10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from    to

Commission File Number: 001-03789

Southwestern Public Service Company

(Exact Name of Registrant as Specified in its Charter)

New Mexico			75-0575400
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)
790 South Buchanan Street	Amarillo	Texas	79101
(Address of Principal Executive Offices)			(Zip Code)

(303)	571-7511
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒Yes  ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes   ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at April 28, 2022
Common Stock, $1.00 par value	100 shares

Southwestern Public Service Company meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) to such Form 10-Q.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION
Item 1 —	Financial Statements (unaudited)	4
	Statements of Income	4
	Statements of Cash Flows	5
	Balance Sheets	6
	Statements of Common Stockholder’s Equity	7
	Notes to Financial Statements	8
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 4 —	Controls and Procedures	15
PART II	OTHER INFORMATION
Item 1 —	Legal Proceedings	15
Item 1A —	Risk Factors	15
Item 6 —	Exhibits	16
SIGNATURES		17

This Form 10-Q is filed by SPS, a New Mexico corporation. SPS is a wholly owned subsidiary of Xcel Energy Inc. Additional information on Xcel Energy is available in various filings with the SEC. This report should be read in its entirety.

Table of Contents

Definitions of Abbreviations

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	United States Environmental Protection Agency
FERC	Federal Energy Regulatory Commission
NMPRC	New Mexico Public Regulation Commission
PUCT	Public Utility Commission of Texas
SEC	Securities and Exchange Commission
Other
BART	Best available retrofit technology
CEO	Chief executive officer
CFO	Chief financial officer
COVID-19	Novel coronavirus
ETR	Effective tax rate
FTR	Financial transmission right
GAAP	United States generally accepted accounting principles
IPP	Independent power producing entity
LP&L	Lubbock Power and Light
OATT	Open access transmission tariff
PPA	Power purchase agreement
PTC	Production tax credit
ROE	Return on equity
RTO	Regional Transmission Organization
SPP	Southwest Power Pool, Inc.
Measurements
MW	Megawatts

Forward-Looking Statements

Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impact on our results of operations, financial condition and cash flows of resettlement calculations and credit losses relating to certain energy transactions, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in SPS’ Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2021 and subsequent filings with the SEC, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: uncertainty around the impacts and duration of the COVID-19 pandemic, including potential impacts resulting from vaccination requirements, quarantine policies or government restrictions, and sales volatility; operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee work force and third-party contractor factors; violations of our Code of Conduct; ability to recover costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations, supply chain constraints, and their impact on capital expenditures and/or the ability of SPS to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; tax laws; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; and costs of potential regulatory penalties; and regulatory changes and/or limitations related to the use of natural gas as an energy source.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

SOUTHWESTERN PUBLIC SERVICE COMPANY

STATEMENTS OF INCOME (UNAUDITED)

(amounts in millions)

	Three Months Ended March 31
	2022		2021
Operating revenues	$	477	$	934
Operating expenses
Electric fuel and purchased power	237		693
Operating and maintenance expenses	72		71
Demand side management expenses	5		4
Depreciation and amortization	78		78
Taxes (other than income taxes)	25		21
Total operating expenses	417		867
Operating income	60		67
Other income, net	—		1
Allowance for funds used during construction — equity	—		1
Interest charges and financing costs
Interest charges — includes other financing costs of $1 and $1, respectively	29		30
Total interest charges and financing costs	29		30
Income before income taxes	31		39
Income tax benefit	(21)		(19)
Net income	$	52	$	58
See Notes to Financial Statements

4

Table of Contents

SOUTHWESTERN PUBLIC SERVICE COMPANY

STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)

	Three Months Ended March 31
	2022		2021
Operating activities
Net income	$	52	$	58
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	79		79
Deferred income taxes	(2)		(19)
Allowance for equity funds used during construction	—		(1)
Provision for bad debts	2		2
Changes in operating assets and liabilities:
Accounts receivable	(26)		(1)
Accrued unbilled revenues	—		3
Inventories	(6)		(17)
Prepayments and other	(8)		21
Accounts payable	—		56
Net regulatory assets and liabilities	3		(95)
Other current liabilities	(3)		(3)
Pension and other employee benefit obligations	1		(15)
Other, net	(3)		(2)
Net cash provided by operating activities	89		66
Investing activities
Utility capital/construction expenditures	(123)		(172)
Investments in utility money pool arrangement	—		(83)
Repayments from utility money pool arrangement	—		83
Net cash used in investing activities	(123)		(172)
Financing activities
Proceeds from (repayments of) short-term borrowings, net	75		(250)
Proceeds from issuance of long-term debt, net	—		247
Borrowings under utility money pool arrangement	202		213
Repayments under utility money pool arrangement	(193)		(213)
Capital contributions from parent	8		304
Dividends paid to parent	(58)		(54)
Net cash provided by financing activities	34		247
Net change in cash, cash equivalents and restricted cash	—		141
Cash, cash equivalents and restricted cash at beginning of period	1		6
Cash, cash equivalents and restricted cash at end of period	$	1	$	147
Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(21)	$	(19)
Cash received for income taxes, net	3		14
Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	38	$	54
Inventory transfers to property, plant and equipment	4		7
Allowance for equity funds used during construction	—		1

See Notes to Financial Statements

5

Table of Contents

SOUTHWESTERN PUBLIC SERVICE COMPANY

BALANCE SHEETS (UNAUDITED)

(amounts in millions, except share and per share data)

	March 31, 2022		Dec. 31, 2021
Assets
Current assets
Cash and cash equivalents	$	1	$	1
Accounts receivable, net	137		115
Accounts receivable from affiliates	10		9
Accrued unbilled revenues	125		125
Inventories	53		51
Regulatory assets	130		193
Derivative instruments	30		30
Prepaid taxes	20		3
Prepayments and other	11		21
Total current assets	517		548
Property, plant and equipment, net	7,891		7,838
Other assets
Regulatory assets	447		380
Derivative instruments	10		6
Operating lease right-of-use assets	456		463
Other	28		27
Total other assets	941		876
Total assets	$	9,349	$	9,262
Liabilities and Equity
Current liabilities
Short-term debt	$	212	$	137
Borrowings under utility money pool arrangement	100		91
Accounts payable	172		172
Accounts payable to affiliates	18		16
Regulatory liabilities	52		54
Taxes accrued	33		47
Accrued interest	38		30
Dividends payable to parent	53		58
Derivative instruments	4		4
Operating lease liabilities	30		30
Other	27		24
Total current liabilities	739		663
Deferred credits and other liabilities
Deferred income taxes	703		702
Regulatory liabilities	721		709
Asset retirement obligations	117		116
Derivative instruments	5		6
Pension and employee benefit obligations	8		8
Operating lease liabilities	426		434
Other	7		8
Total deferred credits and other liabilities	1,987		1,983
Commitments and contingencies
Capitalization
Long-term debt	3,013		3,013
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at March 31, 2022 and Dec. 31, 2021, respectively	—		—
Additional paid in capital	3,099		3,091
Retained earnings	512		513
Accumulated other comprehensive loss	(1)		(1)
Total common stockholder's equity	3,610		3,603
Total liabilities and equity	$	9,349	$	9,262

See Notes to Financial Statements

6

Table of Contents

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 Stockholder's Equity
	Shares	Par Value		Additional Paid In Capital
Three Months Ended March 31, 2022 and 2021
Balance at Dec. 31, 2020	100	$	—	$	2,790	$	509	$	(1)	$	3,298
Net income						58				58
Dividends declared to parent						(52)				(52)
Contributions of capital by parent				304						304
Balance at March 31, 2021	100	$	—	$	3,094	$	515	$	(1)	$	3,608
Balance at Dec. 31, 2021	100	$	—	$	3,091	$	513	$	(1)	$	3,603
Net income						52				52
Dividends declared to parent						(53)				(53)
Contributions of capital by parent				8						8
Balance at March 31, 2022	100	$	—	$	3,099	$	512	$	(1)	$	3,610

7

Table of Contents

SOUTHWESTERN PUBLIC SERVICE COMPANY

Notes to Financial Statements (UNAUDITED)

In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly, in accordance with GAAP, the financial position of SPS as of March 31, 2022 and Dec. 31, 2021; the results of SPS’ operations, including the components of net income and changes in stockholder’s equity for the three months ended March 31, 2022 and 2021; and SPS’ cash flows for the three months ended March 31, 2022 and 2021.

All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after March 31, 2022 up to the date of issuance of these financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2021 balance sheet information has been derived from the audited 2021 financial statements included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2021.

Notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the financial statements and notes thereto included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2021, filed with the SEC on Feb. 23, 2022.

Due to the seasonality of SPS’ electric sales, interim results are not necessarily an appropriate base from which to project annual results.

1. Summary of Significant Accounting Policies

The significant accounting policies set forth in Note 1 to the financial statements in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2021 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.

2. Accounting Pronouncements

As of March 31, 2022, there was no material impact from the recent adoption of new accounting pronouncements, nor expected material impact from recently issued accounting pronouncements yet to be adopted, on SPS’ financial statements.

3. Selected Balance Sheet Data

(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Accounts receivable, net
Accounts receivable	$	149	$	127
Less allowance for bad debts	(12)		(12)
Accounts receivable, net	$	137	$	115

(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Inventories
Materials and supplies	$	34	$	29
Fuel	19		22
Total inventories	$	53	$	51

(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Property, plant and equipment, net
Electric plant	$	9,734	$	9,639
Plant to be retired (a)	285		299
CWIP	195		171
Total property, plant and equipment	10,214		10,109
Less accumulated depreciation	(2,323)		(2,271)
Property, plant and equipment, net	$	7,891	$	7,838

(a)Includes expected retirement of Tolk and conversion of Harrington to natural gas.

