|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Wisconsin
|
39-0508315
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
1414 West Hamilton Avenue
|
||
Eau Claire, Wisconsin
|
54701
|
|
(Address of principal executive offices)
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(Zip Code)
|
Large accelerated filer o
|
Accelerated filer o
|
|
Non-accelerated filer x
|
Smaller reporting company o
|
|
(Do not check if smaller reporting company)
|
Class
|
Outstanding at Aug. 1, 2011
|
|
Common Stock, $100 par value
|
933,000 shares
|
PART I - FINANCIAL INFORMATION
|
||||
Item l
|
—
|
3
|
||
Item 2
|
—
|
20
|
||
Item 4
|
—
|
23
|
||
PART II - OTHER INFORMATION
|
||||
Item 1
|
—
|
24
|
||
Item 1A
|
—
|
24
|
||
Item 6
|
—
|
26
|
||
27
|
||||
Certifications Pursuant to Section 302
|
1
|
|||
Certifications Pursuant to Section 906
|
1
|
|||
Statement Pursuant to Private Litigation
|
1
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Operating revenues
|
||||||||||||||||
Electric
|
$ | 178,692 | $ | 164,082 | $ | 363,060 | $ | 337,144 | ||||||||
Natural gas
|
19,880 | 15,281 | 73,363 | 66,762 | ||||||||||||
Other
|
278 | 234 | 535 | 460 | ||||||||||||
Total operating revenues
|
198,850 | 179,597 | 436,958 | 404,366 | ||||||||||||
Operating expenses
|
||||||||||||||||
Electric fuel and purchased power
|
100,183 | 99,535 | 205,665 | 196,885 | ||||||||||||
Cost of natural gas sold and transported
|
12,081 | 8,623 | 49,345 | 44,701 | ||||||||||||
Other operating and maintenance expenses
|
40,309 | 37,934 | 79,897 | 75,820 | ||||||||||||
Conservation program expenses
|
3,422 | 2,989 | 6,483 | 5,885 | ||||||||||||
Depreciation and amortization
|
16,906 | 15,883 | 33,645 | 31,613 | ||||||||||||
Taxes (other than income taxes)
|
5,834 | 5,639 | 11,911 | 11,601 | ||||||||||||
Total operating expenses
|
178,735 | 170,603 | 386,946 | 366,505 | ||||||||||||
Operating income
|
20,115 | 8,994 | 50,012 | 37,861 | ||||||||||||
Other (expense) income, net
|
(60 | ) | 86 | 14 | 749 | |||||||||||
Allowance for funds used during construction — equity
|
305 | 649 | 411 | 1,083 | ||||||||||||
Interest charges and financing costs
|
||||||||||||||||
Interest charges — includes other financing costs of $445, $354, $809 and $704, respectively
|
6,082 | 6,043 | 12,085 | 12,399 | ||||||||||||
Allowance for funds used during construction — debt
|
(39 | ) | (298 | ) | (77 | ) | (483 | ) | ||||||||
Total interest charges and financing costs
|
6,043 | 5,745 | 12,008 | 11,916 | ||||||||||||
Income before income taxes
|
14,317 | 3,984 | 38,429 | 27,777 | ||||||||||||
Income taxes
|
5,839 | 1,305 | 15,308 | 11,554 | ||||||||||||
Net income
|
$ | 8,478 | $ | 2,679 | $ | 23,121 | $ | 16,223 |
Six Months Ended June 30,
|
||||||||
2011
|
2010
|
|||||||
Operating activities
|
||||||||
Net income
|
$ | 23,121 | $ | 16,223 | ||||
Adjustments to reconcile net income to cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
34,303 | 32,271 | ||||||
Deferred income taxes
|
14,494 | 7,224 | ||||||
Amortization of investment tax credits
|
(307 | ) | (312 | ) | ||||
Allowance for equity funds used during construction
|
(411 | ) | (1,083 | ) | ||||
Net realized and unrealized hedging and derivative transactions
|
63 | 63 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
4,029 | 24,110 | ||||||
Accrued unbilled revenues
|
14,515 | 10,467 | ||||||
Inventories
|
5,804 | 6,116 | ||||||
Other current assets
|
1,713 | 8,213 | ||||||
Accounts payable
|
(21,340 | ) | (17,803 | ) | ||||
Net regulatory assets and liabilities
|
246 | (5,879 | ) | |||||
Other current liabilities
|
2,944 | 624 | ||||||
Change in other noncurrent assets
|
(59 | ) | (78 | ) | ||||
Change in other noncurrent liabilities
|
(7,532 | ) | 2,324 | |||||
Net cash provided by operating activities
|
71,583 | 82,480 | ||||||
Investing activities
|
||||||||
Utility capital/construction expenditures
|
(58,219 | ) | (56,028 | ) | ||||
Allowance for equity funds used during construction
|
411 | 1,083 | ||||||
Other investments
|
(43 | ) | 2,281 | |||||
Net cash used in investing activities
|
(57,851 | ) | (52,664 | ) | ||||
Financing activities
|
||||||||
Proceeds from short-term borrowings, net
|
35,000 | - | ||||||
Proceeds from notes payable to affiliate
|
111,300 | 190,500 | ||||||
Repayment of notes payable to affiliate
|
(148,300 | ) | (206,000 | ) | ||||
Repayment of long-term debt
|
(30 | ) | (34 | ) | ||||
Capital contributions from parent
|
- | 44,032 | ||||||
Dividends paid to parent
|
(16,728 | ) | (57,296 | ) | ||||
Net cash used in financing activities
|
(18,758 | ) | (28,798 | ) | ||||
Net (decrease) increase in cash and cash equivalents
|
(5,026 | ) | 1,018 | |||||
Cash and cash equivalents at beginning of period
|
6,445 | 923 | ||||||
Cash and cash equivalents at end of period
|
$ | 1,419 | $ | 1,941 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest (net of amounts capitalized)
|
$ | (11,514 | ) | $ | (11,215 | ) | ||
Cash received for income taxes, net
|
441 | 1,558 | ||||||
Supplemental disclosure of non-cash investing transactions:
|
||||||||
Property, plant and equipment additions in accounts payable
|
$ | 1,094 | $ | 1,615 |
June 30, 2011
|
Dec. 31, 2010
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 1,419 | $ | 6,445 | ||||
Accounts receivable, net
|
47,638 | 51,667 | ||||||
Accrued unbilled revenues
|
37,064 | 51,579 | ||||||
Inventories
|
20,812 | 26,616 | ||||||
Regulatory assets
|
12,395 | 14,084 | ||||||
Prepaid taxes
|
20,060 | 21,097 | ||||||
Prepayments and other
|
1,879 | 2,555 | ||||||
Total current assets
|
141,267 | 174,043 | ||||||
Property, plant and equipment, net
|
1,153,063 | 1,130,342 | ||||||
Other assets
|
||||||||
Regulatory assets
|
210,533 | 214,402 | ||||||
Other investments
|
4,078 | 4,036 | ||||||
Other
|
3,680 | 3,705 | ||||||
Total other assets
|
218,291 | 222,143 | ||||||
Total assets
|
$ | 1,512,621 | $ | 1,526,528 | ||||
Liabilities and Equity
|
||||||||
Current liabilities
|
||||||||
Current portion of long-term debt
|
$ | 1,473 | $ | 1,502 | ||||
Short-term debt
|
35,000 | - | ||||||
Notes payable to affiliates
|
550 | 37,550 | ||||||
Accounts payable
|
20,830 | 35,124 | ||||||
Accounts payable to affiliates
|
26,739 | 36,320 | ||||||
Dividends payable to parent
|
8,112 | 8,441 | ||||||
Regulatory liabilities
|
8,636 | 10,377 | ||||||
Accrued interest
|
6,646 | 6,438 | ||||||
Taxes accrued
|
2,303 | 867 | ||||||
Derivative instruments
|
293 | 1,787 | ||||||
Other
|
17,826 | 17,543 | ||||||
Total current liabilities
|
128,408 | 155,949 | ||||||
Deferred credits and other liabilities
|
||||||||
Deferred income taxes
|
212,164 | 198,793 | ||||||
Deferred investment tax credits
|
8,803 | 9,110 | ||||||
Regulatory liabilities
|
118,105 | 117,318 | ||||||
Environmental liabilities
|
98,486 | 97,740 | ||||||
Pension and employee benefit obligations
|
44,877 | 51,592 | ||||||
Customer advances
|
17,844 | 17,352 | ||||||
Other
|
6,589 | 8,142 | ||||||
Total deferred credits and other liabilities
|
506,868 | 500,047 | ||||||
Commitments and contingent liabilities
|
||||||||
Capitalization
|
||||||||
Long-term debt
|
367,907 | 367,854 | ||||||
Common stock — authorized 1,000,000 shares of $100 par value; outstanding 933,000 shares
|
93,300 | 93,300 | ||||||
Additional paid in capital
|
187,071 | 187,071 | ||||||
Retained earnings
|
229,619 | 222,897 | ||||||
Accumulated other comprehensive loss
|
(552 | ) | (590 | ) | ||||
Total common stockholder's equity
|
509,438 | 502,678 | ||||||
Total liabilities and equity
|
$ | 1,512,621 | $ | 1,526,528 |
1.
