Company Quick10K Filing
Quick10K
Northern States Power
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2018-11-06 Other Events
8-K 2018-10-25 Earnings, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-04-26 Earnings, Exhibits
8-K 2018-02-07 Earnings, Exhibits
PPL PPL 21,840
HUD Hudson 1,470
GTE Gran Tierra Energy 857
JOUT Johnson Outdoors 730
TMCX Trinity Merger 442
FBIZ First Business Financial Services 210
MNDO Mind CTI 43
RGRX Regenerx 0
MBCQ Madison Bank 0
ORRP Oroplata Resources 0
NSPM 2019-03-31
Part I - Financial Information
Item 1 - Financial Statements
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 4 - Controls and Procedures
Part II - Other Information
Item 1 - Legal Proceedings
Item 1A - Risk Factors
Item 6 - Exhibits
EX-31.01 nspmex3101q12019.htm
EX-31.02 nspmex3102q12019.htm
EX-32.01 nspmex3201q12019.htm

Northern States Power Earnings 2019-03-31

NSPM 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 nspm03311910-q.htm 10-Q Document
 
 
 
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
001-31387
 
41-1967505
(Commission File Number)
 
(I.R.S. Employer Identification No.)

(Registrant, State of Incorporation or Organization, Address of Principal Executive Officers and Telephone Number)
Northern States Power Company
(a Minnesota corporation)
414 Nicollet Mall
Minneapolis, MN 55401
612-330-5500

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. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 and 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). x 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 x
 
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 x No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
April 26, 2019
Common Stock, $0.01 par value
 
1,000,000 shares
Northern States Power 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 —

Item 2 —

Item 4 —

 
 
 
PART II
OTHER INFORMATION
 
Item 1 —

Item 1A —

Item 6 —

 
 
 

 
 
Certifications Pursuant to Section 302
1

Certifications Pursuant to Section 906
1

This Form 10-Q is filed by Northern States Power Company, a Minnesota corporation (NSP-Minnesota). NSP-Minnesota 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.



ABBREVIATIONS AND INDUSTRY TERMS
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
DOC
Minnesota Department of Commerce
FERC
Federal Energy Regulatory Commission
IRS
Internal Revenue Service
MPUC
Minnesota Public Utilities Commission
OAG
Minnesota Office of the Attorney General
SEC
Securities and Exchange Commission
 
 
Electric, Purchased Gas and Resource Adjustment Clauses
GUIC
Gas utility infrastructure cost rider
RDF
Renewable development fund
RES
Renewable energy standard
TCR
Transmission cost recovery adjustment
 
 
Other
ARAM
Average rate assumption method
ASC
FASB Accounting Standards Codification
ASU
FASB Accounting Standards Update
CCR
Coal combustion residuals
CCR Rule
Final rule (40 CFR 257.50 - 257.107) published by the United States Environmental Protection Agency regulating the management, storage and disposal of CCRs as nonhazardous waste
ETR
Effective tax rate
FASB
Financial Accounting Standards Board
FTR
Financial transmission right
GAAP
Generally accepted accounting principles
GE
General Electric
IPP
Independent power producing entity
ITC
Investment tax credit
MGP
Manufactured gas plant
MISO
Midcontinent Independent System Operator, Inc.
NAV
Net asset value
NOI
Notice of inquiry
NOL
Net operating loss
O&M
Operating and maintenance
PPA
Purchased power agreement
PTC
Production tax credit
ROE
Return on equity
ROU
Right-of-use
RTO
Regional Transmission Organization
SMMPA
Southern Minnesota Municipal Power Agency
TCJA
2017 federal tax reform enacted as Public Law No: 115-97, commonly referred to as the Tax Cuts and Jobs Act
TO
Transmission owner
VIE
Variable interest entity
 
 
 
 
 
 
 
Measurements
KV
Kilovolts
MMBtu
Million British thermal units
MW
Megawatts
MWh
Megawatt hours

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, 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 elsewhere in this Quarterly Report on Form 10-Q and in other securities filings (including NSP-Minnesota’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018, and subsequent securities filings), could cause actual results to differ materially from management expectations as suggested by such forward-looking information: 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; ability to recover costs from customers; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of NSP-Minnesota and its subsidiaries 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; operational safety, including our nuclear generation facilities; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices; costs of potential regulatory penalties; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; fuel costs; and employee work force and third party contractor factors.




PART I FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS
NSP-MINNESOTA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(amounts in millions)
 
 
Three Months Ended March 31
 
 
2019
 
2018
Operating revenues
 
 
 
 
Electric, non-affiliates
 
$
958.6

 
$
945.3

Electric, affiliates
 
120.1

 
117.0

Natural gas
 
264.0

 
241.4

Other
 
7.8

 
7.1

Total operating revenues
 
1,350.5

 
1,310.8

 
 
 
 
 
Operating expenses
 
 
 
 
Electric fuel and purchased power
 
391.9

 
407.8

Cost of natural gas sold and transported
 
174.4

 
155.3

Cost of sales — other
 
5.2

 
4.2

Operating and maintenance expenses
 
311.9

 
292.3

Conservation program expenses
 
32.5

 
30.8

Depreciation and amortization
 
197.7

 
181.5

Taxes (other than income taxes)
 
69.6

 
67.5

Total operating expenses
 
1,183.2

 
1,139.4

 
 
 
 
 
Operating income
 
167.3

 
171.4

 
 
 
 
 
Other income, net
 
1.5

 
0.2

 
 
 
 
