Borrowings and Other Financing Instruments

Short-Term Borrowings

Money Pool — Xcel Energy Inc. and its utility subsidiaries have established a money pool arrangement that allows for short-term investments in and borrowings between the utility subsidiaries. NSP-Wisconsin does not participate in the money pool. 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. The money pool balances are eliminated in consolidation.

Commercial Paper — Xcel Energy Inc. and its utility subsidiaries meet their short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under their credit facilities. Commercial paper outstanding for Xcel Energy was as follows:



(Amounts in Millions, Except Interest Rates)	Three Months Ended Dec. 31, 2015
Borrowing limit	$	2,750
Amount outstanding at period end	846
Average amount outstanding	290
Maximum amount outstanding	846
Weighted average interest rate, computed on a daily basis	0.56		%
Weighted average interest rate at period end	0.82



	Year Ended Dec. 31
(Amounts in Millions, Except Interest Rates)	2015			2014			2013
Borrowing limit	$	2,750		$	2,750		$	2,450
Amount outstanding at period end	846			1,020			759
Average amount outstanding	601			841			481
Maximum amount outstanding	1,360			1,200			1,160
Weighted average interest rate, computed on a daily basis	0.48		%	0.33		%	0.31		%
Weighted average interest rate at end of period	0.82			0.56			0.25

Letters of Credit — Xcel Energy Inc. and its subsidiaries use letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. At Dec. 31, 2015 and 2014, there were $29 million and $61 million of letters of credit outstanding, respectively, under the credit facilities. The contract amounts of these letters of credit approximate their fair value and are subject to fees.

Credit Facilities — In order to use their commercial paper programs to fulfill short-term funding needs, Xcel Energy Inc. and its utility subsidiaries must have revolving credit facilities in place at least equal to the amount of their respective commercial paper borrowing limits and cannot issue commercial paper in an aggregate amount exceeding available capacity under these credit facilities. The lines of credit provide short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

Credit Agreements — NSP-Minnesota, NSP-Wisconsin, PSCo, SPS and Xcel Energy Inc. each have five-year credit agreements with a syndicate of banks. The total size of the credit facilities is $2.75 billion and each credit facility matures in October 2019.

NSP-Minnesota, PSCo, SPS, and Xcel Energy Inc. each have the right to request an extension of the termination date for two additional one-year periods. NSP-Wisconsin has the right to request an extension of the termination date for an additional one-year period. All extension requests are subject to majority bank group approval.

Features of the credit facilities include:


•	Xcel Energy Inc. may increase its credit facility by up to $200 million, NSP-Minnesota and PSCo may each increase their credit facilities by $100 million and SPS may increase its credit facility by $50 million. The NSP-Wisconsin credit facility cannot be increased.


•	Each credit facility has a financial covenant requiring that the debt-to-total capitalization ratio of each entity be less than or equal to 65 percent. Each entity was in compliance at Dec. 31, 2015 and 2014, respectively, as evidenced by the table below:



	Debt-to-Total Capitalization Ratio
	2015		2014
Xcel Energy Inc.	57	%	56	%
NSP-Wisconsin	46		48
NSP-Minnesota	48		48
SPS	46		47
PSCo	45		47


•	If Xcel Energy Inc. or any of its utility subsidiaries do 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.

•

The Xcel Energy Inc. credit facility has a cross-default provision that provides Xcel Energy Inc. will be in default on its borrowings under the facility if it or any of its subsidiaries, except NSP-Wisconsin as long as its total assets do not comprise more than 15 percent of Xcel Energy’s consolidated total assets, default on certain indebtedness in an aggregate principal amount exceeding $75 million.


•	Xcel Energy Inc. and its subsidiaries were in compliance with all financial covenants in their debt agreements as of Dec. 31, 2015 and 2014.


•	The interest rates under these lines of credit are based on Eurodollar borrowing margins ranging from 87.5 to 175 basis points per year based on the applicable long-term credit ratings.


