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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024 or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
001-03789
(Commission File Number)
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)(IRS 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)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
N/AN/AN/A
Securities registered pursuant to Section 12(g) of the Act:  None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  ☒ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  ☐ Yes ☒ No
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.  ☒ Yes   ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of 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).  ☒ Yes  ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☐ 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  ☐ Yes   ☒ No
As of Feb. 27, 2025, 100 shares of common stock, par value $1.00 per share, were outstanding, all of which were held by Xcel Energy Inc., a Minnesota corporation.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Item 14 of Form 10-K is set forth under the heading “Independent Registered Public Accounting Firm – Audit and Non-Audit Fees” in Xcel Energy Inc.’s definitive Proxy Statement for the 2025 Annual Meeting of Shareholders which definitive Proxy Statement is expected to be filed with the SEC on or about April 8, 2025. Such information set forth under such heading is incorporated herein by this reference hereto.
Southwestern Public Service Company meets the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format permitted by General Instruction I(2).


TABLE OF CONTENTS
PART I
Item 1 —
Item 1A —
Item 1B —
Item 1C —
Item 2 —
Item 3 —
Item 4 —
PART II
Item 5 —
Item 6 —
Item 7 —
Item 7A —
Item 8 —
Item 9 —
Item 9A —
Item 9B —
Item 9C —
PART III
Item 10 —
Item 11 —
Item 12 —
Item 13 —
Item 14 —
PART IV
Item 15 —
Item 16 —

This Form 10-K is filed by SPS. SPS is a wholly owned subsidiary of Xcel Energy Inc. Additional information on Xcel Energy is available in various filings with the SEC. This report should be read in its entirety.
2
Table of Contents
PART I
ITEM l — BUSINESS
Definitions of Abbreviations
Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former)
NSP-MinnesotaNorthern States Power Company, a Minnesota corporation
NSP-WisconsinNorthern States Power Company, a Wisconsin corporation
PSCoPublic Service Company of Colorado
SPSSouthwestern Public Service Company
Utility subsidiariesNSP-Minnesota, NSP-Wisconsin, PSCo and SPS
Xcel EnergyXcel Energy Inc. and its subsidiaries
Federal and State Regulatory Agencies
DOTUnited States Department of Transportation
EPAUnited States Environmental Protection Agency
ERCOTElectric Reliability Council of Texas
FASBFinancial accounting standards board
FERCFederal Energy Regulatory Commission
IRSInternal Revenue Service
NERCNorth American Electric Reliability Corporation
NISTNational Institute of Standards and Technology
NMPRCNew Mexico Public Regulation Commission
PHMSAPipeline and Hazardous Materials Safety Administration
PUCTPublic Utility Commission of Texas
SECSecurities and Exchange Commission
Other
AFUDCAllowance for funds used during construction
AROAsset retirement obligation
ASCFASB Accounting Standards Codification
ASUAccounting standards update
C&ICommercial and industrial
CCRCoal combustion residuals
CCR RuleFinal rule (40 CFR 257.50 - 257.107) published by the EPA regulating the management, storage and disposal of CCRs as a nonhazardous waste
CEOChief executive officer
CERCLAComprehensive Environmental Response, Compensation, and Liability Act
CFOChief financial officer
CO2
Carbon dioxide
CPCNCertificate of public convenience and necessity
CSPVCrystalline silicon photovoltaic
CWIPConstruction work in progress
D.C. CircuitUnited States Court of Appeals for the District of Columbia Circuit
DSMDemand side management
ETREffective tax rate
FTRFinancial transmission right
GAAPGenerally accepted accounting principles
GHGGreenhouse gas
IPPIndependent power producing entity
IRPIntegrated resource plan
ISOIndependent system operator
ITCInvestment tax credit
LP&LLubbock Power and Light
MGPManufactured gas plant
Native loadCustomer demand of retail and wholesale customers whereby a utility has an obligation to serve under statute or long-term contract
NAVNet asset value
NOLNet operating loss
NOxNitrogen oxides
O&MOperating and maintenance
OATTOpen access transmission tariff
ONES
Operations, Nuclear, Environmental and Safety
PFAS
Per- and polyfluoroalkyl Substances
Post-65Post-Medicare
PPAPurchased power agreement
Pre-65Pre-Medicare
PTCProduction tax credit
RECRenewable energy credit
RFPRequest for proposal
ROEReturn on equity
ROURight-of-use
RTORegional transmission organization
S&PStandard & Poor’s Global Ratings
SERPSupplemental executive retirement plan
SPPSouthwest Power Pool, Inc.
SRPSystem resiliency plan
TCJA2017 federal tax reform enacted as Public Law No: 115-97, commonly referred to as the Tax Cuts and Jobs Act
VIEVariable interest entity
WACCWeighted average cost of capital
Measurements
KVKilovolts
KWhKilowatt hours
MMBtuMillion British thermal units
MWMegawatts
MWhMegawatt hours

