9. Benefit Plans and Other Postretirement Benefits

Xcel Energy offers various benefit plans to its employees. Approximately 50 percent of employees that receive benefits are represented by several local labor unions under several collective-bargaining agreements. At Dec. 31, 2011:

NSP-Minnesota had 2,033 and NSP-Wisconsin had 405 bargaining employees covered under a collective-bargaining agreement, which expires at the end of 2013. NSP-Minnesota also had an additional 228 nuclear operation bargaining employees covered under several collective-bargaining agreements, which expire at various dates in 2012 and 2013.

PSCo had 2,122 bargaining employees covered under a collective-bargaining agreement, which expires in May 2014.

SPS had 804 bargaining employees covered under a collective-bargaining agreement, which expires in October 2014.

The plans invest in various instruments which are disclosed under the accounting guidance for fair value measurements which establishes a hierarchal framework for disclosing the observability of the inputs utilized in measuring fair value. The three levels in the hierarchy and examples of each level are as follows:

Level 1 - Quoted prices are available in active markets for identical assets as of the reporting date. The types of assets included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as common stocks listed by the New York Stock Exchange.

Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reporting date. The types of assets included in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs, such as corporate bonds with pricing based on market interest rate curves and recent trades of similarly rated securities.

Level 3 - Significant inputs to pricing have little or no observability as of the reporting date. The types of assets included in Level 3 are those with inputs requiring significant management judgment or estimation, such as private equity investments and real estate investments, for which the measurement of net asset value requires significant use of unobservable inputs when determining the fair value of the underlying fund investments, including equity in non-publicly traded entities and real estate properties.

Pension Benefits

Xcel Energy has several noncontributory, defined benefit pension plans that cover almost all employees. Benefits are based on a combination of years of service, the employee's average pay and social security benefits. Xcel Energy's policy is to fully fund into an external trust the actuarially determined pension costs recognized for ratemaking and financial reporting purposes, subject to the limitations of applicable employee benefit and tax laws.

Xcel Energy bases the investment-return assumption on expected long-term performance for each of the investment types included in its pension asset portfolio. Xcel Energy considers the actual historical returns achieved by its asset portfolio over the past 20-year or longer period, as well as the long-term return levels projected and recommended by investment experts. The historical weighted average annual return for the past 20 years for the Xcel Energy portfolio of pension investments is 8.73 percent, which is greater than the current assumption level. The pension cost determination assumes a forecasted mix of investment types over the long term. Investment returns were above the assumed levels of 7.50, 7.79 and 8.50 percent in 2011, 2010 and 2009, respectively. Xcel Energy continually reviews its pension assumptions. In 2012, Xcel Energy's expected investment return assumption is 7.10 percent.

The assets are invested in a portfolio according to Xcel Energy's return, liquidity and diversification objectives to provide a source of funding for plan obligations and minimize the necessity of contributions to the plan, within appropriate levels of risk. The principal mechanism for achieving these objectives is the projected allocation of assets to selected asset classes, given the long-term risk, return, and liquidity characteristics of each particular asset class. There were no significant concentrations of risk in any particular industry, index, or entity; however, as Xcel Energy has experienced in recent years, unusual market volatility can impact even well-diversified portfolios and significantly affect the return levels achieved by pension assets in any year.

The following table presents the target pension asset allocations for Xcel Energy:

	2011			2010
Domestic and international equity securities		27	%		24	%
Long-duration fixed income securities		31			41
Short-to-intermediate fixed income securities		12			11
Alternative investments		27			17
Cash		3			7
Total		100	%		100	%

Xcel Energy's ongoing investment strategy is based on plan-specific investment recommendations that seek to minimize potential investment and interest rate risk as a plan's funded status increases over time. The investment recommendations result in a greater percentage of long-duration fixed income securities being allocated to specific plans having relatively higher funded status ratios, and a greater percentage of growth assets being allocated to plans having relatively lower funded status ratios. The aggregate projected asset allocation presented in the table above for the master pension trust results from the plan-specific strategies.

