4. Borrowings and Other Financing Instruments

Short-Term Borrowings

Money Pool - Xcel Energy Inc. and its utility subsidiaries have established a money pool arrangement that allows for short-term investments in and borrowings between the utility subsidiaries. NSP-Wisconsin does not participate in the money pool. Xcel Energy Inc. may make investments in the utility subsidiaries at market-based interest rates; however, the money pool arrangement does not allow the utility subsidiaries to make investments in Xcel Energy Inc. The money pool balances are eliminated upon consolidation.

Commercial Paper - Xcel Energy Inc. and its utility subsidiaries meet their short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under their credit facilities. Commercial paper outstanding for Xcel Energy was as follows:

	Three Months Ended
(Amounts in Millions, Except Interest Rates)	Dec. 31, 2011
Borrowing limit	$	2,450
Amount outstanding at period end		219
Average amount outstanding		165
Maximum amount outstanding		241
Weighted average interest rate, computed on a daily basis		0.35	%
Weighted average interest rate at end of period		0.40

	Twelve Months Ended			Twelve Months Ended			Twelve Months Ended
(Amounts in Millions, Except Interest Rates)	Dec. 31, 2011			Dec. 31, 2010			Dec. 31, 2009
Borrowing limit	$	2,450		$	2,177		$	2,177
Amount outstanding at period end		219			466			459
Average amount outstanding		430			263			406
Maximum amount outstanding		824			653			675
Weighted average interest rate, computed on a daily basis		0.36	%		0.36	%		0.95	%
Weighted average interest rate at end of period		0.40			0.40			0.36

Credit Facilities - In order to use their commercial paper programs to fulfill short-term funding needs, Xcel Energy Inc. and its utility subsidiaries must have revolving credit facilities in place at least equal to the amount of their respective commercial paper borrowing limits and cannot issue commercial paper in an aggregate amount exceeding available capacity under these credit agreements.

During 2011, NSP-Minnesota, NSP-Wisconsin, PSCo, SPS and Xcel Energy Inc. executed new four-year credit agreements. The total size of the credit facilities is $2.45 billion and each credit facility terminates in March 2015. Xcel Energy Inc. and its utility subsidiaries have the right to request an extension of the revolving termination date for two additional one-year periods, subject to majority bank group approval.

The credit facilities provide short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings. Other features of the credit facilities include:

Each of the credit facilities, other than NSP-Wisconsin's, may be increased by up to $200 million for Xcel Energy Inc., $100 million each for NSP-Minnesota and PSCo, and $50 million for SPS.

Each credit facility has a financial covenant requiring that the debt-to-total capitalization ratio of each entity be less than or equal to 65 percent. Each entity was in compliance at Dec. 31, 2011 as evidenced by the table below:

	Debt-to-Total Capitalization Ratio
Xcel Energy		55	%
NSP-Wisconsin		50
NSP-Minnesota		48
SPS		48
PSCo		45

If Xcel Energy Inc. or any of its utility subsidiaries do not comply with the covenant, an event of default may be declared, and if not remedied, any outstanding amounts due under the facility can be declared due by the lender.

The Xcel Energy Inc. credit facility has a cross-default provision that provides Xcel Energy Inc. will be in default on its borrowings under the facility if it or any of its subsidiaries, except NSP-Wisconsin as long as its total assets do not comprise more than 15 percent of Xcel Energy's consolidated total assets, default on certain indebtedness in an aggregate principal amount exceeding $75 million.

The interest rates under these lines of credit are based on the Eurodollar rate or an alternate base rate, plus a borrowing margin of 0 to 200 basis points per year based on the applicable credit ratings.

The commitment fees, also based on applicable long-term credit ratings, are calculated on the unused portion of the lines of credit at a range of 10 to 35 basis points per year.

NSP-Wisconsin's intercompany borrowing arrangement with NSP-Minnesota was subsequently terminated.