Where to Find More Information
SPS is a wholly owned subsidiary of Xcel Energy Inc., and Xcel Energy’s website address is www.xcelenergy.com. Xcel Energy makes available, free of charge through its website, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after the reports are electronically filed with or furnished to the SEC. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically at http://www.sec.gov. The information on Xcel Energy’s website is not a part of, or incorporated by reference in, this annual report on Form 10-K.
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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 those relating to future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, expected pension contributions and expected impact on our results of operations, financial condition and cash flows of interest rate changes, increased credit exposure and legal proceeding outcomes, 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 Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2024 (including risk factors listed from time to time by SPS in reports filed with the SEC, including “Risk Factors” in Item 1A of this Annual Report on Form 10-K), could cause actual results to differ materially from management expectations as suggested by such forward-looking information: operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee workforce and third-party contractor factors; violations of our Codes of Conduct; our ability to recover costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including recessionary conditions, inflation rates, monetary fluctuations, supply chain constraints, and their impact on capital expenditures and/or 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; uncertainty regarding epidemics; effects of geopolitical events, including war and acts of terrorism; cybersecurity threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather events; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; costs of potential regulatory penalties and wildfire damages in excess of liability insurance coverage; regulatory changes and/or limitations related to the use of natural gas as an energy source; challenging labor market conditions and our ability to attract and retain a qualified workforce; and our ability to execute on our strategies or achieve expectations related to environmental, social and governance matters including as a result of evolving legal, regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets.
Company Overview
SPS-map-185-blk.jpg
Electric customers0.4 million
SPS was incorporated in 1921 under the laws of New Mexico. SPS conducts business in Texas and New Mexico and generates, purchases, transmits, distributes and sells electricity.
Total assets$10.8 billion
Rate Base (estimated)$7.6 billion
GAAP ROE9.57%
Electric generating capacity (owned)5,100 MW
Electric transmission lines (conductor miles)41,000 miles
Electric distribution lines (conductor miles)25,000 miles
Electric Operations
Electric operations consist of energy supply, generation, transmission and distribution activities. SPS had electric sales volume of 28,270 (millions of KWh), 0.4 million customers and electric revenues of $1,939 million for 2024.
Electric Operations (percentage of total)Sales VolumeNumber of CustomersRevenues
Residential13 %79 %21 %
C&I74 %19 %52 %
Other13 %2 %27 %
Retail Sales/Revenue Statistics (a)
20242023
KWH sales per retail customer61,647 57,541 
Revenue per retail customer$3,566 $3,914 
Residential revenue per KWh11.00 ¢11.86 ¢
C&I revenue per KWh4.77 ¢5.70 ¢
Total retail revenue per KWh5.78 ¢6.80 ¢
(a)See Note 6 to the financial statements for further information.
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Owned and Purchased Energy Generation — 2024
365
Electric Energy Sources
Total electric energy generation by source for the year ended Dec. 31:
10K 2024 trimmed SPS.jpgCarbon–Free
SPS’ carbon–free energy portfolio includes wind and solar power from both owned generating facilities and PPAs. Carbon–free percentages will vary year over year based on system additions, commodity costs, weather, system demand and transmission constraints.
See Item 2 — Properties for further information.
Wind
Wind Capacity is shown as net maximum capacity. Net maximum capacity is attainable only when wind conditions are sufficiently available.
Owned — Owned and operated wind farms with corresponding capacity:
20242023
Wind FarmsCapacity (MW)Wind FarmsCapacity (MW)
2 985 2 985 
PPAs — Number of PPAs with capacity range:
20242023
PPAsRange (MW)PPAsRange (MW)
16 1 — 25016 1 — 250
Current contracted wind capacity for PPAs was 1,562 in 2024 and 2023.
In 2024, the average cost of wind energy was $1 per MWh for owned generation and $28 per MWh for existing PPAs. In 2023, the average cost of wind energy was $6 per MWh for owned generation and $26 per MWh for existing PPAs. The cost of owned wind includes the impact of PTCs.
Solar
PPAs — Solar PPAs capacity by type:
TypeCapacity (MW)
Distributed Generation30 
Utility-Scale192 
Total 222 
The average cost of solar energy under existing distributed and utility-scale generation PPAs was $68 per MWh and $67 per MWh in 2024 and 2023, respectively.
Approximately 450 MW of solar and storage are expected to be placed in service in 2026 and 2027.
Fossil Fuel
SPS’ fossil fuel energy portfolio includes coal and natural gas power from both owned generating facilities and PPAs.
See Item 2 — Properties for further information.
Coal
SPS owns and operates coal units with approximately 2,100 MW of total 2024 net summer dependable capacity, which provided 15% of the SPS energy mix in 2024. This amount includes the coal units Harrington Units 1-3, which are in the process of being converted to natural gas (net summer dependable capacity of 1,018 MW).
Approved early coal plant retirements:
YearPlant UnitCapacity (MW)
2028
Tolk 1
532
2028Tolk 2535
Coal Fuel Cost — Delivered cost per MMBtu of coal consumed for owned electric generation and the percentage of total fuel requirements (coal and natural gas):
Coal
CostPercent
2024$2.87 34 %
20232.73 48 
Natural Gas
SPS has eight natural gas plants with approximately 2,000 MW of total 2024 net summer dependable capacity, which provided 46% of the SPS energy mix in 2024.
Natural gas supplies, transportation and storage services for power plants are procured to provide an adequate supply of fuel. Remaining requirements are procured through a liquid spot market. Generally, natural gas supply contracts have variable pricing that is tied to natural gas indices. Natural gas supply and transportation agreements include obligations for the purchase and/or delivery of specified volumes or payments in lieu of delivery.
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Natural Gas Cost — Delivered cost per MMBtu of natural gas consumed for owned electric generation and the percentage of total fuel requirements (coal and natural gas):
Natural Gas
CostPercent
2024$0.94 66 %
20232.35 52 
As part of the Harrington gas conversion, a total of 339 MW was converted from coal to natural gas in 2024 and an additional 679 MW will be converted in 2025.
Capacity and Demand
Uninterrupted system peak demand and occurrence date:
20242023
MWDateMWDate
4,437 Aug. 194,372 Aug. 17
Transmission
Transmission lines deliver electricity over long distances from power sources to substations closer to customers. A strong transmission system ensures continued reliable and affordable service, ability to meet state and regional energy policy goals, and support for a diverse generation mix, including renewable energy. SPS owns more than 40,000 conductor miles of transmission lines across its service territory.
See Item 2 - Properties for further information.
Distribution
Distribution lines allow electricity to travel at lower voltages from substations directly to customers. SPS has a vast distribution network, owning and operating approximately 25,000 conductor miles of distribution lines across our service territory.
See Item 2 - Properties for further information.
Governmental Regulations
Public Utility Regulation
See Item 7 for discussion of public utility regulation.
Environmental Regulation
Our facilities are regulated by federal and state agencies that have jurisdiction over air emissions, water quality, wastewater discharges, solid and hazardous wastes or substances. Certain SPS activities require registrations, permits, licenses, inspections and approvals from these agencies. SPS has received necessary authorizations for the construction and continued operation of its generation, transmission and distribution systems. Our facilities strive to operate in compliance with applicable environmental standards and related monitoring and reporting requirements.
However, it is not possible to determine what additional facilities or modifications to existing or planned facilities will be required as a result of changes to regulations, interpretations or enforcement policies or what effect future laws or regulations may have. We may be required to incur expenditures in the future for remediation of historic and current operating sites and other waste treatment, storage and disposal sites.
There are significant environmental regulations to encourage use of clean energy technologies and regulate emissions of GHGs. SPS has undertaken numerous initiatives to meet current requirements and prepare for potential future regulations, reduce GHG emissions and respond to state renewable and energy efficiency goals. However, costs to comply with past environmental regulations have largely been recoverable through rates.
Emerging Environmental Regulation
Power Plant Greenhouse Gas Regulations — In April 2024, the EPA published final rules addressing control of CO2 emissions from the power sector. The rules regulate new natural gas generating units and emission guidelines for existing coal and certain natural gas generation. The rules create subcategories of coal units based on planned retirement date and subcategories of natural gas combustion turbines and combined cycle units based on utilization. The CO2 control requirements vary by subcategory. Based on current estimates and assumptions, SPS has determined that due to scheduled plant retirements, there is minimal financial or operational impact associated with these requirements and believes that the cost of these initiatives or replacement generation would be recoverable through rates based on prior state commission practices.
Emerging Contaminants of Concern
PFAS are man-made chemicals that are widely used in consumer products and can persist and bio-accumulate in the environment. SPS does not manufacture PFAS, but because PFAS are so ubiquitous in products and the environment, it may impact our operations.
In June 2024, the EPA finalized a rule that designated certain PFAS as hazardous substances under CERCLA. In July 2024, the EPA finalized another rule that set enforceable drinking water standards for certain PFAS.
Potential costs for these rules and any additional proposed regulations related to PFAS are uncertain and will be determined on a site specific basis where applicable. If costs are incurred, SPS believes the costs will be recoverable through rates based on prior state commission practices.
Other
Our operations are subject to workplace safety standards under the Federal Occupational Safety and Health Act of 1970 (“OSHA”) and comparable state laws that regulate the protection of worker health and safety. In addition, the Company is subject to other government regulations impacting such matters as labor, competition, data privacy, etc. Based on information to date and because our policies and business practices are designed to comply with all applicable laws, we do not believe the effects of compliance on our operations, financial condition or cash flows are material.
General
General Economic Conditions
Economic conditions may have a material impact on SPS’ operating results. Management cannot predict the impact of fluctuating energy or commodity prices, pandemics, terrorist activity, war or the threat of war. We could experience a material impact to our results of operations, future growth or ability to raise capital resulting from a sustained general slowdown in economic growth or a significant increase in interest rates or inflation.
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Seasonality
Demand for electric power is affected by seasonal differences in the weather. In general, peak sales of electricity occur in the summer months. As a result, the overall operating results may fluctuate substantially on a seasonal basis. Additionally, SPS’ operations have historically generated less revenues and income when weather conditions are warmer in the winter and cooler in the summer.
Competition
SPS is subject to public policies that promote competition and development of energy markets. SPS’ industrial and large commercial customers have the ability to generate their own electricity. In addition, customers may have the option of substituting other fuels or relocating their facilities to a lower cost region.
Customers have the opportunity to supply their own power with distributed generation including solar generation and can currently avoid paying for most of the fixed production, transmission and distribution costs incurred to serve them in most jurisdictions.
Several states have incentives for the development of rooftop solar, community solar gardens and other distributed energy resources. Distributed generating resources are potential competitors to SPS’ electric service business with these incentives and federal tax subsidies.
The FERC has continued to promote competitive wholesale markets through open access transmission and other means. SPS’ wholesale customers can purchase energy from other generation resources and transmission services from other service providers to serve their native load.
FERC Order No. 1000 established competition for ownership of certain new electric transmission facilities under Federal regulations. Some states have state laws that allow the incumbent a Right of First Refusal to own these transmission facilities.
FERC Order 2222 requires that RTO and ISO markets allow participation of aggregations of distributed energy resources. This order is expected to incentivize distributed energy resource adoption, however implementation is expected to vary by RTO/ISO and the near, medium, and long-term impacts of Order 2222 remain unclear.
SPS has franchise agreements with cities subject to periodic renewal; however, a city could seek alternative means to access electric power, such as municipalization. No municipalization activities are occurring presently.
While facing these challenges, SPS believes its rates and services are competitive with alternatives currently available.
Employees
As of Dec. 31, 2024, SPS had 1,140 full-time employees and seven part-time employees, of which 788 were covered under collective-bargaining agreements.
ITEM 1A — RISK FACTORS
Xcel Energy, which includes SPS, is subject to a variety of risks, many of which are beyond our control. Risks that may adversely affect the business, financial condition, results of operations or cash flows are described below. Although the risks are organized by heading, and each risk is described separately, many of the risks are interrelated. These risks should be carefully considered together with the other information set forth in this report and future reports that SPS files with the SEC.
While we believe we have identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our business, financial condition, results of operations or cash flows in the future.
Oversight of Risk and Related Processes
SPS’ Board of Directors is responsible for the oversight of material risk and maintaining an effective risk monitoring process. Management and the Board of Directors have responsibility for overseeing the identification and mitigation of key risks.
SPS maintains a robust compliance program and promotes a culture of compliance beginning with the tone at the top. The risk mitigation process includes adherence to our Code of Conduct and compliance policies, operation of formal risk management structures and overall business management. SPS further mitigates inherent risks through formal risk committees and corporate functions such as internal audit, and internal controls over financial reporting and legal.
Management identifies and analyzes risks to determine materiality and other attributes such as timing, probability and controllability. Identification and risk analysis occurs formally through risk assessment conducted by senior management, the financial disclosure process, hazard risk procedures, internal audit and compliance with financial and operational controls.
Management also identifies and analyzes risk through the business planning process, development of goals and establishment of key performance indicators, including identification of barriers to implementing our strategy. The business planning process also identifies likelihood and mitigating factors to prevent the assumption of inappropriate risk to meet goals.
Management communicates regularly with the Board of Directors and its sole stockholder regarding risk. Senior management presents and communicates a periodic risk assessment to the Board of Directors, providing information on the risks that management believes are material, including financial impact, timing, likelihood and mitigating factors. The Board of Directors regularly reviews management’s key risk assessments, which includes areas of existing and future macroeconomic, financial, operational, policy, environmental, safety and security risks.
The oversight, management and mitigation of risk is an integral and continuous part of the Board of Directors’ governance of SPS. Processes are in place to confirm appropriate risk oversight, as well as identification and consideration of new risks.
Risks Associated with Our Business
Operational Risks
Our electric generation, transmission and distribution operations involve numerous risks that may result in accidents and other operating risks and costs.
Our electric generation, transmission and distribution activities include inherent hazards and operating risks such as contact, fire and outages. Our natural gas transmission activities include inherent hazards and operating risks, such as leaks, explosions, outages and mechanical problems.
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These risks could result in loss of life, significant property damage, environmental pollution, impairment of our operations and substantial financial losses to customers, the public, employees or third-party contractors. We maintain insurance against most, but not all, of these risks and losses. The occurrence of these events, if not fully covered by insurance, could have a material effect on our financial condition, results of operations and cash flows as well as potential reputational impact.
Other uncertainties and risks inherent in operating and maintaining SPS’ facilities include, but are not limited to:
•Risks associated with facility start-up operations, such as whether the facility will achieve projected operating performance on schedule and otherwise as planned.
•Failures in the availability, acquisition or transportation of fuel or other supplies.
•Impact of adverse weather conditions and natural disasters, including, wildfires, tornadoes, avalanches, icing events, floods, high winds, droughts and the availability or changes to wind patterns.
•Performance below expected or contracted levels of output or efficiency.
•Availability of replacement or new equipment.
•Availability of adequate water resources and ability to satisfy water intake and discharge requirements.
•Inability to identify, manage properly or mitigate equipment defects.
•Use of new or unproven technology.
•Inability to use information effectively given the rapidly increasing volume of data.
•Risks associated with dependence on a specific type of fuel or fuel source, such as commodity price risk, availability of adequate fuel supply and transportation and lack of available alternative fuel sources.
•Increased competition due to, among other factors, new facilities, excess supply, shifting demand and regulatory changes.
•Increased costs due to aging infrastructure.
Additionally, compliance with existing and potential new regulations related to the operation and maintenance of our natural gas infrastructure could result in significant costs. The PHMSA is responsible for administering the Department of Transportation’s national regulatory program to assure the safe transportation of natural gas, petroleum and other hazardous materials by pipelines. The PHMSA continues to develop regulations and other approaches to risk management to assure safety in design, construction, testing, operation, maintenance and emergency response of natural gas pipeline infrastructure. We have programs in place to comply with these regulations and systematically monitor and renew infrastructure over time, however, a significant incident or material finding of non-compliance could result in penalties and higher costs of operations.
Our electric transmission and distribution operations and natural gas transmission operations are dependent upon complex information technology systems and network infrastructure, the failure of which could disrupt our normal business operations, which could have a material adverse effect on our ability to process transactions and provide services.
Our utility operations are subject to long-term planning and project risks.
Most utility investments are planned to be used for decades. Transmission and generation investments typically have long lead times and are planned well in advance of in-service dates and typically subject to long-term resource plans. These plans are based on numerous assumptions such as: sales growth, customer usage, commodity prices, economic activity, costs, regulatory mechanisms, customer behavior, available technology and public policy. Our long-term resource plan is dependent on our ability to obtain required approvals (including regulatory approval in jurisdictions where SPS operates), develop necessary technical expertise, allocate and coordinate sufficient resources and adhere to budgets and timelines.
In addition, the long-term nature of both our planning processes and our asset lives are subject to risk. The utility sector is undergoing significant change (e.g., increases in energy efficiency, wider adoption of distributed generation and shifts away from fossil fuel generation to renewable generation). Customer adoption of these technologies and increased energy efficiency could result in excess transmission and generation resources, downward pressure on sales growth, and potentially stranded costs if we are not able to fully recover costs and investments.
The magnitude and timing of resource additions and changes in customer demand may not coincide with evolving customer preference for generation resources and end-uses, which introduces further uncertainty into long-term planning. Efforts to electrify the transportation and building sectors to reduce GHG emissions may result in higher electric demand and lower natural gas demand over time. New data centers and crypto mining facilities could generate significant increase in demand. Higher electric demand may require us to adopt new technologies and make significant generation, transmission and distribution investments including advanced grid infrastructure, which increases exposure to overall grid instability and technology obsolescence. Evolving stakeholder preference for lower emissions from generation sources and end-uses, like heating, may impact our resource mix and put pressure on our ability to recover capital investments in natural gas generation and delivery. Multiple states may not agree as to the appropriate resource mix, which may lead to costs to comply with one jurisdiction that are not recoverable across all jurisdictions served by the same assets.
We require inputs such as coal, natural gas and water. Lack of availability of these resources could jeopardize long-term operations of our facilities or make them uneconomic to operate.
Our utility operations are highly dependent on suppliers to deliver components in accordance with short and long-term project schedules.
Our products contain components that are globally sourced from suppliers. A shortage of key components in which an alternative supplier is not identified could significantly impact operations and project plans for SPS and our customers. Such impacts could include timing of projects and the potential for project cancellation. Failure to adhere to project budgets and timelines could adversely impact our results of operations, financial condition or cash flows.
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We are subject to physical and financial risks associated with climate change and other weather, natural disaster and resource depletion impacts.
Climate change can create physical and financial risk. Physical risks include changes in weather conditions and extreme weather events. Our customers’ energy needs vary with weather. To the extent weather conditions are affected by climate change, customers’ energy use could increase or decrease. Increased energy use due to weather changes over the long-term may require us to invest in generating assets, transmission and infrastructure. Decreased energy use due to weather changes may result in decreased revenues.
Severe weather impacts our service territories, primarily when thunderstorms, flooding, tornadoes, wildfires, snow, ice storms or extreme temperatures (high heating/cooling days) occur. Extreme weather conditions in general require system backup and can contribute to increased system stress, including service interruptions. Extreme weather conditions creating high energy demand may raise electricity prices, increasing the cost of energy we provide to our customers.
To the extent the frequency of extreme weather events increases, this could increase our cost of providing service and result in more frequent service interruptions. Periods of extreme temperatures could also impact our ability to meet demand.
Drought or water depletion could adversely impact our ability to provide electricity to customers, cause early retirement of power plants that require water or increase the cost for energy.
Adverse events may result in increased insurance costs and/or decreased insurance availability. We may not recover all costs related to mitigating these physical and financial risks.
Our utilities have physical and financial risks associated with wildfires.
In recent years, wildfires have impacted the utility industry. More frequent and severe drought conditions, extreme swings in amount and timing of precipitation, changes in vegetation, unseasonably warm temperatures, very low humidity, stronger winds and other factors have increased the duration of the wildfire season and the potential impact of an event. Also, the expansion of the wildland urban interface increases the wildfire risk to surrounding communities and SPS' electric infrastructure. Wildfires could jeopardize SPS’ electric infrastructure and third-party property and result in temporary power outages or shortages in our service territories.
We have programs in place to mitigate the physical and financial risks associated with wildfires; however, SPS’ wildfire mitigation initiatives may not be successful or effective in preventing or reducing wildfire-related losses. Wildfires can occur even when SPS follows its procedures and implements its wildfire mitigation initiatives.
Other potential risks associated with wildfires and other climate events include the inability to secure sufficient insurance coverage, increased costs of insurance, or ability for insurers to meet their obligations, regulatory recovery risk, and the potential for a credit downgrade and subsequent additional costs to access capital markets.
While we carry liability insurance, given an extreme event, if SPS was found to be liable for wildfire damages, amounts could potentially exceed our coverage and negatively impact our results of operations, financial condition or cash flows.
We are subject to commodity risks and other risks associated with energy markets and energy production.
A significant increase in fuel costs could cause a decline in customer demand, adverse regulatory outcomes and an increase in bad debt expense which may have a material impact on our results of operations. Despite existing fuel cost recovery mechanisms, higher fuel costs could significantly impact our results of operations if costs are not recovered. Delays in the timing of the collection of fuel cost recoveries could impact our cash flows and liquidity.
A significant disruption in supply could cause us to seek alternatives at potentially higher costs. Additionally, supply shortages may not be fully resolved, which negatively impacts our ability to provide services to our customers. Failure to provide service due to disruptions may also result in fines, penalties or cost disallowances through the regulatory process. Also, significantly higher energy or fuel costs relative to sales commitments negatively impacts our cash flows and results of operations.
We also engage in wholesale sales and purchases of electric capacity, energy and energy-related products as well as natural gas. In many markets, emission allowances and/or RECs are also needed to comply with various statutes and commission rulings. As a result, we are subject to market supply and commodity price risk.
Commodity price changes can affect the value of our commodity trading derivatives. We mark certain derivatives to estimated fair market value on a daily basis. Settlements can vary significantly from estimated fair values recorded and significant changes from the assumptions underlying our fair value estimates could cause earnings variability. The management of risks associated with hedging and trading is based, in part, on programs and procedures which utilize historical prices and trends.
Public perception often does not distinguish between pass through commodity costs and base rates. High commodity prices that are passed through to customer bills could impact our ability to recover costs for other improvements and operations.
Due to the uncertainty involved in price movements and potential deviation from historical pricing, SPS is unable to fully assure that its risk management programs and procedures would be effective to protect against all significant adverse market deviations. In addition, SPS cannot fully assure that its controls will be effective against all potential risks. If such programs and procedures are not effective, SPS’ results of operations, financial condition or cash flows could be materially impacted.
Failure to attract and retain a qualified workforce could have an adverse effect on operations.
The competition for talent has become increasingly prevalent, and we have experienced increased employee turnover due to the condition of the labor market and decisions related to strategic workforce planning. In addition, specialized knowledge and skills are required for many of our positions, which may pose additional difficulty for us as we work to recruit, retain and motivate employees in this climate.
Failure to hire, adequately train replacement employees, transfer knowledge/expertise or future availability and cost of contract labor may adversely affect the ability to manage and operate our business. Inability to attract and retain these employees could adversely impact our results of operations, financial condition or cash flows.
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Our businesses have collective bargaining agreements with labor unions. Failure to renew or renegotiate these contracts could lead to labor disruptions, including strikes or boycotts. Such disruptions or any negotiated wage or benefit increases could have a material adverse impact to our results of operations, financial condition or cash flows.
National unionization efforts could affect our business, as an increase in unionized workers could challenge our operational efficiency and increase costs.
Our operations use third-party contractors in addition to employees to perform periodic and ongoing work.
We rely on third-party contractors to perform operations, maintenance and construction work. Our contractual arrangements with these contractors typically include performance and safety standards, progress payments, insurance requirements and security for performance. Poor vendor performance or contractor unavailability could impact ongoing operations, restoration operations, regulatory recovery and our reputation and could introduce financial risk or risks of fines.
Our employees, directors, third-party contractors, or suppliers may violate or be perceived to violate our Codes of Conduct, which could have an adverse effect on our reputation.
We are exposed to risk of employee or third-party contractor fraud or misconduct. All employees and members of the Board of Directors are subject to compliance with our Code of Conduct and are required to participate in annual training. Additionally, suppliers are subject to compliance with our Supplier Code of Conduct. SPS does not tolerate discrimination, violations of our Code of Conduct or other unacceptable behaviors. However, it is not always possible to identify and deter misconduct by employees and other third-parties, which may result in governmental investigations, other actions or lawsuits. If such actions are taken against us we may suffer loss of reputation and such actions could have a material effect on our financial condition, results of operations and cash flows.
We are a wholly owned subsidiary of Xcel Energy Inc. Xcel Energy Inc. can exercise substantial control over our dividend policy and business and operations and may exercise that control in a manner that may be perceived to be adverse to our interests.
All of the members of our Board of Directors, as well as many of our executive officers, are officers of Xcel Energy Inc. Our Board of Directors makes determinations with respect to a number of significant corporate events, including the payment of our dividends.
We have historically paid quarterly dividends to Xcel Energy Inc. If Xcel Energy Inc.’s cash requirements increase, our Board of Directors could decide to increase the dividends we pay to Xcel Energy Inc. to help support Xcel Energy Inc.’s cash needs. This could adversely affect our liquidity. The most restrictive dividend limitation for SPS is imposed by its state regulatory commissions. State regulatory commissions indirectly limit the amount of dividends that SPS can pay Xcel Energy Inc., by requiring a minimum equity-to-total capitalization ratio.
See Note 5 to the financial statements for further information.
Financial Risks
Our profitability depends on our ability to recover costs, and changes in regulation may impair our ability to recover costs from our customers.
We are subject to comprehensive regulation by federal and state utility regulatory agencies, including siting and construction of facilities, customer service and the rates that we can charge customers.
The profitability of our operations is dependent on our ability to recover the costs of providing energy and utility services and earn a return on capital investment. Our rates are generally regulated and are based on an analysis of our costs incurred in a test year. We are subject to both future and historical test years depending upon the regulatory jurisdiction. Thus, the rates we are allowed to charge may or may not match our costs at any given time. Rate regulation is premised on providing an opportunity to earn a reasonable rate of return on invested capital.
There can also be no assurance that our regulatory commissions will judge all our costs to be prudent, which could result in disallowances, or that the regulatory process will always result in rates that will produce full recovery.
Overall, management believes prudently incurred costs are recoverable given the existing regulatory framework. However, there may be changes in the regulatory environment that could impair our ability to recover costs historically collected from our customers, or we could exceed caps on capital costs required by commissions and result in less than full recovery.
Changes in the long-term cost-effectiveness or to the operating conditions of our assets may result in early retirements of utility facilities. While regulation typically provides cost recovery for these types of changes, there is no assurance that regulators would allow full recovery of all remaining costs.
Higher than expected inflation, shortages of skilled labor, tariffs or federal policies may increase costs of construction and operations. Also, rising fuel costs could increase prices to consumers, all of which could increase the risk that we will not be able to fully recover their costs from our customers.
Adverse regulatory rulings (including changes in recovery mechanisms) or the imposition of additional regulations could negatively impact our results of operations, financial condition or cash flows.
Any reductions in our credit ratings could increase our financing costs and the cost of maintaining certain contractual relationships.
Our credit ratings are subject to change, and our credit ratings may be lowered or withdrawn by a rating agency. Significant events including disallowance of costs, use of historic test years, elimination of riders or interim rates, increasing depreciation lives, lower returns on equity, changes to equity ratios, impacts of tax policy and unfavorable litigation outcomes may impact our cash flows and credit metrics, potentially resulting in a change in our credit ratings. In addition, our credit ratings may change as a result of the differing methodologies or change in the methodologies used by the various rating agencies.
Any credit ratings downgrade could lead to higher borrowing costs or lower proceeds from equity issuances. It could also impact our ability to access capital markets. Also, we may enter into contracts that require posting of collateral or settlement if credit ratings fall below investment grade. The credit rating agencies may change their assessment or our regulatory or business risk, such as with the increase of climate events, which could negatively impact our credit ratings.
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We are subject to capital market and interest rate risks.
Utility operations require significant capital investment. As a result, we frequently need to access capital markets. Any disruption in capital markets could have a material impact on our ability to fund our operations. Capital market disruption and financial market distress could prevent us from issuing commercial paper, issuing new securities or cause us to issue securities with unfavorable terms and conditions, such as higher interest rates or lower proceeds from equity issuances. Higher interest rates on short-term borrowings with variable interest rates could also have an adverse effect on our operating results.
We are subject to credit risks.
Credit risk includes the risk that our customers will not pay their bills, which may lead to a reduction in our cash flows and liquidity and an increase in bad debt expense. Credit risk is comprised of numerous factors including the price of products and services provided, the overall economy and unemployment rates.
Credit risk also includes the risk that counterparties that owe us money or product will become insolvent and may breach their obligations. Should the counterparties fail to perform, we may be forced to enter into alternative arrangements. In that event, our financial results could be adversely affected and we may incur losses. This could be particularly impactful for long-lead time equipment contracts that require significant deposits and milestone payments, for items that may be difficult to procure elsewhere in the event of non-performance.
We may have direct credit exposure in our short-term wholesale and commodity trading activity to financial institutions trading for their own accounts or issuing collateral support on behalf of other counterparties. We may also have some indirect credit exposure due to participation in organized markets, (e.g., SPP, ERCOT and California ISO), in which any credit losses are socialized to all market participants.
We have additional indirect credit exposure to financial institutions from letters of credit provided as security by power suppliers under various purchased power contracts. If any of the credit ratings of the letter of credit issuers were to drop below investment grade, the supplier would need to replace that security with an acceptable substitute. If the security were not replaced, the party could be in default under the contract.
As we are a subsidiary of Xcel Energy Inc. we may be negatively affected by events impacting the credit or liquidity of Xcel Energy Inc. and its affiliates.
If either S&P or Moody’s Investor Services were to downgrade Xcel Energy Inc.’s debt securities below investment grade, it would increase Xcel Energy Inc.’s cost of capital and restrict its access to the capital markets. This could limit Xcel Energy Inc.’s ability to contribute equity or make loans to us, or may cause Xcel Energy Inc. to seek additional or accelerated funding from us in the form of dividends. If such event were to occur, we may need to seek alternative sources of funds to meet our cash needs.
As of Dec. 31, 2024, Xcel Energy Inc. and its utility subsidiaries had approximately $27.3 billion of long-term debt and $1.8 billion of short-term debt and current maturities. Xcel Energy Inc. provides various guarantees and bond indemnities supporting some of its subsidiaries by guaranteeing the payment or performance by these subsidiaries for specified agreements or transactions.
Xcel Energy also has other contingent liabilities resulting from various tax disputes and other matters. Xcel Energy Inc.’s exposure under the guarantees is based upon the net liability of the relevant subsidiary under the specified agreements or transactions. The majority of Xcel Energy Inc.’s guarantees limit its exposure to a maximum amount that is stated in the guarantees.
As of Dec. 31, 2024, Xcel Energy had the following guarantees outstanding:
•$951 million for performance and payment of Capital Services, LLC contracts for wind and solar generating equipment, with immaterial exposure.
•$29 million for performance on operating lease agreements, with $29 million of exposure.
•$93 million for performance and payment of surety bonds for the benefit of itself and its subsidiaries, with total exposure that cannot be estimated at this time.
If Xcel Energy Inc. were to become obligated to make payments under these guarantees and bond indemnities or become obligated to fund other contingent liabilities, it could limit Xcel Energy Inc.’s ability to contribute equity or make loans to us, or may cause Xcel Energy Inc. to seek additional or accelerated funding from us in the form of dividends. If such event were to occur, we may need to seek alternative sources of funds to meet our cash needs.
Increasing costs of our defined benefit retirement plans and employee benefits may adversely affect our results of operations, financial condition or cash flows.
We have defined benefit pension and postretirement plans that cover most of our employees. Assumptions related to future costs, return on investments, interest rates and other actuarial assumptions have a significant impact on our funding requirements of these plans. Estimates and assumptions may change. In addition, the Pension Protection Act sets the minimum funding requirements for defined benefit pension plans. Therefore, our funding requirements and contributions may change in the future. Also, the payout of a significant percentage of pension plan liabilities in a single year due to high numbers of retirements or employees leaving would trigger settlement accounting and could require SPS to recognize incremental pension expense related to unrecognized plan losses in the year liabilities are paid. Changes in industry standards utilized in key assumptions (e.g., mortality tables) could have a significant impact on future obligations and benefit costs.
Increasing costs associated with health care plans may adversely affect our results of operations.
Increasing levels of large individual health care claims and overall health care claims could have an adverse impact on our results of operations, financial condition or cash flows. Health care legislation could also significantly impact our benefit programs and costs.
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Federal tax law may significantly impact our business.
SPS collects estimated federal, state and local tax payments through their regulated rates. Changes to federal tax law may benefit or adversely affect our earnings and customer costs. Tax depreciable lives and the value/availability of various tax credits or the timeliness of their utilization may impact the economics or selection of resources. If tax rates are increased, there could be timing delays before regulated rates provide for recovery of such tax increases in revenues. In addition, certain IRS tax policies such as tax normalization may impact our ability to economically deliver certain types of resources relative to market prices. Changes to the availability of tax credit transferability could impact our cash flows and the cost of certain types of resources.
Macroeconomic Risks
Economic conditions impact our business.
Our operations are affected by economic conditions, which correlates to customers/sales growth (decline). Economic conditions may be impacted by recessionary factors, rising interest rates, inflation, the impacts of federal policy and insufficient financial sector liquidity leading to potential increased unemployment, which may impact customers’ ability to pay their bills which could lead to additional bad debt expense.
Additionally, SPS faces competitive factors, which could have an adverse impact on our financial condition, results of operations and cash flows. Further, worldwide economic activity impacts the demand for basic commodities necessary for utility infrastructure, which may inhibit our ability to acquire sufficient supplies.