Pension Plan Assets

The following tables present, for each of the fair value hierarchy levels, Xcel Energy's pension plan assets that are measured at fair value as of Dec. 31, 2011 and 2010:

	Dec. 31, 2011
(Thousands of Dollars)	Level 1		Level 2			Level 3		Total
Cash equivalents	$	147,590	$	-		$	-	$	147,590
Derivatives		-		8,011			-		8,011
Government securities		-		301,999			-		301,999
Corporate bonds		-		606,001			-		606,001
Asset-backed securities		-		-			31,368		31,368
Mortgage-backed securities		-		-			73,522		73,522
Common stock		68,553		-			-		68,553
Private equity investments		-		-			159,363		159,363
Commingled funds		-		1,292,569			-		1,292,569
Real estate		-		-			37,106		37,106
Securities lending collateral obligation and other		-		(55,802	)		-		(55,802	)
Total	$	216,143	$	2,152,778		$	301,359	$	2,670,280

	Dec. 31, 2010
(Thousands of Dollars)	Level 1		Level 2			Level 3		Total
Cash equivalents	$	122,643	$	135,710		$	-	$	258,353
Derivatives		-		8,140			-		8,140
Government securities		-		117,522			-		117,522
Corporate bonds		-		641,807			-		641,807
Asset-backed securities		-		-			26,986		26,986
Mortgage-backed securities		-		-			113,418		113,418
Common stock		117,899		-			-		117,899
Private equity investments		-		-			122,223		122,223
Commingled funds		-		1,152,386			-		1,152,386
Real estate		-		-			73,701		73,701
Securities lending collateral obligation and other		-		(91,727	)		-		(91,727	)
Total	$	240,542	$	1,963,838		$	336,328	$	2,540,708

The following tables present the changes in Xcel Energy's Level 3 pension plan assets for the years ended Dec. 31, 2011, 2010 and 2009:

									Purchases,
			Net Realized			Net Unrealized			Issuances, and
(Thousands of Dollars)	Jan. 1, 2011		Gains (Losses)			Gains (Losses)			Settlements, Net			Dec. 31, 2011
Asset-backed securities	$	26,986	$	2,391		$	(2,504	)	$	4,495		$	31,368
Mortgage-backed securities		113,418		1,103			(5,926	)		(35,073	)		73,522
Real estate		73,701		(629	)		20,271			(56,237	)		37,106
Private equity investments		122,223		3,971			12,412			20,757			159,363
Total	$	336,328	$	6,836		$	24,253		$	(66,058	)	$	301,359

									Purchases,
			Net Realized			Net Unrealized			Issuances, and
(Thousands of Dollars)	Jan. 1, 2010		Gains (Losses)			Gains (Losses)			Settlements, Net			Dec. 31, 2010
Asset-backed securities	$	47,825	$	3,400		$	(7,078	)	$	(17,161	)	$	26,986
Mortgage-backed securities		144,006		13,719			(19,095	)		(25,212	)		113,418
Real estate		66,704		(1,135	)		8,235			(103	)		73,701
Private equity investments		82,098		(1,008	)		(24	)		41,157			122,223
Total	$	340,633	$	14,976		$	(17,962	)	$	(1,319	)	$	336,328

									Purchases,
			Net Realized			Net Unrealized			Issuances, and
(Thousands of Dollars)	Jan. 1, 2009		Gains (Losses)			Gains (Losses)			Settlements, Net			Dec. 31, 2009
Asset-backed securities	$	77,398	$	2,365		$	45,920		$	(77,858	)	$	47,825
Mortgage-backed securities		166,610		5,531			97,939			(126,074	)		144,006
Real estate		109,289		(569	)		(42,638	)		622			66,704
Private equity investments		81,034		-			(5,682	)		6,746			82,098
Total	$	434,331	$	7,327		$	95,539		$	(196,564	)	$	340,633

Benefit Obligations - A comparison of the actuarially computed pension benefit obligation and plan assets for Xcel Energy is presented in the following table:

(Thousands of Dollars)	2011			2010
Accumulated Benefit Obligation at Dec. 31	$	3,073,637		$	2,865,845

