10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended Sept. 30, 2018 or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-03789

Southwestern Public Service Company

(Exact name of registrant as specified in its charter)

New Mexico	75-0575400
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
790 South Buchanan Street
Amarillo, Texas	79101
(Address of principal executive offices)	(Zip Code)

(303) 571-7511

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 and Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer x	Smaller reporting company ¨
	Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at Oct. 26, 2018
Common Stock, $1 par value	100 shares

Southwestern Public Service Company meets the conditions set forth in General Instruction H (1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H (2) to such Form 10-Q.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item l     —	Financial Statements (Unaudited)	3
Item 2    —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 4    —	Controls and Procedures	25
PART II — OTHER INFORMATION
Item 1     —	Legal Proceedings	26
Item 1A  —	Risk Factors	26
Item 6    —	Exhibits	26
SIGNATURES		27
Certifications Pursuant to Section 302		1
Certifications Pursuant to Section 906		1
Statement Pursuant to Private Litigation		1

This Form 10-Q is filed by Southwestern Public Service Company, a New Mexico corporation (SPS). SPS is a wholly owned subsidiary of Xcel Energy Inc.  Xcel Energy Inc. wholly owns the following subsidiaries: Northern States Power Company, a Minnesota corporation (NSP-Minnesota); Northern States Power Company, a Wisconsin corporation (NSP-Wisconsin); Public Service Company of Colorado, a Colorado corporation (PSCo); and SPS.  NSP-Minnesota, NSP-Wisconsin, PSCo and SPS are also referred to collectively as utility subsidiaries.  Additional information on Xcel Energy Inc. and its subsidiaries (collectively, Xcel Energy) is available on various filings with the Securities and Exchange Commission (SEC).

PART 1 — FINANCIAL INFORMATION

Item 1 — FINANCIAL STATEMENTS

SOUTHWESTERN PUBLIC SERVICE COMPANY

STATEMENTS OF INCOME (UNAUDITED)

(amounts in thousands)

	Three Months Ended Sept. 30						Nine Months Ended Sept. 30,
	2018			2017			2018			2017
Operating revenues	$	540,063		$	551,623		$	1,468,633		$	1,491,491
Operating expenses
Electric fuel and purchased power	284,006			294,400			795,592			816,027
Operating and maintenance expenses	71,444			65,540			203,660			211,101
Demand side management expenses	4,590			4,236			13,527			11,802
Depreciation and amortization	52,204			47,548			150,199			144,781
Taxes (other than income taxes)	16,814			16,743			50,033			50,222
Total operating expenses	429,058			428,467			1,213,011			1,233,933
Operating income	111,005			123,156			255,622			257,558
Other expense, net	(1,026		)	(464		)	(2,512		)	(1,795		)
Allowance for funds used during construction — equity	5,019			2,453			11,637			6,457
Interest charges and financing costs
Interest charges — includes other financing costs of $710, $625, $2,106, and $1,781, respectively	21,006			21,444			61,782			66,128
Allowance for funds used during construction — debt	(2,223		)	(1,349		)	(5,526		)	(3,816		)
Total interest charges and financing costs	18,783			20,095			56,256			62,312
Income before income taxes	96,215			105,050			208,491			199,908
Income taxes	14,674			37,269			35,400			71,710
Net income	$	81,541		$	67,781		$	173,091		$	128,198

See Notes to Financial Statements

3

SOUTHWESTERN PUBLIC SERVICE COMPANY

STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in thousands)

	Three Months Ended Sept. 30,				Nine Months Ended Sept. 30,
	2018		2017		2018		2017
Net income	$	81,541	$	67,781	$	173,091	$	128,198
Other comprehensive income
Pension and retiree medical benefits:
Amortization of losses included in net periodic benefit cost, net of tax of $5, $9, $15 and $27, respectively	18		16		55		46
Derivative instruments:
Reclassification of losses to net income, net of tax of $3, $6, $10 and $18, respectively	13		10		37		29
Other comprehensive income	31		26		92		75
Comprehensive income	$	81,572	$	67,807	$	173,183	$	128,273

See Notes to Financial Statements

4

SOUTHWESTERN PUBLIC SERVICE COMPANY

STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)

	Nine Months Ended Sept. 30,
	2018			2017
Operating activities
Net income	$	173,091		$	128,198
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	150,403			144,664
Demand side management program amortization	1,255			1,255
Deferred income taxes	14,395			101,388
Amortization of investment tax credits	(39		)	(99		)
Allowance for equity funds used during construction	(11,637		)	(6,457		)
Net derivative losses	47			47
Other, net	(5		)	9
Changes in operating assets and liabilities:
Accounts receivable	(25,096		)	(25,134		)
Accrued unbilled revenues	9,648			(13,682		)
Inventories	7,032			(2,845		)
Prepayments and other	641			19,361
Accounts payable	(935		)	7,817
Net regulatory assets and liabilities	58,832			24,856
Other current liabilities	12,972			19,748
Pension and other employee benefit obligations	(7,907		)	(21,638		)
Change in other noncurrent assets	3,546			(1,697		)
Change in other noncurrent liabilities	(235		)	(18,690		)
Net cash provided by operating activities	386,008			357,101
Investing activities
Utility capital/construction expenditures	(621,641		)	(400,957		)
Allowance for equity funds used during construction	11,637			6,457
Investments in utility money pool arrangement	(46,000		)	—
Repayments from utility money pool arrangement	111,000			—
Other, net	—			(493		)
Net cash used in investing activities	(545,004		)	(394,993		)
Financing activities
Proceeds from short-term borrowings, net	35,000			(50,000		)
Proceeds from issuance of long-term debt, net	—			442,651
Borrowings under utility money pool arrangement	446,000			323,000
Repayments under utility money pool arrangement	(423,000		)	(323,000		)
Capital contributions from parent	181,484			45,000
Repayment of long-term debt	—			(271,613		)
Dividends paid to parent	(90,705		)	(82,599		)
Other, net	(31		)	—
Net cash provided by financing activities	148,748			83,439
Net change in cash and cash equivalents	(10,248		)	45,547
Cash and cash equivalents at beginning of period	10,871			844
Cash and cash equivalents at end of period	$	623		$	46,391
Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(57,924	)	$	(58,581	)
Cash (paid) received for income taxes, net	(15,251		)	37,899
Supplemental disclosure of non-cash investing transactions:
Property, plant and equipment additions in accounts payable	$	54,601		$	40,861

See Notes to Financial Statements

5

SOUTHWESTERN PUBLIC SERVICE COMPANY

BALANCE SHEETS (UNAUDITED)

(amounts in thousands, except share and per share data)

	Sept. 30, 2018			Dec. 31, 2017
Assets
Current assets
Cash and cash equivalents	$	623		$	10,871
Accounts receivable, net	101,870			79,581
Accounts receivable from affiliates	4,085			1,297
Investments in utility money pool arrangement	—			65,000
Accrued unbilled revenues	120,156			129,804
Inventories	33,401			40,433
Regulatory assets	23,387			31,538
Derivative instruments	28,436			15,882
Prepaid taxes	15,821			15,025
Prepayments and other	10,137			10,341
Total current assets	337,916			399,772
Property, plant and equipment, net	5,539,200			5,095,609
Other assets
Regulatory assets	366,885			362,943
Derivative instruments	16,584			18,954
Other	4,602			11,266
Total other assets	388,071			393,163
Total assets	$	6,265,187		$	5,888,544
Liabilities and Equity
Current liabilities
Short-term debt	$	35,000		$	—
Borrowings under utility money pool arrangement	23,000			—
Accounts payable	191,874			211,756
Accounts payable to affiliates	17,308			22,577
Regulatory liabilities	112,585			68,835
Taxes accrued	53,453			35,243
Accrued interest	20,396			23,275
Dividends payable	40,071			26,753
Derivative instruments	3,565			3,565
Other	25,548			29,641
Total current liabilities	522,800			421,645
Deferred credits and other liabilities
Deferred income taxes	601,294			574,906
Regulatory liabilities	795,424			784,564
Asset retirement obligations	29,664			28,524
Derivative instruments	17,275			19,949
Pension and employee benefit obligations	82,369			90,266
Other	4,816			8,386
Total deferred credits and other liabilities	1,530,842			1,506,595
Commitments and contingencies
Capitalization
Long-term debt	1,830,796			1,829,941
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at Sept. 30, 2018 and Dec. 31, 2017, respectively	—			—
Additional paid in capital	1,771,469			1,590,242
Retained earnings	610,655			541,588
Accumulated other comprehensive loss	(1,375		)	(1,467		)
Total common stockholder’s equity	2,380,749			2,130,363
Total liabilities and equity	$	6,265,187		$	5,888,544

See Notes to Financial Statements

6

SOUTHWESTERN PUBLIC SERVICE COMPANY

Notes to Financial Statements (UNAUDITED)

In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America (GAAP), the financial position of SPS as of Sept. 30, 2018 and Dec. 31, 2017; the results of its operations, including the components of net income and comprehensive income, for the three and nine months ended Sept. 30, 2018 and 2017; and its cash flows for the nine months endedSept. 30, 2018 and 2017. All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after Sept. 30, 2018 up to the date of issuance of these financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2017 balance sheet information has been derived from the audited 2017 financial statements included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2017. These notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the financial statements and notes thereto, included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2017, filed with the SEC on Feb. 23, 2018. Due to the seasonality of SPS’ electric sales, interim results are not necessarily an appropriate base from which to project annual results.

1. Summary of Significant Accounting Policies

The significant accounting policies set forth in Note 1 to the financial statements in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2017, appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.

2. Accounting Pronouncements

Recently Issued

Leases — In February 2016, the Financial Accounting Standards Board (FASB) issued Leases, Topic 842 (Accounting Standards Update (ASU) No. 2016-02), which for lessees requires balance sheet recognition of right-of-use assets and lease liabilities for most leases. This guidance will be effective for interim and annual reporting periods beginning after Dec. 15, 2018. Adoption will occur on Jan. 1, 2019 utilizing the practical expedients provided by the standard and included in Targeted Improvements, Topic 842 (ASU No. 2018-11). On Jan. 1, 2019, agreements historically disclosed as operating leases for the use of real estate, equipment and certain fossil-fueled generating facilities operated under purchased power agreements (PPAs) are expected to be recognized on the consolidated balance sheet. Other than first-time recognition of these types of operating leases on the balance sheet, the implementation is not expected to have a significant impact on SPS’ financial statements.

Recently Adopted

Revenue Recognition— In May 2014, the FASB issued Revenue from Contracts with Customers, Topic 606 (ASU No. 2014-09), which provides a new framework for the recognition of revenue. SPS implemented the guidance on a modified retrospective basis on Jan. 1, 2018. Results for reporting periods beginning after Dec. 31, 2017 are presented in accordance with Topic 606, while prior period results have not been adjusted and continue to be reported in accordance with prior accounting guidance. Other than increased disclosures regarding revenues related to contracts with customers, the implementation did not have a material impact on SPS’ financial statements. For related disclosures, see Note 12 to the financial statements.

Classification and Measurement of Financial Instruments — In January 2016, the FASB issued Recognition and Measurement of Financial Assets and Financial Liabilities, Subtopic 825-10 (ASU No. 2016-01), which eliminated the available-for-sale classification for marketable equity securities and also replaced the cost method of accounting for non-marketable equity securities with a model for recognizing impairments and observable price changes. Under the new standard, other than when the consolidation or equity method of accounting is utilized, changes in the fair value of equity securities are recognized in earnings. SPS implemented the guidance on Jan. 1, 2018 and the implementation did not have a material impact on its financial statements.

7

Presentation of Net Periodic Benefit Cost —In March 2017, the FASB issued Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, Topic 715 (ASU No. 2017-07), which establishes that only the service cost element of pension cost may be presented as a component of operating income in the income statement. Also under the guidance, only the service cost component of pension cost is eligible for capitalization. As a result of the application of accounting principles for rate regulated entities, a similar amount of pension cost, including non-service components, will be recognized consistent with the historical ratemaking treatment, and the impacts of adoption will be limited to changes in classification of non-service costs in the statement of income. SPS implemented the new guidance on Jan. 1, 2018, and as a result, $0.7 million and $2.2 million of pension costs were retrospectively reclassified from operating and maintenance expenses to other income, net on the income statement for the three and nine months ended Sept. 30, 2017, respectively. Under a practical expedient permitted by the standard, SPS used benefit cost amounts disclosed for prior periods as the basis for retrospective application.

3. Selected Balance Sheet Data

(Thousands of Dollars)	Sept. 30, 2018			Dec. 31, 2017
Accounts receivable, net
Accounts receivable	$	107,709		$	85,929
Less allowance for bad debts	(5,839		)	(6,348		)
	$	101,870		$	79,581

(Thousands of Dollars)	Sept. 30, 2018		Dec. 31, 2017
Inventories
Materials and supplies	$	25,380	$	26,218
Fuel	8,021		14,215
	$	33,401	$	40,433

(Thousands of Dollars)	Sept. 30, 2018			Dec. 31, 2017
Property, plant and equipment, net
Electric plant	$	7,115,175		$	6,765,371
Construction work in progress	533,538			351,875
Total property, plant and equipment	7,648,713			7,117,246
Less accumulated depreciation	(2,109,513		)	(2,021,637		)
	$	5,539,200		$	5,095,609

4. Income Taxes

Except to the extent noted below, Note 6 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2017 appropriately represents, in all material respects, the current status of other income tax matters, and are incorporated herein by reference.

8

Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense. The following reconciles such differences:

	Nine Months Ended Sept. 30,
	2018		2017
Federal statutory rate	21.0	%	35.0	%
State tax (net of federal tax effect)	2.3		2.3
Increases (decreases) in tax from:
Regulatory differences - ARAM (a)	(4.0	)	—
Regulatory differences - ARAM deferral (b)	1.7		—
Regulatory differences - reversal of prior quarters' ARAM deferral (b)	(0.2	)	—
Regulatory differences - other utility plant items	(1.3	)	(0.8	)
Tax credits (net of federal income tax expense)	(0.7	)	(0.7	)
Other (net)	(1.8	)	0.1
Effective income tax rate	17.0	%	35.9	%

^(a)   The average rate assumption method (ARAM); a method to flow back excess deferred taxes to customers.

^(b) ARAM has been deferred when regulatory treatment has not been established. As SPS received direction from its regulatory commissions regarding the return of excess deferred taxes to customers, the ARAM deferral was reversed. This resulted in a reduction to tax expense with a corresponding reduction to revenue.

Federal Audits — SPS is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. The statute of limitations applicable to Xcel Energy’s federal income tax returns expire as follows:

Tax Year(s)	Expiration
2009 - 2014	October 2019
2015	September 2019
2016	September 2020

In 2012, the Internal Revenue Service (IRS) commenced an examination of tax years 2010 and 2011, including the 2009 carryback claim. In 2017 Xcel Energy and the Office of Appeals (Appeals) reached an agreement and the benefit related to the agreed upon portions was recognized. SPS did not accrue any income tax benefit related to this adjustment. In the second quarter of 2018, the Joint Committee on Taxation completed its review and took no exception to the agreement. As a result, the remaining unrecognized tax benefit was released and recorded as a payable to the IRS.

In the third quarter of 2015, the IRS commenced an examination of tax years 2012 and 2013. In the third quarter of 2017, the IRS concluded the audit of tax years 2012 and 2013 and proposed an adjustment that would impact Xcel Energy’s net operating loss (NOL) and effective tax rate (ETR). Xcel Energy filed a protest with the IRS. As of Sept. 30, 2018 the case has been forwarded to Appeals and Xcel Energy has recognized its best estimate of income tax expense that will result from a final resolution of this issue; however, the outcome and timing of a resolution is unknown.

State Audits — SPS is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of Sept. 30, 2018, SPS’ earliest open tax year that is subject to examination by state taxing authorities under applicable statutes of limitations is 2009. There are currently no state income tax audits in progress.

Unrecognized Benefits — The unrecognized tax benefit balance includes permanent tax positions, which if recognized would affect the annual ETR. In addition, the unrecognized tax benefit balance includes temporary tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the ETR but would accelerate the payment of cash to the taxing authority to an earlier period.

A reconciliation of the amount of unrecognized tax benefit is as follows:

(Millions of Dollars)	Sept. 30, 2018		Dec. 31, 2017
Unrecognized tax benefit — Permanent tax positions	$	2.8	$	2.3
Unrecognized tax benefit — Temporary tax positions	1.6		2.0
Total unrecognized tax benefit	$	4.4	$	4.3

9

The unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryforwards. The amounts of tax benefits associated with NOL and tax credit carryforwards are as follows:

(Millions of Dollars)	Sept. 30, 2018			Dec. 31, 2017
NOL and tax credit carryforwards	$	(6.9	)	$	(5.9	)

It is reasonably possible that SPS’ amount of unrecognized tax benefits could significantly change in the next 12 months as the IRS Appeals progresses and audit resumes and state audits resume. As the IRS Appeals progresses and the IRS audit resumes, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $3 million.

Payables for interest related to unrecognized tax benefits were not material and no amounts were accrued for penalties related to unrecognized tax benefits as of Sept. 30, 2018 or Dec. 31, 2017.

5. Rate Matters

Except to the extent noted below, the circumstances set forth in Note 10 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2017 and in Note 5 to the financial statements included in to SPS’ Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018, appropriately represent, in all material respects, the current status of other rate matters, and are incorporated herein by reference.

Tax Reform — Regulatory Proceedings

The specific impacts of the TCJA on customer rates are subject to regulatory approval. The following details the status of regulatory decisions in each state where Xcel Energy, which includes Texas and New Mexico, operates.

