x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Colorado | 84-0296600 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1800 Larimer, Suite 1100 | ||
Denver, Colorado | 80202 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ¨ | Accelerated filer ¨ | |
Non-accelerated filer x | Smaller reporting company ¨ | |
(Do not check if smaller reporting company) |
Class | Outstanding at Oct. 28, 2013 | |
Common Stock, $0.01 par value | 100 shares |
PART I — FINANCIAL INFORMATION | |||
Item l — | |||
Item 2 — | |||
Item 4 — | |||
PART II — OTHER INFORMATION | |||
Item 1 — | |||
Item 1A — | |||
Item 4 — | |||
Item 5 — | |||
Item 6 — | |||
Certifications Pursuant to Section 302 | 1 | ||
Certifications Pursuant to Section 906 | 1 | ||
Statement Pursuant to Private Litigation | 1 |
Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Operating revenues | |||||||||||||||
Electric | $ | 898,811 | $ | 870,975 | $ | 2,368,041 | $ | 2,267,905 | |||||||
Natural gas | 137,349 | 113,230 | 730,569 | 643,632 | |||||||||||
Steam and other | 8,140 | 8,082 | 29,576 | 26,303 | |||||||||||
Total operating revenues | 1,044,300 | 992,287 | 3,128,186 | 2,937,840 | |||||||||||
Operating expenses | |||||||||||||||
Electric fuel and purchased power | 355,727 | 315,319 | 998,395 | 920,916 | |||||||||||
Cost of natural gas sold and transported | 43,881 | 24,662 | 403,198 | 338,630 | |||||||||||
Cost of sales — steam and other | 3,398 | 3,650 | 12,211 | 10,745 | |||||||||||
Operating and maintenance expenses | 192,073 | 180,994 | 553,266 | 529,476 | |||||||||||
Demand side management program expenses | 38,016 | 33,670 | 104,075 | 92,462 | |||||||||||
Depreciation and amortization | 88,577 | 85,905 | 267,206 | 249,645 | |||||||||||
Taxes (other than income taxes) | 32,887 | 32,696 | 104,120 | 99,359 | |||||||||||
Total operating expenses | 754,559 | 676,896 | 2,442,471 | 2,241,233 | |||||||||||
Operating income | 289,741 | 315,391 | 685,715 | 696,607 | |||||||||||
Other income, net | 946 | 1,000 | 3,845 | 3,582 | |||||||||||
Allowance for funds used during construction — equity | 8,815 | 4,687 | 21,529 | 10,961 | |||||||||||
Interest charges and financing costs | |||||||||||||||
Interest charges — includes other financing costs of $1,747, $1,803, $5,118 and $5,383, respectively | 43,187 | 49,369 | 127,806 | 145,734 | |||||||||||
Allowance for funds used during construction — debt | (3,187 | ) | (2,633 | ) | (8,438 | ) | (5,328 | ) | |||||||
Total interest charges and financing costs | 40,000 | 46,736 | 119,368 | 140,406 | |||||||||||
Income before income taxes | 259,502 | 274,342 | 591,721 | 570,744 | |||||||||||
Income taxes | 93,236 | 81,899 | 211,551 | 189,609 | |||||||||||
Net income | $ | 166,266 | $ | 192,443 | $ | 380,170 | $ | 381,135 |
Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income | $ | 166,266 | $ | 192,443 | $ | 380,170 | $ | 381,135 | ||||||||
Other comprehensive loss | ||||||||||||||||
Derivative instruments: | ||||||||||||||||
Net fair value increase (decrease), net of tax of $5, $(2,197), $(2), and $(5,710), respectively | 11 | (3,574 | ) | (2 | ) | (9,311 | ) | |||||||||
Reclassification of gains to net income, net of tax of $(76), $(186), $(221), and $(646), respectively | (119 | ) | (304 | ) | (355 | ) | (1,055 | ) | ||||||||
Other comprehensive loss | (108 | ) | (3,878 | ) | (357 | ) | (10,366 | ) | ||||||||
Comprehensive income | $ | 166,158 | $ | 188,565 | $ | 379,813 | $ | 370,769 |
Nine Months Ended Sept. 30 | |||||||
2013 | 2012 | ||||||
Operating activities | |||||||
Net income | $ | 380,170 | $ | 381,135 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | 271,150 | 253,764 | |||||
Demand side management program amortization | 3,658 | 4,042 | |||||
Deferred income taxes | 230,665 | 179,254 | |||||
Amortization of investment tax credits | (2,219 | ) | (1,955 | ) | |||
Allowance for equity funds used during construction | (21,529 | ) | (10,961 | ) | |||
Net realized and unrealized hedging and derivative transactions | (9,052 | ) | (39,241 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 61,660 | 50,612 | |||||
Accrued unbilled revenues | 80,347 | 110,880 | |||||
Inventories | (28,021 | ) | 11,553 | ||||
Prepayments and other | 5,818 | (33,967 | ) | ||||
Accounts payable | (28,581 | ) | (83,400 | ) | |||
Net regulatory assets and liabilities | 74,709 | (66,007 | ) | ||||
Other current liabilities | (16,662 | ) | (8,444 | ) | |||
Pension and other employee benefit obligations | (44,101 | ) | (59,154 | ) | |||
Change in other noncurrent assets | 6,917 | (8,730 | ) | ||||
Change in other noncurrent liabilities | 7,744 | (505 | ) | ||||
Net cash provided by operating activities | 972,673 | 678,876 | |||||
Investing activities | |||||||
Utility capital/construction expenditures | (742,822 | ) | (610,309 | ) | |||
Allowance for equity funds used during construction | 21,529 | 10,961 | |||||
Investments in utility money pool arrangement | (1,086,000 | ) | (820,000 | ) | |||
Repayments from utility money pool arrangement | 951,000 | 752,000 | |||||
Net cash used in investing activities | (856,293 | ) | (667,348 | ) | |||
Financing activities | |||||||
Repayments of short-term borrowings, net | (154,000 | ) | — | ||||
Borrowings under utility money pool arrangement | 14,000 | 36,000 | |||||
Repayments under utility money pool arrangement | (14,000 | ) | (36,000 | ) | |||
Proceeds from issuance of long-term debt | 492,372 | 791,007 | |||||
Repayments of long-term debt | (250,000 | ) | — | ||||
Capital contributions from parent | 4,485 | 28,122 | |||||
Dividends paid to parent | (198,941 | ) | (200,501 | ) | |||
Net cash (used in) provided by financing activities | (106,084 | ) | 618,628 | ||||
Net change in cash and cash equivalents | 10,296 | 630,156 | |||||
Cash and cash equivalents at beginning of period | 5,150 | 3,763 | |||||
Cash and cash equivalents at end of period | $ | 15,446 | $ | 633,919 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest (net of amounts capitalized) | $ | (131,378 | ) | $ | (133,667 | ) | |
Cash received (paid) for income taxes, net | 41,531 | (51,240 | ) | ||||
Supplemental disclosure of non-cash investing transactions: | |||||||
Property, plant and equipment additions in accounts payable | $ | 100,475 | $ | 79,597 |
Sept. 30, 2013 | Dec. 31, 2012 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 15,446 | $ | 5,150 | |||
