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:



	Three Months Ended Dec. 31, 2018			Year Ended Dec. 31
(Amounts in Millions, Except Interest Rates)	Three Months Ended Dec. 31, 2018			2018			2017			2016
Borrowing limit	$	100		$	100		$	100		$	100
Amount outstanding at period end	—			—			—			—
Average amount outstanding	14			29			13			28
Maximum amount outstanding	74			100			100			100
Weighted average interest rate, computed on a daily basis	2.13		%	1.96		%	1.12		%	0.67		%
Weighted average interest rate at end of period	N/A			N/A			N/A			N/A

Commercial Paper — SPS meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility.

Commercial paper outstanding for SPS was as follows:



	Three Months Ended Dec. 31, 2018			Year Ended Dec. 31
(Amounts in Millions, Except Interest Rates)	Three Months Ended Dec. 31, 2018			2018			2017			2016
Borrowing limit	$	400		$	400		$	400		$	400
Amount outstanding at period end	42			42			—			50
Average amount outstanding	20			30			69			43
Maximum amount outstanding	100			144			176			140
Weighted average interest rate, computed on a daily basis	2.45		%	2.27		%	1.13		%	0.67		%
Weighted average interest rate at end of period	2.80			2.80			NA			0.95

Letters of Credit — SPS may use letters of credit, typically with terms of one-year, to provide financial guarantees for certain operating obligations. At Dec. 31, 2018 and 2017, there were $2 million and $3 million of letters of credit outstanding, respectively, under the credit facility. Amounts approximate their fair value.

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.

Features of SPS’ credit facility:


^(a)	The SPS credit facility has a financial covenant requiring that the debt-to-total capitalization ratio be less than or equal to 65%.


^(b)	All extension requests are subject to majority bank group approval.

The credit facility has a cross-default provision that SPS will be in default on its borrowings under the facility if SPS or any of its future significant subsidiaries whose total assets exceed 15% of SPS’ total assets default on indebtedness in an aggregate principal amount exceeding $75 million.

If SPS does not comply with the covenant, an event of default may be declared, and if not remedied, any outstanding amounts due under the facility can be declared due by the lender. As of Dec. 31, 2018, SPS was in compliance with all financial covenants.

SPS had the following committed credit facilities available as of Dec. 31, 2018.



Credit Facility ^(a)	Drawn ^(b)	Available
$400	$44	$356


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


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

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 facility outstanding at Dec. 31, 2018 and 2017.

Long-Term Borrowings and Other Financing Instruments

Generally, all property of SPS is subject to the lien of its first mortgage indenture. Debt premiums, discounts and expenses are amortized over the life of the related debt. The premiums, discounts and expenses for refinanced debt are deferred and amortized over the life of the new issuance.

Long term debt obligations for SPS as of Dec. 31:



(Millions of Dollars)	Maturity Range	Interest Rate Range 2018	Interest Rate Range 2017	2018			2017
Mortgage bonds	2024 - 2048	3.30% - 4.50%	3.30% - 4.50%	$	1,800		$	1,500
Unsecured senior notes	2033 - 2036	6.00%	6.00% - 8.75%	350			350
Unamortized discount				(4		)	(2		)
Unamortized debt issuance cost				(20		)	(18		)
Current maturities				—			—
Total long term debt				$	2,126		$	1,830

During the next five years, SPS has no long term debt maturities.

Deferred Financing Costs — Deferred financing costs of approximately $20 million and $18 million, net of amortization, are presented as a deduction from the carrying amount of long-term debt at Dec. 31, 2018 and 2017, respectively. SPS is amortizing these financing costs over the remaining maturity periods of the related debt.

2018 financings:



Amount	Financing Instrument	Interest Rate		Maturity Date
$300 million	First mortgage bonds	4.40	%	Nov 15, 2048

2017 financings:



Amount	Financing Instrument	Interest Rate		Maturity Date
$450 million	First mortgage bonds	3.70	%	Aug 15, 2047

Capital Stock — SPS has the following preferred stock:



	Preferred Stock Authorized (Shares)	Par Value of Preferred Stock	Preferred Stock Outstanding (Shares)2018 and 2017
SPS	10,000,000	1.00	0

Dividend Restrictions — SPS dividends are subject to the FERC’s jurisdiction, which prohibits the payment of dividends out of capital accounts. Dividends are solely to be paid from retained earnings. SPS is required to be current on particular interest payments before dividends can be paid.

SPS’ state regulatory commission imposes the most restrictive dividend limitations.

Requirements and actuals as of Dec. 31, 2018:



Equity to Total Capitalization Ratio - Required Range				Equity to Total Capitalization Ratio - Actual ^(a)
Low		High		2018
45.0	%	55.0	%	54.4	%


^(a)	SPS excludes short-term debt.



	Unrestricted Retained Earnings			Total Capitalization			Limit on Total Capitalization
	2018			2018			2018
SPS^(a)	$	605.7	million	$	4.7	billion	N/A

^(a) SPS may not pay a dividend that would cause it to lose its investment grade bond rating.

Debt-to-Total Capitalization Ratio^(a)

Amount Facility May Be Increased (millions)

Additional Periods For Which a One-Year Extension May Be Requested ^(b)