Texas — In June 2018, SPS, the Public Utility Commission of Texas (PUCT) Staff and various intervenors reached a settlement in the Texas electric rate case which included the impacts of the TCJA. The settlement reflects no change in customer rates or refunds and SPS’ actual capital structure, which SPS has informed the parties it intends to be up to a 57 percent equity ratio to offset the negative impacts on its credit metrics and potentially its credit ratings. A PUCT decision is expected in the fourth quarter of 2018.

New Mexico— In September 2018, the New Mexico Public Regulation Commission (NMPRC) issued its final order in SPS’ 2017 electric rate case, which included a refund of the 2018 impact of the TCJA.

Pending Regulatory Proceedings — PUCT

Texas 2017 Electric Rate Case — In 2017, SPS filed a $54 million, or 5.8 percent, retail electric, non-fuel base rate increase case in Texas with each of its Texas municipalities and the PUCT. The request was based on a historic test year (HTY) ended June 30, 2017, a requested return on equity (ROE) of 10.25 percent, an electric rate base of approximately $1.9 billion and an equity ratio of 53.97 percent.

In May 2018, SPS filed rebuttal testimony and revised its request to an overall increase in the annual base rate revenue of approximately $32 million, or 5.9 percent, net of the TCJA (after adjusting for a requested 58 percent equity ratio) and other adjustments. This request would be equivalent to approximately $17 million after adjusting for the Transmission Cost Recovery Factor (TCRF) rider.

In June 2018, SPS, the PUCT Staff and various intervenors reached a settlement, which results in no overall change to SPS’ revenues after adjusting for the impact of the TCJA and the lower costs of long-term debt.

The following are key terms:

• The ability to use an equity ratio that reflects SPS' actual capital structure, up to 57 percent;

• A 9.5 percent ROE for the calculation of allowance for funds used during construction (AFUDC);

• TCRF rider will remain in effect;

• SPS will accelerate the depreciable lives of Tolk Units 1 and 2 from 2042 and 2045, respectively, to 2037; and

• SPS agrees that it will file its next base rate case no later than Dec. 31, 2019.

A PUCT decision on the settlement is expected in the fourth quarter of 2018.

10

Pending Regulatory Proceeding — New Mexico Public Regulation Commission (NMPRC)

New Mexico 2017 Electric Rate Case — In October 2017, SPS filed an electric rate case with the NMPRC seeking an increase in base rates of approximately $43 million. The request was based on a HTY ended June 30, 2017, a ROE of 10.25 percent, an equity ratio of 53.97 percent, a 35 percent federal income tax rate and a rate base of approximately $885 million, including rate base additions through Nov. 30, 2017.

In May 2018, SPS reduced its request to $27 million, net of the TCJA (approximately $11 million, net of the requested higher equity ratio) and other adjustments, based on a requested ROE of 10.25 percent and an equity ratio of 58.0 percent.

In June 2018, the New Mexico Hearing Examiner issued a recommended decision proposing an increase of $12 million based on a ROE of 9.4 percent and an equity ratio of 53.97 percent. She also denied SPS' requests to shorten depreciation lives related to Tolk Units 1 and 2 and Cunningham Unit 1. The Hearing Examiner rejected intervenor proposals to refund the impacts of the TCJA back to Jan. 1, 2018.

On Sept. 5, 2018, the NMPRC issued its final order resulting in a revenue increase of approximately $8 million, or 2.1 percent, effective Sept. 27, 2018, based on a ROE of 9.1 percent and a 51 percent equity ratio. The NMPRC also ordered a refund of $10 million associated with the TCJA impacts for the retroactive period of Jan. 1, 2018 through Sept. 27, 2018. SPS recorded a regulatory liability of $10 million for the customer refund in the third quarter of 2018.

On Sept. 7, 2018, SPS filed an appeal with the NMSC on the grounds that the NMPRC’s findings are contrary to the factual record and do not result in just and reasonable rates as required by law.  In addition, SPS filed a motion for stay with the NMSC to delay the implementation of the retroactive TCJA refund until the NMSC issues its decision on SPS' appeal of the rate case order.  SPS considers the refund illegal primarily because it violates the prohibition on retroactive ratemaking and results in rates that are not just and reasonable.  On Sept. 26, 2018, the NMSC granted a temporary stay to delay the implementation of the retroactive refund until further order of the Court.

Appeal of the New Mexico 2016 Electric Rate Case Dismissal — In November 2016, SPS filed an electric rate case with the NMPRC seeking an increase in base rates of approximately $41 million, representing a total revenue increase of approximately 10.9 percent. The rate filing was based on a requested ROE of 10.1 percent, an equity ratio of 53.97 percent, an electric rate base of approximately $832 million and a future test year ended June 30, 2018. In 2017, the NMPRC dismissed SPS’ rate case. SPS filed a notice of appeal in the NMSC. A decision is not expected until the second half of 2019.

Pending Regulatory Proceeding — Federal Energy Regulatory Commission (FERC)

Southwest Power Pool, Inc. (SPP) Open Access Transmission Tariff (OATT) Upgrade Costs — Under the SPP OATT, costs of participant funded, or “sponsored,” transmission upgrades may be recovered from other SPP customers whose transmission service depends on capacity enabled by the upgrade.  The SPP OATT has allowed SPP to charge for these upgrades since 2008, but SPP had not been charging its customers for these upgrades.  In 2016, the FERC granted SPP’s request to recover the charges not billed since 2008.  SPP subsequently billed SPS approximately $13 million for these charges. SPP is also billing SPS ongoing charges of approximately $0.5 million per month. In July 2018, SPS’ appeal to the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) over the FERC rulings granting SPP the right to recover these charges was remanded to the FERC. As of September 2018, SPS’ recovery of these charges (from 2008 through 2016) is being reviewed by the FERC, which is expected to rule in the first quarter of 2019.

11

In October 2017, SPS filed a complaint against SPP regarding the amounts billed asserting that SPP has assessed upgrade charges to SPS in violation of the SPP OATT. In March 2018, the FERC denied SPS’ complaint. SPS sought rehearing in April 2018, and the FERC granted a rehearing for purposes of further consideration in May 2018. The timing of FERC action on the SPS rehearing is uncertain. If SPS’ complaint results in additional charges or refunds, SPS will seek to recover or refund the differential in future rate proceedings.

SPP Filing to Assign GridLiance Facilities to SPS Rate Zone — In August 2018, SPP filed a request with the FERC to amend its OATT to include the costs of the GridLiance High Plains, LLC. facilities in the SPS rate zone. The FERC initially determined the facilities did not qualify as transmission facilities under the SPP OATT. SPP’s proposed tariff changes could result in an increase in the annual transmission revenue requirement (ATRR) of $9.5 million per year, with $6 million allocated to SPS’ retail customers. The remaining $3.5 million would be paid by other wholesale loads in the SPS rate zone. In September 2018, SPS protested the proposed SPP tariff charges, and asked the FERC to reject the SPP filing. The FERC is expected to take initial action in the fourth quarter of 2018.

6. Commitments and Contingencies

Except to the extent noted below and in Note 5 above, the circumstances set forth in Notes 10, 11 and 12 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2017 and in Notes 5 and 6 to the financial statements included in SPS’ Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018, appropriately represent, in all material respects, the current status of commitments and contingent liabilities and are incorporated herein by reference. The following include commitments, contingencies and unresolved contingencies that are material to SPS’ financial position.

PPAs

SPS purchases power from independent power producing entities that own natural gas fueled power plants for which SPS is required to reimburse natural gas fuel costs, or to participate in tolling arrangements under which SPS procures the natural gas required to produce the energy that it purchases. These specific PPAs create a variable interest in the associated independent power producing entity.

SPS had approximately 967 Megawatts (MW) of capacity under long-term PPAs as of Sept. 30, 2018 and 897 MW as of Dec. 31, 2017, with entities that have been determined to be variable interest entities. SPS has concluded that these entities are not required to be consolidated in its financial statements because it does not have the power to direct the activities that most significantly impact the entities’ economic performance. These agreements have various expiration dates through 2041.

Environmental Contingencies

Manufactured Gas Plant (MGP), Landfill or Disposal Sites— SPS is currently involved in investigating and/or remediating an MGP, landfill or other disposal site. SPS has identified one site where investigation and/or remediation activities are currently underway. Other parties may have responsibility for some portion of the investigation and/or remediation activities. SPS anticipates that the investigation or remediation activities will continue through at least 2019. SPS accrued $0.1 million for the site as of Sept. 30, 2018 and Dec. 31, 2017, respectively. There may be insurance recovery and/or recovery from other responsible parties that will offset any costs incurred.

Legal Contingencies

SPS is involved in various litigation matters that are being defended and handled in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for such losses that are probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings would have a material effect on SPS’ financial statements. Unless otherwise required by GAAP, legal fees are expensed as incurred.

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7. 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 Sept. 30, 2018			Year Ended Dec. 31, 2017
Borrowing limit	$	100		$	100
Amount outstanding at period end	23			—
Average amount outstanding	76			13
Maximum amount outstanding	100			100
Weighted average interest rate, computed on a daily basis	1.97		%	1.12		%
Weighted average interest rate at period end	1.99			N/A

Commercial Paper — SPS meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility and the money pool. Commercial paper outstanding for SPS was as follows:

(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2018			Year Ended Dec. 31, 2017
Borrowing limit	$	400		$	400
Amount outstanding at period end	35			—
Average amount outstanding	63			69
Maximum amount outstanding	144			176
Weighted average interest rate, computed on a daily basis	2.25		%	1.13		%
Weighted average interest rate at period end	2.35			N/A

Letters of Credit — SPS uses letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. As of Sept. 30, 2018 and Dec. 31, 2017, there were $2 million and $3 million, respectively, of letters of credit outstanding 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.

As of Sept. 30, 2018, SPS had the following committed credit facility available (in millions of dollars):

Credit Facility (a)		Drawn(b)		Available
$	400	$	37	$	363

^(a)  This credit facility expires 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 as of Sept. 30, 2018 and Dec. 31, 2017.

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8. 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 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 value.

Interest rate derivatives— The fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts.

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 classification. 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.

Electric commodity derivatives held by SPS include transmission congestion instruments, generally referred to as financial transmission rights (FTRs), purchased from SPP. FTRs purchased from a regional transmission organization (RTO) are financial instruments that entitle or obligate the holder to monthly revenues or charges based on transmission congestion across a given transmission path. The value of an FTR is derived from, and designed to offset, the cost of transmission congestion. In addition to overall transmission load, congestion is also influenced by the operating schedules of power plants and the consumption of electricity pertinent to a given transmission path. Unplanned plant outages, scheduled plant maintenance, changes in the relative costs of fuels used in generation, weather and overall changes in demand for electricity can each impact the operating schedules of the power plants on the transmission grid and the value of an FTR. The valuation process for FTRs utilizes the cleared prices for each FTR for the most recent auction.

If forecasted costs of electric transmission congestion increase or decrease for a given FTR path, the value of that particular FTR instrument will likewise increase or decrease. Given the limited transparency in the auction process, fair value measurements for FTRs have been assigned a Level 3. Non-trading monthly FTR settlements are expected to be recovered through fuel and purchased energy cost recovery mechanisms, and therefore changes in the fair value of the yet to be settled portions of FTRs are deferred as a regulatory asset or liability. Given this regulatory treatment and the limited magnitude of FTRs, the limited transparency associated with the valuation of FTRs is insignificant to the financial statements of SPS.

Derivative Instruments Fair Value Measurements

SPS enters into derivative instruments, including forward contracts, for trading purposes and to manage risk in connection with changes in interest rates and electric utility commodity prices.

Interest Rate Derivatives — SPS may enter 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.

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As of Sept. 30, 2018, accumulated other comprehensive losses related to interest rate derivatives included immaterial net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings, including forecasted amounts for unsettled hedges, as applicable.

Wholesale and Commodity Trading Risk — SPS conducts various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy and energy-related instruments, including derivatives. SPS’ 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 — SPS enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric utility operations. This could include the purchase or sale of energy or energy-related products and FTRs.

The following table details the gross notional amounts of commodity FTRs as of Sept. 30, 2018 and Dec. 31, 2017:

(Amounts in Thousands) (a)	Sept. 30, 2018	Dec. 31, 2017
Megawatt hours of electricity	8,594	4,251

^(a)  Amounts are not reflective of net positions in the underlying commodities.

Impact of Derivative Activities on Income and Accumulated Other Comprehensive Loss — Pre-tax losses related to interest rate derivatives reclassified from accumulated other comprehensive loss into earnings were immaterial for each of the three and nine months ended Sept. 30, 2018 and 2017.

During the three and nine months ended Sept. 30, 2018, changes in the fair value of FTRs resulted in pre-tax net losses of $3.3 million and pre-tax net gains of $10.1 million, respectively, and were recognized as regulatory assets and liabilities. For the three and nine months ended Sept. 30, 2017, changes in the fair value of FTRs resulted in pre-tax net losses of $2.5 million and $0.2 million, respectively, and were recognized as regulatory assets and liabilities. The classification as a regulatory asset or liability is based on expected recovery of FTR settlements through fuel and purchased energy cost recovery mechanisms.

There were immaterial FTR settlement losses and $3.4 million of FTR settlement gains recognized for the three and nine months ended Sept. 30, 2018, respectively, and were recorded to electric fuel and purchased power. For the three and nine months ended Sept. 30, 2017, FTR settlement losses of $2.2 million and gains of $0.1 million, respectively, were recognized and recorded to electric fuel and purchased power. These derivative settlement gains and losses are shared with electric customers through fuel and purchased energy cost-recovery mechanisms, and reclassified out of income as regulatory assets or liabilities, as appropriate.

SPS had no derivative instruments designated as fair value hedges during the three and nine months ended Sept. 30, 2018 and 2017. Therefore, no gains or losses from fair value hedges or related hedged transactions were recognized for these periods.

Consideration of Credit Risk and Concentrations — SPS 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 SPS’ own credit risk when determining the fair value of derivative liabilities, the impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented in the balance sheets.

SPS 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.

SPS’ most significant concentrations of credit risk with particular entities or industries are contracts with counterparties to its wholesale, trading and non-trading commodity activities. As of Sept. 30, 2018, two of SPS’ most significant counterparties, comprising $16.9 million or 34 percent of this credit exposure, had investment grade credit ratings from Standard & Poor’s, Moody’s or Fitch Ratings. Five of the most significant counterparties, comprising $10.7 million or 22 percent of this credit exposure, were not rated by these external agencies, but based on SPS’s internal analysis, had credit quality consistent with investment grade. All seven of these significant counterparties are municipal or cooperative electric entities or other utilities.

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Recurring Fair Value Measurements — The following table presents for each of the fair value hierarchy levels, SPS’ derivative assets and liabilities measured at fair value on a recurring basis as of Sept. 30, 2018:

	Sept. 30, 2018
	Fair Value						Fair Value Total		Counterparty Netting (b)
(Thousands of Dollars)	Level 1		Level 2		Level 3							Total
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	25,666	$	25,666	$	(389	)	$	25,277
Total current derivative assets	$	—	$	—	$	25,666	$	25,666	$	(389	)	25,277
PPAs (a)												3,159
Current derivative instruments												$	28,436
Noncurrent derivative assets
PPAs (a)												$	16,584
Noncurrent derivative instruments												$	16,584
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	389	$	389	$	(389	)	$	—
Total current derivative liabilities	$	—	$	—	$	389	$	389	$	(389	)	—
PPAs (a)												3,565
Current derivative instruments												$	3,565
Noncurrent derivative liabilities
PPAs (a)												$	17,275
Noncurrent derivative instruments												$	17,275

^(a) During 2006, SPS 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 is being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b)  SPS nets derivative instruments and related collateral in its 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, 2018. At Sept. 30, 2018, derivative assets and liabilities include no obligations to return cash collateral or 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.

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The following table presents for each of the fair value hierarchy levels, SPS’ derivative assets and liabilities measured at fair value on a recurring basis as of Dec. 31, 2017:

	Dec. 31, 2017
	Fair Value						Fair Value Total		Counterparty Netting (b)
(Thousands of Dollars)	Level 1		Level 2		Level 3							Total
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	14,717	$	14,717	$	(1,994	)	$	12,723
Total current derivative assets	$	—	$	—	$	14,717	$	14,717	$	(1,994	)	12,723
PPAs (a)												3,159
Current derivative instruments												$	15,882
Noncurrent derivative assets
PPAs (a)												$	18,954
Noncurrent derivative instruments												$	18,954
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	1,994	$	1,994	$	(1,994	)	$	—
Total current derivative liabilities	$	—	$	—	$	1,994	$	1,994	$	(1,994	)	—
PPAs (a)												3,565
Current derivative instruments												$	3,565
Noncurrent derivative liabilities
PPAs (a)												$	19,949
Noncurrent derivative instruments												$	19,949

^(a)  During 2006, SPS 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 is being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b)  SPS nets derivative instruments and related collateral in its 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, 2017. At Dec. 31, 2017, derivative assets and liabilities include no obligations to return cash collateral or 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.