Accounts receivable, net | 282,823 | 277,461 | |||||
Accounts receivable from affiliates | 26,235 | 93,544 | |||||
Investments in utility money pool arrangement | 135,000 | — | |||||
Accrued unbilled revenues | 205,277 | 285,624 | |||||
Inventories | 251,234 | 223,794 | |||||
Regulatory assets | 142,973 | 143,689 | |||||
Deferred income taxes | 63,784 | — | |||||
Derivative instruments | 8,181 | 4,889 | |||||
Prepayments and other | 18,504 | 22,970 | |||||
Total current assets | 1,149,457 | 1,057,121 | |||||
Property, plant and equipment, net | 10,501,875 | 10,030,991 | |||||
Other assets | |||||||
Regulatory assets | 904,546 | 934,728 | |||||
Derivative instruments | 7,333 | 10,868 | |||||
Other | 50,000 | 50,461 | |||||
Total other assets | 961,879 | 996,057 | |||||
Total assets | $ | 12,613,211 | $ | 12,084,169 | |||
Liabilities and Equity | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 281,906 | $ | 256,297 | |||
Short-term debt | — | 154,000 | |||||
Accounts payable | 332,775 | 359,969 | |||||
Accounts payable to affiliates | 34,800 | 30,001 | |||||
Regulatory liabilities | 47,204 | 33,723 | |||||
Taxes accrued | 158,996 | 153,614 | |||||
Accrued interest | 31,838 | 48,014 | |||||
Dividends payable to parent | 65,000 | 66,803 | |||||
Derivative instruments | 8,084 | 8,753 | |||||
Other | 68,528 | 72,669 | |||||
Total current liabilities | 1,029,131 | 1,183,843 | |||||
Deferred credits and other liabilities | |||||||
Deferred income taxes | 2,091,827 | 1,782,828 | |||||
Deferred investment tax credits | 39,926 | 42,097 | |||||
Regulatory liabilities | 428,344 | 417,404 | |||||
Asset retirement obligations | 44,505 | 43,751 | |||||
Derivative instruments | 24,663 | 30,605 | |||||
Customer advances | 241,705 | 229,498 | |||||
Pension and employee benefit obligations | 280,486 | 324,625 | |||||
Other | 67,614 | 69,307 | |||||
Total deferred credits and other liabilities | 3,219,070 | 2,940,115 | |||||
Commitments and contingencies | |||||||
Capitalization | |||||||
Long-term debt | 3,592,116 | 3,374,476 | |||||
Common stock — 100 shares authorized at $0.01 par value; 100 shares outstanding at Sept. 30, 2013 and Dec. 31, 2012 | — | — | |||||
Additional paid in capital | 3,420,154 | 3,415,669 | |||||
Retained earnings | 1,375,968 | 1,192,937 | |||||
Accumulated other comprehensive loss | (23,228 | ) | (22,871 | ) | |||
Total common stockholder’s equity | 4,772,894 | 4,585,735 | |||||
Total liabilities and equity | $ | 12,613,211 | $ | 12,084,169 |
1. | Summary of Significant Accounting Policies |
2. | Accounting Pronouncements |
3. | Selected Balance Sheet Data |
(Thousands of Dollars) | Sept. 30, 2013 | Dec. 31, 2012 | ||||||
Accounts receivable, net | ||||||||
Accounts receivable | $ | 305,360 | $ | 299,379 | ||||
Less allowance for bad debts | (22,537 | ) | (21,918 | ) | ||||
$ | 282,823 | $ | 277,461 |
(Thousands of Dollars) | Sept. 30, 2013 | Dec. 31, 2012 | ||||||
Inventories | ||||||||
Materials and supplies | $ | 55,869 | $ | 54,486 | ||||
Fuel | 86,597 | 89,246 | ||||||
Natural gas | 108,768 | 80,062 | ||||||
$ | 251,234 | $ | 223,794 |
(Thousands of Dollars) | Sept. 30, 2013 | Dec. 31, 2012 | ||||||
Property, plant and equipment, net | ||||||||
Electric plant | $ | 10,045,683 | $ | 9,782,163 | ||||
Natural gas plant | 2,662,749 | 2,583,394 | ||||||
Common and other property | 749,437 | 761,712 | ||||||
Plant to be retired (a) | 115,753 | 152,730 | ||||||
Construction work in progress | 850,106 | 506,225 | ||||||
Total property, plant and equipment | 14,423,728 | 13,786,224 | ||||||
Less accumulated depreciation | (3,921,853 | ) | (3,755,233 | ) | ||||
$ | 10,501,875 | $ | 10,030,991 |
(a) | In 2010, in response to the Clean Air Clean Jobs Act (CACJA), the Colorado Public Utilities Commission (CPUC) approved the early retirement of Cherokee Units 1, 2 and 3, Arapahoe Unit 3 and Valmont Unit 5 between 2011 and 2017. In 2011, Cherokee Unit 2 was retired and in 2012, Cherokee Unit 1 was retired. Amounts are presented net of accumulated depreciation. |
4. | Income Taxes |
(Millions of Dollars) | Sept. 30, 2013 | Dec. 31, 2012 | ||||||
Unrecognized tax benefit — Permanent tax positions | $ | 2.4 | $ | 1.3 | ||||
Unrecognized tax benefit — Temporary tax positions | 9.4 | 8.3 | ||||||
Total unrecognized tax benefit | $ | 11.8 | $ | 9.6 |
(Millions of Dollars) | Sept. 30, 2013 | Dec. 31, 2012 | ||||||
NOL and tax credit carryforwards | $ | (7.8 | ) | $ | (5.3 | ) |
5. | Rate Matters |
(Millions of Dollars) | CPUC Staff | OCC | ALJ | |||||||||
PSCo deficiency based on a FTY | $ | 44.8 | $ | 44.8 | $ | 44.8 | ||||||
Move to HTY | (1.6 | ) | (1.6 | ) | (1.6 | ) | ||||||
ROE and capital structure adjustments | (20.8 | ) | (20.0 | ) | (7.7 | ) | ||||||
Move to a 13 month average from year end rate base | (5.7 | ) | (3.2 | ) | (3.3 | ) | ||||||
Remove pension asset | (5.9 | ) | — | — | ||||||||
Reduce pension expense net of corrections | (1.6 | ) | — | — | ||||||||
Remove incentive compensation | (3.5 | ) | (0.2 | ) | (0.2 | ) | ||||||
Challenge known and measurable | — | (9.0 | ) | — | ||||||||
Eliminate depreciation annualization | — | (1.8 | ) | — | ||||||||
Revenue adjustments | (4.1 | ) | (1.4 | ) | (1.4 | ) | ||||||
Resulting tax impacts | 1.5 | 4.7 | (0.2 | ) | ||||||||
Other adjustments | (4.2 | ) | 3.1 | (1.2 | ) | |||||||
Remove PSIA from base rates | (14.2 | ) | (14.2 | ) | — | |||||||
Recommendation | $ | (15.3 | ) | $ | 1.2 | $ | 29.2 | |||||
Neutralize PSIA - base rate transfer | 14.2 | 14.2 | (14.2 | ) | ||||||||
Incremental base revenue | $ | (1.1 | ) | $ | 15.4 | $ | 15.0 |
• | Direct testimony - Nov. 5, 2013; |
• | Intervenor testimony - Jan. 7, 2014; |
• | Rebuttal testimony - Feb. 6, 2014; |
• | Evidentiary hearing - March 3 - March 7, 2014; |
• | Initial brief - March 28, 2014; and |
• | Reply brief - April 11, 2014. |
6. | Commitments and Contingencies |
7. | Borrowings and Other Financing Instruments |
(Amounts in Millions, Except Interest Rates) | Three Months Ended Sept. 30, 2013 | Twelve Months Ended Dec. 31, 2012 | ||||||
Borrowing limit | $ | 250 | $ | 250 | ||||
Amount outstanding at period end | — | — | ||||||
Average amount outstanding | — | 0.3 | ||||||
Maximum amount outstanding | — | 8 | ||||||
Weighted average interest rate, computed on a daily basis | N/A | 0.33 | % | |||||
Weighted average interest rate at period end | N/A | N/A |