We operate in a capital intensive industry and federal trade policy could significantly impact the cost of materials we use. There may be delays before these additional material costs can be recovered in rates.
The oil and gas industry represents our largest C&I customer base. Oil and natural gas prices are sensitive to market risk factors which may impact demand.
We face risks related to health epidemics and other outbreaks, which may have a material effect on our financial condition, results of operations and cash flows.
Health epidemics impact countries, communities, supply chains and markets. Uncertainty continues to exist regarding epidemics; the duration and magnitude of business restrictions including shutdowns (domestically and globally); the potential impact on the workforce including shortages of employees and third-party contractors due to quarantine policies, vaccination requirements or government restrictions; impacts on the transportation of goods, and the generalized impact on the economy.
We cannot ultimately predict whether an epidemic will have a material impact on our future liquidity, financial condition or results of operations. Nor can we predict the impact on the health of our employees, our supply chain or our ability to recover higher costs associated with managing an outbreak.
Operations could be impacted by war, terrorism or other events.
Our generation plants, fuel storage facilities, transmission and distribution facilities and information and control systems may be targets of terrorist activities. Any disruption could impact operations or result in a decrease in revenues and additional costs to repair and insure our assets. These disruptions could have a material impact on our financial condition, results of operations or cash flows.
The potential for terrorism has subjected our operations to increased risks and could have a material effect on our business. We have incurred increased costs for security and capital expenditures in response to these risks. The insurance industry has also been affected by these events and the availability of insurance may decrease. In addition, insurance may have higher deductibles, higher premiums and more restrictive policy terms.
A disruption of the regional electric transmission grid, interstate natural gas pipeline infrastructure or other fuel sources, could negatively impact our business, brand and reputation. Because our facilities are part of an interconnected system, we face the risk of possible loss of business due to a disruption caused by the actions of a neighboring utility.
We also face the risks of possible loss of business due to significant events such as severe storms, temperature extremes, wildfires, widespread pandemic, generator or transmission facility outage, pipeline rupture, railroad disruption, operator error, sudden and significant increase or decrease in wind generation or a workforce disruption.
In addition, major catastrophic events throughout the world may disrupt our business. While we have business continuity plans in place, our ability to recover may be prolonged due to the type and extent of the event. SPS participates in a global supply chain, which includes materials and components that are globally sourced. A prolonged disruption could result in the delay of equipment and materials that may impact our ability to connect, restore and reliably serve our customers.
A major disruption could result in a significant decrease in revenues, additional costs to repair assets, and an adverse impact on the cost and availability of insurance, which could have a material impact on our results of operations, financial condition or cash flows.
A cybersecurity incident or security breach could have a material effect on our business.
We operate in an industry that requires the continued operation of sophisticated information technology, control systems and network infrastructure. In addition, we use our systems and infrastructure to create, collect, use, disclose, store, dispose of and otherwise process sensitive information, including Company data, customer energy usage data, and personal information regarding customers, employees and their dependents, contractors and other individuals.
Our generation, transmission, distribution and fuel storage facilities, information technology systems and other infrastructure or physical assets, as well as information processed in our systems (e.g., information regarding our customers, employees, operations, infrastructure and assets) could be affected by cybersecurity incidents, including those caused by human error.
The utility industry has been the target of several attacks on operational systems and has seen an increased volume and sophistication of cybersecurity incidents from international activist organizations, other countries and individuals. We expect to continue to experience attempts to compromise our information technology and control systems, network infrastructure and other assets. To date, no cybersecurity incident or attack affecting us or our vendors has had a material impact on our business or results of operations.
Cybersecurity incidents could harm our businesses by limiting our generation, transmission and distribution capabilities, delaying our development and construction of new facilities or capital improvement projects to existing facilities, disrupting our customer operations or causing the release of customer information, all of which would likely receive state and federal regulatory scrutiny and could expose us to liability.
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Our generation, transmission systems and natural gas pipelines are part of an interconnected system. Therefore, a disruption caused by the impact of a cybersecurity incident on the regional electric transmission grid, natural gas pipeline infrastructure or other fuel sources of our third-party service providers’ operations, could also negatively impact our business.
Generative Artificial Intelligence, such as large language models like ChatGPT, present a range of challenges and potential risks as we consider impacts to the business. These challenges involve navigating the complexities of creating and deploying AI models that generate content autonomously. Data privacy, legal concerns, and security issues are all risks as this technology continues to be adopted.
Our supply chain for procurement of digital equipment and services may expose software or hardware to these risks and could result in a breach or significant costs of remediation. We are unable to quantify the potential impact of cybersecurity threats or subsequent related actions. Cybersecurity incidents and regulatory action could result in a material decrease in revenues and may cause significant additional costs (e.g., penalties, third-party claims, repairs, insurance or compliance) and potentially disrupt our supply and markets for natural gas, oil and other fuels.
We maintain security measures to protect our information technology and control systems, network infrastructure and other assets. However, these assets and the information they process may be vulnerable to cybersecurity incidents, including asset failure or unauthorized access to assets or information. A failure or breach of our technology systems or those of our third-party service providers could disrupt critical business functions and may negatively impact our business, our brand, and our reputation. The cybersecurity threat is dynamic and evolves continually, and our efforts to prioritize network protection may not be effective given the constant changes to threat vulnerability.
While the Company maintains insurance relating to cybersecurity events, such insurance is subject to a number of exclusions and may be insufficient to offset any losses, costs or damages experienced. Also, the market for cybersecurity insurance is relatively new and coverage available for cybersecurity events is evolving as the industry matures.
Our operating results may fluctuate on a seasonal and quarterly basis and can be adversely affected by milder weather.
Our electric utility business is seasonal, and weather patterns can have a material impact on our operating performance. Demand for electricity is often greater in the summer and winter months associated with cooling and heating. Accordingly, our operations have historically generated less revenues and income when weather conditions are milder in the winter and cooler in the summer. Unusually mild winters and summers could have an adverse effect on our financial condition, results of operations, or cash flows.
Public Policy Risks
Increased risks of regulatory penalties could negatively impact our business.
The Energy Act increased civil penalty authority for violation of FERC statutes, rules and orders. FERC can impose penalties of up to $1.5 million per violation per day, particularly as it relates to energy trading activities for both electricity and natural gas. In addition, NERC electric reliability standards and critical infrastructure protection requirements are mandatory and subject to potential financial penalties. Also, the PHMSA, Occupational Safety and Health Administration and other federal agencies have the authority to assess penalties.
In the event of serious incidents, these agencies may pursue penalties. In addition, certain states have the authority to impose substantial penalties. If a serious reliability, cybersecurity or safety incident did occur, it could have a material effect on our results of operations, financial condition or cash flows.
The continued use of natural gas for power generation has increasingly become a public policy advocacy target. These efforts may result in a limitation of natural gas as an energy source for power generation, which could impact our ability to reliably and affordably serve our customers.
In recent years, there have been various local and state agency proposals within and outside our service territories that would attempt to restrict the use and availability of natural gas. If such policies were to prevail, we may be forced to make new resource investment decisions which could potentially result in stranded costs if we are not able to fully recover costs and investments and impact the overall reliability of our service.
Environmental Policy Risks
We may be subject to legislative and regulatory responses to climate change, with which compliance could be difficult and costly.
Legislative and regulatory responses related to climate change may create financial risk as our facilities may be subject to additional regulation at either the state or federal level in the future. International agreements could additionally lead to future federal or state regulations.
In 2015, the United Nations Framework Convention on Climate Change reached consensus among 190 nations on an agreement (the Paris Agreement) that establishes a framework for GHG mitigation actions by all countries, with a goal of holding the increase in global average temperature to below 2º Celsius above pre-industrial levels and an aspiration to limit the increase to 1.5º Celsius. Although the United States has withdrawn from the Paris Agreement, many states and localities continue to pursue their own climate policies which could result in future additional GHG reductions.
The steps SPS has taken to date to reduce GHG emissions, including energy efficiency measures, adding renewable generation and retiring or converting coal plants to natural gas, occurred under state-endorsed resource plans, renewable energy standards and other state policies.
We may be subject to climate change lawsuits. An adverse outcome could require substantial capital expenditures and possibly require payment of substantial penalties or damages. Defense costs associated with such litigation can also be significant and could affect results of operations, financial condition or cash flows if such costs are not recovered through regulated rates.
If our regulators do not allow us to recover all or a part of the cost of capital investment or the O&M costs incurred to comply with the mandates, it could have a material effect on our results of operations, financial condition or cash flows.
We are subject to environmental laws and regulations, with which compliance could be difficult and costly.
We are subject to environmental laws and regulations that affect many aspects of our operations, including air emissions, water quality, wastewater discharges and the generation, transport and disposal of solid wastes and hazardous substances. Laws and regulations require us to obtain permits, licenses, and approvals and to comply with a variety of environmental requirements.
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Environmental laws and regulations can also require us to restrict or limit the output of facilities or the use of certain fuels, shift generation to lower-emitting facilities, install pollution control equipment, clean up spills and other contamination and correct environmental hazards. Failure to meet requirements of environmental mandates may result in fines or penalties. We may be required to pay all or a portion of the cost to remediate sites where our past activities, or the activities of other parties, caused environmental contamination.
Changes in environmental policies and regulations or regulatory decisions may result in early retirements of our generation facilities. While regulation typically provides relief for these types of changes, there is no assurance that regulators would allow full recovery of all remaining costs.
We are subject to mandates to provide customers with clean energy, renewable energy and energy conservation offerings. It could have a material effect on our results of operations, financial condition or cash flows if our regulators do not allow us to recover the cost of capital investment or O&M costs incurred to comply with the requirements. Additionally, the impact of environmental laws and regulations may impact the economic health of consumers through higher prices of energy and purchased goods.
While we establish strategies and expectations related to climate change and other environmental matters, our ability to achieve any such strategies or expectations is subject to numerous factors and conditions, many of which are outside of our control. Examples of such factors include, but are not limited to, evolving legal, regulatory, and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets. Failures or delays (whether actual or perceived) in achieving our strategies or expectations related to climate change and other environmental matters could adversely affect our business, operations, and reputation, and increase risk of litigation.
In addition, existing environmental laws or regulations may be revised and new laws or regulations may be adopted. We may also incur additional unanticipated obligations or liabilities under existing environmental laws and regulations.
ITEM 1B — UNRESOLVED STAFF COMMENTS
None.
ITEM 1C — CYBERSECURITY
SPS is a wholly owned subsidiary of Xcel Energy. As such, its cybersecurity processes are maintained by Xcel Energy management and governed by its Board of Directors.
As described in Item 1A – Risk Factors, Xcel Energy operates in an industry that requires the continued operation of sophisticated information technology, control systems and network infrastructure, as such, our business is subject to the risk of interruption by cybersecurity incidents that range from attacks common to most industries, such as phishing and denial-of-service, to attacks from more sophisticated adversaries, including nation state actors, that target the critical infrastructure used in the operation of our business.
The Company has a security risk program in place to identify, assess, manage and report material risks from cybersecurity incidents. As a utility provider, Xcel Energy complies with reliability standards imposed by NERC, including critical infrastructure protection standards related to both cybersecurity and physical security. These standards imposed by NERC, in alignment with the NIST Cybersecurity Framework, are the basis for which Xcel Energy has designed the cybersecurity control framework within its security risk program.
Annually, as part of Xcel Energy’s enterprise risk program, an integrated cybersecurity risk identification and assessment is completed across Xcel Energy’s business, including generation, transmission, distribution and fuel storage facilities, information technology systems and other infrastructure or physical assets as well as information processed in our systems (including systems hosted by third parties) that could be affected by cybersecurity incidents. This analysis includes the impact, likelihood, timeframe and controllability of cybersecurity risks and is presented to the Board of Directors. Management monitors and reviews the results of this analysis, integrating them into the enterprise risk assessment processes and implements appropriate mitigating actions as needed.
Xcel Energy’s cybersecurity policies, standards, practices, annual cybersecurity training content and readiness are regularly assessed by third-party consultants. These partners are engaged to perform independent penetration testing and other security related services to assist in the prevention, detection, monitoring, mitigation and remediation of cybersecurity incidents and risks. The results of these assessments are communicated to management and the Board of Directors by the Chief Security Officer.
Xcel Energy employs a comprehensive risk based approach to assess the magnitude and significance of a vendor’s risk to the Company. Certain third-party service providers are subject to vendor security risk assessments at the time of integration, contract execution/renewal, and upon detection of any increase in risk profile. Xcel Energy uses a variety of inputs in such risk assessments, including information supplied by providers and third parties (including information analysis centers that share daily threat intelligence and improve organizational agility associated with management of cybersecurity risks). In addition, the Company requires certain third-party service providers to meet appropriate security requirements, controls and responsibilities. The Company deploys periodic monitoring activities to assess compliance with our cybersecurity control framework and investigates security incidents that have impacted our third-party service providers as appropriate.
Management has assigned responsibility for the security risk program to the Chief Security Officer who has multiple years of experience in the Defense Industrial Base. The Chief Security Officer is informed about and monitors prevention, detection, mitigation and remediation efforts through a team of security professionals, many of whom are Certified Information Systems Security Professionals, Certified Information Security Managers or have received other cybersecurity certifications. The team has extensive experience selecting, deploying and operating cybersecurity technologies, initiatives and processes that aid in preventing, remediating and mitigating known and unknown security threats.
The Chief Security Officer or members of management brief the Board on routine and regular cybersecurity risk and threat updates, typically on an annual basis. In the event of a significant threat or incident, management and the Chief Security Officer leverage Xcel Energy’s incident response processes to assess impacts and resolve incidents. When a significant cybersecurity incident occurs, management communicates with the Board of Directors and relevant committees.
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The Board of Directors oversees the risks associated with cybersecurity and the physical security of our assets, with information security matters being discussed at board meetings as well as at the ONES and Audit Committee meetings throughout the year.
While the ONES Committee has primary committee responsibility for cybersecurity due to the operational issues involved, the Board of Directors has determined that the topic is of sufficient importance to warrant this comprehensive oversight approach. Augmenting such oversight efforts, the enterprise has the ability to notify and update the Board of Directors in the event of a possible crisis situation.
Cybersecurity risks are a part of Xcel Energy’s normal course of business. To date, no cybersecurity incident or attack affecting us or our vendors has had a material impact on our business or results of operations. As of Feb. 27, 2025 there have been no material cybersecurity incidents to report.
ITEM 2 — PROPERTIES
Virtually all of the utility plant property of SPS is subject to the lien of its first mortgage bond indenture.
Station, Location and Unit at Dec. 31, 2024FuelInstalled
MW (a)
Steam:
Cunningham-Hobbs, NM, 1 UnitNatural Gas1957 - 1965183 
Harrington-Amarillo, TX 1 UnitNatural Gas2024339 
(b)
Harrington-Amarillo, TX 2 UnitsCoal1976 - 1980679 
(b)
Jones-Lubbock, TX, 2 UnitsNatural Gas1971 - 1974486 
Maddox-Hobbs, NM, 1 UnitNatural Gas1967112 
Nichols-Amarillo, TX, 3 UnitsNatural Gas1960 - 1968457 
Plant X-Earth, TX, 1 UnitNatural Gas1952 - 1964190 
Tolk-Muleshoe, TX, 2 UnitsCoal1982 - 19851,067 
Combustion Turbine:
Cunningham-Hobbs, NM, 2 UnitsNatural Gas1997207 
Jones-Lubbock, TX, 2 UnitsNatural Gas2011 - 2013334 
Maddox-Hobbs, NM, 1 UnitNatural Gas1963 - 197661 
Wind:
Hale-Plainview, TX, 239 UnitsWind2019478 
(c)
Sagamore-Dora, NM, 240 UnitsWind2020507 
(c)
Total5,100 
(a)Summer 2024 net dependable capacity. Wind is presented as net maximum capacity.
(b)Harrington coal plant units 1-3 were retired in December 2024. Unit 2 was repowered to natural gas in the fourth quarter of 2024. Units 1 and 3 are also being repowered to natural gas in 2025, with Unit 1 having completed conversion in January and Unit 3 expected to be completed in the summer.
(c)Net maximum capacity is attainable only when wind conditions are sufficiently available. Typical average capacity factors are 35-50% for wind facilities. For the year ended Dec. 31, 2024 SPS’ wind facilities had a weighted-average capacity factor of 50%.
Electric utility overhead and underground transmission and distribution lines (measured in conductor miles) at Dec. 31, 2024:
Conductor Miles
Transmission
345 KV11,676 
230 KV9,845 
115 KV14,953 
Less than 115 KV4,501 
Total Transmission40,975 
Distribution
Less than 115 KV24,878 
Total65,853 
SPS had 454 electric utility transmission and distribution substations at Dec. 31, 2024.
SPS had 35 miles of natural gas utility transmission mains at Dec. 31, 2024.
ITEM 3 — LEGAL PROCEEDINGS
SPS is involved in various litigation matters 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 losses 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, would have a material effect on SPS’ financial statements. Legal fees are generally expensed as incurred.
See Note 10 to the financial statements, Item 1 and Item 7 for further information.
ITEM 4 — MINE SAFETY DISCLOSURES
None.
PART II
ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
SPS is a wholly owned subsidiary of Xcel Energy Inc. and there is no market for its common equity securities.
See Note 5 to the financial statements for further information.
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The dividends declared during 2024 and 2023 were as follows:
(Millions of Dollars)20242023
First quarter$89 $66 
Second quarter46 102 
Third quarter183 70 
Fourth quarter101 69 
ITEM 6 — [RESERVED]
ITEM 7 — 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 I(1)(a) and (b) of Form 10-K for wholly owned subsidiaries. It is replaced with management’s narrative analysis and the results of operations for the current year as set forth in general instructions I(2)(a) of Form 10-K for wholly owned subsidiaries (reduced disclosure format).
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 ongoing earnings. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that is adjusted from measures calculated and presented in accordance with GAAP.
SPS’ management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors.
Non-GAAP financial measures are intended to supplement investors’ understanding of our 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.
Earnings Adjusted for Certain Items (Ongoing Earnings)
Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items.
We use this non-GAAP financial measure to evaluate and provide details of SPS’ core earnings and underlying performance. For instance, to present ongoing earnings, we may adjust the related GAAP amounts for certain items that are non-recurring in nature. We believe this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of our subsidiaries. This non-GAAP financial measure should not be considered as an alternative to measures calculated and reported in accordance with GAAP.
The following table provides a reconciliation of GAAP earnings (net income) to ongoing earnings:
(Millions of Dollars)20242023
GAAP net income$394 $384 
Workforce reduction expenses— 9 
Less: tax effect of adjustment— (2)
Ongoing earnings$394 $391 
Workforce Reduction — In 2023, Xcel Energy implemented workforce actions to align resources and investments with our evolving business and customer needs, and streamline the organization for long-term success. Xcel Energy initiated a voluntary retirement program, under which approximately 400 eligible non-bargaining employees retired. Xcel Energy also eliminated approximately 150 non-bargaining employees through an involuntary severance program.
Total Xcel Energy workforce reduction expenses of $72 million were recorded in the fourth quarter of 2023, of which $9 million was attributable to SPS. Given the non-recurring nature of this item, it has been excluded from ongoing earnings.
Results of Operations
2024 Comparison with 2023
SPS’ GAAP net income was $394 million for 2024, compared with GAAP net income of $384 million for 2023. Ongoing net income was $394 million for 2024, compared to $391 million for 2023. Ongoing earnings were impacted by increased depreciation, O&M expenses and interest charges, largely offset by regulatory rate outcomes and sales growth.
Electric Revenue
Electric revenues are impacted by changing sales, fluctuations in the price of natural gas and coal, regulatory outcomes, market prices and seasonality. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and income taxes.
(Millions of Dollars)2024 vs. 2023
Recovery of lower cost of electric fuel and purchased power(276)
Wholesale generation revenues(91)
Transmission revenues(15)
PTCs flowed back to customers (offset by lower ETR)(13)
Regulatory rate outcomes92 
Sales and demand47 
Revenue recognition for the Texas rate case surcharge39 
Estimated impact of weather10 
Other, net(6)
Total decrease$(213)
Electric Fuel and Purchased Power — Expenses incurred for electric fuel and purchased power are impacted by fluctuations in market prices of natural gas and coal, as well as seasonality. These incurred expenses are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are largely offset in operating revenues and have minimal earnings impact.
Electric fuel and purchased power expenses decreased $322 million in 2024. The decrease is primarily due to timing of fuel recovery mechanisms and lower commodity prices.
Non-Fuel Operating Expense and Other Items
O&M Expenses — O&M expenses increased $34 million in 2024. The increase was primarily due to recognition of previously deferred costs associated with the Texas Electric Rate Case in 2024 and operational activities, including generation maintenance and wildfire mitigation, partially offset by lower labor and benefit costs.
Depreciation and Amortization — Depreciation and amortization increased $87 million for 2024. The increase was largely the result of recognition of previously deferred costs and depreciation rate changes associated with the Texas Rate Case as well as system expansion.
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Interest Charges — Interest charges increased $19 million for 2024. The increase was largely due to higher interest rates and higher long-term debt to fund capital investments.
Public Utility Regulation and Other
The FERC and state and local regulatory commissions regulate SPS. SPS is subject to rate regulation by state utility regulatory agencies, which have jurisdiction with respect to the rates of electric distribution companies in New Mexico and Texas.
Rates are designed to recover plant investment, operating costs and an allowed return on investment. SPS requests changes in utility rates through commission filings. Changes in operating costs can affect SPS’ financial results, depending on the timing of rate cases and implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and DSM efforts, and the cost of capital.
In addition, the regulatory commissions authorize the ROE, capital structure and depreciation rates in rate proceedings. Decisions by these regulators can significantly impact SPS’ results of operations and credit quality.
See Rate Matters within Note 10 to the financial statements for further information.
Summary of Regulatory Agencies / RTO and Areas of Jurisdiction
Regulatory Body / RTO
Additional Information
PUCT
Retail electric operations, rates, services, construction of transmission or generation and other aspects of SPS’ electric operations.
The municipalities in which SPS operates in Texas have original jurisdiction over rates in those communities. The municipalities’ rate setting decisions are subject to PUCT review.
NMPRC
Retail electric operations, retail rates and services and the construction of transmission or generation.
Reviews Integrated Resource Plans for meeting future energy needs.
FERC
Wholesale electric operations, accounting practices, wholesale sales for resale, the transmission of electricity in interstate commerce, compliance with NERC electric reliability standards, asset transactions and mergers, and natural gas transactions in interstate commerce.
SPP RTO and SPP Integrated and Wholesale Markets
SPS is a transmission owning member of the SPP RTO and operates within the SPP RTO and SPP integrated and wholesale markets. SPS is authorized to make wholesale electric sales at market-based prices.
DOTPipeline safety compliance.
Recovery Mechanisms
Mechanism
Additional Information
Advanced Metering System SurchargeRecovers costs incurred in deployment of the Advanced Metering System in Texas.
Consulting Fee RiderRecovers consulting fees and carrying charges incurred by SPS on behalf of the PUCT.
Distribution Cost Recovery Factor
Recovers distribution costs not included in rates in Texas.
Electric Vehicle RiderRecovers costs of the Transportation Electrification Plan in New Mexico.
Energy Efficiency Cost Recovery Factor
Recovers costs for energy efficiency programs in Texas.
Energy Efficiency Rider
Recovers costs for energy efficiency programs in New Mexico.
Fixed Fuel and Purchased Recovery Factor
Provides for the over- or under-recovery of energy expenses in Texas. Regulations require refunding or surcharging over- or under- recovery amounts, including interest, when they exceed 4% of the utility’s annual fuel and purchased energy costs on a rolling 12-month basis, if this condition is expected to continue.
Fuel and Purchased Power Cost Adjustment Clause
Adjusts monthly to recover actual fuel and purchased power costs in New Mexico.
Grid Modernization Rider
Recovers costs incurred in the implementation of Grid Modernization Components in New Mexico.
Renewable Portfolio Standards
Recovers deferred costs for renewable energy programs in New Mexico.
Transmission Cost Recovery Factor
Recovers certain transmission infrastructure improvement costs and changes in wholesale transmission charges not included in Texas base rates.
Wholesale Fuel and Purchased Energy Cost Adjustment
SPS recovers fuel and purchased energy costs from its wholesale customers through a monthly wholesale fuel and purchased energy cost adjustment clause accepted by the FERC. Wholesale customers also pay the jurisdictional allocation of production costs.
Pending and Recently Concluded Regulatory Proceedings
2023 Texas Electric Rate Case — In 2023, SPS filed an electric rate case with the PUCT seeking an increase in base rate revenue of $158 million (14%). Interim rates went into effect on Feb. 1, 2024. In April 2024, the PUCT approved a black box settlement between SPS and intervening parties, which reflect the following terms:
•A base rate increase of $65 million effective back to July 13, 2023.
•A 9.55% ROE, a 54.51% equity ratio and a 7.11% WACC for purposes of calculating SPS’ allowance for funds used during construction and in other proceedings filed before the PUCT where a stated WACC is required.
•The reflection in rates of the retirement of Tolk Generation Station from 2034 to 2028.
•Establishment of a rate rider of approximately $18 million to be recovered over a three-year period for various deferred expenses.
In July 2024, SPS filed to surcharge the final under-recovered amount of $37 million. This will be largely offset by previously deferred costs. In February 2025, the PUCT approved the surcharge.
2022 All-Source RFP — In July 2023, SPS filed for approval of a CPCN for a recommended generation portfolio, which includes 418 MW of self-build solar projects and a 36 MW battery. The NMPRC approved the projects in May 2024. In July 2024, the PUCT approved the solar projects and denied the battery project. The PUCT’s approval included minimum production and PTC guarantees.
New Mexico Resource Plan (IRP) — In October 2023, SPS filed its IRP with the NMPRC, which supports projected load growth and increasing reliability requirements, and secures replacement energy and capacity for retiring resources. SPS’ projected resource needs ranging from approximately 5,300 MW to 10,200 MW by 2030. In February 2024, the NMPRC accepted the IRP.
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In July 2024, SPS issued a RFP, seeking approximately 3,200 MW of accredited generation capacity by 2030. The total capacity to be added to the system is expected to align with the range identified in the SPS IRP, depending on the types of resources proposed in the RFP and their accredited capacity factors.
The RFP portfolio selection is expected in May 2025. SPS is expected to file for a certificate of need for the recommended portfolio in the summer of 2025. The PUCT and NMPRC are expected to rule on the portfolio in 2026.
Texas System Resiliency Plan — In December 2024, SPS filed its Texas SRP with the PUCT. Consistent with PUCT requirements, SPS’ proposed plan discusses resiliency-related risks and the five measures that have been designed to help SPS prevent, withstand, mitigate or more promptly recover from resiliency events, including wildfire.
The SRP includes the following measures:
•Distribution overhead hardening — Replacing and reinforcing key components of the distribution overhead system.
•Distribution system protection modernization — Installing enhanced reclosers, communications equipment and replacing substation relay panels and breakers.
•Communication modernization — Building out a private LTE network, installing fiber optic cable and adding remote terminal units.
•Operational flexibility — Procuring mobile substation equipment and installing additional switching devices.
•Wildfire mitigation — Weather stations, modeling, deploying artificial intelligence and vegetation management.
The plan covers 2025-2028 and includes the following total spend:
(Millions of Dollars)CapitalO&MTotal
Distribution overhead hardening$253 $— $253 
Distribution system protection modernization92 — 92 
Communication modernization112 — 112 
Operational flexibility44 — 44 
Wildfire mitigation20 17 37 
Total$521 $17 $538 
The procedural schedule is as follows:
•Intervenor testimony: February 28, 2025
•Staff testimony: March 7, 2025
•Rebuttal testimony: March 17, 2025
•Hearing: March 25-26, 2025
A PUCT decision is expected in the summer of 2025.
Purchased Power Arrangements and Transmission Service Providers
SPS expects to use electric generating stations, power purchases, DSM and new generation options to meet its system capacity requirements.
Purchased Power — SPS purchases power from other utilities and IPPs. Long-term purchased power contracts typically require periodic capacity and energy charges. SPS also makes short-term purchases to meet system load and energy requirements to replace owned generation, meet operating reserve obligations or obtain energy at a lower cost.
Purchased Transmission Services — SPS has contractual arrangements with SPP and regional transmission service providers to deliver power and energy to its native load customers.
Natural Gas
SPS does not provide retail natural gas service, but purchases and transports natural gas for its generation facilities and operates limited natural gas pipeline facilities connecting the generation facilities to interstate natural gas pipelines, subject in certain cases to the regulation of the Railroad Commission of Texas. SPS is subject to the jurisdiction of the FERC with respect to natural gas transactions in interstate commerce and the PHMSA, DOT and PUCT for pipeline safety compliance.
Wholesale and Commodity Marketing Operations
SPS conducts various wholesale marketing operations, including the purchase and sale of electric capacity, energy, ancillary services and energy related products. SPS uses physical and financial instruments to minimize commodity price risk and to hedge sales and purchases. Sharing of any margin is determined through state regulatory proceedings as well as the operation of the FERC approved joint operating agreement.
Other
Supply Chain
SPS’ ability to meet customer energy requirements, growing customer demand, respond to storm-related disruptions, and execute our capital expenditure program are dependent on maintaining an efficient supply chain.
Large global demand for energy-related infrastructure has stretched equipment supply chains, extended delivery dates and increased prices for items like combustion turbines, transformers and other large electrical equipment. The labor market for skilled engineering and construction resources to build renewables and gas generation has also been strained, impacting cost and availability.
In addition, manufacturing processes have experienced disruptions related to the scarcity of certain raw materials and interruptions in production and shipping. The impact of inflationary pressures, geopolitical events and federal policies have exacerbated the situation. SPS continues to monitor the situation as it remains fluid and seeks to mitigate the impacts by securing alternative suppliers and key vendor partners, increasing procurement lead times, modifying design standards, and adjusting the timing of work.
Tariffs and Trade Complaints
In May 2024, the U.S. Department of Commerce announced the initiation of anti-dumping and countervailing duty investigations of CSPV cells from Cambodia, Malaysia, Thailand and Vietnam, whether or not assembled into modules.
In October 2024, the U.S. Department of Commerce announced its preliminary determination in the countervailing duty circumvention investigation, which is not expected to impact SPS projects. In November 2024, the U.S. Department of Commerce concluded that dumping had occurred and the impact to SPS is still being evaluated.
In May 2024, the White House imposed a new 25% tariff on Lithium-Ion storage along with other trade measures. The tariff went into immediate effect for EV batteries but has a grace period until January 2026 for stationary energy storage applications.
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In January of 2025, the U.S. International Trade Commission made an affirmative determination in the preliminary phase of the anti-dumping and countervailing duty investigations concerning Active Anode Material, a component of lithium-ion batteries, from China. This case will be reviewed by the U.S. Department of Commerce and the International Trade Commission over the course of 2025.
In early 2025, several executive orders were issued, some of which impose new tariffs on certain imports, which may impact our procurement activities.
SPS continues to assess the impacts of these tariffs, trade complaints and federal policies on its business, including company owned projects and PPAs. SPS may seek regulatory relief for tariffs, if required, in its jurisdictions.
Further policy actions or other restrictions on solar and storage imports, disruptions in imports from key suppliers, or any new trade complaint could impact project timelines and costs of various generation projects and PPAs.
Excess Liability Insurance Coverage
SPS maintains excess liability coverage, which is intended to insure against liability to third parties. During 2024, Xcel Energy had approximately $600 million of excess liability coverage; including $520 million of wildfire coverage with an annual premium assigned to SPS of approximately $12 million. Examples of claims paid under this policy include property damage or bodily injury to members of the public caused by SPS’ employees, equipment or facilities. The increased wildfire liability risk and claims are driving a significant increase of premiums and reductions in insurance coverage in the excess liability markets, especially in the western United States. In October 2024, Xcel Energy renewed its excess liability coverage and now has $450 million of total coverage, including $300 million of wildfire coverage for SPS. The annual premium for this excess liability insurance assigned to SPS is approximately $45 million. SPS anticipates seeking recovery of these increased costs through various regulatory proceedings.
ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Derivatives, Risk Management and Market Risk
SPS is exposed to a variety of market risks in the normal course of business. Market risk is the potential loss that may occur as a result of adverse changes in the market or fair value for a particular instrument or commodity. All financial and commodity-related instruments, including derivatives, are subject to market risk.
SPS is exposed to the impact of adverse changes in price for energy and energy-related products, which is partially mitigated by the use of commodity derivatives. In addition to ongoing monitoring and maintaining credit policies intended to minimize overall credit risk, management takes steps to mitigate changes in credit and concentration risks associated with its derivatives and other contracts, including parental guarantees and requests of collateral. While SPS expects that the counterparties will perform on the contracts underlying its derivatives, the contracts expose SPS to credit and non-performance risk.
Distress in the financial markets may impact counterparty risk and the fair value of the securities in the pension fund.
Commodity Price Risk — We are exposed to commodity price risk in our electric operations. Commodity price risk is managed by entering into long and short-term physical purchase and sales contracts for electric capacity, energy and energy-related products.
Commodity price risk is also managed through the use of financial derivative instruments. Our risk management policy allows us to manage commodity price risk within each rate-regulated operation per commission approved hedge plans.
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.
Interest Rate Risk — SPS is subject to interest rate risk. SPS’ risk management policy allows interest rate risk to be managed through the use of fixed rate debt, floating rate debt and interest rate derivatives.
A 100-basis-point change in the benchmark rate on SPS’ variable rate debt would impact pretax interest expense annually by $2 million in 2024 and an immaterial amount in 2023.
The value of pension and postretirement plan assets and benefit costs are impacted by changes in discount rates and expected return on plan assets. SPS’ ongoing pension and postretirement investment strategy is based on plan-specific investment recommendations that seek to optimize potential investment risk and minimize interest rate risk associated with changes in the obligations as a plan’s funded status increases over time. The impacts of fluctuations in interest rates on pension and postretirement costs are mitigated by pension cost calculation methodologies and regulatory mechanisms that minimize the earnings impacts of such changes.
Credit Risk — SPS is also exposed to credit risk. Credit risk relates to the risk of loss resulting from counterparties’ nonperformance on their contractual obligations. SPS maintains credit policies intended to minimize overall credit risk and actively monitors these policies to reflect changes and scope of operations.
At Dec. 31, 2024, a 10% increase in commodity prices would have resulted in an increase in credit exposure of $7 million, while a decrease in prices of 10% would have resulted in a decrease in credit exposure of $7 million. At Dec. 31, 2023, a 10% increase in commodity prices would have resulted in an increase in credit exposure of $4 million, while a decrease in prices of 10% would have resulted in a decrease in credit exposure of $4 million.
SPS conducts credit reviews for all wholesale, trading and non-trading commodity counterparties and employs credit risk controls, such as letters of credit, parental guarantees, master netting agreements and termination provisions. Credit exposure is monitored and, when necessary, the activity with a specific counterparty is limited until credit enhancement is provided. Distress in the financial markets could increase SPS’ credit risk.
Fair Value Measurements
Derivative contracts, with the exception of those designated as normal purchases and normal sales, are reported at fair value. SPS’ investments held in pension and other postretirement funds are also subject to fair value accounting. See Note 8 and 9 to the financial statements for further information.
ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 15-1 for an index of financial statements included herein.
See Note 12 to the financial statements for further information.