The following table presents the changes in Level 3 commodity derivatives for the three and nine months ended Sept. 30, 2018 and 2017:

	Three Months Ended Sept. 30,
(Thousands of Dollars)	2018			2017
Balance at July 1	$	35,389		$	28,665
Purchases	3,169			43
Settlements	(10,068		)	(9,939		)
Net transactions recorded during the period:
Net (losses) gains recognized as regulatory assets and liabilities	(3,213		)	1,669
Balance at Sept. 30	$	25,277		$	20,438

	Nine Months Ended Sept. 30,
(Thousands of Dollars)	2018			2017
Balance at Jan. 1	$	12,723		$	1,955
Purchases	22,517			39,376
Settlements	(35,305		)	(40,437		)
Net transactions recorded during the period:
Net gains recognized as regulatory assets and liabilities	25,342			19,544
Balance at Sept. 30	$	25,277		$	20,438

SPS 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, 2018 and 2017.

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Fair Value of Long-Term Debt

As of Sept. 30, 2018 and Dec. 31, 2017, other financial instruments for which the carrying amount did not equal fair value were as follows:

	Sept. 30, 2018				Dec. 31, 2017
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	1,830,796	$	1,832,158	$	1,829,941	$	2,001,992

The fair value of SPS’ 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, 2018 and Dec. 31, 2017, and given the observability of the inputs to these estimates, the fair values presented for long-term debt have been assigned a Level 2.

9. Other Expense, Net

Other expense, net consisted of the following:

	Three Months Ended Sept. 30						Nine Months Ended Sept. 30,
(Thousands of Dollars)	2018			2017			2018			2017
Interest income	$	473		$	296		$	771		$	488
Other nonoperating income	—			1			2			—
Other nonoperating expense	(1		)	—			—			—
Insurance policy expense	(11		)	(12		)	(35		)	(36		)
Benefits non-service cost	(1,487		)	(749		)	(3,250		)	(2,247		)
Other expense, net	$	(1,026	)	$	(464	)	$	(2,512	)	$	(1,795	)

10. Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost (Credit)

	Three Months Ended Sept. 30
	2018			2017			2018			2017
(Thousands of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	2,429		$	2,439		$	280		$	219
Interest cost (a)	4,603			4,928			410			415
Expected return on plan assets (a)	(7,082		)	(6,971		)	(615		)	(589		)
Amortization of prior service credit (a)	(34		)	—			(101		)	(100		)
Amortization of net loss (gain) (a)	3,517			3,245			(114		)	(155		)
Net periodic benefit cost (credit)	3,433			3,641			(140		)	(210		)
(Costs) credits not recognized due to the effects of regulation	(468		)	553			—			—
Net benefit cost (credit) recognized for financial reporting	$	2,965		$	4,194		$	(140	)	$	(210	)

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	Nine Months Ended Sept. 30
	2018			2017			2018			2017
(Thousands of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	7,289		$	7,319		$	839		$	657
Interest cost (a)	13,808			14,783			1,231			1,245
Expected return on plan assets (a)	(21,246		)	(20,913		)	(1,846		)	(1,767		)
Amortization of prior service credit (a)	(103		)	—			(302		)	(300		)
Amortization of net loss (gain) (a)	10,551			9,735			(340		)	(465		)
Net periodic benefit cost (credit)	10,299			10,924			(418		)	(630		)
Credits not recognized due to the effects of regulation	1,267			1,275			—			—
Net benefit cost (credit) recognized for financial reporting	$	11,566		$	12,199		$	(418	)	$	(630	)

^(a) The components of net periodic cost other than the service cost component are included in the line item “other expense, net” in the income statement or capitalized on the balance sheet as a regulatory asset.

In January 2018, contributions of $150 million were made across four of Xcel Energy’s pension plans, of which $8.0 million was attributable to SPS. Xcel Energy does not expect additional pension contributions during 2018.

11. Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive loss, net of tax, for the three and nine months ended Sept. 30, 2018 and 2017 were as follows:

	Three Months Ended Sept. 30, 2018
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at July 1	$	(752	)	$	(654	)	$	(1,406	)
Losses reclassified from net accumulated other comprehensive loss	13			18			31
Net current period other comprehensive income	13			18			31
Accumulated other comprehensive loss at Sept. 30	$	(739	)	$	(636	)	$	(1,375	)

	Three Months Ended Sept. 30, 2017
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at July 1	$	(659	)	$	(582	)	$	(1,241	)
Losses reclassified from net accumulated other comprehensive loss	10			16			26
Net current period other comprehensive income	10			16			26
Accumulated other comprehensive loss at Sept. 30	$	(649	)	$	(566	)	$	(1,215	)

	Nine Months Ended Sept. 30, 2018
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at Jan. 1	$	(776	)	$	(691	)	$	(1,467	)
Losses reclassified from net accumulated other comprehensive loss	37			55			92
Net current period other comprehensive income	37			55			92
Accumulated other comprehensive loss at Sept. 30	$	(739	)	$	(636	)	$	(1,375	)

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	Nine Months Ended Sept. 30, 2017
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at Jan. 1	$	(678	)	$	(612	)	$	(1,290	)
Losses reclassified from net accumulated other comprehensive loss	29			46			75
Net current period other comprehensive income	29			46			75
Accumulated other comprehensive loss at Sept. 30	$	(649	)	$	(566	)	$	(1,215	)

Reclassifications from accumulated other comprehensive loss for the three and nine months ended Sept. 30, 2018 and 2017 were as follows:

	Amounts Reclassified from Accumulated Other Comprehensive Loss
(Thousands of Dollars)	Three Months Ended Sept. 30, 2018				Three Months Ended Sept. 30, 2017
Losses on cash flow hedges:
Interest rate derivatives	$	16		(a)	$	16		(a)
Total, pre-tax	16				16
Tax benefit	(3		)		(6		)
Total, net of tax	13				10
Defined benefit pension and postretirement losses:
Amortization of net loss	23			(b)	24			(b)
Total, pre-tax	23				24
Tax benefit	(5		)		(8		)
Total, net of tax	18				16
Total amounts reclassified, net of tax	$	31			$	26

	Amounts Reclassified from Accumulated Other Comprehensive Loss
(Thousands of Dollars)	Nine Months Ended Sept. 30, 2018				Nine Months Ended Sept. 30, 2017
Losses on cash flow hedges:
Interest rate derivatives	$	47		(a)	$	47		(a)
Total, pre-tax	47				47
Tax benefit	(10		)		(18		)
Total, net of tax	37				29
Defined benefit pension and postretirement losses:
Amortization of net loss	70			(b)	72			(b)
Total, pre-tax	70				72
Tax benefit	(15		)		(26		)
Total, net of tax	55				46
Total amounts reclassified, net of tax	$	92			$	75

^(a) Included in interest charges.

^(b)  Included in the computation of net periodic pension and postretirement benefit costs. See Note 10 to the financial statements for details regarding these benefit plans.

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12. Revenues

SPS principally generates revenue from the generation, transmission, distribution and sale of electricity to wholesale and retail customers. Performance obligations related to the sale of energy are satisfied as energy is delivered to customers. SPS recognizes revenue in an amount that corresponds directly to the price of the energy delivered to the customer. The measurement of energy sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, amounts of energy delivered to customers since the date of the last meter reading are estimated, and the corresponding unbilled revenue is recognized. Contract terms are generally short-term in nature, and as such SPS does not recognize a separate financing component of its collections from customers. SPS presents its revenues net of any excise or other fiduciary-type taxes or fees.

SPS participates in SPP. SPS recognizes sales to both native load and other end use customers on a gross basis in electric revenues and cost of sales. Revenues and charges for short term wholesale sales of excess energy transacted through RTOs are recorded on a gross basis. Other revenues and charges related to participating and transacting in RTOs are also recorded on a net basis in cost of sales. SPS has various rate-adjustment mechanisms in place that provide for the recovery of natural gas, electric fuel and purchased energy costs. These cost-adjustment tariffs may increase or decrease the level of revenue collected from customers and are revised periodically for differences between the total amount collected under the clauses and the costs incurred.

When applicable, under governing regulatory commission rate orders, fuel cost over-recoveries (the excess of fuel revenue billed to customers over fuel costs incurred) are deferred as regulatory liabilities and under-recoveries (the excess of fuel costs incurred over fuel revenues billed to customers) are deferred as regulatory assets.

Certain rate rider mechanisms qualify as alternative revenue programs under GAAP. These mechanisms arise from costs imposed upon the utility by action of a regulator or legislative body related to an environmental, public safety or other mandate. When certain criteria are met (including collection within 24 months), revenue is recognized equal to the revenue requirement, which may include return on rate base items and incentives. The mechanisms are revised periodically for differences between the total amount collected and the revenue recognized, which may increase or decrease the level of revenue collected from customers. Alternative revenue is recorded on a gross basis and is disclosed separate from revenue from contracts with customers in the period earned.

In the following tables, regulated electric revenue is classified by the type of goods/services rendered and market/customer type.

	Three Months Ended
(Thousands of Dollars)	Sept. 30, 2018		Sept. 30, 2017
Major product lines
Revenue from contracts with customers:
Residential	$	114,387	$	113,380
Commercial and industrial (C&I)	229,457		241,295
Other	12,983		13,399
Total retail	356,827		368,074
Wholesale	117,949		116,635
Transmission	60,726		56,143
Other	1,792		3,862
Total revenue from contracts with customers	537,294		544,714
Alternative revenue and other	2,769		6,909
Total revenues	$	540,063	$	551,623

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	Nine Months Ended
(Thousands of Dollars)	Sept. 30, 2018		Sept. 30, 2017
Major product lines
Revenue from contracts with customers:
Residential	$	279,543	$	277,169
C&I	625,988		658,057
Other	34,010		35,253
Total retail	939,541		970,479
Wholesale	326,810		309,669
Transmission	175,342		166,715
Other	12,181		7,872
Total revenue from contracts with customers	1,453,874		1,454,735
Alternative revenue and other	14,759		36,756
Total revenues	$	1,468,633	$	1,491,491

Item 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Discussion of financial condition and liquidity for SPS is omitted per conditions set forth in general instructions H (1) (a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management’s narrative analysis of the results of operations set forth in general instructions H (2) (a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).

Financial Review

The following discussion and analysis by management focuses on those factors that had a material effect on SPS’ financial condition, results of operations, and cash flows during the periods presented, or are expected to have a material impact in the future. It should be read in conjunction with the accompanying unaudited financial statements and the related notes to the financial statements.  Due to the seasonality of SPS’ electric sales, such interim results are not necessarily an appropriate base from which to project annual results.

Forward-Looking Statements

Except for the historical statements contained in this report, the matters discussed herein, are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including our 2018 earnings per share

guidance, the TCJA’s impact to SPS and its customers, long-term earnings per share and dividend growth rate, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed elsewhere in this Quarterly Report on Form 10-Q and in other securities filings (including SPS’ Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017, and subsequent securities filings), could cause actual results to differ materially from management expectations as suggested by such forward-looking information: changes in environmental laws and regulations; unusual weather and climate change, including compliance with any accompanying legislative and regulatory changes; ability to recover costs from customers; actions of credit rating agencies; general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of SPS to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; tax laws; operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; costs of potential regulatory penalties; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; fuel costs; and employee work force factors.

22

Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with GAAP, as well as certain non-GAAP financial measures such as electric margin. Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are adjusted from the most directly comparable measure calculated and presented in accordance with GAAP. SPS’ management uses non-GAAP measures internally for financial planning and analysis, for reporting of results to the Board of Directors, and when communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our operating performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.

Electric Margins

Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Expenses incurred for electric fuel and purchased power are generally recovered through various recovery mechanisms, and as a result, changes in these expenses are offset in operating revenues. Management believes electric margin provides the most meaningful basis for evaluating our operations because they exclude the revenue impact of fluctuations in these expenses.

These margins can be reconciled to operating income, a GAAP measure, by including operating and maintenance (O&M) expenses, demand side management (DSM) expenses, depreciation and amortization, and taxes (other than income taxes).

Results of Operations

SPS’ net income was approximately $173 million for 2018 year-to-date, compared with approximately $128 million for the same period in 2017. The year-to-date increase was primarily due to higher AFUDC related to the Hale County wind project, timing of O&M expenses, the favorable impact of weather, sales growth, and lower interest expense, partially offset by higher depreciation expense.

Electric Revenues and Margin

Electric fuel and purchased power expenses tend to vary with changing retail and wholesale sales requirements and unit cost changes in fuel and purchased power. Changes in fuel or purchased power costs can impact earnings as the fuel and purchased power cost recovery mechanisms of the Texas and New Mexico jurisdictions may not allow for complete recovery of all expenses. The following tables detail the electric revenues and margin:

	Nine Months Ended Sept. 30
(Millions of Dollars)	2018			2017
Electric revenues before impact of the TCJA	$	1,513		$	1,491
Electric fuel and purchased power	(802		)	(816		)
Electric margin before impact of the TCJA	$	711		$	675
Impact of the TCJA (offset as a reduction in income tax expense)	(38		)	—
Electric margin	$	673		$	675

23

The following tables summarize the components of the changes in electric revenues and electric margin for the nine months ended Sept. 30, 2018:

Electric Revenue

(Millions of Dollars)	2018 vs 2017
Fuel and purchased power cost recovery	$	(72	)
Firm wholesale	(12		)
Trading	42
Wholesale transmission revenue	25
Estimated impact of weather	18
Sales Growth	5
Demand revenue	5
Other, net	11
Total increase in electric revenues before impact of the TCJA	$	22
Impact of TCJA (offset as a reduction in income tax expense)	(44		)
Total decrease in electric revenues	$	(22	)

Electric Margin

(Millions of Dollars)	2018 vs 2017
Firm wholesale	$	(12	)
Estimated impact of weather	18
Wholesale transmission revenue, net of costs	12
Sales growth	5
Demand revenue	5
Other, net	8
Total increase in electric margin before impact of the TCJA	$	36
Impact of TCJA (offset as a reduction in income tax expense)	(38		)
Total decrease in electric margin	$	(2	)

Non-Fuel Operating Expense and Other Items

O&M Expenses — O&M expenses decreased $7 million, or 3.5 percent, for 2018 year-to-date. The decrease primarily relates to timing of O&M expenses.

Depreciation and Amortization — Depreciation and amortization increased $5 million, or 3.7 percent for 2018 year-to-date. The increase primarily relates to an increase in capital investments and planned system investments.

Income Taxes — Income tax expense decreased $36 million for the first nine months of 2018 compared with the same period in 2017. The decrease was primarily driven by a lower federal tax rate due to the TCJA and an increase in plant-related regulatory differences related to ARAM (net of deferrals). The ETR was 17.0 percent for the first nine months of 2018, compared with 35.9 percent for the same period in 2017. The lower ETR in 2018 is primarily due to the items referenced above. See Note 4 to the financial statements.

AFUDC, Equity and Debt — AFUDC increased $3 million for the third quarter of 2018 and increased $7 million year-to-date. The increase was primarily due to the Hale wind project and other capital investments.

Interest Charges — Interest charges decreased $4 million, or 6.6 percent, year-to-date. The decrease was related to refinancing at lower interest rates, partially offset by higher debt levels to fund capital investments.

Public Utility Regulation

Except to the extent noted below and in Note 5 in the notes to the financial statements, the circumstances set forth in Public Utility Regulation included in Item 1 of SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2017 and in Public Utility Regulation included in Item 2 of SPS’ Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018, appropriately represent, in all material respects, the current status of public utility regulation and are incorporated herein by reference.

24

Texas State Right of First Refusal (ROFR) Request for Declaratory Order — In February 2017, SPS and SPP filed a joint petition with the PUCT for a declaratory order regarding SPS’ ROFR. SPS contended that Texas law grants an incumbent electric utility, operating in areas outside of Electric Reliability Council of Texas, the ROFR to construct new transmission facilities located in the utility’s service area. SPP stated that Texas law does not provide a clear statement regarding the ROFR for incumbent utilities and therefore SPP was abiding by the portion of its OATT, which requires competitive solicitation to construct and operate new transmission facilities within areas of Texas’ SPP footprint.

In October 2017, the PUCT issued an order finding that SPS does not possess an exclusive right to construct and operate transmission facilities within its service area. In January 2018, SPS and two other parties filed appeals of the PUCT’s order in the Texas State District Court. In September 2018, the District Court affirmed the PUCT’s ROFR order. SPS plans to file an appeal in the fourth quarter of 2018.

Summary of Recent Federal Regulatory Developments

FERC

The FERC has jurisdiction over rates for electric transmission service in interstate commerce and electricity sold at wholesale, asset transactions and mergers, accounting practices and certain other activities of SPS, including enforcement of North American Electric Reliability Corporation mandatory electric reliability standards. State and local agencies have jurisdiction over many of SPS’ activities, including regulation of retail rates and environmental matters. See additional discussion in the summary of recent federal regulatory developments and public utility regulation sections of the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2017 and Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018. In addition to the matters discussed below, see Note 5 to the financial statements for a discussion of other regulatory matters.

Xcel Energy, which includes SPS, attempts to mitigate the risk of regulatory penalties through formal training on

prohibited practices and a compliance function that reviews interaction with the markets under FERC and Commodity Futures Trading Commission jurisdictions. Public campaigns are conducted to raise awareness of the public safety issues of interacting with our electric systems. While programs to comply with regulatory requirements are in place, there is no guarantee the compliance programs or other measures will be sufficient to ensure against violations.

Item 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

SPS maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.  In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the chief executive officer (CEO) and chief financial officer (CFO), allowing timely decisions regarding required disclosure.  As of Sept. 30, 2018, based on an evaluation carried out under the supervision and with the participation of SPS’ management, including the CEO and CFO, of the effectiveness of its disclosure controls and the procedures, the CEO and CFO have concluded that SPS’ disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

No changes in SPS’ internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, SPS’ internal control over financial reporting.

