7.	Borrowings and Other Financing Instruments

Commercial Paper - SPS meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility. The following table presents commercial paper outstanding for SPS:

(Millions of Dollars)	Three Months Ended Sept. 30, 2011			Twelve Months Ended Dec. 31, 2010
Borrowing limit	$	300		$	248
Amount outstanding at period end		-			49
Average amount outstanding		64			8
Maximum amount outstanding		161			65
Weighted average interest rate, computed on a daily basis		0.36	%		0.37	%
Weighted average interest rate at period end		N/A			0.37

Credit Facilities - In order to use its commercial paper program to fulfill short-term funding needs, SPS must have a revolving credit facility in place at least equal to the amount of its commercial paper borrowing limit and cannot issue commercial paper in an aggregate amount exceeding available capacity under the credit agreement.

During March 2011, SPS executed a new four-year credit agreement. The total size of the credit facility is $300 million and terminates in March 2015. SPS has the right to request an extension of the revolving termination date for two additional one-year periods, subject to majority bank group approval.

The line of credit provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings. Other features of SPS' credit facility include:

The credit facility may be increased by up to $50 million.

The credit facility has a financial covenant requiring that SPS' debt-to-total capitalization ratio be less than or equal to 65 percent. SPS was in compliance as its debt-to-total capitalization ratio was 48 percent at Sept. 30, 2011. If SPS does not comply with the covenant, an event of default may be declared, and if not remedied, any outstanding amounts due under the facility can be declared due by the lender.

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

The interest rates under the line of credit are based on the Eurodollar rate or an alternate base rate, plus a borrowing margin of 0 to 200 basis points per year based on the applicable credit ratings.

The commitment fees, also based on applicable long-term credit ratings, are calculated on the unused portion of the line of credit at a range of 10 to 35 basis points per year.

At Sept. 30, 2011, SPS had the following committed credit facility available (in millions of dollars):

Credit Facility				Drawn				Available
$	300.0			$	-			$	300.0

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 at Sept. 30, 2011 and Dec. 31, 2010.

Letters of Credit - SPS uses letters of credit, generally with terms of one-year, to provide financial guarantees for certain operating obligations. At Sept. 30, 2011 and Dec. 31, 2010 there were no letters of credit outstanding.

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 utility money pool arrangement does not allow the utility subsidiaries to make investments in Xcel Energy Inc.

The following table presents the money pool borrowings for SPS:

(Millions of Dollars)	Three Months Ended Sept. 30, 2011			Twelve Months Ended Dec. 31, 2010
Borrowing limit	$	100		$	100
Amount outstanding at period end		-			-
Average amount outstanding		2			16
Maximum amount outstanding		20			77
Weighted average interest rate, computed on a daily basis		0.35	%		0.37	%
Weighted average interest rate at period end		N/A			N/A

Long-Term Borrowings

In August 2011, SPS issued $200 million of 4.50 percent first mortgage bonds due Aug. 15, 2041. SPS used a portion of the net proceeds from the sale of the first mortgage bonds to repay short-term debt borrowings incurred to fund daily operational needs and to redeem $57.3 million of the outstanding 5.75 percent Pollution Control Revenue Refunding Bonds due Sept. 1, 2016. The balance of the net proceeds was used for general corporate purposes.