 
Allowance for funds used during construction — equity
 
5.1

 
6.7

 
 
 
 
 
Interest charges and financing costs
 
 
 
 
Interest charges — includes other financing costs of
 $1.8 and $1.8, respectively
 
57.2

 
57.3

Allowance for funds used during construction — debt
 
(2.5
)
 
(3.4
)
Total interest charges and financing costs
 
54.7

 
53.9

 
 
 
 
 
Income before income taxes
 
119.2

 
124.4

Income taxes
 
6.0

 
12.7

Net income
 
$
113.2

 
$
111.7


See Notes to Consolidated Financial Statements

4


NSP-MINNESOTA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(amounts in millions)
 
Three Months Ended March 31
 
2019
 
2018
Net income
$
113.2

 
$
111.7

 
 
 
 
Other comprehensive income
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
Reclassification of losses to net income, net of tax of $0.1 and $0, respectively
0.2

 
0.2

 
0.2

 
0.2

Marketable securities:
 
 
 
Reclassification of gains to net income, net of tax of $0 and $(0.1), respectively

 
(0.1
)
 
 
 
 
Other comprehensive income
0.2

 
0.1

Comprehensive income
$
113.4

 
$
111.8


See Notes to Consolidated Financial Statements

5


NSP-MINNESOTA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(amounts in millions)
 
Three Months Ended March 31,
 
2019
 
2018
Operating activities
 
 
 
Net income
$
113.2

 
$
111.7

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
Depreciation and amortization
199.0

 
183.0

Nuclear fuel amortization
30.5

 
30.8

Deferred income taxes
(14.6
)
 
9.5

Amortization of investment tax credits
(0.3
)
 
(0.4
)
Allowance for equity funds used during construction
(5.1
)
 
(6.7
)
Net realized and unrealized hedging and derivative transactions
6.4

 
(1.0
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(39.0
)
 
(34.7
)
Accrued unbilled revenues
49.2

 
76.1

Inventories
52.8

 
45.3

Other current assets
(30.2
)
 
39.2

Accounts payable
(48.2
)
 
(48.0
)
Net regulatory assets and liabilities
54.7

 
74.1

Other current liabilities
18.0

 
34.8

Pension and other employee benefit obligations
(46.6
)
 
(60.8
)
Other, net
(9.1
)
 
(18.8
)
Net cash provided by operating activities
330.7

 
434.1

 
 
 
 
Investing activities
 
 
 
Utility capital/construction expenditures
(197.3
)
 
(207.4
)
Purchases investment securities
(304.7
)
 
(184.5
)
Proceeds from the sale of investment securities
299.6

 
179.5

Investments in utility money pool arrangement
(38.0
)
 
(159.0
)
Repayments from utility money pool arrangement

 
111.0

Other, net
(0.3
)
 
(2.6
)
Net cash used in investing activities
(240.7
)
 
(263.0
)
 
 
 
 
Financing activities
 
 
 
Repayments of short-term borrowings, net
(150.0
)
 
(20.0
)
Borrowings under utility money pool arrangement
31.0

 
69.0

Repayments under utility money pool arrangement
(31.0
)
 
(154.0
)
Capital contributions from parent
134.9

 
49.6

Dividends paid to parent
(82.8
)
 
(98.7
)
Net cash used in financing activities
(97.9
)
 
(154.1
)
 
 
 
 
Net change in cash and cash equivalents
(7.9
)
 
17.0

Cash and cash equivalents at beginning of period
50.0

 
43.8

Cash and cash equivalents at end of period
$
42.1

 
$
60.8

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest (net of amounts capitalized)
$
(68.2
)
 
$
(63.8
)
Cash (paid) received for income taxes, net
(22.0
)
 
48.2

Supplemental disclosure of non-cash investing and financing transactions:
 
 
 
Accrued property, plant and equipment additions
$
110.8

 
$
37.5

Inventory transfers to property, plant and equipment
4.4

 
6.0

Operating lease right-of-use assets
444.2

 

Allowance for equity funds used during construction
5.1

 
6.7


See Notes to Consolidated Financial Statements

6


NSP-MINNESOTA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(amounts in millions, except share and per share data)
 
 
March 31, 2019
 
Dec. 31, 2018
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
42.1

 
$
50.0

Accounts receivable, net
 
414.8

 
380.9

Accounts receivable from affiliates
 
16.1

 
11.0

Investments in utility money pool arrangement
 
38.0

 

Accrued unbilled revenues
 
221.0

 
270.3

Inventories
 
242.2

 
299.4

Regulatory assets
 
285.5

 
280.3

Derivative instruments
 
19.5

 
25.8

Prepaid taxes
 
19.1

 

Prepayments and other
 
38.0

 
28.9

Total current assets
 
1,336.3

 
1,346.6

 
 
 
 
 
Property, plant and equipment
 
13,593.0

 
13,541.7

 
 
 
 
 
Other assets
 
 
 
 
Nuclear decommissioning fund and other investments
 
2,291.4

 
2,107.2

Regulatory assets
 
1,294.3

 
1,454.1

Derivative instruments
 
6.9

 
17.0

Operating lease right-of-use assets
 
431.7

 

Other
 
8.6

 
3.3

Total other assets
 
4,032.9

 
3,581.6

Total assets
 
$
18,962.2

 
$
18,469.9

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Current liabilities
 
 
 
