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Borrowings and Other Financing Instruments

12 Months Ended

Dec. 31, 2019

Borrowings and Other Financing Instruments

Short-Term Borrowings

SPS meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility and the money pool.

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. 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.

Money pool borrowings for SPS were as follows:



(Millions of Dollars, Except Interest Rates)	Three Months Ended Dec. 31, 2019			Year Ended Dec. 31
(Millions of Dollars, Except Interest Rates)	Three Months Ended Dec. 31, 2019			2019			2018			2017
Borrowing limit	$	100		$	100		$	100		$	100
Amount outstanding at period end	—			—			—			—
Average amount outstanding	1			8			29			13
Maximum amount outstanding	12			100			100			100
Weighted average interest rate, computed on a daily basis	1.63		%	2.42		%	1.96		%	1.12		%
Weighted average interest rate at end of period	N/A			N/A			N/A			N/A

Commercial Paper — Commercial paper outstanding for SPS was as follows:



(Millions of Dollars, Except Interest Rates)	Three Months Ended Dec. 31, 2019		Year Ended Dec. 31
(Millions of Dollars, Except Interest Rates)	Three Months Ended Dec. 31, 2019		2019			2018			2017
Borrowing limit	$	500	$	500		$	400		$	400
Amount outstanding at period end	—		—			42			—
Average amount outstanding	—		72			30			69
Maximum amount outstanding	—		316			144			176
Weighted average interest rate, computed on a daily basis	N/A		2.68		%	2.27		%	1.13		%
Weighted average interest rate at end of period	N/A		N/A			2.80			NA

Letters of Credit — SPS may use letters of credit, typically with terms of one year, to provide financial guarantees for certain operating obligations. At Dec. 31, 2019 and 2018, there were $2 million of letters of credit outstanding under the credit facility. The contract amounts of these letters of credit approximate their fair value and are subject to fees.

Credit Facility — In order to use its commercial paper program to fulfill short-term funding needs, SPS must have a revolving credit facility in place at least equal to the amount of its commercial paper borrowing limit and cannot issue commercial paper in an aggregate amount exceeding available capacity under this credit facility. The line of credit provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

Amended Credit Agreement — In June 2019, SPS entered into an amended five-year credit agreement with a syndicate of banks. The amended credit agreements have substantially the same terms and conditions as the prior credit agreements with the exception of the following:


•	Maturity extended from June 2021 to June 2024; and


•	Borrowing limit increased from $400 million to $500 million.

The line of credit provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

Features of SPS’ credit facility:


^(a)	The SPS credit facility has a financial covenant requiring that the debt-to-total capitalization ratio be less than or equal to 65%.


^(b)	All extension requests are subject to majority bank group approval.

The credit facility has a cross-default provision that SPS will be in default on its borrowings under the facility if SPS or any of its future significant subsidiaries whose total assets exceed 15% of SPS’ total assets default on indebtedness in an aggregate principal amount exceeding $75 million.

If SPS does 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. As of Dec. 31, 2019, SPS was in compliance with all financial covenants.

SPS had the following committed credit facilities available as of Dec. 31, 2019.



Credit Facility ^(a)	Drawn ^(b)	Available
$500	$2	$498


^(a)	This credit facility matures in June 2024.


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

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. SPS had no direct advances on the facility outstanding at Dec. 31, 2019 and 2018.

Long-Term Borrowings and Other Financing Instruments

Generally, all property of SPS is subject to the lien of its first mortgage indenture. Debt premiums, discounts and expenses are amortized over the life of the related debt. The premiums, discounts and expenses for refinanced debt are deferred and amortized over the life of the new issuance.

Long-term debt obligations for SPS as of Dec. 31 (millions of dollars):



Financing Instrument	Interest Rate		Maturity Date	2019			2018
First mortgage bonds	3.30	%	June 15, 2024	$	150		$	150
First mortgage bonds	3.30		June 15, 2024	200			200
Unsecured senior notes	6.00		Oct. 1, 2033	100			100
Unsecured senior notes	6.00		Oct. 1, 2036	250			250
First mortgage bonds	4.50		Aug. 15, 2041	200			200
First mortgage bonds	4.50		Aug. 15, 2041	100			100
First mortgage bonds	4.50		Aug. 15, 2041	100			100
First mortgage bonds	3.40		Aug. 15, 2046	300			300
First mortgage bonds	3.70		Aug. 15, 2047	450			450
First mortgage bonds ^(b)	4.40		Nov. 15, 2048	300			300
First mortgage bonds ^(a)	3.75		June 15, 2049	300			—
Unamortized discount				(7		)	(4		)
Unamortized debt issuance cost				(23		)	(20		)
Total long-term debt				$	2,420		$	2,126


^(a)	2019 financing


^(b)	2018 financing

Maturities of long-term debt:



(Millions of Dollars)
2020	$	—
2021	—
2022	—
2023	—
2024	350

Deferred Financing Costs — Deferred financing costs of approximately $23 million and $20 million, net of amortization, are presented as a deduction from the carrying amount of long-term debt at Dec. 31, 2019 and 2018, respectively. SPS is amortizing these financing costs over the remaining maturity periods of the related debt.

Capital Stock — SPS has the following preferred stock:



Preferred Stock Authorized (Shares)	Par Value of Preferred Stock	Preferred Stock Outstanding (Shares) 2019 and 2018
10,000,000	1.00	—

Dividend Restrictions — SPS dividends are subject to the FERC’s jurisdiction, which prohibits the payment of dividends out of capital accounts. Dividends are solely to be paid from retained earnings. SPS is required to be current on particular interest payments before dividends can be paid.

SPS’ state regulatory commissions additionally impose dividend limitations, which are more restrictive than those imposed by the FERC.

Requirements and actuals as of Dec. 31, 2019:



Equity to Total Capitalization Ratio - Required Range				Equity to Total Capitalization Ratio - Actual ^(a)
Low		High		2019
45.0	%	55.0	%	54.4	%


^(a)	Excludes short-term debt.



Unrestricted Retained Earnings			Total Capitalization			Limit on Total Capitalization ^(a)
$	535.0	million	$	5.3	billion	N/A

^(a) SPS may not pay a dividend that would cause it to lose its investment grade bond rating.

Debt-to-Total Capitalization Ratio^(a)

Amount Facility May Be Increased (millions)

Additional Periods for Which a One-Year Extension May Be Requested ^(b)