QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Commission File Number) | (I.R.S. Employer Identification No.) |
(Registrant, State of Incorporation or Organization, Address of Principal Executive Officers and Telephone Number) | |||
Southwestern Public Service Company | |||
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
N/A | N/A | N/A |
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | ||
☒ | Smaller Reporting Company | ||||
Emerging growth company |
Class | Oct. 25, 2019 | |
Common Stock, $1.00 par value |
PART I — FINANCIAL INFORMATION | ||
Item l — | ||
Item 2 — | ||
Item 4 — | ||
PART II — OTHER INFORMATION | ||
Item 1 — | ||
Item 1A — | ||
Item 6 — | ||
Certifications Pursuant to Section 302 | ||
Certifications Pursuant to Section 906 |
Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former) | |
NSP-Minnesota | Northern States Power Company, a Minnesota corporation |
NSP-Wisconsin | Northern States Power Company, a Wisconsin corporation |
PSCo | Public Service Company of Colorado |
SPS | Southwestern Public Service Company |
Utility subsidiaries | NSP-Minnesota, NSP-Wisconsin, PSCo and SPS |
Xcel Energy | Xcel Energy Inc. and its subsidiaries |
Federal and State Regulatory Agencies | |
D.C. Circuit | United States Court of Appeals for the District of Columbia Circuit |
EPA | Environmental Protection Agency |
FERC | Federal Energy Regulatory Commission |
IRS | Internal Revenue Service |
NERC | North American Electric Reliability Corporation |
NMPRC | New Mexico Public Regulation Commission |
PUCT | Public Utility Commission of Texas |
SEC | Securities and Exchange Commission |
Electric and Resource Adjustment Clauses | |
DSM | Demand side management |
FPPCAC | Fuel and Purchased Power Cost Adjustment Clause |
Other Terms and Abbreviations | |
ACE | Affordable Clean Energy |
ADIT | Accumulated deferred income tax |
AFUDC | Allowance for funds used during construction |
ALJ | Administrative Law Judge |
ASC | FASB Accounting Standards Codification |
ASU | FASB Accounting Standards Update |
ATRR | Annual transmission revenue requirement |
C&I | Commercial and Industrial |
CEO | Chief executive officer |
CFO | Chief financial officer |
ETR | Effective tax rate |
FASB | Financial Accounting Standards Board |
FTR | Financial transmission right |
GAAP | Generally accepted accounting principles |
IPP | Independent power producers |
NAV | Net asset value |
NOL | Net operating loss |
O&M | Operating and maintenance |
OATT | Open access transmission tariff |
PPA | Power purchase agreement |
PTC | Production tax credit |
ROE | Return on equity |
ROU | Right-of-use |
RTO | Regional Transmission Organization |
SPP | Southwest Power Pool, Inc. |
TCJA | 2017 federal tax reform enacted as Public Law No: 115-97, commonly referred to as the Tax Cuts and Jobs Act |
VIE | Variable interest entity |
Measurements | |
MW | Megawatts |
MWh | Megawatt hours |
Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating revenues | $ | $ | $ | $ | |||||||||||
Operating expenses | |||||||||||||||
Electric fuel and purchased power | |||||||||||||||
Operating and maintenance expenses | |||||||||||||||
Demand side management expenses | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Taxes (other than income taxes) | |||||||||||||||
Total operating expenses | |||||||||||||||
Operating income | |||||||||||||||
Other income (expense), net | ( | ) | ( | ) | |||||||||||
Allowance for funds used during construction — equity | |||||||||||||||
Interest charges and financing costs | |||||||||||||||
Interest charges — includes other financing costs of $0.9, $0.7, $2.5 and $2.1, respectively | |||||||||||||||
Allowance for funds used during construction — debt | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total interest charges and financing costs | |||||||||||||||
Income before income taxes | |||||||||||||||
Income taxes | |||||||||||||||
Net income | $ | $ | $ | $ |
Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Other comprehensive income | ||||||||||||||||
Pension and retiree medical benefits: | ||||||||||||||||
Amortization of losses included in net periodic benefit cost, net of tax of $0 | ||||||||||||||||
Other comprehensive income | ||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Nine Months Ended Sept. 30, | |||||||
2019 | 2018 | ||||||
Operating activities | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Demand side management program amortization | |||||||
Deferred income taxes | |||||||
Allowance for equity funds used during construction | ( | ) | ( | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Accrued unbilled revenues | ( | ) | |||||
Inventories | ( | ) | |||||
Prepayments and other | |||||||
Accounts payable | ( | ) | ( | ) | |||
Net regulatory assets and liabilities | |||||||
Other current liabilities | |||||||
Pension and other employee benefit obligations | ( | ) | ( | ) | |||
Change in other noncurrent assets | |||||||
Change in other noncurrent liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
Investing activities | |||||||
Utility capital/construction expenditures | ( | ) | ( | ) | |||
Investments in utility money pool arrangement | ( | ) | ( | ) | |||
Repayments from utility money pool arrangement | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Financing activities | |||||||
(Repayments of) Proceeds from short-term borrowings, net | ( | ) | |||||
Proceeds from issuance of long-term debt, net | |||||||
Borrowings under utility money pool arrangement | |||||||
Repayments under utility money pool arrangement | ( | ) | ( | ) | |||
Capital contributions from parent | |||||||
Dividends paid to parent | ( | ) | ( | ) | |||
Net cash provided by financing activities | |||||||
Net change in cash and cash equivalents | ( | ) | |||||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ | |||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest (net of amounts capitalized) | $ | ( | ) | $ | ( | ) | |
Cash paid for income taxes, net | ( | ) | ( | ) | |||
Supplemental disclosure of non-cash investing and financing transactions: | |||||||
Property, plant and equipment additions in accounts payable | $ | $ | |||||
Inventory transfer additions in PPE | |||||||
Operating lease right-of-use assets | |||||||
Allowance for equity funds used during construction |
Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net | |||||||
Accounts receivable from affiliates | |||||||
Accrued unbilled revenues | |||||||
Inventories | |||||||
Regulatory assets | |||||||
Derivative instruments | |||||||
Prepaid taxes | |||||||
Prepayments and other | |||||||
Total current assets | |||||||
Property, plant and equipment, net | |||||||
Other assets | |||||||
Regulatory assets | |||||||