25

Part II — OTHER INFORMATION

Item 1 — LEGAL PROCEEDINGS

SPS is involved in various litigation matters that are being defended and handled in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for such losses that are probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss.

Additional Information

See Note 6 to the financial statements for further discussion of legal claims and environmental proceedings.  See Part I Item 2 and Note 5 to the financial statements for a discussion of proceedings involving utility rates and other regulatory matters.

Item 1A — RISK FACTORS

SPS’ risk factors are documented in Item 1A of Part I of its Annual Report on Form 10-K for the year ended Dec. 31, 2017, which is incorporated herein by reference. There have been no material changes from the risk factors previously disclosed in the Form 10-K.

Item 6 — EXHIBITS

*  Indicates incorporation by reference

3.01*	Amended and Restated Articles of Incorporation dated Sept. 30, 1997 (Exhibit 3.01 to Form 10-Q for the quarter ended Sept. 30, 2017 (file no. 001-03789)).
3.02*	By-Laws of SPS as Amended and Restated on Sept. 26, 2013 (Exhibit 3.02 to Form 10-Q/A for the quarter ended Sept. 30, 2013 (file no. 001-03789)).
31.01	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.
31.02	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.
32.01	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.01	Statement pursuant to Private Securities Litigation Reform Act of 1995.
101	The following materials from SPS’ Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2018 are formatted in XBRL (eXtensible Business Reporting Language):  (i) the Statements of Income, (ii) the Statements of Comprehensive Income (iii) the Statements of Cash Flows, (iv) the Balance Sheets, (v) Notes to Financial Statements, and (vi) document and entity information.

26

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Southwestern Public Service Company
Oct. 26, 2018	By:	/s/ JEFFREY S. SAVAGE
		Jeffrey S. Savage
		Senior Vice President, Controller
		(Principal Accounting Officer)
		/s/ ROBERT C. FRENZEL
		Robert C. Frenzel
		Executive Vice President, Chief Financial Officer and Director
		(Principal Financial Officer)

27

EX-31.01

Exhibit 31.01

CERTIFICATION

I, Ben Fowke, certify that:

1. I have reviewed this report on Form 10-Q of Southwestern Public Service Company;

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 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.

Date: Oct. 26, 2018

/s/ BEN FOWKE

Ben Fowke

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)

1

EX-31.02

Exhibit 31.02

CERTIFICATION

I, Robert C. Frenzel, certify that:

1. I have reviewed this report on Form 10-Q of Southwestern Public Service Company;

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 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

Date: Oct. 26, 2018

/s/ ROBERT C. FRENZEL

Robert C. Frenzel

Executive Vice President, Chief Financial Officer and Director

(Principal Financial Officer)

2

EX-32.01

Exhibit 32.01

OFFICER CERTIFICATION

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Southwestern Public Service Company (SPS) on Form 10-Q for the quarter ended Sept. 30, 2018, as filed with the SEC on the date hereof (Form 10-Q), each of the undersigned officers of SPS certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(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 SPS as of the dates and for the periods expressed in the Form 10-Q.

Date: Oct. 26, 2018

/s/ BEN FOWKE

Ben Fowke

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)

/s/ ROBERT C. FRENZEL

Robert C. Frenzel

Executive Vice President, Chief Financial Officer and Director

(Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to SPS and will be retained by SPS and furnished to the SEC or its staff upon request.

1

EX-99.01

Exhibit 99.01

SPS Cautionary Factors

The Private Securities Litigation Reform Act provides a “safe harbor” for forward-looking statements to encourage such disclosures without the threat of litigation, providing those statements are identified as forward-looking and are accompanied by meaningful, cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement.  Forward-looking statements are made in written documents and oral presentations of SPS, Xcel Energy Inc. or any of its other subsidiaries.  These statements are based on management’s beliefs as well as assumptions and information currently available to management.  Such forward-looking statements are intended to be identified in this document by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should” and similar expressions.  In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause SPS’ actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following:

• 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 SPS 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 FERC and similar entities with regulatory oversight;

• Availability of cost or capital such as changes in: interest rates; market perceptions of the utility industry, SPS, Xcel Energy Inc. or any of its other subsidiaries; or security ratings;

• Factors affecting utility 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 SPS, Xcel Energy Inc. and its other subsidiaries;

• State and federal 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 market; 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 implementation of new technologies; and

• Other business or investment considerations that may be disclosed from time to time in SEC filings, including “Risk Factors” in Item 1A of SPS’ Form 10-K for the year ended Dec. 31, 2017, or in other publicly disseminated written documents.

 SPS undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  The foregoing review of factors should not be construed as exhaustive.

1

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 26, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	SOUTHWESTERN PUBLIC SERVICE CO
Entity Central Index Key	0000092521
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Entity Emerging Growth Company	false
Entity Small Business	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		100

XML

STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues [Abstract]
Operating revenues	$ 540,063	$ 551,623	$ 1,468,633	$ 1,491,491
Operating expenses
Electric fuel and purchased power	284,006	294,400	795,592	816,027
Operating and maintenance expenses	71,444	65,540	203,660	211,101
Demand side management expenses	4,590	4,236	13,527	11,802
Depreciation and amortization	52,204	47,548	150,199	144,781
Taxes (other than income taxes)	16,814	16,743	50,033	50,222
Total operating expenses	429,058	428,467	1,213,011	1,233,933
Operating income	111,005	123,156	255,622	257,558
Other expense, net	(1,026)	(464)	(2,512)	(1,795)
Allowance for funds used during construction — equity	5,019	2,453	11,637	6,457
Interest charges and financing costs
Interest charges — includes other financing costs of $710, $625, $2,106, and $1,781, respectively	21,006	21,444	61,782	66,128
Allowance for funds used during construction — debt	(2,223)	(1,349)	(5,526)	(3,816)
Total interest charges and financing costs	18,783	20,095	56,256	62,312
Income before income taxes	96,215	105,050	208,491	199,908
Income taxes	14,674	37,269	35,400	71,710
Net income	$ 81,541	$ 67,781	$ 173,091	$ 128,198

XML

STATEMENTS OF INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Interest charges and financing costs
Other financing costs	$ 710	$ 625	$ 2,106	$ 1,781

XML

STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Comprehensive income:
Net income	$ 81,541	$ 67,781	$ 173,091	$ 128,198
Pension and retiree medical benefits:
Amortization of losses included in net periodic benefit cost, net of tax of $5, $9, $15 and $27, respectively	18	16	55	46
Derivative instruments:
Reclassification of losses to net income, net of tax of $3, $6, $10 and $18, respectively	13	10	37	29
Other comprehensive income	31	26	92	75
Comprehensive income	$ 81,572	$ 67,807	$ 173,183	$ 128,273

XML

STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Derivative instruments:
Reclassification of losses to net income, tax	$ 3	$ 6	$ 10	$ 18
Other Comprehensive (Income) Loss, Defined Benefit Plan, Prior Service Cost (Credit), Reclassification Adjustment from AOCI, Tax	$ 5	$ 9	$ 15	$ 27

XML

STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Operating activities
Net income	$ 173,091	$ 128,198
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	150,403	144,664
Demand side management program amortization	1,255	1,255
Deferred income taxes	14,395	101,388
Amortization of investment tax credits	(39)	(99)
Allowance for equity funds used during construction	(11,637)	(6,457)
Net derivative losses	47	47
Other, net	(5)	9
Changes in operating assets and liabilities:
Accounts receivable	(25,096)	(25,134)
Accrued unbilled revenues	9,648	(13,682)
Inventories	7,032	(2,845)
Prepayments and other	641	19,361
Accounts payable	(935)	7,817
Net regulatory assets and liabilities	58,832	24,856
Other current liabilities	12,972	19,748
Pension and other employee benefit obligations	(7,907)	(21,638)
Change in other noncurrent assets	3,546	(1,697)
Change in other noncurrent liabilities	(235)	(18,690)
Net cash provided by operating activities	386,008	357,101
Investing activities
Utility capital/construction expenditures	(621,641)	(400,957)
Allowance for equity funds used during construction	11,637	6,457
Investments in utility money pool arrangement	46,000	0
Repayments from utility money pool arrangement	111,000	0
Payments for (Proceeds from) Other Investing Activities	0	(493)
Net cash used in investing activities	(545,004)	(394,993)
Financing activities
Proceeds from short-term borrowings, net	35,000	(50,000)
Proceeds from issuance of long-term debt, net	0	442,651
Borrowings under utility money pool arrangement	446,000	323,000
Repayments under utility money pool arrangement	(423,000)	(323,000)
Capital contributions from parent	181,484	45,000
Repayment of long-term debt	0	(271,613)
Dividends paid to parent	(90,705)	(82,599)
Other, net	(31)	0
Net cash provided by financing activities	148,748	83,439
Net change in cash and cash equivalents	(10,248)	45,547
Cash and cash equivalents at beginning of period	10,871	844
Cash and cash equivalents at end of period	623	46,391
Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	(57,924)	(58,581)
Cash (paid) received for income taxes, net	(15,251)	37,899
Supplemental disclosure of non-cash investing transactions:
Property, plant and equipment additions in accounts payable	$ 54,601	$ 40,861

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BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 623	$ 10,871
Accounts receivable, net	101,870	79,581
Accounts receivable from affiliates	4,085	1,297
Investments in utility money pool arrangement	0	65,000
Accrued unbilled revenues	120,156	129,804
Inventories	33,401	40,433
Regulatory assets	23,387	31,538
Derivative instruments	28,436	15,882
Prepaid taxes	15,821	15,025
Prepayments and other	10,137	10,341
Total current assets	337,916	399,772
Property, plant and equipment, net	5,539,200	5,095,609
Other assets
Regulatory assets	366,885	362,943
Derivative instruments	16,584	18,954
Other	4,602	11,266
Total other assets	388,071	393,163
Total assets	6,265,187	5,888,544
Current liabilities
Short-term debt	35,000	0
Borrowings Payable Under Utility Money Pool Arrangement	23,000	0
Accounts payable	191,874	211,756
Accounts payable to affiliates	17,308	22,577
Regulatory liabilities	112,585	68,835
Taxes accrued	53,453	35,243
Accrued interest	20,396	23,275
Dividends payable	40,071	26,753
Derivative instruments	3,565	3,565
Other	25,548	29,641
Total current liabilities	522,800	421,645
Deferred credits and other liabilities
Deferred income taxes	601,294	574,906
Regulatory liabilities	795,424	784,564
Asset retirement obligations	29,664	28,524
Derivative instruments	17,275	19,949
Pension and employee benefit obligations	82,369	90,266
Other	4,816	8,386
Total deferred credits and other liabilities	1,530,842	1,506,595
Commitments and contingencies
Capitalization
Long-term debt	1,830,796	1,829,941
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at Sept. 30, 2018 and Dec. 31, 2017, respectively	0	0
Additional paid in capital	1,771,469	1,590,242
Retained earnings	610,655	541,588
Accumulated other comprehensive loss	(1,375)	(1,467)
Total common stockholder’s equity	2,380,749	2,130,363
Total liabilities and equity	$ 6,265,187	$ 5,888,544

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BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Capitalization, Long-term Debt and Equity [Abstract]
Common stock, shares authorized (in shares)	200	200
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, shares outstanding (in shares)	100	100

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Management's Opinion

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Management's Opinion

In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America (GAAP), the financial position of SPS as of Sept. 30, 2018 and Dec. 31, 2017; the results of its operations, including the components of net income and comprehensive income, for the three and nine months ended Sept. 30, 2018 and 2017; and its cash flows for the nine months endedSept. 30, 2018 and 2017. All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after Sept. 30, 2018 up to the date of issuance of these financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2017 balance sheet information has been derived from the audited 2017 financial statements included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2017. These notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the financial statements and notes thereto, included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2017, filed with the SEC on Feb. 23, 2018. Due to the seasonality of SPS’ electric sales, interim results are not necessarily an appropriate base from which to project annual results.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The significant accounting policies set forth in Note 1 to the financial statements in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2017, appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.

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Accounting Pronouncements

9 Months Ended

Sep. 30, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Accounting Pronouncements

Accounting Pronouncements

Recently Issued

Leases — In February 2016, the Financial Accounting Standards Board (FASB) issued Leases, Topic 842 (Accounting Standards Update (ASU) No. 2016-02), which for lessees requires balance sheet recognition of right-of-use assets and lease liabilities for most leases. This guidance will be effective for interim and annual reporting periods beginning after Dec. 15, 2018. Adoption will occur on Jan. 1, 2019 utilizing the practical expedients provided by the standard and included in Targeted Improvements, Topic 842 (ASU No. 2018-11). On Jan. 1, 2019, agreements historically disclosed as operating leases for the use of real estate, equipment and certain fossil-fueled generating facilities operated under purchased power agreements (PPAs) are expected to be recognized on the consolidated balance sheet. Other than first-time recognition of these types of operating leases on the balance sheet, the implementation is not expected to have a significant impact on SPS’ financial statements.

Recently Adopted

Revenue Recognition— In May 2014, the FASB issued Revenue from Contracts with Customers, Topic 606 (ASU No. 2014-09), which provides a new framework for the recognition of revenue. SPS implemented the guidance on a modified retrospective basis on Jan. 1, 2018. Results for reporting periods beginning after Dec. 31, 2017 are presented in accordance with Topic 606, while prior period results have not been adjusted and continue to be reported in accordance with prior accounting guidance. Other than increased disclosures regarding revenues related to contracts with customers, the implementation did not have a material impact on SPS’ financial statements. For related disclosures, see Note 12 to the financial statements.

Classification and Measurement of Financial Instruments — In January 2016, the FASB issued Recognition and Measurement of Financial Assets and Financial Liabilities, Subtopic 825-10 (ASU No. 2016-01), which eliminated the available-for-sale classification for marketable equity securities and also replaced the cost method of accounting for non-marketable equity securities with a model for recognizing impairments and observable price changes. Under the new standard, other than when the consolidation or equity method of accounting is utilized, changes in the fair value of equity securities are recognized in earnings. SPS implemented the guidance on Jan. 1, 2018 and the implementation did not have a material impact on its financial statements.

Presentation of Net Periodic Benefit Cost —In March 2017, the FASB issued Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, Topic 715 (ASU No. 2017-07), which establishes that only the service cost element of pension cost may be presented as a component of operating income in the income statement. Also under the guidance, only the service cost component of pension cost is eligible for capitalization. As a result of the application of accounting principles for rate regulated entities, a similar amount of pension cost, including non-service components, will be recognized consistent with the historical ratemaking treatment, and the impacts of adoption will be limited to changes in classification of non-service costs in the statement of income. SPS implemented the new guidance on Jan. 1, 2018, and as a result, $0.7 million and $2.2 million of pension costs were retrospectively reclassified from operating and maintenance expenses to other income, net on the income statement for the three and nine months ended Sept. 30, 2017, respectively. Under a practical expedient permitted by the standard, SPS used benefit cost amounts disclosed for prior periods as the basis for retrospective application.

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Selected Balance Sheet Data

9 Months Ended

Sep. 30, 2018

Balance Sheet Related Disclosures [Abstract]

Selected Balance Sheet Data

Selected Balance Sheet Data

(Thousands of Dollars)	Sept. 30, 2018			Dec. 31, 2017
Accounts receivable, net
Accounts receivable	$	107,709		$	85,929
Less allowance for bad debts	(5,839		)	(6,348		)
	$	101,870		$	79,581

(Thousands of Dollars)	Sept. 30, 2018		Dec. 31, 2017
Inventories
Materials and supplies	$	25,380	$	26,218
Fuel	8,021		14,215
	$	33,401	$	40,433

(Thousands of Dollars)	Sept. 30, 2018			Dec. 31, 2017
Property, plant and equipment, net
Electric plant	$	7,115,175		$	6,765,371
Construction work in progress	533,538			351,875
Total property, plant and equipment	7,648,713			7,117,246
Less accumulated depreciation	(2,109,513		)	(2,021,637		)
	$	5,539,200		$	5,095,609

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Income Taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Except to the extent noted below, Note 6 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2017 appropriately represents, in all material respects, the current status of other income tax matters, and are incorporated herein by reference.

Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense. The following reconciles such differences:

	Nine Months Ended Sept. 30,
	2018		2017
Federal statutory rate	21.0	%	35.0	%
State tax (net of federal tax effect)	2.3		2.3
Increases (decreases) in tax from:
Regulatory differences - ARAM (a)	(4.0	)	—
Regulatory differences - ARAM deferral (b)	1.7		—
Regulatory differences - reversal of prior quarters' ARAM deferral (b)	(0.2	)	—
Regulatory differences - other utility plant items	(1.3	)	(0.8	)
Tax credits (net of federal income tax expense)	(0.7	)	(0.7	)
Other (net)	(1.8	)	0.1
Effective income tax rate	17.0	%	35.9	%

^(a)   The average rate assumption method (ARAM); a method to flow back excess deferred taxes to customers.

^(b) ARAM has been deferred when regulatory treatment has not been established. As SPS received direction from its regulatory commissions regarding the return of excess deferred taxes to customers, the ARAM deferral was reversed. This resulted in a reduction to tax expense with a corresponding reduction to revenue.

Federal Audits — SPS is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. The statute of limitations applicable to Xcel Energy’s federal income tax returns expire as follows:

Tax Year(s)	Expiration
2009 - 2014	October 2019
2015	September 2019
2016	September 2020

In 2012, the Internal Revenue Service (IRS) commenced an examination of tax years 2010 and 2011, including the 2009 carryback claim. In 2017 Xcel Energy and the Office of Appeals (Appeals) reached an agreement and the benefit related to the agreed upon portions was recognized. SPS did not accrue any income tax benefit related to this adjustment. In the second quarter of 2018, the Joint Committee on Taxation completed its review and took no exception to the agreement. As a result, the remaining unrecognized tax benefit was released and recorded as a payable to the IRS.

