Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2014

Cost and Fair Value of Nuclear Decommissioning Fund Investments

The following tables present the cost and fair value of Xcel Energy’s non-derivative instruments with recurring fair value measurements in the nuclear decommissioning fund at June 30, 2014 and Dec. 31, 2013:



	June 30, 2014
			Fair Value
(Thousands of Dollars)	Cost		Level 1		Level 2		Level 3		Total
Nuclear decommissioning fund ^(a)
Cash equivalents	$	26,344	$	26,344	$	—	$	—	$	26,344
Commingled funds	469,692		—		483,482		—		483,482
International equity funds	78,812		—		87,748		—		87,748
Private equity investments	63,096		—		—		81,123		81,123
Real estate	49,421		—		—		65,658		65,658
Debt securities:
Government securities	34,393		—		30,545		—		30,545
U.S. corporate bonds	80,647		—		84,230		—		84,230
International corporate bonds	15,919		—		16,432		—		16,432
Municipal bonds	225,508		—		228,506		—		228,506
Asset-backed securities	9,218		—		9,334		—		9,334
Mortgage-backed securities	24,097		—		24,250		—		24,250
Equity securities:
Common stock	376,214		572,065		—		—		572,065
Total	$	1,453,361	$	598,409	$	964,527	$	146,781	$	1,709,717


^(a)	Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $85.5 million of equity investments in unconsolidated subsidiaries and $43.4 million of miscellaneous investments.



	Dec. 31, 2013
			Fair Value
(Thousands of Dollars)	Cost		Level 1		Level 2		Level 3		Total
Nuclear decommissioning fund ^(a)
Cash equivalents	$	33,281	$	33,281	$	—	$	—	$	33,281
Commingled funds	457,986		—		452,227		—		452,227
International equity funds	78,812		—		81,671		—		81,671
Private equity investments	52,143		—		—		62,696		62,696
Real estate	45,564		—		—		57,368		57,368
Debt securities:
Government securities	34,304		—		27,628		—		27,628
U.S. corporate bonds	80,275		—		83,538		—		83,538
International corporate bonds	15,025		—		15,358		—		15,358
Municipal bonds	241,112		—		232,016		—		232,016
Equity securities:
Common stock	406,695		581,243		—		—		581,243
Total	$	1,445,197	$	614,524	$	892,438	$	120,064	$	1,627,026


^(a)	Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $87.1 million of equity investments in unconsolidated subsidiaries and $41.9 million of miscellaneous investments.

Changes in Level 3 Nuclear Decommissioning Fund Investments

The following tables present the changes in Level 3 nuclear decommissioning fund investments for the three and six months ended June 30, 2014 and 2013:



(Thousands of Dollars)	April 1, 2014		Purchases		Settlements			Gains Recognized as Regulatory Liabilities		Transfers Out of Level 3		June 30, 2014
Private equity investments	$	73,801	$	2,184	$	—		$	5,138	$	—	$	81,123
Real estate	62,954		197		—			2,507		—		65,658
Total	$	136,755	$	2,381	$	—		$	7,645	$	—	$	146,781

(Thousands of Dollars)	April 1, 2013		Purchases		Settlements			Gains Recognized as Regulatory Liabilities		Transfers Out of Level 3		June 30, 2013
Private equity investments	$	34,506	$	7,298	$	—		$	3,786	$	—	$	45,590
Real estate	40,406		2,032		(4,723		)	425		—		38,140
Total	$	74,912	$	9,330	$	(4,723	)	$	4,211	$	—	$	83,730



(Thousands of Dollars)	Jan. 1, 2014		Purchases		Settlements			Gains Recognized as Regulatory Liabilities		Transfers Out of Level 3			June 30, 2014
Private equity investments	$	62,696	$	10,953	$	—		$	7,474	$	—		$	81,123
Real estate	57,368		3,856		—			4,434		—			65,658
Total	$	120,064	$	14,809	$	—		$	11,908	$	—		$	146,781

(Thousands of Dollars)	Jan. 1, 2013		Purchases		Settlements			Gains Recognized as Regulatory Liabilities		Transfers Out of Level 3 ^(a)			June 30, 2013
Private equity investments	$	33,250	$	8,554	$	—		$	3,786	$	—		$	45,590
Real estate	39,074		6,818		(9,022		)	1,270		—			38,140
Asset-backed securities	2,067		—		—			—		(2,067		)	—
Mortgage-backed securities	30,209		—		—			—		(30,209		)	—
Total	$	104,600	$	15,372	$	(9,022	)	$	5,056	$	(32,276	)	$	83,730


^(a)	Transfers out of Level 3 into Level 2 were principally due to diminished use of unobservable inputs that were previously significant to these fair value measurements.

