Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2013

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, 2013 and Dec. 31, 2012:



	June 30, 2013
			Fair Value
(Thousands of Dollars)	Cost		Level 1		Level 2		Level 3		Total
Nuclear decommissioning fund ^(a)
Cash equivalents	$	32,663	$	32,663	$	—	$	—	$	32,663
Commingled funds	415,197		—		414,899		—		414,899
International equity funds	66,452		—		65,606		—		65,606
Private equity investments	36,496		—		—		45,590		45,590
Real estate	30,357		—		—		38,140		38,140
Debt securities:
Government securities	56,017		—		49,702		—		49,702
U.S. corporate bonds	131,917		—		134,571		—		134,571
International corporate bonds	18,859		—		18,703		—		18,703
Municipal bonds	190,353		—		182,225		—		182,225
Equity securities:
Common stock	429,086		513,339		—		—		513,339
Total	$	1,407,397	$	546,002	$	865,706	$	83,730	$	1,495,438


^(a)	Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $88.7 million of equity investments in unconsolidated subsidiaries and $38.8 million of miscellaneous investments.



	Dec. 31, 2012
			Fair Value
(Thousands of Dollars)	Cost		Level 1		Level 2		Level 3		Total
Nuclear decommissioning fund ^(a)
Cash equivalents	$	246,904	$	237,938	$	8,966	$	—	$	246,904
Commingled funds	396,681		—		417,583		—		417,583
International equity funds	66,452		—		69,481		—		69,481
Private equity investments	27,943		—		—		33,250		33,250
Real estate	32,561		—		—		39,074		39,074
Debt securities:
Government securities	21,092		—		21,521		—		21,521
U.S. corporate bonds	162,053		—		169,488		—		169,488
International corporate bonds	15,165		—		16,052		—		16,052
Municipal bonds	21,392		—		23,650		—		23,650
Asset-backed securities	2,066		—		—		2,067		2,067
Mortgage-backed securities	28,743		—		—		30,209		30,209
Equity securities:
Common stock	379,093		420,263		—		—		420,263
Total	$	1,400,145	$	658,201	$	726,741	$	104,600	$	1,489,542


^(a)	Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $91.2 million of equity investments in unconsolidated subsidiaries and $37.1 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, 2013 and 2012:



(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)	April 1, 2012		Purchases		Settlements			Gains (Losses) Recognized as Regulatory Assets and Liabilities			Transfers Out of Level 3		June 30, 2012
Private equity investments	$	20,068	$	3,235	$	—		$	—		$	—	$	23,303
Real estate	27,905		2,271		—			2,545			—		32,721
Asset-backed securities	16,547		—		(9,458		)	(21		)	—		7,068
Mortgage-backed securities	68,671		7,414		(9,690		)	(74		)	—		66,321
Total	$	133,191	$	12,920	$	(19,148	)	$	2,450		$	—	$	129,413



(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.



(Thousands of Dollars)	Jan. 1, 2012		Purchases		Settlements			Gains (Losses) Recognized as Regulatory Assets and Liabilities			Transfers Out of Level 3		June 30, 2012
Private equity investments	$	9,203	$	13,390	$	—		$	710		$	—	$	23,303
Real estate	26,395		3,907		(1,766		)	4,185			—		32,721
Asset-backed securities	16,501		—		(9,459		)	26			—		7,068
Mortgage-backed securities	78,664		14,318		(26,418		)	(243		)	—		66,321
Total	$	130,763	$	31,615	$	(37,643	)	$	4,678		$	—	$	129,413

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, 2013:



	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	$	—	$	2,793	$	11,211	$	35,698	$	49,702
U.S. corporate bonds	1,734		39,998		81,716		11,123		134,571
International corporate bonds	—		3,115		14,588		1,000		18,703
Municipal bonds	3,790		24,313		26,270		127,852		182,225
Debt securities	$	5,524	$	70,219	$	133,785	$	175,673	$	385,201

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, 2013 and Dec. 31, 2012:


^(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.