(Amounts in Millions, Except Interest Rates) | Three Months Ended Sept. 30, 2013 | Twelve Months Ended Dec. 31, 2012 | ||||||
Borrowing limit | $ | 700 | $ | 700 | ||||
Amount outstanding at period end | — | 154 | ||||||
Average amount outstanding | — | 8 | ||||||
Maximum amount outstanding | — | 165 | ||||||
Weighted average interest rate, computed on a daily basis | N/A | 0.33 | % | |||||
Weighted average interest rate at period end | N/A | 0.35 |
Credit Facility (a) | Drawn (b) | Available | ||||||||
$ | 700.0 | $ | 6.9 | $ | 693.1 |
(a) | Credit facility expires in July 2017. |
(b) | Includes outstanding letters of credit. |
8. | Fair Value of Financial Assets and Liabilities |
(Amounts in Thousands) (a)(b) | Sept. 30, 2013 | Dec. 31, 2012 | ||||
Megawatt hours (MWh) of electricity | 486 | 813 | ||||
Million British thermal units (MMBtu) of natural gas | 9,800 | 646 | ||||
Gallons of vehicle fuel | 239 | 307 |
(a) | Amounts are not reflective of net positions in the underlying commodities. |
(b) | Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise. |
Three Months Ended Sept. 30 | ||||||||
(Thousands of Dollars) | 2013 | 2012 | ||||||
Accumulated other comprehensive loss related to cash flow hedges at July 1 | $ | (23,120 | ) | $ | (18,865 | ) | ||
After-tax net unrealized gains (losses) related to derivatives accounted for as hedges | 11 | (3,574 | ) | |||||
After-tax net realized gains on derivative transactions reclassified into earnings | (119 | ) | (304 | ) | ||||
Accumulated other comprehensive loss related to cash flow hedges at Sept. 30 | $ | (23,228 | ) | $ | (22,743 | ) |
Nine Months Ended Sept. 30 | ||||||||
(Thousands of Dollars) | 2013 | 2012 | ||||||
Accumulated other comprehensive loss related to cash flow hedges at Jan. 1 | $ | (22,871 | ) | $ | (12,377 | ) | ||
After-tax net unrealized losses related to derivatives accounted for as hedges | (2 | ) | (9,311 | ) | ||||
After-tax net realized gains on derivative transactions reclassified into earnings | (355 | ) | (1,055 | ) | ||||
Accumulated other comprehensive loss related to cash flow hedges at Sept. 30 | $ | (23,228 | ) | $ | (22,743 | ) |
Three Months Ended Sept. 30, 2013 | |||||||||||||||||||||
Pre-Tax Fair Value Gains (Losses) Recognized During the Period in: | Pre-Tax (Gains) Losses Reclassified into Income During the Period from: | ||||||||||||||||||||
(Thousands of Dollars) | Accumulated Other Comprehensive Loss | Regulatory (Assets) and Liabilities | Accumulated Other Comprehensive Loss | Regulatory Assets and (Liabilities) | Pre-Tax Gains Recognized During the Period in Income | ||||||||||||||||
Derivatives designated as cash flow hedges | |||||||||||||||||||||
Interest rate | $ | — | $ | — | $ | (184 | ) | (a) | $ | — | $ | — | |||||||||
Vehicle fuel and other commodity | 16 | — | (11 | ) | (b) | — | — | ||||||||||||||
Total | $ | 16 | $ | — | $ | (195 | ) | $ | — | $ | — | ||||||||||
Other derivative instruments | |||||||||||||||||||||
Natural gas commodity | $ | — | $ | (1,727 | ) | $ | — | $ | — | $ | 13 | (d) | |||||||||
Total | $ | — | $ | (1,727 | ) | $ | — | $ | — | $ | 13 |
Nine Months Ended Sept. 30, 2013 | |||||||||||||||||||||
Pre-Tax Fair Value Gains (Losses) Recognized During the Period in: | Pre-Tax (Gains) Losses Reclassified into Income During the Period from: | ||||||||||||||||||||
(Thousands of Dollars) | Accumulated Other Comprehensive Loss | Regulatory (Assets) and Liabilities | Accumulated Other Comprehensive Loss | Regulatory Assets and (Liabilities) | Pre-Tax Losses Recognized During the Period in Income | ||||||||||||||||
Derivatives designated as cash flow hedges | |||||||||||||||||||||
Interest rate | $ | — | $ | — | $ | (546 | ) | (a) | $ | — | $ | — | |||||||||
Vehicle fuel and other commodity | (4 | ) | — | (30 | ) | (b) | — | — | |||||||||||||
Total | $ | (4 | ) | $ | — | $ | (576 | ) | $ | — | $ | — | |||||||||
Other derivative instruments | |||||||||||||||||||||
Natural gas commodity | $ | — | $ | (4,896 | ) | $ | — | $ | 7 | (e) | $ | (216 | ) | (d) | |||||||
Total | $ | — | $ | (4,896 | ) | $ | — | $ | 7 | $ | (216 | ) |
Three Months Ended Sept. 30, 2012 | |||||||||||||||||||||
Pre-Tax Fair Value Gains (Losses) Recognized During the Period in: | Pre-Tax (Gains) Losses Reclassified into Income During the Period from: | ||||||||||||||||||||
(Thousands of Dollars) | Accumulated Other Comprehensive Loss | Regulatory (Assets) and Liabilities | Accumulated Other Comprehensive Loss | Regulatory Assets and (Liabilities) | Pre-Tax Gains Recognized During the Period in Income | ||||||||||||||||
Derivatives designated as cash flow hedges | |||||||||||||||||||||
Interest rate | $ | (5,836 | ) | $ | — | $ | (470 | ) | (a) | $ | — | $ | — | ||||||||
Vehicle fuel and other commodity | 65 | — | (20 | ) | (b) | — | — | ||||||||||||||
Total | $ | (5,771 | ) | $ | — | $ | (490 | ) | $ | — | $ | — | |||||||||
Other derivative instruments | |||||||||||||||||||||
Commodity trading | $ | — | $ | — | $ | — | $ | — | $ | 1 | (c) | ||||||||||
Natural gas commodity | — | 1,109 | — | — | — | ||||||||||||||||
Total | $ | — | $ | 1,109 | $ | — | $ | — | $ | 1 |
Nine Months Ended Sept. 30, 2012 | |||||||||||||||||||||
Pre-Tax Fair Value Gains (Losses) Recognized During the Period in: | Pre-Tax (Gains) Losses Reclassified into Income During the Period from: | ||||||||||||||||||||
(Thousands of Dollars) | Accumulated Other Comprehensive Loss | Regulatory (Assets) and Liabilities | Accumulated Other Comprehensive Loss | Regulatory Assets and (Liabilities) | Pre-Tax Gains (Losses) Recognized During the Period in Income | ||||||||||||||||
Derivatives designated as cash flow hedges | |||||||||||||||||||||
Interest rate | $ | (15,082 | ) | $ | — | $ | (1,635 | ) | (a) | $ | — | $ | — | ||||||||
Vehicle fuel and other commodity | 61 | — | (66 | ) | (b) | — | — | ||||||||||||||
Total | $ | (15,021 | ) | $ | — | $ | (1,701 | ) | $ | — | $ | — | |||||||||
Other derivative instruments | |||||||||||||||||||||
Commodity trading | $ | — | $ | — | $ | — | $ | — | $ | 2 | (c) | ||||||||||
Natural gas commodity | — | (5,837 | ) | — | 61,858 | (e) | (109 | ) | (d) | ||||||||||||
Total | $ | — | $ | (5,837 | ) | $ | — | $ | 61,858 | $ | (107 | ) |
(a) | Recorded to interest charges. |
(b) | Recorded to operating and maintenance (O&M) expenses. |