Final Contractual Maturity Dates of Debt Securities in the Nuclear Decommissioning Fund by Asset Class

The following table summarizes the final contractual maturity dates of the debt securities in the nuclear decommissioning fund, by asset class, at June 30, 2014:



	Final Contractual Maturity
(Thousands of Dollars)	Due in 1 Year or Less		Due in 1 to 5 Years		Due in 5 to 10 Years		Due after 10 Years		Total
Government securities	$	—	$	—	$	—	$	30,545	$	30,545
U.S. corporate bonds	307		15,358		66,131		2,434		84,230
International corporate bonds	—		3,854		12,578		—		16,432
Municipal bonds	2,608		26,902		36,195		162,801		228,506
Asset-backed securities	—		—		3,540		5,794		9,334
Mortgage-backed securities	—		—		—		24,250		24,250
Debt securities	$	2,915	$	46,114	$	118,444	$	225,824	$	393,297

Gross Notional Amounts of Commodity Forwards, Options, and FTRs

The following table details the gross notional amounts of commodity forwards, options and FTRs at June 30, 2014 and Dec. 31, 2013:


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


^(b)	Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise.

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

The following tables detail the impact of derivative activity during the three and six months ended June 30, 2014 and 2013, on accumulated other comprehensive loss, regulatory assets and liabilities, and income:



	Three Months Ended June 30, 2014
	Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:					Pre-Tax (Gains) Losses Reclassified into Income During the Period from:								Pre-Tax Gains (Losses) Recognized During the Period in Income
(Thousands of Dollars)	Accumulated Other Comprehensive Loss		Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss				Regulatory Assets and (Liabilities)
Derivatives designated as cash flow hedges
Interest rate	$	—	$	—		$	956		^(a)	$	—			$	—
Vehicle fuel and other commodity	25		—			(17		)	^(b)	—				—
Total	$	25	$	—		$	939			$	—			$	—
Other derivative instruments
Commodity trading	$	—	$	—		$	—			$	—			$	5,176		^(c)
Electric commodity	—		(17,375		)	—				(4,574		)	^(d)	—
Natural gas commodity	—		(2,449		)	—				—				(65		)	^(d)
Other commodity	—		—			—				—				643			^(c)
Total	$	—	$	(19,824	)	$	—			$	(4,574	)		$	5,754



	Six Months Ended June 30, 2014
	Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:					Pre-Tax (Gains) Losses Reclassified into Income During the Period from:								Pre-Tax Gains (Losses) Recognized During the Period in Income
(Thousands of Dollars)	Accumulated Other Comprehensive Loss		Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss				Regulatory Assets and (Liabilities)
Derivatives designated as cash flow hedges
Interest rate	$	—	$	—		$	1,902		^(a)	$	—			$	—
Vehicle fuel and other commodity	14		—			(45		)	^(b)	—				—
Total	$	14	$	—		$	1,857			$	—			$	—
Other derivative instruments
Commodity trading	$	—	$	—		$	—			$	—			$	2,922		^(c)
Electric commodity	—		(13,849		)	—				(25,270		)	^(d)	—
Natural gas commodity	—		16,058			—				(18,840		)	^(e)	(5,367		)	^(e)
Other commodity	—		—			—				—				643			^(c)
Total	$	—	$	2,209		$	—			$	(44,110	)		$	(1,802	)



	Three Months Ended June 30, 2013
	Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:						Pre-Tax (Gains) Losses Reclassified into Income During the Period from:								Pre-Tax Gains Recognized During the Period in Income
(Thousands of Dollars)	Accumulated Other Comprehensive Loss			Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss				Regulatory Assets and (Liabilities)				Pre-Tax Gains Recognized During the Period in Income
Derivatives designated as cash flow hedges
Interest rate	$	—		$	—		$	1,162		^(a)	$	—			$	—
Vehicle fuel and other commodity	(73		)	—			(17		)	^(b)	—				—
Total	$	(73	)	$	—		$	1,145			$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	—			$	—			$	(498	)	^(c)
Electric commodity	—			53,974			—				(13,764		)	^(d)	—
Natural gas commodity	—			(3,427		)	—				—				(244		)	^(d)
Total	$	—		$	50,547		$	—			$	(13,764	)		$	(742	)