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Management Report on Internal Control Over Financial Reporting
The management of SPS is responsible for establishing and maintaining adequate internal control over financial reporting. SPS’ internal control system was designed to provide reasonable assurance to Xcel Energy Inc.’s and SPS’ management and board of directors regarding the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
SPS management assessed the effectiveness of SPS’ internal control over financial reporting as of Dec. 31, 2024. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on our assessment, we believe that, as of Dec. 31, 2024, SPS’ internal control over financial reporting is effective at the reasonable assurance level based on those criteria.
/s/ ROBERT C. FRENZEL/s/ BRIAN J. VAN ABEL
Robert C. FrenzelBrian J. Van Abel
Chairman, Chief Executive Officer and DirectorExecutive Vice President, Chief Financial Officer and Director
Feb. 27, 2025Feb. 27, 2025

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholder and the Board of Directors of Southwestern Public Service Company


Opinion on the Financial Statements
We have audited the accompanying balance sheets of Southwestern Public Service Company (the "Company") as of December 31, 2024 and 2023, the related statements of income, common stockholder’s equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Regulatory Assets and Liabilities - Impact of Rate Regulation on the Financial Statements — Refer to Notes 4 and 10 to the financial statements.
Critical Audit Matter Description
The Company is subject to rate regulation by state utility regulatory agencies, which have jurisdiction with respect to the rates of its electric operations in New Mexico and Texas. The Company is also subject to the jurisdiction of the Federal Energy Regulatory Commission for its wholesale electric operations, accounting practices, wholesale sales for resale, transmission of electricity in interstate commerce, compliance with North American Electric Reliability Corporation standards, asset transactions and mergers and natural gas transactions in interstate commerce, (collectively with state utility regulatory agencies, the “Commissions”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation affects multiple financial statement line items and disclosures, including property, plant and equipment, regulatory assets and liabilities, operating revenues and expenses, and income taxes.
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The Company is subject to regulatory rate setting processes. Rates are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on, and recovery of, the Company’s investment in assets required to deliver services to customers. Accounting for the Company’s regulated operations provides that rate-regulated entities report assets and liabilities consistent with the recovery of those incurred costs in rates, if it is probable that such rates will be charged and collected. The Commissions’ regulation of rates is premised on the full recovery of incurred costs and a reasonable rate of return on invested capital. Decisions by the Commissions in the future will impact the accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required. In the rate setting process, the Company’s rates result in the recording of regulatory assets and liabilities based on the probability of future cash flows. Regulatory assets generally represent incurred or accrued costs that have been deferred because future recovery from customers is probable. Regulatory liabilities generally represent amounts that are expected to be refunded to customers in future rates or amounts collected in current rates for future costs.
We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs and requirements to refund amounts to customers. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the recognition of regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the Commissions for the Company, other regulatory filings, legal decisions and recommendations being evaluated by the Commissions, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates. We evaluated historic orders for precedents of the Commissions’ treatment of similar costs under similar circumstances. We compared the regulatory orders, filings and other publicly available information to the Company’s recorded regulatory assets and liabilities for completeness.
•We obtained management’s analysis and correspondence from counsel, as appropriate, regarding regulatory assets or liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or a future reduction in rates.
Commitments and Contingencies - Wildfires – Refer to Note 10 to the financial statements
Critical Audit Matter Description
As a result of a wildfire that occurred in the Company's service territory in Texas, the Company is required to evaluate its exposure to potential loss contingencies arising from claims associated with the 2024 Smokehouse Creek Fire Complex (the "Wildfire"). In evaluating this exposure, the Company is required to determine whether the likelihood of loss for the Wildfire is remote, reasonably possible or probable, which involves complex judgments based on several variables including available information regarding the cause and origin of the Wildfire, investigations, and discovery associated with lawsuits.
A provision for a loss contingency is recorded when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If deemed reasonably possible, the Company is required to estimate the potential loss or range of potential loss and disclose any material amounts. A current asset for claim amounts that are recoverable from insurance related to a loss contingency is recorded when it is probable the claim will be recovered.
We identified contingencies from the Wildfire and the related disclosure as a critical audit matter due to the significant judgments made by management to determine the probability of loss and estimate the probable losses and insurance recoveries. Auditing the reasonableness of management's judgments, estimates and disclosures related to the Wildfire required a high degree of auditor judgment and increased extent of audit effort.



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How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management's judgments regarding the probability of loss, estimated losses and insurance recoveries, and related disclosure for contingencies related to the Wildfire included the following, among others:
•We tested the effectiveness of controls over (1) the Company's determination of whether a loss was probable and/or reasonably possible and whether recoveries were probable; (2) the determination of the significant assumptions used in estimating the amount of probable loss and probable insurance recoveries; and (3) the disclosure related to the Wildfire.
•We evaluated management's judgments related to whether a loss was probable or reasonably possible from the Wildfire by inquiring of management and the Company's external and internal legal counsel. We also evaluated the potential impact of information gained through the Company and third parties' investigations into the cause of the Wildfire, information from claimants, the advice of legal counsel, and reading external information for any evidence that might contradict management's assertions.
•We evaluated management’s methodologies for assessing estimates of loss and recording a probable loss through inquiries with management and external and internal legal counsel and we tested the significant assumptions, including payments to settle claims, used in the estimates of probable loss.
•We read legal letters from the Company's external and internal legal counsel regarding known information and evaluated whether the information therein was consistent with the information obtained in our procedures.
•We evaluated management's judgments related to whether certain insurance recoveries were probable of collection by inquiring of management and the Company's internal legal counsel regarding the amounts of insurance recoveries recorded or disclosed. We obtained and inspected relevant insurance policies to evaluate coverages as well as communication between the Company and insurers.
•We evaluated whether the Company's disclosure was appropriate and consistent with the information obtained in our procedures.