Derivative instruments | |||||||
Operating lease right-of-use assets | |||||||
Other | |||||||
Total other assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Equity | |||||||
Current liabilities | |||||||
Short-term debt | $ | $ | |||||
Accounts payable | |||||||
Accounts payable to affiliates | |||||||
Regulatory liabilities | |||||||
Taxes accrued | |||||||
Accrued interest | |||||||
Dividends payable to parent | |||||||
Derivative instruments | |||||||
Other | |||||||
Total current liabilities | |||||||
Deferred credits and other liabilities | |||||||
Deferred income taxes | |||||||
Regulatory liabilities | |||||||
Asset retirement obligations | |||||||
Derivative instruments | |||||||
Pension and employee benefit obligations | |||||||
Operating lease liabilities | |||||||
Other | |||||||
Total deferred credits and other liabilities | |||||||
Commitments and contingencies | |||||||
Capitalization | |||||||
Long-term debt | |||||||
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at Sept. 30, 2019 and Dec. 31, 2018, respectively | |||||||
Additional paid in capital | |||||||
Retained earnings | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total common stockholder’s equity | |||||||
Total liabilities and equity | $ | $ |
SOUTHWESTERN PUBLIC SERVICE COMPANY STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED) (amounts in millions, except share data) | ||||||||||||||||||||||
Common Stock Issued | Retained Earnings | Accumulated Other Comprehensive Loss | Total Common Stockholders’ Equity | |||||||||||||||||||
Shares | Par Value | Additional Paid In Capital | ||||||||||||||||||||
Three Months Ended Sept. 30, 2019 and 2018 | ||||||||||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Net income | ||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||
Dividends declared to parent | ( | ) | ( | ) | ||||||||||||||||||
Contributions of capital by parent | ||||||||||||||||||||||
Balance at Sept. 30, 2018 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Net income | ||||||||||||||||||||||
Dividends declared to parent | ( | ) | ( | ) | ||||||||||||||||||
Contributions of capital by parent | ||||||||||||||||||||||
Balance at Sept. 30, 2019 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
See Notes to Financial Statements |
SOUTHWESTERN PUBLIC SERVICE COMPANY STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED) (amounts in millions, except share data) | ||||||||||||||||||||||
Common Stock Issued | Retained Earnings | Accumulated Other Comprehensive Loss | Total Common Stockholders’ Equity | |||||||||||||||||||
Shares | Par Value | Additional Paid In Capital | ||||||||||||||||||||
Nine Months Ended Sept. 30, 2019 and 2018 | ||||||||||||||||||||||
Balance at Dec. 31, 2017 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Net income | ||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||
Dividends declared to parent | ( | ) | ( | ) | ||||||||||||||||||
Contributions of capital by parent | — | — | ||||||||||||||||||||
Balance at Sept. 30, 2018 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Balance at Dec. 31, 2018 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Net income | ||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||
Dividends declared to parent | ( | ) | ( | ) | ||||||||||||||||||
Contributions of capital by parent | ||||||||||||||||||||||
Balance at Sept. 30, 2019 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
See Notes to Financial Statements |
1. | Summary of Significant Accounting Policies |
2. | Accounting Pronouncements |
3. | Selected Balance Sheet Data |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Accounts receivable, net | ||||||||
Accounts receivable | $ | $ | ||||||
Less allowance for bad debts | ( | ) | ( | ) | ||||
Accounts receivable, net | $ | $ |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Inventories | ||||||||
Materials and supplies | $ | $ | ||||||
Fuel | ||||||||
Total inventories | $ | $ |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Property, plant and equipment, net | ||||||||
Electric plant | $ | $ | ||||||
Construction work in progress | ||||||||
Total property, plant and equipment | ||||||||
Less accumulated depreciation | ( | ) | ( | ) | ||||
Property, plant and equipment, net | $ | $ |
(Amounts in Millions, Except Interest Rates) | Three Months Ended Sept. 30, 2019 | Year Ended Dec. 31, 2018 | ||||||
Borrowing limit | $ | $ | ||||||
Amount outstanding at period end | ||||||||
Average amount outstanding | ||||||||
Maximum amount outstanding | ||||||||
Weighted average interest rate, computed on a daily basis | N/A | % | ||||||
Weighted average interest rate at period end | N/A | N/A |
(Amounts in Millions, Except Interest Rates) | Three Months Ended Sept. 30, 2019 | Year Ended Dec. 31, 2018 | ||||||
Borrowing limit | $ | $ | ||||||
Amount outstanding at period end | ||||||||
Average amount outstanding | ||||||||
Maximum amount outstanding | ||||||||
Weighted average interest rate, computed on a daily basis | N/A | % | ||||||
Weighted average interest rate at period end | N/A |
• | Maturity extended from June 2021 to June 2024. |
• | Borrowing limit increased from $ |
Credit Facility (a) | Outstanding (b) | Available | ||||||||
$ | $ | $ |
(a) |
(b) | Includes outstanding letters of credit. |
Three Months Ended | ||||||||
(Millions of Dollars) | Sept. 30, 2019 | Sept. 30, 2018 | ||||||
Major revenue types | ||||||||
Revenue from contracts with customers: | ||||||||
Residential | $ | $ | ||||||
C&I | ||||||||
Other | ||||||||
Total retail | ||||||||
Wholesale | ||||||||
Transmission | ||||||||
Other | ||||||||
Total revenue from contracts with customers | ||||||||
Alternative revenue and other | ||||||||
Total revenues | $ | $ |
Nine Months Ended | ||||||||
(Millions of Dollars) | Sept. 30, 2019 | Sept. 30, 2018 | ||||||
Major revenue types | ||||||||
Revenue from contracts with customers: | ||||||||
Residential | $ | $ | ||||||
C&I | ||||||||
Other | ||||||||
Total retail | ||||||||
Wholesale | ||||||||
Transmission | ||||||||
Other | ||||||||
Total revenue from contracts with customers | ||||||||
Alternative revenue and other | ||||||||
Total revenues | $ | $ |
6. | Income Taxes |
Nine Months Ended Sept. 30, | ||||||
2019 | 2018 | |||||
Federal statutory rate | % | % | ||||
State tax (net of federal tax effect) | ||||||
Decreases in tax from: | ||||||
Plant regulatory differences (a) | ( | ) | ( | ) | ||
Wind PTCs | ( | ) | ||||
Other tax credits and tax credit and NOL allowances (net) | ( | ) | ( | ) | ||
Prior period adjustments | ( | ) | ( | ) | ||
Other (net) | ( | ) | ||||
Effective income tax rate | % | % |