 
Short-term debt
 

 
150.0

Accounts payable
 
405.8

 
393.6

Accounts payable to affiliates
 
49.8

 
109.7

Regulatory liabilities
 
279.0

 
262.4

Taxes accrued
 
307.1

 
230.1

Accrued interest
 
51.8

 
67.2

Dividends payable to parent
 
94.6

 
82.7

Derivative instruments
 
14.1

 
16.5

Customer deposits
 
44.3

 
53.7

Other
 
204.6

 
154.8

Total current liabilities
 
1,451.1

 
1,520.7

 
 
 
 
 
Deferred credits and other liabilities
 
 
 
 
Deferred income taxes
 
1,718.9

 
1,682.4

Deferred investment tax credits
 
20.7

 
21.1

Regulatory liabilities
 
1,969.5

 
1,984.7

Asset retirement obligations
 
2,204.5

 
2,177.9

Derivative instruments
 
105.8

 
112.2

Pension and employee benefit obligations
 
258.8

 
305.1

Operating lease liabilities
 
420.4

 

Other
 
112.4

 
155.5

Total deferred credits and other liabilities
 
6,811.0

 
6,438.9

 
 
 
 
 
Commitments and contingencies
 


 


Capitalization
 
 
 
 
Long-term debt
 
4,938.2

 
4,937.2

Common stock — 5,000,000 shares authorized of $0.01 par value; 1,000,000 shares
outstanding at March 31, 2019 and Dec. 31, 2018, respectively
 

 

Additional paid in capital
 
3,794.2

 
3,624.2

Retained earnings
 
1,990.6

 
1,972.0

Accumulated other comprehensive loss
 
(22.9
)
 
(23.1
)
Total common stockholder’s equity
 
5,761.9

 
5,573.1

Total liabilities and equity
 
$
18,962.2

 
$
18,469.9

See Notes to Consolidated Financial Statements

7


NSP-MINNESOTA AND SUBSIDIARIES
CONSOLIDATED 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, 2019 and 2018
 
 
 
 
 
 
 
 
 
 
Balance at Dec. 31, 2017
1,000,000

 
$

 
$
3,580.2

 
$
1,919.9

 
$
(24.5
)
 
$
5,475.6

Net income
 
 
 
 
 
 
111.7

 
 
 
111.7

Other comprehensive income
 
 
 
 
 
 
 
 
0.1

 
0.1

Common dividends declared to parent
 
 
 
 
 
 
(84.6
)
 
 
 
(84.6
)
Contribution of capital by parent
 
 
 
 
20.0

 
 
 
 
 
20.0

Balance at March 31, 2018
1,000,000

 
$

 
$
3,600.2

 
$
1,947.0

 
$
(24.4
)
 
$
5,522.8

 
 
 
 
 
 
 
 
 
 
 
 
Balance at Dec. 31, 2018
1,000,000

 
$

 
$
3,624.2

 
$
1,972.0

 
$
(23.1
)
 
$
5,573.1

Net income
 
 
 
 
 
 
113.2

 
 
 
113.2

Other comprehensive income
 
 
 
 
 
 
 
 
0.2

 
0.2

Common dividends declared to parent
 
 
 
 
 
 
(94.6
)
 
 
 
(94.6
)
Contribution of capital by parent
 
 
 
 
170.0

 
 
 
 
 
170.0

Balance at March 31, 2019
1,000,000

 
$

 
$
3,794.2

 
$
1,990.6

 
$
(22.9
)
 
$
5,761.9

 
 
 
 
 
 
 
 
 
 
 
 
See Notes to Consolidated Financial Statements

8



NSP-MINNESOTA AND SUBSIDIARIES
Notes to Consolidated Financial Statements (UNAUDITED)
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America (GAAP), the financial position of NSP-Minnesota and its subsidiaries as of March 31, 2019 and Dec. 31, 2018; the results of its operations, including the components of net income and comprehensive income, and changes in stockholder’s equity for the three months ended March 31, 2019 and 2018; and its cash flows for the three months ended March 31, 2019 and 2018. All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after March 31, 2019 up to the date of issuance of these consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2018 balance sheet information has been derived from the audited 2018 consolidated financial statements included in the NSP-Minnesota Annual Report on Form 10-K for the year ended Dec. 31, 2018. These notes to the consolidated 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 consolidated financial statements and notes thereto, included in the NSP-Minnesota Annual Report on Form 10-K for the year ended Dec. 31, 2018, filed with the SEC on Feb. 22, 2019. Due to the seasonality of NSP-Minnesota’s electric and natural gas 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 consolidated financial statements in the NSP-Minnesota Annual Report on Form 10-K for the year ended Dec. 31, 2018, appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.
2.
Accounting Pronouncements
Recently Issued
Credit Losses In 2016, the FASB issued Financial Instruments - Credit Losses, Topic 326 (ASC Topic 326), which changes how entities account for credit losses on receivables and certain other assets. The guidance requires use of a current expected loss model, which may result in earlier recognition of credit losses than under previous accounting standards. ASC Topic 326 is effective for interim and annual periods beginning on or after Dec. 15, 2019. NSP-Minnesota is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.
Recently Adopted
Leases In 2016, the FASB issued Leases, Topic 842 (ASC Topic 842), which provides new accounting and disclosure guidance for leasing activities, most significantly requiring that operating leases be recognized on the balance sheet. NSP-Minnesota adopted the guidance on Jan. 1, 2019 utilizing the package of transition practical expedients provided by the new standard, including carrying forward prior conclusions on whether agreements existing before the adoption date contain leases and whether existing leases are operating or finance leases; ASC Topic 842 refers to capital leases as finance leases.
 