Financial Impact of Qualifying Cash Flow Hedges on Accumulated Other Comprehensive Loss

Financial Impact of Qualifying Cash Flow Hedges — The impact of qualifying interest rate and vehicle fuel cash flow hedges on Xcel Energy’s accumulated other comprehensive loss, included in the consolidated statements of common stockholders’ equity and in the consolidated statements of comprehensive income, is detailed in the following table:



	Three Months Ended June 30
(Thousands of Dollars)	2013			2012
Accumulated other comprehensive loss related to cash flow hedges at April 1	$	(61,533	)	$	(20,165	)
After-tax net unrealized losses related to derivatives accounted for as hedges	(44		)	(35,727		)
After-tax net realized losses on derivative transactions reclassified into earnings	694			182
Accumulated other comprehensive loss related to cash flow hedges at June 30	$	(60,883	)	$	(55,710	)



	Six Months Ended June 30
(Thousands of Dollars)	2013			2012
Accumulated other comprehensive loss related to cash flow hedges at Jan. 1	$	(61,241	)	$	(45,738	)
After-tax net unrealized losses related to derivatives accounted for as hedges	(31		)	(10,335		)
After-tax net realized losses on derivative transactions reclassified into earnings	389			363
Accumulated other comprehensive loss related to cash flow hedges at June 30	$	(60,883	)	$	(55,710	)

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, 2013 and 2012, on accumulated other comprehensive loss, regulatory assets and liabilities, and income:



	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:
(Thousands of Dollars)	Accumulated Other Comprehensive Loss			Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss				Regulatory Assets and(Liabilities)				Pre-Tax Losses 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:
(Thousands of Dollars)	Accumulated Other Comprehensive Loss			Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss				Regulatory Assets and (Liabilities)				Pre-Tax Gains (Losses) Recognized During the Period in Income
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



	Three Months Ended June 30, 2012
	Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:					Pre-Tax (Gains) Losses Reclassified into Income During the Period from:
(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	$	(58,695	)	$	—	$	389		^(a)	$	—			$	—
Vehicle fuel and other commodity	(196		)	—		(49		)	^(b)	—				—
Total	$	(58,891	)	$	—	$	340			$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—	$	—			$	—			$	1,589	^(c)
Electric commodity	—			38,174		—				(9,713		)	^(d)	—
Natural gas commodity	—			885		—				—				—
Total	$	—		$	39,059	$	—			$	(9,713	)		$	1,589



	Six Months Ended June 30, 2012
	Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:						Pre-Tax (Gains) Losses Reclassified into Income During the Period from:
(Thousands of Dollars)	Accumulated Other Comprehensive Loss			Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss				Regulatory Assets and (Liabilities)				Pre-Tax Gains (Losses) Recognized During the Period in Income
Derivatives designated as cash flow hedges
Interest rate	$	(16,991	)	$	—		$	777		^(a)	$	—			$	—
Vehicle fuel and other commodity	(17		)	—			(100		)	^(b)	—				—
Total	$	(17,008	)	$	—		$	677			$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	—			$	—			$	3,312		^(c)
Electric commodity	—			39,756			—				(17,685		)	^(d)	—
Natural gas commodity	—			(9,898		)	—				80,939			^(e)	(109		)	^(d)
Total	$	—		$	29,858		$	—			$	63,254			$	3,203


^(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 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.

^(e)

Amounts for the six months ended June 30, 2012 included $5.0 million of 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. Such losses for the six months ended June 30, 2013 were immaterial. The remaining settlement losses for the six months ended June 30, 2013 and 2012 relate to natural gas operations and are recorded to cost of natural gas sold and transported. These losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset, 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, 2013:



	June 30, 2013
	Fair Value
(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	$	—	$	61	$	—	$	61	$	—		$	61
Other derivative instruments:
Commodity trading	—		23,508		2,349		25,857		(8,008		)	17,849
Electric commodity	—		—		50,105		50,105		(2,823		)	47,282
Natural gas commodity	—		1,999		—		1,999		(2		)	1,997
Total current derivative assets	$	—	$	25,568	$	52,454	$	78,022	$	(10,833	)	67,189
Purchased power agreements ^(a)												33,026
Current derivative instruments												$	100,215
Noncurrent derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	26	$	—	$	26	$	(14	)	$	12
Other derivative instruments:
Commodity trading	—		28,867		55		28,922		(3,410		)	25,512
Total noncurrent derivative assets	$	—	$	28,893	$	55	$	28,948	$	(3,424	)	25,524
Purchased power agreements ^(a)												74,789
Noncurrent derivative instruments												$	100,313
Current derivative liabilities
Other derivative instruments:
Commodity trading	$	—	$	15,116	$	2,468	$	17,584	$	(11,060	)	$	6,524
Electric commodity	—		—		2,823		2,823		(2,823		)	—
Natural gas commodity	—		231		—		231		(2		)	229
Total current derivative liabilities	$	—	$	15,347	$	5,291	$	20,638	$	(13,885	)	6,753
Purchased power agreements ^(a)												23,144
Current derivative instruments												$	29,897
Noncurrent derivative liabilities
Other derivative instruments:
Commodity trading	$	—	$	10,741	$	—	$	10,741	$	(3,424	)	$	7,317
Total noncurrent derivative liabilities	$	—	$	10,741	$	—	$	10,741	$	(3,424	)	7,317
Purchased power agreements ^(a)												215,258
Noncurrent derivative instruments												$	222,575

^(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 purchased power agreements 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, 2013. 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, 2012:



	Dec. 31, 2012
	Fair Value
							Fair Value		Counterparty
(Thousands of Dollars)	Level 1		Level 2		Level 3		Total		Netting ^(b)			Total
Current derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	95	$	—	$	95	$	—		$	95
Other derivative instruments:
Commodity trading	—		26,303		692		26,995		(6,675		)	20,320
Electric commodity	—		—		16,724		16,724		(843		)	15,881
Natural gas commodity	—		7		—		7		(7		)	—
Total current derivative assets	$	—	$	26,405	$	17,416	$	43,821	$	(7,525	)	36,296
Purchased power agreements ^(a)												32,717
Current derivative instruments												$	69,013
Noncurrent derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	—	$	86	$	—	$	86	$	(47	)	$	39
Other derivative instruments:
Commodity trading	—		41,282		77		41,359		(4,162		)	37,197
Total noncurrent derivative assets	$	—	$	41,368	$	77	$	41,445	$	(4,209	)	37,236
Purchased power agreements ^(a)												89,061
Noncurrent derivative instruments												$	126,297
Current derivative liabilities
Other derivative instruments:
Commodity trading	$	—	$	18,622	$	1	$	18,623	$	(9,112	)	$	9,511
Electric commodity	—		—		843		843		(843		)	—
Natural gas commodity	—		98		—		98		(7		)	91
Total current derivative liabilities	$	—	$	18,720	$	844	$	19,564	$	(9,962	)	9,602
Purchased power agreements ^(a)												22,880
Current derivative instruments												$	32,482
Noncurrent derivative liabilities
Other derivative instruments:
Commodity trading	$	—	$	21,417	$	—	$	21,417	$	(4,210	)	$	17,207
Total noncurrent derivative liabilities	$	—	$	21,417	$	—	$	21,417	$	(4,210	)	17,207
Purchased power agreements ^(a)												225,659
Noncurrent derivative instruments												$	242,866

^(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, 2012. 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, 2013 and 2012:



	Three Months Ended June 30
(Thousands of Dollars)	2013			2012
Balance at April 1	$	7,642		$	5,324
Purchases	51,386			37,296
Settlements	(8,503		)	(12,675		)
Net transactions recorded during the period:
Losses recognized in earnings ^(a)	(217		)	—
(Losses) gains recognized as regulatory assets and liabilities	(3,090		)	3,844
Balance at June 30	$	47,218		$	33,789



	Six Months Ended June 30
(Thousands of Dollars)	2013			2012
Balance at Jan. 1	$	16,649		$	12,417
Purchases	51,386			37,297
Settlements	(20,952		)	(21,560		)
Net transactions recorded during the period:
Losses recognized in earnings ^(a)	(279		)	(9		)
Gains recognized as regulatory liabilities	414			5,644
Balance at June 30	$	47,218		$	33,789


^(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, 2013 and Dec. 31, 2012, other financial instruments for which the carrying amount did not equal fair value were as follows:



	June 30, 2013				Dec. 31, 2012
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	11,098,519	$	11,996,501	$	10,402,060	$	12,207,866

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

June 30, 2013

Dec. 31, 2012

Megawatt hours (MWh) of electricity

Million British thermal units (MMBtu) of natural gas

Gallons of vehicle fuel