	Six Months Ended June 30, 2013
	Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:						Pre-Tax (Gains) Losses Reclassified into Income During the Period from:								Pre-Tax Gains (Losses) Recognized During the Period in Income
(Thousands of Dollars)	Accumulated Other Comprehensive Loss			Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss				Regulatory Assets and (Liabilities)
Derivatives designated as cash flow hedges
Interest rate	$	—		$	—		$	2,312		^(a)	$	—			$	—
Vehicle fuel and other commodity	(48		)	—			(42		)	^(b)	—				—
Total	$	(48	)	$	—		$	2,270			$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	—			$	—			$	2,278		^(c)
Electric commodity	—			60,393			—				(28,993		)	^(d)	—
Natural gas commodity	—			(3,374		)	—				9			^(e)	(228		)	^(d)
Total	$	—		$	57,019		$	—			$	(28,984	)		$	2,050


^(a)	Amounts are recorded to interest charges.


^(b)	Amounts are recorded to O&M expenses.


^(c)	Amounts are recorded to electric operating revenues. Portions of these gains and losses are subject to sharing with electric customers through margin-sharing mechanisms and deducted from gross revenue, as appropriate.


^(d)	Amounts are recorded to electric fuel and purchased power. These derivative settlement gain and loss amounts 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.

^(e)

Amounts for the six months ended June 30, 2014 and 2013 included immaterial settlement losses on derivatives entered to mitigate natural gas price risk for electric generation, recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. The remaining derivative settlement gains and losses for the six months ended June 30, 2014 and 2013 relate to natural gas operations and are recorded to cost of natural gas sold and transported. These gains and losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset or liability, as appropriate.

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

Recurring Fair Value Measurements — The following table presents for each of the fair value hierarchy levels, Xcel Energy’s derivative assets and liabilities measured at fair value on a recurring basis at June 30, 2014:



	June 30, 2014
	Fair Value						Fair Value Total		Counterparty Netting ^(b)			Total
(Thousands of Dollars)	Level 1		Level 2		Level 3		Fair Value Total		Counterparty Netting ^(b)			Total
Current derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	60	$	—	$	60	$	—		$	60
Other derivative instruments:
Commodity trading	—		21,311		7,586		28,897		(9,225		)	19,672
Electric commodity	—		—		125,619		125,619		(26,339		)	99,280
Natural gas commodity	—		5,629		—		5,629		(9		)	5,620
Other commodity	—		—		643		643		—			643
Total current derivative assets	$	—	$	27,000	$	133,848	$	160,848	$	(35,573	)	125,275
PPAs ^(a)												29,665
Current derivative instruments												$	154,940
Noncurrent derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	34	$	—	$	34	$	—		$	34
Other derivative instruments:
Commodity trading	—		17,792		180		17,972		(3,399		)	14,573
Total noncurrent derivative assets	$	—	$	17,826	$	180	$	18,006	$	(3,399	)	14,607
PPAs ^(a)												45,125
Noncurrent derivative instruments												$	59,732
Current derivative liabilities
Other derivative instruments:
Commodity trading	$	—	$	12,076	$	2,295	$	14,371	$	(14,371	)	$	—
Electric commodity	—		—		26,339		26,339		(26,339		)	—
Natural gas commodity	—		63		—		63		(9		)	54
Total current derivative liabilities	$	—	$	12,139	$	28,634	$	40,773	$	(40,719	)	54
PPAs ^(a)												20,820
Current derivative instruments												$	20,874
Noncurrent derivative liabilities
Other derivative instruments:
Commodity trading	$	—	$	5,562	$	—	$	5,562	$	(5,474	)	$	88
Natural gas commodity	—		27		—		27		—			27
Total noncurrent derivative liabilities	$	—	$	5,589	$	—	$	5,589	$	(5,474	)	115
PPAs ^(a)												194,438
Noncurrent derivative instruments												$	194,553

^(a)