Specifically for land easement contracts, NSP-Minnesota has elected the practical expedient provided by ASU No. 2018-01 Leases: Land Easement Practical Expedient for Transition to Topic 842, and as a result, only those easement contracts entered on or after Jan. 1, 2019 will be evaluated to determine if lease treatment is appropriate.
NSP-Minnesota also utilized the transition practical expedient offered by ASU No. 2018-11 Leases: Targeted Improvements to implement the standard on a prospective basis. As a result, reporting periods in the consolidated financial statements beginning Jan. 1, 2019 reflect the implementation of ASC Topic 842, while prior periods continue to be reported in accordance with Leases, Topic 840 (ASC Topic 840). Other than first-time recognition of operating leases on its consolidated balance sheet, the implementation of ASC Topic 842 did not have a significant impact on NSP-Minnesota’s consolidated financial statements. Adoption resulted in recognition of approximately $0.5 billion of operating lease ROU assets and current/noncurrent operating lease liabilities. See Note 9 for leasing disclosures.
3.
Selected Balance Sheet Data
(Millions of Dollars)
 
March 31, 2019
 
Dec. 31, 2018
Accounts receivable, net
 
 
 
 
Accounts receivable
 
$
438.4

 
$
404.4

Less allowance for bad debts
 
(23.6
)
 
(23.5
)
 
 
$
414.8

 
$
380.9

(Millions of Dollars)
 
March 31, 2019
 
Dec. 31, 2018
Inventories
 
 
 
 
Materials and supplies
 
$
177.4

 
$
176.3

Fuel
 
57.5

 
88.5

Natural gas
 
7.3

 
34.6

 
 
$
242.2

 
$
299.4

(Millions of Dollars)
 
March 31, 2019
 
Dec. 31, 2018
Property, plant and equipment
 
 
 
 
Electric plant
 
$
17,821.5

 
$
17,749.3

Natural gas plant
 
1,477.4

 
1,475.5

Common and other property
 
815.5

 
803.1

Construction work in progress
 
664.6

 
615.1

Total property, plant and equipment
 
20,779.0

 
20,643.0

Less accumulated depreciation
 
(7,590.0
)
 
(7,454.8
)
Nuclear fuel
 
2,851.3

 
2,770.4

Less accumulated amortization
 
(2,447.3
)
 
(2,416.9
)
 
 
13,593.0

 
$
13,541.7


9


4. Borrowings and Other Financing Instruments
Short-Term Borrowings
NSP-Minnesota 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 NSP-Minnesota were as follows:
(Amounts in Millions, Except Interest Rates)
 
Three Months Ended March 31, 2019
 
Year Ended Dec. 31, 2018
Borrowing limit
 
$
250

 
$
250

Amount outstanding at period end
 

 

Average amount outstanding
 

 
17

Maximum amount outstanding
 

 
143

Weighted average interest rate, computed on a daily basis
 
N/A

 
1.96
%
Weighted average interest rate at period end
 
N/A

 
N/A

Commercial Paper — Commercial paper outstanding for NSP-Minnesota was as follows:
(Amounts in Millions, Except Interest Rates)
 
Three Months Ended March 31, 2019
 
Year Ended Dec. 31, 2018
Borrowing limit
 
$
500

 
$
500

Amount outstanding at period end
 

 
150

Average amount outstanding
 
121

 
38

Maximum amount outstanding
 
317

 
198

Weighted average interest rate, computed on a daily basis
 
2.72
%
 
2.08
%
Weighted average interest rate at period end
 
N/A

 
2.97

Letters of Credit — NSP-Minnesota uses letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. At March 31, 2019 and Dec. 31, 2018, there were $39 million and $37 million, respectively, of letters of credit outstanding under the credit facility. The contract amounts of these letters of credit approximate their fair value and are subject to fees.
Credit Facility — In order to use its commercial paper program to fulfill short-term funding needs, NSP-Minnesota 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 amount exceeding available capacity under this credit facility. The line of credit provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.
At March 31, 2019, NSP-Minnesota had the following committed credit facility available (in millions of dollars):
Credit Facility (a)
 
Outstanding (b)
 
Available
$
500

 
$
39

 
$
461

(a) 
This credit facility expires in June 2021.
(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. NSP-Minnesota had no direct advances on the credit facility outstanding at March 31, 2019 and Dec. 31, 2018.
Bilateral Credit Agreement — On March 28, 2019 NSP-Minnesota entered into a one year uncommitted bilateral credit agreement for up to $75 million. This facility is limited in use to support letters of credit, and is in addition to the $500 million facility shown in the table above. As of March 31, 2019 there were no outstanding letters of credit that this agreement was supporting.
5. Revenues
Revenue is classified by the type of goods/services rendered and market/customer type. NSP-Minnesota’s operating revenues consists of the following:
 
 
Three Months Ended March 31, 2019
(Millions of Dollars)
 
Electric
 
Natural Gas
 
All Other
 
Total
Major revenue types
Revenue from contracts with customers:
Residential
 
$
326.9

 
$
149.6

 
$
6.9

 
$
483.4

Commercial and industrial
 
467.5

 
108.8

 

 
576.3

Other
 
8.3

 

 
0.9

 
9.2

Total retail
 
802.7

 
258.4

 
7.8

 
1,068.9

Wholesale
 
46.9

 

 

 
46.9

Transmission
 
60.4

 

 

 
60.4

Interchange
 
120.1

 

 

 
120.1

Other
 
4.8

 
1.0

 