|
Summary of Significant Accounting Policies
|
2.
|
Accounting Pronouncements
|
3.
|
Selected Balance Sheet Data
|
(Thousands of Dollars)
|
June 30, 2011
|
Dec. 31, 2010
|
||||||
Accounts receivable, net (a)
|
||||||||
Accounts receivable
|
$ | 51,606 | $ | 55,929 | ||||
Less allowance for bad debts
|
(3,968 | ) | (4,262 | ) | ||||
$ | 47,638 | $ | 51,667 | |||||
Inventories
|
||||||||
Materials and supplies
|
$ | 5,807 | $ | 5,564 | ||||
Fuel
|
10,268 | 10,819 | ||||||
Natural gas
|
4,737 | 10,233 | ||||||
$ | 20,812 | $ | 26,616 | |||||
Property, plant and equipment, net
|
||||||||
Electric plant
|
$ | 1,633,630 | $ | 1,590,713 | ||||
Natural gas plant
|
203,046 | 199,224 | ||||||
Common and other property
|
128,044 | 123,793 | ||||||
Construction work in progress
|
41,312 | 42,874 | ||||||
Total property, plant and equipment
|
2,006,032 | 1,956,604 | ||||||
Less accumulated depreciation
|
(852,969 | ) | (826,262 | ) | ||||
$ | 1,153,063 | $ | 1,130,342 |
4.
|
Income Taxes
|
(Millions of Dollars)
|
June 30, 2011
|
Dec. 31, 2010
|
||||||
Unrecognized tax benefit - Permanent tax positions
|
$ | 0.2 | $ | 0.2 | ||||
Unrecognized tax benefit - Temporary tax positions
|
1.7 | 1.7 | ||||||
Unrecognized tax benefit balance
|
$ | 1.9 | $ | 1.9 |
(Millions of Dollars)
|
June 30, 2011
|
Dec. 31, 2010
|
||||||
NOL and tax credit carryforwards
|
$ | (0.2 | ) | $ | (0.1 | ) |
5.
|
Rate Matters
|
6.
|
Commitments and Contingent Liabilities
|
(Thousands of Dollars)
|
June 30, 2011
|
Dec. 31, 2010
|
||||||
Current assets
|
$ | 207 | $ | 228 | ||||
Property, plant and equipment, net
|
2,811 | 2,891 | ||||||
Other noncurrent assets
|
101 | 89 | ||||||
Total assets
|
$ | 3,119 | $ | 3,208 | ||||
Current liabilities
|
$ | 1,584 | $ | 1,612 | ||||
Mortgages and other long-term debt payable
|
486 | 486 | ||||||
Other noncurrent liabilities
|
45 | 43 | ||||||
Total liabilities
|
$ | 2,115 | $ | 2,141 |
(Millions of Dollars)
|
June 30, 2011
|
Dec. 31, 2010
|
||||||
Guarantees issued and outstanding
|
$ | 1.0 | $ | 1.0 | ||||
Known exposure under these guarantees
|
0.4 | 0.5 |
7.
|
Borrowings and Other Financing Instruments
|
(Millions of Dollars)
|
Three Months Ended
June 30, 2011
|
|||
Borrowing limit
|
$
|
150
|
||
Amount outstanding at period end
|
35
|
|||
Average amount outstanding
|
28
|
|||
Maximum amount outstanding
|
46
|
|||
Weighted average interest rate, computed on a daily basis
|
0.35
|
%
|
||
Weighted average interest rate at end of period
|
0.33
|
|
·
|
The credit facility has a financial covenant requiring that NSP-Wisconsin’s 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 49 percent at June 30, 2011. 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 Xcel Energy Inc. or any of its subsidiaries, comprising 15 percent or more of the consolidated assets, default on any indebtedness in an aggregate principal amount exceeding $75 million.
|
|
·
|
The interest rates under the line of credit are based on the Eurodollar rate, plus a borrowing margin based on the applicable credit ratings of 100 to 200 basis points per year.
|
|
·
|
The commitment fees, also based on applicable long-term credit ratings, are calculated on the unused portion of the line of credit at a range of 10 to 35 basis points per year.
|
Credit Facility
|
Drawn (a)
|
Available
|
||||||||
$ |
150.0
|
$ | 35.0 | $ | 115.0 |
(Millions of Dollars)
|
Twelve Months Ended
Dec. 31, 2010
|
|||
Borrowing limit
|
$
|
100
|
||
Amount outstanding at period end
|
37
|
|||
Average amount outstanding
|
11
|
|||
Maximum amount outstanding
|
59
|
|||
Weighted average interest rate, computed on a daily basis
|
0.33
|
%
|
||
Weighted average interest rate at end of period
|
0.38
|
(Millions of Dollars)
|
June 30, 2011
|
Dec. 31, 2010
|
||||||
Notes payable to affiliates
|
$ | 0.6 | $ | 0.6 | ||||
Weighted average interest rate
|
0.33 | % | 0.36 | % |
8.
|
Fair Value of Financial Assets and Liabilities
|
Three Months Ended June 30,
|
||||||||
(Thousands of Dollars)
|
2011
|
2010
|
||||||
Accumulated other comprehensive loss related to cash flow hedges at April 1
|
$ | (571 | ) | $ | (647 | ) | ||
After-tax net realized losses on derivative transactions reclassified into earnings
|
19 | 19 | ||||||
Accumulated other comprehensive loss related to cash flow hedges at June 30
|
$ | (552 | ) | $ | (628 | ) |
|
Six Months Ended June 30,
|
|||||||
(Thousands of Dollars)
|
2011
|
2010
|
||||||
Accumulated other comprehensive loss related to cash flow hedges at Jan. 1
|
$ | (590 | ) | $ | (666 | ) | ||
After-tax net realized losses on derivative transactions reclassified into earnings
|
38 | 38 | ||||||
Accumulated other comprehensive loss related to cash flow hedges at June 30
|
$ | (552 | ) | $ | (628 | ) |
(Amounts in Thousands) (a)
|
June 30, 2011
|
Dec. 31, 2010
|
||||||
MMBtu of natural gas
|
1,459 | 2,242 |
June 30, 2011
|
|||||||||||||||||||||||||
Fair Value
|
|||||||||||||||||||||||||
(Thousands of Dollars)
|
Level 1
|
Level 2
|
Level 3
|
Fair Value Total
|
Counterparty Netting (a)
|
Total
|
|||||||||||||||||||
Current derivative liabilities
|
|||||||||||||||||||||||||
Natural gas commodity
|
$ | 27 | $ | 266 | $ | - | $ | 293 | $ | - | $ | 293 |
Dec. 31, 2010
|
|||||||||||||||||||||||||
Fair Value
|
|||||||||||||||||||||||||
(Thousands of Dollars)
|
Level 1
|
Level 2
|
Level 3
|
Fair Value Total
|
Counterparty Netting (a)
|
Total
|
|||||||||||||||||||
Current derivative liabilities
|
|||||||||||||||||||||||||
Natural gas commodity
|
$ | - | $ | 1,800 | $ | - | $ | 1,800 | $ | (13 | ) | $ | 1,787 |
(a)
|
The accounting for derivatives and hedging permits the netting of receivables and payables for derivatives and related collateral amounts when a legally enforceable master netting agreement exists between NSP-Wisconsin and a counterparty. A master netting agreement is an agreement between two parties who have multiple contracts with each other that provides for the net settlement of all contracts in the event of default on or termination of any one contract.
|
June 30, 2011
|
Dec. 31, 2010
|
|||||||||||||||
Historical
|
Historical
|
|||||||||||||||
(Thousands of Dollars)
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
||||||||||||
Long-term debt, including current portion
|
$ | 369,380 | $ | 420,126 | $ | 369,356 | $ | 416,587 |
9.