(a) | Regulatory differences for income tax primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method and the timing of regulatory decisions regarding the return of excess deferred taxes. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions. |
Tax Year(s) | Expiration | |
2009 - 2013 | June 2020 | |
2014 - 2016 | September 2020 |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Unrecognized tax benefit — Permanent tax positions | $ | $ | ||||||
Unrecognized tax benefit — Temporary tax positions | ||||||||
Total unrecognized tax benefit | $ | $ |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
NOL and tax credit carryforwards | $ | ( | ) | $ | ( | ) |
7. | Fair Value of Financial Assets and Liabilities |
(Amounts in Millions) (a) | Sept. 30, 2019 | Dec. 31, 2018 | ||||
Mwh of electricity |
(a) | Amounts are not reflective of net positions in the underlying commodities. |
Sept. 30, 2019 | Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Level 1 | Level 2 | Level 3 | Fair Value Total | Netting (a) | Total | Level 1 | Level 2 | Level 3 | Fair Value Total | Netting (a) | Total | ||||||||||||||||||||||||||||||||||||
Current derivative assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||||||||||||||||||||||||||
Electric commodity | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||
Total current derivative assets | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||||||
PPAs (b) | ||||||||||||||||||||||||||||||||||||||||||||||||
Current derivative instruments | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative assets | ||||||||||||||||||||||||||||||||||||||||||||||||
PPAs (b) | ||||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative instruments | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Current derivative liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||||||||||||||||||||||||||
Electric commodity | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||
Total current derivative liabilities | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||||||
PPAs (b) | . | |||||||||||||||||||||||||||||||||||||||||||||||
Current derivative instruments | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
PPAs (b) | ||||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative instruments | $ | $ |
(a) | SPS nets derivative instruments and related collateral in its 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, 2019 and Dec. 31, 2018. At both Sept. 30, 2019 and Dec. 31, 2018, derivative assets and liabilities include |
(b) | During 2006, SPS 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. |
Three Months Ended Sept. 30, | ||||||||
(Millions of Dollars) | 2019 | 2018 | ||||||
Balance at July 1 | $ | $ | ||||||
Purchases | ||||||||
Settlements | ( | ) | ( | ) | ||||
Net transactions recorded during the period: | ||||||||
Net losses recognized as regulatory assets and liabilities | ( | ) | ( | ) | ||||
Balance at Sept. 30 | $ | $ |
Nine Months Ended Sept. 30, | ||||||||
(Millions of Dollars) | 2019 | 2018 | ||||||
Balance at Jan. 1 | $ | $ | ||||||
Purchases | ||||||||
Settlements | ( | ) | ( | ) | ||||
Net transactions recorded during the period: | ||||||||
Net gains recognized as regulatory assets and liabilities | ||||||||
Balance at Sept. 30 | $ | $ |
Sept. 30, 2019 | Dec. 31, 2018 | |||||||||||||||
(Millions of Dollars) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Long-term debt | $ | $ | $ | $ |
8. | Benefit Plans and Other Postretirement Benefits |
Three Months Ended Sept. 30 | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Millions of Dollars) | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||
Interest cost (a) | ||||||||||||||||
Expected return on plan assets (a) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Amortization of prior service credit (a) | ( | ) | ( | ) | ||||||||||||
Amortization of net loss (gain) (a) | ( | ) | ( | ) | ||||||||||||
Net periodic benefit cost (credit) | ( | ) | ( | ) | ||||||||||||
Credits (costs) not recognized due to the effects of regulation | ( | ) | ||||||||||||||
Net benefit cost (credit) recognized for financial reporting | $ | $ | $ | ( | ) | $ | ( | ) |
Nine Months Ended Sept. 30 | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Millions of Dollars) | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||
Interest cost (a) | ||||||||||||||||
Expected return on plan assets (a) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Amortization of prior service credit (a) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Amortization of net loss (gain) (a) | ( | ) | ( | ) | ||||||||||||
Net periodic benefit cost (credit) | ( | ) | ( | ) | ||||||||||||
Credits not recognized due to the effects of regulation | ||||||||||||||||
Net benefit cost (credit) recognized for financial reporting | $ | $ | $ | ( | ) | $ | ( | ) |
9. | Commitments and Contingencies |
(Millions of Dollars) | Sept. 30, 2019 | |||
PPAs | $ | |||
Other | ||||
Gross operating lease ROU assets | ||||
Accumulated amortization | ( | ) | ||
Net operating lease ROU assets | $ |
(Millions of Dollars) | Three Months Ended Sept. 30, 2019 | Nine Months Ended Sept. 30, 2019 | ||||||
Operating leases | ||||||||
PPA capacity payments | $ | $ | ||||||
Other operating leases (a) | ||||||||
Total operating lease expense (b) | $ | $ |
(a) | Includes short-term lease expense of $ |
(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. |
(Millions of Dollars) | PPA (a) (b) Operating Leases | Other Operating Leases | Total Operating Leases | |||||||||
2019 | $ | $ | $ | |||||||||
2020 | ||||||||||||
2021 | ||||||||||||
2022 | ||||||||||||
2023 | ||||||||||||
Thereafter | ||||||||||||
Total minimum obligation | ||||||||||||
Interest component of obligation | ( | ) | ( | ) | ( | ) | ||||||
Present value of minimum obligation | ||||||||||||
Less current portion | ( | ) | ||||||||||
Noncurrent operating lease liabilities | $ | |||||||||||
Weighted-average remaining lease term in years | 14.3 |
(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. |
(Millions of Dollars) | PPA (a) (b) Operating Leases | Other Operating Leases | Total Operating Leases | |||||||||
2019 | $ | $ | $ | |||||||||
2020 | ||||||||||||
2021 | ||||||||||||
2022 | ||||||||||||
2023 | ||||||||||||
Thereafter |
(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. |
Nine Months Ended Sept. 30 | ||||||||
(Millions of Dollars) | 2019 | 2018 | ||||||
Electric revenues | $ | 1,397.7 | $ | 1,468.6 | ||||
Electric fuel and purchased power | (651.0 | ) | (795.6 | ) | ||||
Electric margin | $ | 746.7 | $ | 673.0 |
(Millions of Dollars) | 2019 vs 2018 | |||
Purchased capacity costs | $ | 31.9 | ||
Regulatory rate outcomes | 23.7 | |||
Demand revenue | 19.2 | |||
Wholesale transmission, net | 14.5 | |||
Non-fuel riders | 9.8 | |||
Retail sales growth | 3.4 | |||