/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
2/27/2025
We have served as the Company’s auditor since 2002.

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SOUTHWESTERN PUBLIC SERVICE CO.
STATEMENTS OF INCOME
(amounts in millions)
Year Ended Dec. 31
202420232022
Operating revenues$1,939 $2,152 $2,426 
Operating expenses
Electric fuel and purchased power588 910 1,157 
Operating and maintenance expenses313 279 317 
Demand side management expenses20 20 23 
Depreciation and amortization455 368 388 
Taxes (other than income taxes)102 100 107 
Workforce reduction expense— 9 — 
Total operating expenses1,478 1,686 1,992 
Operating income461 466 434 
Other income, net12 2 — 
Allowance for funds used during construction — equity1773
Interest charges and financing costs
Interest charges — includes other financing costs162 143 143 
Allowance for funds used during construction — debt(9)(7)(2)
Total interest charges and financing costs153136141
Income before income taxes337 339 296 
Income tax benefit(57)(45)(53)
Net income$394 $384 $349 
See Notes to Financial Statements

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SOUTHWESTERN PUBLIC SERVICE CO.
STATEMENTS OF CASH FLOWS
(amounts in millions)
Year Ended Dec. 31
202420232022
Operating activities
Net income$394 $384 $349 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization458 373 391 
Deferred income taxes123 (133)17 
Allowance for equity funds used during construction(17)(7)(3)
Provision for bad debts6 11 9 
Changes in operating assets and liabilities:
Accounts receivable82 (67)(67)
Accrued unbilled revenues10 1 (16)
Inventories(59)(51)(19)
Prepayments and other(35)39 (50)
Accounts payable29 (37)22 
Net regulatory assets and liabilities(26)307 (5)
Other current liabilities(63)5 52 
Pension and other employee benefit obligations— 3 1 
Other, net(16)(18)(5)
Net cash provided by operating activities886 810 676 
Investing activities
Utility capital/construction expenditures(1,015)(714)(578)
Investments in utility money pool arrangement— — (176)
Receipts from utility money pool arrangement— — 176 
Net cash used in investing activities(1,015)(714)(578)
Financing activities
Proceeds from (repayments of) short-term borrowings, net70 41 (103)
Proceeds from issuance of long-term debt, net588 98 196 
Repayment of long-term debt(350)— — 
Borrowings under utility money pool arrangement520 371 336 
Repayments under utility money pool arrangement(540)(344)(427)
Capital contributions from parent279 48 220 
Dividends paid to parent(427)(309)(319)
Net cash provided by (used in) financing activities140 (95)(97)
Net change in cash and cash equivalents11 1 1 
Cash, cash equivalents and restricted cash at beginning of period3 2 1 
Cash, cash equivalents and restricted cash at end of period$14 $3 $2 
Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)$(144)$(127)$(137)
Cash received (paid) for income taxes, net; includes proceeds from tax credit transfers159 (80)81 
Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions$99 $56 $86 
Inventory transfers to property, plant and equipment56 43 10 
Allowance for equity funds used during construction17 7 3 
See Notes to Financial Statements
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SOUTHWESTERN PUBLIC SERVICE CO.
BALANCE SHEETS
(amounts in millions, except share and per share data)
Dec. 31
20242023
Assets
Current assets
Cash and cash equivalents$14 $3 
Accounts receivable, net139 222 
Accounts receivable from affiliates20 26 
Accrued unbilled revenues129 139 
Inventories71 69 
Regulatory assets43 30 
Derivative instruments67 42 
Prepaid taxes6 2 
Prepayments and other289 32 
Total current assets778 565 
Property, plant and equipment, net9,251 8,536 
Other assets
Regulatory assets359 349 
Operating lease right-of-use assets371 403 
Other42 28 
Total other assets772 780 
Total assets$10,801 $9,881 
Liabilities and Equity
Current liabilities
Current portion of long-term debt$— $350 
Short-term debt145 75 
Borrowings under utility money pool arrangement7 27 
Accounts payable233 188 
Accounts payable to affiliates27 7 
Regulatory liabilities142 116 
Taxes accrued51 77 
Accrued interest36 33 
Dividends payable to parent51 59 
Derivative instruments— 2 
Operating lease liabilities34 32 
Other222 42 
Total current liabilities948 1,008 
Deferred credits and other liabilities
Deferred income taxes765 622 
Regulatory liabilities768 761 
Asset retirement obligations167 153 
Pension and employee benefit obligations17 12 
Operating lease liabilities337 371 
Other10 7 
Total deferred credits and other liabilities2,064 1,926 
Commitments and contingencies
Capitalization
Long-term debt3,551 2,961 
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at Dec. 31, 2024 and Dec. 31, 2023, respectively
— — 
Additional paid in capital3,647 3,370 
Retained earnings592 617 
Accumulated other comprehensive loss(1)(1)
Total common stockholder's equity4,238 3,986 
Total liabilities and equity$10,801 $9,881 
See Notes to Financial Statements
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SOUTHWESTERN PUBLIC SERVICE CO.
STATEMENTS OF COMMON STOCKHOLDER’S EQUITY
(amounts in millions, except share data)
Common Stock IssuedAccumulated
Other
Comprehensive
Loss
Total
Common
Stockholder’s
Equity
SharesPar Value
Additional
Paid In
Capital
Retained
Earnings
Balance at Dec. 31, 2021100 $— $3,091 $513 $(1)$3,603 
Net income349 349 
Common dividends declared to parent(322)(322)
Contribution of capital by parent220 220 
Balance at Dec. 31, 2022100 $— $3,311 $540 $(1)$3,850 
Net income384 384 
Common dividends declared to parent(307)(307)
Contribution of capital by parent59 59 
Balance at Dec. 31, 2023100 $— $3,370 $617 $(1)$3,986 
Net income394 394 
Common dividends declared to parent(419)(419)
Contribution of capital by parent277 277 
Balance at Dec. 31, 2024100 $— $3,647 $592 $(1)$4,238 
See Notes to Financial Statements

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SOUTHWESTERN PUBLIC SERVICE COMPANY
Notes to Financial Statements
1. Summary of Significant Accounting Policies
General — SPS is engaged in the regulated generation, purchase, transmission, distribution and sale of electricity.
SPS’ financial statements are presented in accordance with GAAP. All of SPS’ underlying accounting records also conform to the FERC uniform system of accounts. Certain amounts in the financial statements or notes have been reclassified for comparative purposes; however, such reclassifications did not affect net income, total assets, liabilities, equity or cash flows.
SPS has evaluated events occurring after Dec. 31, 2024 up to the date of issuance of these financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation.
Use of Estimates — SPS uses estimates based on the best information available to record transactions and balances resulting from business operations.
Estimates are used for items such as plant depreciable lives or potential disallowances, AROs, certain regulatory assets and liabilities, tax provisions, uncollectible amounts, environmental costs, unbilled revenues, jurisdictional fuel and energy cost allocations, actuarially determined benefit costs and wildfire contingencies. Recorded estimates are revised when better information becomes available or actual amounts can be determined. Revisions can affect operating results.
Regulatory Accounting — SPS accounts for income and expense items in accordance with accounting guidance for regulated operations. Under this guidance:
•Certain costs, which would otherwise be charged to expense or other comprehensive income, are deferred as regulatory assets based on the expected ability to recover the costs in future rates.
•Certain credits, which would otherwise be reflected as income or other comprehensive income, are deferred as regulatory liabilities based on the expectation the amounts will be returned to customers in future rates or because the amounts were collected in rates prior to the costs being incurred.
Estimates and assumptions for recovery of deferred costs and refund of deferred credits are based on specific ratemaking decisions, precedent or other available information. Regulatory assets and liabilities are amortized consistent with the treatment in the rate setting process.
If changes in the regulatory environment occur, SPS may no longer be eligible to apply this accounting treatment and may be required to eliminate regulatory assets and liabilities. Such changes could have a material effect on SPS’ results of operations, financial condition and cash flows.
See Note 4 for further information.
Income Taxes — SPS accounts for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Income taxes are deferred for all temporary differences between pretax financial and taxable income and between the book and tax bases of assets and liabilities utilizing rates that are scheduled to be in effect when the temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date.
Utility rate regulation has resulted in the recognition of regulatory assets and liabilities related to income taxes. The effects of SPS’ tax rate changes are generally subject to a normalization method of accounting. Therefore, the revaluation of most of its net deferred taxes upon a tax rate reduction results in the establishment of a net regulatory liability, refundable to utility customers over the remaining life of the related assets. SPS anticipates that a tax rate increase would predominantly result in the establishment of a regulatory asset, subject to an evaluation of whether future recovery is expected.
Tax credits are recorded when earned unless there is a requirement to defer the benefit and amortize over the book depreciable lives of related property. The requirement to defer and amortize these credits specifically applies to certain federal ITCs, as determined by tax regulations and SPS tax elections. For tax credits otherwise eligible to be recognized when earned, SPS considers the impact of rate regulation to determine if these credits and related adjustments should be deferred as regulatory assets or liabilities.
Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. This evaluation includes consideration of whether tax credits are expected to be sold at a discount and impact the realization of amounts presented as deferred tax assets. Transferable tax credits are accounted for under ASC 740, Income Taxes, and valuation allowances and any adjustments for discounts incurred on sales transactions are recorded to deferred tax expense.
SPS measures and discloses uncertain tax positions that it has taken or expects to take in its income tax returns. A tax position is recognized in the financial statements when it is more likely than not that the position will be sustained upon examination based on the technical merits of the position. Recognition of changes in uncertain tax positions are reflected as a component of income tax expense.
Interest and penalties related to income taxes are reported within Other income, net or interest charges in the statements of income.
Xcel Energy Inc. and its subsidiaries, including SPS file consolidated federal income tax returns as well as consolidated or separate state income tax returns. Federal income taxes paid by Xcel Energy Inc. are allocated to its subsidiaries based on separate company computations. A similar allocation is made for state income taxes paid by Xcel Energy Inc. in connection with consolidated state filings. Xcel Energy Inc. also allocates its own income tax benefits to its direct subsidiaries.
See Note 7 for further information.
Property, Plant and Equipment and Depreciation in Regulated Operations — Property, plant and equipment is stated at original cost. The cost of plant includes direct labor and materials, contracted work, overhead costs and AFUDC. The cost of plant retired is charged to accumulated depreciation and amortization. Amounts recovered in rates for future removal costs are recorded as regulatory liabilities. Significant additions or improvements extending asset lives are capitalized, while repairs and maintenance costs and replacement of items determined to be less than a unit of property are charged to expense as incurred.
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Property, plant and equipment is tested for impairment when it is determined that the carrying value of the assets may not be recoverable. A loss is recognized in the current period if it becomes probable that part of a cost of a plant under construction or recently completed plant will be disallowed for recovery from customers and a reasonable estimate of the disallowance can be made. For investments in property, plant and equipment that are abandoned and not expected to go into service, incurred costs and related deferred tax amounts are compared to the discounted estimated future rate recovery, and a loss is recognized, if necessary.
Depreciation expense is recorded using the straight-line method over the plant’s commission approved useful life. Actuarial life studies are performed and submitted to the state and federal commissions for review. Upon acceptance by the various commissions, the resulting lives and net salvage rates are used to calculate depreciation. Plant removal costs are typically recognized at the amounts recovered in rates as authorized by the applicable regulator. Accumulated removal costs are reflected in the balance sheet as a regulatory liability. Depreciation expense, expressed as a percentage of average depreciable property, was approximately 3.9% in 2024 and 3.4% in 2023 and 2022.
See Note 3 for further information.
AROs — SPS records AROs as a liability in the period incurred (if fair value can be reasonably estimated), with the offsetting/associated costs capitalized as a long-lived asset. The liability is generally increased over time by applying the effective interest method of accretion and the capitalized costs are typically depreciated over the useful life of the long-lived asset. Changes resulting from revisions to timing or amounts of expected asset retirement cash flows are recognized as an increase or a decrease in the ARO.
See Note 10 for further information.
Benefit Plans and Other Postretirement Benefits — SPS maintains pension and postretirement benefit plans for eligible employees. Recognizing the cost of providing benefits and measuring the projected benefit obligation of these plans requires management to make various assumptions and estimates.
Certain unrecognized actuarial gains and losses and unrecognized prior service costs or credits are deferred as regulatory assets and liabilities, rather than recorded as other comprehensive income, based on regulatory recovery mechanisms.
See Note 9 for further information.
Environmental Costs — Environmental costs are recorded when it is probable SPS is liable for remediation costs and the amount can be reasonably estimated. Costs are deferred as a regulatory asset if it is probable the costs will be recovered from customers in future rates. Otherwise, the costs are expensed. For certain environmental costs related to facilities currently in use, such as for emission-control equipment, the cost is capitalized and depreciated over the life of the plant.
Estimated remediation costs are regularly adjusted as estimates are revised and remediation is performed. If other participating potentially responsible parties exist and acknowledge their potential involvement with a site, costs are estimated and recorded only for SPS’ expected share of the cost.
Estimated future expenditures to restore sites are generally treated as a capitalized cost of plant retirement. The depreciation expense levels recoverable in rates include a provision for removal expenses. Removal costs recovered in rates before the related costs are incurred are classified as a regulatory liability. When separate mechanisms are expected to provide cost recovery or when changes in projected costs occur near the end of a facility’s useful life, regulatory accounting may be applied.
See Note 10 for further information.
Revenue from Contracts with Customers — Performance obligations related to the sale of energy are satisfied as energy is delivered to customers. SPS recognizes revenue that corresponds 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 systematically 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.
A separate financing component of collections from customers is not recognized as contract terms are short-term in nature. Revenues are net of any excise or sales taxes or fees.
SPS participates in SPP. SPS recognizes physical sales to customers (native load and wholesale) on a gross basis in electric revenues and cost of sales. Revenues and charges for short-term physical wholesale sales of excess energy transacted through RTOs are also recorded on a gross basis. Other revenues and charges settled/facilitated through an RTO are recorded on a net basis in cost of sales.
See Note 6 for further information.
Cash and Cash Equivalents — SPS considers investments in instruments with a remaining maturity of three or less at the time of purchase to be cash equivalents.
Accounts Receivable and Allowance for Bad Debts — Accounts receivable are stated at the actual billed amount net of an allowance for bad debts. SPS establishes an allowance for uncollectible receivables based on a policy that reflects its expected exposure to the credit risk of customers.
As of Dec. 31, 2024 and 2023, the allowance for bad debts was $12 million and $15 million, respectively.
Inventory — Inventory is recorded at the lower of average cost or net realizable value and consisted of the following:
(Millions of Dollars)Dec. 31, 2024Dec. 31, 2023
Inventories
Materials and supplies$60 $56 
Fuel11 13 
Total inventories$71 $69 
Fair Value Measurements — SPS presents cash equivalents, interest rate derivatives, commodity derivatives and pension and postretirement plan assets at estimated fair values in its financial statements.
For interest rate derivatives, quoted prices based primarily on observable market interest rate curves are used to estimate fair value. For commodity derivatives, the most observable inputs available are generally used to determine the fair value of each contract. In the absence of a quoted price, quoted prices for similar contracts or internally prepared valuation models may be used to determine fair value.
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For the pension and postretirement plan assets, published trading data and pricing models, generally using the most observable inputs available, are utilized to determine fair value for each security.
See Notes 8 and 9 for further information.
Derivative Instruments — SPS uses derivative instruments in connection with its commodity trading activities, and to manage risk associated with changes in interest rates and utility commodity prices, including forward contracts, futures, swaps and options. Derivatives not qualifying for the normal purchases and normal sales exception are recorded on the balance sheets at fair value as derivative instruments. Classification of changes in fair value for those derivative instruments is dependent on the designation of a qualifying hedging relationship.
Changes in fair value of derivative instruments not designated in a qualifying hedging relationship are reflected in current earnings or as a regulatory asset or liability. Classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms.
Gains or losses on commodity trading transactions are recorded as a component of electric operating revenues.
Normal Purchases and Normal Sales — SPS enters into contracts for purchases and sales of commodities for use and sale in its operations. At inception, contracts are evaluated to determine whether they contain a derivative, and if so, whether they may be exempted from derivative accounting if designated as normal purchases or normal sales.
See Note 8 for further information.
Other Utility Items
AFUDC — AFUDC represents the cost of capital used to finance utility construction activity and is computed by applying a composite financing rate to qualified CWIP. The amount of AFUDC capitalized as a utility construction cost is credited to other nonoperating income (for equity capital) and interest charges (for debt capital). AFUDC amounts capitalized are included in SPS’ rate base.
Alternative Revenue — Certain rate rider mechanisms (including DSM programs) qualify as alternative revenue programs. These mechanisms arise from instances in which the regulator authorizes a future surcharge in response to past activities or completed events. When certain criteria are met, including expected collection within 24 months, revenue is recognized, which may include incentives and return on rate base items. Billing amounts are revised periodically for differences between total amount collected and revenue earned, which may increase or decrease the level of revenue collected from customers. Alternative revenues arising from these programs are presented on a gross basis and disclosed separately from revenue from contracts with customers.
See Note 6 for further information.
Conservation Programs — SPS has implemented programs in its jurisdictions to assist customers in conserving energy and reducing peak demand on the electric system. These programs include commercial motor, air conditioner and lighting upgrades, as well as residential rebates for participation in air conditioner interruption and home weatherization.
The costs incurred for some DSM programs are deferred as permitted by the applicable regulatory jurisdiction. For those programs, costs are deferred if it is probable future revenue will be provided to permit recovery of the incurred cost. Revenues recognized for incentive programs designed for recovery of lost margins and/or conservation performance incentives are limited to amounts expected to be collected within 24 months from the annual period in which they are earned. SPS recovers approved conservation program costs in base rate revenue or through a rider.
Emissions Allowances — Emissions allowances are recorded at cost, including broker commission fees. The inventory accounting model is utilized for all emissions allowances and any sales of these allowances are included in electric revenues.
RECs — Cost of RECs that are utilized for compliance is recorded as electric fuel and purchased power expense. SPS reduces recoverable fuel and purchased power costs for the cost of RECs received.
An inventory accounting model is used to account for RECs, however these assets are classified as regulatory assets if amounts are recoverable in future rates.
2. Accounting Pronouncements
Recently Adopted
Segment Reporting — In November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, which extends the existing requirements for annual disclosures to quarterly periods, and requires that both annual and quarterly disclosures present segment expenses using line items consistent with information regularly provided to the chief operating decision maker, including entities, such as SPS, with a single segment. SPS implemented this guidance on a retrospective basis in the year ended Dec. 31, 2024. The adoption impacts were not material.
See Note 11 for further information.
Recently Issued
Income Taxes — In December 2023, the FASB issued ASU 2023-09 – Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, with new disclosure requirements including presentation of prescribed line items in the ETR reconciliation and disclosures regarding state and local tax payments. The ASU is effective for annual periods beginning after Dec. 15, 2024, and SPS does not expect implementation of the new disclosure guidance to have a material impact on its financial statements.
Climate-Related Disclosures — In March 2024, the SEC issued Final Rule 33-11275 – The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule requires registrants to provide standardized disclosures in Form 10-K related to climate-related risks, Scope 1 and 2 GHG emissions, as well as to include in a footnote to the financial statements the financial impact of severe weather events and other natural conditions. The rule requires implementation in phases between 2025 and 2033. In April 2024, the SEC announced that it would voluntarily stay its final climate disclosure rules pending judicial review. SPS does not expect the potential implementation of the new guidance to have a material impact on the financial statements.
Disaggregation of Income Statement Expenses — In November 2024, the FASB issued ASU 2024-03 – Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities. The ASU is effective for annual periods beginning after Dec. 15, 2026. SPS is currently evaluating the impact of implementing the new disclosure guidance.
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3. Property, Plant and Equipment
Major classes of property, plant and equipment
(Millions of Dollars)Dec. 31, 2024Dec. 31, 2023
Property, plant and equipment, net
Electric plant$11,443 $10,752 
Plant to be retired (a)
182 248 
CWIP518 226 
Total property, plant and equipment12,143 11,226 
Less accumulated depreciation(2,892)(2,690)
Property, plant and equipment, net$9,251 $8,536 
(a)Amounts include Tolk Unit 1 and 2. The Dec. 31, 2023 amounts also include coal generation assets at Harrington. The coal assets were retired in 2024 and the conversion to natural gas is in process. Amounts are reported net of accumulated depreciation.
4. Regulatory Assets and Liabilities
Regulatory assets and liabilities are created for amounts that regulators may allow to be collected or may require to be paid back to customers in future electric rates. SPS would be required to recognize the write-off of regulatory assets and liabilities in net income or other comprehensive income if changes in the utility industry no longer allow for the application of regulatory accounting guidance under GAAP.
Components of regulatory assets:
(Millions of Dollars)See Note(s)Remaining Amortization PeriodDec. 31, 2024Dec. 31, 2023
Regulatory AssetsCurrentNoncurrentCurrentNoncurrent
Pension and retiree medical obligations9Various$4 $156 $2 $147 
Net AROs (a)
1, 10Various— 70 — 59 
Recoverable deferred taxes on AFUDCPlant lives— 46 — 44 
Excess deferred taxes — TCJA 7Various1 45 1 47 
Losses on reacquired debtTerm of related debt1 17 1 18 
Texas revenue surcharges
Less than one year
30 — 21 — 
OtherVarious7 25 5 34 
Total regulatory assets$43 $359 $30 $349 
(a)Includes amounts recorded for future recovery of AROs.

