Fair Value of Financial Assets and Liabilities (Tables)

9 Months Ended

Sep. 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 Sept. 30, 2014 and Dec. 31, 2013:



	Sept. 30, 2014
			Fair Value
(Thousands of Dollars)	Cost		Level 1		Level 2		Level 3		Total
Nuclear decommissioning fund ^(a)
Cash equivalents	$	14,972	$	14,972	$	—	$	—	$	14,972
Commingled funds	469,608		—		471,388		—		471,388
International equity funds	78,812		—		85,856		—		85,856
Private equity investments	74,222		—		—		97,004		97,004
Real estate	45,075		—		—		63,973		63,973
Debt securities:
Government securities	34,379		—		29,726		—		29,726
U.S. corporate bonds	80,196		—		79,248		—		79,248
International corporate bonds	17,696		—		17,613		—		17,613
Municipal bonds	235,751		—		240,907		—		240,907
Asset-backed securities	9,226		—		9,347		—		9,347
Mortgage-backed securities	23,554		—		23,696		—		23,696
Equity securities:
Common stock	377,287		555,711		—		—		555,711
Total	$	1,460,778	$	570,683	$	957,781	$	160,977	$	1,689,441


^(a)	Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $84.5 million of equity investments in unconsolidated subsidiaries and $43.0 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 nine months ended Sept. 30, 2014 and 2013:



(Thousands of Dollars)	July 1, 2014		Purchases		Settlements			Gains Recognized as Regulatory Liabilities		Transfers Out of Level 3		Sept. 30, 2014
Private equity investments	$	81,123	$	11,125	$	—		$	4,756	$	—	$	97,004
Real estate	65,658		1,530		(5,876		)	2,661		—		63,973
Total	$	146,781	$	12,655	$	(5,876	)	$	7,417	$	—	$	160,977

(Thousands of Dollars)	July 1, 2013		Purchases		Settlements			Gains Recognized as Regulatory Liabilities		Transfers Out of Level 3		Sept. 30, 2013
Private equity investments	$	45,590	$	6,790	$	—		$	94	$	—	$	52,474
Real estate	38,140		11,288		—			1,928		—		51,356
Total	$	83,730	$	18,078	$	—		$	2,022	$	—	$	103,830



(Thousands of Dollars)	Jan. 1, 2014		Purchases		Settlements			Gains Recognized as Regulatory Liabilities		Transfers Out of Level 3			Sept. 30, 2014
Private equity investments	$	62,696	$	22,078	$	—		$	12,230	$	—		$	97,004
Real estate	57,368		5,386		(5,876		)	7,095		—			63,973
Total	$	120,064	$	27,464	$	(5,876	)	$	19,325	$	—		$	160,977

(Thousands of Dollars)	Jan. 1, 2013		Purchases		Settlements			Gains Recognized as Regulatory Liabilities		Transfers Out of Level 3 ^(a)			Sept. 30, 2013
Private equity investments	$	33,250	$	15,344	$	—		$	3,880	$	—		$	52,474
Real estate	39,074		18,106		(9,022		)	3,198		—			51,356
Asset-backed securities	2,067		—		—			—		(2,067		)	—
Mortgage-backed securities	30,209		—		—			—		(30,209		)	—
Total	$	104,600	$	33,450	$	(9,022	)	$	7,078	$	(32,276	)	$	103,830


^(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 Sept. 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	$	—	$	—	$	—	$	29,726	$	29,726
U.S. corporate bonds	303		15,878		62,985		82		79,248
International corporate bonds	—		4,266		13,347		—		17,613
Municipal bonds	807		34,188		41,744		164,168		240,907
Asset-backed securities	—		—		3,546		5,801		9,347
Mortgage-backed securities	—		—		—		23,696		23,696
Debt securities	$	1,110	$	54,332	$	121,622	$	223,473	$	400,537

Gross Notional Amounts of Commodity Forwards, Options, and FTRs

The following table details the gross notional amounts of commodity forwards, options and FTRs at Sept. 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 nine months ended Sept. 30, 2014 and 2013, on accumulated other comprehensive loss, regulatory assets and liabilities, and income:



	Three Months Ended Sept. 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	$	—		$	—		$	967		^(a)	$	—		$	—
Vehicle fuel and other commodity	(69		)	—			(16		)	^(b)	—			—
Total	$	(69	)	$	—		$	951			$	—		$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	—			$	—		$	(1,656	)	^(c)
Electric commodity	—			(3,391		)	—				6,629		^(d)	—
Natural gas commodity	—			(2,455		)	—				—			(209		)	^(d)
Total	$	—		$	(5,846	)	$	—			$	6,629		$	(1,865	)