•	The commitment fees, also based on applicable long-term credit ratings, are calculated on the unused portion of the lines of credit at a range of 7.5 to 27.5 basis points per year.

At Dec. 31, 2015, Xcel Energy Inc. and its utility subsidiaries had the following committed credit facilities available:



(Millions of Dollars)	Credit Facility ^(a)		Drawn ^(b)		Available
Xcel Energy Inc.	$	1,000	$	584	$	416
PSCo	700		18		682
NSP-Minnesota	500		241		259
SPS	400		22		378
NSP-Wisconsin	150		10		140
Total	$	2,750	$	875	$	1,875


^(a)	These credit facilities mature in October 2019.


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

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the respective credit facilities. Xcel Energy Inc. and its subsidiaries had no direct advances on the credit facilities outstanding at Dec. 31, 2015 and 2014.

Long-Term Borrowings and Other Financing Instruments

Generally, all real and personal property of NSP-Minnesota, NSP-Wisconsin, PSCo and SPS are subject to the liens of their first mortgage indentures. Debt premiums, discounts and expenses are amortized over the life of the related debt. The premiums, discounts and expenses associated with refinanced debt are deferred and amortized over the life of the related new issuance, in accordance with regulatory guidelines.

Maturities of long-term debt are as follows:



(Millions of Dollars)
2016	$	657
2017	638
2018	1,206
2019	406
2020	1,257

During 2015, Xcel Energy Inc. and its utility subsidiaries completed the following financings:


•	PSCo issued $250 million of 2.9 percent first mortgage bonds due May 15, 2025;


•	Xcel Energy Inc. issued $250 million of 1.2 percent senior notes due June 1, 2017 and $250 million of 3.3 percent senior notes due June 1, 2025;


•	NSP-Wisconsin issued $100 million of 3.3 percent first mortgage bonds due June 15, 2024;


•	NSP-Minnesota issued $300 million of 2.2 percent first mortgage bonds due Aug. 15, 2020 and $300 million of 4.0 percent first mortgage bonds due Aug. 15, 2045; and


•	SPS issued $200 million of 3.3 percent first mortgage bonds due June 15, 2024.

During 2014, Xcel Energy Inc. and its utility subsidiaries completed the following financings:


•	PSCo issued $300 million of 4.3 percent first mortgage bonds due March 15, 2044;


•	NSP-Minnesota issued $300 million of 4.125 percent first mortgage bonds due May 15, 2044;


•	SPS issued $150 million of 3.3 percent first mortgage bonds due June 15, 2024; and


•	NSP-Wisconsin issued $100 million of 3.3 percent first mortgage bonds due June 15, 2024.

In 2014, in connection with SPS’ issuance of $150 million of 3.30 percent first mortgage bonds due June 15, 2024, SPS concurrently secured its previously issued Series G Senior Notes due Dec. 1, 2018 equally and ratably with SPS’ first mortgage bonds as required pursuant to the terms of the Series G notes.

Also in 2014, to provide the required collateralization, SPS issued $250 million of collateral 8.75 percent first mortgage bonds due Dec. 1, 2018 to the trustee under its senior unsecured indenture which secured the previously issued Series G Senior Notes, 8.75 percent due Dec. 1, 2018, equally and ratably with SPS’ first mortgage bonds.

Issuances of Common Stock — During the year ended Dec. 31, 2014, Xcel Energy Inc. issued approximately 5.7 million shares of common stock through an at-the-market (ATM) program and received cash proceeds of $172.7 million net of $1.9 million in fees and commissions. Xcel Energy completed its ATM program as of June 30, 2014. The proceeds from the issuances of common stock were used to repay short-term debt, infuse equity into the utility subsidiaries and for other general corporate purposes.

Deferred Financing Costs — Other assets included deferred financing costs of approximately $92 million and $85 million, net of amortization, at Dec. 31, 2015 and 2014, respectively. Xcel Energy is amortizing these financing costs over the remaining maturity periods of the related debt.

Capital Stock — Xcel Energy Inc. has 7,000,000 shares of preferred stock authorized to be issued with a $100 par value. At Dec. 31, 2015 and 2014, there were no shares of preferred stock outstanding.

