Xcel Energy 2015 Annual Report Download - page 157
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Indeterminate AROs — PSCo has certain underground natural gas storage facilities that have special closure requirements for which
the final removal date cannot be determined. Additionally, outside of the known and recorded asbestos AROs, other plants or
buildings may contain asbestos due to the age of many of Xcel Energy’s facilities, but no confirmation or measurement of the amount
of asbestos or cost of removal could be determined as of Dec. 31, 2015. Therefore, an ARO has not been recorded for these facilities.
Removal Costs — Xcel Energy records a regulatory liability for the plant removal costs of generation, transmission and distribution
facilities of its utility subsidiaries that are recovered currently in rates. Generally, the accrual of future non-ARO removal obligations
is not required. However, long-standing ratemaking practices approved by applicable state and federal regulatory commissions have
allowed provisions for such costs in historical depreciation rates. These removal costs have accumulated over a number of years based
on varying rates as authorized by the appropriate regulatory entities. Given the long time periods over which the amounts were
accrued and the changing of rates over time, the utility subsidiaries have estimated the amount of removal costs accumulated through
historic depreciation expense based on current factors used in the existing depreciation rates.
The accumulated balances by entity were as follows at Dec. 31:
(Millions of Dollars) 2015 2014
NSP-Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 430 $ 396
PSCo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 366
SPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 68
NSP-Wisconsin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 123
Total Xcel Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,130 $ 953
Nuclear Insurance
NSP-Minnesota’s public liability for claims resulting from any nuclear incident is limited to $13.5 billion under the Price-Anderson
amendment to the Atomic Energy Act. NSP-Minnesota has secured $375 million of coverage for its public liability exposure with a
pool of insurance companies. The remaining $13.1 billion of exposure is funded by the Secondary Financial Protection Program,
available from assessments by the federal government in case of a nuclear accident. NSP-Minnesota is subject to assessments of up to
$127.3 million per reactor per accident for each of its three licensed reactors, to be applied for public liability arising from a nuclear
incident at any licensed nuclear facility in the United States. The maximum funding requirement is $19.0 million per reactor during
any one year. These maximum assessment amounts are both subject to inflation adjustment by the NRC and state premium taxes. The
NRC’s last adjustment was effective September 2013.
NSP-Minnesota purchases insurance for property damage and site decontamination cleanup costs from Nuclear Electric Insurance Ltd.
(NEIL). The coverage limits are $2.3 billion for each of NSP-Minnesota’s two nuclear plant sites. NEIL also provides business
interruption insurance coverage, including the cost of replacement power obtained during certain prolonged accidental outages of
nuclear generating units. Premiums are expensed over the policy term. All companies insured with NEIL are subject to retroactive
premium adjustments if losses exceed accumulated reserve funds. Capital has been accumulated in the reserve funds of NEIL to the
extent that NSP-Minnesota would have no exposure for retroactive premium assessments in case of a single incident under the
business interruption and the property damage insurance coverage. However, in each calendar year, NSP-Minnesota could be subject
to maximum assessments of approximately $19.9 million for business interruption insurance and $43.7 million for property damage
insurance if losses exceed accumulated reserve funds.
Legal Contingencies
Xcel Energy is involved in various litigation matters that are being defended and handled in the ordinary course of business. The
assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often
involves a series of complex judgments about future events. Management maintains accruals for such losses that are probable of
being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably
possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are
in the early stages, or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty
regarding the timing or ultimate resolution of such matters, including a possible eventual loss. For current proceedings not
specifically reported herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings
would have a material effect on Xcel Energy’s financial statements. Unless otherwise required by GAAP, legal fees are expensed as
incurred.