Xcel Energy 2015 Annual Report Download - page 148
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PSCo records amortization for its capital leases as cost of natural gas sold and transported on the consolidated statements of income.
Total amortization expenses under capital lease assets were approximately $8.2 million, $7.2 million and $6.3 million for 2015, 2014
and 2013, respectively. Following is a summary of property held under capital leases:
(Millions of Dollars) Dec. 31, 2015 Dec. 31, 2014
Gas storage facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200.5 $ 200.5
Gas pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7 20.7
Property held under capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221.2 221.2
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (57.2) (49.0)
Total property held under capital leases, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 164.0 $ 172.2
The remainder of the leases, primarily for office space, railcars, generating facilities, trucks, aircraft, cars and power-operated
equipment, are accounted for as operating leases. Total expenses under operating lease obligations for Xcel Energy were
approximately $265.3 million, $271.9 million and $242.1 million for 2015, 2014 and 2013, respectively. These expenses include
capacity payments for PPAs accounted for as operating leases of $223.6 million, $228.2 million and $197.7 million in 2015, 2014 and
2013, respectively, recorded to electric fuel and purchased power expenses.
Included in the future commitments under operating leases are estimated future capacity payments under PPAs that have been
accounted for as operating leases in accordance with the applicable accounting guidance.
Future commitments under operating and capital leases are:
(Millions of Dollars) Operating
Leases
PPA (a) (b)
Operating
Leases
Total
Operating
Leases Capital Leases
2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24.6 $ 217.0 $ 241.6 $ 17.1
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.0 208.7 230.7 15.1
2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.5 210.0 231.5 14.7
2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.9 227.8 253.7 14.5
2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8 241.3 262.1 14.3
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175.0 2,135.2 2,310.2 258.8
Total minimum obligation. . . . . . . . . . . . . . . . . . . . . . . 334.5
Interest component of obligation. . . . . . . . . . . . . . . . . . . (236.9)
Present value of minimum obligation . . . . . . . . . . . $ 97.6 (c)
(a) Amounts do not include PPAs accounted for as executory contracts.
(b) PPA operating leases contractually expire through 2039.
(c) Future commitments exclude certain amounts related to Xcel Energy’s 50 percent ownership interest in WYCO.
Variable Interest Entities — The accounting guidance for consolidation of variable interest entities requires enterprises to consider the
activities that most significantly impact an entity’s financial performance, and power to direct those activities, when determining
whether an enterprise is a variable interest entity’s primary beneficiary.
PPAs —Under certain PPAs, NSP-Minnesota, PSCo and SPS purchase power from independent power producing entities for which
the utility subsidiaries are required to reimburse natural gas or biomass fuel costs, or to participate in tolling arrangements under
which the utility subsidiaries procure the natural gas required to produce the energy that they purchase. These specific PPAs create a
variable interest in the independent power producing entity.
Xcel Energy has determined that certain independent power producing entities are variable interest entities. Xcel Energy is not subject
to risk of loss from the operations of these entities, and no significant financial support has been, or is required to be provided other
than contractual payments for energy and capacity set forth in the PPAs.
Xcel Energy has evaluated each of these variable interest entities for possible consolidation, including review of qualitative factors
such as the length and terms of the contract, control over O&M, control over dispatch of electricity, historical and estimated future fuel
and electricity prices, and financing activities. Xcel Energy has concluded that these entities are not required to be consolidated in its
consolidated financial statements because it does not have the power to direct the activities that most significantly impact the entities’
economic performance. Xcel Energy’s utility subsidiaries had approximately 3,698 MW of capacity under long-term PPAs as of Dec.
31, 2015, and 2014 with entities that have been determined to be variable interest entities. These agreements have expiration dates
through 2033.