The charters of PSCo and SPS authorize each subsidiary to issue 10,000,000 shares of preferred stock with par values of $0.01 and $1.00 per share, respectively. At Dec. 31, 2015 and 2014, there were no preferred shares of subsidiaries outstanding.

Xcel Energy Inc. has 1,000,000,000 shares of common stock authorized to be issued with a $2.50 par value. Outstanding shares at Dec. 31, 2015 and 2014 were 507,535,523 and 505,733,267, respectively.

Dividend and Other Capital-Related Restrictions — Xcel Energy depends on its subsidiaries to pay dividends. All of Xcel Energy Inc.’s utility subsidiaries’ dividends are subject to the FERC’s jurisdiction, which prohibits the payment of dividends out of capital accounts; payment of dividends is allowed out of retained earnings only. Due to certain restrictive covenants, Xcel Energy Inc. is required to be current on particular interest payments before dividends can be paid.

The most restrictive dividend limitations for NSP-Minnesota, NSP-Wisconsin and SPS are imposed by their respective state regulatory commission. PSCo’s dividends are subject to the FERC’s jurisdiction under the Federal Power Act, which prohibits the payment of dividends out of capital accounts; payment of dividends is allowed out of retained earnings only.

Only NSP-Minnesota has a first mortgage indenture which places certain restrictions on the amount of cash dividends it can pay to Xcel Energy Inc., the holder of its common stock. Even with this restriction, NSP-Minnesota could have paid more than $1.7 billion and $1.6 billion in additional cash dividends to Xcel Energy Inc. at Dec. 31, 2015 and 2014, respectively.

NSP-Minnesota’s state regulatory commissions indirectly limit the amount of dividends NSP-Minnesota can pay by requiring an equity-to-total capitalization ratio between 46.9 percent and 57.3 percent. NSP-Minnesota’s equity-to-total capitalization ratio was 52.1 percent at Dec. 31, 2015 and $967 million in retained earnings was not restricted. Total capitalization for NSP-Minnesota was $9.9 billion at Dec. 31, 2015, which did not exceed the limit of $10.5 billion.

NSP-Wisconsin cannot pay annual dividends in excess of approximately $33.3 million if its calendar year average equity-to-total capitalization ratio is or falls below the state commission authorized level of 52.5 percent, as calculated consistent with PSCW requirements. NSP-Wisconsin’s calendar year average equity-to-total capitalization ratio calculated on this basis was 52.6 percent at Dec. 31, 2015 and $2.4 million in retained earnings was not restricted.

SPS’ state regulatory commissions indirectly limit the amount of dividends that SPS can pay Xcel Energy Inc. by requiring an equity-to-total capitalization ratio (excluding short-term debt) between 45.0 percent and 55.0 percent. In addition, SPS may not pay a dividend that would cause it to lose its investment grade bond rating. SPS’ equity-to-total capitalization ratio (excluding short-term debt) was 53.8 percent at Dec. 31, 2015 and $438 million in retained earnings was not restricted.

The issuance of securities by Xcel Energy Inc. generally is not subject to regulatory approval. However, utility financings and certain intra-system financings are subject to the jurisdiction of the applicable state regulatory commissions and/or the FERC. As of Dec. 31, 2015:


•	PSCo has authorization to issue up to an additional $450 million of long-term debt and up to $800 million of short-term debt.


•	SPS has authorization to issue up to $100 million of long-term debt and $500 million of short-term debt.


•	NSP-Wisconsin has authorization to issue up to $150 million of short-term debt and NSPW will file for additional long-term debt authorization.


•	NSP-Minnesota has authorization to issue long-term securities provided the equity-to-total capitalization ratio remains between 46.9 percent and 57.3 percent and to issue short-term debt provided it does not exceed 15 percent of total capitalization. Total capitalization for NSP-Minnesota cannot exceed $10.5 billion.

Xcel Energy believes these authorizations are adequate and seeks additional authorization as necessary.