At Dec. 31, 2011, Xcel Energy Inc. and its utility subsidiaries had the following committed credit facilities available:

(Millions of Dollars)	Facility		Drawn (a)		Available
Xcel Energy Inc.	$	800.0	$	127.1	$	672.9
PSCo		700.0		4.9		695.1
NSP-Minnesota		500.0		33.7		466.3
SPS		300.0		-		300.0
NSP-Wisconsin		150.0		66.0		84.0
Total	$	2,450.0	$	231.7	$	2,218.3

(a)	Includes outstanding commercial paper and letters of credit.

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the respective credit facilities. Xcel Energy Inc. and its subsidiaries had no direct advances on the credit facilities outstanding at Dec. 31, 2011 and 2010.

Letters of Credit - Xcel Energy Inc. and its subsidiaries use letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. At Dec. 31, 2011 and 2010, there were $12.7 million and $10.1 million of letters of credit outstanding, respectively, under the credit facilities. An additional $1.1 million of letters of credit not issued under the credit facilities were outstanding at Dec. 31, 2011 and 2010, respectively. The contract amounts of these letters of credit approximate their fair value and are subject to fees determined in the marketplace.

Long-Term Borrowings and Other Financing Instruments

Generally, all real and personal property of NSP-Minnesota and NSP-Wisconsin and all real and personal property used in or in connection with the electric utility business of PSCo and SPS are subject to the liens of their first mortgage indentures. Additionally, debt premiums, discounts and expenses are amortized over the life of the related debt. The premiums, discounts and expenses associated with refinanced debt are deferred and amortized over the life of the related new issuance, in accordance with regulatory guidelines.

Maturities of long-term debt are as follows:

(Millions of Dollars)
2012	$	1,060
2013		257
2014		282
2015		256
2016		207

Xcel Energy has entered into a Replacement Capital Covenant (RCC). Under the terms of the RCC, Xcel Energy has agreed not to redeem or repurchase all or part of the $400 million of 7.6 percent junior subordinated notes due 2068 (Junior Subordinated Notes) prior to 2038 unless qualifying securities are issued to non-affiliates in a replacement offering in the 180 days prior to the redemption or repurchase date. Qualifying securities include those that have equity-like characteristics that are the same as, or more equity-like than, the applicable characteristics of the Junior Subordinated Notes at the time of redemption or repurchase.

During 2011, Xcel Energy Inc. and its utility subsidiaries completed the following financings:

In September 2011, Xcel Energy Inc. issued $250 million of 4.80 percent senior unsecured notes due Sept. 15, 2041.

In August 2011, PSCo issued $250 million of 4.75 percent first mortgage bonds due Aug. 15, 2041.

In August 2011, SPS issued $200 million of 4.50 percent first mortgage bonds due Aug. 15, 2041.

During 2010, Xcel Energy Inc. and its utility subsidiaries completed the following financings:

In May 2010, Xcel Energy Inc. issued $550 million of 4.70 percent unsecured senior notes, due May 15, 2020.

In August 2010, NSP-Minnesota issued $250 million of 1.95 percent first mortgage bonds, due Aug. 15, 2015 and $250 million of 4.85 percent first mortgage bonds, due Aug. 15, 2040.

In November 2010, PSCo issued $400 million of 3.2 percent first mortgage bonds, due Nov. 15, 2020.

Deferred Financing Costs - Other assets included deferred financing costs of approximately $75 million and $74 million, net of amortization, at Dec. 31, 2011 and 2010, respectively. Xcel Energy is amortizing these financing costs over the remaining maturity periods of the related debt.

Capital Stock - Xcel Energy Inc. has authorized 7,000,000 shares of preferred stock with a $100 par value. At Dec. 31, 2011, there were no shares of preferred stock outstanding and at Dec. 31, 2010, Xcel Energy Inc. had six series of preferred stock outstanding, redeemable at its option at prices ranging from $102 to $103.75 per share plus accrued dividends. Xcel Energy Inc. redeemed all series of its preferred stock on Oct. 31, 2011, at an aggregate purchase price of $108 million, plus accrued dividends. As such, the redemption premium of $3.3 million and accrued dividends are reflected as reductions of Xcel Energy's earnings available to common shareholders in the consolidated statements of income.

