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Benefit Plans and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2025
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 4.82, 4.84 and 4.45 percent in 2025, 2024 and 2023, 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.
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 2025 were above the assumed level of 7.03%.
•Investment returns in 2024 were below the assumed level of 6.97%.
•Investment returns in 2023 were above the assumed level of 6.96%.
•In 2026, 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, 2025 (a)
Dec. 31, 2024 (a)
(Millions of Dollars)Level 1Level 2Level 3Measured at NAVTotalLevel 1Level 2Level 3Measured at NAVTotal
Cash equivalents$18 $— $— $— $18 $19 $— $— $— $19 
Commingled funds (b)
— — — 165 165 — — — 158 158 
Debt securities— 125 — — 125 — 113 1 — 114 
Equity securities3 — — — 3 4 — — — 4 
Partnerships (b)
— — — 101 101 — — — 101 101 
Other— 1 — — 1 — 1 — — 1 
Total$21 $126 $— $266 $413 $23 $114 $1 $259 $397 
(a)See Note 8 for further information on fair value measurement inputs and methods.
(b)Prior period amounts have been reclassified to conform with current year presentation.
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, 2025 (a)
Dec. 31, 2024 (a)
(Millions of Dollars)Level 1Level 2Level 3Measured at NAVTotalLevel 1Level 2Level 3Measured at NAVTotal
Cash equivalents$4 $— $— $— $4 $4 $— $— $— $4 
Insurance contracts— 4 — — 4 — 4 — — 4 
Commingled funds (b)
— — — 7 7 — — — 2 2 
Debt securities— 17 — — 17 — 21 — — 21 
Partnerships (b)
— — — 5 5 — — — 5 5 
Total$4 $21 $— $12 $37 $4 $25 $— $7 $36 
(a)See Note 8 for further information on fair value measurement inputs and methods.
(b)Prior period amounts have been reclassified to conform with current year presentation.
No assets were transferred in or out of Level 3 for 2025 and 2024.
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)2025202420252024
Change in Benefit Obligation:
Obligation at Jan. 1$409 $425 $26 $26 
Service cost7 7 1 1 
Interest cost23 22 1 1 
Actuarial loss (gain)12 (12)4 1 
Plan participants’ contributions— — — 1 
Benefit payments(31)(33)(2)(4)
Obligation at Dec. 31$420 $409 $30 $26 
Change in Fair Value of Plan Assets:
Fair value of plan assets at Jan. 1$397 $420 $36 $36 
Actual return on plan assets44 7 3 2 
Employer contributions3 3 — 1 
Plan participants’ contributions— — — 1 
Benefit payments(31)(33)(2)(4)
Fair value of plan assets at Dec. 31$413 $397 $37 $36 
Funded status of plans at Dec. 31$(7)$(12)$7 $10 
Amounts recognized in the Balance Sheet at Dec. 31:
Noncurrent assets— — 7 10 
Noncurrent liabilities(7)(12)— — 
Net amounts recognized$(7)$(12)$7 $10 
Pension BenefitsPostretirement Benefits
Significant Assumptions Used to Measure Benefit Obligations:2025202420252024
Discount rate for year-end valuation5.78 %5.88 %5.66 %5.88 %
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 %7.00 %
Health care costs trend rate — initial: Post-65N/AN/A7.50 %7.50 %
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/A89
Accumulated benefit obligation for the pension plan was $393 million and $383 million as of Dec. 31, 2025 and 2024, respectively.
Net Periodic Benefit Cost — Net periodic benefit cost, other than the service cost component, is included in other income, net in the statements of income.
Components of net periodic benefit cost and amounts recognized in other comprehensive income and regulatory assets and liabilities:
Pension BenefitsPostretirement Benefits
(Millions of Dollars)202520242023202520242023
Service cost$7 $7 $7 $1 $1 $1 
Interest cost23 22 22 1 1 1 
Expected return on plan assets(32)(32)(32)(2)(2)(1)
Amortization of net loss (gain)3 3 2 (1)— — 
Net periodic pension cost1 — (1)(1)— 1 
Effects of regulation2 (1)5 — — — 
Net benefit cost recognized for financial reporting$3 $(1)$4 $(1)$— $1 
Significant Assumptions Used to Measure Costs:
Discount rate5.88 %5.49 %5.80 %5.88 %5.54 %5.80 %
Expected average long-term increase in compensation level4.25 4.25 4.25 — — — 
Expected average long-term rate of return on assets7.03 6.97 6.96 6.25 5.00 5.00 
Pension BenefitsPostretirement Benefits
(Millions of Dollars)2025202420252024
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost:
Net loss (gain)$162 $165 $(15)$(19)
Prior service credit(1)(1)— — 
Total$161 $164 $(15)$(19)
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$5 $4 $— $— 
Noncurrent regulatory assets156 160 — — 
Current regulatory liabilities— — — (1)
Noncurrent regulatory liabilities— — (15)(18)
Total$161 $164 $(15)$(19)
Measurement dateDec. 31, 2025Dec. 31, 2024Dec. 31, 2025Dec. 31, 2024
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 2023 - 2026 to meet minimum funding requirements.
Total voluntary and required pension funding contributions across all four of Xcel Energy’s pension plans were as follows:
•$75 million in January 2026, of which $2 million was attributable to SPS.
•$125 million in 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.
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 2026.
•$13 million during 2025.
•$11 million during 2024.
•$11 million during 2023.
Target asset allocations:
Pension BenefitsPostretirement Benefits
2025202420252024
Long-duration fixed income securities38 %38 %— %— %
Domestic and international equity securities30 31 25 25 
Alternative investments19 20 13 11 
Short-to-intermediate fixed income securities11 9 61 61 
Cash2 2 1 3 
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 2025 and 2024 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, 2025 and 2024.
Projected Benefit Payments
SPS’ projected benefit payments:
(Millions of Dollars)Projected
Pension Benefit
Payments
Net Projected
Postretirement Health Care
Benefit Payments (a)
2026$31 $3 
202731 3 
202832 3 
202932 3 
203033 3 
2031-2035161 11 
(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 2025, 2024 and 2023.