 
5.8

Total revenue from contracts with customers
 
1,034.9

 
259.4

 
7.8

 
1,302.1

Alternative revenue and other
 
43.8

 
4.6

 

 
48.4

Total revenues
 
$
1,078.7

 
$
264.0

 
$
7.8

 
$
1,350.5

 
 
Three Months Ended March 31, 2018
(Millions of Dollars)
 
Electric
 
Natural Gas
 
All Other
 
Total
Major revenue types
Revenue from contracts with customers:
Residential
 
$
311.1

 
$
131.7

 
$
6.3

 
$
449.1

Commercial and industrial
 
468.0

 
96.9

 
0.1

 
565.0

Other
 
9.8

 

 
0.7

 
10.5

Total retail
 
788.9

 
228.6

 
7.1

 
1,024.6

Wholesale
 
46.4

 

 

 
46.4

Transmission
 
54.8

 

 

 
54.8

Interchange
 
117.0

 

 

 
117.0

Other
 
11.5

 
2.2

 

 
13.7

Total revenue from contracts with customers
 
1,018.6

 
230.8

 
7.1

 
1,256.5

Alternative revenue and other
 
43.7

 
10.6

 

 
54.3

Total revenues
 
$
1,062.3

 
$
241.4

 
$
7.1

 
$
1,310.8


10


6.    Income Taxes
Except to the extent noted below, Note 7 to the consolidated financial statements included in NSP-Minnesota’s Annual Report on Form 10-K for the year ended Dec. 31, 2018 appropriately represents, in all material respects, the current status of other income tax matters, and are incorporated herein by reference.
Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense. The following reconciles such differences:
 
 
Three Months Ended March 31
 
 
2019
 
2018
Federal statutory rate
 
21.0
 %
 
21.0
 %
State tax (net of federal tax effect)
 
7.1

 
7.1

Increases (decreases) in tax from:
 
 
 
 
Wind PTCs
 
(14.4
)
 
(17.0
)
Regulatory differences (a)
 
(8.2
)
 
(0.1
)
Other tax credits and allowances (net)
 
(1.3
)
 
(1.5
)
Other (net)
 
0.8

 
0.7

Effective income tax rate
 
5.0
 %
 
10.2
 %
(a)
Regulatory differences for income tax purposes primarily include the average rate assumption method (ARAM), ARAM deferral and AFUDC - Equity. ARAM is a method to flow back excess deferred taxes to customers. ARAM has been deferred when regulatory treatment has not been established. As Xcel Energy received direction from its regulatory commissions regarding the return of excess deferred taxes to customers, the ARAM deferral was reversed. This resulted in a reduction to tax expense with a corresponding reduction to revenue.
Federal Audits — NSP-Minnesota is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. Statute of limitations applicable to Xcel Energy’s federal income tax returns expire as follows:
Tax Year(s)
 
Expiration
2009 - 2013
 
October 2019
2014 - 2016
 
September 2020
2017
 
September 2021
In the third quarter of 2015, the IRS commenced an examination of tax years 2012 and 2013. In the third quarter of 2017, the IRS concluded the audit of tax years 2012 and 2013 and proposed an adjustment that would impact Xcel Energy’s NOL and ETR. Xcel Energy filed a protest with the IRS. As of March 31, 2019, the case has been forwarded to the Office of Appeals and Xcel Energy has recognized its best estimate of income tax expense that will result from a final resolution of this issue; however, the outcome and timing of a resolution is unknown.
In the fourth quarter of 2018, the IRS began an audit of tax years 2014 - 2016. As of March 31, 2019 no adjustments have been proposed.
State Audits — NSP-Minnesota is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of March 31, 2019, NSP-Minnesota’s earliest open tax year that is subject to examination by state taxing authorities under applicable statutes of limitations is 2009. There are currently no state income tax audits in progress.
Unrecognized Benefits — Unrecognized tax benefit balance includes permanent tax positions, which if recognized would affect the annual ETR. In addition, the unrecognized tax benefit balance includes temporary tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the ETR but would accelerate the payment to the taxing authority to an earlier period.
 
Unrecognized tax benefits - permanent vs temporary:
(Millions of Dollars)
 
March 31, 2019
 
Dec. 31, 2018
Unrecognized tax benefit — Permanent tax positions
 
$
12.2

 
$
11.6

Unrecognized tax benefit — Temporary tax positions
 
5.2

 
5.3

Total unrecognized tax benefit
 
$
17.4

 
$
16.9

Unrecognized tax benefits were reduced by tax benefits associated with NOL and tax credit carryforwards:
(Millions of Dollars)
 
March 31, 2019
 
Dec. 31, 2018
NOL and tax credit carryforwards
 
$
(14.0
)
 
$
(12.7
)
Net deferred tax liability associated with the unrecognized tax benefit amounts and related NOLs and tax credits carryforwards were $8.7 million and $7.3 million at March 31, 2019 and Dec. 31, 2018, respectively.
As the IRS Appeals and federal audit progress and state audits resume, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $13.7 million in the next 12 months.
Payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with NOL and tax credit carryforwards.
Interest payable related to unrecognized tax benefits:
(Millions of Dollars)
 
March 31, 2019
 
Dec. 31, 2018
Payable for interest related to unrecognized tax benefits at beginning of period
 
$
(1.2
)
 
$
(0.9
)
Interest expense related to unrecognized tax benefits
 
(0.1
)
 
(0.3
)
Payable for interest related to unrecognized tax benefits at end of period
 
$
(1.3
)
 
$
(1.2
)
No amounts were accrued for penalties related to unrecognized tax benefits as of March 31, 2019 or Dec. 31, 2018.
7.
Fair Value of Financial Assets and Liabilities
Fair Value Measurements
The 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.

