4.	Borrowings and Other Financing Instruments

Short-Term Borrowings

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 to enter into a back-up credit facility. Subsequently, NSP-Wisconsin entered into a four-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:

(Amounts in Millions, Except Interest Rates)	Three Months Ended Dec. 31, 2011			Twelve Months Ended Dec. 31, 2011
Borrowing limit	$	150		$	150
Amount outstanding at period end		66			66
Average amount outstanding		37			24
Maximum amount outstanding		70			70
Weighted average interest rate, computed on a daily basis		0.39	%		0.37	%
Weighted average interest rate at end of period		0.46			0.46

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 2011, NSP-Wisconsin executed a new four-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 credit facility 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:

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 50 percent at Dec. 31, 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 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.

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

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

At Dec. 31, 2011, NSP-Wisconsin had the following committed credit facility available (in millions):

		Credit Facility		Drawn (a)				Available
	$	150.0		$	66.0			$	84.0

(a)	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, 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 Dec. 31, 2011 and 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, during which time there were no borrowings. The following table presents the intercompany borrowing arrangement with NSP-Minnesota at Dec. 31, 2010 and Dec. 31, 2009:

(Amounts in Millions, Except Interest Rates)	Twelve Months Ended Dec. 31, 2010			Twelve Months Ended Dec. 31, 2009
Borrowing limit	$	100		$	100
Amount outstanding at period end		37			16
Average amount outstanding		11			1
Maximum amount outstanding		59			25
Weighted average interest rate, computed on a daily basis		0.33	%		0.60	%
Weighted average interest rate at end of period		0.38			0.36

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, 2011			Dec. 31, 2010
Notes payable to affiliates	$	0.5		$	0.6
Weighted average interest rate		0.46	%		0.36	%

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. Additionally, debt premiums, discounts and expenses are amortized over the life of the related debt. The premiums, discounts and expenses associated with refinanced debt are deferred and amortized over the life of the related new issuance, in accordance with regulatory guidelines.

During the next five years, NSP-Wisconsin has long-term debt maturities of $1.3 million due in 2012.

Deferred Financing Costs - Other assets included deferred financing costs of approximately $2.6 million and $2.7 million, net of amortization, at Dec. 31, 2011 and 2010, 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 under the Federal Power Act, which prohibits the payment of dividends out of capital accounts; payment of dividends is allowed out of retained earnings only.

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