Components of regulatory liabilities:
(Millions of Dollars)See Note(s)Remaining Amortization PeriodDec. 31, 2024Dec. 31, 2023
Regulatory LiabilitiesCurrentNoncurrentCurrentNoncurrent
Deferred income tax adjustments and TCJA refunds (a)
7 Various$— $436 $— $458 
Plant removal costs1, 10Various— 267 — 223 
LP&L departure paymentVarious4 29 33 33 
Effects of regulation on employee benefit costsVarious— 18 — 19 
Formula rates
One to two years
16 2 13 10 
Contract valuation adjustments (b)
1, 8
Less than one year
67 — 41 — 
Deferred electric energy costs
Less than one year
41 — 15 — 
OtherVarious14 16 14 18 
Total regulatory liabilities$142 $768 $116 $761 

(a)Includes the revaluation of recoverable/regulated plant accumulated deferred income taxes and revaluation impact of non-plant accumulated deferred income taxes due to the TCJA.
(b)Includes the fair value of FTR instruments utilized/intended to offset the impacts of transmission system congestion.

SPS’ regulatory assets not earning a return include past expenditures of $126 million and $123 million at Dec. 31, 2024 and 2023, respectively, which predominately relate to rate case expenses, losses on reacquired debt and transmission-related deferrals and amortizations. Additionally, the unfunded portion of pension and retiree medical obligations and net AROs (i.e. deferrals for which cash has not been disbursed) do not earn a return.
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5. Borrowings and Other Financing Instruments
Short-Term Borrowings
SPS meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility and the money pool.
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:
(Millions of Dollars, Except Interest Rates)Three Months Ended Dec. 31, 2024Year Ended Dec. 31
202420232022
Borrowing limit$100 $100 $100 $100 
Amount outstanding at period end7 7 27 — 
Average amount outstanding6 24 46 35 
Maximum amount outstanding60 100 100 100 
Weighted average interest rate, computed on a daily basis4.58 %5.29 %5.04 %0.44 %
Weighted average interest rate at end of period4.58 4.58 5.34 N/A
Commercial Paper — Commercial paper outstanding:
(Millions of Dollars, Except Interest Rates)Three Months Ended Dec. 31, 2024Year Ended Dec. 31
202420232022
Borrowing limit$500 $500 $500 $500 
Amount outstanding at period end145 145 75 34 
Average amount outstanding13 35 50 100 
Maximum amount outstanding145 160 119 324 
Weighted average interest rate, computed on a daily basis4.70 %5.47 %5.12 %0.79 %
Weighted average interest rate at end of period4.66 4.66 5.56 4.55 
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, 2024 and 2023, there were no letters of credit outstanding under the credit facility, respectively. 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.
Features of SPS’ credit facility:
Debt-to-Total Capitalization Ratio (a)
Amount Facility May Be Increased (millions of dollars)
Additional Periods for Which a One-Year Extension May Be Requested (b)
20242023
46.6%46.1%$502
(a)The 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 would 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, 2024, SPS was in compliance with the financial covenant.
SPS had the following committed credit facility available as of Dec. 31, 2024 (in millions) of dollars:
Credit Facility (a)
Drawn (b)
Available
$500 $145 $355 
(a)This credit facility matures in September 2027.
(b)Includes letters of credit and outstanding commercial paper.
All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. SPS had no direct advances on the facility outstanding at Dec. 31, 2024 and 2023.
Long-Term Borrowings and Other Financing Instruments
Generally, the property of SPS is subject to the lien of its first mortgage indenture for the benefit of bondholders. Debt premiums, discounts and expenses are amortized over the life of the related debt. The premiums, discounts and expenses for refinanced debt are deferred and amortized over the life of the new issuance.
Long-term debt obligations for SPS as of Dec. 31 (in millions of dollars):
Financing InstrumentInterest RateMaturity Date20242023
First mortgage bonds3.30 %June 15, 2024$— $150 
First mortgage bonds3.30 June 15, 2024— 200 
Unsecured senior notes6.00 Oct. 1, 2033100 100 
Unsecured senior notes6.00 Oct. 1, 2036250 250 
First mortgage bonds4.50 Aug. 15, 2041200 200 
First mortgage bonds4.50 Aug. 15, 2041100 100 
First mortgage bonds4.50 Aug. 15, 2041100 100 
First mortgage bonds3.40 Aug. 15, 2046300 300 
First mortgage bonds3.70 Aug. 15, 2047450 450 
First mortgage bonds4.40 Nov. 15, 2048300 300 
First mortgage bonds 3.75 June 15, 2049300 300 
First mortgage bonds3.15 May 1, 2050350 350 
First mortgage bonds3.15 May 1, 2050250 250 
First mortgage bonds5.15 June 1, 2052200 200 
First mortgage bonds (a)
6.00 Sept. 15, 2053100 100 
First mortgage bonds (b)
6.00 June 1, 2054600 — 
Unamortized discount(14)(10)
Unamortized debt issuance cost(35)(29)
Current maturities— (350)
Total long-term debt$3,551 $2,961 
(a)2023 financing.
(b)2024 financing.
There are no maturities of long-term debt until 2033.
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Capital Stock — SPS has the following preferred stock:
Preferred Stock Authorized (Shares)Par Value of Preferred StockPreferred Stock Outstanding (Shares) 2024 and 2023
10,000,000 1.00 — 
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 commissions additionally impose dividend limitations, which are more restrictive than those imposed by the FERC.
Requirements and actuals as of Dec. 31, 2024:
Equity to Total Capitalization Ratio
Required Range
Equity to Total Capitalization Ratio Actual (a)
LowHigh2024
45.0 %55.0 %54.4 %
(a)Excludes short-term debt.
Unrestricted Retained EarningsTotal Capitalization
Limit on Total Capitalization (a)
$592  million$7,789 millionN/A
(a)SPS may not pay a dividend that would cause it to lose its investment grade bond rating.
6. Revenues
Revenue is classified by the type of goods/services rendered and market/customer type. SPS’ operating revenues consisted of the following:
Year Ended Dec. 31
(Millions of Dollars)202420232022
Major revenue types
Revenue from contracts with customers:
Residential$413 $442 $445 
C&I1,000 1,094 
(a)
1,102 
Other48 58 51 
Total retail1,461 1,594 1,598 
Wholesale116 223 407 
Transmission288 296 296 
Other5 — 10 
Total revenue from contracts with customers1,870 2,113 2,311 
Alternative revenue and other69 39 115 
Total revenues$1,939 $2,152 $2,426 
(a)In 2023, revenues from one C&I customer represented approximately 10.6% of total revenues.
7. Income Taxes
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.
Effective income tax rate for years ended Dec. 31:
202420232022
Federal statutory rate21.0 %21.0 %21.0 %
State income tax on pretax income, net of federal tax effect2.1 2.4 2.3 
Increases (decreases) in tax from:
Wind PTCs (a)
(34.3)(33.5)(35.9)
Plant regulatory differences (b)
(4.6)(3.3)(3.8)
Amortization of (excess)/deficient nonplant deferred taxes(0.2)0.3 (0.9)
Other, net(0.9)(0.2)(0.6)
Effective income tax rate(16.9)%(13.3)%(17.9)%
(a)Wind PTCs net of estimated transfer discounts. Gross wind PTCs are credited to customers (reduction to revenue) and do not materially impact net income.
(b)Plant regulatory differences primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit are offset by corresponding revenue reductions.
Components of income tax expense for years ended Dec. 31:
(Millions of Dollars)202420232022
Current federal tax expense (benefit)$42 $76 $(65)
Current state tax expense (benefit)4 12 (5)
Deferred federal tax (benefit) expense(105)(132)3 
Deferred state tax expense (benefit)2 (1)13 
Deferred change in unrecognized tax expense— — 1 
Total income tax benefit$(57)$(45)$(53)
Components of deferred income tax expense as of Dec. 31:
(Millions of Dollars)202420232022
Deferred tax expense (benefit) excluding items below
$143 $(117)$37 
Adjustments to deferred income taxes for tax credit cash transfers (a)
(226)— — 
Amortization and adjustments to deferred income taxes on income tax regulatory assets and liabilities(19)(16)(20)
Tax expense allocated to other comprehensive income and other(1)— — 
Deferred tax (benefit) expense$(103)$(133)$17 
(a)Proceeds from tax credit transfers are included in cash received (paid) for income taxes in the statement of cash flows.
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Components of the net deferred tax liability as of Dec. 31:
(Millions of Dollars)20242023
Deferred tax liabilities:
Differences between book and tax bases of property$1,089 $1,072 
Operating lease assets83 90 
Regulatory assets53 51 
Pension expense33 32 
Other2 — 
Total deferred tax liabilities$1,260 $1,245 
Deferred tax assets:
Tax credit carryforward$292 $406 
Regulatory liabilities90 95 
Operating lease liabilities83 90 
Other employee benefits5 6 
Deferred fuel costs10 5 
Tax credit valuation allowances— (2)
Other15 23 
Total deferred tax assets495 623 
Net deferred tax liability$765 $622 
Other Income Tax Matters — NOL amounts represent the tax loss that is carried forward and tax credits represent the deferred tax asset. NOL and tax credit carryforwards as of Dec. 31 were as follows:
(Millions of Dollars)20242023
Federal tax credit carryforwards$292 $406 
Valuation allowances for federal credit carryforwards— (2)
State NOL carryforwards2 3 
Federal carryforward periods expire between 2039 and 2044. State carryforwards have an indefinite expiration period.
Unrecognized Tax Benefits
Federal Audit — SPS is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. Statute of limitations applicable to Xcel Energy’s consolidated federal tax returns expire as follows:
Tax Year(s)Expiration
2014 - 2016March 2025
2021October 2025
Additionally, the statute of limitations related to the federal tax credit carryforwards will remain open until those credits are utilized in subsequent returns. Further, the statute of limitations related to the additional federal tax loss carryback claim filed in 2020 has been extended. In 2023 the IRS issued its Revenue Agent’s Report related to the federal tax loss carryback claim. The Company materially agreed with the report and re-recognized the related benefit in 2023.

State Audits — SPS is a member of the Xcel Energy affiliated group that files consolidated state tax returns based on income in its major operating jurisdictions and various other state income-based tax returns. As of Dec. 31, 2024, SPS’ earliest open tax years (subject to examination by state taxing authorities in its major operating jurisdictions) were as follows:
StateTax Year(s)Expiration
Texas2016 - 2019December 2025
In 2021, Texas began an audit of tax years 2016 - 2019. As of Dec. 31, 2024, no material adjustments have been proposed.
Unrecognized tax benefit balance may include permanent tax positions, which if recognized would affect the ETR. In addition, the unrecognized tax benefit balance may include temporary tax positions for which deductibility is highly certain, but for which there is uncertainty about the timing. A change in the period of deductibility would not affect the ETR but would accelerate the payment to the taxing authority.
Unrecognized tax benefits — permanent vs temporary:
(Millions of Dollars)Dec. 31, 2024Dec. 31, 2023
Unrecognized tax benefit — Permanent tax positions$5 $5 
Unrecognized tax benefit — Temporary tax positions— — 
Total unrecognized tax benefit$5 $5 
Changes in unrecognized tax benefits:
(Millions of Dollars)202420232022
Balance at Jan. 1$5 $9 $8 
Additions based on tax positions related to the current year1 1 1 
Reductions for tax positions of prior years(1)(5)— 
Balance at Dec. 31$5 $5 $9 
Unrecognized tax benefits were reduced by tax benefits associated with tax credit carryforwards:
(Millions of Dollars)Dec. 31, 2024Dec. 31, 2023
Tax credit carryforwards$(4)$(4)
There exists approximately $5 million of noncurrent liabilities related to unrecognized tax benefits for which there is uncertainty about if or when these liabilities will significantly increase or decrease.
Payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with tax credit carryforwards.
Interest payable related to unrecognized tax benefits:
(Millions of Dollars)202420232022
Payable for interest related to unrecognized tax benefits at Jan. 1$— $— $(1)
Interest benefit related to unrecognized tax benefits— — 1 
Payable for interest related to unrecognized tax benefits at Dec. 31$— $— $— 
No penalties were accrued related to unrecognized tax benefits as of Dec. 31, 2024, 2023 or 2022.

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8. Fair Value of Financial Assets and Liabilities
Fair Value Measurements
Accounting guidance for fair value measurements and disclosures provides a hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value.
•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 actively traded instruments with observable actual trading prices.
•Level 2 — Pricing inputs are other than actual trading 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 include those valued with models requiring significant judgment or estimation.
Specific valuation methods include:
Interest rate derivatives — Fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts.
Commodity derivatives — 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 contracts relate to inactive delivery locations or extend to periods beyond those readily observable on active exchanges, the significance of the use of less observable inputs 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 FTRs. FTRs purchased from an 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 values of these instruments are derived from, and designed to offset, the costs 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 these instruments.
FTRs are recognized at fair value and adjusted each period prior to settlement. Given the limited observability of certain variables underlying the reported auction, values of FTRs, these fair value measurements have been assigned a Level 3 classification.
Net congestion costs, including the impact of FTR settlements, are shared through fuel and purchased energy cost recovery mechanisms. As such, the fair value of the unsettled instruments (i.e., derivative asset or liability) is offset/deferred as a regulatory asset or liability.
Derivative Activities and 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 utility commodity prices.
Interest Rate Derivatives — SPS enters into contracts that effectively fix the interest rate on a specified principal amount of a hypothetical future debt issuance. These financial swaps net settle based on changes in a specified benchmark interest rate, acting as a hedge of changes in market interest rates that will impact specified anticipated debt issuances. These derivative instruments are designated as cash flow hedges for accounting purposes, with changes in fair value prior to occurrence of the hedged transactions recorded as other comprehensive income.
As of Dec. 31, 2024, accumulated other comprehensive loss related to interest rate derivatives included immaterial net losses expected to be reclassified into earnings during the next 12 months as the hedged transactions impact earnings. As of Dec. 31, 2024, SPS had no unsettled interest rate swaps outstanding.
Wholesale and Commodity Trading — SPS conducts various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy and energy-related instruments, including derivatives. SPS is allowed to conduct these activities within guidelines and limitations as approved by its risk management committee, comprised of management personnel not directly involved in the activities governed by this policy.
Results of derivative instrument transactions entered into for trading purposes are presented in the statements of income as electric revenues, net of any sharing with customers. These activities are not intended to mitigate commodity price risk associated with regulated electric operations. Sharing of these margins is determined through state regulatory proceedings as well as the operation of the FERC-approved joint operating agreement.
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 most significant derivative positions outstanding at Dec. 31, 2024 and 2023 for this purpose relate to FTR instruments administered by SPP. These instruments are intended to offset the impacts of transmission system congestion.
When SPS enters into derivative instruments that mitigate commodity price risk on behalf of electric customers, the instruments are not typically designated as qualifying hedging transactions. The classification of unrealized losses or gains on these instruments as a regulatory asset or liability, if applicable, is based on approved regulatory recovery mechanisms.
As of Dec. 31, 2024, SPS had no commodity contracts designated as cash flow hedges.
Gross notional amounts of FTRs:
(Amounts in Millions) (a)
Dec. 31, 2024Dec. 31, 2023
MWh of electricity7 8 
(a)Not reflective of net positions in the underlying commodities.
Consideration of Credit Risk and Concentrations — SPS continuously monitors the creditworthiness of 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. Impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented on the balance sheets.
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PSCo often has significant concentrations of credit risk with particular entities or industries in its wholesale, trading and non-trading commodity activities.
As of Dec. 31, 2024, one of SPS’ nine most significant counterparties for these activities, comprising $2 million or 9% of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services, or Fitch Ratings.
Five of the nine most significant counterparties, comprising $21 million or 91% of this credit exposure, were not rated by these external ratings agencies, but based on SPS’ internal analysis, had credit quality consistent with investment grade. 
Three of these significant counterparties, comprising an immaterial amount or less than 1% of this credit exposure, had credit quality less than investment grade, based on internal analysis.
Seven of these significant counterparties are municipal or cooperative electric entities, RTOs or other utilities.
Recurring Derivative Fair Value Measurements
Impact of derivative activity:
Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:
(Millions of Dollars)Regulatory (Assets) and Liabilities
Year Ended Dec. 31, 2024
Other derivative instruments
Electric commodity$62 
Total$62 
Year Ended Dec. 31, 2023
Other derivative instruments
Electric commodity$(88)
Total$(88)
Year Ended Dec. 31, 2022
Other derivative instruments
Electric commodity$(3)
Total$(3)
Pre-Tax (Gains) Losses Reclassified into Income During the Period from:
(Millions of Dollars)Regulatory
Assets and (Liabilities)
Year Ended Dec. 31, 2024
Other derivative instruments
Electric commodity(43)
(a)
Total$(43)
Year Ended Dec. 31, 2023
Other derivative instruments
Electric commodity78 
(a)
Total$78 
Year Ended Dec. 31, 2022
Other derivative instruments
Electric commodity2 
(a)
Total$2 
(a)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. FTR settlements are shared with customers and do not have a material impact on net income. Presented amounts reflect changes in fair value between auction and settlement dates, but exclude the original auction fair value.
SPS had no derivative instruments designated as fair value hedges during the years ended Dec. 31, 2024, 2023 and 2022.