11


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 NAV.
Investments in equity securities and other funds Equity securities are valued using quoted prices in active markets. The fair values for commingled funds are measured using NAVs. The investments in commingled funds may be redeemed for NAV with proper notice. Private equity commingled fund investments require approval of the fund for any unscheduled redemption, and such redemptions may be approved or denied by the fund at its sole discretion. Unscheduled distributions from real estate commingled funds investments may be redeemed with proper notice, however, withdrawals may be delayed or discounted as a result of fund illiquidity.
Investments in debt securities Fair values for debt securities are determined by a third party pricing service using recent trades and observable spreads from benchmark interest rates for similar securities.
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 generally utilize observable forward prices and volatilities, as well as observable pricing adjustments for specific delivery locations, and are generally assigned a Level 2 classification. When contractual settlements relate to delivery locations for which pricing is relatively unobservable, 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 NSP-Minnesota include transmission congestion instruments, generally referred to as FTRs. 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 included in fuel and purchased energy cost recovery mechanisms, and therefore changes in the fair value of the yet to be settled portions of most FTRs are deferred as a regulatory asset or liability. Given this regulatory treatment and the limited magnitude of NSP-Minnesota’s FTRs relative to its electric utility operations, the numerous unobservable quantitative inputs pertinent to the value of FTRs are insignificant to the consolidated financial statements of NSP-Minnesota.
 
Non-Derivative Fair Value Measurements
The Nuclear Regulatory Commission requires NSP-Minnesota to maintain a portfolio of investments to fund the costs of decommissioning its nuclear generating plants. Assets of the nuclear decommissioning fund are legally restricted for the purpose of decommissioning these facilities. The fund contains cash equivalents, debt securities, equity securities and other investments. NSP-Minnesota uses the MPUC approved asset allocation for the escrow and investment targets by asset class for both the escrow and qualified trust.
NSP-Minnesota recognizes the costs of funding the decommissioning over the lives of the nuclear plants, assuming rate recovery of all costs. Realized and unrealized gains on fund investments over the life of the fund are deferred as an offset of NSP-Minnesota’s regulatory asset for nuclear decommissioning costs. Consequently, any realized and unrealized gains and losses on securities in the nuclear decommissioning fund are deferred as a component of the regulatory asset.
Unrealized gains for the nuclear decommissioning fund were $553.4 million and $450.1 million as of March 31, 2019 and Dec. 31, 2018, respectively, and unrealized losses were $15.3 million and $44.8 million as of March 31, 2019 and Dec. 31, 2018, respectively.
Non-derivative instruments with recurring fair value measurements in the nuclear decommissioning fund:
 
 
March 31, 2019
 
 
 
 
Fair Value
(Millions of Dollars)
 
Cost
 
Level 1
 
Level 2
 
Level 3
 
NAV
 
Total
Nuclear decommissioning fund (a)
 
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents
 
$
35.7

 
$
35.7

 
$

 
$

 
$

 
$
35.7

Commingled funds
 
774.5

 

 

 

 
937.4

 
937.4

Debt securities
 
483.5

 

 
463.7

 
15.8

 

 
479.5

Equity securities
 
406.8

 
786.0

 

 

 

 
786.0

Total
 
$
1,700.5

 
$
821.7

 
$
463.7

 
$
15.8

 
$
937.4

 
$
2,238.6

(a) 
Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $52.8 million of rabbi trust assets and miscellaneous investments.
 
 
Dec 31, 2018
 
 
 
 
Fair Value
(Millions of Dollars)
 
Cost
 
Level 1
 
Level 2
 
Level 3 (b)
 
NAV
 
Total
Nuclear decommissioning fund (a)
 
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents
 
$
24.3

 
$
24.3

 
$

 
$

 
$

 
$
24.3

Commingled funds
 
758.1

 
79.2

 

 

 
819.1

 
898.3

Debt securities
 
465.6

 

 
435.6

 

 

 
435.6

Equity securities
 
401.4

 
696.5

 

 

 

 
696.5

Total
 
$
1,649.4

 
$
800.0

 
$
435.6

 
$

 
$
819.1

 
$
2,054.7

(a) 
Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $52.5 million of rabbi trust assets and miscellaneous investments.
(b) 
For the year ended Dec. 31, 2018, there were no Level 3 nuclear decommissioning fund investments.
For the three months ended March 31, 2019 and 2018 there was no transfer of amounts between levels.

12


Contractual maturity dates of debt securities in the nuclear decommissioning fund as of March 31, 2019:
 
 
Final Contractual Maturity
(Millions of Dollars)
 
Due in 1 Year
or Less
 
Due in 1 to 5
Years
 
Due in 5 to 10
Years
 
Due after 10
Years
 
Total
Debt securities
 
$
1.3

 
$
110.7

 
$
246.8

 
$
120.7

 
$
479.5

Rabbi Trusts
NSP-Minnesota has established a rabbi trust to provide partial funding for future deferred compensation plan distributions.
Cost and fair value of assets held in rabbi trusts:
 
 
March 31, 2019
 
 
 
 
Fair Value
(Millions of Dollars)
 
Cost
 
Level 1
 
Level 2
 
Level 3
 
Total
Rabbi Trusts (a)
 
 
 
 
 