In the third quarter of 2015, the IRS commenced an examination of tax years 2012 and 2013. In the third quarter of 2017, the IRS concluded the audit of tax years 2012 and 2013 and proposed an adjustment that would impact Xcel Energy’s net operating loss (NOL) and effective tax rate (ETR). Xcel Energy filed a protest with the IRS. As of Sept. 30, 2018 the case has been forwarded to Appeals and Xcel Energy has recognized its best estimate of income tax expense that will result from a final resolution of this issue; however, the outcome and timing of a resolution is unknown.

State Audits — SPS is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of Sept. 30, 2018, SPS’ earliest open tax year that is subject to examination by state taxing authorities under applicable statutes of limitations is 2009. There are currently no state income tax audits in progress.

Unrecognized Benefits — The unrecognized tax benefit balance includes permanent tax positions, which if recognized would affect the annual ETR. In addition, the unrecognized tax benefit balance includes temporary tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the ETR but would accelerate the payment of cash to the taxing authority to an earlier period.

A reconciliation of the amount of unrecognized tax benefit is as follows:

(Millions of Dollars)	Sept. 30, 2018		Dec. 31, 2017
Unrecognized tax benefit — Permanent tax positions	$	2.8	$	2.3
Unrecognized tax benefit — Temporary tax positions	1.6		2.0
Total unrecognized tax benefit	$	4.4	$	4.3

The unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryforwards. The amounts of tax benefits associated with NOL and tax credit carryforwards are as follows:

(Millions of Dollars)	Sept. 30, 2018			Dec. 31, 2017
NOL and tax credit carryforwards	$	(6.9	)	$	(5.9	)

It is reasonably possible that SPS’ amount of unrecognized tax benefits could significantly change in the next 12 months as the IRS Appeals progresses and audit resumes and state audits resume. As the IRS Appeals progresses and the IRS audit resumes, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $3 million.

Payables for interest related to unrecognized tax benefits were not material and no amounts were accrued for penalties related to unrecognized tax benefits as of Sept. 30, 2018 or Dec. 31, 2017.

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Rate Matters

9 Months Ended

Sep. 30, 2018

Public Utilities, General Disclosures [Abstract]

Rate Matters

Rate Matters

Except to the extent noted below, the circumstances set forth in Note 10 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2017 and in Note 5 to the financial statements included in to SPS’ Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018, appropriately represent, in all material respects, the current status of other rate matters, and are incorporated herein by reference.

Tax Reform — Regulatory Proceedings

The specific impacts of the TCJA on customer rates are subject to regulatory approval. The following details the status of regulatory decisions in each state where Xcel Energy, which includes Texas and New Mexico, operates.

Texas — In June 2018, SPS, the Public Utility Commission of Texas (PUCT) Staff and various intervenors reached a settlement in the Texas electric rate case which included the impacts of the TCJA. The settlement reflects no change in customer rates or refunds and SPS’ actual capital structure, which SPS has informed the parties it intends to be up to a 57 percent equity ratio to offset the negative impacts on its credit metrics and potentially its credit ratings. A PUCT decision is expected in the fourth quarter of 2018.

New Mexico— In September 2018, the New Mexico Public Regulation Commission (NMPRC) issued its final order in SPS’ 2017 electric rate case, which included a refund of the 2018 impact of the TCJA.

Pending Regulatory Proceedings — PUCT

Texas 2017 Electric Rate Case — In 2017, SPS filed a $54 million, or 5.8 percent, retail electric, non-fuel base rate increase case in Texas with each of its Texas municipalities and the PUCT. The request was based on a historic test year (HTY) ended June 30, 2017, a requested return on equity (ROE) of 10.25 percent, an electric rate base of approximately $1.9 billion and an equity ratio of 53.97 percent.

In May 2018, SPS filed rebuttal testimony and revised its request to an overall increase in the annual base rate revenue of approximately $32 million, or 5.9 percent, net of the TCJA (after adjusting for a requested 58 percent equity ratio) and other adjustments. This request would be equivalent to approximately $17 million after adjusting for the Transmission Cost Recovery Factor (TCRF) rider.

In June 2018, SPS, the PUCT Staff and various intervenors reached a settlement, which results in no overall change to SPS’ revenues after adjusting for the impact of the TCJA and the lower costs of long-term debt.

The following are key terms:

• The ability to use an equity ratio that reflects SPS' actual capital structure, up to 57 percent;

• A 9.5 percent ROE for the calculation of allowance for funds used during construction (AFUDC);

• TCRF rider will remain in effect;

• SPS will accelerate the depreciable lives of Tolk Units 1 and 2 from 2042 and 2045, respectively, to 2037; and

• SPS agrees that it will file its next base rate case no later than Dec. 31, 2019.

A PUCT decision on the settlement is expected in the fourth quarter of 2018.

Pending Regulatory Proceeding — New Mexico Public Regulation Commission (NMPRC)

New Mexico 2017 Electric Rate Case — In October 2017, SPS filed an electric rate case with the NMPRC seeking an increase in base rates of approximately $43 million. The request was based on a HTY ended June 30, 2017, a ROE of 10.25 percent, an equity ratio of 53.97 percent, a 35 percent federal income tax rate and a rate base of approximately $885 million, including rate base additions through Nov. 30, 2017.

In May 2018, SPS reduced its request to $27 million, net of the TCJA (approximately $11 million, net of the requested higher equity ratio) and other adjustments, based on a requested ROE of 10.25 percent and an equity ratio of 58.0 percent.

In June 2018, the New Mexico Hearing Examiner issued a recommended decision proposing an increase of $12 million based on a ROE of 9.4 percent and an equity ratio of 53.97 percent. She also denied SPS' requests to shorten depreciation lives related to Tolk Units 1 and 2 and Cunningham Unit 1. The Hearing Examiner rejected intervenor proposals to refund the impacts of the TCJA back to Jan. 1, 2018.

On Sept. 5, 2018, the NMPRC issued its final order resulting in a revenue increase of approximately $8 million, or 2.1 percent, effective Sept. 27, 2018, based on a ROE of 9.1 percent and a 51 percent equity ratio. The NMPRC also ordered a refund of $10 million associated with the TCJA impacts for the retroactive period of Jan. 1, 2018 through Sept. 27, 2018. SPS recorded a regulatory liability of $10 million for the customer refund in the third quarter of 2018.

On Sept. 7, 2018, SPS filed an appeal with the NMSC on the grounds that the NMPRC’s findings are contrary to the factual record and do not result in just and reasonable rates as required by law.  In addition, SPS filed a motion for stay with the NMSC to delay the implementation of the retroactive TCJA refund until the NMSC issues its decision on SPS' appeal of the rate case order.  SPS considers the refund illegal primarily because it violates the prohibition on retroactive ratemaking and results in rates that are not just and reasonable.  On Sept. 26, 2018, the NMSC granted a temporary stay to delay the implementation of the retroactive refund until further order of the Court.

Appeal of the New Mexico 2016 Electric Rate Case Dismissal — In November 2016, SPS filed an electric rate case with the NMPRC seeking an increase in base rates of approximately $41 million, representing a total revenue increase of approximately 10.9 percent. The rate filing was based on a requested ROE of 10.1 percent, an equity ratio of 53.97 percent, an electric rate base of approximately $832 million and a future test year ended June 30, 2018. In 2017, the NMPRC dismissed SPS’ rate case. SPS filed a notice of appeal in the NMSC. A decision is not expected until the second half of 2019.

Pending Regulatory Proceeding — Federal Energy Regulatory Commission (FERC)

Southwest Power Pool, Inc. (SPP) Open Access Transmission Tariff (OATT) Upgrade Costs — Under the SPP OATT, costs of participant funded, or “sponsored,” transmission upgrades may be recovered from other SPP customers whose transmission service depends on capacity enabled by the upgrade.  The SPP OATT has allowed SPP to charge for these upgrades since 2008, but SPP had not been charging its customers for these upgrades.  In 2016, the FERC granted SPP’s request to recover the charges not billed since 2008.  SPP subsequently billed SPS approximately $13 million for these charges. SPP is also billing SPS ongoing charges of approximately $0.5 million per month. In July 2018, SPS’ appeal to the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) over the FERC rulings granting SPP the right to recover these charges was remanded to the FERC. As of September 2018, SPS’ recovery of these charges (from 2008 through 2016) is being reviewed by the FERC, which is expected to rule in the first quarter of 2019.

In October 2017, SPS filed a complaint against SPP regarding the amounts billed asserting that SPP has assessed upgrade charges to SPS in violation of the SPP OATT. In March 2018, the FERC denied SPS’ complaint. SPS sought rehearing in April 2018, and the FERC granted a rehearing for purposes of further consideration in May 2018. The timing of FERC action on the SPS rehearing is uncertain. If SPS’ complaint results in additional charges or refunds, SPS will seek to recover or refund the differential in future rate proceedings.

SPP Filing to Assign GridLiance Facilities to SPS Rate Zone — In August 2018, SPP filed a request with the FERC to amend its OATT to include the costs of the GridLiance High Plains, LLC. facilities in the SPS rate zone. The FERC initially determined the facilities did not qualify as transmission facilities under the SPP OATT. SPP’s proposed tariff changes could result in an increase in the annual transmission revenue requirement (ATRR) of $9.5 million per year, with $6 million allocated to SPS’ retail customers. The remaining $3.5 million would be paid by other wholesale loads in the SPS rate zone. In September 2018, SPS protested the proposed SPP tariff charges, and asked the FERC to reject the SPP filing. The FERC is expected to take initial action in the fourth quarter of 2018.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Except to the extent noted below and in Note 5 above, the circumstances set forth in Notes 10, 11 and 12 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2017 and in Notes 5 and 6 to the financial statements included in SPS’ Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018, appropriately represent, in all material respects, the current status of commitments and contingent liabilities and are incorporated herein by reference. The following include commitments, contingencies and unresolved contingencies that are material to SPS’ financial position.

PPAs

SPS purchases power from independent power producing entities that own natural gas fueled power plants for which SPS is required to reimburse natural gas fuel costs, or to participate in tolling arrangements under which SPS procures the natural gas required to produce the energy that it purchases. These specific PPAs create a variable interest in the associated independent power producing entity.

SPS had approximately 967 Megawatts (MW) of capacity under long-term PPAs as of Sept. 30, 2018 and 897 MW as of Dec. 31, 2017, with entities that have been determined to be variable interest entities. SPS has concluded that these entities are not required to be consolidated in its financial statements because it does not have the power to direct the activities that most significantly impact the entities’ economic performance. These agreements have various expiration dates through 2041.

Environmental Contingencies

Manufactured Gas Plant (MGP), Landfill or Disposal Sites— SPS is currently involved in investigating and/or remediating an MGP, landfill or other disposal site. SPS has identified one site where investigation and/or remediation activities are currently underway. Other parties may have responsibility for some portion of the investigation and/or remediation activities. SPS anticipates that the investigation or remediation activities will continue through at least 2019. SPS accrued $0.1 million for the site as of Sept. 30, 2018 and Dec. 31, 2017, respectively. There may be insurance recovery and/or recovery from other responsible parties that will offset any costs incurred.

Legal Contingencies

SPS is involved in various litigation matters that are being defended and handled in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for such losses that are probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings would have a material effect on SPS’ financial statements. Unless otherwise required by GAAP, legal fees are expensed as incurred.

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Borrowings and Other Financing Instruments

9 Months Ended

Sep. 30, 2018

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 Sept. 30, 2018			Year Ended Dec. 31, 2017
Borrowing limit	$	100		$	100
Amount outstanding at period end	23			—
Average amount outstanding	76			13
Maximum amount outstanding	100			100
Weighted average interest rate, computed on a daily basis	1.97		%	1.12		%
Weighted average interest rate at period end	1.99			N/A

Commercial Paper — SPS meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility and the money pool. Commercial paper outstanding for SPS was as follows:

(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2018			Year Ended Dec. 31, 2017
Borrowing limit	$	400		$	400
Amount outstanding at period end	35			—
Average amount outstanding	63			69
Maximum amount outstanding	144			176
Weighted average interest rate, computed on a daily basis	2.25		%	1.13		%
Weighted average interest rate at period end	2.35			N/A

Letters of Credit — SPS uses letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. As of Sept. 30, 2018 and Dec. 31, 2017, there were $2 million and $3 million, respectively, of letters of credit outstanding 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.

As of Sept. 30, 2018, SPS had the following committed credit facility available (in millions of dollars):

Credit Facility (a)		Drawn(b)		Available
$	400	$	37	$	363

^(a)  This credit facility expires 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 as of Sept. 30, 2018 and Dec. 31, 2017.

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Fair Value of Financial Assets and Liabilities

9 Months Ended

Sep. 30, 2018

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 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 value.

Interest rate derivatives— The fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts.

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 classification. 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.

Electric commodity derivatives held by SPS include transmission congestion instruments, generally referred to as financial transmission rights (FTRs), purchased from SPP. FTRs purchased from a regional transmission organization (RTO) are financial instruments that entitle or obligate the holder to monthly revenues or charges based on transmission congestion across a given transmission path. The value of an FTR is derived from, and designed to offset, the cost of transmission congestion. In addition to overall transmission load, congestion is also influenced by the operating schedules of power plants and the consumption of electricity pertinent to a given transmission path. Unplanned plant outages, scheduled plant maintenance, changes in the relative costs of fuels used in generation, weather and overall changes in demand for electricity can each impact the operating schedules of the power plants on the transmission grid and the value of an FTR. The valuation process for FTRs utilizes the cleared prices for each FTR for the most recent auction.

If forecasted costs of electric transmission congestion increase or decrease for a given FTR path, the value of that particular FTR instrument will likewise increase or decrease. Given the limited transparency in the auction process, fair value measurements for FTRs have been assigned a Level 3. Non-trading monthly FTR settlements are expected to be recovered through fuel and purchased energy cost recovery mechanisms, and therefore changes in the fair value of the yet to be settled portions of FTRs are deferred as a regulatory asset or liability. Given this regulatory treatment and the limited magnitude of FTRs, the limited transparency associated with the valuation of FTRs is insignificant to the financial statements of SPS.

Derivative Instruments Fair Value Measurements

SPS enters into derivative instruments, including forward contracts, for trading purposes and to manage risk in connection with changes in interest rates and electric utility commodity prices.

Interest Rate Derivatives — SPS may enter 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.

As of Sept. 30, 2018, accumulated other comprehensive losses related to interest rate derivatives included immaterial net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings, including forecasted amounts for unsettled hedges, as applicable.

Wholesale and Commodity Trading Risk — SPS conducts various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy and energy-related instruments, including derivatives. SPS’ 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 — SPS enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric utility operations. This could include the purchase or sale of energy or energy-related products and FTRs.

The following table details the gross notional amounts of commodity FTRs as of Sept. 30, 2018 and Dec. 31, 2017:

(Amounts in Thousands) (a)	Sept. 30, 2018	Dec. 31, 2017
Megawatt hours of electricity	8,594	4,251

^(a)  Amounts are not reflective of net positions in the underlying commodities.

Impact of Derivative Activities on Income and Accumulated Other Comprehensive Loss — Pre-tax losses related to interest rate derivatives reclassified from accumulated other comprehensive loss into earnings were immaterial for each of the three and nine months ended Sept. 30, 2018 and 2017.

During the three and nine months ended Sept. 30, 2018, changes in the fair value of FTRs resulted in pre-tax net losses of $3.3 million and pre-tax net gains of $10.1 million, respectively, and were recognized as regulatory assets and liabilities. For the three and nine months ended Sept. 30, 2017, changes in the fair value of FTRs resulted in pre-tax net losses of $2.5 million and $0.2 million, respectively, and were recognized as regulatory assets and liabilities. The classification as a regulatory asset or liability is based on expected recovery of FTR settlements through fuel and purchased energy cost recovery mechanisms.

There were immaterial FTR settlement losses and $3.4 million of FTR settlement gains recognized for the three and nine months ended Sept. 30, 2018, respectively, and were recorded to electric fuel and purchased power. For the three and nine months ended Sept. 30, 2017, FTR settlement losses of $2.2 million and gains of $0.1 million, respectively, were recognized and recorded to electric fuel and purchased power. These derivative settlement gains and losses are shared with electric customers through fuel and purchased energy cost-recovery mechanisms, and reclassified out of income as regulatory assets or liabilities, as appropriate.

SPS had no derivative instruments designated as fair value hedges during the three and nine months ended Sept. 30, 2018 and 2017. Therefore, no gains or losses from fair value hedges or related hedged transactions were recognized for these periods.

Consideration of Credit Risk and Concentrations — SPS 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 SPS’ own credit risk when determining the fair value of derivative liabilities, the impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented in the balance sheets.

SPS 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.

SPS’ most significant concentrations of credit risk with particular entities or industries are contracts with counterparties to its wholesale, trading and non-trading commodity activities. As of Sept. 30, 2018, two of SPS’ most significant counterparties, comprising $16.9 million or 34 percent of this credit exposure, had investment grade credit ratings from Standard & Poor’s, Moody’s or Fitch Ratings. Five of the most significant counterparties, comprising $10.7 million or 22 percent of this credit exposure, were not rated by these external agencies, but based on SPS’s internal analysis, had credit quality consistent with investment grade. All seven of these significant counterparties are municipal or cooperative electric entities or other utilities.