Derivative assets and liabilities measured at fair value on a recurring basis were as follows:
Dec. 31, 2024Dec. 31, 2023
Fair ValueFair Value Total
Netting (a)
TotalFair ValueFair Value Total
Netting (a)
Total
(Millions of Dollars)Level 1Level 2Level 3Level 1Level 2Level 3
Current derivative assets
Other derivative instruments:
Electric commodity$— $— $67 $67 $— $67 $— $— $39 $39 $— $39 
Total current derivative assets$— $— $67 $67 $— 67 $— $— $39 $39 $— 39 
PPAs (b)
— 3 
Current derivative instruments$67 $42 
Current derivative liabilities
Other derivative instruments:
PPAs (b)
$— $2 
Current derivative instruments$— $2 
(a)SPS nets derivative instruments and related collateral on its balance sheet when supported by a legally enforceable master netting agreement. At Dec. 31, 2024 and 2023, derivative assets and liabilities include no obligations to return cash collateral or rights to reclaim cash collateral. Counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.
(b)SPS currently applies the normal purchase exception to qualifying PPAs. Balance relates to specific contracts that were previously recognized at fair value prior to applying the normal purchase exception, and are being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.
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Changes in Level 3 commodity derivatives:
Year Ended Dec. 31
(Millions of Dollars)202420232022
Balance at Jan. 1$39 $119 $27 
Purchases (a)
138 79 248 
Settlements (a)
(242)(89)(168)
Net transactions recorded during the period:
Net gains (losses) recognized as regulatory assets and liabilities (a)
132 (70)12 
Balance at Dec. 31$67 $39 $119 
(a)Relates primarily to FTR instruments administered by SPP.
Fair Value of Long-Term Debt
As of Dec. 31, other financial instruments for which the carrying amount did not equal fair value:
20242023
(Millions of Dollars)Carrying AmountFair ValueCarrying AmountFair Value
Long-term debt$3,551 $2,968 $3,311 $2,818 
Fair value of SPS’ long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of Dec. 31, 2024 and 2023, and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.
9. Benefit Plans and Other Postretirement Benefits
Pension and Postretirement Health Care Benefits
Xcel Energy, which includes SPS, has several noncontributory, qualified, defined benefit pension plans that cover almost all employees. All newly hired or rehired employees participate under the Cash Balance formula, which is based on pay credits using a percentage of annual eligible pay and annual interest credits.
The average annual interest crediting rates for these plans was 4.84, 4.45 and 4.69 percent in 2024, 2023 and 2022, respectively.
Some employees may participate under legacy formulas such as the traditional final average pay or pension equity. Xcel Energy’s policy is to fully fund into an external trust the actuarially determined pension costs subject to the limitations of applicable employee benefit and tax laws.
In addition to the qualified pension plans, Xcel Energy maintains a SERP and a nonqualified pension plan. The SERP is maintained for certain executives who participated in the plan in 2008, when the SERP was closed to new participants.
The nonqualified pension plan provides benefits for compensation that is in excess of the limits applicable to the qualified pension plans, with distributions funded by Xcel Energy’s consolidated operating cash flows.
Obligations of the SERP and nonqualified plan as of Dec. 31, 2024 and 2023 were $13 million and $12 million, respectively, of which an immaterial amount was attributable to SPS.
Xcel Energy’s postretirement health care benefit plan is a continuation of certain welfare benefit programs for current employees. A full-time employee’s date of hire or a retiree’s date of retirement determine eligibility for each of the programs.
Xcel Energy’s investment-return assumption considers the expected long-term performance for each of the asset classes in its pension and postretirement health care portfolio. Xcel Energy considers the historical returns achieved by its asset portfolios over long time periods, as well as the long-term projected return levels from investment experts. Xcel Energy and SPS continually review pension assumptions.
Pension cost determination assumes a forecasted mix of investment types over the long-term.
•Investment returns in 2024 were below the assumed level of 6.97%.
•Investment returns in 2023 were above the assumed level of 6.96%.
•Investment returns in 2022 were below the assumed level of 6.39%.
•In 2025, SPS’ expected investment-return assumption is 7.03%.
Pension plan and postretirement benefit assets are invested in a portfolio according to Xcel Energy’s return, liquidity and diversification objectives to provide a source of funding for plan obligations and minimize contributions to the plan, within appropriate levels of risk.
The principal mechanism for achieving these objectives is the asset allocation given the long-term risk, return, correlation and liquidity characteristics of each particular asset class.
There were no significant concentrations of risk in any industry, index, or entity. Market volatility can impact even well-diversified portfolios and significantly affect the return levels achieved by the assets in any year.
State agencies also have issued guidelines to the funding of postretirement benefit costs. SPS is required to fund postretirement benefit plans for Texas and New Mexico equal to amounts collected in rates. These assets are invested in a manner consistent with the investment strategy for the pension plan.
Xcel Energy’s ongoing investment strategy is based on plan-specific investment recommendations that seek to minimize potential investment and interest rate risk as a plan’s funded status increases over time.
The investment recommendations consider many factors and generally result in a greater percentage of long-duration fixed income securities being allocated to specific plans having relatively higher funded status ratios and a greater percentage of growth assets being allocated to plans having relatively lower funded status ratios.

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Plan Assets
For each of the fair value hierarchy levels, SPS’ pension plan assets measured at fair value:
Dec. 31, 2024 (a)
Dec. 31, 2023 (a)
(Millions of Dollars)Level 1Level 2Level 3Measured at NAVTotalLevel 1Level 2Level 3Measured at NAVTotal
Cash equivalents$19 $— $— $— $19 $38 $— $— $— $38 
Commingled funds— — — 259 259 72 — — 190 262 
Debt securities— 113 1 — 114 — 116 1 — 117 
Equity securities4 — — — 4 5 — — — 5 
Other— 1 — — 1 — (2)— — (2)
Total$23 $114 $1 $259 $397 $115 $114 $1 $190 $420 
(a)See Note 8 for further information on fair value measurement inputs and methods.
For each of the fair value hierarchy levels, SPS’ proportionate allocation of the total postretirement benefit plan assets that were measured at fair value:
Dec. 31, 2024 (a)
Dec. 31, 2023 (a)
(Millions of Dollars)Level 1Level 2Level 3Measured at NAVTotalLevel 1Level 2Level 3Measured at NAVTotal
Cash equivalents$4 $— $— $— $4 $3 $— $— $— $3 
Insurance contracts— 4 — — 4 — 5 — — 5 
Commingled funds— — — 7 7 2 — — 7 9 
Debt securities— 21 — — 21 — 19 — — 19 
Total$4 $25 $— $7 $36 $5 $24 $— $7 $36 
(a)See Note 8 for further information on fair value measurement inputs and methods.
No assets were transferred in or out of Level 3 for 2024 and immaterial assets were transferred in or out of Level 3 for 2023.
Funded Status — Comparisons of the actuarially computed benefit obligation, changes in plan assets and funded status of the pension and postretirement health care plans for SPS are as follows:
Pension BenefitsPostretirement Benefits
(Millions of Dollars)2024202320242023
Change in Benefit Obligation:
Obligation at Jan. 1$425 $414 $26 $26 
Service cost7 7 1 1 
Interest cost22 22 1 1 
Actuarial (gain) loss(12)16 1 1 
Plan participants’ contributions— — 1 1 
Benefit payments(33)(34)(4)(4)
Obligation at Dec. 31$409 $425 $26 $26 
Change in Fair Value of Plan Assets:
Fair value of plan assets at Jan. 1$420 $417 $36 $36 
Actual return on plan assets7 37 2 3 
Employer contributions3 — 1 — 
Plan participants’ contributions— — 1 1 
Benefit payments(33)(34)(4)(4)
Fair value of plan assets at Dec. 31$397 $420 $36 $36 
Funded status of plans at Dec. 31$(12)$(5)$10 $10 
Amounts recognized in the Balance Sheet at Dec. 31:
Noncurrent assets— 1 10 10 
Noncurrent liabilities(12)(6)— — 
Net amounts recognized$(12)$(5)$10 $10 
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Pension BenefitsPostretirement Benefits
Significant Assumptions Used to Measure Benefit Obligations:2024202320242023
Discount rate for year-end valuation5.88 %5.49 %5.88 %5.54 %
Expected average long-term increase in compensation level4.25 %4.25 %N/AN/A
Mortality tablePri-2012Pri-2012Pri-2012Pri-2012
Health care costs trend rate — initial: Pre-65N/AN/A7.00 %6.50 %
Health care costs trend rate — initial: Post-65N/AN/A7.50 %5.50 %
Ultimate trend assumption — initial: Pre-65N/AN/A4.50 %4.50 %
Ultimate trend assumption — initial: Post-65N/AN/A4.50 %4.50 %
Years until ultimate trend is reachedN/AN/A96
Accumulated benefit obligation for the pension plan was $383 million and $395 million as of Dec. 31, 2024 and 2023, respectively.
Net Periodic Benefit Cost (Credit) — Net periodic benefit cost (credit), other than the service cost component, is included in other income, net in the statements of income.
Components of net periodic benefit cost (credit) and amounts recognized in other comprehensive income and regulatory assets and liabilities:
Pension BenefitsPostretirement Benefits
(Millions of Dollars)202420232022202420232022
Service cost$7 $7 $10 $1 $1 $1 
Interest cost22 22 16 1 1 1 
Expected return on plan assets(32)(32)(31)(2)(1)(2)
Amortization of net loss (gain)3 2 10 — — — 
Settlement charge (a)
— — 2 — — — 
Net periodic pension cost— (1)7 — 1 — 
Effects of regulation(1)5 (1)— — — 
Net benefit cost recognized for financial reporting$(1)$4 $6 $— $1 $— 
Significant Assumptions Used to Measure Costs:
Discount rate5.49 %5.80 %3.08 %5.54 %5.80 %3.09 %
Expected average long-term increase in compensation level4.25 4.25 3.75 — — — 
Expected average long-term rate of return on assets6.97 6.96 6.39 5.00 5.00 4.10 
(a)A settlement charge is required when the amount of all lump-sum distributions during the year is greater than the sum of the service and interest cost components of the annual net periodic pension cost. There were no settlement charges recorded to the qualified pension plans in 2024 or 2023. In 2022, as a result of lump-sum distributions during each plan year, SPS recorded a total pension settlement charge of $2 million. An immaterial amount was recorded in the income statement in 2022.
Pension BenefitsPostretirement Benefits
(Millions of Dollars)2024202320242023
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost:
Net loss (gain)$165 $155 $(19)$(20)
Prior service credit(1)(1)— — 
Total$164 $154 $(19)$(20)
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost Have Been Recorded as Follows Based Upon Expected Recovery in Rates:
Current regulatory assets$4 $2 $— $— 
Noncurrent regulatory assets160 152 — — 
Current regulatory liabilities— — (1)(1)
Noncurrent regulatory liabilities— — (18)(19)
Total$164 $154 $(19)$(20)
Measurement dateDec. 31, 2024Dec. 31, 2023Dec. 31, 2024Dec. 31, 2023
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Cash Flows — Funding requirements can be impacted by changes to actuarial assumptions, actual asset levels and other calculations prescribed by the requirements of income tax and other pension-related regulations. Required contributions were made in 2022 - 2025 to meet minimum funding requirements.
Total voluntary and required pension funding contributions across all four of Xcel Energy’s pension plans were as follows:
•$125 million in January 2025, of which $3 million was attributable to SPS.
•$100 million in 2024, of which $3 million was attributable to SPS.
•$50 million in 2023, of which none was attributable to SPS.
•$50 million in 2022, of which none was attributable to SPS.
For future years, Xcel Energy and SPS anticipate contributions will be made as necessary.
The postretirement health care plans have no funding requirements other than fulfilling benefit payment obligations when claims are presented and approved. Additional cash funding requirements are prescribed by certain state and federal rate regulatory authorities.
Xcel Energy’s voluntary postretirement funding contributions, of which the amounts attributable to SPS were immaterial, were as follows:
•$8 million expected in 2025.
•$11 million during 2024.
•$11 million during 2023.
•$13 million during 2022.
Target asset allocations:
Pension BenefitsPostretirement Benefits
2024202320242023
Long-duration fixed income securities38 %38 %— %— %
Domestic and international equity securities31 31 25 9 
Alternative investments20 20 11 13 
Short-to-intermediate fixed income securities9 9 61 77 
Cash2 2 3 1 
Total100 %100 %100 %100 %
The asset allocations above reflect target allocations approved in the calendar year to take effect in the subsequent year.
Plan Amendments — There were no significant plan amendments made in 2024 and 2022 which affected the pension or postretirement benefit obligation.
In 2023, Xcel Energy amended the Xcel Energy Pension Plan and Xcel Energy Inc. Nonbargaining Pension Plan (South) to reduce supplemental social security benefits for all active participants on and after Jan. 1, 2024.
Voluntary Retirement Program
Incremental to amounts presented above for postretirement benefits, Xcel Energy, which includes SPS, recognized new postemployment costs and obligations in the fourth quarter of 2023 for employees accepted to a voluntary retirement program.
Immaterial unfunded obligations for health plan subsidies and other medical benefits are presented in other current liabilities and noncurrent pension and employee benefit obligations in the balance sheets as of Dec. 31, 2024 and 2023.
Projected Benefit Payments
SPS’ projected benefit payments:
(Millions of Dollars)Projected
Pension Benefit
Payments
Net Projected
Postretirement Health Care
Benefit Payments (a)
2025$30 $2 
202630 2 
202732 2 
202832 2 
202932 2 
2030-2034158 10 
(a)Amount is reported net of expected Medicare Part D subsidies, which are immaterial.
Defined Contribution Plans
Xcel Energy, which includes SPS, maintains 401(k) and other defined contribution plans that cover most employees. The expense to these plans for SPS was approximately $4 million in 2024 and 2023 and $3 million in 2022.
10. Commitments and Contingencies
Legal
SPS is involved in various litigation matters 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 losses 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, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on SPS’ financial statements. Legal fees are generally expensed as incurred.
2024 Smokehouse Creek Fire Complex — On February 26, 2024, multiple wildfires began in the Texas Panhandle, including the Smokehouse Creek Fire and the 687 Reamer Fire, which burned into the perimeter of the Smokehouse Creek Fire (together, referred to herein as the “Smokehouse Creek Fire Complex”). The Texas A&M Forest Service issued incident reports that determined that the Smokehouse Creek Fire and the 687 Reamer Fire were caused by power lines owned by SPS after wooden poles near each fire origin failed. According to the Texas A&M Forest Service’s Incident Viewer and news reports, the Smokehouse Creek Fire Complex burned approximately 1,055,000 acres.
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SPS is aware of approximately 25 complaints, most of which have also named Xcel Energy Services Inc. as an additional defendant, relating to the Smokehouse Creek Fire Complex. The complaints generally allege that SPS’ equipment ignited the Smokehouse Creek Fire Complex and seek compensation for losses resulting from the fire, asserting various causes of action under Texas law. In addition to seeking compensatory damages, certain of the complaints also seek exemplary damages. SPS has also received approximately 205 claims for losses related to the Smokehouse Creek Fire Complex through its claims process and has reached final settlements on 129 of those claims as of the date of this filing. In addition to filed complaints and claims made through SPS’ claims process, SPS has also received information from attorneys for claims related to the Smokehouse Creek Fire Complex which have not been submitted through the claims process and have also not been filed as lawsuits, and has reached settlement of a portion of those claims. SPS anticipates additional complaints and demands will be made. As of December 2024, SPS has settled claims related to both of the fatalities believed to be associated with the Smokehouse Creek Fire Complex.
Texas law does not apply strict liability in determining an electric utility company’s liability for fire-related damages. For negligence claims under Texas law, a public utility has a duty to exercise ordinary and reasonable care.
Potential liabilities related to the Smokehouse Creek Fire Complex depend on various factors, including the cause of the equipment failure and the extent and magnitude of potential damages, including damages to residential and commercial structures, personal property, vegetation, livestock and livestock feed (including replacement feed), personal injuries and any other damages, penalties, fines or restitution that may be imposed by courts or other governmental entities if SPS is found to have been negligent.
Based on the current state of the law and the facts and circumstances available as of the date of this filing, Xcel Energy believes it is probable that it will incur a loss in connection with the Smokehouse Creek Fire Complex and accordingly has recorded a total of $215 million of estimated losses for the matter (before available insurance). Settlements reached as of the date of this filing total $76 million of expected loss payments, of which $35 million were paid in 2024, resulting in a remaining estimated liability of $180 million presented in other current liabilities as of Dec. 31, 2024.
The cumulative estimated probable losses of $215 million for complaints and claims in connection with the Smokehouse Creek Fire Complex (before available insurance) corresponds to the lower end of the range of Xcel Energy’s reasonably estimable range of losses, and is subject to change based on additional information. This $215 million estimate does not include, among other things, amounts for (i) potential penalties or fines that may be imposed by governmental entities on Xcel Energy, (ii) exemplary or punitive damages, (iii) compensation claims by federal, state, county and local government entities or agencies, (iv) compensation claims for damage to trees, railroad lines, or oil and gas equipment, or (v) other amounts that are not reasonably estimable.
Xcel Energy remains unable to reasonably estimate any additional loss or the upper end of the range because there are a number of unknown facts and legal considerations that may impact the amount of any potential liability. In the event that SPS or Xcel Energy Services Inc. was found liable related to the litigation related to the Smokehouse Creek Fire Complex and was required to pay damages, such amounts could exceed our insurance coverage of approximately $500 million for the annual policy period and could have a material adverse effect on our financial condition, results of operations or cash flows.
The process for estimating losses associated with potential claims related to the Smokehouse Creek Fire Complex requires management to exercise significant judgment based on a number of assumptions and subjective factors, including the factors identified above and estimates based on currently available information and prior experience with wildfires. As more information becomes available, management estimates and assumptions regarding the potential financial impact of the Smokehouse Creek Fire Complex may change.
SPS records insurance recoveries when it is deemed probable that recovery will occur, and SPS can reasonably estimate the amount or range. SPS has recorded an insurance receivable, net of recoveries received, for $210 million, presented within prepayments and other current assets as of Dec. 31, 2024. While SPS plans to seek recovery of all insured losses, it is unable to predict the ultimate amount and timing of such insurance recoveries.
Rate Matters
SPS is involved in various regulatory proceedings arising in the ordinary course of business. Until resolution, typically in the form of a rate order, uncertainties may exist regarding the ultimate rate treatment for certain activities and transactions. Amounts have been recognized for probable and reasonably estimable losses that may result. Unless otherwise disclosed, any reasonably possible range of loss in excess of any recognized amount is not expected to have a material effect on the financial statements.
SPP OATT Upgrade Costs — Costs of transmission upgrades may be recovered from other SPP customers whose transmission service depends on capacity enabled by the upgrade under the SPP OATT. SPP had not been charging its customers for these upgrades, even though the SPP OATT had allowed SPP to do so since 2008. In 2016, the FERC granted SPP’s request to recover these previously unbilled charges and SPP subsequently billed SPS approximately $13 million.
In 2018, SPS’ appeal to the D.C. Circuit over the FERC rulings granting SPP the right to recover previously unbilled charges was remanded to the FERC. In 2019, the FERC reversed its 2016 decision and ordered SPP to refund charges retroactively collected from its transmission customers, including SPS, related to periods before September 2015. In 2020, SPP and Oklahoma Gas & Electric separately filed petitions for review of the FERC’s orders at the D.C. Circuit. In 2021, the D.C. Circuit issued a decision denying these appeals and upholding the FERC’s orders.
In September 2024, the Eighth Circuit issued an additional decision reaffirming FERC’s decision to order refunds. SPP is currently working to process the refunds. Any refunds received by SPS are expected to be given back to SPS customers through future rates.
Wind Operating Commitments — PUCT and NMPRC orders related to the Hale and Sagamore wind projects included certain operating and savings minimums. In general, generation must exceed a net capacity factor of 48%. If generation is below the guaranteed level, SPS would be obligated to refund an amount equal to foregone PTCs and fuel savings. Additionally, retail customer savings must exceed project costs included in base rates over the first ten years of operations. SPS would be required to refund excess costs, if any, after ten years of operations. As of Dec. 31, 2024, the net capacity factor exceeded the guaranteed level, resulting in no refund liability for 2024.
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Environmental
New and changing federal and state environmental mandates can create financial liabilities for SPS, which are normally recovered through the regulated rate process.
Site Remediation
Various federal and state environmental laws impose liability where hazardous substances or other regulated materials have been released to the environment. SPS may sometimes pay all or a portion of the cost to remediate sites where past activities of SPS’ predecessors or other parties have caused environmental contamination.
Environmental contingencies could arise from various situations, including sites of former MGPs; and third-party sites, such as landfills, for which SPS is alleged to have sent wastes to that site.
MGP, Landfill and Disposal Sites
SPS is investigating, remediating or performing post-closure actions at three historical MGP, landfill or other disposal sites across its service territories, in addition to sites that are being addressed under current coal ash regulations (see below).
SPS has recognized its best estimate of costs/liabilities for resolution of these issues, however, the final outcome and timing are unknown. In addition, there may be insurance recovery and/or recovery from other potentially responsible parties, offsetting a portion of costs incurred.
Water and Waste
Coal Ash Regulation — SPS is subject to the CCR Rule, which imposes requirements for handling, storage, treatment and disposal of coal ash and other solid waste.
In May 2024, final amendments to the CCR Rule were published, widening its scope to include legacy CCR surface impoundments at inactive facilities and previously exempt areas where CCR was placed directly on land at CCR-regulated facilities, including areas of beneficial use.
As a requirement of the CCR Rule, utilities must complete facility evaluations and groundwater sampling around their subject landfills, surface impoundments and certain other areas where coal ash was placed on land.
If certain impacts to groundwater are detected, utilities may be required to perform additional groundwater investigations and/or perform corrective actions, typically beginning with an Assessment of Corrective Measures.
SPS expects to incur $4 million for investigations through 2028 to perform required reporting and assess whether corrective actions are necessary. Asset retirement obligations have been recorded for each of these activities, and amounts are expected to be recoverable through regulatory mechanisms.
SPS continues to evaluate the 2024 updates to the CCR Rule, the interpretations of those updates and how they will apply to specific sites. Assessment of the recent updates to the CCR Rule and corresponding site investigation activities may result in updates to estimated costs as well as identification of additional required corrective actions.