4. 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:

(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2022			Year Ended Dec. 31, 2021
Borrowing limit	$	100		$	100
Amount outstanding at period end	100			91
Average amount outstanding	67			51
Maximum amount outstanding	100			100
Weighted average interest rate, computed on a daily basis	0.13		%	0.05		%
Weighted average interest rate at period end	0.19			0.05

Commercial Paper — Commercial paper outstanding for SPS:

(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2022			Year Ended Dec. 31, 2021
Borrowing limit	$	500		$	500
Amount outstanding at period end	212			137
Average amount outstanding	233			63
Maximum amount outstanding	324			342
Weighted average interest rate, computed on a daily basis	0.39		%	0.21		%
Weighted average interest rate at period end	0.83			0.26

Letters of Credit — SPS uses letters of credit, generally with terms of one year, to provide financial guarantees for certain obligations. At both March 31, 2022 and Dec. 31, 2021, there were $2 million of letters of credit outstanding under the credit facility. Amounts approximate their fair value and are subject to fees.

Revolving Credit Facility — In order to issue its commercial paper, 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 exceeding available capacity under this credit facility. The credit facility provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

8

Table of Contents

SPS has the right to request an extension of the revolving credit facility termination date for two additional one-year periods. All extension requests are subject to majority bank group approval.

As of March 31, 2022, SPS had the following committed revolving credit facility available (in millions of dollars):

Credit Facility (a)		Drawn (b)		Available
$	500	$	214	$	286

(a)Expires in June 2024.

(b)Includes outstanding letters of credit.

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 credit facility outstanding as of March 31, 2022 and Dec. 31, 2021.

5. Revenues

Revenue is classified by the type of goods/services rendered and market/customer type. SPS’ operating revenues consisted of the following:

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Major revenue types
Revenue from contracts with customers:
Residential	$	97	$	91
Commercial and Industrial	222		189
Other	8		9
Total retail	327		289
Wholesale	69		558
Transmission	72		71
Other	3		2
Total revenue from contracts with customers	471		920
Alternative revenue and other	6		14
Total revenues	$	477	$	934

6. Income Taxes

Note 7 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2021 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.

Difference between the statutory rate and ETR:

	Three Months Ended March 31
	2022		2021
Federal statutory rate	21.0	%	21.0	%
State tax (net of federal tax effect)	2.5		2.6
Decreases in tax from:
Wind PTCs	(87.2)		(65.5)
Plant regulatory differences (a)	(4.0)		(4.7)
Amortization of excess nonplant deferred taxes	(1.1)		(1.2)
Other (net)	1.1		(0.9)
Effective income tax rate	(67.7)	%	(48.7)	%

(a)Regulatory differences for income tax primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions.

7. Fair Value of Financial Assets and Liabilities

Fair Value Measurements

Accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires disclosures about assets and liabilities measured at fair value. A hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance.

•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 net asset value.

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 utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations and are generally assigned a Level 2 classification. When contractual settlements relate to inactive delivery locations 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 a 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.

9

Table of Contents

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 immaterial 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 interest payments on certain floating rate debt obligations or 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 March 31, 2022, accumulated other comprehensive loss related to interest rate derivatives included immaterial net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings. As of March 31, 2022, SPS had no unsettled interest rate derivatives.

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. Sharing of any margins is determined through state regulatory proceedings as well as the operation of the FERC approved joint operating agreement.

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.

Amounts in Millions (a)	March 31, 2022	Dec. 31, 2021
Megawatt hours of electricity	10	8

(a)Amounts are not reflective of net positions in the underlying commodities.

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 March 31, 2022, two of the eight most significant counterparties for these activities, comprising $8 million, or 21%, of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. Five of the eight most significant counterparties, comprising $28 million, or 78%, of this credit exposure, were not rated by external ratings agencies, but based on SPS’ internal analysis, had credit quality consistent with investment grade. One of these significant counterparties, comprising an immaterial amount of this credit exposure, had credit quality less than investment grade, based on internal analysis. All eight of these significant counterparties are municipal or cooperative electric entities, RTOs or other utilities.

Impact of Derivative Activities on Income and Accumulated Other Comprehensive Loss — There were no gains or immaterial losses related to interest rate derivatives reclassified from accumulated other comprehensive loss into earnings for the three months ended March 31, 2022 and 2021.

Changes in the fair value of FTRs resulting in pre-tax net gains of $1 million and $2 million recognized for the three months ended March 31, 2022 and 2021, respectively, which were reclassified as regulatory assets or 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 losses of $12 million and gains of $4 million were recognized for the three months ended March 31, 2022, and 2021, 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 months ended March 31, 2022 and 2021.

10

Table of Contents

Recurring Fair Value Measurements — SPS’ derivative assets and liabilities measured at fair value on a recurring basis were as follows:

	March 31, 2022												Dec. 31, 2021
	Fair Value						Fair Value Total		Netting (a)		Total		Fair Value						Fair Value Total		Netting (a)		Total
(Millions of Dollars)	Level 1		Level 2		Level 3								Level 1		Level 2		Level 3
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	28	$	28	$	(1)	$	27	$	—	$	—	$	27	$	27	$	—	$	27
Total current derivative assets	$	—	$	—	$	28	$	28	$	(1)	27		$	—	$	—	$	27	$	27	$	—	27
PPAs (b)											3												3
Current derivative instruments											$	30											$	30
Noncurrent derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	5	$	5	$	—	$	5	$	—	$	—	$	—	$	—	$	—	$	—
Total noncurrent derivative assets	$	—	$	—	$	5	$	5	$	—	5		$	—	$	—	$	—	$	—	$	—	—
PPAs (b)											5												6
Noncurrent derivative instruments											$	10											$	6
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	1	$	1	$	(1)	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total current derivative liabilities	$	—	$	—	$	1	$	1	$	(1)	—		$	—	$	—	$	—	$	—	$	—	—
PPAs (b)											4												4
Current derivative instruments											$	4											$	4
Noncurrent derivative liabilities
PPAs (b)											$	5											$	6
Noncurrent derivative instruments											$	5											$	6

(a)SPS nets derivative instruments and related collateral on its balance sheets when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at March 31, 2022 and Dec. 31, 2021. At March 31, 2022 and Dec. 31, 2021, derivative assets and liabilities include no obligations to return cash collateral or rights to reclaim cash collateral. The counterparty netting excludes settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

(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.

Changes in Level 3 commodity derivatives for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Balance at Jan 1	$	27	$	7
Purchases	4		—
Settlements	(33)		(9)
Net transactions recorded during the period:
Net gains (losses) recognized as regulatory assets and liabilities	34		14
Balance at March 31	$	32	$	12

SPS recognizes transfers between levels as of the beginning of each period. There were no transfers of amounts between levels for derivative instruments for the three months ended March 31, 2022 and 2021.

Fair Value of Long-Term Debt

Other financial instruments for which the carrying amount did not equal fair value:

	March 31, 2022				Dec. 31, 2021
(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt	$	3,013	$	3,057	$	3,013	$	3,454

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 March 31, 2022 and Dec. 31, 2021 and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.

11

Table of Contents

8. Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost (Credit)

	Three Months Ended March 31
	2022		2021
(Millions of Dollars)	Pension Benefits
Service cost	$	2	$	2
Interest cost (a)	4		4
Expected return on plan assets (a)	(8)		(7)
Amortization of net loss (a)	3		4
Net periodic benefit cost	$	1	$	3
Effects of regulation	1		—
Net benefit cost recognized for financial reporting	$	2	$	3

(a)The components of net periodic cost other than the service cost component are included in the line item “Other income (expense), net” in the statements of income or capitalized on the balance sheets as a regulatory asset.

In January 2022, contributions of $50 million were made across four of Xcel Energy’s pension plans, none of which was attributable to SPS. Xcel Energy does not expect additional pension contributions during 2022.

9. Commitments and Contingencies

The following includes commitments, contingencies and unresolved contingencies that are material to SPS’ financial position.

Legal

SPS is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories.

In such cases, there is considerable uncertainty regarding the timing or ultimate resolution, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on SPS’ financial statements. Legal fees are generally expensed as incurred.

Rate Matters and Other

SPS is involved in various regulatory proceedings arising in the ordinary course of business. Until resolution, typically in the form of a rate order, uncertainties may exist regarding the ultimate rate treatment for certain activities and transactions. Amounts have been recognized for probable and reasonably estimable losses that may result. Unless otherwise disclosed, any reasonably possible range of loss in excess of any recognized amount is not expected to have a material effect on the financial statements.

SPP OATT Upgrade Costs — Costs of transmission upgrades may be recovered from other SPP customers whose transmission service depends on capacity enabled by the upgrade under the SPP OATT. SPP had not been charging its customers for these upgrades, even though the SPP OATT had allowed SPP to do so since 2008. In 2016, the FERC granted SPP’s request to recover these previously unbilled charges and SPP subsequently billed SPS approximately $13 million.

In July 2018, SPS’ appeal to the D.C. Circuit over the FERC rulings granting SPP the right to recover previously unbilled charges was remanded to the FERC. In February 2019, the FERC reversed its 2016 decision and ordered SPP to refund charges retroactively collected from its transmission customers, including SPS, related to periods before September 2015. In March 2020, SPP and Oklahoma Gas & Electric separately filed petitions for review of the FERC’s orders at the D.C. Circuit. In August 2021, the D.C. Circuit issued a decision denying these appeals and upholding the FERC’s orders. Refunds received by SPS are expected to be given back to SPS customers through future rates.

