
	2021
(Millions of Dollars)	Jan. 1, 2021		Accretion		Cash Flow Revisions (a)		Dec. 31, 2021 (b)
Electric
Steam, hydro and other production	$	137	$	5	$	10	$	152
Wind	40		2		—		42
Distribution	15		1		—		16
Natural gas
Transmission and distribution	203		9		(8)		204
Miscellaneous	3		—		5		8
Common
Miscellaneous	1		(1)		—		—
Total liability	$	399	$	16	$	7	$	422

(a)In 2021, AROs were revised for changes in timing and estimates of cash flows. Revisions in steam, hydro, and other production AROs primarily related to changes in cost estimates for remediation of ash containment facilities. Changes in gas transmission and distribution AROs were primarily related to changes in labor rates coupled with increased gas line mileage and number of services.


	2020
(Millions of Dollars)	Jan. 1, 2020		Amounts Incurred (a)		Amounts Settled (b)		Accretion		Cash Flow Revisions (c)		Dec. 31, 2020
Electric
Steam, hydro and other production	$	100	$	—	$	—	$	4	$	33	$	137
Wind	16		26		(3)		1		—		40
Distribution	14		—		—		1		—		15
Natural gas
Transmission and distribution	190		—		—		8		5		203
Miscellaneous	3		—		—		—		—		3
Common
Miscellaneous	1		—		—		—		—		1
Total liability	$	324	$	26	$	(3)	$	14	$	38	$	399

(c)In 2020, AROs were revised for changes in timing and estimates of cash flows. Revisions in steam, hydro, and other production AROs primarily related to changes in cost estimates for remediation of ash containment facilities.

Indeterminate AROs — Outside of the recorded asbestos AROs, other plants or buildings may contain asbestos due to the age of many of PSCo’s facilities, but no confirmation or measurement of the cost of removal could be determined as of Dec. 31, 2021. Therefore, an ARO has not been recorded for these facilities.

PSCo evaluates contracts that may contain leases, including PPAs and arrangements for the use of office space and other facilities, vehicles and equipment. A contract contains a lease if it conveys the exclusive right to control the use of a specific asset. A contract determined to contain a lease is evaluated further to determine if the arrangement is a finance lease.

ROU assets represent PSCo's rights to use leased assets. The present value of future operating lease payments is recognized in current and noncurrent operating lease liabilities. These amounts, adjusted for any prepayments or incentives, are recognized as operating lease ROU assets.

Most of PSCo’s leases do not contain a readily determinable discount rate. Therefore, the present value of future lease payments is generally calculated using the estimated incremental borrowing rate (weighted average of 3.9%). PSCo has elected to utilize the practical expedient under which non-lease components, such as asset maintenance costs included in payments, are not deducted from minimum lease payments for the purposes of lease accounting and disclosure.

Leases with an initial term of 12 months or less are classified as short-term leases and are not recognized on the consolidated balance sheet.


(Millions of Dollars)	Dec. 31, 2021		Dec. 31, 2020
PPAs	$	600	$	591
Other	77		68
Gross operating lease ROU assets	677		659
Accumulated amortization	(268)		(159)
Net operating lease ROU assets	$	409	$	500

ROU assets for finance leases are included in other noncurrent assets, and the present value of future finance lease payments is included in other current liabilities and other noncurrent liabilities.

PSCo’s most significant finance lease activities are related to WYCO, a joint venture with CIG, to develop and lease natural gas pipeline, storage and compression facilities. Xcel Energy Inc. has a 50% ownership interest in WYCO. WYCO leases its facilities to CIG, and CIG operates the facilities, providing natural gas storage and transportation services to PSCo under separate service agreements.

PSCo accounts for its Totem natural gas storage service and Front Range pipeline arrangements with CIG and WYCO, respectively, as finance leases.


(Millions of Dollars)	Dec. 31, 2021		Dec. 31, 2020
Gas storage facilities	$	201	$	201
Gas pipeline	21		21
Gross finance lease ROU assets	222		222
Accumulated amortization	(97)		(90)
Net finance lease ROU assets	$	125	$	132


(Millions of Dollars)	2021		2020		2019
Operating leases
PPA capacity payments	$	102	$	100	$	98
Other operating leases (a)	16		13		14
Total operating lease expense (b)	$	118	$	113	$	112
Finance leases
Amortization of ROU assets	$	7	$	7	$	6
Interest expense on lease liability	17		18		19
Total finance lease expense	$	24	$	25	$	25

(a)Includes short-term lease expense of $1 million, $1 million and $2 million for 2021, 2020 and 2019, respectively.

(b)PPA capacity payments are included in electric fuel and purchased power on the consolidated statements of income. Expense for other operating leases is included in O&M expense and electric fuel and purchased power.


(Millions of Dollars)	PPA (a) (b) Operating Leases		Other Operating Leases		Total Operating Leases		Finance Leases
2022	$	84	$	16	$	100	$	21
2023	70		11		81		20
2024	63		11		74		20
2025	63		5		68		19
2026	59		1		60		18
Thereafter	104		11		115		362
Total minimum obligation	443		55		498		460
Interest component of obligation	(57)		(6)		(63)		(335)
Present value of minimum obligation	$	386	$	49	435		125
Less current portion					(84)		(4)
Noncurrent operating and finance lease liabilities					$	351	$	121

Weighted-average remaining lease term in years					6.5		37.3

(a)Amounts do not include PPAs accounted for as executory contracts and/or contingent payments, such as energy payments on renewable PPAs.

Non-Lease PPAs — SPS has entered into PPAs with other utilities and energy suppliers for purchased power to meet system load and energy requirements, operating reserve obligations and as part of wholesale and commodity trading activities. In general, these agreements provide for energy payments, based on actual energy delivered and capacity payments. Certain PPAs, accounted for as executory contracts with various expiration dates through 2027, contain minimum energy purchase requirements.

Included in electric fuel and purchased power expenses for PPAs accounted for as executory contracts were payments for capacity of $2 million, $10 million and $12 million in 2021, 2020 and 2019, respectively.

Capacity and energy payments are contingent on the IPP meeting contract obligations, including plant availability requirements. Certain contractual payments are adjusted based on market indices. The effects of price adjustments on financial results are mitigated through purchased energy cost recovery mechanisms.

At Dec. 31, 2021, the estimated future payments for capacity that PSCo is obligated to purchase pursuant to these executory contracts, subject to availability, were as follows:

Fuel Contracts — PSCo has entered into various long-term commitments for the purchase and delivery of a significant portion of its coal and natural gas requirements. These contracts expire between 2023 and 2060. PSCo is required to pay additional amounts depending on actual quantities shipped under these agreements.


(Millions of Dollars)	Coal		Natural gas supply		Natural gas storage and transportation
2022	$	186	$	324	$	116
2023	102		75		67
2024	67		3		37
2025	28		—		36
2026	29		—		35
Thereafter	30		—		440
Total	$	442	$	402	$	731

Under certain PPAs, PSCo purchases power from IPPs for which PSCo is required to reimburse fuel costs, or to participate in tolling arrangements under which PSCo procures the natural gas required to produce the energy that it purchases. PSCo has determined that certain IPPs are VIEs. PSCo is not subject to risk of loss from the operations of these entities, and no significant financial support is required other than contractual payments for energy and capacity.