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Benefit Plans and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Benefit Plans and Other Postretirement Benefits
9. Benefit Plans and Other Postretirement Benefits
Pension and Postretirement Health Care Benefits
Xcel Energy, which includes SPS, has several noncontributory, qualified, defined benefit pension plans that cover almost all employees. All newly hired or rehired employees participate under the Cash Balance formula, which is based on pay credits using a percentage of annual eligible pay and annual interest credits.
The average annual interest crediting rates for these plans was 4.84, 4.45 and 4.69 percent in 2024, 2023 and 2022, respectively.
Some employees may participate under legacy formulas such as the traditional final average pay or pension equity. Xcel Energy’s policy is to fully fund into an external trust the actuarially determined pension costs subject to the limitations of applicable employee benefit and tax laws.
In addition to the qualified pension plans, Xcel Energy maintains a SERP and a nonqualified pension plan. The SERP is maintained for certain executives who participated in the plan in 2008, when the SERP was closed to new participants.
The nonqualified pension plan provides benefits for compensation that is in excess of the limits applicable to the qualified pension plans, with distributions funded by Xcel Energy’s consolidated operating cash flows.
Obligations of the SERP and nonqualified plan as of Dec. 31, 2024 and 2023 were $13 million and $12 million, respectively, of which an immaterial amount was attributable to SPS.
Xcel Energy’s postretirement health care benefit plan is a continuation of certain welfare benefit programs for current employees. A full-time employee’s date of hire or a retiree’s date of retirement determine eligibility for each of the programs.
Xcel Energy’s investment-return assumption considers the expected long-term performance for each of the asset classes in its pension and postretirement health care portfolio. Xcel Energy considers the historical returns achieved by its asset portfolios over long time periods, as well as the long-term projected return levels from investment experts. Xcel Energy and SPS continually review pension assumptions.
Pension cost determination assumes a forecasted mix of investment types over the long-term.
•Investment returns in 2024 were below the assumed level of 6.97%.
•Investment returns in 2023 were above the assumed level of 6.96%.
•Investment returns in 2022 were below the assumed level of 6.39%.
•In 2025, SPS’ expected investment-return assumption is 7.03%.
Pension plan and postretirement benefit assets are invested in a portfolio according to Xcel Energy’s return, liquidity and diversification objectives to provide a source of funding for plan obligations and minimize contributions to the plan, within appropriate levels of risk.
The principal mechanism for achieving these objectives is the asset allocation given the long-term risk, return, correlation and liquidity characteristics of each particular asset class.
There were no significant concentrations of risk in any industry, index, or entity. Market volatility can impact even well-diversified portfolios and significantly affect the return levels achieved by the assets in any year.
State agencies also have issued guidelines to the funding of postretirement benefit costs. SPS is required to fund postretirement benefit plans for Texas and New Mexico equal to amounts collected in rates. These assets are invested in a manner consistent with the investment strategy for the pension plan.
Xcel Energy’s ongoing investment strategy is based on plan-specific investment recommendations that seek to minimize potential investment and interest rate risk as a plan’s funded status increases over time.
The investment recommendations consider many factors and generally result in a greater percentage of long-duration fixed income securities being allocated to specific plans having relatively higher funded status ratios and a greater percentage of growth assets being allocated to plans having relatively lower funded status ratios.

Plan Assets
For each of the fair value hierarchy levels, SPS’ pension plan assets measured at fair value:
Dec. 31, 2024 (a)
Dec. 31, 2023 (a)
(Millions of Dollars)Level 1Level 2Level 3Measured at NAVTotalLevel 1Level 2Level 3Measured at NAVTotal
Cash equivalents$19 $— $— $— $19 $38 $— $— $— $38 
Commingled funds— — — 259 259 72 — — 190 262 
Debt securities— 113 1 — 114 — 116 1 — 117 
Equity securities4 — — — 4 5 — — — 5 
Other— 1 — — 1 — (2)— — (2)
Total$23 $114 $1 $259 $397 $115 $114 $1 $190 $420 
(a)See Note 8 for further information on fair value measurement inputs and methods.
