable rental housing developments which qualify for low-income housing tax credits. Xcel Energy Inc. has
determined Eloigne and NSP-Wisconsin’s low-income housing limited partnerships to be variable interest entities primarily due to
contractual arrangements within each limited partnership that establish sharing of ongoing voting control and profits and losses that
does not consistently align with the partners’ proportional equity ownership. These limited partnerships are designed to qualify for
low-income housing tax credits. Eloigne and NSP-Wisconsin generally receive a larger allocation of the tax credits than the general
partners at inception of the arrangements. Xcel Energy Inc. has determined that Eloigne and NSP-Wisconsin have the power to direct
the activities that most significantly impact these entities’ economic performance, and therefore Xcel Energy Inc. consolidates these
limited partnerships in its consolidated financial statements.
Equity financing for these entities has been provided by Eloigne, NSP-Wisconsin and the general partner of each limited partnership.
Xcel Energy’s risk of loss is limited to its capital contributions, adjusted for any distributions and its share of undistributed profits and
losses; no significant additional financial support has been, or is required to be provided to the limited partnerships by Eloigne or
NSP-Wisconsin. Mortgage-backed debt typically comprises the majority of the financing at inception of each limited partnership and
is paid over the life of the limited partnership arrangement. Obligations of the limited partnerships are generally secured by the
housing properties of each limited partnership, and the creditors of each limited partnership have no significant recourse to Xcel
Energy Inc. or its subsidiaries. Likewise, the assets of the limited partnerships may only be used to settle obligations of the limited
partnerships, and not those of Xcel Energy Inc. or its subsidiaries.
Amounts reflected in Xcel Energy’s consolidated balance sheets for the Eloigne and NSP-Wisconsin low-income housing limited
partnerships include the following:
(Thousands of Dollars) Dec. 31, 2015 Dec. 31, 2014
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,274 $ 6,609
Property, plant and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,480 53,047
Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,394 1,503
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 59,148 $ 61,159
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,540 $ 7,774
Mortgages and other long-term debt payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,082 31,207
Other noncurrent liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644 619
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,266 $ 39,600
Technology Agreements — Xcel Energy has a contract that extends through December 2019 with International Business Machines
Corp. (IBM) for information technology services. The contract is cancelable at Xcel Energy’s option, although Xcel Energy would be
obligated to pay 50 percent of the contract value for early termination. Xcel Energy capitalized or expensed $109.5 million, $111.3
million and $90.3 million associated with the IBM contract in 2015, 2014 and 2013, respectively.
Xcel Energy’s contract with Accenture for information technology services extends through December 2020. The contract is
cancelable at Xcel Energy’s option, although there are financial penalties for early termination. Xcel Energy capitalized or expensed
$17.3 million, $27.3 million and $23.7 million associated with the Accenture contract in 2015, 2014 and 2013, respectively.