Xcel Energy 2015 Annual Report Download - page 59
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Our generation, transmission, distribution and fuel storage facilities, information technology systems and other infrastructure or
physical assets, as well as the information processed in our systems (e.g., information about our customers, employees, operations,
infrastructure and assets) could be affected by cyber security incidents, including those caused by human error. Our industry has
begun to see an increased volume and sophistication of cyber security incidents from international activist organizations, Nation States
and individuals. Cyber security incidents could harm our businesses by limiting our generating, transmitting and distributing
capabilities, delaying our development and construction of new facilities or capital improvement projects to existing facilities,
disrupting our customer operations or exposing us to liability. Our generation, transmission systems and natural gas pipelines are part
of an interconnected system. Therefore, a disruption caused by the impact of a cyber security incident of the regional electric
transmission grid, natural gas pipeline infrastructure or other fuel sources of our third party service providers’ operations, could also
negatively impact our business. In addition, such an event would likely receive regulatory scrutiny at both the federal and state level.
We are unable to quantify the potential impact of cyber security threats or subsequent related actions. These potential cyber security
incidents and corresponding regulatory action could result in a material decrease in revenues and may cause significant additional
costs (e.g., penalties, third party claims, repairs, insurance or compliance) and potentially disrupt our supply and markets for natural
gas, oil and other fuels.
We maintain security measures designed to protect our information technology systems, network infrastructure and other assets.
However, these assets and the information they process may be vulnerable to cyber security incidents, including the resulting
disability, or failures of assets or unauthorized access to assets or information. If our technology systems were to fail or be breached,
or those of our third-party service providers, we may be unable to fulfill critical business functions, including effectively maintaining
certain internal controls over financial reporting. We are unable to quantify the potential impact of cyber security incidents on our
business.
Rising energy prices could negatively impact our business.
Although commodity prices are currently relatively low, if fuel costs increase, customer demand could decline and bad debt expense
may rise, which could have a material impact on our results of operations. While we have fuel clause recovery mechanisms in most of
our states, higher fuel costs could significantly impact our results of operations if costs are not recovered. Delays in the timing of the
collection of fuel cost recoveries as compared with expenditures for fuel purchases could have an impact on our cash flows. Low fuel
costs could have a positive impact on sales, although particularly on the southern part of our service territory, low oil prices could
negatively impact oil and gas production activities. We are unable to predict future prices or the ultimate impact of such prices on our
results of operations or cash flows.
Our operating results may fluctuate on a seasonal and quarterly basis and can be adversely affected by milder weather.
Our electric and natural gas utility businesses are seasonal, and weather patterns can have a material impact on our operating
performance. Demand for electricity is often greater in the summer and winter months associated with cooling and heating. Because
natural gas is heavily used for residential and commercial heating, the demand depends heavily upon weather patterns throughout our
service territory, and a significant amount of natural gas revenues are recognized in the first and fourth quarters related to the heating
season. Accordingly, our operations have historically generated less revenues and income when weather conditions are milder in the
winter and cooler in the summer. Unusually mild winters and summers could have an adverse effect on our financial condition, results
of operations, or cash flows.
Item 1B — Unresolved Staff Comments
None.