 
 
 
 
 
Cash equivalents
 
$
0.4

 
$
0.4

 
$

 
$

 
$
0.4

Mutual funds
 
10.8

 
11.7

 

 

 
11.7

Total
 
$
11.2

 
$
12.1

 
$

 
$

 
$
12.1

 
 
Dec. 31, 2018
 
 
 
 
Fair Value
(Millions of Dollars)
 
Cost
 
Level 1
 
Level 2
 
Level 3
 
Total
Rabbi Trusts (a)
 
 
 
 
 
 
 
 
 
 
Cash equivalents
 
$
0.4

 
$
0.4

 
$

 
$

 
$
0.4

Mutual funds
 
10.8

 
10.7

 

 

 
10.7

Total
 
$
11.2

 
$
11.1

 
$

 
$

 
$
11.1

(a) 
Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet.
Derivative Instruments Fair Value Measurements
NSP-Minnesota enters into derivative instruments, including forward contracts, futures, swaps and options, for trading purposes and to manage risk in connection with changes in interest rates, utility commodity prices and vehicle fuel prices.
Interest Rate Derivatives — NSP-Minnesota enters 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.
At March 31, 2019, accumulated other comprehensive losses related to interest rate derivatives included $0.8 million of net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings.
Wholesale and Commodity Trading Risk — NSP-Minnesota conducts various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy, energy-related instruments and natural gas-related instruments, including derivatives. NSP-Minnesota 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 activities governed by this policy.
 
Commodity Derivatives — NSP-Minnesota enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric and natural gas operations, as well as for trading purposes. This could include the purchase or sale of energy or energy-related products, natural gas to generate electric energy, natural gas for resale, FTRs, vehicle fuel, and weather derivatives.
NSP-Minnesota may enter into derivative instruments that mitigate commodity price risk on behalf of electric and natural gas customers, but may not be designated as qualifying hedging transactions. Changes in the fair value of non-trading commodity derivative instruments are recorded in other comprehensive income or deferred as a regulatory asset or liability. The classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms.
At March 31, 2019, NSP-Minnesota had no commodity contracts designated as cash flow hedges, and there were no net gains related to commodity derivative cash flow hedges recorded as a component of accumulated other comprehensive losses or related amounts expected to be reclassified into earnings during the next 12 months.
NSP-Minnesota also enters into commodity derivative instruments for trading purposes not directly related to commodity price risks associated with serving its electric and natural gas customers. Changes in the fair value of these commodity derivatives are recorded in electric operating revenues, net of amounts credited to customers under margin-sharing mechanisms.
Gross notional amounts of commodity forwards, options and FTRs:
(Amounts in Millions) (a)(b)
 
March 31, 2019
 
Dec. 31, 2018
MWh of electricity
 
50.6

 
56.8

MMBTU of natural gas
 
35.7

 
42.7

(a) 
Amounts are not reflective of net positions in the underlying commodities.
(b) 
Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise.
Consideration of Credit Risk and Concentrations — NSP-Minnesota 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 consolidated balance sheets. NSP-Minnesota’s most significant concentrations of credit risk with particular entities or industries are contracts with counterparties to its wholesale, trading and non-trading commodity activities.
As of March 31, 2019, seven of NSP-Minnesota’s 10 most significant counterparties for these activities, comprising $38.6 million or 49% of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. Three of the 10 most significant counterparties, comprising $16.1 million or 20% of this credit exposure, were not rated by these external agencies, but based on NSP-Minnesota’s internal analysis, had credit quality consistent with investment grade. Seven of these significant counterparties are municipal or cooperative electric entities, or other utilities.

13


Impact of derivative activity:
 
 
Pre-Tax Fair Value
Gains (Losses) Recognized
During the Period in:
(Millions of Dollars)
 
Accumulated Other Comprehensive Loss
 
Regulatory (Assets) and Liabilities
Three Months Ended March 31, 2019
 
 
 
 
Other derivative instruments
 
 
 
 
Electric commodity
 
$

 
$
5.3

Natural gas commodity
 

 
0.9

Total
 
$

 
$
6.2

 
 
 
 
 
Three Months Ended March 31, 2018
 
 
 
 
Other derivative instruments
 
 
 
 
Electric commodity
 
$

 
$
(4.3
)
Natural gas commodity
 

 
0.9

Total
 
$

 
$
(3.4
)
 
Pre-Tax (Gains) Losses
Reclassified into Income
During the Period from:
 
Pre-Tax Gains (Losses)
Recognized
During the Period in Income
 
(Millions of Dollars)
Accumulated Other Comprehensive Loss
 
Regulatory
Assets and (Liabilities)
 
 
Three Months Ended March 31, 2019
 
 
 
 
 
 
Derivatives designated as cash flow hedges
 
 
 
 
 
 
Interest rate
$
0.3

(a) 
$

 
$

 
Total
$
0.3

 
$

 
$

 
Other derivative instruments
 
 
 
 
 
 
Commodity trading
$

 
$

 
$
0.5

(b) 
Electric commodity

 
0.7

(c) 

 
Natural gas commodity

 
0.2

(d) 
(1.3
)
(d) 
Total
$

 
$
0.9

 
$
(0.8
)
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
 
 
 
 
 
Derivatives designated as cash flow hedges
 
 
 
 
 
 
Interest rate
$
0.2

(a) 
$

 
$

 
Total
$
0.2

 
$

 
$

 
Other derivative instruments
 
 
 
 
 
