Company Quick10K Filing
Southwestern Public Service
Price-0.01 EPS2,180,000
Shares0 P/E-0
MCap-0 P/FCF-0
Net Debt2,272 EBIT327
TEV2,272 TEV/EBIT7
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-10-29
10-Q 2020-06-30 Filed 2020-07-31
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-21
10-Q 2019-09-30 Filed 2019-10-25
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-04-26
10-K 2018-12-31 Filed 2019-02-22
10-Q 2018-09-30 Filed 2018-10-26
10-Q 2018-06-30 Filed 2018-07-27
10-Q 2018-03-31 Filed 2018-04-27
10-K 2017-12-31 Filed 2018-02-23
10-Q 2017-09-30 Filed 2017-10-27
10-Q 2017-06-30 Filed 2017-07-28
10-Q 2017-03-31 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-02-24
10-Q 2016-09-30 Filed 2016-10-31
10-Q 2016-06-30 Filed 2016-08-04
10-Q 2016-03-31 Filed 2016-05-13
10-K 2015-12-31 Filed 2016-02-22
10-Q 2015-09-30 Filed 2015-11-02
10-Q 2015-06-30 Filed 2015-08-03
10-Q 2015-03-31 Filed 2015-05-04
10-K 2014-12-31 Filed 2015-02-23
10-Q 2014-09-30 Filed 2014-11-03
10-Q 2014-06-30 Filed 2014-08-01
10-Q 2014-03-31 Filed 2014-05-05
10-K 2013-12-31 Filed 2014-02-24
10-Q 2013-09-30 Filed 2013-10-28
10-Q 2013-06-30 Filed 2013-08-05
10-Q 2013-03-31 Filed 2013-05-06
10-K 2012-12-31 Filed 2013-02-25
10-Q 2012-09-30 Filed 2012-10-29
10-Q 2012-06-30 Filed 2012-08-06
10-Q 2012-03-31 Filed 2012-04-30
10-K 2011-12-31 Filed 2012-02-27
10-Q 2011-09-30 Filed 2011-10-31
10-Q 2011-06-30 Filed 2011-08-01
10-Q 2011-03-31 Filed 2011-05-02
10-K 2010-12-31 Filed 2011-02-28
10-Q 2010-09-30 Filed 2010-11-01
10-Q 2010-06-30 Filed 2010-08-02
10-Q 2010-03-31 Filed 2010-05-03
10-K 2009-12-31 Filed 2010-03-01
8-K 2020-05-18
8-K 2020-01-14
8-K 2019-11-22
8-K 2019-10-24
8-K 2019-08-30
8-K 2019-08-08
8-K 2019-08-01
8-K 2019-07-01
8-K 2019-06-18
8-K 2019-06-07
8-K 2019-04-25
8-K 2019-02-15
8-K 2019-01-31
8-K 2018-11-05
8-K 2018-10-25
8-K 2018-07-26
8-K 2018-04-26
8-K 2018-02-07

SPS 10Q Quarterly Report

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 spsex3101q32020.htm
EX-31.02 spsex3102q32020.htm
EX-32.01 spsex3201q32020.htm

Southwestern Public Service Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
0.60.50.40.20.10.02012201420172020
Rev, G Profit, Net Income
0.50.30.1-0.0-0.2-0.42012201420172020
Ops, Inv, Fin

sps-20200930
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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 Sept. 30, 2020 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Southwestern Public Service Company
(Exact name of registrant as specified in its charter)
New Mexico001-303475-0575400
(State or Other Jurisdiction of Incorporation or Organization)(Commission File Number)(IRS Employer Identification No.)
790 South Buchanan StreetAmarilloTexas79101
(Address of Principal Executive Offices)(Zip Code)
303571-7511
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
N/AN/AN/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 FilerAccelerated Filer
Non-accelerated FilerSmaller 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 Oct. 29, 2020
Common Stock, $1.00 par value 100 shares
Southwestern Public Service Company meets the conditions set forth in General Instruction 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 IIOTHER INFORMATION
Item 1 —
Item 1A —
Item 6 —
  
 
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

This Form 10-Q is filed by Southwestern Public Service Company, a New Mexico corporation (SPS). SPS is a wholly owned subsidiary of Xcel Energy Inc. Additional information on Xcel Energy is available in various filings with the Securities and Exchange Commission. 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-MinnesotaNorthern States Power Company, a Minnesota corporation
NSP-WisconsinNorthern States Power Company, a Wisconsin corporation
PSCoPublic Service Company of Colorado
SPSSouthwestern Public Service Company
Utility subsidiariesNSP-Minnesota, NSP-Wisconsin, PSCo and SPS
Xcel EnergyXcel Energy Inc. and its subsidiaries
Federal and State Regulatory Agencies
D.C. CircuitUnited States Court of Appeals for the District of Columbia Circuit
EPAUnited States Environmental Protection Agency
FERCFederal Energy Regulatory Commission
IRSInternal Revenue Service
NMPRCNew Mexico Public Regulation Commission
PUCTPublic Utility Commission of Texas
SECSecurities and Exchange Commission
  
