Xcel Energy 2015 Annual Report Download - page 89
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Regulation of Derivatives — In July 2010, financial reform legislation was passed that provides for the regulation of derivative
transactions amongst other provisions. Provisions within the bill provide the CFTC and the SEC with expanded regulatory authority
over derivative and swap transactions. The CFTC ruled that swap dealing activity conducted by entities for the preceding 12 months
under a notional limit, initially set at $8 billion, will fall under the general de minimis threshold and will not subject an entity to
registering as a swap dealer. The de minimis threshold is scheduled to be reduced to $3 billion in 2017. Xcel Energy’s current and
projected swap activity is well below these de minimis thresholds. The bill also contains provisions that exempt certain derivatives
end users from much of the clearing and margin requirements and Xcel Energy’s Board of Directors has renewed the end-user
exemption on an annual basis. Xcel Energy is currently meeting all reporting requirements and transaction restrictions.
Pension Fund — Xcel Energy’s pension assets are invested in a diversified portfolio of domestic and international equity securities,
short-term to long-duration fixed income and interest rate swap securities, and alternative investments, including private equity, real
estate, hedge funds and commodity investments.
The funded status and pension assumptions are summarized in the following tables:
(Millions of Dollars) Dec. 31, 2015 Dec. 31, 2014
Fair value of pension assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,884 $ 3,084
Projected pension obligation (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,568 3,747
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (684) $ (663)
(a) Excludes nonqualified plan of $42 million and $47 million at Dec. 31, 2015 and 2014, respectively.
Pension Assumptions 2015 2014
Discount rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.66% 4.11%
Expected long-term rate of return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.87 7.09
Capital Sources
Short-Term Funding Sources — Xcel Energy uses a number of sources to fulfill short-term funding needs, including operating cash
flow, notes payable, commercial paper and bank lines of credit. The amount and timing of short-term funding needs depend in large
part on financing needs for construction expenditures, working capital and dividend payments.
Short-Term Investments — Xcel Energy Inc., NSP-Minnesota, NSP-Wisconsin, PSCo and SPS maintain cash operating and short-
term investment accounts. At Dec. 31, 2015 and 2014, there was $3.3 million of cash held in these accounts.
Commercial Paper — Xcel Energy Inc., NSP-Minnesota, NSP-Wisconsin, PSCo and SPS each have individual commercial paper
programs. The authorized levels for these commercial paper programs are:
• $1 billion for Xcel Energy Inc.;
• $700 million for PSCo;
• $500 million for NSP-Minnesota;
• $400 million for SPS; and
• $150 million for NSP-Wisconsin.
Commercial paper outstanding for Xcel Energy was as follows:
(Amounts in Millions, Except Interest Rates) Three Months Ended
Dec. 31, 2015
Borrowing limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,750
Amount outstanding at period end. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 846
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
Maximum amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 846
Weighted average interest rate, computed on a daily basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.56%
Weighted average interest rate at end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.82