Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2015

Cost and Fair Value of Nuclear Decommissioning Fund Investments

The following tables present the cost and fair value of Xcel Energy’s non-derivative instruments with recurring fair value measurements in the nuclear decommissioning fund at March 31, 2015 and Dec. 31, 2014:



	March 31, 2015
			Fair Value
(Thousands of Dollars)	Cost		Level 1		Level 2		Level 3		Total
Nuclear decommissioning fund ^(a)
Cash equivalents	$	20,836	$	20,836	$	—	$	—	$	20,836
Commingled funds	470,810		—		489,704		—		489,704
International equity funds	123,123		—		120,608		—		120,608
Private equity investments	86,318		—		—		113,619		113,619
Real estate	46,339		—		—		67,774		67,774
Debt securities:
Government securities	24,188		—		23,796		—		23,796
U.S. corporate bonds	64,574		—		60,712		—		60,712
International corporate bonds	16,429		—		16,234		—		16,234
Municipal bonds	201,125		—		206,814		—		206,814
Asset-backed securities	2,828		—		2,847		—		2,847
Mortgage-backed securities	12,292		—		12,787		—		12,787
Equity securities:
Common stock	395,104		601,714		—		—		601,714
Total	$	1,463,966	$	622,550	$	933,502	$	181,393	$	1,737,445


^(a)	Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $81.8 million of equity investments in unconsolidated subsidiaries and $48.2 million of miscellaneous investments.



	Dec. 31, 2014
			Fair Value
(Thousands of Dollars)	Cost		Level 1		Level 2		Level 3		Total
Nuclear decommissioning fund ^(a)
Cash equivalents	$	24,184	$	24,184	$	—	$	—	$	24,184
Commingled funds	470,013		—		465,615		—		465,615
International equity funds	80,454		—		78,721		—		78,721
Private equity investments	73,936		—		—		101,237		101,237
Real estate	43,859		—		—		64,249		64,249
Debt securities:
Government securities	30,674		—		28,808		—		28,808
U.S. corporate bonds	81,463		—		77,562		—		77,562
International corporate bonds	16,950		—		16,341		—		16,341
Municipal bonds	242,282		—		249,201		—		249,201
Asset-backed securities	9,131		—		9,250		—		9,250
Mortgage-backed securities	23,225		—		23,895		—		23,895
Equity securities:
Common stock	369,751		564,858		—		—		564,858
Total	$	1,465,922	$	589,042	$	949,393	$	165,486	$	1,703,921


^(a)	Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $83.1 million of equity investments in unconsolidated subsidiaries and $45.6 million of miscellaneous investments.

Changes in Level 3 Nuclear Decommissioning Fund Investments

The following tables present the changes in Level 3 nuclear decommissioning fund investments for the three months ended March 31, 2015 and 2014:



(Thousands of Dollars)	Jan. 1, 2015		Purchases		Settlements			Gains Recognized as Regulatory Assets ^(a)		March 31, 2015
Private equity investments	$	101,237	$	12,382	$	—		$	—	$	113,619
Real estate	64,249		3,861		(1,381		)	1,045		67,774
Total	$	165,486	$	16,243	$	(1,381	)	$	1,045	$	181,393

(Thousands of Dollars)	Jan. 1, 2014		Purchases		Settlements			Gains Recognized as Regulatory Asset ^(a)		March 31, 2014
Private equity investments	$	62,696	$	8,769	$	—		$	2,336	$	73,801
Real estate	57,368		3,660		—			1,926		62,954
Total	$	120,064	$	12,429	$	—		$	4,262	$	136,755


^(a)	Gains are deferred as a component of the regulatory assets for nuclear decommissioning.

Final Contractual Maturity Dates of Debt Securities in the Nuclear Decommissioning Fund by Asset Class

The following table summarizes the final contractual maturity dates of the debt securities in the nuclear decommissioning fund, by asset class, at March 31, 2015:



	Final Contractual Maturity
(Thousands of Dollars)	Due in 1 Year or Less		Due in 1 to 5 Years		Due in 5 to 10 Years		Due after 10 Years			Total
Government securities	$	—	$	—	$	—	$	23,796		$	23,796
U.S. corporate bonds	473		13,627		49,626		(3,014		)	60,712
International corporate bonds	—		4,494		11,334		406			16,234
Municipal bonds	716		32,054		35,877		138,167			206,814
Asset-backed securities	—		—		2,847		—			2,847
Mortgage-backed securities	—		—		—		12,787			12,787
Debt securities	$	1,189	$	50,175	$	99,684	$	172,142		$	323,190

Gross Notional Amounts of Commodity Forwards, Options, and FTRs

The following table details the gross notional amounts of commodity forwards, options and FTRs at March 31, 2015 and Dec. 31, 2014:


^(a)	Amounts are not reflective of net positions in the underlying commodities.


^(b)	Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise.