	Nine Months Ended Sept. 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	$	—		$	—		$	2,869		^(a)	$	—			$	—
Vehicle fuel and other commodity	(56		)	—			(61		)	^(b)	—				—
Total	$	(56	)	$	—		$	2,808			$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	—			$	—			$	1,266		^(c)
Electric commodity	—			(17,240		)	—				(18,641		)	^(d)	—
Natural gas commodity	—			13,603			—				(18,840		)	^(e)	(5,575		)	^(e)
Other commodity	—			—			—				—				643			^(c)
Total	$	—		$	(3,637	)	$	—			$	(37,481	)		$	(3,666	)



	Three Months Ended Sept. 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	$	—	$	—		$	829		^(a)	$	—			$	—
Vehicle fuel and other commodity	36		—			(24		)	^(b)	—				—
Total	$	36	$	—		$	805			$	—			$	—
Other derivative instruments
Commodity trading	$	—	$	—		$	—			$	—			$	7,094	^(c)
Electric commodity	—		921			—				(9,823		)	^(d)	—
Natural gas commodity	—		(1,967		)	—				—				12		^(d)
Total	$	—	$	(1,046	)	$	—			$	(9,823	)		$	7,106



	Nine Months Ended Sept. 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	$	—		$	—		$	3,140		^(a)	$	—			$	—
Vehicle fuel and other commodity	(11		)	—			(67		)	^(b)	—				—
Total	$	(11	)	$	—		$	3,073			$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	—			$	—			$	9,372		^(c)
Electric commodity	—			61,314			—				(38,816		)	^(d)	—
Natural gas commodity	—			(5,341		)	—				9			^(e)	(216		)	^(d)
Total	$	—		$	55,973		$	—			$	(38,807	)		$	9,156


^(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 nine months ended Sept. 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 nine months ended Sept. 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 Sept. 30, 2014:



	Sept. 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	$	—	$	4	$	—	$	4	$	(3	)	$	1
Other derivative instruments:
Commodity trading	—		18,912		4,609		23,521		(5,395		)	18,126
Electric commodity	—		—		86,708		86,708		(17,685		)	69,023
Natural gas commodity	—		10,051		—		10,051		(74		)	9,977
Total current derivative assets	$	—	$	28,967	$	91,317	$	120,284	$	(23,157	)	97,127
PPAs ^(a)												23,527
Current derivative instruments												$	120,654
Noncurrent derivative assets
Derivatives designated as cash flow hedges:
Other derivative instruments:
Commodity trading	$	—	$	13,269	$	—	$	13,269	$	(2,408	)	$	10,861
Total noncurrent derivative assets	$	—	$	13,269	$	—	$	13,269	$	(2,408	)	10,861
PPAs ^(a)												42,716
Noncurrent derivative instruments												$	53,577
Current derivative liabilities
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	3	$	—	$	3	$	(3	)	$	—
Other derivative instruments:
Commodity trading	—		9,759		—		9,759		(9,337		)	422
Electric commodity	—		—		17,685		17,685		(17,685		)	—
Natural gas commodity	—		74		—		74		(74		)	—
Total current derivative liabilities	$	—	$	9,836	$	17,685	$	27,521	$	(27,099	)	422
PPAs ^(a)												22,502
Current derivative instruments												$	22,924
Noncurrent derivative liabilities
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	5	$	—	$	5	$	—		$	5
Other derivative instruments:
Commodity trading	—		3,066		—		3,066		(2,408		)	658
Natural gas commodity	—		71		—		71		—			71
Total noncurrent derivative liabilities	$	—	$	3,142	$	—	$	3,142	$	(2,408	)	734
PPAs ^(a)												186,711
Noncurrent derivative instruments												$	187,445

^(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 Sept. 30, 2014. At Sept. 30, 2014, derivative assets and liabilities include no obligations to return cash collateral and the rights to reclaim cash collateral of $3.9 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 nine months ended Sept. 30, 2014 and 2013:



	Three Months Ended Sept. 30
(Thousands of Dollars)	2014			2013
Balance at July 1	$	105,394		$	47,218
Purchases	5,588			155
Settlements	(20,032		)	(9,342		)
Transfers out of Level 3	(1,093		)	—
Net transactions recorded during the period:
Gains recognized in earnings ^(a)	1,480			4,008
Losses recognized as regulatory assets and liabilities	(17,705		)	(571		)
Balance at Sept. 30	$	73,632		$	41,468

	Nine Months Ended Sept. 30
(Thousands of Dollars)	2014			2013
Balance at Jan. 1	$	41,660		$	16,649
Purchases	126,752			51,541
Settlements	(107,451		)	(30,294		)
Transfers out of Level 3	(1,093		)	—
Net transactions recorded during the period:
Gains recognized in earnings ^(a)	8,917			3,729
Gains (losses) recognized as regulatory assets and liabilities	4,847			(157		)
Balance at Sept. 30	$	73,632		$	41,468


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



	Sept. 30, 2014				Dec. 31, 2013
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	11,759,226	$	12,990,348	$	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)

Sept. 30, 2014

Dec. 31, 2013

Megawatt hours of electricity

Million British thermal units of natural gas

Gallons of vehicle fuel