Xcel Energy 2002 Annual Report Download - page 70

Xcel Energy evaluates all of its contracts within the regulated and nonregulated operations when such contracts are entered to determine
if they are derivatives and if so, if they qualify and meet the normal designation requirements under SFAS No. 133. None of the contracts
entered into within the trading operation are considered normal.
Normal purchases and normal sales contracts are accounted for as executory contracts as required under other generally accepted
accounting principles.
18.commitments and contingencies
commitments
Legislative Resource Commitments In 1994, NSP-Minnesota received Minnesota legislative approval for additional on-site temporary
spent fuel storage facilities at its Prairie Island nuclear power plant, provided NSP-Minnesota satisfies certain requirements. Seventeen
dry cask containers were approved. As of Dec. 31, 2002, NSP-Minnesota had loaded 17 of the containers. The Minnesota Legislature
established several energy resource and other commitments for NSP-Minnesota to obtain the Prairie Island temporary nuclear fuel storage
facility approval. These commitments can be met by building, purchasing or, in the case of biomass, converting generation resources.
Other commitments established by the Legislature included a discount for low-income electric customers, required conservation
improvement expenditures and various study and reporting requirements to a legislative electric energy task force. NSP-Minnesota
has implemented programs to meet the legislative commitments. NSP-Minnesota’s capital commitments include the known effects
of the Prairie Island legislation. The impact of the legislation on future power purchase commitments and other operating expenses
is not yet determinable.
See additional discussion of the current operating contingency related to the spent fuel storage facilities under Operating Contingency.
Capital Commitments As discussed in Liquidity and Capital Resources under Management’s Discussion and Analysis, the estimated
cost, as of Dec. 31, 2002, of the capital expenditure programs of Xcel Energy and its subsidiaries and other capital requirements is
approximately $1.5 billion in 2003, $1.2 billion in 2004 and $1.3 billion in 2005.
The capital expenditure programs of Xcel Energy are subject to continuing review and modification. Actual utility construction
expenditures may vary from the estimates due to changes in electric and natural gas projected load growth, the desired reserve margin
and the availability of purchased power, as well as alternative plans for meeting Xcel Energy’s long-term energy needs. In addition,
Xcel Energy’s ongoing evaluation of merger, acquisition and divestiture opportunities to support corporate strategies, address restructuring
requirements and comply with future requirements to install emission-control equipment may impact actual capital requirements.
Support and Capital Subscription Agreement In May 2002, Xcel Energy and NRG entered into a support and capital subscription
agreement pursuant to which Xcel Energy agreed under certain circumstances to provide up to $300 million to NRG. Xcel Energy
has not to date provided funds to NRG under this agreement. However, Xcel Energy is willing to make a contribution of $300 million
if the restructuring plan discussed earlier is approved by the creditors. See additional discussion of NRG restructuring at Note 4.
Leases Our subsidiaries lease a variety of equipment and facilities used in the normal course of business. Some of these leases qualify as
capital leases and are accounted for accordingly. The capital leases expire between 2002 and 2025. The net book value of property under
capital leases was approximately $624 million and $605 million at Dec. 31, 2002 and 2001, respectively. Assets acquired under capital
leases are recorded as property at the lower of fair-market value or the present value of future lease payments and are amortized over their
actual contract term in accordance with practices allowed by regulators. The related obligation is classified as long-term debt. Executory
costs are excluded from the minimum lease payments.
The remainder of the leases, primarily real estate leases and leases of coal-hauling railcars, trucks, cars and power-operated equipment,
are accounted for as operating leases. Rental expense under operating lease obligations was approximately $86 million, $58 million and
$56 million for 2002, 2001 and 2000, respectively.
Future commitments under operating and capital leases are:
Operating Capital
(Millions of dollars) Leases Leases
2003 $ 66 $ 83
2004 64 80
2005 61 78
2006 58 75
2007 51 73
Thereafter 86 1,030
Total minimum obligation $1,419
Interest (795)
Present value of minimum obligation $ 624
page 84 xcel energy inc. and subsidiaries
notes to consolidated financial statements