Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Earliest Open Tax Years Subject to Examination by State Taxing Authorities in the Major Operating Jurisdictions

As of Dec. 31, 2011, Xcel Energy's earliest open tax years that are subject to examination by state taxing authorities in its major operating jurisdictions were as follows:

State		Year
Colorado		2006
Minnesota		2007
Texas		2007
Wisconsin		2007

Summary of Income Tax Contingencies

A reconciliation of the amount of unrecognized tax benefit is as follows:

(Millions of Dollars)	Dec. 31, 2011		Dec. 31, 2010
Unrecognized tax benefit - Permanent tax positions	$	4.3	$	5.9
Unrecognized tax benefit - Temporary tax positions		30.4		34.6
Unrecognized tax benefit balance	$	34.7	$	40.5

A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

(Millions of Dollars)	2011			2010			2009
Balance at Jan. 1	$	40.5		$	30.3		$	42.1
Additions based on tax positions related to the current year - continuing operations		11.9			13.4			12.6
Reductions based on tax positions related to the current year - continuing operations		(1.9	)		(0.6	)		(1.8	)
Additions for tax positions of prior years - continuing operations		14.0			5.5			6.8
Reductions for tax positions of prior years - continuing operations		(2.4	)		(1.8	)		(2.3	)
Reductions for tax positions of prior years - discontinued operations		-			(6.3	)		-
Settlements with taxing authorities - continuing operations		(27.3	)		-			(27.1	)
Lapse of applicable statutes of limitations - continuing operations		(0.1	)		-			-
Balance at Dec. 31	$	34.7		$	40.5		$	30.3

The unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryforwards. The amounts of tax benefits associated with NOL and tax credit carryfowards are as follows:

(Millions of Dollars)		Dec. 31, 2011				Dec. 31, 2010
NOL and tax credit carryforwards		$	(33.6	)		$	(38.0	)

The decrease in the unrecognized tax benefit balance of $5.8 million in 2011 was due to the resolution of certain federal audit matters, partially offset by an increase due to the addition of uncertain tax positions related to current and prior years' activity. Xcel Energy's amount of unrecognized tax benefits could change in the next 12 months as the IRS and state audits resume. At this time, due to the uncertain nature of the audit process, it is not reasonably possible to estimate an overall range of possible change. However, Xcel Energy does not anticipate total unrecognized tax benefits will significantly change within the next 12 months.

The payable for interest related to unrecognized tax benefits is substantially offset by the interest benefit associated with NOL and tax credit carryforwards. A reconciliation of the beginning and ending amount of the payable for interest related to unrecognized tax benefits reported is as follows:

(Millions of Dollars)	2011			2010			2009
Payable for interest related to unrecognized tax benefits at Jan. 1	$	(0.3	)	$	(0.2	)	$	(0.4	)
Interest income (expense) related to unrecognized tax benefits - continuing operations		0.9			(0.6	)		1.5
Interest (expense) income related to unrecognized tax benefits - discontinued operations		(0.8	)		0.5			(1.3	)
Payable for interest related to unrecognized tax benefits at Dec. 31	$	(0.2	)	$	(0.3	)	$	(0.2	)

NOL and Tax Credit Carryforwards

NOL and tax credit carryforwards as of Dec. 31 were as follows:

(Millions of Dollars)	2011			2010
Federal NOL carryforward	$	1,710		$	989
Federal tax credit carryforwards		232			205
State NOL carryforwards		1,707			1,363
Valuation allowances for state NOL carryforwards		(51	)		(32	)
State tax credit carryforwards, net of federal detriment (a)		22			21
Valuation allowances for state tax credit carryforwards, net of federal benefit		(2	)		-

(a)	State tax credit carryforwards are net of federal detriment of $12 million and $11 million as of Dec. 31, 2011 and 2010, respectively.

Reconciliation of Effective Tax Rate from Continuing Operations

The following reconciles such differences for the years ending Dec. 31:

	2011			2010			2009
Federal statutory rate		35.0	%		35.0	%		35.0	%
Increases (decreases) in tax from:
State income taxes, net of federal income tax benefit		4.2			3.9			4.0
Resolution of income tax audits and other		0.3			0.6			0.8
Tax credits recognized, net of federal income tax expense		(2.6	)		(1.8	)		(2.0	)
Regulatory differences - utility plant items		(0.8	)		(1.1	)		(2.0	)
Change in unrecognized tax benefits		(0.1	)		0.1			(0.5	)
Life insurance policies		(0.1	)		(0.8	)		(0.2	)
Previously recognized Medicare Part D subsidies		-			1.4			-
Other, net		(0.1	)		(0.6	)		-
Effective income tax rate from continuing operations		35.8	%		36.7	%		35.1	%

Components of Income Tax Expense from Continuing Operations

The components of Xcel Energy's income tax expense for the years ending Dec. 31 were:

(Thousands of Dollars)	2011			2010			2009
Current federal tax expense (benefit)	$	3,399		$	16,657		$	(39,886	)
Current state tax expense		9,971			12,580			8,672
Current change in unrecognized tax benefit		(8,266	)		(2,982	)		(7,627	)
Current tax credits		-			(944	)		-
Deferred federal tax expense		410,794			376,073			360,252
Deferred state tax expense		80,670			52,543			69,947
Deferred change in unrecognized tax expense		6,705			4,641			2,387
Deferred tax credits		(28,763	)		(15,580	)		(16,005	)
Deferred investment tax credits		(6,194	)		(6,353	)		(6,426	)
Total income tax expense from continuing operations	$	468,316		$	436,635		$	371,314

Components of Net Deferred Tax Liability from Continuing Operations

The components of Xcel Energy's net deferred tax liability (current and noncurrent) at Dec. 31 were as follows:

(Thousands of Dollars)	2011			2010
Deferred tax liabilities:
Differences between book and tax bases of property	$	4,558,951		$	3,853,425
Regulatory assets		253,162			242,760
Other		279,162			219,035
Total deferred tax liabilities	$	5,091,275		$	4,315,220

Deferred tax assets:
NOL carryforward	$	696,435		$	425,620
Tax credit carryforward		254,157			226,057
Unbilled revenue - fuel costs		73,912			69,358
Environmental remediation		45,551			41,696
Rate refund		37,443			8,971
Deferred investment tax credits		37,425			39,916
Regulatory liabilities		37,012			51,600
Accrued liabilities and other		73,092			58,891
NOL and tax credit valuation allowances		(5,683	)		(1,927	)
Total deferred tax assets	$	1,249,344		$	920,182
Net deferred tax liability	$	3,841,931		$	3,395,038

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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- Definition

Tabular disclosure of income tax examinations that an enterprise is currently subject to or that have been completed in the current period typically including a description of the examination, the jurisdiction conducting the examination, the tax year(s) under examination, the likelihood of an unfavorable settlement, the range of possible losses, the liability recorded, the increase or decrease in the liability from the prior period, and any penalties and interest that have been recorded.

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