(c) | Recorded to electric operating revenues. Portions of these gains and losses are shared with electric customers through margin-sharing mechanisms and deducted from gross revenue, as appropriate. |
(d) | Amounts are recorded to electric fuel and purchased power. |
(e) | Amounts for the nine months ended Sept. 30, 2012 included $5.0 million of settlement losses on derivatives entered to mitigate natural gas price risk for electric generation, recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. Such losses for the nine months ended Sept. 30, 2013 were immaterial. The remaining settlement losses for the nine months ended Sept. 30, 2013 and 2012 relate to natural gas operations and are recorded to cost of natural gas sold and transported. These losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset, as appropriate. |
Sept. 30, 2013 | ||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||
(Thousands of Dollars) | Level 1 | Level 2 | Level 3 | Fair Value Total | Counterparty Netting (b) | Total | ||||||||||||||||||
Current derivative assets | ||||||||||||||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||||||||||||||
Vehicle fuel and other commodity | $ | — | $ | 33 | $ | — | $ | 33 | $ | — | $ | 33 | ||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||
Commodity trading | — | 5,318 | — | 5,318 | (2,507 | ) | 2,811 | |||||||||||||||||
Natural gas commodity | — | 3,622 | — | 3,622 | — | 3,622 | ||||||||||||||||||
Total current derivative assets | $ | — | $ | 8,973 | $ | — | $ | 8,973 | $ | (2,507 | ) | 6,466 | ||||||||||||
Purchased power agreements (a) | 1,715 | |||||||||||||||||||||||
Current derivative instruments | $ | 8,181 | ||||||||||||||||||||||
Noncurrent derivative assets | ||||||||||||||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||||||||||||||
Vehicle fuel and other commodity | $ | — | $ | 12 | $ | — | $ | 12 | $ | — | $ | 12 | ||||||||||||
Total noncurrent derivative assets | $ | — | $ | 12 | $ | — | $ | 12 | $ | — | 12 | |||||||||||||
Purchased power agreements (a) | 7,321 | |||||||||||||||||||||||
Noncurrent derivative instruments | $ | 7,333 | ||||||||||||||||||||||
Current derivative liabilities | ||||||||||||||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||
Commodity trading | $ | — | $ | 4,844 | $ | — | $ | 4,844 | $ | (2,155 | ) | $ | 2,689 | |||||||||||
Total current derivative liabilities | $ | — | $ | 4,844 | $ | — | $ | 4,844 | $ | (2,155 | ) | 2,689 | ||||||||||||
Purchased power agreements (a) | 5,395 | |||||||||||||||||||||||
Current derivative instruments | $ | 8,084 | ||||||||||||||||||||||
Noncurrent derivative liabilities | ||||||||||||||||||||||||
Purchased power agreements (a) | 24,663 | |||||||||||||||||||||||
Noncurrent derivative instruments | $ | 24,663 |
(a) | In 2003, as a result of implementing new guidance on the normal purchase exception for derivative accounting, PSCo began recording several long-term purchased power agreements at fair value due to accounting requirements related to underlying price adjustments. As these purchases are recovered through normal regulatory recovery mechanisms, the changes in fair value for these contracts were offset by regulatory assets and liabilities. During 2006, PSCo qualified these contracts under the normal purchase exception. Based on this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities. |
(b) | PSCo nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at Sept. 30, 2013. At Sept. 30, 2013, derivative assets and liabilities include obligations to return cash collateral of $0.4 million and no rights to reclaim cash collateral. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements. |
Dec. 31, 2012 | ||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||
(Thousands of Dollars) | Level 1 | Level 2 | Level 3 | Fair Value Total | Counterparty Netting (b) | Total | ||||||||||||||||||
Current derivative assets | ||||||||||||||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||||||||||||||
Vehicle fuel and other commodity | $ | — | $ | 43 | $ | — | $ | 43 | $ | — | $ | 43 | ||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||
Commodity trading | — | 6,432 | — | 6,432 | (3,301 | ) | 3,131 | |||||||||||||||||
Natural gas commodity | — | 7 | — | 7 | (7 | ) | — | |||||||||||||||||
Total current derivative assets | $ | — | $ | 6,482 | $ | — | $ | 6,482 | $ | (3,308 | ) | 3,174 | ||||||||||||
Purchased power agreements (a) | 1,715 | |||||||||||||||||||||||
Current derivative instruments | $ | 4,889 | ||||||||||||||||||||||
Noncurrent derivative assets | ||||||||||||||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||||||||||||||
Vehicle fuel and other commodity | $ | — | $ | 39 | $ | — | $ | 39 | $ | — | $ | 39 | ||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||
Commodity trading | — | 3,768 | — | 3,768 | (1,546 | ) | 2,222 | |||||||||||||||||
Total noncurrent derivative assets | $ | — | $ | 3,807 | $ | — | $ | 3,807 | $ | (1,546 | ) | 2,261 | ||||||||||||
Purchased power agreements (a) | 8,607 | |||||||||||||||||||||||
Noncurrent derivative instruments | $ | 10,868 | ||||||||||||||||||||||
Current derivative liabilities | ||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||
Commodity trading | $ | — | $ | 5,958 | $ | — | $ | 5,958 | $ | (2,712 | ) | $ | 3,246 | |||||||||||
Natural gas commodity | — | 85 | — | 85 | (7 | ) | 78 | |||||||||||||||||
Total current derivative liabilities | $ | — | $ | 6,043 | $ | — | $ | 6,043 | $ | (2,719 | ) | 3,324 | ||||||||||||
Purchased power agreements (a) | 5,429 | |||||||||||||||||||||||
Current derivative instruments | $ | 8,753 | ||||||||||||||||||||||
Noncurrent derivative liabilities | ||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||
Commodity trading | $ | — | $ | 3,450 | $ | — | $ | 3,450 | $ | (1,546 | ) | $ | 1,904 | |||||||||||
Total noncurrent derivative liabilities | $ | — | $ | 3,450 | $ | — | $ | 3,450 | $ | (1,546 | ) | 1,904 | ||||||||||||
Purchased power agreements (a) | 28,701 | |||||||||||||||||||||||
Noncurrent derivative instruments | $ | 30,605 |
(a) | In 2003, as a result of implementing new guidance on the normal purchase exception for derivative accounting, PSCo began recording several long-term purchased power agreements at fair value due to accounting requirements related to underlying price adjustments. As these purchases are recovered through normal regulatory recovery mechanisms, the changes in fair value for these contracts were offset by regulatory assets and liabilities. During 2006, PSCo qualified these contracts under the normal purchase exception. Based on this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities. |