In October 2017, SPS filed a separate related complaint asserting SPP assessed upgrade charges to SPS in violation of the SPP OATT. In March 2018, the FERC issued an order denying the SPS complaint. SPS filed a request for rehearing in April 2018. The FERC issued a tolling order granting a rehearing for further consideration in May 2018. If SPS’ complaint results in additional charges or refunds, SPS will seek to recover or refund the amount through future SPS customer rates. In October 2020, SPS filed a petition for review of the FERC’s March 2018 order and May 2018 tolling order at the D.C. Circuit. In February 2022, FERC issued an order rejecting SPS’ request for hearing. SPS has appealed that order. That appeal has been combined with SPS’ prior appeal.

Contract Termination — SPS and LP&L have a 25-year, 170 MW partial requirements contract. In May 2021, SPS and LP&L finalized a settlement which would terminate the contract upon LP&L’s move from the SPP to the Electric Reliability Council of Texas (expected in 2023). The settlement agreement requires LP&L to pay SPS $78 million, to the benefit of SPS’ remaining customers. LP&L would remain obligated to pay for SPP transmission charges associated with LP&L’s load in SPP. The settlement agreement is subject to approval by the PUCT and FERC.

Environmental

Manufactured Gas Plant, Landfill and Disposal Sites

SPS is remediating a former disposal site. SPS has recognized its best estimate of costs/liabilities from final resolution of these issues, however, the outcome and timing are unknown. In addition, there may be insurance recovery and/or recovery from other potentially responsible parties, offsetting a portion of costs incurred.

Environmental Requirements — Air

Reasonable Progress Rule: In 2016, the EPA adopted a final rule establishing a federal implementation plan for reasonable further progress under the regional haze program for the state of Texas. The rule imposes sulfur dioxide emission limitations that would require the installation of dry scrubbers on Tolk Units 1 and 2; compliance would have been required by February 2021. Investment costs associated with dry scrubbers could be $600 million. SPS appealed the EPA’s decision and obtained a stay of the final rule.

12

Table of Contents

In March 2017, the Fifth Circuit remanded the rule to the EPA for reconsideration, leaving the stay in effect. In a future rulemaking, the EPA will address whether sulfur dioxide emission reductions beyond those required in the BART alternative rule referenced above are needed at Tolk under the “reasonable progress” requirements. As states are now proceeding with the second regional haze planning period, the EPA may choose not to act on the remanded rule, but could impose additional requirements as part of a BART reconsideration or as part of the second planning period.

Leases

SPS evaluates contracts that may contain leases, including PPAs and arrangements for the use of office space and other facilities, vehicles and equipment. A contract contains a lease if it conveys the exclusive right to control the use of a specific asset.

Components of lease expense:

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Operating leases
PPA capacity payments	$	13	$	13
Other operating leases (a)	2		1
Total operating lease expense (b)	$	15	$	14

(a)Includes immaterial short-term lease expense for 2022 and 2021.

(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 operating and maintenance expense and electric fuel and purchased power.

Commitments under operating leases as of March 31, 2022:

(Millions of Dollars)	PPA Operating Leases		Other Operating Leases		Total Operating Leases
Total minimum obligation	$	532	$	55	$	587
Interest component of obligation	(115)		(16)		(131)
Present value of minimum obligation	$	417	$	39	456
Less current portion					(30)
Noncurrent operating and finance lease liabilities					$	426

Variable Interest Entities

Under certain PPAs, SPS purchases power from IPPs for which SPS is required to reimburse fuel costs, or to participate in tolling arrangements under which SPS procures the natural gas required to produce the energy that they purchase. These specific PPAs create a variable interest in the IPP.

SPS had approximately 1,197 MW of capacity under long-term PPAs at both March 31, 2022 and Dec. 31, 2021 with entities that have been determined to be variable interest entities. SPS concluded that these entities are not required to be consolidated in its financial statements because it does not have the power to direct the activities that most significantly impact the entities’ economic performance. The PPAs have expiration dates through 2041.

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Discussion of financial condition and liquidity for SPS is omitted per conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management’s narrative analysis of the results of operations set forth in General Instruction H(2)(a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).

Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with GAAP, as well as certain non-GAAP financial measures such as ongoing earnings. 

Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that adjusts measures calculated and presented in accordance with GAAP.

SPS’ management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation, and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.

Earnings Adjusted for Certain Items (Ongoing Earnings)

Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items. We use this non-GAAP financial measure to evaluate and provide details of SPS’ core earnings and underlying performance.

We believe this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of SPS. For the three months ended March 31, 2022 and 2021, there were no such adjustments to GAAP earnings and therefore GAAP earnings equal ongoing earnings.

Results of Operations

SPS’ net income was approximately $52 million for the three months ended March 31, 2022 compared with approximately $58 million for the prior year. The decrease was primarily due to taxes (other than income taxes) and impacts associated with Winter Storm Uri, partially offset by favorable sales.

Electric Margin

Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Expenses incurred for electric fuel and purchased power are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues.

Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas and coal. However, these price fluctuations generally have minimal impact on earnings impact due to fuel recovery mechanisms. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and income taxes.

Electric Revenues, Fuel and Purchased Power and Electric Margin

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Electric revenues (a)	$	477	$	934
Electric fuel and purchased power (a)	(237)		(693)
Electric margin	$	240	$	241

(a)The decrease in revenue and electric fuel and purchased power is primarily due to Winter Storm Uri in 2021, resulting in higher fuel prices, as well as additional long-term energy sales/purchases market adjustments and SPP market transactions.

13

Table of Contents

Changes in electric margin:

(Millions of Dollars)	Three Months Ended March 31, 2022 vs. 2021
Regulatory rate outcomes (Texas and New Mexico)	$	12
Sales and demand	13
PTCs flowed back to customers (offset by lower ETR)	(9)
Proprietary commodity trading, net of sharing (a)	(4)
Other (net)	(13)
Total decrease	$	(1)

(a)Includes $4 million of trading margin recognized in the first quarter of 2021, driven by market changes associated with Winter Storm Uri.

Non-Fuel Operating Expense and Other Items

Taxes (other than income taxes) — Taxes (other than income taxes) increased $4 million for the first quarter, primarily driven by an increase in property tax expense.

Income Taxes — Income tax benefit increased $2 million for the first quarter. The increase was primarily driven by lower pretax earnings in 2022 and an increase in wind PTCs. Wind PTCs are largely credited to customers (recorded as a reduction to revenue) and do not have a material impact on net income.

In April 2022, the Internal Revenue Service published inflation factors used to determine the PTC rate. As a result, the 2022 PTC rate on the sale of electricity produced from wind is 2.7 cents per kilowatt hour, compared to 2.5 cents for 2021.

See Note 6 to the financial statements for further information.

Public Utility Regulation and Other

The FERC and state and local regulatory commissions regulate SPS. SPS is subject to rate regulation by state utility regulatory agencies, which have jurisdiction with respect to the rates of electric distribution companies in New Mexico and Texas.

Rates are designed to recover plant investment, operating costs and an allowed return on investment. SPS requests changes in utility rates through commission filings. Changes in operating costs can affect SPS’ financial results, depending on the timing of rate cases and implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and demand side management efforts, and the cost of capital.

In addition, the regulatory commissions authorize the ROE, capital structure and depreciation rates in rate proceedings. Decisions by these regulators can significantly impact SPS’ results of operations.

Except to the extent noted below, the circumstances set forth in Public Utility Regulation included in Item 7 of SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2021 appropriately represent, in all material respects, the current status of public utility regulation and are incorporated herein by reference.

Pending and Recently Concluded Regulatory Proceedings

2021 New Mexico Electric Rate Case — In January 2021, SPS filed an electric rate case with the NMPRC with a current requested base rate increase of $84 million.

In February 2022, the NMPRC approved an uncontested stipulation without modification, which reflected a $62 million rate increase, a change in the depreciation life of the Tolk coal plant to 2032, an equity ratio of 54.72% and a ROE of 9.35% for reconciliation statements and determining the revenue requirements for the Sagamore and Hale wind projects. New rates went into effect on Feb. 26, 2022.

2021 Texas Electric Rate Case — In 2021, SPS filed an electric rate case with the PUCT and its municipalities seeking an increase in base rates of approximately $140 million. The request was based on a ROE of 10.35%, an equity ratio of 54.60%, a rate base of approximately $3.3 billion and a historic test year based on the 12-months ended Dec. 31, 2020.

In January 2022, SPS and intervenors filed a blackbox settlement. Key terms include:

•Base rate increase of $89 million effective back to March 15, 2021.

•A 9.35% ROE and 7.01% weighted average cost of capital for allowance for funds used during construction purposes only.

•Depreciation lives for Tolk moved up to 2034 and Harrington coal assets moved up to 2024.

In February 2022, the Administrative Law Judge issued an order approving interim rates effective March 1, 2022. A PUCT decision is expected in the second quarter of 2022.

Other

Supply Chain

SPS’ ability to meet customer energy requirements, respond to storm-related disruptions and execute our capital expenditure program are dependent on maintaining an efficient supply chain. Manufacturing processes have experienced disruptions related to scarcity of certain raw materials and interruptions in production and shipping. These disruptions have been further exacerbated by inflationary pressures, labor shortages and the impact of international conflicts/issues. SPS continues to monitor the availability of materials and has sought to mitigate impacts by seeking alternative suppliers as necessary.

Winter Storm Uri

In February 2021, the United States experienced Winter Storm Uri. Extreme cold temperatures impacted certain operational assets as well as the availability of renewable generation. The cold weather also affected the country’s supply and demand for natural gas. These factors contributed to extremely high market prices for natural gas and electricity. As a result of the extremely high market prices, SPS incurred net natural gas, fuel and purchased energy costs of approximately $100 million (largely deferred as regulatory assets) in the first quarter.