Change in Projected Benefit Obligation:
Obligation at Jan. 1	$	3,030,292		$	2,829,631
Service cost		77,319			73,147
Interest cost		161,412			165,010
Plan amendments		-			18,739
Actuarial loss		195,369			169,203
Benefit payments		(238,173	)		(225,438	)
Obligation at Dec. 31	$	3,226,219		$	3,030,292

(Thousands of Dollars)	2011			2010
Change in Fair Value of Plan Assets:
Fair value of plan assets at Jan. 1	$	2,540,708		$	2,449,326
Actual return on plan assets		230,401			282,688
Employer contributions		137,344			34,132
Benefit payments		(238,173	)		(225,438	)
Fair value of plan assets at Dec. 31	$	2,670,280		$	2,540,708

Funded Status of Plans at Dec. 31:
Funded status (a)	$	(555,939	)	$	(489,584	)

Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost:
Net loss	$	1,610,946		$	1,502,888
Prior service cost		18,432			40,965
Total	$	1,629,378		$	1,543,853

Amounts Related to the Funded Status of the Plans Have Been Recorded as Follows Based Upon Expected Recovery in Rates:
Current regulatory assets	$	123,814		$	92,765
Noncurrent regulatory assets		1,435,372			1,386,125
Deferred income taxes		28,759			26,592
Net-of-tax accumulated other comprehensive income		41,433			38,371
Total	$	1,629,378		$	1,543,853

Measurement date	Dec. 31, 2011			Dec. 31, 2010

Significant Assumptions Used to Measure Benefit Obligations:
Discount rate for year-end valuation		5.00	%		5.50	%
Expected average long-term increase in compensation level		4.00			4.00
Mortality table	RP 2000			RP 2000

(a)	Amounts are recognized in noncurrent liabilities on Xcel Energy's consolidated balance sheet.

Cash Flows - Cash funding requirements can be impacted by changes to actuarial assumptions, actual asset levels and other calculations prescribed by the funding requirements of income tax and other pension-related regulations. These regulations did not require cash funding for 2008 through 2010 for Xcel Energy's pension plans. Required contributions were made in 2011 and 2012 to meet minimum funding requirements.

The Pension Protection Act changed the minimum funding requirements for defined benefit pension plans beginning in 2008. The following are the pension funding contributions, both voluntary and required, made by Xcel Energy for 2010 through 2012:

In January 2012, contributions of $190.5 million were made across four of Xcel Energy's pension plans;

In 2011, contributions of $137.3 million were made across three of Xcel Energy's pension plans;

In 2010, contributions of $34 million were made to the Xcel Energy Pension Plan.

For future years, we anticipate contributions will be made as necessary.

Plan Amendments - No amendments occurred during 2011 to the Xcel Energy pension plans.

Benefit Costs - The components of Xcel Energy's net periodic pension cost were:


(Thousands of Dollars)	2011			2010			2009
Service cost	$	77,319		$	73,147		$	65,461
Interest cost		161,412			165,010			169,790
Expected return on plan assets		(221,600	)		(232,318	)		(256,538	)
Amortization of prior service cost		22,533			20,657			24,618
Amortization of net loss		78,510			48,315			12,455
Net periodic pension cost		118,174			74,811			15,786
Costs not recognized due to effects of regulation		(37,198	)		(27,027	)		(2,891	)
Net benefit cost recognized for financial reporting	$	80,976		$	47,784		$	12,895


Significant Assumptions Used to Measure Costs:
Discount rate	5.50	%	6.00	%	6.75	%
Expected average long-term increase in compensation level	4.00		4.00		4.00
Expected average long-term rate of return on assets	7.50		7.79		8.50

Pension costs include an expected return impact for the current year that may differ from actual investment performance in the plan. The return assumption used for 2012 pension cost calculations will be 7.10 percent.

Xcel Energy also maintains noncontributory, defined benefit supplemental retirement income plans for certain qualifying executive personnel. Benefits for these unfunded plans are paid out of Xcel Energy's consolidated operating cash flows.

Defined Contribution Plans

Xcel Energy maintains 401(k) and other defined contribution plans that cover substantially all employees. Total contributions to these plans were approximately $27.1 million in 2011, $27.3 million in 2010 and $21.9 million in 2009.

