Borrowings and Other Financing Instruments

Commercial Paper — NSP-Wisconsin meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility. Commercial paper outstanding for NSP-Wisconsin was as follows:



(Amounts in Millions, Except Interest Rates)	Three Months Ended Dec. 31, 2015
Borrowing limit	$	150
Amount outstanding at period end	10
Average amount outstanding	6
Maximum amount outstanding	18
Weighted average interest rate, computed on a daily basis	0.44		%
Weighted average interest rate at period end	0.70



(Amounts in Millions, Except Interest Rates)	Twelve Months Ended Dec. 31, 2015			Twelve Months Ended Dec. 31, 2014			Twelve Months Ended Dec. 31, 2013
Borrowing limit	$	150		$	150		$	150
Amount outstanding at period end	10			78			68
Average amount outstanding	39			46			20
Maximum amount outstanding	122			101			71
Weighted average interest rate, computed on a daily basis	0.44		%	0.27		%	0.31		%
Weighted average interest rate at period end	0.70			0.55			0.27

Letters of Credit — NSP-Wisconsin may use letters of credit, generally with terms of one-year, to provide financial guarantees for certain operating obligations. At Dec. 31, 2015 and 2014, there were no letters of credit outstanding.

Credit Facility — In order to use its commercial paper program to fulfill short-term funding needs, NSP-Wisconsin must have a revolving credit facility in place at least equal to the amount of its commercial paper borrowing limit and cannot issue commercial paper in an aggregate amount exceeding available capacity under this credit facility. The line of credit provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

Credit Agreement — NSP-Wisconsin has a five-year credit agreement with a syndicate of banks. The total size of the credit facility is $150 million and the credit facility terminates in October 2019.

NSP-Wisconsin has the right to request an extension of the termination date for an additional one-year period. All extension requests are subject to majority bank group approval.

Other features of NSP-Wisconsin’s credit facility include:

•

The credit facility has a financial covenant requiring that the debt-to-total capitalization ratio be less than or equal to 65 percent. NSP-Wisconsin was in compliance as its debt-to-total capitalization ratio was 46 percent and 48 percent at Dec. 31, 2015 and 2014, respectively. If NSP-Wisconsin does 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 credit facility has a cross-default provision that provides NSP-Wisconsin will be in default on its borrowings under the facility if NSP-Wisconsin or any of its subsidiaries whose total assets exceed 15 percent of NSP-Wisconsin’s consolidated total assets, default on certain indebtedness in an aggregate principal amount exceeding $75 million.


•	NSP-Wisconsin was in compliance with all financial covenants on its debt agreements as of Dec. 31, 2015 and 2014.


•	The interest rates under the line of credit are based on Eurodollar borrowing margins ranging from 87.5 to 175 basis points per year based on the applicable long-term 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 7.5 to 27.5 basis points per year.

At Dec. 31, 2015, NSP-Wisconsin had the following committed credit facility available (in millions):



Credit Facility ^(a)		Drawn ^(b)		Available
$	150	$	10	$	140


^(a)	This credit facility matures in October 2019.


^(b)	Includes outstanding commercial paper.

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. NSP-Wisconsin had no direct advances on the credit facility outstanding at Dec. 31, 2015 and 2014.

Other Short-Term Borrowings — The following table presents the notes payable of Clearwater Investments, Inc., a NSP-Wisconsin subsidiary, to Xcel Energy Inc.:



(Amounts in Millions, Except Interest Rates)	Dec. 31, 2015			Dec. 31, 2014
Notes payable to affiliates	$	0.5		$	0.5
Weighted average interest rate	0.87		%	0.51		%

Long-Term Borrowings and Other Financing Instruments

Generally, all real and personal property of NSP-Wisconsin is subject to the liens of its first mortgage indentures. 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.

In 2015, NSP-Wisconsin issued $100 million of 3.3 percent first mortgage bonds due June 15, 2024. In 2014, NSP-Wisconsin issued $100 million of 3.30 percent first mortgage bonds due June 15, 2024.

During the next five years, NSP-Wisconsin has long-term debt maturities of $150 million due in 2018.

Deferred Financing Costs — Other assets included deferred financing costs of approximately $5.1 million and $4.3 million, net of amortization, at Dec. 31, 2015 and 2014, respectively. NSP-Wisconsin is amortizing these financing costs over the remaining maturity periods of the related debt.

Dividend Restrictions — NSP-Wisconsin’s dividends are subject to the FERC’s jurisdiction, which prohibits the payment of dividends out of capital accounts; payment of dividends is allowed out of retained earnings only.

The most restrictive dividend limitation for NSP-Wisconsin is imposed by its state regulatory commission. NSP-Wisconsin cannot pay annual dividends in excess of approximately $33.3 million if its calendar year average equity-to-total capitalization ratio is or falls below the state commission authorized level of 52.5 percent, as calculated consistent with PSCW requirements. NSP-Wisconsin’s calendar year average equity-to-total capitalization ratio calculated on this basis was 52.6 percent at Dec. 31, 2015 and $2.4 million in retained earnings was not restricted.