SPS has electric fuel and purchased energy mechanisms in each jurisdiction for recovering incurred costs. However, February cost increases were deferred for future recovery with recovery proposed over a period of up to two years to significantly mitigate the impact to customer bills. SPS currently has approval for recovery of Winter Storm Uri costs in New Mexico.

14

Table of Contents

Regulatory Overview — In 2021, SPS filed to recover $88 million of Winter Storm Uri costs over 24 months, as part of the Texas fuel surcharge filing.

In January 2022, SPS and other parties filed a stipulation for interim rates. The filing covers all fuel under-collections occurring between January 2020 and August 2021, totaling $121 million. The settlement does not address the prudence of Winter Storm Uri costs nor the retention of $11 million related to market sales during the event. These items will be reviewed through the triennial Fuel Reconciliation proceeding and are subject to a final PUCT decision. Interim rates, designed to collect up to $110 million over a period of 30 months, began on Feb. 1, 2022.

Environmental

Affordable Clean Energy

In July 2019, the EPA adopted the Affordable Clean Energy rule, which requires states to develop plans by 2022 for greenhouse gas reductions from coal-fired power plants. In January 2021, the U.S. Court of Appeals for the D.C. Circuit issued a decision vacating and remanding the Affordable Clean Energy rule. That decision would allow the EPA to proceed with alternate regulation of coal-fired power plants. However, the Court of Appeals decision has been appealed to the U.S Supreme Court, where the Court heard argument in February and is expected to rule by June on the nature and extent of the EPA’s greenhouse gas regulatory authority. If any new rules require additional investment, SPS believes that the cost of these initiatives or replacement generation would be recoverable through rates based on prior state commission practices.

ITEM 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

SPS maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. 

In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the CEO and CFO, allowing timely decisions regarding required disclosure.

As of March 31, 2022, based on an evaluation carried out under the supervision and with the participation of SPS’ management, including the CEO and CFO, of the effectiveness of its disclosure controls and procedures, the CEO and CFO have concluded that SPS’ disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

No changes in SPS’ internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, SPS’ internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

SPS is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation.

Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to, when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss.

For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on SPS’ financial statements. Legal fees are generally expensed as incurred.

See Note 9 to the financial statements and Part I Item 2 for further information.

ITEM 1A — RISK FACTORS

SPS’ risk factors are documented in Item 1A of Part I of its Annual Report on Form 10-K for the year ended Dec. 31, 2021, which is incorporated herein by reference. There have been no material changes from the risk factors previously disclosed in the Form 10-K.

15

Table of Contents

ITEM 6 — EXHIBITS

* Indicates incorporation by reference

Exhibit Number	Description	Report or Registration Statement	Exhibit Reference
3.01*	Amended and Restated Articles of Incorporation, dated Sept. 30, 1997	SPS Form 10-Q for the quarter ended Sept. 30, 2017	3.01
3.02*	Amended and Restated Bylaws of SPS, dated Jan. 25, 2019	SPS Form 10-K for the year ended Dec. 31, 2018	3.02
31.01	Principal Executive Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Principal Financial Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline 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	Inline XBRL Schema
101.CAL	Inline XBRL Calculation
101.DEF	Inline XBRL Definition
101.LAB	Inline XBRL Label
101.PRE	Inline XBRL Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

16

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Southwestern Public Service Company
4/28/2022	By:	/s/ BRIAN J. VAN ABEL
		Brian J. Van Abel
		Executive Vice President, Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

17

EX-31.01

Exhibit 31.01

CERTIFICATION

I, Robert C. Frenzel, certify that:

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.

Date: 4/28/2022

/s/ ROBERT C. FRENZEL

Robert C. Frenzel

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)

1

EX-31.02

Exhibit 31.02

CERTIFICATION

I, Brian J. Van Abel, certify that:

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

Date: 4/28/2022

/s/ BRIAN J. VAN ABEL

Brian J. Van Abel

Executive Vice President, Chief Financial Officer and Director

(Duly Authorized Officer and Principal Financial Officer)

2

EX-32.01

Exhibit 32.01

OFFICER CERTIFICATION

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Southwestern Public Service Company (SPS) on Form 10-Q for the quarter ended March 31, 2022, as filed with the SEC on the date hereof (Form 10-Q), each of the undersigned officers of SPS certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(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.

Date: 4/28/2022

/s/ ROBERT C. FRENZEL

Robert C. Frenzel

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)

/s/ BRIAN J. VAN ABEL

Brian J. Van Abel

Executive Vice President, Chief Financial Officer and Director

(Duly Authorized Officer and Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to SPS and will be retained by SPS and furnished to the SEC or its staff upon request.

1

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2022	Apr. 28, 2022
Cover [Abstract]
Entity Registrant Name	SOUTHWESTERN PUBLIC SERVICE CO
Entity Central Index Key	0000092521
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity Tax Identification Number	75-0575400
Entity Incorporation, State or Country Code	NM
Entity Address, Address Line One	790 South Buchanan Street
Entity Address, City or Town	Amarillo
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	79101
City Area Code	(303)
Local Phone Number	571-7511
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		100
Entity File Number	001-03789

XML

STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Operating revenues
Operating revenues	$ 477	$ 934
Operating expenses
Electric fuel and purchased power	237	693
Operating and maintenance expenses	72	71
Demand side management expenses	5	4
Depreciation and amortization	78	78
Taxes (other than income taxes)	25	21
Total operating expenses	417	867
Operating income	60	67
Other income, net	0	1
Allowance for funds used during construction — equity	0	1
Interest charges and financing costs
Interest Expense	29	30
Total interest charges and financing costs	29	30
Income before income taxes	31	39
Income tax benefit	(21)	(19)
Net income	$ 52	$ 58

XML

STATEMENTS OF INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Interest charges and financing costs
Debt Related Commitment Fees and Debt Issuance Costs	$ 1	$ 1

XML

STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Operating activities
Net income	$ 52	$ 58
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	79	79
Deferred income taxes	(2)	(19)
Allowance for equity funds used during construction	0	(1)
Provision for bad debts	2	2
Changes in operating assets and liabilities:
Accounts receivable	(26)	(1)
Accrued unbilled revenues	0	(3)
Inventories	(6)	(17)
Prepayments and other	(8)	21
Accounts payable	0	56
Net regulatory assets and liabilities	3	(95)
Other current liabilities	(3)	(3)
Pension and other employee benefit obligations	1	(15)
Other, net	(3)	(2)
Net cash provided by operating activities	89	66
Investing activities
Utility capital/construction expenditures	(123)	(172)
Investments in utility money pool arrangement	0	83
Repayments from utility money pool arrangement	0	83
Net cash used in investing activities	(123)	(172)
Financing activities
Proceeds from (repayments of) short-term borrowings, net	75	(250)
Proceeds from issuance of long-term debt, net	0	247
Borrowings under utility money pool arrangement	202	213
Repayments under utility money pool arrangement	(193)	(213)
Capital contributions from parent	8	304
Dividends paid to parent	(58)	(54)
Net cash provided by financing activities	34	247
Net change in cash, cash equivalents and restricted cash	0	141
Cash, cash equivalents and restricted cash at beginning of period	1	6
Cash, cash equivalents and restricted cash at end of period	1	147
Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	(21)	(19)
Cash received for income taxes, net	3	14
Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	38	54
Inventory transfers to property, plant and equipment	4	7
Allowance for equity funds used during construction	0	1
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	$ 1	$ 147

XML

BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 1	$ 1
Accounts receivable, net	137	115
Accounts receivable from affiliates	10	9
Accrued unbilled revenues	125	125
Inventories	53	51
Regulatory assets	130	193
Derivative instruments	30	30
Prepaid taxes	20	3
Prepayments and other	11	21
Total current assets	517	548
Property, plant and equipment, net	7,891	7,838
Other assets
Regulatory assets	447	380
Derivative instruments	10	6
Operating lease right-of-use assets	456	463
Other	28	27
Total other assets	941	876
Total assets	9,349	9,262
Current liabilities
Short-term Debt	212	137
Borrowings Payable Under Utility Money Pool Arrangement	100	91
Accounts payable	172	172
Accounts payable to affiliates	18	16
Regulatory liabilities	52	54
Taxes accrued	33	47
Accrued interest	38	30
Dividends payable to parent	53	58
Derivative instruments	4	4
Operating lease liabilities	30	30
Other	27	24
Total current liabilities	739	663
Deferred credits and other liabilities
Deferred income taxes	703	702
Regulatory liabilities	721	709
Asset retirement obligations	117	116
Derivative instruments	5	6
Pension and employee benefit obligations	8	8
Operating lease liabilities	426	434
Other	7	8
Total deferred credits and other liabilities	1,987	1,983
Capitalization
Long-term debt	3,013	3,013
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at March 31, 2022 and Dec. 31, 2021, respectively	0	0
Additional paid in capital	3,099	3,091
Retained earnings	512	513
Accumulated other comprehensive loss	(1)	(1)
Total common stockholder's equity	3,610	3,603
Total liabilities and equity	$ 9,349	$ 9,262

XML

BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common Stock, Shares Authorized	200	200
Common Stock, Par or Stated Value Per Share	$ 1.00	$ 1.00
Common Stock, Shares, Outstanding	100	100

XML

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, 2020		100
Beginning balance at Dec. 31, 2020	$ 3,298	$ 0	$ 2,790	$ 509	$ (1)
Increase (Decrease) in Stockholders' Equity
Net income	58			58
Dividends declared to parent	(52)			(52)
Contributions of capital by parent	304		304
Ending balance (in shares) at Mar. 31, 2021		100
Ending balance at Mar. 31, 2021	$ 3,608	$ 0	3,094	515	(1)
Beginning balance (in shares) at Dec. 31, 2021	100	100
Beginning balance at Dec. 31, 2021	$ 3,603	$ 0	3,091	513	(1)
Increase (Decrease) in Stockholders' Equity
Net income	52			52
Dividends declared to parent	(53)			(53)
Contributions of capital by parent	$ 8		8
Ending balance (in shares) at Mar. 31, 2022	100	100
Ending balance at Mar. 31, 2022	$ 3,610	$ 0	$ 3,099	$ 512	$ (1)

XML

Commitments and Contingencies (Details) - Enviromental $ in Millions	Dec. 31, 2022 USD ($)
Federal Clean Water Act Section 316 (b) | Capital Addition Purchase Commitments
Liability for estimated cost to comply with entrainment regulation	$ 600

XML

Management's Opinion

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Management's Opinion

In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly, in accordance with GAAP, the financial position of SPS as of March 31, 2022 and Dec. 31, 2021; the results of SPS’ operations, including the components of net income and changes in stockholder’s equity for the three months ended March 31, 2022 and 2021; and SPS’ cash flows for the three months ended March 31, 2022 and 2021.

