| Business Segment Information |
BUSINESS SEGMENT INFORMATION
Our reportable segments are based on our method of internal reporting, which is generally segregated by differences in products, services and regulation.
Accounting standards for presentation of segments require an approach based on the way we organize the segments for making operating decisions and how the chief operating decision maker (CODM) assesses performance. Effective January 1, 2019, we concluded that adjusted operating income, instead of net income available for common stock which was used previously, is the most relevant metric for measuring segment performance. The change to our segment performance measure resulted in a revision of the Company’s segment disclosures for all periods to report adjusted operating income as the measure of segment performance.
Prior to January 1, 2019, operating income for the Electric Utilities and Power Generation segments and Corporate and Other included the impacts of finance lease accounting relating to Colorado Electric’s PPA with Colorado IPP. This PPA provides 200 MW of energy and capacity to Colorado Electric from Colorado IPP’s combined-cycle turbines and expires on December 31, 2031. Finance lease accounting required us to de-recognize the asset from Colorado IPP (Power Generation segment), which legally owns the asset, and recognize it at Colorado Electric (Electric Utilities segment).
The CODM assesses the performance of our segments using adjusted operating income, which recognizes intersegment revenues, costs, and assets for Colorado Electric’s PPA with Colorado IPP on an accrual basis rather than as a finance lease. Effective January 1, 2019, we changed how we account for this PPA at the segment level, which impacts disclosures for all periods for revenues, fuel and purchased power cost, operating income and total assets for the Electric Utilities and Power Generation segments as well as Corporate and Other. There were no revisions to Gas Utilities and Mining segments and this change had no effect on our consolidated revenues, fuel and purchased power cost, operating income or total assets.
Segment information and Corporate and Other is as follows (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, 2019 | External Operating Revenue | | Inter-company Operating Revenue | | Total Revenues | Contract Customers | Other Revenues | Contract Customers | Other Revenues | Segment: | | | | | | | | Electric Utilities | $ | 185,811 |
| $ | 234 |
|
| $ | 5,339 |
| $ | — |
|
| $ | 191,384 |
| Gas Utilities | 129,385 |
| 810 |
|
| 549 |
| — |
|
| 130,744 |
| Power Generation | 1,703 |
| 531 |
|
| 14,415 |
| 9,162 |
|
| 25,811 |
| Mining | 6,846 |
| 228 |
|
| 8,146 |
| 332 |
|
| 15,552 |
| Inter-company eliminations | — |
| — |
| | (28,449 | ) | (9,494 | ) | | (37,943 | ) | Total | $ | 323,745 |
| $ | 1,803 |
| | $ | — |
| $ | — |
| | $ | 325,548 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, 2018 | External Operating Revenue | | Inter-company Operating Revenue | | Total Revenues | Contract Customers | Other Revenues | Contract Customers | Other Revenues | Segment: | | | | | | | | Electric Utilities | $ | 179,527 |
| $ | 231 |
| | $ | 5,032 |
| $ | — |
| | $ | 184,790 |
| Gas Utilities | 130,390 |
| 1,011 |
| | 275 |
| — |
| | 131,676 |
| Power Generation (a) | 1,437 |
| 348 |
| | 13,936 |
| 8,770 |
| | 24,491 |
| Mining | 8,809 |
| 226 |
| | 7,942 |
| 324 |
| | 17,301 |
| Inter-company eliminations (a) | — |
| — |
| | (27,185 | ) | (9,094 | ) | | (36,279 | ) | Total | $ | 320,163 |
| $ | 1,816 |
| | $ | — |
| $ | — |
| | $ | 321,979 |
|
| | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2019 | External Operating Revenue | | Inter-company Operating Revenue | | Total Revenues | Contract Customers | Other Revenues | Contract Customers | Other Revenues | Segment: | | | | | | | | Electric Utilities | $ | 521,614 |
| $ | 2,465 |
| | $ | 16,586 |
| $ | — |
| | $ | 540,665 |
| Gas Utilities | 704,188 |
| 1,134 |
| | 1,971 |
| — |
| | 707,293 |
| Power Generation | 5,725 |
| 1,401 |
| | 40,924 |
| 27,714 |
| | 75,764 |
| Mining | 19,934 |
| 785 |
| | 23,315 |
| 992 |
| | 45,026 |