Firm wholesale | (16.9 | ) | ||
PTC sharing | (4.4 | ) | ||
Estimated weather impact | (4.2 | ) | ||
Other, net | (3.3 | ) | ||
Total increase in electric margin | $ | 73.7 |
Revenue Request (Millions of Dollars) | ||||
Hale Wind Farm | $ | 62 | ||
Capital investments | 47 | |||
Depreciation rate change (including Tolk) | 34 | |||
Cost of capital | 10 | |||
Expiring purchased power contracts | (28 | ) | ||
Other, net | 11 | |||
New revenue request | $ | 136 |
• | Intervenor testimony — Feb. 10, 2020 |
• | Staff testimony — Feb. 18, 2020 |
• | Rebuttal testimony — March 11, 2020 |
• | Public hearing begins — March 30, 2020 |
• | Final order deadline — Sept. 7, 2020 |
Revenue Request (Millions of Dollars) | ||||
Hale Wind Farm | $ | 28 | ||
Other plant investment | 22 | |||
Wholesale sales reduction | 17 | |||
Allocator changes due to load growth | 15 | |||
Depreciation rate change (including Tolk) | 15 | |||
Base rate sales growth | (41 | ) | ||
Other, net | (5 | ) | ||
New revenue request | $ | 51 |
• | Filing of stipulation, if any — Nov. 15, 2019 |
• | Staff and intervenor testimony or testimony in support of a stipulation — Nov. 22, 2019 |
• | Testimony in opposition to a stipulation, if any — Dec. 6, 2019 |
• | Rebuttal testimony — Dec. 20, 2019 |
• | Public hearing begins — Jan. 7, 2020 |
• | End of 9-month suspension — April 30, 2020 |
Exhibit Number | Description | Report or Registration Statement | SEC File or Registration Number | Exhibit Reference |
3.01* | SPS Form 10-Q for the quarter ended Sept. 30, 2017 | 001-03789 | 3.01 | |
3.02* | SPS Form 10-K for the year ended Dec. 31, 2018 | 001-03789 | 3.02 | |
101.INS | 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 | XBRL Schema | |||
101.CAL | XBRL Calculation | |||
101.DEF | XBRL Definition | |||
101.LAB | XBRL Label | |||
101.PRE | XBRL Presentation | |||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Southwestern Public Service Company | ||
Oct. 25, 2019 | By: | /s/ JEFFREY S. SAVAGE |
Jeffrey S. Savage | ||
Senior Vice President, Controller | ||
(Principal Accounting Officer) | ||
/s/ ROBERT C. FRENZEL | ||
Robert C. Frenzel | ||
Executive Vice President, Chief Financial Officer and Director | ||
(Principal Financial Officer) |
1. | I have reviewed this report on Form 10-Q of Southwestern Public Service Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ BEN FOWKE | |
Ben Fowke | |
Chairman, Chief Executive Officer and Director | |
(Principal Executive Officer) |
1. | I have reviewed this report on Form 10-Q of Southwestern Public Service Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting |
/s/ ROBERT C. FRENZEL | |
Robert C. Frenzel | |
Executive Vice President, Chief Financial Officer and Director | |
(Principal Financial Officer) |
(1) | The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of SPS as of the dates and for the periods expressed in the Form 10-Q. |
/s/ BEN FOWKE | |
Ben Fowke | |
Chairman, Chief Executive Officer and Director | |
(Principal Executive Officer) | |
/s/ ROBERT C. FRENZEL | |
Robert C. Frenzel | |
Executive Vice President, Chief Financial Officer and Director | |
(Principal Financial Officer) |
Interest Rate Derivatives (Details) $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
Interest Rate Swap [Member] | |
Derivative [Line Items] | |
Interest rate derivatives net losses reclassified during next 12 months | $ 0.1 |
Commitments and Contingencies SPP Filing to Assign GridLiance Facilities to SPS Rate Zone (Details) - Southwest Power Pool (SPP) - SPP Open Access Transmission Tariff Upgrade Costs $ in Millions |
1 Months Ended |
---|---|
Aug. 31, 2018
USD ($)
| |
Public Utilities, General Disclosures [Line Items] | |
Annual Transmission Revenue Requirement Increase | $ 9.5 |
Annual Transmission Revenue Requirement (Other Utilities) | 3.5 |
SPS | |
Public Utilities, General Disclosures [Line Items] | |
Annual Transmission Revenue Requirement Increase (SPS) | $ 6.0 |
Selected Balance Sheet Data Selected Balance Sheet Data Inventories (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventories | $ 31.4 | $ 33.9 |
Inventory, Net | 31.4 | 33.9 |
Materials and supplies | ||
Inventories | 24.8 | 25.7 |
Fuel | ||
Inventories | $ 6.6 | $ 8.2 |
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Millions |
Total |
Common Stock |
Additional Paid In Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
---|---|---|---|---|---|
Beginning balance (in shares) at Dec. 31, 2017 | 100 | ||||
Beginning balance at Dec. 31, 2017 | $ 2,130.3 | $ 0.0 | $ 1,590.2 | $ 541.6 | $ (1.5) |
Increase (Decrease) in Stockholders' Equity | |||||
Other comprehensive income | 0.1 | 0.1 | |||
Ending balance (in shares) at Jun. 30, 2018 | 100 | ||||
Ending balance at Jun. 30, 2018 | 2,159.1 | $ 0.0 | 1,591.4 | 569.2 | (1.5) |
Beginning balance (in shares) at Dec. 31, 2017 | 100 | ||||
Beginning balance at Dec. 31, 2017 | 2,130.3 | $ 0.0 | 1,590.2 | 541.6 | (1.5) |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 173.1 | 173.1 | |||
Other comprehensive income | 0.1 | ||||
Dividends declared to parent | (104.0) | (104.0) | |||
Contributions of capital by parent | 181.2 | 181.2 | |||
Ending balance (in shares) at Sep. 30, 2018 | 100 | ||||
Ending balance at Sep. 30, 2018 | 2,380.7 | $ 0.0 | 1,771.4 | 610.7 | (1.4) |
Beginning balance (in shares) at Jun. 30, 2018 | 100 | ||||
Beginning balance at Jun. 30, 2018 | 2,159.1 | $ 0.0 | 1,591.4 | 569.2 | (1.5) |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 81.5 | 81.5 | |||
Other comprehensive income | 0.1 | ||||
Dividends declared to parent | (40.0) | (40.0) | |||
Contributions of capital by parent | 180.0 | 180.0 | |||
Ending balance (in shares) at Sep. 30, 2018 | 100 | ||||
Ending balance at Sep. 30, 2018 | $ 2,380.7 | $ 0.0 | 1,771.4 | 610.7 | (1.4) |
Beginning balance (in shares) at Dec. 31, 2018 | 100 | 100 | |||
Beginning balance at Dec. 31, 2018 | $ 2,536.6 | $ 0.0 | 1,932.3 | 605.7 | (1.4) |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 218.0 | 218.0 | |||
Other comprehensive income | 0.1 | 0.1 | |||
Dividends declared to parent | (255.5) | (255.5) | |||
Contributions of capital by parent | $ 393.0 | 393.0 | |||
Ending balance (in shares) at Sep. 30, 2019 | 100 | 100 | |||
Ending balance at Sep. 30, 2019 | $ 2,892.2 | $ 0.0 | 2,325.3 | 568.2 | (1.3) |
Beginning balance (in shares) at Jun. 30, 2019 | 100 | ||||
Beginning balance at Jun. 30, 2019 | 2,883.7 | $ 0.0 | 2,307.3 | 577.7 | (1.3) |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 105.1 | 105.1 | |||
Other comprehensive income | 0.0 | ||||
Dividends declared to parent | (114.6) | (114.6) | |||
Contributions of capital by parent | $ 18.0 | 18.0 | |||
Ending balance (in shares) at Sep. 30, 2019 | 100 | 100 | |||