(b) | PSCo nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at Dec. 31, 2012. At Dec. 31, 2012, derivative assets and liabilities include obligations to return cash collateral of $0.6 million and no rights to reclaim cash collateral. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements. |
Sept. 30, 2013 | Dec. 31, 2012 | |||||||||||||||
(Thousands of Dollars) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Long-term debt, including current portion | $ | 3,874,022 | $ | 4,059,661 | $ | 3,630,773 | $ | 4,131,866 |
9. | Other Income, Net |
Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||||||
(Thousands of Dollars) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest income | $ | 713 | $ | 909 | $ | 2,470 | $ | 2,709 | ||||||||
Other nonoperating income | 667 | 441 | 2,186 | 1,807 | ||||||||||||
Insurance policy expense | (434 | ) | (350 | ) | (811 | ) | (934 | ) | ||||||||
Other income, net | $ | 946 | $ | 1,000 | $ | 3,845 | $ | 3,582 |
10. | Segment Information |
• | PSCo’s regulated electric utility segment generates electricity which is transmitted and distributed in Colorado. In addition, this segment includes sales for resale and provides wholesale transmission service to various entities in the United States. Regulated electric utility also includes PSCo’s commodity trading operations. |
• | PSCo’s regulated natural gas utility segment transports, stores and distributes natural gas in portions of Colorado. |
• | 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 steam revenue, appliance repair services and nonutility real estate activities. |
(Thousands of Dollars) | Regulated Electric | Regulated Natural Gas | All Other | Reconciling Eliminations | Consolidated Total | |||||||||||||||
Three Months Ended Sept. 30, 2013 | ||||||||||||||||||||
Operating revenues from external customers | $ | 898,811 | $ | 137,349 | $ | 8,140 | $ | — | $ | 1,044,300 | ||||||||||
Intersegment revenues | 67 | 3 | — | (70 | ) | — | ||||||||||||||
Total revenues | $ | 898,878 | $ | 137,352 | $ | 8,140 | $ | (70 | ) | $ | 1,044,300 | |||||||||
Net income | $ | 158,498 | $ | 3,555 | $ | 4,213 | $ | — | $ | 166,266 |
(Thousands of Dollars) | Regulated Electric | Regulated Natural Gas | All Other | Reconciling Eliminations | Consolidated Total | |||||||||||||||
Three Months Ended Sept. 30, 2012 | ||||||||||||||||||||
Operating revenues from external customers | $ | 870,975 | $ | 113,230 | $ | 8,082 | $ | — | $ | 992,287 | ||||||||||
Intersegment revenues | 63 | (19 | ) | — | (44 | ) | — | |||||||||||||
Total revenues | $ | 871,038 | $ | 113,211 | $ | 8,082 | $ | (44 | ) | $ | 992,287 | |||||||||
Net income | $ | 181,743 | $ | 6,366 | $ | 4,334 | $ | — | $ | 192,443 |
(Thousands of Dollars) | Regulated Electric | Regulated Natural Gas | All Other | Reconciling Eliminations | Consolidated Total | |||||||||||||||
Nine Months Ended Sept. 30, 2013 | ||||||||||||||||||||
Operating revenues from external customers | $ | 2,368,041 | $ | 730,569 | $ | 29,576 | $ | — | $ | 3,128,186 | ||||||||||
Intersegment revenues | 215 | 75 | — | (290 | ) | — | ||||||||||||||
Total revenues | $ | 2,368,256 | $ | 730,644 | $ | 29,576 | $ | (290 | ) | $ | 3,128,186 | |||||||||
Net income | $ | 322,569 | $ | 46,141 | $ | 11,460 | $ | — | $ | 380,170 |
(Thousands of Dollars) | Regulated Electric | Regulated Natural Gas | All Other | Reconciling Eliminations | Consolidated Total | |||||||||||||||
Nine Months Ended Sept. 30, 2012 | ||||||||||||||||||||
Operating revenues from external customers | $ | 2,267,905 | $ | 643,632 | $ | 26,303 | $ | — | $ | 2,937,840 | ||||||||||
Intersegment revenues | 198 | 55 | — | (253 | ) | — | ||||||||||||||
Total revenues | $ | 2,268,103 | $ | 643,687 | $ | 26,303 | $ | (253 | ) | $ | 2,937,840 | |||||||||
Net income | $ | 331,883 | $ | 40,205 | $ | 9,047 | $ | — | $ | 381,135 |
11. | Benefit Plans and Other Postretirement Benefits |
Three Months Ended Sept. 30 | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(Thousands of Dollars) | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||
Service cost | $ | 6,302 | $ | 5,679 | $ | 803 | $ | 706 | ||||||||
Interest cost | 11,540 | 12,776 | 5,934 | 6,131 | ||||||||||||
Expected return on plan assets | (15,955 | ) | (16,326 | ) | (7,307 | ) | (6,264 | ) | ||||||||
Amortization of transition obligation | — | — | 196 | 2,751 | ||||||||||||
Amortization of prior service (credit) cost | (266 | ) | 57 | (1,229 | ) | (1,288 | ) | |||||||||
Amortization of net loss | 10,855 | 8,552 | 3,490 | 2,734 | ||||||||||||
Net periodic benefit cost | 12,476 | 10,738 | 1,887 | 4,770 | ||||||||||||
Additional cost recognized due to the effects of regulation | — | — | — | 972 | ||||||||||||
Net benefit cost recognized for financial reporting | $ | 12,476 | $ | 10,738 | $ | 1,887 | $ | 5,742 |
Nine Months Ended Sept. 30 | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(Thousands of Dollars) | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||
Service cost | $ | 18,905 | $ | 17,039 | $ | 2,409 | $ | 2,119 | ||||||||
Interest cost | 34,620 | 38,329 | 17,802 | 18,395 | ||||||||||||
Expected return on plan assets | (47,865 | ) | (48,977 | ) | (21,921 | ) | (18,792 | ) | ||||||||
Amortization of transition obligation | — | — | 588 | 8,253 | ||||||||||||
Amortization of prior service (credit) cost | (798 | ) | 171 | (3,687 | ) | (3,863 | ) | |||||||||
Amortization of net loss | 32,563 | 25,652 | 10,469 | 8,198 | ||||||||||||
Net periodic benefit cost | 37,425 | 32,214 | 5,660 | 14,310 | ||||||||||||
Additional cost recognized due to the effects of regulation | — | — | — | 2,918 | ||||||||||||
Net benefit cost recognized for financial reporting | $ | 37,425 | $ | 32,214 | $ | 5,660 | $ | 17,228 |
12. | Other Comprehensive Income |
(Thousands of Dollars) | Gains and Losses on Cash Flow Hedges | |||
Accumulated other comprehensive loss at July 1 | $ | (23,120 | ) | |
Other comprehensive gain before reclassifications | 11 | |||
Gains reclassified from net accumulated other comprehensive loss | (119 | ) | ||
Net current period other comprehensive loss | (108 | ) | ||