| Inter-company eliminations | — |
| — |
| | (82,796 | ) | (28,706 | ) | | (111,502 | ) | Total | $ | 1,251,461 |
| $ | 5,785 |
| | $ | — |
| $ | — |
| | $ | 1,257,246 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2018 | External Operating Revenue | | Inter-company Operating Revenue | | Total Revenues | Contract Customers | Other Revenues | Contract Customers | Other Revenues | Segment: | | | | | | | | Electric Utilities | $ | 513,270 |
| $ | 2,218 |
| | $ | 16,473 |
| $ | — |
| | $ | 531,961 |
| Gas Utilities | 702,532 |
| 3,106 |
| | 1,002 |
| — |
| | 706,640 |
| Power Generation (a) | 4,287 |
| 1,066 |
| | 39,457 |
| 26,363 |
| | 71,173 |
| Mining | 25,892 |
| 701 |
| | 23,761 |
| 974 |
| | 51,328 |
| Inter-company eliminations (a) | — |
| — |
| | (80,693 | ) | (27,337 | ) | | (108,030 | ) | Total | $ | 1,245,981 |
| $ | 7,091 |
| | $ | — |
| $ | — |
| | $ | 1,253,072 |
|
| | (a) | Due to the changes in our segment disclosures, Power Generation Inter-company Operating Revenue for Contract Customers was revised for the three and nine months ended September 30, 2018 which resulted in an increase of $0.9 million and $2.6 million, respectively. The changes to Power Generation were offset by changes to Inter-company eliminations within Corporate and Other and there was no impact on our consolidated Total revenues. |
| | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | Nine Months Ended September 30, | | 2019 | 2018 | 2019 | 2018 | Adjusted operating income: | | | | | Electric Utilities (a) | $ | 50,653 |
| $ | 43,393 |
| $ | 125,219 |
| $ | 123,073 |
| Gas Utilities | 4,736 |
| 4,240 |
| 116,607 |
| 116,168 |
| Power Generation (a) | 11,822 |
| 13,079 |
| 33,945 |
| 33,731 |
| Mining | 3,374 |
| 4,551 |
| 9,351 |
| 12,647 |
| Corporate and Other (a) | (34 | ) | (178 | ) | (439 | ) | (2,709 | ) | Operating income | 70,551 |
| 65,085 |
| 284,683 |
| 282,910 |
| | | | | | Interest expense, net | (33,487 | ) | (35,297 | ) | (102,469 | ) | (104,826 | ) | Impairment of investment | (19,741 | ) | — |
| (19,741 | ) | — |
| Other income (expense), net | 580 |
| (510 | ) | 55 |
| (1,923 | ) | Income tax benefit (expense) (b) | (2,508 | ) | (7,477 | ) | (22,078 | ) | 11,784 |
| Income from continuing operations | 15,395 |
| 21,801 |
| 140,450 |
| 187,945 |
| Net (loss) from discontinued operations | — |
| (857 | ) | — |
| (5,627 | ) | Net income | 15,395 |
| 20,944 |
| 140,450 |
| 182,318 |
| Net income attributable to noncontrolling interest | (3,655 | ) | (3,994 | ) | (10,319 | ) | (10,447 | ) | Net income available for common stock | $ | 11,740 |
| $ | 16,950 |
| $ | 130,131 |
| $ | 171,871 |
|
___________ | | (a) | Due to the changes in our segment disclosures, Adjusted operating income was revised for the three and nine months ended September 30, 2018, which resulted in an increase (decrease) as follows (in millions): |
| | | | | | | | Segment | Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 | Electric Utilities | $ | 1.6 |
| $ | 4.8 |
| Power Generation | (1.4 | ) | (4.4 | ) | Corporate and Other | (0.2 | ) | (0.4 | ) | | $ | — |
| $ | — |
|
| | (b) | Income tax benefit (expense) for the nine months ended September 30, 2018 included a $49 million tax benefit resulting from legal entity restructuring. See Note 18 for more information. |
Segment information and Corporate and Other balances included in the accompanying Condensed Consolidated Balance Sheets were as follows (in thousands): | | | | | | | | | Total assets (net of inter-company eliminations) as of: | September 30, 2019 | | December 31, 2018 | Segment: | | | | Electric Utilities (a) | $ | 2,810,108 |
| | $ | 2,707,695 |
| Gas Utilities | 3,797,941 |
| | 3,623,475 |
| Power Generation (a) | 414,526 |
| | 342,085 |
| Mining | 78,073 |
| | 80,594 |
| Corporate and Other | 174,302 |
| | 209,478 |
| Total assets | $ | 7,274,950 |
| | $ | 6,963,327 |
|
___________ (a) Due to the changes in our segment disclosures, Electric Utilities and Power Generation Total assets were revised as of December 31, 2018 which resulted in an increase (decrease) of ($188) million and $188 million, respectively. There was no impact on our consolidated Total assets.
|