For each of the fair value hierarchy levels, SPS’ proportionate allocation of the total postretirement benefit plan assets that were measured at fair value:
Dec. 31, 2024 (a)
Dec. 31, 2023 (a)
(Millions of Dollars)Level 1Level 2Level 3Measured at NAVTotalLevel 1Level 2Level 3Measured at NAVTotal
Cash equivalents$4 $— $— $— $4 $3 $— $— $— $3 
Insurance contracts— 4 — — 4 — 5 — — 5 
Commingled funds— — — 7 7 2 — — 7 9 
Debt securities— 21 — — 21 — 19 — — 19 
Total$4 $25 $— $7 $36 $5 $24 $— $7 $36 
(a)See Note 8 for further information on fair value measurement inputs and methods.
No assets were transferred in or out of Level 3 for 2024 and immaterial assets were transferred in or out of Level 3 for 2023.
Funded Status — Comparisons of the actuarially computed benefit obligation, changes in plan assets and funded status of the pension and postretirement health care plans for SPS are as follows:
Pension BenefitsPostretirement Benefits
(Millions of Dollars)2024202320242023
Change in Benefit Obligation:
Obligation at Jan. 1$425 $414 $26 $26 
Service cost7 7 1 1 
Interest cost22 22 1 1 
Actuarial (gain) loss(12)16 1 1 
Plan participants’ contributions— — 1 1 
Benefit payments(33)(34)(4)(4)
Obligation at Dec. 31$409 $425 $26 $26 
Change in Fair Value of Plan Assets:
Fair value of plan assets at Jan. 1$420 $417 $36 $36 
Actual return on plan assets7 37 2 3 
Employer contributions3 — 1 — 
Plan participants’ contributions— — 1 1 
Benefit payments(33)(34)(4)(4)
Fair value of plan assets at Dec. 31$397 $420 $36 $36 
Funded status of plans at Dec. 31$(12)$(5)$10 $10 
Amounts recognized in the Balance Sheet at Dec. 31:
Noncurrent assets— 1 10 10 
Noncurrent liabilities(12)(6)— — 
Net amounts recognized$(12)$(5)$10 $10 
Pension BenefitsPostretirement Benefits
Significant Assumptions Used to Measure Benefit Obligations:2024202320242023
Discount rate for year-end valuation5.88 %5.49 %5.88 %5.54 %
Expected average long-term increase in compensation level4.25 %4.25 %N/AN/A
Mortality tablePri-2012Pri-2012Pri-2012Pri-2012
Health care costs trend rate — initial: Pre-65N/AN/A7.00 %6.50 %
Health care costs trend rate — initial: Post-65N/AN/A7.50 %5.50 %
Ultimate trend assumption — initial: Pre-65N/AN/A4.50 %4.50 %
Ultimate trend assumption — initial: Post-65N/AN/A4.50 %4.50 %
Years until ultimate trend is reachedN/AN/A96
Accumulated benefit obligation for the pension plan was $383 million and $395 million as of Dec. 31, 2024 and 2023, respectively.
Net Periodic Benefit Cost (Credit) — Net periodic benefit cost (credit), other than the service cost component, is included in other income, net in the statements of income.
Components of net periodic benefit cost (credit) and amounts recognized in other comprehensive income and regulatory assets and liabilities:
Pension BenefitsPostretirement Benefits
(Millions of Dollars)202420232022202420232022
Service cost$7 $7 $10 $1 $1 $1 
Interest cost22 22 16 1 1 1 
Expected return on plan assets(32)(32)(31)(2)(1)(2)
Amortization of net loss (gain)3 2 10 — — — 
Settlement charge (a)
— — 2 — — — 
Net periodic pension cost— (1)7 — 1 — 
Effects of regulation(1)5 (1)— — — 
Net benefit cost recognized for financial reporting$(1)$4 $6 $— $1 $— 
Significant Assumptions Used to Measure Costs:
Discount rate5.49 %5.80 %3.08 %5.54 %5.80 %3.09 %
Expected average long-term increase in compensation level4.25 4.25 3.75 — — — 
Expected average long-term rate of return on assets6.97 6.96 6.39 5.00 5.00 4.10 
(a)A settlement charge is required when the amount of all lump-sum distributions during the year is greater than the sum of the service and interest cost components of the annual net periodic pension cost. There were no settlement charges recorded to the qualified pension plans in 2024 or 2023. In 2022, as a result of lump-sum distributions during each plan year, SPS recorded a total pension settlement charge of $2 million. An immaterial amount was recorded in the income statement in 2022.