All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after March 31, 2022 up to the date of issuance of these financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2021 balance sheet information has been derived from the audited 2021 financial statements included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2021.

Notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the financial statements and notes thereto included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2021, filed with the SEC on Feb. 23, 2022.

Due to the seasonality of SPS’ electric sales, interim results are not necessarily an appropriate base from which to project annual results.

XML

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	The significant accounting policies set forth in Note 1 to the financial statements in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2021 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.

XML

Accounting Pronouncements	3 Months Ended
	Mar. 31, 2022
Accounting Standards Update and Change in Accounting Principle [Abstract]
Accounting Pronouncements	As of March 31, 2022, there was no material impact from the recent adoption of new accounting pronouncements, nor expected material impact from recently issued accounting pronouncements yet to be adopted, on SPS’ financial statements.

XML

Selected Balance Sheet Data

3 Months Ended

Mar. 31, 2022

Balance Sheet Related Disclosures [Abstract]

Selected Balance Sheet Data

(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Accounts receivable, net
Accounts receivable	$	149	$	127
Less allowance for bad debts	(12)		(12)
Accounts receivable, net	$	137	$	115

(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Inventories
Materials and supplies	$	34	$	29
Fuel	19		22
Total inventories	$	53	$	51

(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Property, plant and equipment, net
Electric plant	$	9,734	$	9,639
Plant to be retired (a)	285		299
CWIP	195		171
Total property, plant and equipment	10,214		10,109
Less accumulated depreciation	(2,323)		(2,271)
Property, plant and equipment, net	$	7,891	$	7,838

XML

Borrowings and Other Financing Instruments

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

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:

(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2022			Year Ended Dec. 31, 2021
Borrowing limit	$	100		$	100
Amount outstanding at period end	100			91
Average amount outstanding	67			51
Maximum amount outstanding	100			100
Weighted average interest rate, computed on a daily basis	0.13		%	0.05		%
Weighted average interest rate at period end	0.19			0.05

Commercial Paper — Commercial paper outstanding for SPS:

(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2022			Year Ended Dec. 31, 2021
Borrowing limit	$	500		$	500
Amount outstanding at period end	212			137
Average amount outstanding	233			63
Maximum amount outstanding	324			342
Weighted average interest rate, computed on a daily basis	0.39		%	0.21		%
Weighted average interest rate at period end	0.83			0.26

Letters of Credit — SPS uses letters of credit, generally with terms of one year, to provide financial guarantees for certain obligations. At both March 31, 2022 and Dec. 31, 2021, there were $2 million of letters of credit outstanding under the credit facility. Amounts approximate their fair value and are subject to fees.

Revolving Credit Facility — In order to issue its commercial paper, 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 exceeding available capacity under this credit facility. The credit facility provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

SPS has the right to request an extension of the revolving credit facility termination date for two additional one-year periods. All extension requests are subject to majority bank group approval.

As of March 31, 2022, SPS had the following committed revolving credit facility available (in millions of dollars):

Credit Facility (a)		Drawn (b)		Available
$	500	$	214	$	286

(a)Expires in June 2024.

(b)Includes outstanding letters of credit.

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 credit facility outstanding as of March 31, 2022 and Dec. 31, 2021.

XML

Revenues

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue

Revenue is classified by the type of goods/services rendered and market/customer type. SPS’ operating revenues consisted of the following:

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Major revenue types
Revenue from contracts with customers:
Residential	$	97	$	91
Commercial and Industrial	222		189
Other	8		9
Total retail	327		289
Wholesale	69		558
Transmission	72		71
Other	3		2
Total revenue from contracts with customers	471		920
Alternative revenue and other	6		14
Total revenues	$	477	$	934

XML

Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

Note 7 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2021 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.

Difference between the statutory rate and ETR:

	Three Months Ended March 31
	2022		2021
Federal statutory rate	21.0	%	21.0	%
State tax (net of federal tax effect)	2.5		2.6
Decreases in tax from:
Wind PTCs	(87.2)		(65.5)
Plant regulatory differences (a)	(4.0)		(4.7)
Amortization of excess nonplant deferred taxes	(1.1)		(1.2)
Other (net)	1.1		(0.9)
Effective income tax rate	(67.7)	%	(48.7)	%

(a)Regulatory differences for income tax primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions.

XML

Fair Value of Financial Assets and Liabilities

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

Fair Value Measurements

Accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires disclosures about assets and liabilities measured at fair value. A hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance.

•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 net asset value.

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 utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations and are generally assigned a Level 2 classification. When contractual settlements relate to inactive delivery locations 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 a 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 immaterial 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 interest payments on certain floating rate debt obligations or 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 March 31, 2022, accumulated other comprehensive loss related to interest rate derivatives included immaterial net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings. As of March 31, 2022, SPS had no unsettled interest rate derivatives.

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. Sharing of any margins is determined through state regulatory proceedings as well as the operation of the FERC approved joint operating agreement.

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.

Amounts in Millions (a)	March 31, 2022	Dec. 31, 2021
Megawatt hours of electricity	10	8

(a)Amounts are not reflective of net positions in the underlying commodities.

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 March 31, 2022, two of the eight most significant counterparties for these activities, comprising $8 million, or 21%, of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. Five of the eight most significant counterparties, comprising $28 million, or 78%, of this credit exposure, were not rated by external ratings agencies, but based on SPS’ internal analysis, had credit quality consistent with investment grade. One of these significant counterparties, comprising an immaterial amount of this credit exposure, had credit quality less than investment grade, based on internal analysis. All eight of these significant counterparties are municipal or cooperative electric entities, RTOs or other utilities.

Impact of Derivative Activities on Income and Accumulated Other Comprehensive Loss — There were no gains or immaterial losses related to interest rate derivatives reclassified from accumulated other comprehensive loss into earnings for the three months ended March 31, 2022 and 2021.

Changes in the fair value of FTRs resulting in pre-tax net gains of $1 million and $2 million recognized for the three months ended March 31, 2022 and 2021, respectively, which were reclassified as regulatory assets or 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 losses of $12 million and gains of $4 million were recognized for the three months ended March 31, 2022, and 2021, 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 months ended March 31, 2022 and 2021.

Recurring Fair Value Measurements — SPS’ derivative assets and liabilities measured at fair value on a recurring basis were as follows:

	March 31, 2022												Dec. 31, 2021
	Fair Value						Fair Value Total		Netting (a)		Total		Fair Value						Fair Value Total		Netting (a)		Total
(Millions of Dollars)	Level 1		Level 2		Level 3								Level 1		Level 2		Level 3
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	28	$	28	$	(1)	$	27	$	—	$	—	$	27	$	27	$	—	$	27
Total current derivative assets	$	—	$	—	$	28	$	28	$	(1)	27		$	—	$	—	$	27	$	27	$	—	27
PPAs (b)											3												3
Current derivative instruments											$	30											$	30
Noncurrent derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	5	$	5	$	—	$	5	$	—	$	—	$	—	$	—	$	—	$	—
Total noncurrent derivative assets	$	—	$	—	$	5	$	5	$	—	5		$	—	$	—	$	—	$	—	$	—	—
PPAs (b)											5												6
Noncurrent derivative instruments											$	10											$	6
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	1	$	1	$	(1)	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total current derivative liabilities	$	—	$	—	$	1	$	1	$	(1)	—		$	—	$	—	$	—	$	—	$	—	—
PPAs (b)											4												4
Current derivative instruments											$	4											$	4
Noncurrent derivative liabilities
PPAs (b)											$	5											$	6
Noncurrent derivative instruments											$	5											$	6

(a)SPS nets derivative instruments and related collateral on its balance sheets when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at March 31, 2022 and Dec. 31, 2021. At March 31, 2022 and Dec. 31, 2021, derivative assets and liabilities include no obligations to return cash collateral or rights to reclaim cash collateral. The counterparty netting excludes settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

(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.

Changes in Level 3 commodity derivatives for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Balance at Jan 1	$	27	$	7
Purchases	4		—
Settlements	(33)		(9)
Net transactions recorded during the period:
Net gains (losses) recognized as regulatory assets and liabilities	34		14
Balance at March 31	$	32	$	12

SPS recognizes transfers between levels as of the beginning of each period. There were no transfers of amounts between levels for derivative instruments for the three months ended March 31, 2022 and 2021.

Fair Value of Long-Term Debt

Other financial instruments for which the carrying amount did not equal fair value:

	March 31, 2022				Dec. 31, 2021
(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt	$	3,013	$	3,057	$	3,013	$	3,454

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 March 31, 2022 and Dec. 31, 2021 and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.