Ending balance at Sep. 30, 2019 | $ 2,892.2 | $ 0.0 | $ 2,325.3 | $ 568.2 | $ (1.3) |
Borrowings and Other Financing Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Borrowings and Other Financing Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Facilities | As of Sept. 30, 2019, SPS had the following committed credit facility available (in millions of dollars):
(b) Includes outstanding letters of credit.
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Money Pool | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings and Other Financing Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Borrowings | Money pool borrowings for SPS were as follows:
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Borrowings and Other Financing Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Borrowings | Commercial paper outstanding for SPS was as follows:
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Benefit Plans and Other Postretirement Benefits (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost (Credit) | Components of Net Periodic Benefit Cost (Credit)
(a) The components of net periodic cost other than the service cost component are included in the line item “other expense, net” in the income statement or capitalized on the balance sheet as a regulatory asset.
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STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Derivative instruments: | ||||
Reclassification of losses to net income, tax | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 |
Credit Facility (Details) - Credit Facility |
9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2019
USD ($)
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Jun. 01, 2019
USD ($)
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Dec. 31, 2018
USD ($)
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Line of Credit Facility [Line Items] | ||||||||
Credit Facility | $ 500,000,000 | [1] | $ 400,000,000 | |||||
Outstanding | [2] | 2,000,000 | ||||||
Available | 498,000,000 | |||||||
Direct advances on the credit facility outstanding | $ 0 | $ 0 | ||||||
Number of extension you can request | 2 | |||||||
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Selected Balance Sheet Data Balance Sheet Related Disclosures, Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Public Utility, Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 8,715.8 | $ 8,075.0 |
Accumulated depreciation | 2,273.9 | 2,128.6 |
Property, plant and equipment, net | 6,441.9 | 5,946.4 |
Electric plant | ||
Public Utility, Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 8,296.6 | 7,227.7 |
Construction work in progress | ||
Public Utility, Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 419.2 | $ 847.3 |
Income Taxes Federal Audits (Details) |
9 Months Ended |
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Sep. 30, 2019
USD ($)
| |
Internal Revenue Service (IRS) [Member] | |
Investments, Owned, Federal Income Tax Note [Line Items] | |
Proposed Tax Adjustments | $ 0 |
Selected Balance Sheet Data |
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Selected Balance Sheet Data | Selected Balance Sheet Data
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Fair Value of Financial Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities | Fair Value of Financial Assets and Liabilities Fair Value Measurements The accounting guidance for fair value measurements and disclosures provides a single definition of fair value, hierarchical framework for measuring assets and liabilities and requires disclosure about assets and liabilities measured 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 highly liquid and actively traded instruments with quoted prices. Level 2 — Pricing inputs are other than quoted 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 are those valued with models requiring significant management judgment or estimation. Specific valuation methods include: Cash equivalents — The fair values of cash equivalents are generally based on cost plus accrued interest; money market funds are measured using quoted NAVs. Interest rate derivatives — The fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts. Commodity derivatives — The methods used to measure the fair value of commodity derivative forwards and options generally utilize observable forward prices and volatilities, as well as observable pricing adjustments for specific delivery locations, and are generally assigned a Level 2 classification. When contractual settlements relate to delivery locations for which pricing is relatively unobservable, or extend to periods beyond those readily observable on active exchanges or quoted by brokers, 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, purchased from SPP. 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 value of an FTR is derived from, and designed to offset, the cost 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 an FTR. If forecasted costs of electric transmission congestion increase or decrease for a given FTR path, the value of that particular FTR instrument will likewise increase or decrease. Given the limited observability of important inputs to the value of FTRs between auction processes, including expected plant operating schedules and retail and wholesale demand, fair value measurements for FTRs have been assigned a Level 3. Non-trading monthly FTR settlements are expected to be recovered through fuel and purchased energy cost recovery mechanisms, and therefore changes in the fair value of the yet to be settled portions of FTRs are deferred as a regulatory asset or liability. Given this regulatory treatment and the limited magnitude of FTRs relative to the electric utility operations of SPS, the numerous unobservable quantitative inputs pertinent to the value of FTRs are insignificant to the financial statements of SPS. Derivative Instruments 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 electric utility commodity prices. Interest Rate Derivatives — SPS may enter into various instruments that effectively fix the yield or price on a specified benchmark interest rate for an anticipated debt issuance for a specific period. These derivative instruments are generally designated as cash flow hedges for accounting purposes. As of Sept. 30, 2019, accumulated other comprehensive loss related to interest rate derivatives included $0.1 million of net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings, including forecasted amounts for unsettled hedges, as applicable. 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 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. 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.