Postretirement Health Care Benefits

Xcel Energy has a contributory health and welfare benefit plan that provides health care and death benefits to certain Xcel Energy retirees.

The former NSP discontinued contributing toward health care benefits for nonbargaining employees retiring after 1998 and for bargaining employees of NSP-Minnesota and NSP-Wisconsin who retired after 1999.

Xcel Energy discontinued contributing toward health care benefits for former NCE nonbargaining employees retiring after June 30, 2003.

Employees of NCE who retired in 2002 continue to receive employer-subsidized health care benefits.

Nonbargaining employees of the former NCE who retired after 1998, bargaining employees of the former NCE who retired after 1999 and nonbargaining employees of NCE who retired after June 30, 2003, are eligible to participate in the Xcel Energy health care program with no employer subsidy.

In 1993, Xcel Energy adopted accounting guidance regarding other non-pension postretirement benefits and elected to amortize the unrecognized APBO on a straight-line basis over 20 years.

Regulatory agencies for nearly all of Xcel Energy's retail and wholesale utility customers have allowed rate recovery of accrued postretirement benefit costs. The Colorado jurisdictional postretirement benefit costs deferred during the transition period are being amortized to expense on a straight-line basis over the 15-year period from 1998 to 2012. PSCo transitioned to full accrual accounting for postretirement benefit costs between 1993 and 1997.

Plan Assets - Certain state agencies that regulate Xcel Energy Inc.'s utility subsidiaries also have issued guidelines related to the funding of postretirement benefit costs. SPS is required to fund postretirement benefit costs for Texas and New Mexico jurisdictional amounts collected in rates and PSCo is required to fund postretirement benefit costs in irrevocable external trusts that are dedicated to the payment of these postretirement benefits. Also, a portion of the assets contributed on behalf of nonbargaining retirees has been funded into a sub-account of the Xcel Energy pension plans. These assets are invested in a manner consistent with the investment strategy for the pension plan.

Xcel Energy bases its investment-return assumption for the postretirement health care fund assets on expected long-term performance for each of the investment types included in its asset portfolio. The assets are invested in a portfolio according to Xcel Energy's return, liquidity and diversification objectives to provide a source of funding for plan obligations and minimize the necessity of contributions to the plan, within appropriate levels of risk. The principal mechanism for achieving these objectives is the projected allocation of assets to selected asset classes, given the long-term risk, return, correlation, and liquidity characteristics of each particular asset class. There were no significant concentrations of risk in any particular industry, index, or entity. Investment-return volatility is not considered to be a material factor in postretirement health care costs.

The following tables present, for each of the fair value hierarchy levels, Xcel Energy's postretirement benefit plan assets that are measured at fair value as of Dec. 31, 2011 and 2010:

	Dec. 31, 2011
(Thousands of Dollars)	Level 1		Level 2			Level 3		Total
Cash equivalents	$	58,037	$	-		$	-	$	58,037
Derivatives		-		13,178			-		13,178
Government securities		-		65,746			-		65,746
Corporate bonds		-		61,524			-		61,524
Asset-backed securities		-		-			7,867		7,867
Mortgage-backed securities		-		-			27,253		27,253
Preferred stock		-		423			-		423
Common stock		351		-			-		351
Private equity investments		-		-			479		479
Commingled funds		-		202,912			-		202,912
Real estate		-		-			144		144
Securities lending collateral obligation and other		-		(11,079	)		-		(11,079	)
Total	$	58,388	$	332,704		$	35,743	$	426,835

	Dec. 31, 2010
(Thousands of Dollars)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	72,573	$	76,352	$	-	$	148,925
Derivatives		-		13,632		-		13,632
Government securities		-		3,402		-		3,402
Corporate bonds		-		70,752		-		70,752
Asset-backed securities		-		-		2,585		2,585
Mortgage-backed securities		-		-		19,212		19,212
Preferred stock		-		507		-		507
Commingled funds		-		102,962		-		102,962
Securities lending collateral obligation and other		-		70,253		-		70,253
Total	$	72,573	$	337,860	$	21,797	$	432,230

The following tables present the changes in Xcel Energy's Level 3 postretirement benefit plan assets for the years ended Dec. 31, 2011, 2010 and 2009:

