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Borrowings and Other Financing Instruments
12 Months Ended
Dec. 31, 2016
Debt Disclosure [Abstract]  
Borrowings and Other Financing Instruments
Borrowings and Other Financing Instruments

Short-Term Borrowings

Money Pool — Xcel Energy Inc. and its utility subsidiaries have established a money pool arrangement that allows for short-term investments in and borrowings between the utility subsidiaries. Xcel Energy Inc. may make investments in the utility subsidiaries at market-based interest rates; however, the money pool arrangement does not allow the utility subsidiaries to make investments in Xcel Energy Inc. Money pool borrowings for SPS were as follows:
(Amounts in Millions, Except Interest Rates)
 
Three Months Ended Dec. 31, 2016
Borrowing limit
 
$
100

Amount outstanding at period end
 

Average amount outstanding
 
20

Maximum amount outstanding
 
64

Weighted average interest rate, computed on a daily basis
 
0.83
%
Weighted average interest rate at period end
 
N/A


(Amounts in Millions, Except Interest Rates)
 
Twelve Months Ended Dec. 31, 2016
 
Twelve Months Ended Dec. 31, 2015
 
Twelve Months Ended Dec. 31, 2014
Borrowing limit
 
$
100

 
$
100

 
$
100

Amount outstanding at period end
 

 

 
16

Average amount outstanding
 
28

 
21

 
9

Maximum amount outstanding
 
100

 
100

 
100

Weighted average interest rate, computed on a daily basis
 
0.67
%
 
0.40
%
 
0.22
%
Weighted average interest rate at end of period
 
N/A

 
N/A

 
0.45



Commercial Paper — SPS meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility. Commercial paper outstanding for SPS was as follows:
(Amounts in Millions, Except Interest Rates)
 
Three Months Ended Dec. 31, 2016
Borrowing limit
 
$
400

Amount outstanding at period end
 
50

Average amount outstanding
 
19

Maximum amount outstanding
 
75

Weighted average interest rate, computed on a daily basis
 
0.74
%
Weighted average interest rate at period end
 
0.95


(Amounts in Millions, Except Interest Rates)
 
Twelve Months Ended Dec. 31, 2016
 
Twelve Months Ended Dec. 31, 2015
 
Twelve Months Ended Dec. 31, 2014
Borrowing limit
 
$
400

 
$
400

 
$
400

Amount outstanding at period end
 
50

 
15

 
37

Average amount outstanding
 
43

 
100

 
83

Maximum amount outstanding
 
140

 
246

 
241

Weighted average interest rate, computed on a daily basis
 
0.67
%
 
0.46
%
 
0.26
%
Weighted average interest rate at end of period
 
0.95

 
0.60

 
0.47



Letters of Credit — SPS may use letters of credit, generally with terms of one-year, to provide financial guarantees for certain operating obligations. At Dec. 31, 2016 and 2015, there were $5.0 million and $7.0 million of letters of credit outstanding, respectively, under the credit facility. The contract amounts of these letters of credit approximate their fair value and are subject to fees.

Credit Facility — In order to use its commercial paper program to fulfill short-term funding needs, SPS 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 facility. The line of credit provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

Amended Credit Agreement  In June 2016, SPS entered into an amended five-year credit agreement with a syndicate of banks. The total borrowing limit under the amended credit agreement remained at $400 million. The amended credit agreement has substantially the same terms and conditions as the prior credit agreement with the following exceptions:
The maturity extended from October 2019 to June 2021.
The Eurodollar borrowing margins on this line of credit was reduced to a range of 75 to 150 basis points per year, from a range of 87.5 to 175 basis points per year, based upon applicable long-term credit ratings.
The commitment fees, calculated on the unused portion of the line of credit, was reduced to a range of 6 to 22.5 basis points per year, from a range of 7.5 to 27.5 basis points per year, also based on applicable long-term credit ratings.

SPS has the right to request an extension of the termination date for two additional one-year periods. The extension requests are subject to majority bank group approval.

Other features of SPS’ credit facility include:

The credit facility may be increased by up to $50 million.
The credit facility has a financial covenant requiring that SPS’ debt-to-total capitalization ratio be less than or equal to 65 percent. SPS was in compliance as its debt-to-total capitalization ratio was 47 percent and 46 percent at Dec. 31, 2016 and 2015, respectively. If SPS 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 SPS will be in default on its borrowings under the facility if SPS or any of its future significant subsidiaries whose total assets exceed 15 percent of SPS’ total assets, default on certain indebtedness in an aggregate principal amount exceeding $75 million.
SPS was in compliance with all financial covenants on its debt agreements as of Dec. 31, 2016 and 2015.

At Dec. 31, 2016, SPS had the following committed credit facility available (in millions):
Credit Facility (a)
 
Drawn (b)
 
Available
$
400

 
$
55.0

 
$
345.0


(a)
This credit facility matures in June 2021.
(b)
Includes outstanding commercial paper and letters of credit.

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. SPS had no direct advances on the credit facility outstanding at Dec. 31, 2016 and 2015.

Long-Term Borrowings and Other Financing Instruments

Generally, all real and personal property of SPS is subject to the lien of its first mortgage indenture. 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.

In 2016, SPS issued $300 million of 3.4 percent first mortgage bonds due Aug. 15, 2046. In 2015, SPS issued $200 million of 3.3 percent first mortgage bonds due June 15, 2024.

During the next five years, SPS has long-term debt maturities of $250 million due in 2018.

Deferred Financing Costs — Deferred financing costs of approximately $14.5 million and $12.1 million, net of amortization, are presented as a deduction from the carrying amount of long-term debt at Dec. 31, 2016 and 2015, respectively. SPS is amortizing these financing costs over the remaining maturity periods of the related debt.

Dividend Restrictions — SPS’ dividends are subject to the FERC’s jurisdiction, which prohibits the payment of dividends out of capital accounts; payment of dividends is allowed out of retained earnings only.

The most restrictive dividend limitation for SPS is imposed by its state regulatory commissions. SPS’ state regulatory commissions indirectly limit the amount of dividends that SPS can pay Xcel Energy Inc. by requiring an equity-to-total capitalization ratio (excluding short-term debt) between 45.0 percent and 55.0 percent. In addition, SPS may not pay a dividend that would cause it to lose its investment grade bond rating. SPS’ equity-to-total capitalization ratio (excluding short-term debt) was 54.1 percent at Dec. 31, 2016 and $487 million in retained earnings was not restricted.