Recurring Fair Value Measurements — The following table presents for each of the fair value hierarchy levels, SPS’ derivative assets and liabilities measured at fair value on a recurring basis as of Sept. 30, 2018:

	Sept. 30, 2018
	Fair Value						Fair Value Total		Counterparty Netting (b)
(Thousands of Dollars)	Level 1		Level 2		Level 3							Total
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	25,666	$	25,666	$	(389	)	$	25,277
Total current derivative assets	$	—	$	—	$	25,666	$	25,666	$	(389	)	25,277
PPAs (a)												3,159
Current derivative instruments												$	28,436
Noncurrent derivative assets
PPAs (a)												$	16,584
Noncurrent derivative instruments												$	16,584
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	389	$	389	$	(389	)	$	—
Total current derivative liabilities	$	—	$	—	$	389	$	389	$	(389	)	—
PPAs (a)												3,565
Current derivative instruments												$	3,565
Noncurrent derivative liabilities
PPAs (a)												$	17,275
Noncurrent derivative instruments												$	17,275

^(a) During 2006, SPS 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 is being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b)  SPS nets derivative instruments and related collateral in its 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, 2018. At Sept. 30, 2018, derivative assets and liabilities include no obligations to return cash collateral or 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.

The following table presents for each of the fair value hierarchy levels, SPS’ derivative assets and liabilities measured at fair value on a recurring basis as of Dec. 31, 2017:

	Dec. 31, 2017
	Fair Value						Fair Value Total		Counterparty Netting (b)
(Thousands of Dollars)	Level 1		Level 2		Level 3							Total
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	14,717	$	14,717	$	(1,994	)	$	12,723
Total current derivative assets	$	—	$	—	$	14,717	$	14,717	$	(1,994	)	12,723
PPAs (a)												3,159
Current derivative instruments												$	15,882
Noncurrent derivative assets
PPAs (a)												$	18,954
Noncurrent derivative instruments												$	18,954
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	1,994	$	1,994	$	(1,994	)	$	—
Total current derivative liabilities	$	—	$	—	$	1,994	$	1,994	$	(1,994	)	—
PPAs (a)												3,565
Current derivative instruments												$	3,565
Noncurrent derivative liabilities
PPAs (a)												$	19,949
Noncurrent derivative instruments												$	19,949

^(a)  During 2006, SPS 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 is being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b)  SPS nets derivative instruments and related collateral in its 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, 2017. At Dec. 31, 2017, derivative assets and liabilities include no obligations to return cash collateral or 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.

The following table presents the changes in Level 3 commodity derivatives for the three and nine months ended Sept. 30, 2018 and 2017:

	Three Months Ended Sept. 30,
(Thousands of Dollars)	2018			2017
Balance at July 1	$	35,389		$	28,665
Purchases	3,169			43
Settlements	(10,068		)	(9,939		)
Net transactions recorded during the period:
Net (losses) gains recognized as regulatory assets and liabilities	(3,213		)	1,669
Balance at Sept. 30	$	25,277		$	20,438

	Nine Months Ended Sept. 30,
(Thousands of Dollars)	2018			2017
Balance at Jan. 1	$	12,723		$	1,955
Purchases	22,517			39,376
Settlements	(35,305		)	(40,437		)
Net transactions recorded during the period:
Net gains recognized as regulatory assets and liabilities	25,342			19,544
Balance at Sept. 30	$	25,277		$	20,438

SPS 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, 2018 and 2017.

Fair Value of Long-Term Debt

As of Sept. 30, 2018 and Dec. 31, 2017, other financial instruments for which the carrying amount did not equal fair value were as follows:

	Sept. 30, 2018				Dec. 31, 2017
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	1,830,796	$	1,832,158	$	1,829,941	$	2,001,992

The fair value of SPS’ 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, 2018 and Dec. 31, 2017, and given the observability of the inputs to these estimates, the fair values presented for long-term debt have been assigned a Level 2.

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Other Income, Net

9 Months Ended

Sep. 30, 2018

Other Income and Expenses [Abstract]

Other Income, Net

Other Expense, Net

Other expense, net consisted of the following:

	Three Months Ended Sept. 30						Nine Months Ended Sept. 30,
(Thousands of Dollars)	2018			2017			2018			2017
Interest income	$	473		$	296		$	771		$	488
Other nonoperating income	—			1			2			—
Other nonoperating expense	(1		)	—			—			—
Insurance policy expense	(11		)	(12		)	(35		)	(36		)
Benefits non-service cost	(1,487		)	(749		)	(3,250		)	(2,247		)
Other expense, net	$	(1,026	)	$	(464	)	$	(2,512	)	$	(1,795	)

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Benefit Plans and Other Postretirement Benefits

9 Months Ended

Sep. 30, 2018

Retirement Benefits [Abstract]

Benefit Plans and Other Postretirement Benefits

Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost (Credit)

	Three Months Ended Sept. 30
	2018			2017			2018			2017
(Thousands of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	2,429		$	2,439		$	280		$	219
Interest cost (a)	4,603			4,928			410			415
Expected return on plan assets (a)	(7,082		)	(6,971		)	(615		)	(589		)
Amortization of prior service credit (a)	(34		)	—			(101		)	(100		)
Amortization of net loss (gain) (a)	3,517			3,245			(114		)	(155		)
Net periodic benefit cost (credit)	3,433			3,641			(140		)	(210		)
(Costs) credits not recognized due to the effects of regulation	(468		)	553			—			—
Net benefit cost (credit) recognized for financial reporting	$	2,965		$	4,194		$	(140	)	$	(210	)

	Nine Months Ended Sept. 30
	2018			2017			2018			2017
(Thousands of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	7,289		$	7,319		$	839		$	657
Interest cost (a)	13,808			14,783			1,231			1,245
Expected return on plan assets (a)	(21,246		)	(20,913		)	(1,846		)	(1,767		)
Amortization of prior service credit (a)	(103		)	—			(302		)	(300		)
Amortization of net loss (gain) (a)	10,551			9,735			(340		)	(465		)
Net periodic benefit cost (credit)	10,299			10,924			(418		)	(630		)
Credits not recognized due to the effects of regulation	1,267			1,275			—			—
Net benefit cost (credit) recognized for financial reporting	$	11,566		$	12,199		$	(418	)	$	(630	)

^(a) The components of net periodic cost other than the service cost component are included in the line item “other expense, net” in the income statement or capitalized on the balance sheet as a regulatory asset.

In January 2018, contributions of $150 million were made across four of Xcel Energy’s pension plans, of which $8.0 million was attributable to SPS. Xcel Energy does not expect additional pension contributions during 2018.

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Other Comprehensive Income

9 Months Ended

Sep. 30, 2018

Stockholders' Equity Note [Abstract]

Other Comprehensive Income

Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive loss, net of tax, for the three and nine months ended Sept. 30, 2018 and 2017 were as follows:

	Three Months Ended Sept. 30, 2018
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at July 1	$	(752	)	$	(654	)	$	(1,406	)
Losses reclassified from net accumulated other comprehensive loss	13			18			31
Net current period other comprehensive income	13			18			31
Accumulated other comprehensive loss at Sept. 30	$	(739	)	$	(636	)	$	(1,375	)

	Three Months Ended Sept. 30, 2017
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at July 1	$	(659	)	$	(582	)	$	(1,241	)
Losses reclassified from net accumulated other comprehensive loss	10			16			26
Net current period other comprehensive income	10			16			26
Accumulated other comprehensive loss at Sept. 30	$	(649	)	$	(566	)	$	(1,215	)

	Nine Months Ended Sept. 30, 2018
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at Jan. 1	$	(776	)	$	(691	)	$	(1,467	)
Losses reclassified from net accumulated other comprehensive loss	37			55			92
Net current period other comprehensive income	37			55			92
Accumulated other comprehensive loss at Sept. 30	$	(739	)	$	(636	)	$	(1,375	)

	Nine Months Ended Sept. 30, 2017
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at Jan. 1	$	(678	)	$	(612	)	$	(1,290	)
Losses reclassified from net accumulated other comprehensive loss	29			46			75
Net current period other comprehensive income	29			46			75
Accumulated other comprehensive loss at Sept. 30	$	(649	)	$	(566	)	$	(1,215	)

Reclassifications from accumulated other comprehensive loss for the three and nine months ended Sept. 30, 2018 and 2017 were as follows:

	Amounts Reclassified from Accumulated Other Comprehensive Loss
(Thousands of Dollars)	Three Months Ended Sept. 30, 2018				Three Months Ended Sept. 30, 2017
Losses on cash flow hedges:
Interest rate derivatives	$	16		(a)	$	16		(a)
Total, pre-tax	16				16
Tax benefit	(3		)		(6		)
Total, net of tax	13				10
Defined benefit pension and postretirement losses:
Amortization of net loss	23			(b)	24			(b)
Total, pre-tax	23				24
Tax benefit	(5		)		(8		)
Total, net of tax	18				16
Total amounts reclassified, net of tax	$	31			$	26

	Amounts Reclassified from Accumulated Other Comprehensive Loss
(Thousands of Dollars)	Nine Months Ended Sept. 30, 2018				Nine Months Ended Sept. 30, 2017
Losses on cash flow hedges:
Interest rate derivatives	$	47		(a)	$	47		(a)
Total, pre-tax	47				47
Tax benefit	(10		)		(18		)
Total, net of tax	37				29
Defined benefit pension and postretirement losses:
Amortization of net loss	70			(b)	72			(b)
Total, pre-tax	70				72
Tax benefit	(15		)		(26		)
Total, net of tax	55				46
Total amounts reclassified, net of tax	$	92			$	75

^(a) Included in interest charges.

^(b)  Included in the computation of net periodic pension and postretirement benefit costs. See Note 10 to the financial statements for details regarding these benefit plans.

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Revenues

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue

Revenues

SPS principally generates revenue from the generation, transmission, distribution and sale of electricity to wholesale and retail customers. Performance obligations related to the sale of energy are satisfied as energy is delivered to customers. SPS recognizes revenue in an amount that corresponds directly to the price of the energy delivered to the customer. The measurement of energy sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, amounts of energy delivered to customers since the date of the last meter reading are estimated, and the corresponding unbilled revenue is recognized. Contract terms are generally short-term in nature, and as such SPS does not recognize a separate financing component of its collections from customers. SPS presents its revenues net of any excise or other fiduciary-type taxes or fees.

SPS participates in SPP. SPS recognizes sales to both native load and other end use customers on a gross basis in electric revenues and cost of sales. Revenues and charges for short term wholesale sales of excess energy transacted through RTOs are recorded on a gross basis. Other revenues and charges related to participating and transacting in RTOs are also recorded on a net basis in cost of sales. SPS has various rate-adjustment mechanisms in place that provide for the recovery of natural gas, electric fuel and purchased energy costs. These cost-adjustment tariffs may increase or decrease the level of revenue collected from customers and are revised periodically for differences between the total amount collected under the clauses and the costs incurred.

When applicable, under governing regulatory commission rate orders, fuel cost over-recoveries (the excess of fuel revenue billed to customers over fuel costs incurred) are deferred as regulatory liabilities and under-recoveries (the excess of fuel costs incurred over fuel revenues billed to customers) are deferred as regulatory assets.

Certain rate rider mechanisms qualify as alternative revenue programs under GAAP. These mechanisms arise from costs imposed upon the utility by action of a regulator or legislative body related to an environmental, public safety or other mandate. When certain criteria are met (including collection within 24 months), revenue is recognized equal to the revenue requirement, which may include return on rate base items and incentives. The mechanisms are revised periodically for differences between the total amount collected and the revenue recognized, which may increase or decrease the level of revenue collected from customers. Alternative revenue is recorded on a gross basis and is disclosed separate from revenue from contracts with customers in the period earned.

In the following tables, regulated electric revenue is classified by the type of goods/services rendered and market/customer type.

	Three Months Ended
(Thousands of Dollars)	Sept. 30, 2018		Sept. 30, 2017
Major product lines
Revenue from contracts with customers:
Residential	$	114,387	$	113,380
Commercial and industrial (C&I)	229,457		241,295
Other	12,983		13,399
Total retail	356,827		368,074
Wholesale	117,949		116,635
Transmission	60,726		56,143
Other	1,792		3,862
Total revenue from contracts with customers	537,294		544,714
Alternative revenue and other	2,769		6,909
Total revenues	$	540,063	$	551,623

	Nine Months Ended
(Thousands of Dollars)	Sept. 30, 2018		Sept. 30, 2017
Major product lines
Revenue from contracts with customers:
Residential	$	279,543	$	277,169
C&I	625,988		658,057
Other	34,010		35,253
Total retail	939,541		970,479
Wholesale	326,810		309,669
Transmission	175,342		166,715
Other	12,181		7,872
Total revenue from contracts with customers	1,453,874		1,454,735
Alternative revenue and other	14,759		36,756
Total revenues	$	1,468,633	$	1,491,491

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Selected Balance Sheet Data (Tables)

9 Months Ended

Sep. 30, 2018

Balance Sheet Related Disclosures [Abstract]

Accounts Receivable, Net

(Thousands of Dollars)	Sept. 30, 2018			Dec. 31, 2017
Accounts receivable, net
Accounts receivable	$	107,709		$	85,929
Less allowance for bad debts	(5,839		)	(6,348		)
	$	101,870		$	79,581

Inventories

(Thousands of Dollars)	Sept. 30, 2018		Dec. 31, 2017
Inventories
Materials and supplies	$	25,380	$	26,218
Fuel	8,021		14,215
	$	33,401	$	40,433

Property, Plant and Equipment, Net

(Thousands of Dollars)	Sept. 30, 2018			Dec. 31, 2017
Property, plant and equipment, net
Electric plant	$	7,115,175		$	6,765,371
Construction work in progress	533,538			351,875
Total property, plant and equipment	7,648,713			7,117,246
Less accumulated depreciation	(2,109,513		)	(2,021,637		)
	$	5,539,200		$	5,095,609

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense. The following reconciles such differences:

	Nine Months Ended Sept. 30,
	2018		2017
Federal statutory rate	21.0	%	35.0	%
State tax (net of federal tax effect)	2.3		2.3
Increases (decreases) in tax from:
Regulatory differences - ARAM (a)	(4.0	)	—
Regulatory differences - ARAM deferral (b)	1.7		—
Regulatory differences - reversal of prior quarters' ARAM deferral (b)	(0.2	)	—
Regulatory differences - other utility plant items	(1.3	)	(0.8	)
Tax credits (net of federal income tax expense)	(0.7	)	(0.7	)
Other (net)	(1.8	)	0.1
Effective income tax rate	17.0	%	35.9	%

^(a)   The average rate assumption method (ARAM); a method to flow back excess deferred taxes to customers.

^(b) ARAM has been deferred when regulatory treatment has not been established. As SPS received direction from its regulatory commissions regarding the return of excess deferred taxes to customers, the ARAM deferral was reversed. This resulted in a reduction to tax expense with a corresponding reduction to revenue.

Summary of Statute of Limitations Applicable to Open Tax Years [Table Text Block]

SPS is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. The statute of limitations applicable to Xcel Energy’s federal income tax returns expire as follows:

Tax Year(s)	Expiration
2009 - 2014	October 2019
2015	September 2019
2016	September 2020

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the amount of unrecognized tax benefit is as follows:

(Millions of Dollars)	Sept. 30, 2018		Dec. 31, 2017
Unrecognized tax benefit — Permanent tax positions	$	2.8	$	2.3
Unrecognized tax benefit — Temporary tax positions	1.6		2.0
Total unrecognized tax benefit	$	4.4	$	4.3

Tax Benefits Associated with NOL and Tax Credit Carryforwards

The unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryforwards. The amounts of tax benefits associated with NOL and tax credit carryforwards are as follows:

(Millions of Dollars)	Sept. 30, 2018			Dec. 31, 2017
NOL and tax credit carryforwards	$	(6.9	)	$	(5.9	)

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Borrowings and Other Financing Instruments (Tables)

9 Months Ended

Sep. 30, 2018

Borrowings and Other Financing Instruments [Abstract]

Credit Facilities

As of Sept. 30, 2018, SPS had the following committed credit facility available (in millions of dollars):

Credit Facility (a)		Drawn(b)		Available
$	400	$	37	$	363

^(a)  This credit facility expires in June 2021.

^(b)  Includes outstanding commercial paper and letters of credit.

Money Pool

Borrowings and Other Financing Instruments [Abstract]

Short-Term Borrowings

Money pool borrowings for SPS were as follows:

(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2018			Year Ended Dec. 31, 2017
Borrowing limit	$	100		$	100
Amount outstanding at period end	23			—
Average amount outstanding	76			13
Maximum amount outstanding	100			100
Weighted average interest rate, computed on a daily basis	1.97		%	1.12		%
Weighted average interest rate at period end	1.99			N/A

Commercial Paper

Borrowings and Other Financing Instruments [Abstract]

Short-Term Borrowings

Commercial paper outstanding for SPS was as follows:

(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2018			Year Ended Dec. 31, 2017
Borrowing limit	$	400		$	400
Amount outstanding at period end	35			—
Average amount outstanding	63			69
Maximum amount outstanding	144			176
Weighted average interest rate, computed on a daily basis	2.25		%	1.13		%
Weighted average interest rate at period end	2.35			N/A

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Fair Value of Financial Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Gross Notional Amounts of Commodity FTRs

The following table details the gross notional amounts of commodity FTRs as of Sept. 30, 2018 and Dec. 31, 2017:

(Amounts in Thousands) (a)	Sept. 30, 2018	Dec. 31, 2017
Megawatt hours of electricity	8,594	4,251

^(a)  Amounts are not reflective of net positions in the underlying commodities.