XML

Benefit Plans and Other Postretirement Benefits

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost (Credit)

	Three Months Ended March 31
	2022		2021
(Millions of Dollars)	Pension Benefits
Service cost	$	2	$	2
Interest cost (a)	4		4
Expected return on plan assets (a)	(8)		(7)
Amortization of net loss (a)	3		4
Net periodic benefit cost	$	1	$	3
Effects of regulation	1		—
Net benefit cost recognized for financial reporting	$	2	$	3

(a)The components of net periodic cost other than the service cost component are included in the line item “Other income (expense), net” in the statements of income or capitalized on the balance sheets as a regulatory asset.

In January 2022, contributions of $50 million were made across four of Xcel Energy’s pension plans, none of which was attributable to SPS. Xcel Energy does not expect additional pension contributions during 2022.

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

The following includes commitments, contingencies and unresolved contingencies that are material to SPS’ financial position.

Legal

SPS is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories.

In such cases, there is considerable uncertainty regarding the timing or ultimate resolution, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on SPS’ financial statements. Legal fees are generally expensed as incurred.

Rate Matters and Other

SPS is involved in various regulatory proceedings arising in the ordinary course of business. Until resolution, typically in the form of a rate order, uncertainties may exist regarding the ultimate rate treatment for certain activities and transactions. Amounts have been recognized for probable and reasonably estimable losses that may result. Unless otherwise disclosed, any reasonably possible range of loss in excess of any recognized amount is not expected to have a material effect on the financial statements.

SPP OATT Upgrade Costs — Costs of transmission upgrades may be recovered from other SPP customers whose transmission service depends on capacity enabled by the upgrade under the SPP OATT. SPP had not been charging its customers for these upgrades, even though the SPP OATT had allowed SPP to do so since 2008. In 2016, the FERC granted SPP’s request to recover these previously unbilled charges and SPP subsequently billed SPS approximately $13 million.

In July 2018, SPS’ appeal to the D.C. Circuit over the FERC rulings granting SPP the right to recover previously unbilled charges was remanded to the FERC. In February 2019, the FERC reversed its 2016 decision and ordered SPP to refund charges retroactively collected from its transmission customers, including SPS, related to periods before September 2015. In March 2020, SPP and Oklahoma Gas & Electric separately filed petitions for review of the FERC’s orders at the D.C. Circuit. In August 2021, the D.C. Circuit issued a decision denying these appeals and upholding the FERC’s orders. Refunds received by SPS are expected to be given back to SPS customers through future rates.

In October 2017, SPS filed a separate related complaint asserting SPP assessed upgrade charges to SPS in violation of the SPP OATT. In March 2018, the FERC issued an order denying the SPS complaint. SPS filed a request for rehearing in April 2018. The FERC issued a tolling order granting a rehearing for further consideration in May 2018. If SPS’ complaint results in additional charges or refunds, SPS will seek to recover or refund the amount through future SPS customer rates. In October 2020, SPS filed a petition for review of the FERC’s March 2018 order and May 2018 tolling order at the D.C. Circuit. In February 2022, FERC issued an order rejecting SPS’ request for hearing. SPS has appealed that order. That appeal has been combined with SPS’ prior appeal.

Contract Termination — SPS and LP&L have a 25-year, 170 MW partial requirements contract. In May 2021, SPS and LP&L finalized a settlement which would terminate the contract upon LP&L’s move from the SPP to the Electric Reliability Council of Texas (expected in 2023). The settlement agreement requires LP&L to pay SPS $78 million, to the benefit of SPS’ remaining customers. LP&L would remain obligated to pay for SPP transmission charges associated with LP&L’s load in SPP. The settlement agreement is subject to approval by the PUCT and FERC.

Environmental

Manufactured Gas Plant, Landfill and Disposal Sites

SPS is remediating a former disposal site. SPS has recognized its best estimate of costs/liabilities from final resolution of these issues, however, the outcome and timing are unknown. In addition, there may be insurance recovery and/or recovery from other potentially responsible parties, offsetting a portion of costs incurred.

Leases

SPS evaluates contracts that may contain leases, including PPAs and arrangements for the use of office space and other facilities, vehicles and equipment. A contract contains a lease if it conveys the exclusive right to control the use of a specific asset.

Components of lease expense:

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Operating leases
PPA capacity payments	$	13	$	13
Other operating leases (a)	2		1
Total operating lease expense (b)	$	15	$	14

(a)Includes immaterial short-term lease expense for 2022 and 2021.

(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 operating and maintenance expense and electric fuel and purchased power.

Commitments under operating leases as of March 31, 2022:

(Millions of Dollars)	PPA Operating Leases		Other Operating Leases		Total Operating Leases
Total minimum obligation	$	532	$	55	$	587
Interest component of obligation	(115)		(16)		(131)
Present value of minimum obligation	$	417	$	39	456
Less current portion					(30)
Noncurrent operating and finance lease liabilities					$	426

Variable Interest Entities

Under certain PPAs, SPS purchases power from IPPs for which SPS is required to reimburse fuel costs, or to participate in tolling arrangements under which SPS procures the natural gas required to produce the energy that they purchase. These specific PPAs create a variable interest in the IPP.

SPS had approximately 1,197 MW of capacity under long-term PPAs at both March 31, 2022 and Dec. 31, 2021 with entities that have been determined to be variable interest entities. SPS concluded that these entities are not required to be consolidated in its financial statements because it does not have the power to direct the activities that most significantly impact the entities’ economic performance. The PPAs have expiration dates through 2041.

XML

Selected Balance Sheet Data (Tables)

3 Months Ended

Mar. 31, 2022

Balance Sheet Related Disclosures [Abstract]

Accounts Receivable, Net

(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Accounts receivable, net
Accounts receivable	$	149	$	127
Less allowance for bad debts	(12)		(12)
Accounts receivable, net	$	137	$	115

Inventories

(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Inventories
Materials and supplies	$	34	$	29
Fuel	19		22
Total inventories	$	53	$	51

Property, Plant and Equipment, Net

(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Property, plant and equipment, net
Electric plant	$	9,734	$	9,639
Plant to be retired (a)	285		299
CWIP	195		171
Total property, plant and equipment	10,214		10,109
Less accumulated depreciation	(2,323)		(2,271)
Property, plant and equipment, net	$	7,891	$	7,838

XML

Borrowings and Other Financing Instruments (Tables)

3 Months Ended

Mar. 31, 2022

Borrowings and Other Financing Instruments [Abstract]

Credit Facilities

As of March 31, 2022, SPS had the following committed revolving credit facility available (in millions of dollars):

Credit Facility (a)		Drawn (b)		Available
$	500	$	214	$	286

(a)Expires in June 2024.

(b)Includes outstanding letters of credit.

Money Pool

Borrowings and Other Financing Instruments [Abstract]

Short-Term Borrowings

Money pool borrowings for SPS:

(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2022			Year Ended Dec. 31, 2021
Borrowing limit	$	100		$	100
Amount outstanding at period end	100			91
Average amount outstanding	67			51
Maximum amount outstanding	100			100
Weighted average interest rate, computed on a daily basis	0.13		%	0.05		%
Weighted average interest rate at period end	0.19			0.05

Commercial Paper

Borrowings and Other Financing Instruments [Abstract]

Short-Term Borrowings

Commercial paper outstanding for SPS:

(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2022			Year Ended Dec. 31, 2021
Borrowing limit	$	500		$	500
Amount outstanding at period end	212			137
Average amount outstanding	233			63
Maximum amount outstanding	324			342
Weighted average interest rate, computed on a daily basis	0.39		%	0.21		%
Weighted average interest rate at period end	0.83			0.26

XML

Revenues (Tables)

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

SPS’ operating revenues consisted of the following:

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Major revenue types
Revenue from contracts with customers:
Residential	$	97	$	91
Commercial and Industrial	222		189
Other	8		9
Total retail	327		289
Wholesale	69		558
Transmission	72		71
Other	3		2
Total revenue from contracts with customers	471		920
Alternative revenue and other	6		14
Total revenues	$	477	$	934

XML

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Difference between the statutory rate and ETR:

	Three Months Ended March 31
	2022		2021
Federal statutory rate	21.0	%	21.0	%
State tax (net of federal tax effect)	2.5		2.6
Decreases in tax from:
Wind PTCs	(87.2)		(65.5)
Plant regulatory differences (a)	(4.0)		(4.7)
Amortization of excess nonplant deferred taxes	(1.1)		(1.2)
Other (net)	1.1		(0.9)
Effective income tax rate	(67.7)	%	(48.7)	%

(a)Regulatory differences for income tax primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions.

XML

Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Gross Notional Amounts of Commodity FTRs

Amounts in Millions (a)	March 31, 2022	Dec. 31, 2021
Megawatt hours of electricity	10	8

(a)Amounts are not reflective of net positions in the underlying commodities.

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 were as follows:

	March 31, 2022												Dec. 31, 2021
	Fair Value						Fair Value Total		Netting (a)		Total		Fair Value						Fair Value Total		Netting (a)		Total
(Millions of Dollars)	Level 1		Level 2		Level 3								Level 1		Level 2		Level 3
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	28	$	28	$	(1)	$	27	$	—	$	—	$	27	$	27	$	—	$	27
Total current derivative assets	$	—	$	—	$	28	$	28	$	(1)	27		$	—	$	—	$	27	$	27	$	—	27
PPAs (b)											3												3
Current derivative instruments											$	30											$	30
Noncurrent derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	5	$	5	$	—	$	5	$	—	$	—	$	—	$	—	$	—	$	—
Total noncurrent derivative assets	$	—	$	—	$	5	$	5	$	—	5		$	—	$	—	$	—	$	—	$	—	—
PPAs (b)											5												6
Noncurrent derivative instruments											$	10											$	6
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	1	$	1	$	(1)	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total current derivative liabilities	$	—	$	—	$	1	$	1	$	(1)	—		$	—	$	—	$	—	$	—	$	—	—
PPAs (b)											4												4
Current derivative instruments											$	4											$	4
Noncurrent derivative liabilities
PPAs (b)											$	5											$	6
Noncurrent derivative instruments											$	5											$	6

(a)SPS nets derivative instruments and related collateral on its balance sheets when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at March 31, 2022 and Dec. 31, 2021. At March 31, 2022 and Dec. 31, 2021, derivative assets and liabilities include no obligations to return cash collateral or rights to reclaim cash collateral. The counterparty netting excludes settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

(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.