Accumulated other comprehensive loss at Sept. 30 | $ | (23,228 | ) |
(Thousands of Dollars) | Gains and Losses on Cash Flow Hedges | |||
Accumulated other comprehensive loss at Jan. 1 | $ | (22,871 | ) | |
Other comprehensive loss before reclassifications | (2 | ) | ||
Gains reclassified from net accumulated other comprehensive loss | (355 | ) | ||
Net current period other comprehensive loss | (357 | ) | ||
Accumulated other comprehensive loss at Sept. 30 | $ | (23,228 | ) |
Amounts Reclassified from Accumulated Other Comprehensive Loss | |||||||||
(Thousands of Dollars) | Three Months Ended Sept. 30, 2013 | Nine Months Ended Sept. 30, 2013 | |||||||
(Gains) losses on cash flow hedges: | |||||||||
Interest rate derivatives | $ | (184 | ) | (a) | $ | (546 | ) | (a) | |
Vehicle fuel derivatives | (11 | ) | (b) | (30 | ) | (b) | |||
Total, pre-tax | (195 | ) | (576 | ) | |||||
Tax expense | 76 | 221 | |||||||
Total amounts reclassified, net of tax | $ | (119 | ) | $ | (355 | ) |
(a) | Included in interest charges. |
(b) | Included in O&M expenses. |
Nine Months Ended Sept. 30 | ||||||||
(Millions of Dollars) | 2013 | 2012 | ||||||
Electric revenues | $ | 2,368 | $ | 2,268 | ||||
Electric fuel and purchased power | (998 | ) | (921 | ) | ||||
Electric margin | $ | 1,370 | $ | 1,347 |
(Millions of Dollars) | 2013 vs. 2012 | |||
Fuel and purchased power cost recovery | $ | 76 | ||
Retail rate increases | 31 | |||
Non-fuel riders | 12 | |||
Demand side management (DSM) program revenue | 10 | |||
Transmission revenue | 7 | |||
Retail sales growth | 3 | |||
PSCo earnings test refund obligation | (20 | ) | ||
Estimated impact of weather | (16 | ) | ||
DSM program incentives | (11 | ) | ||
Other, net | 8 | |||
Total increase in electric revenues | $ | 100 |
(Millions of Dollars) | 2013 vs. 2012 | |||
Retail rate increases | $ | 31 | ||
Non-fuel riders | 12 | |||
DSM program revenue | 10 | |||
Transmission revenue, net of costs | 9 | |||
Retail sales growth | 3 | |||
PSCo earnings test refund obligation | (20 | ) | ||
Estimated impact of weather | (16 | ) | ||
DSM program incentives | (11 | ) | ||
Other, net | 5 | |||
Total increase in electric margin | $ | 23 |
Nine Months Ended Sept. 30 | ||||||||
(Millions of Dollars) | 2013 | 2012 | ||||||
Natural gas revenues | $ | 731 | $ | 644 | ||||
Cost of natural gas sold and transported | (403 | ) | (339 | ) | ||||
Natural gas margin | $ | 328 | $ | 305 |
(Millions of Dollars) | 2013 vs. 2012 | |||
Purchased natural gas adjustment clause recovery | $ | 67 | ||
Estimated impact of weather | 14 | |||
Retail rate increase | 6 | |||
Retail sales growth | 3 | |||
Other, net | (3 | ) | ||
Total increase in natural gas revenues | $ | 87 |
(Millions of Dollars) | 2013 vs. 2012 | |||
Estimated impact of weather | $ | 14 | ||
Retail rate increase | 6 | |||
Retail sales growth | 3 | |||
Total increase in natural gas margin | $ | 23 |
(Millions of Dollars) | 2013 vs. 2012 | |||
Other electric and gas distribution expenses | $ | 19 | ||
Vegetation management costs | 6 | |||
Transmission costs | 4 | |||
Plant generation costs | 2 | |||
Pipeline system integrity costs | (7 | ) | ||
Employee benefits | (6 | ) | ||
Other, net | 6 | |||
Total increase in O&M expenses | $ | 24 |
• | The addition of 450 MW of Colorado wind generation PPAs. This additional wind would bring the installed capacity on the PSCo’s system in Colorado to 2,650 MW; |
• | The addition of 170 MW of utility-scale solar generation PPAs. PSCo currently has about 80 MW of utility-scale solar and 160 MW of customer-sited solar generation; |
• | The addition of 317 MW of natural gas fired generation PPAs, which would come from existing Colorado power plants that previously supplied PSCo, but at reduced prices. |
• | PSCo also examined whether to continue operating two older company-owned power plants or to replace them with new generation resources. PSCo recommended: |
◦ | The permanent closure of the 109 MW, coal-fired Unit 4 at the Arapahoe Generating Station in Denver at the end of 2013; |
◦ | The permanent closure of the 45 MW, coal-fired Unit 3 at the Arapahoe Generating Station in Denver at the end of 2013; and |
◦ | The continued operation of Cherokee Generating Station’s Unit 4 in Denver as a natural gas facility after 2017 (the plant fuel source will be switched to natural gas from coal by the end of 2017 as part of the CACJA Plan). |
* | Indicates incorporation by reference |
3.01* | Amended and Restated Articles of Incorporation dated July 15, 1998 (Form 10-K, Dec. 31, 1998, Exhibit 3(a)(1)). |
3.02 | By-Laws of PSCo as Amended and Restated on Sept. 26, 2013. |
Principal Executive Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
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 | The following materials from PSCo’s Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2013 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Balance Sheets, (v) Notes to Condensed Consolidated Financial Statements, and (vi) document and entity information. |
Public Service Company of Colorado | ||
Oct. 28, 2013 | By: | /s/ JEFFREY S. SAVAGE |
Jeffrey S. Savage | ||
Vice President and Controller | ||
/s/ TERESA S. MADDEN | ||
Teresa S. Madden | ||
Senior Vice President, Chief Financial Officer and Director |
1. | I have reviewed this report on Form 10-Q of Public Service Company of Colorado; |
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; and |
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. |
/s/ DAVID L. EVES | |
David L. Eves | |
President, Chief Executive Officer and Director |
1. | I have reviewed this report on Form 10-Q of Public Service Company of Colorado; |
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; and |
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. |
/s/ TERESA S. MADDEN | |
Teresa S. Madden | |
Senior Vice President, Chief Financial Officer and Director |
(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 PSCo as of the dates and for the periods expressed in the Form 10-Q. |
/s/ DAVID L. EVES | |
David L. Eves | |
President, Chief Executive Officer and Director | |
/s/ TERESA S. MADDEN | |
Teresa S. Madden | |
Senior Vice President, Chief Financial Officer and Director |
• | 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 PSCo 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 Federal Energy Regulatory Commission and similar entities with regulatory oversight; |