|
Other Income (Expense), Net
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Thousands of Dollars)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Interest (expense) income
|
$ | (5 | ) | $ | 49 | $ | 166 | $ | 781 | |||||||
Other nonoperating income
|
29 | 62 | 11 | 76 | ||||||||||||
Insurance policy expense
|
(82 | ) | (25 | ) | (158 | ) | (108 | ) | ||||||||
Other nonoperating expense
|
(2 | ) | - | (5 | ) | - | ||||||||||
Other (expense) income, net
|
$ | (60 | ) | $ | 86 | $ | 14 | $ | 749 |
10.
|
Segment Information
|
|
·
|
NSP-Wisconsin’s regulated electric utility segment generates electricity which is transmitted and distributed in Wisconsin and Michigan. In addition, this segment includes sales for resale and provides wholesale transmission service to various entities primarily in Wisconsin.
|
|
·
|
NSP-Wisconsin’s regulated natural gas utility segment purchases, transports, stores and distributes natural gas in portions of Wisconsin and Michigan.
|
|
·
|
Revenues from operating segments not included above are below the necessary quantitative thresholds and are therefore included in the all other category. Those primarily include investments in rental housing projects that qualify for low-income housing tax credits.
|
Regulated
|
Regulated
|
All
|
Reconciling
|
Consolidated
|
||||||||||||||||
(Thousands of Dollars)
|
Electric
|
Natural Gas
|
Other
|
Eliminations
|
Total
|
|||||||||||||||
Three Months Ended June 30, 2011
|
||||||||||||||||||||
Operating revenues from external customers
|
$ | 178,692 | $ | 19,880 | $ | 278 | $ | - | $ | 198,850 | ||||||||||
Intersegment revenues
|
116 | 276 | - | (392 | ) | - | ||||||||||||||
Total revenues
|
$ | 178,808 | $ | 20,156 | $ | 278 | $ | (392 | ) | $ | 198,850 | |||||||||
Net income (loss)
|
$ | 9,139 | $ | (618 | ) | $ | (43 | ) | $ | - | $ | 8,478 | ||||||||
Three Months Ended June 30, 2010
|
||||||||||||||||||||
Operating revenues from external customers
|
$ | 164,082 | $ | 15,281 | $ | 234 | $ | - | $ | 179,597 | ||||||||||
Intersegment revenues
|
94 | 418 | - | (512 | ) | - | ||||||||||||||
Total revenues
|
$ | 164,176 | $ | 15,699 | $ | 234 | $ | (512 | ) | $ | 179,597 | |||||||||
Net income (loss)
|
$ | 3,300 | $ | (759 | ) | $ | 138 | $ | - | $ | 2,679 |
Regulated
|
Regulated
|
All
|
Reconciling
|
Consolidated
|
||||||||||||||||
(Thousands of Dollars)
|
Electric
|
Natural Gas
|
Other
|
Eliminations
|
Total
|
|||||||||||||||
Six Months Ended June 30, 2011
|
||||||||||||||||||||
Operating revenues from external customers
|
$ | 363,060 | $ | 73,363 | $ | 535 | $ | - | $ | 436,958 | ||||||||||
Intersegment revenues
|
216 | 838 | - | (1,054 | ) | - | ||||||||||||||
Total revenues
|
$ | 363,276 | $ | 74,201 | $ | 535 | $ | (1,054 | ) | $ | 436,958 | |||||||||
Net income
|
$ | 19,520 | $ | 3,592 | $ | 9 | $ | - | $ | 23,121 | ||||||||||
Six Months Ended June 30, 2010
|
||||||||||||||||||||
Operating revenues from external customers
|
$ | 337,144 | $ | 66,762 | $ | 460 | $ | - | $ | 404,366 | ||||||||||
Intersegment revenues
|
181 | 688 | - | (869 | ) | - | ||||||||||||||
Total revenues
|
$ | 337,325 | $ | 67,450 | $ | 460 | $ | (869 | ) | $ | 404,366 | |||||||||
Net income
|
$ | 12,986 | $ | 3,224 | $ | 13 | $ | - | $ | 16,223 |
11.
|
Comprehensive Income
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Thousands of Dollars)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Net income
|
$ | 8,478 | $ | 2,679 | $ | 23,121 | $ | 16,223 | ||||||||
Other comprehensive income:
|
||||||||||||||||
After-tax net realized losses on derivative transactions reclassified into earnings
|
19 | 19 | 38 | 38 | ||||||||||||
Comprehensive income
|
$ | 8,497 | $ | 2,698 | $ | 23,159 | $ | 16,261 |
12.
|
Benefit Plans and Other Postretirement Benefits
|
Three Months Ended June 30,
|
||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Postretirement Health
|
||||||||||||||||
(Thousands of Dollars)
|
Pension Benefits
|
Care Benefits
|
||||||||||||||
Xcel Energy
|
||||||||||||||||
Service cost
|
$ | 20,548 | $ | 18,956 | $ | 1,097 | $ | 965 | ||||||||
Interest cost
|
40,791 | 41,853 | 10,492 | 10,861 | ||||||||||||
Expected return on plan assets
|
(55,514 | ) | (58,035 | ) | (8,013 | ) | (7,131 | ) | ||||||||
Amortization of transition obligation
|
- | - | 3,611 | 3,611 | ||||||||||||
Amortization of prior service cost (credit)
|
5,633 | 5,164 | (1,233 | ) | (1,233 | ) | ||||||||||
Amortization of net loss
|
20,527 | 13,134 | 3,304 | 3,113 | ||||||||||||
Net periodic benefit cost
|
31,985 | 21,072 | 9,258 | 10,186 | ||||||||||||
Costs not recognized and additional cost recognized due to the effects of regulation
|
(10,715 | ) | (6,314 | ) | 973 | 973 | ||||||||||
Net benefit cost recognized for financial reporting
|
$ | 21,270 | $ | 14,758 | $ | 10,231 | $ | 11,159 | ||||||||
NSP-Wisconsin
|
||||||||||||||||
Net benefit cost recognized for financial reporting
|
$ | 1,931 | $ | 1,358 | $ | 421 | $ | 421 |
Six Months Ended June 30,
|
||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Postretirement Health
|
||||||||||||||||
(Thousands of Dollars)
|
Pension Benefits
|
Care Benefits
|
||||||||||||||
Xcel Energy
|
||||||||||||||||
Service cost
|
$ | 38,660 | $ | 36,574 | $ | 2,412 | $ | 2,003 | ||||||||
Interest cost
|
80,706 | 82,505 | 21,043 | 21,390 | ||||||||||||
Expected return on plan assets
|
(110,800 | ) | (116,159 | ) | (15,981 | ) | (14,265 | ) | ||||||||
Amortization of transition obligation
|
- | - | 7,222 | 7,222 | ||||||||||||
Amortization of prior service cost (credit)
|
11,266 | 10,328 | (2,466 | ) | (2,466 | ) | ||||||||||
Amortization of net loss
|
39,256 | 24,158 | 6,647 | 5,822 | ||||||||||||
Net periodic benefit cost
|
59,088 | 37,406 | 18,877 | 19,706 | ||||||||||||
Costs not recognized and additional cost recognized due to the effects of regulation
|
(18,600 | ) | (13,640 | ) | 1,946 | 1,946 | ||||||||||
Net benefit cost recognized for financial reporting
|
$ | 40,488 | $ | 23,766 | $ | 20,823 | $ | 21,652 | ||||||||
NSP-Wisconsin
|
||||||||||||||||
Net benefit cost recognized for financial reporting
|
$ | 3,392 | $ | 2,432 | $ | 805 | $ | 823 |
Six Months Ended June 30,
|
||||||||
(Millions of Dollars)
|
2011
|
2010
|
||||||
Electric revenues
|
$ | 363 | $ | 337 | ||||
Electric fuel and purchased power
|
(206 | ) | (197 | ) | ||||
Electric margin
|
$ | 157 | $ | 140 |
(Millions of Dollars)
|
2011 vs. 2010
|
|||
Retail rate increase
|
$ | 12 | ||
Firm wholesale
|
3 | |||
Interchange agreement billings with NSP-Minnesota
|
7 | |||
Electric fuel and purchased power cost recovery
|
6 | |||
Retail sales increase (excluding weather impact)
|
2 | |||
Estimated impact of weather
|
2 | |||
Sales mix and demand revenue
|
(5 | ) | ||
Other, net
|
(1 | ) | ||
Total increase in electric revenue
|
$ | 26 |
(Millions of Dollars)
|
2011 vs. 2010
|
|||
Retail rate increase
|
$ | 12 | ||
Firm wholesale
|
3 | |||
Interchange agreement billings with NSP-Minnesota
|
2 | |||
Retail fuel recovery timing
|
2 | |||
Retail sales increase (excluding weather impact)
|
2 | |||
Estimated impact of weather
|
2 | |||
Sales mix and demand revenue
|
(5 | ) | ||
Other, net
|
(1 | ) | ||
Total increase in electric margin
|
$ | 17 |
|
Six Months Ended June 30,
|
|||||||
(Millions of Dollars)
|
2011
|
2010
|
||||||
Natural gas revenues
|
$ | 73 | $ | 67 | ||||
Cost of natural gas sold and transported
|
(49 | ) | (45 | ) | ||||
Natural gas margin
|
$ | 24 | $ | 22 |
(Millions of Dollars)
|
2011 vs. 2010
|
|||
Purchased natural gas adjustment clause recovery
|
$ | 5 | ||
Estimated impact of weather
|
2 | |||
Other, net
|
(1 | ) | ||
Total increase in natural gas revenues
|
$ | 6 |
(Millions of Dollars)
|
2011 vs. 2010
|
|||
Estimated impact of weather
|
$ | 2 | ||
Total increase in natural gas margin
|
$ | 2 |
(Millions of Dollars)
|
2011 vs. 2010
|
|||
Higher plant generation costs
|
$
|
1
|
||
Higher contract labor costs
|
1
|
|||
Higher interchange costs
|
1
|
|||
Other, net
|
1
|
|||
Total increase in other O&M expenses
|
$
|
4
|
·
|
The risks associated with use of radioactive materials in the production of energy, the management, handling, storage and disposal of these radioactive materials and the current lack of a long-term disposal solution for radioactive materials;
|
·
|
Limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with nuclear operations; and
|
·
|
Uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of licensed lives.
