Xcel Energy 2015 Annual Report Download - page 77
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Income tax expense increased $39.8 million for 2014 compared with 2013. The increase was primarily due to higher 2014 pretax
earnings and recognition of additional R&E credits in 2013. These were partially offset by a 2014 tax benefit for prior year
adjustments. The ETR was 33.9 percent for 2014 compared with 33.8 percent for 2013. See Note 6 to the consolidated financial
statements for further discussion.
Xcel Energy Inc. and Other Results
The following tables summarize the net income and EPS contributions of Xcel Energy Inc. and its nonregulated businesses:
Contribution to Xcel Energy’s Earnings
(Millions of Dollars) 2015 2014 2013
Xcel Energy Inc. financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (56.1) $ (51.8) $ (62.9)
Eloigne (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 (0.5) (0.8)
Xcel Energy Inc. taxes and other results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.7)(5.0) (7.1)
Total Xcel Energy Inc. and other costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (58.7) $ (57.3) $ (70.8)
Contribution to Xcel Energy’s EPS
(Earnings per Share) 2015 2014 2013
Xcel Energy Inc. financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.11) $ (0.10) $ (0.13)
Eloigne (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
Xcel Energy Inc. taxes and other results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0.01) (0.01)
Total Xcel Energy Inc. and other costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.11) $ (0.11) $ (0.14)
(a) Amounts include gains or losses associated with sales of properties held by Eloigne.
Xcel Energy Inc.’s results include interest charges, which are incurred at Xcel Energy Inc. and are not directly assigned to individual
subsidiaries.
Factors Affecting Results of Operations
Xcel Energy’s utility revenues depend on customer usage, which varies with weather conditions, general business conditions and the
cost of energy services. Various regulatory agencies approve the prices for electric and natural gas service within their respective
jurisdictions and affect Xcel Energy’s ability to recover its costs from customers. The historical and future trends of Xcel Energy’s
operating results have been, and are expected to be, affected by a number of factors, including those listed below.
General Economic Conditions
Economic conditions may have a material impact on Xcel Energy’s operating results. While economic growth has been improving
over the past year, management cannot predict whether this trend will be sustained going forward. Other events impact overall
economic conditions and management cannot predict the impact of fluctuating energy prices, terrorist activity, war or the threat of war.
However, Xcel Energy could experience a material impact to its results of operations, future growth or ability to raise capital resulting
from a sustained general slowdown in economic growth or a significant increase in interest rates.
Fuel Supply and Costs
Xcel Energy Inc.’s operating utilities have varying dependence on coal, natural gas and uranium. Changes in commodity prices are
generally recovered through fuel recovery mechanisms and have very little impact on earnings. However, availability of supply, the
potential implementation of a carbon tax or emissions-related generation restrictions and unanticipated changes in regulatory recovery
mechanisms could impact our operations. See Item 1 for further discussion of fuel supply and costs.
Pension Plan Costs and Assumptions
Xcel Energy has significant net pension and postretirement benefit costs that are measured using actuarial valuations. Inherent in
these valuations are key assumptions including discount rates and expected return on plan assets. Xcel Energy evaluates these key
assumptions at least annually by analyzing current market conditions, which include changes in interest rates and market returns.
Changes in the related net pension and postretirement benefits costs and funding requirements may occur in the future due to changes
in assumptions. The payout of a significant percentage of pension plan liabilities in a single year due to high retirements or employees
leaving the company would trigger settlement accounting and could require the company to recognize material incremental pension
expense related to unrecognized plan losses in the year these liabilities are paid. For further discussion and a sensitivity analysis on
these assumptions, see “Employee Benefits” under Critical Accounting Policies and Estimates.