• | Availability or cost of capital such as changes in: interest rates; market perceptions of the utility industry, PSCo, 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 or natural gas supply costs or availability due to higher demand, shortages, transportation problems or other developments; environmental incidents; cyber 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 PSCo, Xcel Energy Inc. or any of 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; |
• | 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 PSCo’s SEC filings, including “Risk Factors” in Item 1A of PSCo’s Form 10-K for the year ended Dec. 31, 2012, or in other publicly disseminated written documents. |
Fair Value of Financial Assets and Liabilities
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities | 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 hierarchical 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 discounted cash flow or option pricing 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: Cash equivalents — The fair values of cash equivalents are generally based on cost plus accrued interest; money market funds are measured using quoted net asset values. Commodity derivatives — The methods used to measure the fair value of commodity derivative forwards and options utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations, and are generally assigned a Level 2. When contractual settlements extend to periods beyond those readily observable on active exchanges or quoted by brokers, the significance of the use of less observable forecasts of long-term forward prices and volatilities on a valuation is evaluated, and may result in Level 3 classification. Derivative Instruments Fair Value Measurements PSCo enters into derivative instruments, including forward contracts, futures, swaps and options, for trading purposes and to manage risk in connection with changes in interest rates, utility commodity prices and vehicle fuel prices. Interest Rate Derivatives — PSCo 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 generally designated as cash flow hedges for accounting purposes. At Sept. 30, 2013, accumulated other comprehensive losses related to interest rate derivatives included $0.5 million of net gains expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings, including forecasted amounts for any unsettled hedges. Wholesale and Commodity Trading Risk — PSCo conducts various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy and energy-related instruments. PSCo’s risk management policy allows management to conduct these activities within guidelines and limitations as approved by its risk management committee, which is made up of management personnel not directly involved in the activities governed by this policy. Commodity Derivatives — PSCo enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric and natural gas operations, as well as for trading purposes. This could include the purchase or sale of energy or energy-related products, natural gas to generate electric energy, natural gas for resale, and vehicle fuel. At Sept. 30, 2013, PSCo had various vehicle fuel contracts designated as cash flow hedges extending through December 2016. PSCo also enters into derivative instruments that mitigate commodity price risk on behalf of electric and natural gas customers but are not designated as qualifying hedging transactions. Changes in the fair value of non-trading commodity derivative instruments are recorded in other comprehensive income or deferred as a regulatory asset or liability. The classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms. PSCo recorded immaterial amounts to income related to the ineffectiveness of cash flow hedges for the three and nine months ended Sept. 30, 2013 and 2012. At Sept. 30, 2013, net gains related to commodity derivative cash flow hedges recorded as a component of accumulated other comprehensive losses included an immaterial amount of net gains expected to be reclassified into earnings during the next 12 months as the hedged transactions occur. Additionally, PSCo enters into commodity derivative instruments for trading purposes not directly related to commodity price risks associated with serving its electric and natural gas customers. Changes in the fair value of these commodity derivatives are recorded in electric operating revenues, net of amounts credited to customers under margin-sharing mechanisms. The following table details the gross notional amounts of commodity forwards and options at Sept. 30, 2013 and Dec. 31, 2012:
Consideration of Credit Risk and Concentrations — PSCo continuously monitors the creditworthiness of the counterparties to its interest rate derivatives and commodity derivative contracts prior to settlement, 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 PSCo’s own credit risk when determining the fair value of derivative liabilities, the impact of considering credit risk was immaterial to the fair value of unsettled commodity derivatives presented in the consolidated balance sheets. PSCo employs additional credit risk control mechanisms when appropriate, such as letters of credit, parental guarantees, standardized master netting agreements and termination provisions that allow for offsetting of positive and negative exposures. Credit exposure is monitored and, when necessary, the activity with a specific counterparty is limited until credit enhancement is provided. PSCo’s most significant concentrations of credit risk with particular entities or industries are contracts with counterparties to its wholesale, trading and non-trading commodity activities. At Sept. 30, 2013, five of PSCo’s 10 most significant counterparties, comprising $43.2 million or 37 percent of this credit exposure at Sept. 30, 2013, had investment grade credit ratings from Standard & Poor’s, Moody’s or Fitch Ratings. The remaining five significant counterparties, comprising $46.5 million or 40 percent of this credit exposure at Sept. 30, 2013, were not rated by these agencies, but based on PSCo’s internal analysis, had credit quality consistent with investment grade. All 10 of these significant counterparties are municipal or cooperative electric entities, or other utilities. Financial Impact of Qualifying Cash Flow Hedges — The impact of qualifying interest rate and vehicle fuel cash flow hedges on PSCo’s accumulated other comprehensive loss, included as a component of common stockholder’s equity and in the consolidated statement of comprehensive income, is detailed in the following table:
The following tables detail the impact of derivative activity during the three and nine months ended Sept. 30, 2013 and 2012, on accumulated other comprehensive loss, regulatory assets and liabilities, and income:
PSCo had no derivative instruments designated as fair value hedges during the three and nine months ended Sept. 30, 2013 and 2012. Therefore, no gains or losses from fair value hedges or related hedged transactions were recognized for these periods. Credit Related Contingent Features — Contract provisions for derivative instruments that PSCo enters into, including those recorded to the consolidated balance sheet at fair value, as well as those accounted for as normal purchase-normal sale (NPNS) contracts and therefore not reflected on the balance sheet, may require the posting of collateral or settlement of the contracts for various reasons, including if PSCo is unable to maintain its credit ratings. If the credit ratings of PSCo were downgraded below investment grade, derivative instruments reflected in a $2.7 million and $4.6 million gross liability position on the consolidated balance sheets at Sept. 30, 2013 and Dec. 31, 2012, respectively, would have required PSCo to post collateral or settle outstanding contracts, including other contracts subject to master netting agreements, which would have resulted in payments of $2.7 million and $4.6 million at Sept. 30, 2013 and Dec. 31, 2012, respectively. At Sept. 30, 2013 and Dec. 31, 2012, there was no collateral posted on these specific contracts. Certain derivative instruments are also subject to contract provisions that contain adequate assurance clauses. These provisions allow counterparties to seek performance assurance, including cash collateral, in the event that PSCo’s ability to fulfill its contractual obligations is reasonably expected to be impaired. PSCo had no collateral posted related to adequate assurance clauses in derivative contracts as of Sept. 30, 2013 and Dec. 31, 2012. Recurring Fair Value Measurements — The following table presents, for each of the fair value hierarchy levels, PSCo’s assets and liabilities measured at fair value on a recurring basis at Sept. 30, 2013:
The following table presents, for each of the fair value hierarchy levels, PSCo’s assets and liabilities measured at fair value on a recurring basis at Dec. 31, 2012:
There were no changes in Level 3 recurring fair value measurements for the three and nine months ended Sept. 30, 2013 and 2012. PSCo recognizes transfers between levels as of the beginning of each period. There were no transfers of amounts between levels for derivative instruments for the three and nine months ended Sept. 30, 2013 and 2012. Fair Value of Long-Term Debt As of Sept. 30, 2013 and Dec. 31, 2012, other financial instruments for which the carrying amount did not equal fair value were as follows:
The fair value of PSCo’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. The fair value estimates are based on information available to management as of Sept. 30, 2013 and Dec. 31, 2012, and given the observability of the inputs to these estimates, the fair values presented for long-term debt have been assigned a Level 2. |
Other Comprehensive Income (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2013
|
Sep. 30, 2012
|
Sep. 30, 2013
|
Sep. 30, 2012
|
|||||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||||||||
Accumulated other comprehensive loss at beginning of period | $ (22,871) | |||||||||
Accumulated other comprehensive loss at end of period | (23,228) | (23,228) | ||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||||
Interest charges | 43,187 | 49,369 | 127,806 | 145,734 | ||||||
Operating and maintenance expenses | 192,073 | 180,994 | 553,266 | 529,476 | ||||||
Total, pre-tax | (259,502) | (274,342) | (591,721) | (570,744) | ||||||
Tax expense | 93,236 | 81,899 | 211,551 | 189,609 | ||||||
Gains and Losses on Cash Flow Hedges [Member]
|
||||||||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||||||||
Accumulated other comprehensive loss at beginning of period | (23,120) | (22,871) | ||||||||
Other comprehensive gain (loss) before reclassifications | 11 | (2) | ||||||||
Gains reclassified from net accumulated other comprehensive loss | (119) | (355) | ||||||||
Net current period other comprehensive income (loss) | (108) | (357) | ||||||||
Accumulated other comprehensive loss at end of period | (23,228) | (23,228) | ||||||||
Gains and Losses on Cash Flow Hedges [Member] | Amounts Reclassified from Accumulated Other Comprehensive Loss [Member]
|
||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||||
Total, pre-tax | (195) | (576) | ||||||||
Tax expense | 76 | 221 | ||||||||
Total, net of tax | (119) | (355) | ||||||||
Gains and Losses on Cash Flow Hedges [Member] | Interest Rate Derivatives [Member] | Amounts Reclassified from Accumulated Other Comprehensive Loss [Member]
|
||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||||
Interest charges | (184) | [1] | (546) | [1] | ||||||
Gains and Losses on Cash Flow Hedges [Member] | Vehicle Fuel And Other Commodity Derivatives [Member] | Amounts Reclassified from Accumulated Other Comprehensive Loss [Member]
|
||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||||
Operating and maintenance expenses | $ (11) | [2] | $ (30) | [2] | ||||||
|
&PO=V]R:V)O;VLN>&ULE)=;;]I*%(7?
M*_4_6'X_!5^X)`JIN$5%:B`ZINGC:`H#C&K/('LHR;_OMDE@F2&C\@1C,XN]
ME[^];-]]?
M\2F>Z;ADT@K).W",B%#6QC[A%,=YZ]Y=HPG?G1RZY]1P"X6@S1`3-3_?O^:G
M:V$2LZYW[;=^O=MDN.L"`K$)C!YW)3PVZM7`(\JH7[5LHVHIN$GRALJUI!U42-A*V$J:OX6DGF391N3H\W0[Y>@V&JCE3&7T-ZH49
MU#:/-==Y;*><:5!?^_5QO1J/S8=D/E1S:=8L6#,ZOS9K+-9]-UTI>/D\N
M0E[A4SN'H>(%Q=&*FGKMB#@:)UCZ-2OC/X3G*,*9Z>4F_J&V;44`Z]FKK>?K
MQ%AR5HWAC!@ZQ6660M7DV:@@B!G50F>*$1?54=\373Q^O;562!F6^\STS$H6
MM+.[M?,K;*"G+4Y1LY&[L9HZG$'9!M4;OL?@J8P`PB2!@R<6LJ/P_/2/I/#3
M$FI_P=W=V8:94?
M7
MI%ET?0%=03G#MB))H/7"&JLT8VU3[+A!#-NPOC&6*5V4L)K`5/L"5I@+(@1E
M;4DPF-//<\GAJYVM%%NB5W:+2V,LASBG@KS6J'*%HP6Y1^SL:D_3O5JO`@K&
MS5=HR7E\,HQA9*
MKOS:EC.-1/<"&;$5%:;I1=D+JM0+BOO.MKMV;H,^ENP139AS);?HUTR#/?T,
M%8&BV#/ON;1S"&V$7BS2VK(20[MG!U%TB]++9KAW,5]'E5UYG>Y_4&U\];GZ
M