Changes in Level 3 Commodity Derivatives

Changes in Level 3 commodity derivatives for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Balance at Jan 1	$	27	$	7
Purchases	4		—
Settlements	(33)		(9)
Net transactions recorded during the period:
Net gains (losses) recognized as regulatory assets and liabilities	34		14
Balance at March 31	$	32	$	12

Carrying Amount and Fair Value of Long-term Debt

Other financial instruments for which the carrying amount did not equal fair value:

	March 31, 2022				Dec. 31, 2021
(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt	$	3,013	$	3,057	$	3,013	$	3,454

XML

Benefit Plans and Other Postretirement Benefits (Tables)

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost (Credit)

Components of Net Periodic Benefit Cost (Credit)

	Three Months Ended March 31
	2022		2021
(Millions of Dollars)	Pension Benefits
Service cost	$	2	$	2
Interest cost (a)	4		4
Expected return on plan assets (a)	(8)		(7)
Amortization of net loss (a)	3		4
Net periodic benefit cost	$	1	$	3
Effects of regulation	1		—
Net benefit cost recognized for financial reporting	$	2	$	3

(a)The components of net periodic cost other than the service cost component are included in the line item “Other income (expense), net” in the statements of income or capitalized on the balance sheets as a regulatory asset.

^[1]

[1] The components of net periodic cost other than the service cost component are included in the line item “Other income (expense), net” in the statements of income or capitalized on the balance sheets as a regulatory asset.

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Lease, Cost

Components of lease expense:

	Three Months Ended March 31
(Millions of Dollars)	2022		2021
Operating leases
PPA capacity payments	$	13	$	13
Other operating leases (a)	2		1
Total operating lease expense (b)	$	15	$	14

(a)Includes immaterial short-term lease expense for 2022 and 2021.

(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 operating and maintenance expense and electric fuel and purchased power.

Lessee, Operating Lease, Liability, Maturity

Commitments under operating leases as of March 31, 2022:

(Millions of Dollars)	PPA Operating Leases		Other Operating Leases		Total Operating Leases
Total minimum obligation	$	532	$	55	$	587
Interest component of obligation	(115)		(16)		(131)
Present value of minimum obligation	$	417	$	39	456
Less current portion					(30)
Noncurrent operating and finance lease liabilities					$	426

XML

Selected Balance Sheet Data Accounts Receivable, Net (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Accounts receivable, net
Accounts receivable	$ 149	$ 127
Less allowance for bad debts	(12)	(12)
Accounts receivable, net	$ 137	$ 115

XML

Selected Balance Sheet Data Selected Balance Sheet Data Inventories (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Inventories	$ 53	$ 51
Inventory, Net	53	51
Materials and supplies
Inventories	34	29
Fuel
Inventories	$ 19	$ 22

XML

Selected Balance Sheet Data Balance Sheet Related Disclosures, Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions		Mar. 31, 2022	Dec. 31, 2021
Public Utility, Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross		$ 10,214	$ 10,109
Accumulated depreciation		(2,323)	(2,271)
Property, plant and equipment, net		7,891	7,838
Electric plant
Public Utility, Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross		9,734	9,639
Plant to be Retired
Public Utility, Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	[1]	285	299
Construction work in progress
Public Utility, Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross		$ 195	$ 171

[1] Includes expected retirement of Tolk and conversion of Harrington to natural gas.

XML

Borrowings and Other Financing Instruments - Money Pool (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Short-term Debt [Line Items]
Short-term Debt	$ 212	$ 137
Money Pool
Short-term Debt [Line Items]
Borrowing limit	100	100
Short-term Debt	100	91
Average amount outstanding	67	51
Maximum amount outstanding	$ 100	$ 100
Weighted average interest rate, computed on a daily basis	0.13%	0.05%
Weighted average interest rate at period end	0.19%	0.05%
Commercial Paper
Short-term Debt [Line Items]
Borrowing limit	$ 500	$ 500
Short-term Debt	212	137
Average amount outstanding	233	63
Maximum amount outstanding	$ 324	$ 342
Weighted average interest rate, computed on a daily basis	0.39%	0.21%
Weighted average interest rate at period end	0.83%	0.26%

XML

Borrowings and Other Financing Instruments - Commercial Paper (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Short-term Debt [Line Items]
Short-term Debt	$ 212	$ 137
Commercial Paper
Short-term Debt [Line Items]
Borrowing limit	500	500
Short-term Debt	212	137
Average amount outstanding	233	63
Maximum amount outstanding	$ 324	$ 342
Weighted average interest rate, computed on a daily basis	0.39%	0.21%
Weighted average interest rate at period end	0.83%	0.26%

XML

Borrowings and Other Financing Instruments - Letters of Credit (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Line of Credit Facility [Line Items]
Short-term Debt	$ 212,000,000	$ 137,000,000
Letter of Credit
Line of Credit Facility [Line Items]
Short-term Debt	$ 2,000,000	2,000,000
Debt Instrument, Term	1 year
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Direct advances on the credit facility outstanding	$ 0	$ 0

XML

Borrowings and Other Financing Instruments - Credit Facility (Details)		3 Months Ended
		Mar. 31, 2022 USD ($) Plan	Dec. 31, 2021 USD ($)
Line of Credit Facility [Line Items]
Number of extension you can request | Plan		2
Credit Facility
Line of Credit Facility [Line Items]
Credit Facility	[1]	$ 500,000,000
Outstanding	[2]	214,000,000
Available		286,000,000
Direct advances on the credit facility outstanding		$ 0	$ 0

[1] Expires in June 2024

[2] Includes outstanding letters of credit.

XML

Borrowings and Other Financing Instruments - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Short-term Debt	$ 212	$ 137

XML

Revenues (Details) - Regulated Electric - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	$ 471	$ 920
Total revenues
Disaggregation of Revenue [Line Items]
Total revenues	477	934
Retail
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	327	289
Retail | Residential
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	97	91
Retail | C&I
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	222	189
Retail | Other
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	8	9
Wholesale
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	69	558
Transmission
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	72	71
Other
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	3	2
Alternative and Other
Disaggregation of Revenue [Line Items]
Alternative revenue and other	$ 6	$ 14

XML

Income Taxes (Details)		3 Months Ended
		Mar. 31, 2022	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Federal statutory rate, percent		21.00%	21.00%
State tax (net of federal tax effect), percent		2.50%	2.60%
Wind PTCs, percent		(87.20%)	(65.50%)
Plant regulatory differences, percent	[1]	(4.00%)	(4.70%)
Other tax credits, percent		(1.10%)	(1.20%)
Other (net), percent		1.10%	(0.90%)
Effective income tax rate, percent		(67.70%)	(48.70%)

[1] Regulatory differences for income tax primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions.

XML

Fair Value of Financial Assets and Liabilities - Commodity Derivatives (Details) - MWh MWh in Millions		Mar. 31, 2022	Dec. 31, 2021
Electric Commodity [Member]
Derivative [Line Items]
Mwh of electricity	[1]	10	8

[1] Amounts are not reflective of net positions in the underlying commodities.

XML

Fair Value of Financial Assets and Liabilities - Consideration of Credit Risk Concentrations (Details) - Credit Concentration Risk $ in Millions	Mar. 31, 2022 USD ($) Counterparty
Derivative [Line Items]
Significant counterparties	8
Municipal or cooperative electric entities or other utilities
Derivative [Line Items]
Significant counterparties	8
External credit rating, investment grade
Derivative [Line Items]
Significant counterparties	2
Credit exposure | $	$ 8
Credit exposure, percentage	21.00%
Internal investment grade
Derivative [Line Items]
Significant counterparties	5
Credit exposure | $	$ 28
Credit exposure, percentage	78.00%
External Credit Rating, Non Investment Grade [Member]
Derivative [Line Items]
Significant counterparties	1

XML

Fair Value of Financial Assets and Liabilities - Impact of Derivative Activities on Income and Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Impact of Derivative Activity on Accumulated Other Comprehensive Loss, Regulatory Assets and Liabilities, and Income [Abstract]
Derivative instruments designated as fair value hedges	$ 0	$ 0
Designated as Hedging Instrument [Member] | Interest Rate Contract [Member] | Cash Flow Hedging [Member]
Impact of Derivative Activity on Accumulated Other Comprehensive Loss, Regulatory Assets and Liabilities, and Income [Abstract]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	0	0
Other Derivative Instruments | Electric Commodity
Impact of Derivative Activity on Accumulated Other Comprehensive Loss, Regulatory Assets and Liabilities, and Income [Abstract]
Changes in fair value of FTRs pre-tax gains	1	2
FTR settlement gains	$ 12	$ (4)