									Purchases,
			Net Realized			Net Unrealized			Issuances, and
(Thousands of Dollars)	Jan. 1, 2011		Gains (Losses)			Gains (Losses)			Settlements, Net		Dec. 31, 2011
Asset-backed securities	$	2,585	$	(10	)	$	(664	)	$	5,956	$	7,867
Mortgage-backed securities		19,212		(1,669	)		2,623			7,087		27,253
Real estate		-		(2	)		(34	)		180		144
Private equity investments		-		12			53			414		479
Total	$	21,797	$	(1,669	)	$	1,978		$	13,637	$	35,743

								Purchases,
			Net Realized			Net Unrealized		Issuances, and
(Thousands of Dollars)	Jan. 1, 2010		Gains (Losses)			Gains (Losses)		Settlements, Net			Dec. 31, 2010
Asset-backed securities	$	8,293	$	(259	)	$	2,073	$	(7,522	)	$	2,585
Mortgage-backed securities		47,078		(927	)		15,642		(42,581	)		19,212
Total	$	55,371	$	(1,186	)	$	17,715	$	(50,103	)	$	21,797

							Purchases,
			Net Realized		Net Unrealized		Issuances, and
(Thousands of Dollars)	Jan. 1, 2009		Gains (Losses)		Gains (Losses)		Settlements, Net			Dec. 31, 2009
Asset-backed securities	$	8,705	$	4	$	1,025	$	(1,441	)	$	8,293
Mortgage-backed securities		69,988		733		2,289		(25,932	)		47,078
Total	$	78,693	$	737	$	3,314	$	(27,373	)	$	55,371

Benefit Obligations - A comparison of the actuarially computed benefit obligation and plan assets for Xcel Energy is presented in the following table:

(Thousands of Dollars)	2011			2010
Change in Projected Benefit Obligation:
Obligation at Jan. 1	$	794,905		$	728,902
Service cost		4,824			4,006
Interest cost		42,086			42,780
Medicare subsidy reimbursements		3,518			5,423
ERRP proceeds shared with retirees		4,269			-
Plan amendments		(26,630	)		-
Plan participants' contributions		15,690			14,315
Actuarial loss		8,823			68,126
Benefit payments		(70,638	)		(68,647	)
Obligation at Dec. 31	$	776,847		$	794,905

Change in Fair Value of Plan Assets:
Fair value of plan assets at Jan. 1	$	432,230		$	384,689
Actual return on plan assets		535			53,430
Plan participants' contributions		15,690			14,315
Employer contributions		49,018			48,443
Benefit payments		(70,638	)		(68,647	)
Fair value of plan assets at Dec. 31	$	426,835		$	432,230

(Thousands of Dollars)	2011			2010
Funded Status of Plans at Dec. 31:
Funded status	$	(350,012	)	$	(362,675	)
Current assets		332			-
Current liabilities		(7,594	)		(5,392	)
Noncurrent liabilities		(342,750	)		(357,283	)
Net postretirement amounts recognized on consolidated balance sheets	$	(350,012	)	$	(362,675	)

Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost:
Net loss	$	246,846		$	221,335
Prior service credit		(50,652	)		(28,954	)
Transition obligation		15,147			29,591
Total	$	211,341		$	221,972

Amounts Related to the Funded Status of the Plans Have Been Recorded as Follows Based Upon Expected Recovery in Rates:
Current regulatory assets	$	26,139		$	20,225
Noncurrent regulatory assets		176,730			197,952
Current regulatory liabilities		(1,866	)		-
Noncurrent regulatory liabilities		-			(6,423	)
Deferred income taxes		4,207			4,159
Net-of-tax accumulated other comprehensive income		6,131			6,059
Total	$	211,341		$	221,972

Measurement date	Dec. 31, 2011			Dec. 31, 2010

Significant Assumptions Used to Measure Benefit Obligations:
Discount rate for year-end valuation		5.00	%		5.50	%
Mortality table	RP 2000			RP 2000
Health care costs trend rate - initial		6.31	%		6.50	%

Effective Dec. 31, 2011, the ultimate trend assumption remained unchanged at 5.0 percent. The period until the ultimate rate is reached remained unchanged at eight years. Xcel Energy bases its medical trend assumption on the long-term cost inflation expected in the health care market, considering the levels projected and recommended by industry experts, as well as recent actual medical cost increases experienced by Xcel Energy's retiree medical plan.