Pension BenefitsPostretirement Benefits
(Millions of Dollars)2024202320242023
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost:
Net loss (gain)$165 $155 $(19)$(20)
Prior service credit(1)(1)— — 
Total$164 $154 $(19)$(20)
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost Have Been Recorded as Follows Based Upon Expected Recovery in Rates:
Current regulatory assets$4 $2 $— $— 
Noncurrent regulatory assets160 152 — — 
Current regulatory liabilities— — (1)(1)
Noncurrent regulatory liabilities— — (18)(19)
Total$164 $154 $(19)$(20)
Measurement dateDec. 31, 2024Dec. 31, 2023Dec. 31, 2024Dec. 31, 2023
Cash Flows — Funding requirements can be impacted by changes to actuarial assumptions, actual asset levels and other calculations prescribed by the requirements of income tax and other pension-related regulations. Required contributions were made in 2022 - 2025 to meet minimum funding requirements.
Total voluntary and required pension funding contributions across all four of Xcel Energy’s pension plans were as follows:
•$125 million in January 2025, of which $3 million was attributable to SPS.
•$100 million in 2024, of which $3 million was attributable to SPS.
•$50 million in 2023, of which none was attributable to SPS.
•$50 million in 2022, of which none was attributable to SPS.
For future years, Xcel Energy and SPS anticipate contributions will be made as necessary.
The postretirement health care plans have no funding requirements other than fulfilling benefit payment obligations when claims are presented and approved. Additional cash funding requirements are prescribed by certain state and federal rate regulatory authorities.
Xcel Energy’s voluntary postretirement funding contributions, of which the amounts attributable to SPS were immaterial, were as follows:
•$8 million expected in 2025.
•$11 million during 2024.
•$11 million during 2023.
•$13 million during 2022.
Target asset allocations:
Pension BenefitsPostretirement Benefits
2024202320242023
Long-duration fixed income securities38 %38 %— %— %
Domestic and international equity securities31 31 25 9 
Alternative investments20 20 11 13 
Short-to-intermediate fixed income securities9 9 61 77 
Cash2 2 3 1 
Total100 %100 %100 %100 %
The asset allocations above reflect target allocations approved in the calendar year to take effect in the subsequent year.
Plan Amendments — There were no significant plan amendments made in 2024 and 2022 which affected the pension or postretirement benefit obligation.
In 2023, Xcel Energy amended the Xcel Energy Pension Plan and Xcel Energy Inc. Nonbargaining Pension Plan (South) to reduce supplemental social security benefits for all active participants on and after Jan. 1, 2024.
Voluntary Retirement Program
Incremental to amounts presented above for postretirement benefits, Xcel Energy, which includes SPS, recognized new postemployment costs and obligations in the fourth quarter of 2023 for employees accepted to a voluntary retirement program.
Immaterial unfunded obligations for health plan subsidies and other medical benefits are presented in other current liabilities and noncurrent pension and employee benefit obligations in the balance sheets as of Dec. 31, 2024 and 2023.
Projected Benefit Payments
SPS’ projected benefit payments:
(Millions of Dollars)Projected
Pension Benefit
Payments
Net Projected
Postretirement Health Care
Benefit Payments (a)
2025$30 $2 
202630 2 
202732 2 
202832 2 
202932 2 
2030-2034158 10 
(a)Amount is reported net of expected Medicare Part D subsidies, which are immaterial.
Defined Contribution Plans
Xcel Energy, which includes SPS, maintains 401(k) and other defined contribution plans that cover most employees. The expense to these plans for SPS was approximately $4 million in 2024 and 2023 and $3 million in 2022.