Environmental Requirements — Air
Clean Air Act NOx Allowance Allocations — In June 2023, the EPA published final regulations for ozone under the “Good Neighbor” provisions of the Clean Air Act. The final rule applies to generation facilities in Texas, as well as other states outside of our service territory. In February 2024, the EPA proposed to include New Mexico in the rule. The rule establishes an allowance trading program for NOx that will impact SPS’ fossil fuel-fired electric generating facilities. Subject facilities will have to secure additional allowances, install NOx controls and/or develop a strategy of operations that utilizes the existing allowance allocations.
While the financial impacts of the final rule are uncertain and dependent on market forces and anticipated generation, SPS anticipates the annual costs could be significant, but would be recoverable through regulatory mechanisms.
In June 2024, the U.S. Supreme Court issued an order granting a stay of the final rule. In response, the EPA issued a nationwide administrative stay of the rule. Depending on the outcomes of the underlying legal challenges, the regulation may become applicable in the future.
AROs — AROs have been recorded for SPS’ assets, as follows:
2024
(Millions of Dollars)Jan. 1, 2024
Amounts Incurred (a)
Accretion
Cash Flow Revisions
Dec. 31, 2024
Electric
Steam and other production$87 $9 $5 $1 $102 
Wind56 — 2 (3)55 
Distribution10 — — — 10 
Total liability$153 $9 $7 $(2)$167 
(a)Amounts incurred pertain to CCR coal ash regulations and the Harrington pipeline which was placed in service in 2024.
2023
(Millions of Dollars)Jan. 1, 2023AccretionDec. 31, 2023
Electric
Steam and other production$83 $4 $87 
Wind54 2 56 
Distribution10 — 10 
Total liability$147 $6 $153 
Indeterminate AROs — Outside of the recorded asbestos AROs, other plants or buildings may contain asbestos due to the age of many of SPS’ facilities, but no confirmation or measurement of the cost of removal could be determined as of Dec. 31, 2024. Therefore, an ARO has not been recorded for these facilities.
Leases
SPS evaluates contracts that may contain leases, including PPAs and arrangements for the use of office space and other facilities, vehicles and equipment. A contract contains a lease if it conveys the exclusive right to control the use of a specific asset. A contract determined to contain a lease is evaluated further to determine if the arrangement is a finance lease.
ROU assets represent SPS’ rights to use leased assets. The present value of future operating lease payments is recognized in current and noncurrent operating lease liabilities. These amounts, adjusted for any prepayments or incentives, are recognized as operating lease ROU assets.
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Most of SPS’ leases do not contain a readily determinable discount rate. Therefore, the present value of future lease payments is generally calculated using the estimated incremental borrowing rate (weighted average of 4.4%). For currently existing asset classes, SPS has elected to utilize the practical expedient under which non-lease components, such as asset maintenance costs included in payments, are not deducted from minimum lease payments for the purposes of lease accounting and disclosure.
Leases with an initial term of 12 months or less are classified as short-term leases and are not recognized on the balance sheet.
Operating lease ROU assets:
(Millions of Dollars)Dec. 31, 2024Dec. 31, 2023
PPAs$500 $500 
Other44 44 
Gross operating lease ROU assets544 544 
Accumulated amortization(173)(141)
Net operating lease ROU assets$371 $403 
Components of lease expense:
(Millions of Dollars)202420232022
Operating leases
PPA capacity payments$48 $53 $53 
Other operating leases (a)
3 4 4 
Total operating lease expense (b)
$51 $57 $57 
(a)Includes immaterial short-term lease expense for 2024, 2023 and 2022.
(b)PPA capacity payments are included in electric fuel and purchased power on the statements of income. Expense for other operating leases is included in O&M expense.
Commitments under operating leases as of Dec. 31, 2024:
(Millions of Dollars)
PPA (a) (b)
Operating
Leases
Other Operating
Leases
Total
Operating
Leases
2025$46 $3 $49 
202646 3 49 
202746 3 49 
202846 4 50 
202946 4 50 
Thereafter174 29 203 
Total minimum obligation404 46 450 
Interest component of obligation(69)(10)(79)
Present value of minimum obligation335 36 371 
Less current portion(34)
Noncurrent operating and finance lease liabilities$337 
Weighted-average remaining lease term in years9.1
(a)Amounts do not include PPAs accounted for as executory contracts and/or contingent payments, such as energy payments on renewable PPAs.
(b)PPA operating leases contractually expire at various dates through 2033.
PPAs and Fuel Contracts
Non-Lease PPAs — SPS has entered into PPAs with other utilities and energy suppliers for purchased power to meet system load and energy requirements, operating reserve obligations and as part of wholesale and commodity trading activities. In general, these agreements provide for energy payments, based on actual energy delivered and capacity payments. Certain PPAs, accounted for as executory contracts with various expiration dates through 2026, contain minimum energy purchase requirements. Total energy payments on those contracts were $25 million in 2024.
Included in electric fuel and purchased power expenses for PPAs accounted for as executory contracts, were payments for capacity of $14 million, $12 million and $12 million in 2024, 2023 and 2022, respectively.
Capacity and energy payments are contingent on the IPPs meeting contract obligations, including plant availability requirements. Certain contractual payments are adjusted based on market indices.
At Dec. 31, 2024, the estimated future payments for capacity and energy that SPS is obligated to purchase pursuant to these executory contracts, subject to availability, were as follows:
(Millions of Dollars)Capacity
Energy (a)
2025$16 $40 
202616 38 
2027— — 
2028— — 
2029— — 
Thereafter— — 
Total$32 $78 
(a)Excludes contingent energy payments for renewable energy PPAs.
Amounts exclude approximately $1 billion of incremental payments related to SPS’ renegotiation and extension of a non-lease PPA that received PUCT approval in February 2025. The extension to 2040 will result in annual payments of approximately $65 million to $80 million commencing in 2025.
Fuel Contracts — SPS has entered into various long-term commitments for the purchase and delivery of a significant portion of its coal and natural gas requirements. These contracts expire between 2025 and 2033. SPS is required to pay additional amounts depending on actual quantities shipped under these agreements.
Estimated minimum purchases under these contracts as of Dec. 31, 2024:
(Millions of Dollars)CoalNatural gas
supply		Natural gas
storage and
transportation
2025$75 $57 $58 
202643 — 58 
202730 — 58 
20281 — 52 
2029— — 36 
Thereafter— — 8 
Total$149 $57 $270 
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VIEs
PPAs — Under certain PPAs, SPS purchases power from IPPs for which SPS is required to reimburse fuel costs, or to participate in tolling arrangements under which SPS procures the natural gas required to produce the energy that it purchases. SPS has determined that certain IPPs are VIEs. SPS is not subject to risk of loss from the operations of these entities, and no significant financial support is required other than contractual payments for energy and capacity.
In addition, certain solar PPAs provide an option to purchase emission allowances or sharing provisions related to production credits generated by the solar facility under contract. These specific PPAs create a variable interest in the IPP.
SPS evaluated each of these VIEs for possible consolidation, including review of qualitative factors such as the length and terms of the contract, control over O&M, control over dispatch of electricity, historical and estimated future fuel and electricity prices, and financing activities. SPS 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.
SPS had approximately 1,197 MW of capacity under long-term PPAs at both Dec. 31, 2024 and 2023 with entities that have been determined to be VIEs. These agreements have expiration dates through 2048.
Fuel Contracts — SPS purchases all of its coal requirements for its Tolk plant from TUCO Inc. under contracts that will expire in December 2027. TUCO arranges for the purchase, receiving, transporting, unloading, handling, crushing, weighing and delivery of coal to meet SPS’ requirements. TUCO is responsible for negotiating and administering contracts with coal suppliers, transporters and handlers.
SPS has not provided any significant financial support to TUCO, other than contractual payments for delivered coal. However, the fuel contracts create a variable interest in TUCO due to SPS’ reimbursement of fuel procurement costs.
SPS has determined that TUCO is a VIE, however it has concluded that SPS is not the primary beneficiary because it does not have the power to direct the activities that most significantly impact TUCO’s economic performance.
11. Segment Information
SPS is a wholly owned subsidiary of Xcel Energy. SPS’ chief operating decision maker, the CEO of Xcel Energy Inc., sets the single-segment financial performance objectives and budgets of SPS based on net income generated by its regulated electric utility operations. The regulated electric utility segment generates, purchases, transmits, distributes and sells electricity in New Mexico and Texas. The CEO assesses financial performance, including quarterly and annual budget-to-actual and year-over-year variances in revenues and expenses, to inform operating decisions, capital investments and cost recovery strategies.
Other segment expenses, net, includes conservation and DSM expenses, taxes (other than income taxes), other income, net and AFUDC - equity.
202420232022
(Millions of Dollars)Regulated electric utilityRegulated electric utilityRegulated electric utility
Operating revenues$1,939 $2,152 $2,426 
Electric fuel and purchased power588 910 1,157 
O&M expenses313 279 317 
Depreciation and amortization455 368 388 
Other segment expenses, net (a)
93 120 127 
Interest charges and financing costs153 136 141 
Income tax benefit(57)(45)(53)
Net income$394 $384 $349 
(a)Other segment expenses, net, for 2023 additionally includes workforce reduction expenses.
12. Related Party Transactions
Xcel Energy Services Inc. provides management, administrative and other services for the subsidiaries of Xcel Energy Inc., including SPS. The services are provided and billed to each subsidiary in accordance with service agreements executed by each subsidiary. SPS uses services provided by Xcel Energy Services Inc. whenever possible. Costs are charged directly to the subsidiary and are allocated if they cannot be directly assigned.
Xcel Energy, Inc., NSP-Minnesota, NSP-Wisconsin, PSCo and SPS have established a utility money pool arrangement.
See Note 5 for further information.
Significant affiliate transactions among the companies and related parties for the years ended Dec. 31:
(Millions of Dollars)202420232022
Operating expenses:
Other operating expenses — paid to Xcel Energy Services Inc.$244 $245 $238 
Interest expense3 4 1 
Accounts receivable and payable with affiliates at Dec. 31 were:
20242023
(Millions of Dollars)Accounts ReceivableAccounts PayableAccounts ReceivableAccounts Payable
NSP-Minnesota$2 $— $4 $— 
PSCo8 — 11 — 
Other subsidiaries of Xcel Energy Inc.10 27 11 7 
$20 $27 $26 $7 
13. Workforce Reduction
In 2023, Xcel Energy implemented workforce actions to align resources and investments with evolving business and customer needs, and streamline the organization for long-term success.
In September 2023, Xcel Energy announced a voluntary retirement program to a group of eligible non-bargaining employees, with an enhanced retirement package including certain health care and cash benefits for accepted employees. Approximately 400 employees retired under this program in December 2023.
In November 2023, Xcel Energy, Inc. also reduced its non-bargaining workforce by approximately 150 employees through an involuntary severance program.
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In the fourth quarter of 2023, Xcel Energy recorded total expense of $72 million related to these workforce actions, of which $9 million was attributable to SPS. Expenses relate to the estimated cost of future health plan subsidies and other medical benefits for the voluntary retirement program, as well as severance and other employee payouts and legal and other professional fees.
No such activities occurred in 2024.
For further information on the estimated obligations for future health plan subsidies and other medical benefits, see Note 9 to the financial statements.
ITEM 9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A — 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 CEO and CFO, allowing timely decisions regarding required disclosure. As of Dec. 31, 2024, 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 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 SPS’ most recent fiscal quarter ended Dec. 31, 2024 that materially affected, or are reasonably likely to materially affect, SPS’ internal control over financial reporting. SPS maintains internal control over financial reporting to provide reasonable assurance regarding the reliability of the financial reporting. SPS has evaluated and documented its controls in process activities, general computer activities, and on an entity-wide level.
During the year and in preparation for issuing its report for the year ended Dec. 31, 2024 on internal controls under section 404 of the Sarbanes-Oxley Act of 2002, SPS conducted testing and monitoring of its internal control over financial reporting. Based on the control evaluation, testing and remediation performed, SPS did not identify any material control weaknesses, as defined under the standards and rules issued by the Public Company Accounting Oversight Board, as approved by the SEC and as indicated in SPS’ Management Report on Internal Controls over Financial Reporting, which is contained in Item 8 herein.
This annual report does not include an attestation report of SPS’ independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by SPS’ independent registered public accounting firm pursuant to the rules of the SEC that permit SPS to provide only management’s report in this annual report.
ITEM 9B — OTHER INFORMATION
None.
ITEM 9C — DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
Items 10, 11 and 12 of Part III of Form 10-K have been omitted from this report for SPS in accordance with conditions set forth in general instructions I(1)(a) and (b) of Form 10-K for wholly-owned subsidiaries.
ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11 — EXECUTIVE COMPENSATION
ITEM 12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required under this Item is contained in Xcel Energy Inc.’s definitive Proxy Statement for its 2025 Annual Meeting of Shareholders, which is incorporated by reference.
ITEM 14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required under this Item (aggregate fees billed to us by our principal accountant, Deloitte & Touche LLP (PCAOB ID No. 34)) is contained in Xcel Energy Inc.’s Proxy Statement for its 2025 Annual Meeting of Shareholders, which is incorporated by reference.

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PART IV
ITEM 15 — EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1Financial Statements
Management Report on Internal Controls Over Financial Reporting — For the year ended Dec. 31, 2024.
Report of Independent Registered Public Accounting Firm — Financial Statements
Statements of Income — For each of the three years ended Dec. 31, 2024, 2023 and 2022.
Statements of Comprehensive Income — For each of the three years ended Dec. 31, 2024, 2023 and 2022.
Statements of Cash Flows — For each of the three years ended Dec. 31, 2024, 2023 and 2022.
Balance Sheets — As of Dec. 31, 2024 and 2023.
Statements of Common Stockholder’s Equity — For each of the three years ended Dec. 31, 2024, 2023 and 2022.
2
Schedule II — Valuation and Qualifying Accounts and Reserves for each of the years ended Dec. 31, 2024, 2023 and 2022.
3Exhibits
*Indicates incorporation by reference
+Executive Compensation Arrangements and Benefit Plans Covering Executive Officers and Directors
Exhibit NumberDescriptionReport or Registration StatementExhibit Reference
SPS Form 10-Q for the quarter ended Sept. 30, 20173.01
SPS Form 10-K for the year ended Dec. 31, 20183.02
SPS Form 8-K dated Feb. 25, 199999.2
Xcel Energy Inc. Form 10-Q for the quarter ended Sept. 30, 20034.04
SPS Form 8-K dated Oct. 3, 20064.01
SPS Form 8-K dated Aug. 10, 20114.01
SPS Form 8-K dated Aug. 10, 20114.02
SPS Form 8-K dated Aug. 12, 20164.02
SPS Form 8-K dated Aug. 9, 20174.02
SPS Form 8-K dated Nov. 5, 20184.02
SPS Form 8-K dated June 18, 20194.02
SPS Form 8-K dated May 18, 20204.02
SPS Form 8-K dated May 31, 20224.02
SPS Form 8-K dated August 21, 2023
4.01
SPS Form 8-K dated June 6, 20244.02
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 200810.02
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 200810.05
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 201110.18
Xcel Energy Inc. Form 10-Q for the quarter ended June 30, 201610.01
Xcel Energy Inc. Form 10-Q for the quarter ended June 30, 201810.01
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Xcel Energy Inc. Form 10-Q for the quarter ended March 31, 202010.02
Xcel Energy Inc. Form 10-Q for the quarter ended June 30, 202010.01
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 200810.17
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 200810.07
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 201110.17
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 201310.22
Xcel Energy Inc. Form 10-Q for the quarter ended Sept. 30, 201610.01
Xcel Energy Inc. Form 10-Q for the quarter ended Sept. 30, 201710.1
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 201810.34
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 201910.32
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 202310.16
Xcel Energy Inc. Form 8-K dated Dec. 10, 2021
10.01
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 202310.18
Xcel Energy Inc. Form 8-K dated Jan. 20, 202510.01
Xcel Energy Inc. Definitive Proxy Statement dated April 5, 2011Appendix A
Xcel Energy Inc. Form 10-K for the year ended Dec. 31, 201810.36
Xcel Energy Inc. Form S-8 dated May 22, 20244.03
Xcel Energy Inc. Form 8-K dated May 22, 202410.01
Xcel Energy Inc. Form 8-K dated May 22, 202410.03
Xcel Energy Inc. Form 8-K dated May 22, 202410.04
Xcel Energy Inc. Form U5B dated Nov. 16, 2000H-1
Xcel Energy Inc. Form 8-K dated Sept. 19, 202299.04
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Schema
101.CALInline XBRL Calculation
101.DEFInline XBRL Definition
101.LABInline XBRL Label
101.PREInline XBRL Presentation
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SCHEDULE II
Southwestern Public Service Co. Valuation and Qualifying Accounts Years Ended Dec. 31
Allowance for bad debts
(Millions of Dollars)202420232022
Balance at Jan. 1$15 $13 $12 
Additions charged to costs and expenses8 11 9 
Additions charged to other accounts (a)
2 1 1 
Deductions from reserves (b)
(13)(10)(9)
Balance at Dec. 31$12 $15 $13 
(a)Recovery of amounts previously written-off.
(b)Deductions related primarily to bad debt write-offs.
ITEM 16 — FORM 10-K SUMMARY
None.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
SOUTHWESTERN PUBLIC SERVICE COMPANY
Feb. 27, 2025/s/ BRIAN J. VAN ABEL
Brian J. Van Abel
Executive Vice President, Chief Financial Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the date indicated above.
/s/ ROBERT C. FRENZEL/s/ ADRIAN J. RODRIGUEZ
Robert C. FrenzelAdrian J. Rodriguez
Chairman, Chief Executive Officer and DirectorPresident and Director
(Principal Executive Officer)
/s/ BRIAN J. VAN ABEL/s/ MELISSA L. OSTROM
Brian J. Van AbelMelissa L. Ostrom
Executive Vice President, Chief Financial Officer and DirectorSenior Vice President, Controller
(Principal Financial Officer)(Principal Accounting Officer)
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
SPS has not sent, and does not expect to send, an annual report or proxy statement to its security holder.

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