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, SPS’ derivative assets and liabilities measured at fair value on a recurring basis as of Sept. 30, 2018:

	Sept. 30, 2018
	Fair Value						Fair Value Total		Counterparty Netting (b)
(Thousands of Dollars)	Level 1		Level 2		Level 3							Total
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	25,666	$	25,666	$	(389	)	$	25,277
Total current derivative assets	$	—	$	—	$	25,666	$	25,666	$	(389	)	25,277
PPAs (a)												3,159
Current derivative instruments												$	28,436
Noncurrent derivative assets
PPAs (a)												$	16,584
Noncurrent derivative instruments												$	16,584
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	389	$	389	$	(389	)	$	—
Total current derivative liabilities	$	—	$	—	$	389	$	389	$	(389	)	—
PPAs (a)												3,565
Current derivative instruments												$	3,565
Noncurrent derivative liabilities
PPAs (a)												$	17,275
Noncurrent derivative instruments												$	17,275

^(a) During 2006, SPS 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 is being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b)  SPS nets derivative instruments and related collateral in its 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, 2018. At Sept. 30, 2018, derivative assets and liabilities include no obligations to return cash collateral or 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.

The following table presents for each of the fair value hierarchy levels, SPS’ derivative assets and liabilities measured at fair value on a recurring basis as of Dec. 31, 2017:

	Dec. 31, 2017
	Fair Value						Fair Value Total		Counterparty Netting (b)
(Thousands of Dollars)	Level 1		Level 2		Level 3							Total
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	14,717	$	14,717	$	(1,994	)	$	12,723
Total current derivative assets	$	—	$	—	$	14,717	$	14,717	$	(1,994	)	12,723
PPAs (a)												3,159
Current derivative instruments												$	15,882
Noncurrent derivative assets
PPAs (a)												$	18,954
Noncurrent derivative instruments												$	18,954
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	1,994	$	1,994	$	(1,994	)	$	—
Total current derivative liabilities	$	—	$	—	$	1,994	$	1,994	$	(1,994	)	—
PPAs (a)												3,565
Current derivative instruments												$	3,565
Noncurrent derivative liabilities
PPAs (a)												$	19,949
Noncurrent derivative instruments												$	19,949

^(a)  During 2006, SPS 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 is being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b)  SPS nets derivative instruments and related collateral in its 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, 2017. At Dec. 31, 2017, derivative assets and liabilities include no obligations to return cash collateral or 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.

Changes in Level 3 Commodity Derivatives

The following table presents the changes in Level 3 commodity derivatives for the three and nine months ended Sept. 30, 2018 and 2017:

	Three Months Ended Sept. 30,
(Thousands of Dollars)	2018			2017
Balance at July 1	$	35,389		$	28,665
Purchases	3,169			43
Settlements	(10,068		)	(9,939		)
Net transactions recorded during the period:
Net (losses) gains recognized as regulatory assets and liabilities	(3,213		)	1,669
Balance at Sept. 30	$	25,277		$	20,438

	Nine Months Ended Sept. 30,
(Thousands of Dollars)	2018			2017
Balance at Jan. 1	$	12,723		$	1,955
Purchases	22,517			39,376
Settlements	(35,305		)	(40,437		)
Net transactions recorded during the period:
Net gains recognized as regulatory assets and liabilities	25,342			19,544
Balance at Sept. 30	$	25,277		$	20,438

Carrying Amount and Fair Value of Long-term Debt

As of Sept. 30, 2018 and Dec. 31, 2017, other financial instruments for which the carrying amount did not equal fair value were as follows:

	Sept. 30, 2018				Dec. 31, 2017
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	1,830,796	$	1,832,158	$	1,829,941	$	2,001,992

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Other Income, Net (Tables)

9 Months Ended

Sep. 30, 2018

Other Income and Expenses [Abstract]

Other Income, Net

Other expense, net consisted of the following:

	Three Months Ended Sept. 30						Nine Months Ended Sept. 30,
(Thousands of Dollars)	2018			2017			2018			2017
Interest income	$	473		$	296		$	771		$	488
Other nonoperating income	—			1			2			—
Other nonoperating expense	(1		)	—			—			—
Insurance policy expense	(11		)	(12		)	(35		)	(36		)
Benefits non-service cost	(1,487		)	(749		)	(3,250		)	(2,247		)
Other expense, net	$	(1,026	)	$	(464	)	$	(2,512	)	$	(1,795	)

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Benefit Plans and Other Postretirement Benefits (Tables)

9 Months Ended

Sep. 30, 2018

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost (Credit)

Components of Net Periodic Benefit Cost (Credit)

	Three Months Ended Sept. 30
	2018			2017			2018			2017
(Thousands of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	2,429		$	2,439		$	280		$	219
Interest cost (a)	4,603			4,928			410			415
Expected return on plan assets (a)	(7,082		)	(6,971		)	(615		)	(589		)
Amortization of prior service credit (a)	(34		)	—			(101		)	(100		)
Amortization of net loss (gain) (a)	3,517			3,245			(114		)	(155		)
Net periodic benefit cost (credit)	3,433			3,641			(140		)	(210		)
(Costs) credits not recognized due to the effects of regulation	(468		)	553			—			—
Net benefit cost (credit) recognized for financial reporting	$	2,965		$	4,194		$	(140	)	$	(210	)

	Nine Months Ended Sept. 30
	2018			2017			2018			2017
(Thousands of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	7,289		$	7,319		$	839		$	657
Interest cost (a)	13,808			14,783			1,231			1,245
Expected return on plan assets (a)	(21,246		)	(20,913		)	(1,846		)	(1,767		)
Amortization of prior service credit (a)	(103		)	—			(302		)	(300		)
Amortization of net loss (gain) (a)	10,551			9,735			(340		)	(465		)
Net periodic benefit cost (credit)	10,299			10,924			(418		)	(630		)
Credits not recognized due to the effects of regulation	1,267			1,275			—			—
Net benefit cost (credit) recognized for financial reporting	$	11,566		$	12,199		$	(418	)	$	(630	)

^(a) The components of net periodic cost other than the service cost component are included in the line item “other expense, net” in the income statement or capitalized on the balance sheet as a regulatory asset.

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Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2018

Stockholders' Equity Note [Abstract]

Changes in Accumulated Other Comprehensive Loss, Net of Tax

Changes in accumulated other comprehensive loss, net of tax, for the three and nine months ended Sept. 30, 2018 and 2017 were as follows:

	Three Months Ended Sept. 30, 2018
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at July 1	$	(752	)	$	(654	)	$	(1,406	)
Losses reclassified from net accumulated other comprehensive loss	13			18			31
Net current period other comprehensive income	13			18			31
Accumulated other comprehensive loss at Sept. 30	$	(739	)	$	(636	)	$	(1,375	)

	Three Months Ended Sept. 30, 2017
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at July 1	$	(659	)	$	(582	)	$	(1,241	)
Losses reclassified from net accumulated other comprehensive loss	10			16			26
Net current period other comprehensive income	10			16			26
Accumulated other comprehensive loss at Sept. 30	$	(649	)	$	(566	)	$	(1,215	)

	Nine Months Ended Sept. 30, 2018
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at Jan. 1	$	(776	)	$	(691	)	$	(1,467	)
Losses reclassified from net accumulated other comprehensive loss	37			55			92
Net current period other comprehensive income	37			55			92
Accumulated other comprehensive loss at Sept. 30	$	(739	)	$	(636	)	$	(1,375	)

	Nine Months Ended Sept. 30, 2017
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at Jan. 1	$	(678	)	$	(612	)	$	(1,290	)
Losses reclassified from net accumulated other comprehensive loss	29			46			75
Net current period other comprehensive income	29			46			75
Accumulated other comprehensive loss at Sept. 30	$	(649	)	$	(566	)	$	(1,215	)

Reclassifications out of Accumulated Other Comprehensive Loss

Reclassifications from accumulated other comprehensive loss for the three and nine months ended Sept. 30, 2018 and 2017 were as follows:

	Amounts Reclassified from Accumulated Other Comprehensive Loss
(Thousands of Dollars)	Three Months Ended Sept. 30, 2018				Three Months Ended Sept. 30, 2017
Losses on cash flow hedges:
Interest rate derivatives	$	16		(a)	$	16		(a)
Total, pre-tax	16				16
Tax benefit	(3		)		(6		)
Total, net of tax	13				10
Defined benefit pension and postretirement losses:
Amortization of net loss	23			(b)	24			(b)
Total, pre-tax	23				24
Tax benefit	(5		)		(8		)
Total, net of tax	18				16
Total amounts reclassified, net of tax	$	31			$	26

	Amounts Reclassified from Accumulated Other Comprehensive Loss
(Thousands of Dollars)	Nine Months Ended Sept. 30, 2018				Nine Months Ended Sept. 30, 2017
Losses on cash flow hedges:
Interest rate derivatives	$	47		(a)	$	47		(a)
Total, pre-tax	47				47
Tax benefit	(10		)		(18		)
Total, net of tax	37				29
Defined benefit pension and postretirement losses:
Amortization of net loss	70			(b)	72			(b)
Total, pre-tax	70				72
Tax benefit	(15		)		(26		)
Total, net of tax	55				46
Total amounts reclassified, net of tax	$	92			$	75

^(a) Included in interest charges.

^(b)  Included in the computation of net periodic pension and postretirement benefit costs. See Note 10 to the financial statements for details regarding these benefit plans.

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Revenues (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

In the following tables, regulated electric revenue is classified by the type of goods/services rendered and market/customer type.

	Three Months Ended
(Thousands of Dollars)	Sept. 30, 2018		Sept. 30, 2017
Major product lines
Revenue from contracts with customers:
Residential	$	114,387	$	113,380
Commercial and industrial (C&I)	229,457		241,295
Other	12,983		13,399
Total retail	356,827		368,074
Wholesale	117,949		116,635
Transmission	60,726		56,143
Other	1,792		3,862
Total revenue from contracts with customers	537,294		544,714
Alternative revenue and other	2,769		6,909
Total revenues	$	540,063	$	551,623

	Nine Months Ended
(Thousands of Dollars)	Sept. 30, 2018		Sept. 30, 2017
Major product lines
Revenue from contracts with customers:
Residential	$	279,543	$	277,169
C&I	625,988		658,057
Other	34,010		35,253
Total retail	939,541		970,479
Wholesale	326,810		309,669
Transmission	175,342		166,715
Other	12,181		7,872
Total revenue from contracts with customers	1,453,874		1,454,735
Alternative revenue and other	14,759		36,756
Total revenues	$	1,468,633	$	1,491,491

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Accounting Pronouncements (Details) - Accounting Standards Update 2017-07 - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017
Operating and Maintenance Expense
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net benefit cost (credit) recognized for financial reporting	$ 0.8	$ 2.2
Other Income
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net benefit cost (credit) recognized for financial reporting	$ (0.7)	$ (2.2)

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Selected Balance Sheet Data (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Accounts receivable, net
Accounts receivable	$ 107,709	$ 85,929
Less allowance for bad debts	(5,839)	(6,348)
Accounts receivable, net	$ 101,870	$ 79,581

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Selected Balance Sheet Data Balance Sheet Related Disclosures, Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Public Utilities, Inventory [Line Items]
Inventories	$ 33,401	$ 40,433
Materials and supplies
Public Utilities, Inventory [Line Items]
Inventories	25,380	26,218
Fuel
Public Utilities, Inventory [Line Items]
Inventories	$ 8,021	$ 14,215

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Selected Balance Sheet Data Balance Sheet Related Disclosures, Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Public Utility, Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 7,648,713	$ 7,117,246
Less accumulated depreciation	(2,109,513)	(2,021,637)
Property, plant and equipment, net	5,539,200	5,095,609
Electric plant
Public Utility, Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	7,115,175	6,765,371
Construction work in progress
Public Utility, Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 533,538	$ 351,875

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Income Taxes (Details) - USD ($)		9 Months Ended			12 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2015	Dec. 31, 2012	Dec. 31, 2017
Tax Audits [Abstract]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent		21.00%	35.00%
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent		2.30%	2.30%
Regulatory differences - ARAM (a)	[1]	(4.00%)	0.00%
Regulatory differences - ARAM deferral (b)	[2]	1.70%	0.00%
Regulatory differences - reversal of prior quarters' ARAM deferral (b)	[2]	(0.20%)	0.00%
Effective Income Tax Rate Reconciliation, Other Regulatory Items, Percent		(1.30%)	(0.80%)
Effective Income Tax Rate Reconciliation Regulatory Differences Utility Plant Items		(0.70%)	(0.70%)
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent		(1.80%)	0.10%
Effective Income Tax Rate Reconciliation, Percent		17.00%	35.90%
Unrecognized Tax Benefits [Abstract]
Unrecognized tax benefit - Permanent tax positions		$ 2,800,000				$ 2,300,000
Unrecognized tax benefit - Temporary tax positions		1,600,000				2,000,000
Total unrecognized tax benefit		4,400,000				4,300,000
NOL and tax credit carryforwards		(6,900,000)				(5,900,000)
Upper bound of decrease in unrecognized tax benefit that is reasonably possible		3,000,000
Amounts accrued for penalties related to unrecognized tax benefits		$ 0				$ 0
Internal Revenue Service (IRS)
Tax Audits [Abstract]
Year(s) under examination				2012 and 2013	2010 and 2011
Year of carryback claim under examination					2009
State Jurisdiction (Texas)
Tax Audits [Abstract]
Earliest year subject to examination		2009

[1] The average rate assumption method (ARAM); a method to flow back excess deferred taxes to customers.

[2] ARAM has been deferred when regulatory treatment has not been established. As SPS received direction from its regulatory commissions regarding the return of excess deferred taxes to customers, the ARAM deferral was reversed. This resulted in a reduction to tax expense with a corresponding reduction to revenue.

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Rate Matters (Details) - USD ($) $ in Millions		1 Months Ended						9 Months Ended	12 Months Ended
	Sep. 05, 2018	Aug. 31, 2018	Jun. 30, 2018	May 31, 2018	Feb. 28, 2018	Oct. 31, 2017	Nov. 30, 2016	Sep. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Hearing Examiner [Member] | New Mexico 2017 Electric Rate Case [Member]
Public Utilities, General Disclosures [Line Items]
Public Utilities, Recommended ROE, Percentage			9.40%
Public Utilities, Recommended Equity Capital Structure, Percentage			53.97%
Public Utilities, Total Recommended Rate Increase (Decrease)			$ 12.0
SPS | PUCT Proceeding - Texas 2017 Electric Rate Case
Public Utilities, General Disclosures [Line Items]
Public Utilities, Intended Equity Capital Structure, Percentage			57.00%
Public Utilities, Requested Rate Increase (Decrease), Amount									$ 54.0
Public Utilities, Requested Rate Increase (Decrease), Percentage									5.80%
Public Utilities, Requested Return on Equity, Percentage									10.25%
Public Utilities, Requested Rate Base, Amount									$ 1,900.0
Public Utilities, Requested Equity Capital Structure, Percentage									53.97%
Public Utilities, Revised Requested Rate Increase				$ 32.0
Public Utilities, Revised Requested Rate Increase, Percentage				5.90%
Public Utilities, Revised Requested Capital Structure, Percentage				58.00%
Public Utilities, Revised requested rate increase after TCRF rider adjustment				$ 17.0
SPS | New Mexico 2017 Electric Rate Case [Member]
Public Utilities, General Disclosures [Line Items]
Tax Cuts and Jobs Act of 2017, Estimated Electric Rate Reduction				$ 11.0
Public Utilities, Revised Requested Equity Capital Structure, Percentage					58.00%
Public Utilities, Requested Rate Increase (Decrease), Amount						$ 43.0
Public Utilities, Requested Return on Equity, Percentage				10.25%		10.25%
Public Utilities, Requested Rate Base, Amount						$ 885.0
Public Utilities, Requested Equity Capital Structure, Percentage						53.97%
Public Utiilities, Federal Income Tax Rate Used in Rate Request						35.00%
Public Utilities, Requested Rate Increase (Decrease) Including TCJA Impact, Amount				$ 27.0
SPS | NMPRC Proceeding - New Mexico 2016 Electric Rate Case [Member]
Public Utilities, General Disclosures [Line Items]
Public Utilities, Requested Rate Increase (Decrease), Amount							$ 41.0
Public Utilities, Requested Rate Increase (Decrease), Percentage							10.90%
Public Utilities, Requested Return on Equity, Percentage							10.10%
Public Utilities, Requested Rate Base, Amount							$ 832.0
Public Utilities, Requested Equity Capital Structure, Percentage							53.97%
SPS | Public Utility Commission of Texas (PUCT) | PUCT Proceeding - Texas 2017 Electric Rate Case
Public Utilities, General Disclosures [Line Items]
Public Utilities, Intended Equity Capital Structure, Percentage			57.00%
Public Utilities, Requested Return on Equity, Percentage to Calculate AFUDC			9.50%
SPS | New Mexico Public Regulation Commission [Member] | New Mexico 2017 Electric Rate Case [Member]
Public Utilities, General Disclosures [Line Items]
Public Utilities, Approved Rate Increase (Decrease), Amount	$ 8.0
Public Utilities, Approved Rate Increase (Decrease), Percentage	2.10%
Public Utilities, Approved Return on Equity, Percentage	9.10%
Public Utilities, Approved Equity Capital Structure, Percentage	51.00%
Tax Cuts and Jobs Act of 2017, Approved Refund of 2018 TCJA Benefits	$ 10.0
Tax Cuts and Jobs Act of 2017, Regulatory Liability for Customer Refund	$ 10.0
SPS | Southwest Power Pool (SPP) | SPP Open Access Transmission Tariff Upgrade Costs
Public Utilities, General Disclosures [Line Items]
Public Utilities, Billed Charges For Transmission Service Upgrades										$ 13.0
Public Utilities, Monthly Billed Charges For Transmission Service Upgrades								$ 0.5
Public Utilities, Annual Transmission Revenue Requirement Increase		$ 9.5
Public Utilities, Annual Transmission Revenue Requirement Increase (SPS)		6.0
Public Utilities, Annual Transmission Revenue Requirement (Other Utilities)		$ 3.5