|
*
|
Indicates incorporation by reference
|
t
|
Furnished, herewith, not filed. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
3.01*
|
Amended and Restated Articles of Incorporation (Exhibit 3.01 to Form S-4 (file no. 333-112033) Jan. 21, 2004).
|
|
3.02*
|
By-Laws as amended and June 3, 2008 (Exhibit 3.02 to Form 10-Q for the quarter ended June 30, 2008 (file no. 001-03140) Aug. 4, 2008).
|
|
Principal Executive Officer’s and Principal Financial Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
Statement pursuant to Private Securities Litigation Reform Act of 1995.
|
||
101 t
|
The following materials from NSP-Wisconsin’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Cash Flow, (iii) the Consolidated Balance Sheets, (iv) Notes to Condensed Consolidated Financial Statements, and (v) document and entity information.
|
Northern States Power Company (a Wisconsin corporation)
|
||
Aug. 1, 2011
|
||
By:
|
/s/ TERESA S. MADDEN
|
|
Teresa S. Madden
|
||
Vice President and Controller
|
||
/s/ DAVID M. SPARBY
|
||
David M. Sparby
|
||
Vice President and Chief Financial Officer
|
1.
|
I have reviewed this report on Form 10-Q of Northern States Power Company (a Wisconsin corporation);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: Aug. 1, 2011
|
|
/s/ MICHAEL L. SWENSON
|
|
Michael L. Swenson
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q of Northern States Power Company (a Wisconsin corporation);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: Aug. 1, 2011
|
|
/s/ DAVID M. SPARBY
|
|
David M. Sparby
|
|
Vice President and Chief Financial Officer
|
|
(1)
|
The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of NSP-Wisconsin as of the dates and for the periods expressed in the Form 10-Q.
|
Date: Aug. 1, 2011
|
|
/s/ MICHAEL L. SWENSON
|
|
Michael L. Swenson
|
|
President and Chief Executive Officer
|
|
/s/ DAVID M. SPARBY
|
|
David M. Sparby
|
|
Vice President and Chief Financial Officer
|
|
·
|
Economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures;
|
|
·
|
The risk of a significant slowdown in growth or decline in the U.S. economy, the risk of delay in growth recovery in the U.S. economy or the risk of increased cost for insurance premiums, security and other items as a consequence of past or future terrorist attacks;
|
|
·
|
Trade, monetary, fiscal, taxation and environmental policies of governments, agencies and similar organizations in geographic areas where NSP-Wisconsin has a financial interest;
|
|
·
|
Customer business conditions, including demand for their products or services and supply of labor and materials used in creating their products and services;
|
|
·
|
Financial or regulatory accounting principles or policies imposed by the FASB, the SEC, the FERC and similar entities with regulatory oversight;
|
|
·
|
Availability or cost of capital such as changes in: interest rates; market perceptions of the utility industry, NSP-Wisconsin, Xcel Energy Inc. or any of its other subsidiaries; or security ratings;
|
|
·
|
Factors affecting utility and nonutility operations such as unusual weather conditions; catastrophic weather-related damage; unscheduled generation outages, maintenance or repairs; unanticipated changes to fossil fuel, nuclear fuel or natural gas supply costs or availability due to higher demand, shortages, transportation problems or other developments; nuclear or environmental incidents; or electric transmission or natural gas pipeline constraints;
|
|
·
|
Employee workforce factors, including loss or retirement of key executives, collective bargaining agreements with union employees, or work stoppages;
|
|
·
|
Increased competition in the utility industry or additional competition in the markets served by NSP-Wisconsin, Xcel Energy Inc. and its other subsidiaries;
|
|
·
|
State, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rate structures and affect the speed and degree to which competition enters the electric and natural gas markets; industry restructuring initiatives; transmission system operation and/or administration initiatives; recovery of investments made under traditional regulation; nature of competitors entering the industry; retail wheeling; a new pricing structure; and former customers entering the generation market;
|
|
·
|
Environmental laws and regulations, including legislation and regulations relating to climate change, and the associated cost of compliance;
|
|
·
|
Rate-setting policies or procedures of regulatory entities, including environmental externalities, which are values established by regulators assigning environmental costs to each method of electricity generation when evaluating generation resource options;
|
|
·
|
Nuclear regulatory policies and procedures, including operating regulations and spent nuclear fuel storage;
|
|
·
|
Social attitudes regarding the utility and power industries;
|
|
·
|
Cost and other effects of legal and administrative proceedings, settlements, investigations and claims;
|
|
·
|
Technological developments that result in competitive disadvantages and create the potential for impairment of existing assets;
|
|
·
|
Risks associated with implementations of new technologies; and
|
|
·
|
Other business or investment considerations that may be disclosed from time to time in NSP-Wisconsin’s SEC filings, including “Risk Factors” in Item 1A of NSP-Wisconsin’s form 10-K for the year ended Dec. 31, 2010, or in other publicly disseminated written documents.