Impact of Derivative Activity on Accumulated Other Comprehensive Loss, Regulatory Assets and Liabilities, and Income

The following tables detail the impact of derivative activity during the three months ended March 31, 2015 and 2014, on accumulated other comprehensive loss, regulatory assets and liabilities, and income:



	Three Months Ended March 31, 2015
	Pre-Tax Fair Value Losses Recognized During the Period in:						Pre-Tax (Gains) Losses Reclassified into Income During the Period from:							Pre-Tax Gains Recognized During the Period in Income
(Thousands of Dollars)	Accumulated Other Comprehensive Loss			Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss			Regulatory Assets and (Liabilities)				Pre-Tax Gains Recognized During the Period in Income
Derivatives designated as cash flow hedges
Interest rate	$	—		$	—		$	941	^(a)	$	—			$	—
Vehicle fuel and other commodity	(18		)	—			26		^(b)	—				—
Total	$	(18	)	$	—		$	967		$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	—		$	—			$	3,880	^(c)
Electric commodity	—			(9,471		)	—			(5,123		)	^(d)	—
Natural gas commodity	—			(216		)	—			(8,831		)	^(e)	8,991		^(e)
Total	$	—		$	(9,687	)	$	—		$	(13,954	)		$	12,871



	Three Months Ended March 31, 2014
	Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:					Pre-Tax (Gains) Losses Reclassified into Income During the Period from:								Pre-Tax Losses Recognized During the Period in Income
(Thousands of Dollars)	Accumulated Other Comprehensive Loss			Regulatory (Assets) and Liabilities		Accumulated Other Comprehensive Loss				Regulatory Assets and (Liabilities)				Pre-Tax Losses Recognized During the Period in Income
Derivatives designated as cash flow hedges
Interest rate	$	—		$	—	$	946		^(a)	$	—			$	—
Vehicle fuel and other commodity	(12		)	—		(28		)	^(b)	—				—
Total	$	(12	)	$	—	$	918			$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—	$	—			$	—			$	(2,253	)	^(c)
Electric commodity	—			3,527		—				(20,696		)	^(d)	—
Natural gas commodity	—			18,506		—				(18,840		)	^(e)	(5,302		)	^(e)
Total	$	—		$	22,033	$	—			$	(39,536	)		$	(7,555	)


^(a)	Amounts are recorded to interest charges.


^(b)	Amounts are recorded to operating and maintenance (O&M) expenses.


^(c)	Amounts are recorded to electric operating revenues. Portions of these gains and losses are subject to sharing with electric customers through margin-sharing mechanisms and deducted from gross revenue, as appropriate.


^(d)	Amounts are recorded to electric fuel and purchased power. These derivative settlement gain and loss amounts are shared with electric customers through fuel and purchased energy cost-recovery mechanisms, and reclassified out of income as regulatory assets or liabilities, as appropriate.

^(e)

Amounts for the three months ended March 31, 2015 and 2014 included immaterial settlement losses on derivatives entered to mitigate natural gas price risk for electric generation, recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. The remaining derivative settlement gains and losses for the three months ended March 31, 2015 and 2014 relate to natural gas operations and are recorded to cost of natural gas sold and transported. These gains and losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset or liability, as appropriate.

Derivative Assets and Liabilities Measured at Fair Value on a Recurring Basis by Hierarchy Level

Recurring Fair Value Measurements — The following table presents for each of the fair value hierarchy levels, Xcel Energy’s derivative assets and liabilities measured at fair value on a recurring basis at March 31, 2015:



	March 31, 2015
	Fair Value						Fair Value Total		Counterparty Netting ^(b)			Total
(Thousands of Dollars)	Level 1		Level 2		Level 3		Fair Value Total		Counterparty Netting ^(b)			Total
Current derivative assets
Other derivative instruments:
Commodity trading	$	—	$	11,369	$	2,395	$	13,764	$	(2,017	)	$	11,747
Electric commodity	—		—		19,606		19,606		(4,294		)	15,312
Total current derivative assets	$	—	$	11,369	$	22,001	$	33,370	$	(6,311	)	27,059
PPAs ^(a)												11,846
Current derivative instruments												$	38,905
Noncurrent derivative assets
Other derivative instruments:
Commodity trading	$	—	$	17,967	$	—	$	17,967	$	(4,129	)	$	13,838
Total noncurrent derivative assets	$	—	$	17,967	$	—	$	17,967	$	(4,129	)	13,838
PPAs ^(a)												37,901
Noncurrent derivative instruments												$	51,739



	March 31, 2015
	Fair Value						Fair Value Total		Counterparty Netting ^(b)			Total
(Thousands of Dollars)	Level 1		Level 2		Level 3		Fair Value Total		Counterparty Netting ^(b)			Total
Current derivative liabilities
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	128	$	—	$	128	$	—		$	128
Other derivative instruments:
Commodity trading	—		5,840		278		6,118		(6,110		)	8
Electric commodity	—		—		4,294		4,294		(4,294		)	—
Other commodity	—		527		—		527		—			527
Total current derivative liabilities	$	—	$	6,495	$	4,572	$	11,067	$	(10,404	)	663
PPAs ^(a)												18,952
Current derivative instruments												$	19,615
Noncurrent derivative liabilities
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	85	$	—	$	85	$	—		$	85
Other derivative instruments:
Commodity trading	—		7,541		—		7,541		(7,541		)	—
Other commodity	—		51		—		51		—			51
Total noncurrent derivative liabilities	$	—	$	7,677	$	—	$	7,677	$	(7,541	)	136
PPAs ^(a)												178,821
Noncurrent derivative instruments												$	178,957