In 2003, as a result of implementing new guidance on the normal purchase exception for derivative accounting, Xcel Energy began recording several long-term PPAs at fair value due to accounting requirements related to underlying price adjustments. As these purchases are recovered through normal regulatory recovery mechanisms in the respective jurisdictions, the changes in fair value for these contracts were offset by regulatory assets and liabilities. During 2006, Xcel Energy qualified these contracts under the normal purchase exception. Based on this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b)

Xcel Energy nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at June 30, 2014. At June 30, 2014, derivative assets and liabilities include no obligations to return cash collateral and the rights to reclaim cash collateral of $7.2 million. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

The following table presents for each of the fair value hierarchy levels, Xcel Energy’s derivative assets and liabilities measured at fair value on a recurring basis at Dec. 31, 2013:



	Dec. 31, 2013
	Fair Value						Fair Value Total		Counterparty Netting ^(b)			Total
(Thousands of Dollars)	Level 1		Level 2		Level 3		Fair Value Total		Counterparty Netting ^(b)			Total
Current derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	88	$	—	$	88	$	—		$	88
Other derivative instruments:
Commodity trading	—		20,610		1,167		21,777		(7,994		)	13,783
Electric commodity	—		—		47,112		47,112		(8,210		)	38,902
Natural gas commodity	—		5,906		—		5,906		—			5,906
Total current derivative assets	$	—	$	26,604	$	48,279	$	74,883	$	(16,204	)	58,679
PPAs ^(a)												33,028
Current derivative instruments												$	91,707
Noncurrent derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	29	$	—	$	29	$	(16	)	$	13
Other derivative instruments:
Commodity trading	—		32,074		3,395		35,469		(9,071		)	26,398
Total noncurrent derivative assets	$	—	$	32,103	$	3,395	$	35,498	$	(9,087	)	26,411
PPAs ^(a)												58,431
Noncurrent derivative instruments												$	84,842
Current derivative liabilities
Other derivative instruments:
Commodity trading	$	—	$	10,546	$	1,804	$	12,350	$	(12,002	)	$	348
Electric commodity	—		—		8,210		8,210		(8,210		)	—
Total current derivative liabilities	$	—	$	10,546	$	10,014	$	20,560	$	(20,212	)	348
PPAs ^(a)												23,034
Current derivative instruments												$	23,382
Noncurrent derivative liabilities
Other derivative instruments:
Commodity trading	$	—	$	14,382	$	—	$	14,382	$	(9,087	)	$	5,295
Total noncurrent derivative liabilities	$	—	$	14,382	$	—	$	14,382	$	(9,087	)	5,295
PPAs ^(a)												203,929
Noncurrent derivative instruments												$	209,224

^(a)

^(b)

Xcel Energy nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at Dec. 31, 2013. At Dec. 31, 2013, derivative assets and liabilities include obligations to return cash collateral of $0.2 million and the rights to reclaim cash collateral of $4.2 million. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

Changes in Level 3 Commodity Derivatives

The following table presents the changes in Level 3 commodity derivatives for the three and six months ended June 30, 2014 and 2013:



	Three Months Ended June 30
(Thousands of Dollars)	2014			2013
Balance at April 1	$	24,217		$	7,642
Purchases	120,107			51,386
Settlements	(33,610		)	(8,503		)
Net transactions recorded during the period:
Gains (losses) recognized in earnings ^(a)	6,438			(217		)
Losses recognized as regulatory assets and liabilities	(11,758		)	(3,090		)
Balance at June 30	$	105,394		$	47,218

	Six Months Ended June 30
(Thousands of Dollars)	2014			2013
Balance at Jan. 1	$	41,660		$	16,649
Purchases	121,164			51,386
Settlements	(87,419		)	(20,952		)
Net transactions recorded during the period:
Gains (losses) recognized in earnings ^(a)	7,437			(279		)
Gains recognized as regulatory assets and liabilities	22,552			414
Balance at June 30	$	105,394		$	47,218


^(a)	These amounts relate to commodity derivatives held at the end of the period.

Carrying Amount and Fair Value of Long-term Debt

As of June 30, 2014 and Dec. 31, 2013, other financial instruments for which the carrying amount did not equal fair value were as follows:



	June 30, 2014				Dec. 31, 2013
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	11,760,300	$	13,036,388	$	11,191,517	$	11,878,643

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

+ References+ Details

(Amounts in Thousands) ^(a)(b)

June 30, 2014

Dec. 31, 2013

Megawatt hours of electricity

Million British thermal units of natural gas

Gallons of vehicle fuel