|
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Parenthetical) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Interest charges and financing costs | Â | Â | Â | Â |
Other financing costs | $ 445 | $ 354 | $ 809 | $ 704 |
Document And Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Aug. 01, 2011
|
|
Entity Registrant Name | NORTHERN STATES POWER CO /WI/ | Â |
Entity Central Index Key | 0000072909 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Well-known Seasoned Issuer | Yes | Â |
Entity Voluntary Filers | No | Â |
Entity Current Reporting Status | Yes | Â |
Entity Filer Category | Non-accelerated Filer | Â |
Entity Common Stock, Shares Outstanding | Â | 933,000 |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jun. 30, 2011 |
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Rate Matters
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
|||
Rate Matters [Abstract] | Â | ||
Rate Matters |
Except to the extent noted below, the circumstances set forth in Note 10 to the consolidated financial statements included in NSP-Wisconsin's Annual Report on Form 10-K for the year ended Dec. 31, 2010 appropriately represent, in all material respects, the current status of other rate matters, and are incorporated herein by reference. Pending and Recently Concluded Regulatory Proceedings - Public Service Commission of Wisconsin (PSCW) NSP-Wisconsin 2011 Electric and Gas Rate Case - In June 2011, NSP-Wisconsin filed a request with the PSCW to increase electric rates approximately $29.2 million, or 5.1 percent and natural gas rates approximately $8.0 million, or 6.6 percent, effective Jan. 1, 2012. The rate filing is based on a 2012 forecast test year and includes a requested return on equity (ROE) of 10.75 percent, and an equity ratio of 52.54 percent. The rate base in 2012 is forecast to be approximately $718 million for the electric utility and $84 million for the natural gas utility. A PSCW decision is anticipated in the fourth quarter of 2011. Pending and Recently Concluded Regulatory Proceedings - Michigan Public Service Commission (MPSC) 2011 Michigan Electric Rate Case - In December 2010, NSP-Wisconsin filed an application with the MPSC to increase base electric rates by $1.1 million, or 9.3 percent based on a forecast 2011 test year. The application is based on a Michigan electric rate base of $22.2 million, a 10.75 percent ROE and a 52.3 percent common equity ratio. NSP-Wisconsin's current base electric rates were approved by the MPSC in 1999, based on a 1998 test year. In June 2011, NSP-Wisconsin, MPSC Staff and Enbridge Energy Company, Inc., the sole intervenor in the case, filed a settlement agreement with the MPSC. On July 12, 2011, the MPSC issued an order approving the settlement agreement. Under the settlement agreement, NSP-Wisconsin was authorized to increase rates by approximately $0.8 million, or 7.1 percent, effective Aug. 1, 2011. The new rates are based on a 10.30 percent ROE and a 52.3 percent common equity ratio. Pending and Recently Concluded Regulatory Proceedings - Federal Energy Regulatory Commission (FERC) FERC Rate Case for Wholesale Municipal Customers - In April 2010, NSP-Wisconsin filed a request with FERC proposing to change the rates, terms and conditions of the firm wholesale power sales services to its ten wholesale municipal customers. NSP-Wisconsin proposed to convert to cost-based production formula rates. In May 2010, the FERC issued an order accepting NSP-Wisconsin's proposed formula rate and related terms and conditions for filing, allowing the rate formula to become effective July 1, 2010, subject to refund and settlement procedures. In April 2011, NSP-Wisconsin filed a settlement agreement resolving all issues. NSP-Wisconsin estimates the settlement rates will result in an increase in non-fuel revenues of $5.0 million, or 18 percent, for the formula rate year July 1, 2010 through June 30, 2011, compared to the previously effective rates. In June 2011, the settlement Administrative Law Judge issued an order certifying the settlement for FERC approval. The settlement is pending FERC action. NSP-Wisconsin expects to increase wholesale rates by an additional $2.1 million, or 6.4 percent, annually effective July 1, 2011, pursuant to the rate formula mechanism. NSP-Wisconsin's two largest wholesale customers, the cities of Medford, Wis. and Rice Lake, Wis., issued notices in December 2010 that Medford will terminate service at the end of 2011 and Rice Lake will terminate service at the end of 2012. Subsequently, the remaining eight municipal wholesale customers issued notices stating power supply contracts with NSP-Wisconsin will be cancelled at the end of 2012 and power will be purchased from an alternate supplier starting in 2013. Until the contracts terminate, the municipal wholesale customers will be served under their existing contracts and the formula rate. In 2010, these ten municipal wholesale customers represented approximately 6 percent of NSP-Wisconsin's total electric operating revenue. |
Segment Information
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
NSP-Wisconsin has the following reportable segments: regulated electric, regulated natural gas and all other.
Operating results from the regulated electric utility and regulated natural gas serve as the primary basis for the chief operating decision maker to evaluate the dual performance of NSP-Wisconsin. The accounting policies of the segments are the same as those described in Note 1 to the consolidated financial statements included in the NSP-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2010. These segments are managed separately because the revenue streams are dependent upon regulated rate recovery, which is separately determined for each segment. Asset and capital expenditure information is not provided for NSP-Wisconsin's reportable segments because as an integrated electric and natural gas utility, NSP-Wisconsin operates significant assets that are not dedicated to a specific business segment, and reporting assets and capital expenditures by business segment would require arbitrary and potentially misleading allocations which may not necessarily reflect the assets that would be required for the operation of the business segments on a stand-alone basis. To report income from continuing operations for regulated electric and regulated natural gas utility segments the majority of costs are directly assigned to each segment. However, some costs, such as common depreciation, common operating and maintenance (O&M) expenses and interest expense are allocated based on cost causation allocators. A general allocator is used for certain general and administrative expenses, including office supplies, rent, property insurance and general advertising.
|
Summary of Significant Accounting Policies
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
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Summary of Significant Accounting Policies [Abstract] | Â | ||
Summary of Significant Accounting Policies |
The significant accounting policies set forth in Note 1 to the consolidated financial statements in the NSP-Wisconsin's Annual Report on Form 10-K for the year ended Dec. 31, 2010, appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference. |
Borrowings and Other Financing Instruments
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Jun. 30, 2011
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Borrowings and Other Financing Instruments [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings and Other Financing Instruments |
In an order dated Feb. 4, 2011, NSP-Wisconsin received regulatory approval from the PSCW to establish a commercial paper program in an amount up to $150 million and enter into a back-up credit facility. Subsequently, NSP-Wisconsin entered into a 4-year credit facility, established a commercial paper program and terminated its intercompany borrowing arrangement with NSP-Minnesota. Currently, NSP-Wisconsin meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility. Commercial Paper - The following table presents commercial paper outstanding for NSP-Wisconsin under the new commercial paper program:
Credit Facilities - 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 agreement. During March of 2011, NSP-Wisconsin executed a new 4-year credit agreement. The total size of the credit facility is $150 million and terminates in March 2015. NSP-Wisconsin has the right to request an extension of the revolving termination date for two additional one year periods, subject to majority bank group approval. 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. Other features of NSP-Wisconsin's credit facility include:
At June 30, 2011, NSP-Wisconsin had the following committed credit facility available (in millions of dollars):
(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 credit facility. NSP-Wisconsin had no direct advances on the credit facility outstanding at June 30, 2011. 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 June 30, 2011 and Dec. 31, 2010, there were no letters of credit outstanding. Intercompany Borrowing Arrangement- Prior to entering into its credit facility, NSP-Wisconsin had an intercompany borrowing arrangement with NSP-Minnesota, with interest charged at NSP-Minnesota's short-term borrowing rate. The borrowing arrangement terminated in the first quarter 2011. The following table presents the intercompany borrowing arrangement with NSP-Minnesota at Dec. 31, 2010:
Other Short-Term Borrowings- The following table presents the notes payable of Clearwater Investments, Inc., a NSP-Wisconsin subsidiary, to Xcel Energy:
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Benefit Plans and Other Postretirement Benefits
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Jun. 30, 2011
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Benefit Plans and Other Postretirement Benefits [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit Plans and Other Postretirement Benefits |
Pension and other postretirement benefit disclosures below generally represent Xcel Energy consolidated information unless specifically identified as being attributable to NSP-Wisconsin. Components of Net Periodic Benefit Cost
Voluntary contributions of $134 million were made to three of Xcel Energy's pension plans in January 2011, including $6.4 million related to NSP-Wisconsin. Based on updated valuation results received in March 2011 for the NCE Non-Bargaining Pension Plan, Xcel Energy made a required contribution of $3.3 million to the NCE Non-Bargaining Pension Plan in July 2011. |
Fair Value of Financial Assets and Liabilities
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Jun. 30, 2011
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Fair Value of Financial Assets and Liabilities [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities |
Fair Value Measurements The accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires certain disclosures about assets and liabilities measured at fair value. A hierarchal framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance. The three Levels in the hierarchy are as follows: Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices. 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 and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 - Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those valued with models requiring significant management judgment or estimation. Specific valuation methods include the following: Commodity derivatives - The methods utilized to measure the fair value of commodity derivatives include the use of forward prices and volatilities to value commodity forwards and options. Levels are assigned to these fair value measurements based on the significance of the use of subjective forward price and volatility forecasts for commodities and locations with limited observability, or the significance of contractual settlements that extend to periods beyond those readily observable on active exchanges or quoted by brokers. NSP-Wisconsin continuously monitors the creditworthiness of the counterparties to its commodity derivative contracts and assesses each counterparty's ability to perform on the transactions set forth in the contracts. Given this assessment, as well as an assessment of the impact of NSP-Wisconsin's own credit risk when determining the fair value of commodity derivative liabilities, the impact of considering credit risk was immaterial to the fair value of commodity derivative assets and liabilities presented in the consolidated balance sheets. Derivative Instruments Fair Value Measurements NSP-Wisconsin enters into derivative instruments, including forward contracts, futures, swaps and options, to reduce risk in connection with changes in interest rates and utility commodity prices. Interest Rate Derivatives - NSP-Wisconsin enters into various instruments that effectively fix the interest payments on certain floating rate debt obligations or effectively fix the yield or price on a specified benchmark interest rate for an anticipated debt issuance for a specific period. These derivative instruments are designated as cash flow hedges for accounting purposes. At June 30, 2011, accumulated other comprehensive income (OCI) related to interest rate derivatives included $0.1 million of net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings. There were immaterial losses related to interest rate derivatives reclassified from accumulated OCI into earnings during the three months ended June 30, 2011 and June 30, 2010 and $0.1 million of net losses reclassified from accumulated OCI into earnings during the six months ended June 30, 2011 and June 30, 2010. Financial Impact of Qualifying Cash Flow Hedges - The impact of qualifying interest rate cash flow hedges on NSP-Wisconsin's accumulated other comprehensive losses, included as a component of common stockholder's equity, is detailed in the following table:
Commodity Derivatives - NSP-Wisconsin enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its natural gas operations, including the sale of natural gas or the purchase of natural gas for resale. At June 30, 2011, NSP-Wisconsin had no commodity derivative contracts designated as cash flow hedges. However, as of June 30, 2011, NSP-Wisconsin has entered into derivative instruments that mitigate commodity price risk on behalf of natural gas customers but are not designated as qualifying hedging instruments. Changes in the fair value of these commodity derivative instruments are deferred as a regulatory asset or liability based on the commission approved regulatory recovery mechanisms. The following table details the gross notional amounts of commodity forwards at June 30, 2011 and Dec. 31, 2010:
(a) Amounts are not reflective of net positions in the underlying commodities. During the three and six months ended June 30, 2011, changes in the fair value of natural gas commodity derivatives resulted in net losses of $0.2 million and $0.5 million, respectively, recognized as regulatory assets and liabilities. During the three and six months ended June 30, 2010, changes in the fair value of natural gas commodity derivatives resulted in net losses of $0.1 million and $1.6 million, respectively, recognized as regulatory assets and liabilities. Natural gas commodity derivatives settlement gains of $2.0 million and $0.3 million were recognized during the six months ended June 30, 2011 and June 30, 2010, respectively, and were subject to purchased natural gas cost recovery mechanisms, which result in reclassifications of derivative settlement gains and losses out of income to a regulatory asset or liability, as appropriate. There were no material settlement gains or losses on commodity derivatives for the three months ended June 30, 2011 and June 30, 2010. NSP-Wisconsin had no derivative instruments designated as fair value hedges during the three and six months ended June 30, 2011 and June 31, 2010. Therefore, no gains or losses from fair value hedges or related hedged transactions were recognized for these periods. Recurring Fair Value Measurements- The following tables present, for each of these hierarchy Levels, NSP-Wisconsin's derivative liabilities that are measured at fair value on a recurring basis:
Credit Related Contingent Features- Contract provisions of the derivative instruments that NSP-Wisconsin enters into may require the posting of collateral or settlement of the contracts for various reasons, including if NSP-Wisconsin is unable to maintain its credit ratings. If the credit ratings of NSP-Wisconsin were downgraded below investment grade, no contracts underlying NSP-Wisconsin's derivative liabilities at June 30, 2011 and Dec. 31, 2010 would require the posting of collateral or contract settlement. Certain of NSP-Wisconsin's derivative instruments are subject to contract provisions that contain adequate assurance clauses. These provisions allow counterparties to seek performance assurance, including cash collateral, in the event that NSP-Wisconsin's ability to fulfill its contractual obligations is reasonably expected to be impaired. NSP-Wisconsin had no collateral posted related to adequate assurance clauses in derivative contracts as of June 30, 2011 and Dec. 31, 2010. Fair Value of Long-Term Debt The historical cost and fair value of NSP-Wisconsin's long-term debt are as follows:
The fair value of NSP-Wisconsin's long-term debt is estimated based on the quoted market prices for the same or similar issues or the current rates for debt of the same remaining maturities and credit quality. The fair value estimates presented are based on information available to management as of June 30, 2011 and Dec. 31, 2010. These fair value estimates have not been comprehensively revalued for purposes of these consolidated financial statements since that date and current estimates of fair values may differ significantly. As of June 30, 2011 and Dec. 31, 2010, the historical cost of cash and cash equivalents, notes and accounts receivable, notes and accounts payable and accrued liabilities are representative of fair value because of the short-term nature of these instruments. |
Commitments and Contingent Liabilities
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Jun. 30, 2011
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Commitments and Contingent Liabilities [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities |
Except as noted below and in Note 5 to the consolidated financial statements in this Quarterly Report on Form 10-Q, the circumstances set forth in Notes 10 and 11 to the consolidated financial statements in NSP-Wisconsin's Annual Report on Form 10-K for the year ended Dec. 31, 2010 appropriately represent, in all material respects, the current status of commitments and contingent liabilities and are incorporated herein by reference. The following include commitments, contingencies and unresolved contingencies that are material to NSP-Wisconsin's financial position. Commitments Variable Interest Entities - The accounting guidance for consolidation of variable interest entities requires enterprises to consider the activities that most significantly impact an entity's financial performance, and power to direct those activities, when determining whether an enterprise is a variable interest entity's primary beneficiary. NSP-Wisconsin has entered into limited partnerships for the construction and operation of affordable rental housing developments which qualify for low-income housing tax credits. NSP-Wisconsin has determined the low-income housing limited partnerships to be variable interest entities primarily due to contractual arrangements within each limited partnership that establish sharing of ongoing voting control and profits and losses that does not consistently align with the partners' proportional equity ownership. NSP-Wisconsin has determined that it has the power to direct the activities that most significantly impact these entities' economic performance, and therefore NSP-Wisconsin consolidates these limited partnerships in its consolidated financial statements. Amounts reflected in NSP-Wisconsin's consolidated balance sheets for low-income housing limited partnerships include the following:
Guarantees - NSP-Wisconsin provides a guarantee for payment or performance under a specified agreement. As a result, NSP-Wisconsin's exposure under the guarantee is based upon the net liability under the specified agreement. The guarantee issued by NSP-Wisconsin limits the exposure of NSP-Wisconsin to a maximum amount stated in the guarantee. The guarantee requires no liability to be recorded, contains no recourse provisions and requires no collateral. The following table presents guarantees issued and outstanding for NSP-Wisconsin:
Environmental Contingencies NSP-Wisconsin has been, or is currently, involved with the cleanup of contamination from certain hazardous substances at several sites. In many situations, NSP-Wisconsin believes it will recover some portion of these costs through insurance claims. Additionally, where applicable, NSP-Wisconsin is pursuing, or intends to pursue, recovery from other potentially responsible parties (PRPs) and through the rate regulatory process. New and changing federal and state environmental mandates can also create added financial liabilities for NSP-Wisconsin, which are normally recovered through the rate regulatory process. To the extent any costs are not recovered through the options listed above, NSP-Wisconsin would be required to recognize an expense. Site Remediation - The Comprehensive Environmental Response, Compensation and Liability Act of 1980 and comparable state laws impose liability, without regarding the legality of the original conduct, on certain classes of persons responsible for the release of hazardous substances to the environment. NSP-Wisconsin must pay all or a portion of the cost to remediate sites where past activities of NSP-Wisconsin or other parties have caused environmental contamination. Environmental contingencies could arise from various situations including sites of former manufactured gas plants (MGPs) operated by NSP-Wisconsin, its predecessors, or other entities; and third party sites, such as landfills, for which NSP-Wisconsin is alleged to be a PRP that sent hazardous materials and wastes. At June 30, 2011 and Dec. 31, 2010, the liability for the cost of remediating these sites was estimated to be $103.4 million and $102.8 million, respectively, of which $4.9 million and $5.1 million, respectively, was considered to be a current liability. MGP Sites Ashland MGP Site - NSP-Wisconsin has been named a PRP for creosote and coal tar contamination at a site in Ashland, Wis. The