Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value of Financial Assets and Liabilities [Abstract]

Gross Notional Amounts of Commodity Forwards and Options

The following table details the gross notional amounts of commodity forwards and options at March 31, 2013 and Dec. 31, 2012:

(Amounts in Thousands) (a)(b)	March 31, 2013		Dec. 31, 2012
Megawatt hours (MWh) of electricity		570		813
Million British thermal units (MMBtu) of natural gas		31		646
Gallons of vehicle fuel		284		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.

Financial Impact of Qualifying Cash Flow Hedges on Accumulated Other Comprehensive Loss

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:

	Three Months Ended March 31
(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 gains related to derivatives accounted for as hedges		7			13,020
After-tax net realized gains on derivative transactions reclassified into earnings		(118	)		(375	)
Accumulated other comprehensive (loss) income related to cash flow hedges at March 31	$	(22,982	)	$	268

Impact of Derivative Activity on Accumulated Other Comprehensive Loss, Regulatory Assets and Liabilities, and Income

The following tables detail the impact of derivative activity during the three months ended March 31, 2013 and 2012, on accumulated other comprehensive loss, regulatory assets and liabilities, and income:

	Three Months Ended March 31, 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	$	-	$	-	$	(180	)	(a)	$	-		$	-
Vehicle fuel and other commodity		11		-		(12	)	(d)		-			-
Total	$	11	$	-	$	(192	)		$	-		$	-

Other derivative instruments
Natural gas commodity	$	-	$	43	$	-			$	7	(c)	$	16	(b)
Total	$	-	$	43	$	-			$	7		$	16

	Three Months Ended March 31, 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 Income		Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Income				Regulatory (Assets) and Liabilities			Pre-Tax Losses Recognized During the Period in Income
Derivatives designated as cash flow hedges
Interest rate	$	20,917	$	-		$	(582	)	(a)	$	-		$	-
Vehicle fuel and other commodity		75		-			(23	)	(d)		-			-
Total	$	20,992	$	-		$	(605	)		$	-		$	-

Other derivative instruments
Natural gas commodity	$	-	$	(7,715	)	$	-			$	61,858	(c)	$	(109	)	(b)
Total	$	-	$	(7,715	)	$	-			$	61,858		$	(109	)

(a)	Amounts are recorded to interest charges.

(b)	Amounts are recorded to electric fuel and purchased power.

(c)

Amounts for the three months ended March 31, 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 three months ended March 31, 2013 were immaterial. The remaining settlement losses for the three months ended March 31, 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.

(d)	Amounts are recorded to operating and maintenance (O&M) expenses.

Derivative Assets and Liabilities Measured at Fair Value on a Recurring Basis by Hierarchy Level

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 March 31, 2013:

	March 31, 2013
	Fair Value
							Fair Value		Counterparty
(Thousands of Dollars)	Level 1		Level 2		Level 3		Total		Netting (b)			Total
Current derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	-	$	42	$	-	$	42	$	-		$	42
Other derivative instruments:
Commodity trading		-		4,746		-		4,746		(2,282	)		2,464
Natural gas commodity		-		16		-		16		-			16
Total current derivative assets	$	-	$	4,804	$	-	$	4,804	$	(2,282	)		2,522
Purchased power agreements (a)													1,715
Current derivative instruments												$	4,237
Noncurrent derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	-	$	39	$	-	$	39	$	-		$	39
Other derivative instruments:
Commodity trading		-		1,209		-		1,209		(518	)		691
Total noncurrent derivative assets	$	-	$	1,248	$	-	$	1,248	$	(518	)		730
Purchased power agreements (a)													8,178
Noncurrent derivative instruments												$	8,908
Current derivative liabilities
Derivatives designated as cash flow hedges:
Other derivative instruments:
Commodity trading	$	-	$	4,272	$	-	$	4,272	$	(1,869	)	$	2,403
Total current derivative liabilities	$	-	$	4,272	$	-	$	4,272	$	(1,869	)		2,403
Purchased power agreements (a)													5,429
Current derivative instruments												$	7,832
Noncurrent derivative liabilities
Other derivative instruments:
Commodity trading	$	-	$	1,128	$	-	$	1,128	$	(518	)	$	610
Total noncurrent derivative liabilities	$	-	$	1,128	$	-	$	1,128	$	(518	)		610
Purchased power agreements (a)													27,343
Noncurrent derivative instruments												$	27,953

(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 March 31, 2013 and Dec. 31, 2012. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

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:

	Dec. 31, 2012
	Fair Value
							Fair Value		Counterparty
(Thousands of Dollars)	Level 1		Level 2		Level 3		Total		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)

(b)

Carrying Amount and Fair Value of Long-term Debt

As of March 31, 2013 and Dec. 31, 2012, other financial instruments for which the carrying amount did not equal fair value were as follows:

	March 31, 2013				Dec. 31, 2012
	Carrying				Carrying
(Thousands of Dollars)	Amount		Fair Value		Amount		Fair Value
Long-term debt, including current portion	$	3,876,641	$	4,323,766	$	3,630,773	$	4,131,866

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

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Reference 6: http://www.xbrl.org/2003/role/presentationRef

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+ Details

- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

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