 
Commodity trading
$

 
$

 
$
2.7

(b) 
Electric commodity

 
2.2

(c) 

 
Natural gas commodity

 
(0.5
)
(d) 
(0.4
)
(d) 
Total
$

 
$
1.7

 
$
2.3

 
(a) 
Amounts are recorded to interest charges.
(b) 
Amounts are recorded to electric operating revenues. Portions of these gains and losses are subject to sharing with electric customers through margin-sharing mechanisms and deducted from gross revenue, as appropriate.
(c) 
Amounts are 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.
(d)
Amounts are recorded to cost of natural gas sold and transported. These derivative settlement gains and losses are shared with natural gas customers through purchased natural gas cost-recovery mechanisms, and reclassified out of income as regulatory assets or liabilities, as appropriate.
NSP-Minnesota had no derivative instruments designated as fair value hedges during the three months ended March 31, 2019 and 2018.
 

Credit Related Contingent Features — Contract provisions for derivative instruments that NSP-Minnesota enters into, including those accounted for as normal purchase-normal sale contracts and therefore not reflected on the consolidated balance sheets, may require the posting of collateral or settlement of the contracts for various reasons, including if NSP-Minnesota’s credit ratings are downgraded below its investment grade credit rating by any of the major credit rating agencies, or for cross-default contractual provisions if there was a failure under other financing arrangements related to payment terms or other covenants. At March 31, 2019 and Dec. 31, 2018, less than $1.0 million of derivative instruments were in a liability position with such underlying contract provisions.
Certain derivative instruments are also subject to contract provisions that contain adequate assurance clauses. These provisions allow counterparties to seek performance assurance, including cash collateral, in the event that NSP-Minnesota’s ability to fulfill its contractual obligations is reasonably expected to be impaired. NSP-Minnesota had less than $1.0 million of collateral posted related to adequate assurance clauses in derivative contracts as of March 31, 2019 and Dec. 31, 2018.


14


Recurring Fair Value Measurements — NSP-Minnesota’s derivative assets and liabilities measured at fair value on a recurring basis:
 
 
March 31, 2019
 
Dec. 31, 2018
 
 
Fair Value
 
Fair Value
Total
 
Netting (a)
 
 
 
Fair Value
 
Fair Value
Total
 
Netting (a)
 
 
(Millions of Dollars)
 
Level 1
 
Level 2
 
Level 3
 
 
 
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
Total
Current derivative assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other derivative instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity trading
 
$
0.2

 
$
23.2

 
$
13.0

 
$
36.4

 
$
(22.1
)
 
$
14.3

 
$
1.1

 
$
27.1

 
$
2.2

 
$
30.4

 
$
(16.0
)
 
$
14.4

Electric commodity
 

 

 
5.2

 
5.2

 

 
5.2

 

 

 
10.5

 
10.5

 
(0.1
)
 
10.4

Natural gas commodity
 

 

 

 

 

 

 

 
1.0

 

 
1.0

 

 
1.0

Total current derivative assets
 
$
0.2

 
$
23.2

 
$
18.2

 
$
41.6

 
$
(22.1
)
 
19.5

 
$
1.1

 
$
28.1

 
$
12.7

 
$
41.9

 
$
(16.1
)
 
25.8

PPAs (b)
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 

Current derivative instruments
 
 
 
 
 
 
 
 
 
 
 
$
19.5

 
 
 
 
 
 
 
 
 
 
 
$
25.8

Noncurrent derivative assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other derivative instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity trading
 
$
0.1

 
$
32.3

 
$

 
$
32.4

 
$
(25.5
)
 
$
6.9

 
$

 
$
25.3

 
$
5.0

 
$
30.3

 
$
(13.4
)
 
$
16.9

Total noncurrent derivative assets
 
$
0.1

 
$
32.3

 
$

 
$
32.4

 
$
(25.5
)
 
6.9

 
$

 
$
25.3

 
$
5.0

 
$
30.3

 
$
(13.4
)
 
16.9

PPAs (b)
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
0.1

Noncurrent derivative instruments
 
 
 
 
 
 
 
 
 
 
 
$
6.9

 
 
 
 
 
 
 
 
 
 
 
$
17.0

 
 
March 31, 2019
 
Dec. 31, 2018
 
 
Fair Value
 
Fair Value
Total
 
Netting (a)
 
 
 
Fair Value
 
Fair Value
Total
 
Netting (a)
 
 
(Millions of Dollars)
 
Level 1
 
Level 2
 
Level 3
 
 
 
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
Total
Current derivative liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other derivative instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity trading
 
$

 
$
14.2

 
$
16.3

 
$
30.5

 
$
(30.3
)
 
$
0.2

 
$
1.4

 
$
23.9

 
$
1.7

 
$
27.0

 
$
(24.5
)
 
$
2.5

Electric commodity
 

 

 

 

 

 

 

 

 
0.1

 
0.1

 
(0.1
)
 

Total current derivative liabilities
 
$

 
$
14.2

 
$
16.3

 
$
30.5

 
$
(30.3
)
 
0.2

 
$
1.4

 
$
23.9

 
$
1.8

 
$
27.1

 
$
(24.6
)
 
2.5

PPAs (b)
 
 
 
 
 
 
 
 
 
 
 
13.9

 
 
 
 
 
 
 
 
 
 
 
14.0

Current derivative instruments
 
 
 
 
 
 
 
 
 
 
 
$
14.1

 
 
 
 
 
 
 
 
 
 
 
$
16.5

Noncurrent derivative liabilities