^(a)

In 2003, as a result of implementing new guidance on the normal purchase exception for derivative accounting, Xcel Energy began recording several long-term PPAs at fair value due to accounting requirements related to underlying price adjustments. As these purchases are recovered through normal regulatory recovery mechanisms in the respective jurisdictions, the changes in fair value for these contracts were offset by regulatory assets and liabilities. During 2006, Xcel Energy qualified these contracts under the normal purchase exception. Based on this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b)

Xcel Energy nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at March 31, 2015. At March 31, 2015, derivative assets and liabilities include no obligations to return cash collateral and the rights to reclaim cash collateral of $7.5 million. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

The following table presents for each of the fair value hierarchy levels, Xcel Energy’s derivative assets and liabilities measured at fair value on a recurring basis at Dec. 31, 2014:



	Dec. 31, 2014
	Fair Value						Fair Value Total		Counterparty Netting ^(b)			Total
(Thousands of Dollars)	Level 1		Level 2		Level 3		Fair Value Total		Counterparty Netting ^(b)			Total
Current derivative assets
Other derivative instruments:
Commodity trading	$	—	$	14,326	$	4,732	$	19,058	$	(3,240	)	$	15,818
Electric commodity	—		—		62,825		62,825		(11,402		)	51,423
Natural gas commodity	—		381		—		381		(22		)	359
Total current derivative assets	$	—	$	14,707	$	67,557	$	82,264	$	(14,664	)	67,600
PPAs ^(a)												18,123
Current derivative instruments												$	85,723
Noncurrent derivative assets
Other derivative instruments:
Commodity trading	$	—	$	17,617	$	—	$	17,617	$	(4,151	)	$	13,466
Total noncurrent derivative assets	$	—	$	17,617	$	—	$	17,617	$	(4,151	)	13,466
PPAs ^(a)												40,309
Noncurrent derivative instruments												$	53,775



	Dec. 31, 2014
	Fair Value						Fair Value Total		Counterparty Netting ^(b)			Total
(Thousands of Dollars)	Level 1		Level 2		Level 3		Fair Value Total		Counterparty Netting ^(b)			Total
Current derivative liabilities
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	118	$	—	$	118	$	—		$	118
Other derivative instruments:
Commodity trading	—		7,974		—		7,974		(7,974		)	—
Electric commodity	—		—		11,402		11,402		(11,402		)	—
Natural gas commodity	—		548		—		548		(21		)	527
Total current derivative liabilities	$	—	$	8,640	$	11,402	$	20,042	$	(19,397	)	645
PPAs ^(a)												20,987
Current derivative instruments												$	21,632
Noncurrent derivative liabilities
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	102	$	—	$	102	$	—		$	102
Other derivative instruments:
Commodity trading	—		6,890		—		6,890		(6,033		)	857
Natural gas commodity	—		35		—		35		—			35
Total noncurrent derivative liabilities	$	—	$	7,027	$	—	$	7,027	$	(6,033	)	994
PPAs ^(a)												182,942
Noncurrent derivative instruments												$	183,936

^(a)

^(b)

Xcel Energy nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at Dec. 31, 2014. At Dec. 31, 2014, derivative assets and liabilities include no obligations to return cash collateral and rights to reclaim cash collateral of $6.6 million. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

Changes in Level 3 Commodity Derivatives

The following table presents the changes in Level 3 commodity derivatives for the three months ended March 31, 2015 and 2014:



	Three Months Ended March 31
(Thousands of Dollars)	2015			2014
Balance at Jan. 1	$	56,155		$	41,660
Purchases	5,792			1,056
Settlements	(19,931		)	(53,809		)
Net transactions recorded during the period:
Gains recognized in earnings ^(a)	60			999
(Losses) gains recognized as regulatory assets and liabilities	(24,647		)	34,311
Balance at March 31	$	17,429		$	24,217


^(a)	These amounts relate to commodity derivatives held at the end of the period.

Carrying Amount and Fair Value of Long-term Debt

As of March 31, 2015 and Dec. 31, 2014, other financial instruments for which the carrying amount did not equal fair value were as follows:



	March 31, 2015				Dec. 31, 2014
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	11,756,869	$	13,619,322	$	11,757,360	$	13,360,236

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

+ References+ Details

(Amounts in Thousands) ^(a)(b)

March 31, 2015

Dec. 31, 2014

Megawatt hours of electricity

Million British thermal units of natural gas

Gallons of vehicle fuel