XML

Fair Value of Financial Assets and Liabilities - Recurring Fair Value Measurements (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2022		Mar. 31, 2021	Dec. 31, 2021
Derivatives, Fair Value
Reclaim Cash Collateral		$ 0			$ 0
Return Cash Collateral		0			0
Commodity Contract [Member]
Changes in Level 3 Commodity Derivatives
Balance at beginning of period		27		$ 7
Purchases		4		0
Settlements		(33)		(9)
Net gains recognized as regulatory assets and liabilities		34		14
Balance at end of period		32		12
Transfers Level 3, Net		0		$ 0
Other Current Assets
Derivatives, Fair Value
Derivative asset, net		30			30
Other Noncurrent Assets
Derivatives, Fair Value
Derivative asset, net		10			6
Other Current Liabilities
Derivatives, Fair Value
Derivative liability, net		4			4
Other Noncurrent Liabilities
Derivatives, Fair Value
Derivative liability, net		5			6
Fair Value Measured on a Recurring Basis | Other Current Assets
Derivatives, Fair Value
Derivative asset, gross		28			27
Asset, netting	[1]	(1)			0
Derivative asset, net		27			27
Fair Value Measured on a Recurring Basis | Other Current Assets | Level 1
Derivatives, Fair Value
Derivative asset, gross		0			0
Fair Value Measured on a Recurring Basis | Other Current Assets | Level 2
Derivatives, Fair Value
Derivative asset, gross		0			0
Fair Value Measured on a Recurring Basis | Other Current Assets | Level 3
Derivatives, Fair Value
Derivative asset, gross		28			27
Fair Value Measured on a Recurring Basis | Other Current Assets | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value
Derivative asset, gross		28			27
Asset, netting	[1]	(1)			0
Derivative asset, net		27			27
Fair Value Measured on a Recurring Basis | Other Current Assets | Other Derivative Instruments | Level 1 | Electric Commodity
Derivatives, Fair Value
Derivative asset, gross		0			0
Fair Value Measured on a Recurring Basis | Other Current Assets | Other Derivative Instruments | Level 2 | Electric Commodity
Derivatives, Fair Value
Derivative asset, gross		0			0
Fair Value Measured on a Recurring Basis | Other Current Assets | Other Derivative Instruments | Level 3 | Electric Commodity
Derivatives, Fair Value
Derivative asset, gross		28			27
Fair Value Measured on a Recurring Basis | Other Noncurrent Assets
Derivatives, Fair Value
Derivative asset, gross		5			0
Asset, netting		0			0
Derivative asset, net		5			0
Fair Value Measured on a Recurring Basis | Other Noncurrent Assets | Level 1
Derivatives, Fair Value
Derivative asset, gross		0			0
Fair Value Measured on a Recurring Basis | Other Noncurrent Assets | Level 2
Derivatives, Fair Value
Derivative asset, gross		0			0
Fair Value Measured on a Recurring Basis | Other Noncurrent Assets | Level 3
Derivatives, Fair Value
Derivative asset, gross		5			0
Fair Value Measured on a Recurring Basis | Other Noncurrent Assets | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value
Derivative asset, gross		5			0
Asset, netting		0			0
Derivative asset, net		5			0
Fair Value Measured on a Recurring Basis | Other Noncurrent Assets | Other Derivative Instruments | Level 1 | Electric Commodity
Derivatives, Fair Value
Derivative asset, gross		0			0
Fair Value Measured on a Recurring Basis | Other Noncurrent Assets | Other Derivative Instruments | Level 2 | Electric Commodity
Derivatives, Fair Value
Derivative asset, gross		0			0
Fair Value Measured on a Recurring Basis | Other Noncurrent Assets | Other Derivative Instruments | Level 3 | Electric Commodity
Derivatives, Fair Value
Derivative asset, gross		5			0
Fair Value Measured on a Recurring Basis | Other Current Liabilities
Derivatives, Fair Value
Derivative liability, gross		1			0
Liabilities, netting		(1)			0
Derivative liability, net		0			0
Fair Value Measured on a Recurring Basis | Other Current Liabilities | Level 1
Derivatives, Fair Value
Derivative liability, gross		0			0
Fair Value Measured on a Recurring Basis | Other Current Liabilities | Level 2
Derivatives, Fair Value
Derivative liability, gross		0			0
Fair Value Measured on a Recurring Basis | Other Current Liabilities | Level 3
Derivatives, Fair Value
Derivative liability, gross		1			0
Fair Value Measured on a Recurring Basis | Other Current Liabilities | Other Derivative Instruments | Electric Commodity
Derivatives, Fair Value
Derivative liability, gross		1			0
Liabilities, netting		(1)			0
Derivative liability, net		0			0
Fair Value Measured on a Recurring Basis | Other Current Liabilities | Other Derivative Instruments | Level 1 | Electric Commodity
Derivatives, Fair Value
Derivative liability, gross		0			0
Fair Value Measured on a Recurring Basis | Other Current Liabilities | Other Derivative Instruments | Level 2 | Electric Commodity
Derivatives, Fair Value
Derivative liability, gross		0			0
Fair Value Measured on a Recurring Basis | Other Current Liabilities | Other Derivative Instruments | Level 3 | Electric Commodity
Derivatives, Fair Value
Derivative liability, gross		1			0
Fair Value, Measurements, Nonrecurring | Other Current Assets | PPAs
Derivatives, Fair Value
Derivative asset, net	[2]	3			3
Fair Value, Measurements, Nonrecurring | Other Noncurrent Assets | PPAs
Derivatives, Fair Value
Derivative asset, net	[2]	5			6
Fair Value, Measurements, Nonrecurring | Other Current Liabilities | PPAs
Derivatives, Fair Value
Derivative liability, net		4	[2]		4
Fair Value, Measurements, Nonrecurring | Other Noncurrent Liabilities | PPAs
Derivatives, Fair Value
Derivative liability, net		$ 5	[2]		$ 6

[1] SPS nets derivative instruments and related collateral on its balance sheets when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at March 31, 2022 and Dec. 31, 2021. At March 31, 2022 and Dec. 31, 2021, derivative assets and liabilities include no obligations to return cash collateral or rights to reclaim cash collateral. The counterparty netting excludes settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

[2] 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.

XML

Fair Value of Financial Assets and Liabilities - Fair Value of Long-Term Debt (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term Debt, Carrying Amount	$ 3,013	$ 3,013
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term Debt, Fair Value	$ 3,057	$ 3,454

XML

Benefit Plans and Other Postretirement Benefits (Details) - Pension Plan [Member] $ in Millions		1 Months Ended	3 Months Ended
		Jan. 31, 2022 USD ($) Plan	Mar. 31, 2022 USD ($)	Mar. 31, 2021 USD ($)
Components of Net Periodic Benefit Cost (Credit) [Abstract]
Service cost			$ 2	$ 2
Interest cost (a)	[1]		4	4
Expected return on plan assets (a)	[1]		(8)	(7)
Amortization of net loss (gain) (a)	[1]		3	4
Net periodic benefit cost (credit)			1	3
Contributions to pension plans		$ 0
Effects of regulation			1	0
Defined Benefit Plan, Net Periodic Benefit Cost (Credit)			$ 2	$ 3
Xcel Energy Inc.
Components of Net Periodic Benefit Cost (Credit) [Abstract]
Contributions to pension plans		$ 50
Number of pension plans to which contributions were made | Plan		4

[1] The components of net periodic cost other than the service cost component are included in the line item “Other income (expense), net” in the statements of income or capitalized on the balance sheets as a regulatory asset.

XML

Commitments and Contingencies - SPP OATT Upgrade Costs (Details) $ in Millions	12 Months Ended
	Dec. 31, 2018 USD ($)
Southwest Power Pool (SPP) | SPP Open Access Transmission Tariff Upgrade Costs
Public Utilities, General Disclosures [Line Items]
Charges For Transmission Service Upgrades	$ 13

XML

Contract Termination (Details) $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($) MW
Commitments and Contingencies Disclosure [Abstract]
Megawatts, Lubbock Power and Light contract | MW	170
Lubbock Power and Light contract length	25 years
Settlement Agreement Payment, Lubbock Power and Light Contract | $	$ 78

XML

Leases (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Lessee, Lease, Description [Line Items]
Operating Lease, Cost	[1]	$ 15	$ 14
Lessee, Operating Lease, Liability, to be Paid		587
Lessee, Operating Lease, Liability, Undiscounted Excess Amount		(131)
Operating Lease, Liability		456
Operating Lease, Liability, Current		(30)		$ (30)
Operating lease liabilities		426		$ 434
PPAs
Lessee, Lease, Description [Line Items]
Operating Lease, Cost		13	13
Lessee, Operating Lease, Liability, to be Paid		532
Lessee, Operating Lease, Liability, Undiscounted Excess Amount		(115)
Operating Lease, Liability		417
Property, Plant and Equipment, Other Types
Lessee, Lease, Description [Line Items]
Operating Lease, Cost	[2]	2	$ 1
Lessee, Operating Lease, Liability, to be Paid		55
Lessee, Operating Lease, Liability, Undiscounted Excess Amount		(16)
Operating Lease, Liability		$ 39

[1] PPA capacity payments are included in electric fuel and purchased power on the statements of income. Expense for other operating leases is included in operating and maintenance expense and electric fuel and purchased power.

[2] Includes immaterial short-term lease expense for 2022 and 2021.

XML

Commitments and Contingencies - Variable Interest Entities (Details) - MW	Mar. 31, 2022	Dec. 31, 2021
Equity Method Investment, Nonconsolidated Investee or Group of Investees [Member]
Purchased Power Agreements [Abstract]
Generating capacity (in MW)	1,197	1,197

XML

Other Comprehensive Income (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Accumulated Other Comprehensive Income (Loss) [Line Items]
Income Tax Expense (Benefit)	$ (21)	$ (19)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Accumulated other comprehensive loss at beginning of period	3,603
Accumulated other comprehensive loss at end of period	$ 3,610