Xcel Energy 2015 Annual Report Download - page 158
Download and view the complete annual report
Please find page 158 of the 2015 Xcel Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.140
Employment, Tort and Commercial Litigation
Pacific Northwest FERC Refund Proceeding — A complaint with the FERC posed that sales made in the Pacific Northwest in 2000
and 2001 through bilateral contracts were unjust and unreasonable under the Federal Power Act. The City of Seattle (the City) alleges
between $34 million to $50 million in sales with PSCo is subject to refund. In 2003, the FERC terminated the proceeding, although it
was later remanded back to the FERC in 2007 by the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit).
In May 2015 in the remand proceeding, the FERC issued an order rejecting the City’s claim that any of the sales made resulted in an
excessive burden and concluded that the City failed to establish a causal link between any contracts and any claimed unlawful market
activity. In June 2015, the City requested the FERC grant rehearing of its order, which the FERC denied in December. The City may
appeal this order.
Also in December 2015, the Ninth Circuit issued an order and held that the standard of review applied by the FERC to the contracts
which the City was challenging is appropriate. The Ninth Circuit dismissed questions concerning whether the FERC properly
established the scope of the hearing, and determined that the challenged orders are preliminary and that the Ninth Circuit lacks
jurisdiction to review evidentiary decisions until after the FERC’s proceedings are final. The City joined the State of California in its
request seeking rehearing of this order.
Preliminary calculations of the City of Seattle’s claim for refunds from PSCo are approximately $28 million excluding interest. PSCo
has concluded that a loss is reasonably possible with respect to this matter; however, given the surrounding uncertainties, PSCo is
currently unable to estimate the amount or range of reasonably possible loss in the event of an adverse outcome of this matter. In
making this assessment, PSCo considered two factors. First, notwithstanding PSCo’s view that the City of Seattle has failed to apply
the standard that the FERC has established in this proceeding, and the recognition that this case raises a novel issue and the scope of
the proceeding established by FERC is being challenged in the Ninth Circuit, the outcome of such an appeal cannot be predicted with
any certainty. Second, PSCo would expect to make equitable arguments against refunds even if the City of Seattle were to establish
that it was overcharged for transactions. If a loss were sustained, PSCo would attempt to recover those losses from other PRPs. No
accrual has been recorded for this matter.
Gas Trading Litigation — e prime, inc. (e prime) is a wholly owned subsidiary of Xcel Energy. e prime was in the business of natural
gas trading and marketing, but has not engaged in natural gas trading or marketing activities since 2003. Thirteen lawsuits were
commenced against e prime and Xcel Energy (and NSP-Wisconsin, in two instances) between 2003 and 2009 alleging fraud and
anticompetitive activities in conspiring to restrain the trade of natural gas and manipulate natural gas prices. The cases were
consolidated in U.S. District Court in Nevada. In 2009, five of the cases were settled and one was dismissed. The U.S. District Court
in 2011 issued an order dismissing entirely six of the remaining seven lawsuits, and partially dismissing the seventh. Plaintiffs
appealed the dismissals to the Ninth Circuit, which reversed the District Court. The matter was ultimately heard by the U.S. Supreme
Court in early 2015, which agreed with the Ninth Circuit and remanded the matter to the U.S. District Court. In September 2015, the
District Court held a status conference and set deadlines for certain litigation related activities in 2016. A trial date has not yet been
set, but is not expected to occur prior to late 2016 or early 2017. Xcel Energy and e prime have concluded that a loss is remote with
respect to this matter.
Other Contingencies
Limited Partnership Investment — In October 2015, Energy Impact Fund Investment, LLC (Energy Impact LLC), a wholly-owned
non-utility subsidiary of Xcel Energy Inc., entered into a subscription agreement for a limited partnership interest, committing Energy
Impact LLC to up to $50 million of total future investments in the newly formed Energy Impact Fund Limited Partnership (Energy
Impact Fund LP) over the next five years. Along with the capital contributions of the other limited partners, who are primarily
investor-owned utilities or their affiliates, the funding is expected to be used to make private equity investments in entities that are
active developers and producers of new and emerging energy technologies applicable to utility operations, products and services.
Energy Impact LLC made $0.6 million of capital contributions to the limited partnership in 2015 and uses the equity method to
account for its investment.
See Note 12 for further discussion.
14. Nuclear Obligations
Fuel Disposal — NSP-Minnesota is responsible for temporarily storing used or spent nuclear fuel from its nuclear plants. The DOE is
responsible for permanently storing spent fuel from NSP-Minnesota’s nuclear plants as well as from other U.S. nuclear plants, but no
such facility is yet available. NSP-Minnesota has funded its portion of the DOE’s permanent disposal program since 1981. Through
May 2014, the fuel disposal fees were based on a charge of 0.1 cent per KWh sold to customers from nuclear generation. Since that
time, the DOE has set the fee to zero.