A 1-percent change in the assumed health care cost trend rate would have the following effects on Xcel Energy:

	One Percentage Point
(Thousands of Dollars)	Increase		Decrease
APBO	$	79,710	$	(65,195	)
Service and interest components		5,598		(4,456	)

Cash Flows - The postretirement health care plans have no funding requirements under income tax and other retirement-related regulations other than fulfilling benefit payment obligations, when claims are presented and approved under the plans. Additional cash funding requirements are prescribed by certain state and federal rate regulatory authorities, as discussed previously. Xcel Energy contributed $49.0 million during 2011 and $48.4 million during 2010 and expects to contribute approximately $39.1 million during 2012.

Plan Amendments - The 2011 decrease of the projected Xcel Energy postretirement health and welfare benefit obligation for plan amendments is due to changes in the participant co-pay structure for certain retiree groups and the elimination of dental and vision benefits for some non-bargaining retirees.

Benefit Costs - The components of Xcel Energy's net periodic postretirement benefit costs were:

(Thousands of Dollars)	2011			2010			2009
Service cost	$	4,824		$	4,006		$	4,665
Interest cost		42,086			42,780			50,412
Expected return on plan assets		(31,962	)		(28,529	)		(22,775	)
Amortization of transition obligation		14,444			14,444			14,444
Amortization of prior service cost		(4,932	)		(4,932	)		(2,726	)
Amortization of net loss		13,294			11,643			19,329
Net periodic postretirement benefit cost		37,754			39,412			63,349
Additional cost recognized due to effects of regulation		3,891			3,891			3,891
Net benefit cost recognized for financial reporting	$	41,645		$	43,303		$	67,240

Significant Assumptions Used to Measure Costs:
Discount rate		5.50	%		6.00	%		6.75	%
Expected average long-term rate of return on assets (before tax)		7.50			7.50			7.50

Projected Benefit Payments

The following table lists Xcel Energy's projected benefit payments for the pension and postretirement benefit plans:

(Thousands of Dollars)	Projected Pension Benefit Payments		Gross Projected Postretirement Health Care Benefit Payments		Expected Medicare Part D Subsidies		Net Projected Postretirement Health Care Benefit Payments
2012	$	270,101	$	57,461	$	4,523	$	52,938
2013		253,333		57,318		4,871		52,447
2014		261,854		58,396		5,175		53,221
2015		263,129		59,880		5,471		54,409
2016		264,885		61,375		5,751		55,624
2017-2021		1,328,001		315,139		32,659		282,480

Multiemployer Plans

NSP-Minnesota and NSP-Wisconsin each contribute to several union multiemployer pension and other postretirement benefit plans, none of which are individually significant. These plans provide pension and postretirement health care benefits to certain union employees, including electrical workers, boilermakers, and other construction and facilities workers who may perform services for more than one employer during a given period and do not participate in the NSP-Minnesota and NSP-Wisconsin sponsored pension and postretirement health care plans. Contributing to these types of plans creates risk that differs from providing benefits under NSP-Minnesota and NSP-Wisconsin sponsored plans, in that if another participating employer ceases to contribute to a multiemployer plan, additional unfunded obligations may need to be funded over time by remaining participating employers.

Contributions to multiemployer plans were as follows for the years ended Dec. 31, 2011, 2010 and 2009. There were no significant changes to the nature or magnitude of the participation of NSP-Minnesota and NSP-Wisconsin in multiemployer plans for the years presented:

(Thousands of Dollars)	2011		2010		2009
Multiemployer pension contributions:
NSP-Minnesota	$	17,811	$	13,461	$	11,348
NSP-Wisconsin		169		170		116
Total	$	17,980	$	13,631	$	11,464

Multiemployer other postretirement benefit contributions:
NSP-Minnesota	$	336	$	153	$	140
Total	$	336	$	153	$	140