The charters of some of Xcel Energy Inc.'s subsidiaries also authorize the issuance of preferred stock. However, at Dec. 31, 2011 and 2010, there were no preferred shares of subsidiaries outstanding. The following table lists preferred shares by subsidiary at Dec. 31, 2011 and 2010:

	Preferred Shares Authorized		Par Value
SPS		10,000,000	$	1.00
PSCo		10,000,000		0.01

Xcel Energy Inc. has authorized 1,000,000,000 shares of common stock. Outstanding shares at Dec. 31, 2011 and 2010 were 486,493,933 and 482,333,750, respectively.

Dividend and Other Capital-Related Restrictions - Xcel Energy Inc.'s Articles of Incorporation place restrictions on the amount of common stock dividends it can pay when preferred stock is outstanding. As there was no preferred stock outstanding at Dec. 31, 2011, the restrictions did not place any effective limit on Xcel Energy Inc.'s ability to pay dividends at Dec. 31, 2011.

All of Xcel Energy's utility subsidiaries' dividends are subject to the FERC's jurisdiction under the Federal Power Act, which prohibits the payment of dividends out of capital accounts; payment of dividends is allowed out of retained earnings only.

NSP-Minnesota's first mortgage indenture places certain restrictions on the amount of cash dividends it can pay to Xcel Energy Inc., the holder of its common stock. Even with these restrictions, NSP-Minnesota could have paid more than $1.1 billion in additional cash dividends on common stock at Dec. 31, 2010, or $1.2 billion at Dec. 31, 2011.

NSP-Minnesota's state regulatory commissions indirectly limit the amount of dividends NSP-Minnesota can pay to Xcel Energy Inc. by requiring an equity-to-total capitalization ratio between 47.07 percent and 57.53 percent. NSP-Minnesota's equity-to-total capitalization ratio was 52.1 percent at Dec. 31, 2011. Total capitalization for NSP-Minnesota cannot exceed $8.25 billion.

NSP-Wisconsin shall not pay dividends if its calendar year average equity-to-total capitalization ratio is or falls below the state commission authorized level of 52.5 percent. NSP-Wisconsin's calendar year average equity-to-total capitalization ratio was 55.1 percent at Dec. 31, 2011.

SPS' state regulatory commissions indirectly limit the amount of dividends that SPS can pay Xcel Energy Inc. by requiring an equity-to-total capitalization ratio (excluding short-term debt) between 45.0 percent and 55.0 percent. In addition, SPS may not pay a dividend that would cause it to lose its investment grade bond rating. SPS' equity-to-total capitalization ratio (excluding short-term debt) was 52.0 percent at Dec. 31, 2011.

The issuance of securities by Xcel Energy Inc. generally is not subject to regulatory approval. However, utility financings and certain intra-system financings are subject to the jurisdiction of the applicable state regulatory commissions and/or the FERC under the Federal Power Act.

PSCo currently has authorization to issue up to $1.15 billion of long-term debt and up to $800 million of short-term debt.

SPS currently has authorization to issue up $400 million of short-term debt.

NSP-Wisconsin currently has authorization to issue up to $150 million of long-term debt and up to $150 million of short-term debt.

NSP-Minnesota has authorization to issue long-term securities provided the equity-to-total capitalization ratio remains between 47.07 percent and 57.53 percent and to issue short-term debt provided it does not exceed 15 percent of total capitalization. Total capitalization for NSP-Minnesota cannot exceed $8.25 billion.

Xcel Energy believes these authorizations are adequate and will seek additional authorization when necessary; however, there can be no assurance that additional authorization will be granted on the timeframe or in the amounts requested.