Ashland/Northern States Power Lakefront Superfund Site (Ashland site) includes property owned by NSP-Wisconsin, which was previously an MGP facility and two other properties: an adjacent city lakeshore park area, on which an unaffiliated third party previously operated a sawmill; and an area of Lake Superior's Chequamegon Bay adjoining the park. In 2002, the Ashland site was placed on the National Priorities List. In 2009, the Environmental Protection Agency (EPA) issued its proposed remedial action plan (PRAP). The EPA issued its Record of Decision (ROD) in September 2010, which documents the remedy that the EPA has selected for the cleanup of the site. The EPA has estimated the cost for its selected cleanup is between $83 million and $97 million. The EPA has stated that this cost estimate is expected to be within plus 50 percent to minus 30 percent of the actual project costs. In April 2011, the EPA issued special notice letters identifying several entities, including NSP-Wisconsin, as PRPs, responsible for future cleanup at the site. The special notice letters requested that those PRPs participate in negotiations with the EPA regarding how the PRPs intended to conduct or pay for the cleanup. The special notice established a 60 day moratorium against enforcement action by the EPA. On June 30, 2011, NSP-Wisconsin submitted a settlement offer to the EPA related to the future cleanup of the site and performance of a pilot study in Chequamegon Bay to demonstrate the effectiveness of a wet dredge full scale sediment remedy at the site. On July 14, 2011, the EPA informed NSP-Wisconsin and the other PRPs that it was rejecting all of their individual offers and that the EPA had determined it would not extend the enforcement moratorium by another 60 days, such that the EPA can now choose to initiate enforcement actions at any time. Despite this decision, the EPA also indicated a willingness to continue settlement negotiations with NSP-Wisconsin. NSP-Wisconsin's potential liability, the actual cost of remediating the Ashland site and the time frame over which the amounts may be paid out are not determinable until after negotiations or litigation with the EPA and other PRPs at the site are fully resolved. NSP-Wisconsin also continues to work to identify and access state and federal funds to apply to the ultimate remediation cost of the entire site. NSP-Wisconsin has recorded a liability of $97.5 million based upon potential remediation and design costs together with estimated outside legal and consultant costs. NSP-Wisconsin has deferred, as a regulatory asset, the costs accrued for the Ashland site based on an expectation that the PSCW will continue to allow NSP-Wisconsin to recover payments for environmental remediation from its customers. The PSCW has consistently authorized recovery in NSP-Wisconsin rates of all remediation costs incurred at the Ashland site and has authorized recovery of similar remediation costs incurred by other Wisconsin utilities for remediation of manufactured gas plants. External MGP remediation costs are subject to deferral in the Wisconsin retail jurisdiction and are reviewed for prudence as part of the Wisconsin biennial retail rate case process. Under an existing PSCW policy with respect to recovery of remediation costs for manufactured gas plants, utilities have recovered costs amortized over a four to six year period. The PSCW has not allowed utilities to recover interest on the unamortized balance. In addition, in 2003, the Wisconsin Supreme Court rendered a ruling that reopens the possibility that NSP-Wisconsin may be able to recover a portion of the remediation costs from its insurance carriers. Any insurance proceeds received by NSP-Wisconsin will be credited to ratepayers. In addition to potential liability for remediation, NSP-Wisconsin may also have potential liability for natural resource damages at the Ashland site. NSP-Wisconsin has recorded an estimate of its potential liability based upon its best estimate of potential exposure. Owen Park MGP Site - The Wisconsin Department of Natural Resources (WDNR) requested that NSP-Wisconsin investigate the Owen Park site on the west bank of the Chippewa River in Eau Claire, Wis. It is believed that this site was previously an MGP site prior to current ownership by the City of Eau Claire. The WDNR has indicated that it believes NSP-Wisconsin may have successor liability for the Owen Park site. In response to the WDNR's request, NSP-Wisconsin is performing an ongoing site investigation, and has concluded that materials typically associated with the operation of MGPs are present in soils and groundwater at the site. Information obtained from this ongoing investigation indicates some site remediation may be required. The ultimate scope and costs of such remediation are not determinable at this time, and will not be fully determinable until a remediation action plan is submitted and approved by the WDNR. It is anticipated, however, that remediation costs will not have a material adverse effect on NSP-Wisconsin's consolidated results of operations, cash flow or financial position. Asbestos Removal - Some of NSP-Wisconsin's facilities contain asbestos. Most asbestos will remain undisturbed until the facilities that contain it are demolished or removed. NSP-Wisconsin's removal costs for asbestos are expected to be immaterial; therefore, no asset retirement obligation was recorded. See additional discussion of asset retirement obligations in Note 11 of the NSP-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2010. It may be necessary to remove some asbestos to perform maintenance or make improvements to other equipment. The cost of removing asbestos as part of other work is not expected to be material and is recorded as incurred as operating expenses for maintenance projects, capital expenditures for construction projects or removal costs for demolition projects. Other Environmental Requirements EPA Greenhouse Gas (GHG) Endangerment Rulemaking - In December 2009, the EPA issued its “endangerment” finding that GHG emissions endanger public health and welfare. In January 2011, new EPA permitting requirements became effective for GHG emissions of new and modified large stationary sources, which are applicable to the construction of new power plants or power plant modifications that increase emissions above a certain threshold. The EPA plans to propose GHG regulations applicable to emissions from existing power plants under the Clean Air Act (CAA). In June 2011, the EPA announced that they have delayed the proposal date to September 2011, but still plan on issuing final rules in May 2012. Cross State Air Pollution Rule (CSAPR)- On July 7, 2011, the EPA issued its CSAPR. The rule, previously called the Transport Rule, addresses long range transport of particulate matter and ozone by requiring reductions in sulfur dioxide (SO2) and nitrogen oxide (NOx) from utilities located in the eastern half of the United States (U.S.). The CSAPR sets more stringent requirements than the proposed Transport Rule. The rule creates an emissions trading program, although interstate trading under the rule will be significantly restricted. NSP-Wisconsin may comply by either reducing emissions, purchasing allowances, or a combination of the two. The CSAPR is a final rule and requires compliance beginning in 2012. NSP-Wisconsin is still evaluating compliance options. NSP-Wisconsin will ultimately comply with the rule through execution of their existing resource and emission control plans, as well as, through allowance purchases and other activities. Because the CSAPR requires compliance in 2012, NSP-Wisconsin may be required to take additional short-term action (including redispatching its system to reduce coal plant operating hours) in order to decrease emissions from its facilities prior to the installation of emission controls. NSP-Wisconsin is still evaluating a short-term compliance strategy. NSP-Wisconsin believes the cost of any required capital investment, allowance purchases or redispatch costs will be recoverable from customers. Clean Air Interstate Rule (CAIR) - In 2005, the EPA issued the CAIR to further regulate SO2 and NOx emissions. In 2008, the U.S. Court of Appeals for the District of Columbia vacated and remanded the CAIR, but subsequently allowed the CAIR to continue into effect pending the EPA's adoption of a new rule that addressed the deficiencies found by the court. CSAPR replaces the CAIR, and will be applicable to NSP-Wisconsin's plants beginning in 2012. Under the CAIR's cap and trade structure, companies can comply through capital investments in emission controls or purchase of emission allowances from other utilities making reductions on their systems. At June 30, 2011, the estimated annual CAIR NOx allowance cost for NSP-Wisconsin was $0.1 million. The CSAPR will establish a new emissions market for SO2 and NOx, and NSP-Wisconsin does not yet have enough information to estimate the cost of future CSAPR allowance purchases. NSP-Wisconsin believes the cost of any required capital investment or allowance purchases will be recoverable from customers. Electric Generating Unit (EGU) Maximum Achievable Control Technology (MACT) Rule - In 2005, the EPA issued the Clean Air Mercury Rule (CAMR), which regulated mercury emissions from power plants. In February 2008, the U.S. Court of Appeals for the District of Columbia vacated the CAMR, which impacted federal CAMR requirements, but not necessarily state-only mercury legislation and rules. In March 2011, the EPA issued the proposed EGU MACT designed to address emissions of mercury and other hazardous air pollutants for coal-fired utility units greater than 25 MW. The EPA intends to issue the final rule by November 2011. NSP-Wisconsin anticipates that the EPA will require affected facilities to demonstrate compliance within three to four years. Wisconsin Mercury Rule - In December 2008, the Wisconsin mercury reduction rule took effect, which impacts NSP-Wisconsin's Bay Front plant. The rule applies to coal-fired utility boilers and requires that small coal-fired utility boilers, which include all three boilers at the Bay Front plant, must perform a top-down best available control technology (BACT) analysis for mercury by June 30, 2011, and limit mercury emissions to a level that is determined by the WDNR to be BACT by Jan. 1, 2015. On June 30, 2011, NSP-Wisconsin submitted a BACT analysis to the WDNR, which included a plan to cease burning coal at boiler 5 by Jan.1, 2015. The WDNR has 180 days to review the analysis and propose BACT. NSP-Wisconsin had proposed a gasifier project for boiler 5 at the Bay Front plant. In November 2010, NSP-Wisconsin notified the PSCW that it will not be proceeding with the project due to a significant increase in the estimated costs, declining costs of generation options and considerable regulatory uncertainty at the state and federal level. Since boiler 5 continues to burn coal, it will be subject to this mercury reduction rule and performed the analysis under the Wisconsin mercury rule. In addition, if the industrial boiler (IB) MACT is revised prior to 2015, boilers 1 and 2 will no longer be subject to the Wisconsin mercury reduction rule, and will need to comply with the Boiler MACT. As such, any cost estimates to comply with the Wisconsin mercury reduction rule