Xcel Energy 2012 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 of the 2012 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.

Page out of 172

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172

30
NSP-Wisconsin has certain natural gas supply, transportation and storage agreements that include obligations for the purchase
and/or delivery of specified volumes of natural gas or to make payments in lieu of delivery. At Dec. 31, 2012, NSP-Wisconsin
was committed to approximately $86 million in such obligations under these contracts.
NSP-Wisconsin purchased firm natural gas supply utilizing long-term and short-term agreements from approximately 12
domestic and Canadian suppliers. This diversity of suppliers and contract lengths allows NSP-Wisconsin to maintain competition
from suppliers and minimize supply costs.
See Items 1A and 7 for further discussion of natural gas supply and costs.
PSCo
Public Utility Regulation
Summary of Regulatory Agencies and Areas of Jurisdiction — PSCo is regulated by the CPUC with respect to its facilities,
rates, accounts, services and issuance of securities. PSCo holds a FERC certificate that allows it to transport natural gas in
interstate commerce without PSCo becoming subject to full FERC jurisdiction under the Federal Natural Gas Act. PSCo is subject
to the DOT and the CPUC with regards to pipeline safety compliance.
Purchased Natural Gas and Conservation Cost-Recovery Mechanisms — PSCo has retail adjustment clauses that recover
purchased natural gas and other resource costs:
• GCA — The GCA recovers the actual costs of purchased natural gas and transportation to meet the requirements of its
customers and is revised quarterly to allow for changes in natural gas rates.
• DSMCA — PSCo has a low-income energy assistance program. The costs of this energy conservation and weatherization
program are recovered through the gas DSMCA.
• PSIA — Effective Jan. 1, 2012, the PSIA began to recover costs associated with transmission and distribution pipeline
integrity management programs and two projects to replace large transmission pipelines.
QSP Requirements — The CPUC established a natural gas QSP that provides for bill credits to customers if PSCo does not
achieve certain performance targets relating to natural gas leak repair time and customer service through 2012. The CPUC
conducts proceedings to review and approve the rate adjustment annually. In July 2012, PSCo filed an application with the CPUC
to extend the terms of the current QSP through the end of 2015. PSCo is in settlement discussions and expects to close out this
matter in the first quarter of 2013.
Capability and Demand
PSCo projects peak day natural gas supply requirements for firm sales and backup transportation, which include transportation
customers contracting for firm supply backup, to be 1,936,810 MMBtu. In addition, firm transportation customers hold 726,530 MMBtu
of capacity for PSCo without supply backup. Total firm delivery obligation for PSCo is 2,663,340 MMBtu per day. The maximum daily
deliveries for PSCo for firm and interruptible services were 1,539,864 MMBtu on Dec. 19, 2012 and 2,155,547 on Feb. 1, 2011.
PSCo purchases natural gas from independent suppliers, generally based on market indices that reflect current prices. The natural
gas is delivered under transportation agreements with interstate pipelines. These agreements provide for firm deliverable pipeline
capacity of approximately 1,846,358 MMBtu per day, which includes 853,453 MMBtu of natural gas held under third-party
underground storage agreements. In addition, PSCo operates three company-owned underground storage facilities, which provide
approximately 22,400 MMBtu of natural gas supplies on a peak day. The balance of the quantities required to meet firm peak day
sales obligations are primarily purchased at PSCo’s city gate meter stations.
PSCo is required by CPUC regulations to file a natural gas purchase plan by June of each year projecting and describing the
quantities of natural gas supplies, upstream services and the costs of those supplies and services for the 12-month period of the
following year. PSCo is also required to file a natural gas purchase report by October of each year reporting actual quantities and
costs incurred for natural gas supplies and upstream services for the previous 12-month period.
Natural Gas Supply and Costs
PSCo actively seeks natural gas supply, transportation and storage alternatives to yield a diversified portfolio that provides
increased flexibility, decreased interruption and financial risk and economical rates. In addition, PSCo conducts natural gas price
hedging activities that have been approved by the CPUC.