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Commitments and Contingencies, Purchased Power Agreements (Details) - Independent Power Producing Entities - MW	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Purchased Power Agreements [Abstract]
Generating capacity (in MW)	967	897
Purchase Power Agreement Expiration (year)	2041

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Commitments and Contingencies Commitments and Contingencies, Environmental Contingencies - Site Contingencies (Details) - Other MGP, Landfill, or Disposal Sites [Domain] $ in Millions	Sep. 30, 2018 USD ($) Site	Dec. 31, 2017 USD ($)
Site Contingency [Line Items]
Number of identified MGP, landfill, or disposal sites under current investigation and/or remediation | Site	1
Accrual for Environmental Loss Contingencies | $	$ 0.1	$ 0.1

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Borrowings and Other Financing Instruments, Short-Term Borrowings (Details) - USD ($)	3 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Short-term Debt [Line Items]
Amount outstanding at period end	$ 35,000,000	$ 0
Money Pool
Short-term Debt [Line Items]
Borrowing limit	100,000,000	100,000,000
Amount outstanding at period end	23,000,000	0
Average amount outstanding	76,000,000	13,000,000
Maximum amount outstanding	$ 100,000,000	$ 100,000,000
Weighted average interest rate, computed on a daily basis (percentage)	1.97%	1.12%
Weighted average interest rate at period end (percentage)	1.99%
Commercial Paper
Short-term Debt [Line Items]
Borrowing limit	$ 400,000,000	$ 400,000,000
Amount outstanding at period end	35,000,000	0
Average amount outstanding	63,000,000	69,000,000
Maximum amount outstanding	$ 144,000,000	$ 176,000,000
Weighted average interest rate, computed on a daily basis (percentage)	2.25%	1.13%
Weighted average interest rate at period end (percentage)	2.35%

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Borrowings and Other Financing Instruments, Letters of Credit (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Line of Credit Facility [Line Items]
Amount outstanding at period end	$ 35,000	$ 0
Letter of Credit
Line of Credit Facility [Line Items]
Amount outstanding at period end	$ 2,000	$ 3,000
Letter of Credit | Letter of Credit
Line of Credit Facility [Line Items]
Term of letters of credit (in years)	1 year

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Borrowings and Other Financing Instruments, Credit Facility (Details) - Credit Facility - USD ($)		9 Months Ended
		Sep. 30, 2018	Dec. 31, 2017
Line of Credit Facility [Line Items]
Credit Facility	[1]	$ 400,000,000
Drawn	[2]	37,000,000
Available		$ 363,000,000
Maturity Date		Jun. 30, 2021
Direct advances on the credit facility outstanding		$ 0	$ 0

[1] This credit facility expires in June 2021.

[2] Includes outstanding commercial paper and letters of credit.

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Fair Value of Financial Assets and Liabilities, Derivative Instruments (Details) MWh in Thousands, $ in Millions		Sep. 30, 2018 USD ($) MWh Counterparty	Dec. 31, 2017 MWh
Credit Concentration Risk | Municipal or Cooperative Entities or Other Utilities [Member]
Consideration of Credit Risk and Concentrations [Abstract]
Number of most significant counterparties for wholesale, trading and non-trading commodity activities with credit exposure		7
Credit Concentration Risk | External Credit Rating, Investment Grade [Member]
Consideration of Credit Risk and Concentrations [Abstract]
Number of most significant counterparties for wholesale, trading and non-trading commodity activities with credit exposure		2
Wholesale, trading and non-trading commodity credit exposure for the most significant counterparties		$ 16.9
Percentage of wholesale, trading and non-trading commodity credit exposure for the most significant counterparties (in hundredths)		34.00%
Credit Concentration Risk | No Investment Grade Ratings from External Credit Rating Agencies [Member]
Consideration of Credit Risk and Concentrations [Abstract]
Number of most significant counterparties for wholesale, trading and non-trading commodity activities with credit exposure | Counterparty		5
Wholesale, trading and non-trading commodity credit exposure for the most significant counterparties		$ 10.7
Percentage of wholesale, trading and non-trading commodity credit exposure for the most significant counterparties (in hundredths)		22.00%
Electric Commodity (in megawatt hours)
Gross Notional Amounts of Commodity FTRs [Abstract]
Derivative, Nonmonetary Notional amount | MWh	[1]	8,594	4,251

[1] (a) Amounts are not reflective of net positions in the underlying commodities.

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Fair Value of Financial Assets and Liabilities, Impact of Derivative Activity (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Financial Impact of Qualifying Fair Value Hedges on Earnings [Abstract]
Derivative instruments designated as fair value hedges	$ 0	$ 0	$ 0	$ 0
Recognized gains (losses) from fair value hedges or related hedged transactions	0	0	0	0
Other Derivative Instruments | Electric Commodity
Impact of Derivative Activity on Accumulated Other Comprehensive Loss, Regulatory Assets and Liabilities, and Income [Abstract]
Pre-tax fair value gains (losses) recognized during the period in regulatory (assets) and liabilities	$ (3,300,000)	(2,500,000)	10,100,000	(200,000)
Pre-tax (gains) losses reclassified into income during the period from regulatory assets and (liabilities)		$ 2,200,000	$ 3,400,000	$ (100,000)

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Fair Value of Financial Assets and Liabilities, Fair Value Measurements (Details) - USD ($)	Sep. 30, 2018		Dec. 31, 2017
Derivatives, Fair Value [Line Items]
Derivative Asset, Collateral, Obligation to Return Cash, Offset	$ 0		$ 0
Derivative Liability, Collateral, Right to Reclaim Cash, Offset	0		0
Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	28,436,000		15,882,000
Other Noncurrent Assets
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	16,584,000		18,954,000
Other Current Liabilities
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	3,565,000		3,565,000
Other Noncurrent Liabilities
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	17,275,000		19,949,000
Fair Value Measured on a Recurring Basis | Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	25,277,000		12,723,000
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset	(389,000)	[1]	(1,994,000)	[2]
Fair Value Measured on a Recurring Basis | Other Current Assets | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	25,277,000		12,723,000
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset	(389,000)	[1]	(1,994,000)	[2]
Fair Value Measured on a Recurring Basis | Other Current Liabilities
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	0		0
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset	(389,000)	[1]	(1,994,000)	[2]
Fair Value Measured on a Recurring Basis | Other Current Liabilities | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	0		0
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset	(389,000)	[1]	(1,994,000)	[2]
Fair Value Measured on a Recurring Basis | Level 1 | Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	0		0
Fair Value Measured on a Recurring Basis | Level 1 | Other Current Assets | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	0		0
Fair Value Measured on a Recurring Basis | Level 1 | Other Current Liabilities
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	0		0
Fair Value Measured on a Recurring Basis | Level 1 | Other Current Liabilities | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	0		0
Fair Value Measured on a Recurring Basis | Level 2 | Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	0		0
Fair Value Measured on a Recurring Basis | Level 2 | Other Current Assets | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	0		0
Fair Value Measured on a Recurring Basis | Level 2 | Other Current Liabilities
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	0		0
Fair Value Measured on a Recurring Basis | Level 2 | Other Current Liabilities | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	0		0
Fair Value Measured on a Recurring Basis | Level 3 | Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	25,666,000		14,717,000
Fair Value Measured on a Recurring Basis | Level 3 | Other Current Assets | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	25,666,000		14,717,000
Fair Value Measured on a Recurring Basis | Level 3 | Other Current Liabilities
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	389,000		1,994,000
Fair Value Measured on a Recurring Basis | Level 3 | Other Current Liabilities | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	389,000		1,994,000
Fair Value, Measurements, Nonrecurring | Other Current Assets | Purchased Power Agreements
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	3,159,000	[3]	3,159,000	[4]
Fair Value, Measurements, Nonrecurring | Other Noncurrent Assets | Purchased Power Agreements
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	16,584,000	[3]	18,954,000	[4]
Fair Value, Measurements, Nonrecurring | Other Current Liabilities | Purchased Power Agreements
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	3,565,000	[3]	3,565,000	[4]
Fair Value, Measurements, Nonrecurring | Other Noncurrent Liabilities | Purchased Power Agreements
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	17,275,000	[3]	19,949,000	[4]
Estimate of Fair Value Measurement [Member] | Fair Value Measured on a Recurring Basis | Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	25,666,000		14,717,000
Estimate of Fair Value Measurement [Member] | Fair Value Measured on a Recurring Basis | Other Current Assets | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	25,666,000		14,717,000
Estimate of Fair Value Measurement [Member] | Fair Value Measured on a Recurring Basis | Other Current Liabilities
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	389,000		1,994,000
Estimate of Fair Value Measurement [Member] | Fair Value Measured on a Recurring Basis | Other Current Liabilities | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	$ 389,000		$ 1,994,000

[1] SPS nets derivative instruments and related collateral in its 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, 2018. At Sept. 30, 2018, derivative assets and liabilities include no obligations to return cash collateral or 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.

[2] SPS nets derivative instruments and related collateral in its 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, 2017. At Dec. 31, 2017, derivative assets and liabilities include no obligations to return cash collateral or 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.

[3] During 2006, SPS 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 is being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

[4] During 2006, SPS 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 is being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

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Fair Value of Financial Assets and Liabilities Fair Value of Financial Assets and Liabilities, Changes in Level 3 Commodity Derivatives (Details) - Commodity Contract - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning of period	$ 35,389,000	$ 28,665,000	$ 12,723,000	$ 1,955,000
Purchases	3,169,000	43,000	22,517,000	39,376,000
Settlements	(10,068,000)	(9,939,000)	(35,305,000)	(40,437,000)
Net gains recognized as regulatory assets and liabilities	(3,213,000)	1,669,000	25,342,000	19,544,000
Balance at end of period	25,277,000	20,438,000	25,277,000	20,438,000
Transfers into Level 3	0	0	0	0
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Transfers out of Level 3	$ 0	$ 0	$ 0	$ 0

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Fair Value of Financial Assets and Liabilities, Fair Value of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Carrying Amount
Financial Liabilities, Balance Sheet Groupings [Abstract]
Long-term debt, including current portion	$ 1,830,796	$ 1,829,941
Fair Value
Financial Liabilities, Balance Sheet Groupings [Abstract]
Long-term debt, including current portion	$ 1,832,158	$ 2,001,992

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Other Income, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Other Income and Expenses [Abstract]
Interest income	$ 473	$ 296	$ 771	$ 488
Other Nonoperating Income	0	1	2	0
Other Nonoperating Expense	(1)	0	0	0
Insurance policy expense	(11)	(12)	(35)	(36)
Defined Benefit Plan, Non-service Costs	(1,487)	(749)	(3,250)	(2,247)
Other expense, net	$ (1,026)	$ (464)	$ (2,512)	$ (1,795)

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Benefit Plans and Other Postretirement Benefits (Details) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Jan. 31, 2018 USD ($) Plan	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)		Sep. 30, 2017 USD ($)
Pension Plan [Member]
Components of Net Periodic Benefit Cost (Credit) [Abstract]
Service cost		$ 2,429	$ 2,439	$ 7,289		$ 7,319
Interest cost		4,603	4,928	13,808	[1]	14,783	[1]
Expected return on plan assets		(7,082)	(6,971)	(21,246)	[1]	(20,913)	[1]
Amortization of prior service cost (credit)		(34)	0	(103)	[1]	0	[1]
Amortization of net loss (gain)		3,517	3,245	10,551	[1]	9,735	[1]
Net periodic benefit cost (credit)		3,433	3,641	10,299		10,924
Defined Benefit Plan Credits Not Recognized Due To Effects of Regulation		(468)	553	1,267		1,275
Net benefit cost (credit) recognized for financial reporting		2,965	4,194	11,566		12,199
Total contributions to the pension plans during the period	$ 8,000
Pension Plan [Member] | Xcel Energy Inc.
Components of Net Periodic Benefit Cost (Credit) [Abstract]
Total contributions to the pension plans during the period	$ 150,000
Number of Xcel Energy's pension plans to which contributions were made | Plan	4
Other Postretirement Benefits Plan [Member]
Components of Net Periodic Benefit Cost (Credit) [Abstract]
Service cost		280	219	839		657
Interest cost		410	415	1,231	[1]	1,245	[1]
Expected return on plan assets		(615)	(589)	(1,846)	[1]	(1,767)	[1]
Amortization of prior service cost (credit)		(101)	(100)	(302)	[1]	(300)	[1]
Amortization of net loss (gain)		(114)	(155)	(340)	[1]	(465)	[1]
Net periodic benefit cost (credit)		(140)	(210)	(418)		(630)
Defined Benefit Plan Credits Not Recognized Due To Effects of Regulation		0	0	0		0
Net benefit cost (credit) recognized for financial reporting		$ (140)	$ (210)	$ (418)		$ (630)

[1] The components of net periodic cost other than the service cost component are included in the line item “other expense, net” in the income statement or capitalized on the balance sheet as a regulatory asset.

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Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Accumulated other comprehensive loss at beginning of period			$ 2,130,363
Losses reclassified from net accumulated other comprehensive loss	$ 31	$ 26	92	$ 75
Accumulated other comprehensive loss at end of period	2,380,749		2,380,749
Gains and Losses on Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Accumulated other comprehensive loss at beginning of period	(752)	(659)	(776)	(678)
Losses reclassified from net accumulated other comprehensive loss	13	10	37	29
Net current period other comprehensive income	13	10	37	29
Accumulated other comprehensive loss at end of period	(739)	(649)	(739)	(649)
Defined Benefit Pension and Postretirement Items
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Accumulated other comprehensive loss at beginning of period	(654)	(582)	(691)	(612)
Losses reclassified from net accumulated other comprehensive loss	18	16	55	46
Net current period other comprehensive income	18	16	55	46
Accumulated other comprehensive loss at end of period	(636)	(566)	(636)	(566)
Total
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Accumulated other comprehensive loss at beginning of period	(1,406)	(1,241)	(1,467)	(1,290)
Losses reclassified from net accumulated other comprehensive loss	31	26	92	75
Net current period other comprehensive income	31	26	92	75
Accumulated other comprehensive loss at end of period	$ (1,375)	$ (1,215)	$ (1,375)	$ (1,215)

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Other Comprehensive Income (Reclassifications from AOCI) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018		Sep. 30, 2017
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total, pre-tax	$ (96,215)	$ (105,050)	$ (208,491)		$ (199,908)
Tax benefit	14,674	37,269	35,400		71,710
Total amounts reclassified, net of tax	31	26	92		75
Gains and Losses on Cash Flow Hedges
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total amounts reclassified, net of tax	13	10	37		29
Gains and Losses on Cash Flow Hedges | Amounts Reclassified from Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total, pre-tax	16	16	47		47
Tax benefit	(3)	(6)	(10)		(18)
Total, net of tax	13	10	37		29
Gains and Losses on Cash Flow Hedges | Interest Rate Derivatives | Amounts Reclassified from Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest charges	16	16	47		47	[1]
Amortization of net loss | Amounts Reclassified from Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total, pre-tax	23	24	70	[2]	72	[2]
Defined Benefit Pension and Postretirement Items
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total amounts reclassified, net of tax	18	16	55		46
Defined Benefit Pension and Postretirement Items | Amounts Reclassified from Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total, pre-tax	23	24	70		72
Tax benefit	(5)	(8)	(15)		(26)
Total amounts reclassified, net of tax	$ 18	$ 16	$ 55		$ 46

[1] Included in interest charges.

[2] Included in the computation of net periodic pension and postretirement benefit costs. See Note 10 to the financial statements for details regarding these benefit plans.

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Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Disaggregation of Revenue [Line Items]
Operating revenues	$ 540,063	$ 551,623	$ 1,468,633	$ 1,491,491
Maximum number of months following end of annual period in which revenues are earned to be included in incentive programs			24 months
Regulated Electric [Member] | Total revenue from contracts with customers
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	537,294	544,714	$ 1,453,874	1,454,735
Regulated Electric [Member] | Retail
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	356,827	368,074	939,541	970,479
Regulated Electric [Member] | Retail | Residential
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	114,387	113,380	279,543	277,169
Regulated Electric [Member] | Retail | Commercial and industrial (C&I)
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	229,457	241,295	625,988	658,057
Regulated Electric [Member] | Retail | Other
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	12,983	13,399	34,010	35,253
Regulated Electric [Member] | Wholesale
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	117,949	116,635	326,810	309,669
Regulated Electric [Member] | Transmission
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	60,726	56,143	175,342	166,715
Regulated Electric [Member] | Other
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	1,792	3,862	12,181	7,872
Regulated Electric [Member] | Alternative and Other [Member]
Disaggregation of Revenue [Line Items]
Operating revenues	2,769	6,909	14,759	36,756
Total revenues | Regulated Electric [Member]
Disaggregation of Revenue [Line Items]
Operating revenues	$ 540,063	$ 551,623	$ 1,468,633	$ 1,491,491