Xcel Energy 2015 Annual Report Download - page 56
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Our subsidiary, NSP-Minnesota, is subject to the risks of nuclear generation.
NSP-Minnesota’s two nuclear stations, PI and Monticello, subject it to the risks of nuclear generation, which include:
• The risks associated with use of radioactive material in the production of energy, the management, handling, storage and
disposal and the current lack of a long-term disposal solution for radioactive materials;
• Limitations on the amounts and types of insurance available to cover losses that might arise in connection with nuclear
operations; and
• Uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of their
licensed lives. For example, similar to pensions, interest rate and other assumptions regarding decommissioning costs may
change based on economic conditions and changes in the expected life of the asset may cause our funding obligations to
change.
The NRC has authority to impose licensing and safety-related requirements for the operation of nuclear generation facilities. In the
event of non-compliance, the NRC has the authority to impose fines and/or shut down a unit until compliance is achieved. Revised
NRC safety requirements could necessitate substantial capital expenditures or a substantial increase in operating expenses. In
addition, the Institute for Nuclear Power Operations reviews NSP-Minnesota’s nuclear operations and nuclear generation facilities.
Compliance with the Institute for Nuclear Power Operations’ recommendations could result in substantial capital expenditures or a
substantial increase in operating expenses.
If an incident did occur, it could have a material effect on our results of operations or financial condition. Furthermore, the non-
compliance of other nuclear facilities operators or the occurrence of a serious nuclear incident at other facilities could result in
increased regulation of the industry, which could then increase NSP-Minnesota’s compliance costs and impact the results of operations
of its facilities.
NSP-Wisconsin’s production and transmission system is operated on an integrated basis with NSP-Minnesota’s production and
transmission system, and NSP-Wisconsin may be subject to risks associated with NSP-Minnesota’s nuclear generation.
Our utility operations are subject to long-term planning risks.
Most electric utility investments are long-lived and are planned to be used for decades. Transmission and generation investments
typically have long lead times, and therefore are planned well in advance of when they are brought in-service subject to long-term
resource plans. These plans are based on numerous assumptions over the planning horizon such as: sales growth, customer usage,
economic activity, costs, regulatory mechanisms, customer behavior, available technology and public policy. The electric utility sector
is undergoing a period of significant change. For example, public policy has driven increases in appliance and lighting efficiency and
energy efficient buildings, wider adoption and lower cost of renewable generation and distributed generation, shifts away from coal
generation to decrease carbon dioxide emissions and increasing use of natural gas in electric generation driven by lower natural gas
prices. These changes introduce additional uncertainty into long term planning which gives rise to a risk that the magnitude and
timing of resource additions and growth in customer demand may not coincide, and that the preference for the types of additions may
change from planning to execution.
The resource plans reviewed and approved by our state regulators assume continuation of the traditional utility cost of service model
under which utility costs are recovered from customers as they receive the benefit of service. Xcel Energy is engaged in significant
and ongoing infrastructure investment programs to accommodate distributed generation and maintain high system reliability. Xcel
Energy is also investing in renewable and natural gas-fired generation to reduce our carbon dioxide emissions profile. Early plant
retirements could expose us to premature financial obligations, which could result in less than full recovery of all remaining costs.
Both decreasing use per customer driven by appliance and lighting efficiency and the availability of cost-effective distributed
generation puts downward pressure on load growth. This could lead to under recovery of costs, excess resources to meet customer
demand, and increases in electric rates.
Our natural gas transmission and distribution operations involve numerous risks that may result in accidents and other operating
risks and costs.
Our natural gas transmission and distribution activities include a variety of inherent hazards and operating risks, such as leaks,
explosions and mechanical problems, which could cause substantial financial losses. In addition, these risks could result in loss of
human life, significant damage to property, environmental pollution, impairment of our operations and substantial losses to us. We
maintain insurance against some, but not all, of these risks and losses.