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 in the balance sheets. SPS’ most significant concentrations of credit risk with particular entities or industries are contracts with counterparties to its wholesale, trading and non-trading commodity activities. At Sept. 30, 2019, one of the six most significant counterparties for these activities, comprising $14.2 million or 31% of this credit exposure, had investment grade ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. Five of the six most significant counterparties, comprising $9.7 million or 21% of this credit exposure, were not rated by external rating agencies, but based on SPS’ internal analysis, had credit quality consistent with investment grade. Six of these significant counterparties are municipal or cooperative electric entities, or other utilities. Impact of Derivative Activities on Income and Accumulated Other Comprehensive Loss — Pre-tax losses related to interest rate derivatives reclassified from accumulated other comprehensive loss into earnings were immaterial for the three and nine months ended Sept. 30, 2019 and 2018. Changes in the fair value of FTRs resulting in immaterial pre-tax net gains and pre-tax net gains of $4.7 million were recognized for the three and nine months ended Sept. 30, 2019, respectively, were reclassified as regulatory assets and liabilities. For the three and nine months ended Sept. 30, 2018, changes in the fair value of FTRs resulted in pre-tax net losses of $3.3 million and pre-tax net gains of $10.1 million, respectively, and were recognized as regulatory assets and liabilities. The classification as a regulatory asset or liability is based on expected recovery of FTR settlements through fuel and purchased energy cost recovery mechanisms. FTR settlement gains of $1.7 million and $1.5 million were recognized for the three and nine months ended Sept. 30, 2019, respectively, and were recorded to electric fuel and purchased power. There were immaterial FTR settlement losses and $3.4 million of FTR settlement gains recognized for the three and nine months ended Sept. 30, 2018, respectively, and were recorded to electric fuel and purchased power. These derivative settlement gains and losses are shared with electric customers through fuel and purchased energy cost-recovery mechanisms, and reclassified out of income as regulatory assets or liabilities, as appropriate. SPS had no derivative instruments designated as fair value hedges during the three and nine months ended Sept. 30, 2019 and 2018. Recurring Fair Value Measurements — SPS’ derivative assets and liabilities measured at fair value on a recurring basis:
Changes in Level 3 commodity derivatives for the three and nine months ended Sept. 30, 2019 and 2018:
SPS recognizes transfers between fair value hierarchy levels as of the beginning of each period. There were no transfers of amounts between levels for derivative instruments for the three and nine months ended Sept. 30, 2019 and 2018. Fair Value of Long-Term Debt Other financial instruments for which the carrying amount did not equal fair value:
Fair value of SPS’ long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of Sept. 30, 2019 and Dec. 31, 2018, and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.
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Variable Interest Entities (Details) - MW |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Independent Power Producing Entities | ||
Purchased Power Agreements [Abstract] | ||
Generating capacity (in MW) | 1,197 | 1,197 |
Income Taxes Unrecognized Benefits (Details) - USD ($) |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefit - Permanent tax positions | $ 3,500,000 | $ 3,000,000.0 |
Unrecognized tax benefit - Temporary tax positions | 1,500,000 | 1,500,000 |
Total unrecognized tax benefit | 5,000,000.0 | 4,500,000 |
NOL and tax credit carryforwards | 4,400,000 | 3,800,000 |
Related NOLs and tax credit carryforwards | (1,400,000) | (800,000) |
Reasonably possible decrease in unrecognized tax benefits | 3,700,000 | |
Penalties related to unrecognized tax benefits | $ 0 | $ 0 |
Borrowings and Other Financing Instruments Long-Term Borrowings (Details) - Bonds [Member] - Series Due June 15, 2049 [Domain] $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $ 300 |
Debt Instrument, Interest Rate | 3.75% |
Money Pool (Details) - USD ($) |
3 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
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Short-term Debt [Line Items] | ||
Amount outstanding at period end | $ 0 | $ 42,000,000.0 |
Money Pool | ||
Short-term Debt [Line Items] | ||
Borrowing limit | 100,000,000 | 100,000,000 |
Amount outstanding at period end | 0 | 0 |
Average amount outstanding | 0 | 29,000,000 |
Maximum amount outstanding | $ 0 | $ 100,000,000 |
Weighted average interest rate, computed on a daily basis | 1.96% |
Accounting Pronouncements |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Accounting Pronouncements | Accounting Pronouncements Recently Issued Credit Losses — In 2016, the FASB issued Financial Instruments - Credit Losses, Topic 326 (ASC Topic 326), which changes how entities account for losses on receivables and certain other assets. The guidance requires use of a current expected credit loss model, which may result in earlier recognition of credit losses than under previous accounting standards. ASC Topic 326 is effective for interim and annual periods beginning on or after Dec. 15, 2019, and will be applied on a modified-retrospective approach through a cumulative-effect adjustment to retained earnings as of Jan. 1, 2020. SPS expects the impact of adoption of the new standard to include first-time recognition of expected credit losses (i.e., bad debt expense) on unbilled revenues, with the initial allowance established at Jan. 1, 2020 charged to retained earnings. Recently Adopted Leases — In 2016, the FASB issued Leases, Topic 842 (ASC Topic 842), which provides new accounting and disclosure guidance for leasing activities, most significantly requiring that operating leases be recognized on the balance sheet. SPS adopted the guidance on Jan. 1, 2019 utilizing the package of transition practical expedients provided by the new standard, including carrying forward prior conclusions on whether agreements existing before the adoption date contain leases