are premature at this time. IB MACT Rules - In March 2011, the EPA finalized IB MACT rules to regulate boilers and process heaters fueled with coal, biomass and liquid fuels. The EPA has announced that it will be reconsidering portions of these rules. In its current form, the IB MACT rule would apply to the Bay Front plant. Federal Clean Water Act (CWA Section 316 (b)) - The federal CWA requires the EPA to regulate cooling water intake structures to assure that these structures reflect the best technology available (BTA) for minimizing adverse environmental impacts to aquatic species. In April 2011, the EPA published the proposed rule that was modified to address earlier court decisions. The proposed rule sets prescriptive standards for minimization of aquatic species impingement but leaves entrainment reduction requirements at the discretion of the permit writer and the regional EPA office. NSP-Wisconsin is evaluating the proposed rule, including possible additional capital and operating expenses, and plans to offer comments to the EPA. Due to the uncertainty of the final regulatory requirements, it is not possible to provide an accurate estimate of the overall cost of this rulemaking at this time. Proposed Coal Ash Regulation - NSP-Wisconsin's operations generate hazardous wastes that are subject to the Federal Resource Recovery and Conservation Act and comparable state laws that impose detailed requirements for handling, storage, treatment and disposal of hazardous waste. In June 2010, the EPA published a proposed rule seeking comment on whether to regulate coal combustion byproducts (often referred to as coal ash) as hazardous or nonhazardous waste. Coal ash is currently exempt from hazardous waste regulation. If the EPA ultimately issues a final rule under which coal ash is regulated as hazardous waste, NSP-Wisconsin's costs associated with the management and disposal of coal ash would significantly increase, and the beneficial reuse of coal ash would be negatively impacted. The EPA has not announced a planned date for a final rule. The timing, scope and potential cost of any final rule that might be implemented are not determinable at this time. Legal Contingencies Lawsuits and claims arise in the normal course of business. Management, after consultation with legal counsel, has recorded an estimate of the probable cost of settlement or other disposition. The ultimate outcome of these matters cannot presently be determined. Accordingly, the ultimate resolution of these matters could have a material adverse effect on NSP-Wisconsin's financial position and results of operations. Environmental Litigation State of Connecticut vs. Xcel Energy Inc. et al. - In 2004, the attorneys general of eight states and New York City, as well as several environmental groups, filed lawsuits in U.S. District Court in the Southern District of New York against the following utilities, including Xcel Energy Inc., the parent company of NSP-Wisconsin, to force reductions in carbon dioxide (CO2) emissions: American Electric Power Co., Southern Co., Cinergy Corp. (merged into Duke Energy Corporation) and Tennessee Valley Authority. The lawsuits allege that CO2 emitted by each company is a public nuisance. The lawsuits do not demand monetary damages. Instead, the lawsuits ask the court to order each utility to cap and reduce its CO2 emissions. In September 2005, the court granted plaintiffs' motion to dismiss on constitutional grounds. In August 2010, this decision was reversed by the Second Circuit and was appealed to the U.S. Supreme Court. On June 20, 2011, the Supreme Court issued a ruling reversing the Second Circuit's decision, thereby dismissing plaintiffs' federal claims and remanding the case for further proceedings regarding the state law claims. Native Village of Kivalina vs. Xcel Energy Inc. et al. - In 2008, the City and Native Village of Kivalina, Alaska, filed a lawsuit in U.S. District Court for the Northern District of California against Xcel Energy Inc., the parent company of NSP-Wisconsin, and 23 other utility, oil, gas and coal companies. Plaintiffs claim that defendants' emission of CO2 and other GHGs contribute to global warming, which is harming their village. Xcel Energy Inc. and NSP-Wisconsin believe the claims asserted in this lawsuit are without merit and joined with other utility defendants in filing a motion to dismiss in June 2008. In October 2009, the U.S. District Court dismissed the lawsuit on constitutional grounds. In November 2009, plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. It is unknown when the Ninth Circuit will render a final opinion. The amount of damages claimed by plaintiffs is unknown, but likely includes the cost of relocating the village of Kivalina. Plaintiffs' alleged relocation is estimated to cost between $95 million to $400 million. No accrual has been recorded for this matter. Comer vs. Xcel Energy Inc. et al. - On May 27, 2011, less than one year after their initial lawsuit was dismissed, plaintiffs in this purported class action lawsuit filed a second lawsuit against more than 85 utility, oil, chemical and coal companies in U.S. District Court in Mississippi. The complaint alleges defendants' CO2 emissions intensified the strength of Hurricane Katrina and increased the damage plaintiffs purportedly sustained to their property. Plaintiffs base their claims on public and private nuisance, trespass and negligence. Among the defendants named in the complaint are Xcel Energy Inc., SPS, PSCo, NSP-Wisconsin and NSP-Minnesota. The amount of damages claimed by plaintiffs is unknown. It is believed that this lawsuit is without merit. No accrual has been recorded for this matter. |
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)
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Jun. 30, 2011
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Dec. 31, 2010
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Capitalization | Â | Â |
Common stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Common stock, par value (in dollars per share) | $ 100 | $ 100 |
Common stock, shares outstanding (in shares) | 933,000 | 933,000 |
Accounting Pronouncements
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Jun. 30, 2011
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Accounting Pronouncements [Abstract] | Â | ||
Accounting Pronouncements |
Recently Issued Fair Value Measurement - In May 2011, the Financial Accounting Standards Board (FASB) issued Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (Accounting Standards Update (ASU) No. 2011-04), which provides additional guidance for fair value measurements. These updates to the FASB Accounting Standards Codification (ASC or Codification) include clarifications regarding existing fair value measurement principles and disclosure requirements, and also specific new guidance for items such as measurement of instruments classified within stockholders' equity and disclosures regarding the sensitivity of Level 3 measurements to changes in valuation model inputs. These updates to the Codification are effective for interim and annual periods beginning after Dec. 15, 2011. NSP-Wisconsin does not expect the implementation of this guidance to have a material impact on its consolidated financial statements. Comprehensive Income - In June 2011, the FASB issued Comprehensive Income (Topic 220) - Presentation of Comprehensive Income (ASU No. 2011-05), which updates the Codification to require the presentation of the components of net income, the components of other comprehensive income and total comprehensive income in either a single continuous statement of comprehensive income or in two separate, but consecutive statements of net income and comprehensive income. These updates do not affect the items reported in other comprehensive income or the guidance for reclassifying such items to net income. These updates to the Codification are effective for interim and annual periods beginning after Dec. 15, 2011. NSP-Wisconsin does not expect the implementation of this guidance to have a material impact on its consolidated financial statements. |
Selected Balance Sheet Data
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Selected Balance Sheet Data |
(a) Accounts receivable, net includes $1 million and $3 million due from affiliates, as of June 30, 2011 and Dec. 31, 2010, respectively. |
Comprehensive Income
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Comprehensive Income |
The components of total comprehensive income are shown below:
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Income Taxes
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Jun. 30, 2011
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Income Taxes [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
Except to the extent noted below, the circumstances set forth in Note 5 to the consolidated financial statements included in NSP-Wisconsin's Annual Report on Form 10-K for the year ended Dec. 31, 2010 appropriately represent, in all material respects, the current status of other income tax matters, and are incorporated herein by reference. Federal Audit - NSP-Wisconsin is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. The statute of limitations applicable to Xcel Energy's 2006 federal income tax return expired in August 2010. The statute of limitations applicable to Xcel Energy's 2007 federal income tax return expires in September 2011. The Internal Revenue Service (IRS) commenced an examination of tax years 2008 and 2009 in the third quarter of 2010. As of June 30, 2011, the IRS had not proposed any material adjustments to tax years 2008 and 2009. State Audits - NSP-Wisconsin is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of June 30, 2011, NSP-Wisconsin's earliest open tax year that is subject to examination by state taxing authorities under applicable statutes of limitations is 2006. As of June 30, 2011, there were no state income tax audits in progress. Unrecognized Tax Benefits - The unrecognized tax benefit balance includes permanent tax positions, which if recognized would affect the annual effective tax rate (ETR). In addition, the unrecognized tax benefit balance includes temporary tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the ETR but would accelerate the payment of cash to the taxing authority to an earlier period. A reconciliation of the amount of unrecognized tax benefit is as follows:
The unrecognized tax benefit balance was reduced by the tax benefits associated with net operating loss (NOL) and tax credit carryforwards. The amounts of tax benefits associated with NOL and tax credit carryforwards are as follows:
NSP-Wisconsin's amount of unrecognized tax benefits could significantly change in the next 12 months as the IRS audit progresses and state audits resume. As the IRS examination moves closer to completion, it is reasonably possible that the amount of unrecognized tax benefits could decrease by up to approximately $1 million. The payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with NOL and tax credit carryforwards. The payables for interest related to unrecognized tax benefits at June 30, 2011 and Dec. 31, 2010 were not material. No amounts were accrued for penalties related to unrecognized tax benefits as of June 30, 2011 or Dec. 31, 2010. |
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