and whether existing leases are operating or finance leases; ASC Topic 842 refers to capital leases as finance leases. Specifically for land easement contracts, SPS has elected the practical expedient provided by ASU No. 2018-01 Leases: Land Easement Practical Expedient for Transition to Topic 842, and as a result, only those easement contracts entered on or after Jan. 1, 2019 will be evaluated to determine if lease treatment is appropriate. SPS also utilized the transition practical expedient offered by ASU No. 2018-11 Leases: Targeted Improvements to implement the standard on a prospective basis. As a result, reporting periods in the financial statements beginning Jan. 1, 2019 reflect the implementation of ASC Topic 842, while prior periods continue to be reported in accordance with Leases, Topic 840 (ASC Topic 840). Other than first-time recognition of operating leases on its balance sheet, the implementation of ASC Topic 842 did not have a significant impact on SPS’ financial statements. Adoption resulted in recognition of approximately $0.5 billion of operating lease ROU assets and current/noncurrent operating lease liabilities. See Note 9 to the financial statements for leasing disclosures.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Note 7 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2018 represents, in all material respects, the current status of other income tax matters except to the extent noted below, and are incorporated herein by reference. The following table reconciles the difference between the statutory rate and the ETR:
Federal Audits — 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 federal income tax returns expire as follows:
In 2015, the IRS commenced an examination of tax years 2012 and 2013. In 2017, the IRS concluded the audit of tax years 2012 and 2013 and proposed an adjustment that would impact Xcel Energy’s NOL and ETR. Xcel Energy filed a protest with the IRS. As of Sept. 30, 2019, the case has been forwarded to the Office of Appeals and Xcel Energy has recognized its best estimate of income tax expense that will result from a final resolution of this issue; however, the outcome and timing of a resolution is unknown. In 2018, the IRS began an audit of tax years 2014 - 2016. As of Sept. 30, 2019 no adjustments have been proposed. State Audits — SPS is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of Sept. 30, 2019, SPS’ earliest open tax year subject to examination by state taxing authorities under applicable statutes of limitations is 2009. There are currently no state income tax audits in progress. Unrecognized Benefits — Unrecognized tax benefit balance includes permanent tax positions, which if recognized would affect the annual ETR. In addition, the unrecognized tax benefit balance includes temporary tax positions for which ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the ETR but would accelerate the payment to the taxing authority to an earlier period. Unrecognized tax benefits — permanent vs temporary:
Unrecognized tax benefits were reduced by tax benefits associated with NOL and tax credit carryforwards:
Net deferred tax liability associated with the unrecognized tax benefit amounts and related NOLs and tax credits carryforwards were $1.4 million and $0.8 million at Sept. 30, 2019 and Dec. 31, 2018, respectively. As the IRS Appeals and federal audit progresses, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $3.7 million in the next 12 months. Payables for interest related to unrecognized tax benefits were not material and no amounts were accrued for penalties related to unrecognized tax benefits as of Sept. 30, 2019 or Dec. 31, 2018.
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Commitments and Contingencies Leases (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Lessee, Lease, Description [Line Items] | |||
Weighted Average Discount Rate, Percent | 4.40% | 4.40% | |
Maximum lease term for short-term lease classification | 12 months | ||
Operating Lease Right of Use Assets | |||
Operating Lease, Right-of-Use Asset, Gross | $ 548.3 | $ 548.3 | |
Operating Lease, Right-of-Use Asset, Accumulated Depreciation | (19.3) | (19.3) | |
Operating Lease, Right-of-Use Asset | 529.0 | 529.0 | $ 0.0 |
Operating Leases | |||
Total operating lease expense | 12.6 | 40.5 | |
Short-term lease expense | 0.3 | 1.2 | |
Operating Leases after Adoption of ASC Topic 842 | |||
2019 | 12.4 | 12.4 | |
2020 | 49.6 | 49.6 | |
2021 | 49.5 | 49.5 | |
2022 | 49.6 | 49.6 | |
2023 | 49.6 | 49.6 | |
Thereafter | 505.6 | 505.6 | |
Total minimum obligation | 716.3 | 716.3 | |
Interest component of obligation | (187.3) | (187.3) | |
Present value of minimum obligation | 529.0 | 529.0 | |
Less current portion | (26.8) | (26.8) | |
Noncurrent operating lease liabilities | $ 502.2 | $ 502.2 | 0.0 |
Weighted-average remaining lease term in years | 14 years 4 months | 14 years 4 months | |
Operating Leases before Adoption of ASC 842 | |||
2019 | 51.9 | ||
2020 | 51.4 | ||
2021 | 51.3 | ||
2022 | 51.3 | ||
2023 | 51.3 | ||
Thereafter | 507.1 | ||
PPAs | |||
Operating Lease Right of Use Assets | |||
Operating Lease, Right-of-Use Asset, Gross | $ 500.3 | $ 500.3 | |
Operating Leases | |||
Total operating lease expense | 11.4 | 36.8 | |
Operating Leases after Adoption of ASC Topic 842 | |||
2019 | 11.6 | 11.6 | |
2020 | 46.2 | 46.2 | |
2021 | 46.2 | 46.2 | |
2022 | 46.2 | 46.2 | |
2023 | 46.2 | 46.2 | |
Thereafter | 450.8 | 450.8 | |
Total minimum obligation | 647.2 | 647.2 | |
Interest component of obligation | (165.3) | (165.3) | |
Present value of minimum obligation | 481.9 | 481.9 | |
Operating Leases before Adoption of ASC 842 | |||
2019 | 46.7 | ||
2020 | 46.2 | ||
2021 | 46.2 | ||
2022 | 46.2 | ||
2023 | 46.2 | ||
Thereafter | 450.8 | ||
Other | |||
Operating Lease Right of Use Assets | |||
Operating Lease, Right-of-Use Asset, Gross | 48.0 | 48.0 | |
Operating Leases | |||
Total operating lease expense | 1.2 | 3.7 | |
Operating Leases after Adoption of ASC Topic 842 | |||
2019 | 0.8 | 0.8 | |
2020 | 3.4 | 3.4 | |
2021 | 3.3 | 3.3 | |
2022 | 3.4 | 3.4 | |
2023 | 3.4 | 3.4 | |
Thereafter | 54.8 | 54.8 | |
Total minimum obligation | 69.1 | 69.1 | |
Interest component of obligation | (22.0) | (22.0) | |
Present value of minimum obligation | $ 47.1 | $ 47.1 | |
Operating Leases before Adoption of ASC 842 | |||
2019 | 5.2 | ||
2020 | 5.2 | ||
2021 | 5.1 | ||
2022 | 5.1 | ||
2023 | 5.1 | ||
Thereafter | $ 56.3 |
Label | Element | Value |
---|---|---|
AOCI Attributable to Parent [Member] | ||
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | us-gaap_OtherComprehensiveIncomeLossNetOfTaxPortionAttributableToParent | $ 100,000 |
Commitments and Contingencies SPS Filing to Modify Wholesale Transmission Rates (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Public Utilities, General Disclosure [Abstract] | |
Amount proposed changes would increase wholesale transmission revenues | $ 9.4 |
Amount of proposed changes would be recoverable | $ 4.4 |
Fair Value of Long-Term Debt (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Carrying Amount | $ 2,419.3 | $ 2,126.1 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | $ 2,763.2 | $ 2,139.8 |
Fair Value of Financial Assets and Liabilities Commodity Derivatives (Details) - MWh MWh in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Electric Commodity [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Mwh of electricity | [1] | 9.4 | 5.5 | |
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STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Operating revenues | ||||
Operating revenues | $ 533.1 | $ 540.1 | $ 1,397.7 | $ 1,468.6 |
Operating expenses | ||||
Electric fuel and purchased power | 240.2 | 284.0 | 651.0 | 795.6 |
Operating and maintenance expenses | 74.1 | 71.5 | 216.6 | 203.7 |
Demand side management expenses | 4.5 | 4.6 | 12.9 | 13.5 |
Depreciation and amortization | 61.3 | 52.2 | 172.3 | 150.2 |
Taxes (other than income taxes) | 17.6 | 16.8 | 53.1 | 50.0 |
Total operating expenses | 397.7 | 429.1 | 1,105.9 | 1,213.0 |
Operating income | 135.4 | 111.0 | 291.8 | 255.6 |
Other income (expense), net | 1.5 | (1.0) | 2.4 | (2.4) |
Allowance for funds used during construction — equity | 3.2 | 5.0 | 22.2 | 11.6 |
Interest charges and financing costs | ||||
Interest charges — includes other financing costs of $0.9, $0.7, $2.5 and $2.1, respectively | 26.0 | 21.0 | 76.0 | 61.8 |
Allowance for funds used during construction — debt | (1.5) | (2.2) | (10.2) | (5.5) |
Total interest charges and financing costs | 24.5 | 18.8 | 65.8 | 56.3 |
Income before income taxes | 115.6 | 96.2 | 250.6 | 208.5 |
Income taxes | 10.5 | 14.7 | 32.6 | 35.4 |
Net income | $ 105.1 | $ 81.5 | $ 218.0 | $ 173.1 |
Selected Balance Sheet Data (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Balance Sheet Related Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net |
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Inventories |
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Property, Plant and Equipment, Net |
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Fair Value of Financial Assets and Liabilities (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Notional Amounts of Commodity FTRs | 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.
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Derivative Assets and Liabilities Measured at Fair Value on a Recurring Basis by Hierarchy Level | Recurring Fair Value Measurements — SPS’ derivative assets and liabilities measured at fair value on a recurring basis:
(b) During 2006, SPS 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.
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Changes in Level 3 Commodity Derivatives | Changes in Level 3 commodity derivatives for the three and nine months ended Sept. 30, 2019 and 2018:
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Carrying Amount and Fair Value of Long-term Debt | Other financial instruments for which the carrying amount did not equal fair value:
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STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
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Operating activities | ||
Net income | $ 218.0 | $ 173.1 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 174.0 | 150.4 |
Demand side management program amortization | 0.0 | 1.3 |
Deferred income taxes | 16.2 | 14.4 |
Allowance for equity funds used during construction | (22.2) | (11.6) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (26.5) | (25.1) |
Accrued unbilled revenues | (10.4) | 9.6 |
Inventories | (16.3) | 7.0 |
Prepayments and other | 6.0 | 0.6 |
Accounts payable | (15.1) | (0.9) |
Net regulatory assets and liabilities | 17.6 | 58.8 |
Other current liabilities | 14.1 | 13.0 |
Pension and other employee benefit obligations | (17.6) | (7.9) |
Change in other noncurrent assets | 0.7 | 3.5 |
Change in other noncurrent liabilities | 1.3 | (0.2) |
Net cash provided by operating activities | 339.8 | 386.0 |
Investing activities | ||
Utility capital/construction expenditures | (632.8) | (610.0) |
Investments in utility money pool arrangement | 133.0 | 46.0 |
Repayments from utility money pool arrangement | 133.0 | 111.0 |
Net cash used in investing activities | (632.8) | (545.0) |
Financing activities | ||
(Repayments of) Proceeds from short-term borrowings, net | (42.0) | 35.0 |
Proceeds from issuance of long-term debt, net | 292.2 | 0.0 |
Borrowings under utility money pool arrangement | 283.0 | 446.0 |
Repayments under utility money pool arrangement | (283.0) | (423.0) |
Capital contributions from parent | 400.8 | 181.4 |
Dividends paid to parent | (255.0) | (90.7) |
Net cash provided by financing activities | 396.0 | 148.7 |
Net change in cash and cash equivalents | 103.0 | (10.3) |
Cash and cash equivalents at beginning of period | 44.0 | 10.9 |
Cash and cash equivalents at end of period | 147.0 | 0.6 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest (net of amounts capitalized) | (60.3) | (57.9) |
Cash paid for income taxes, net | (4.4) | (15.3) |
Supplemental disclosure of non-cash investing and financing transactions: | ||
Property, plant and equipment additions in accounts payable | 67.5 | 54.6 |
Inventory transfer additions in PPE | 18.7 | 17.0 |
Operating lease right-of-use assets | 548.3 | 0.0 |
Allowance for equity funds used during construction | $ 22.2 | $ 11.6 |
Selected Balance Sheet Data Accounts Receivable, Net (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts receivable, net | ||
Accounts receivable | $ 119.5 | $ 96.3 |
Less allowance for bad debts | (5.6) | (5.6) |
Accounts receivable, net | $ 113.9 | $ 90.7 |
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