Electric, Purchased Gas and Resource Adjustment Clauses
DSMDemand side management
FPPCACFuel and Purchased Power Cost Adjustment Clause
Other
AFUDCAllowance for funds used during construction
ASCFASB Accounting Standards Codification
C&ICommercial and Industrial
CEOChief executive officer
CFOChief financial officer
COVID-19Novel coronavirus
ETREffective tax rate
FASBFinancial Accounting Standards Board
FTRFinancial transmission right
GAAPGenerally accepted accounting principles
IPPIndependent power producers
LLCLimited liability company
NOLNet operating loss
O&MOperating and maintenance
OATTOpen access transmission tariff
PPAPower purchase agreement
PTCProduction tax credit
ROEReturn on equity
ROFRRight of first refusal
RTORegional Transmission Organization
SPPSouthwest Power Pool, Inc.
VIEVariable interest entity


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 filings with the SEC (including SPS’ Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019, and subsequent filings), 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; 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; 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 and their impact on capital expenditures and 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.



Table of Contents
PART IFINANCIAL INFORMATION
ITEM 1FINANCIAL STATEMENTS

SOUTHWESTERN PUBLIC SERVICE COMPANY
STATEMENTS OF INCOME (UNAUDITED)
(amounts in millions)
Three Months Ended Sept. 30Nine Months Ended Sept. 30
2020201920202019
Operating revenues$615.3 $533.1 $1,433.7 $1,397.7 
Operating expenses  
Electric fuel and purchased power240.0 240.2 626.6 651.0 
Operating and maintenance expenses78.9 74.1 206.8 216.6 
Demand side management expenses4.6 4.5 12.2 12.9 
Depreciation and amortization100.2 61.3 223.3 172.3 
Taxes (other than income taxes)28.8 17.6 68.5 53.1 
Total operating expenses452.5 397.7 1,137.4 1,105.9 
Operating income162.8 135.4 296.3 291.8 
Other (expense) income, net(0.3)1.5 (2.2)2.4 
Allowance for funds used during construction — equity10.1 3.2 23.9 22.2 
Interest charges and financing costs
Interest charges — includes other financing costs of $1.0, $0.9, $2.8 and $2.5, respectively
39.1 26.0 89.0 76.0 
Allowance for funds used during construction — debt(4.4)(1.5)(10.4)(10.2)
Total interest charges and financing costs34.7 24.5 78.6 65.8 
Income before income taxes137.9 115.6 239.4 250.6 
Income tax expense (benefit)10.8 10.5 (2.1)32.6 
Net income$127.1 $105.1 $241.5 $218.0 
See Notes to Financial Statements


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SOUTHWESTERN PUBLIC SERVICE COMPANY
STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(amounts in millions)
Three Months Ended Sept. 30Nine Months Ended Sept. 30
2020201920202019
Net income$127.1 $105.1 $241.5 $218.0 
Other comprehensive income
Pension and retiree medical benefits:
Reclassification of loss to net income, net of tax of $
  0.1 0.1 
Total other comprehensive income  0.1 0.1 
Total comprehensive income$127.1 $105.1 $241.6 $218.1 
See Notes to Financial Statements

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SOUTHWESTERN PUBLIC SERVICE COMPANY
STATEMENTS OF CASH FLOWS (UNAUDITED)
(amounts in millions)
 Nine Months Ended Sept. 30
20202019
Operating activities  
Net income$241.5 $218.0 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization225.2 174.0 
Deferred income taxes25.4 16.2 
Allowance for equity funds used during construction(23.9)(22.2)
Provision for bad debts4.7 4.0 
Changes in operating assets and liabilities:
Accounts receivable(30.5)(30.5)
Accrued unbilled revenues(3.5)(10.4)
Inventories(24.1)(16.3)
Prepayments and other(14.0)6.0 
Accounts payable(2.9)(15.1)
Net regulatory assets and liabilities(95.6)17.6 
Other current liabilities14.5 14.1 
Pension and other employee benefit obligations(15.2)(17.6)
Other, net3.7 2.0 
Net cash provided by operating activities305.3 339.8 
Investing activities
Utility capital/construction expenditures(845.4)(632.8)
Investments in utility money pool arrangement(4.0)(133.0)
Repayments from utility money pool arrangement4.0 133.0 
Net cash used in investing activities(845.4)(632.8)
Financing activities
Repayments of short-term borrowings, net (42.0)
Proceeds from issuance of long-term debt, net342.7 292.2 
Borrowings under utility money pool arrangement721.0 283.0 
Repayments under utility money pool arrangement(711.0)(283.0)
Capital contributions from parent435.4 400.8 
Dividends paid to parent(257.4)(255.0)
Other, net(0.3) 
Net cash provided by financing activities530.4 396.0 
Net change in cash and cash equivalents(9.7)103.0 
Cash and cash equivalents at beginning of period16.2 44.0 
Cash and cash equivalents at end of period$6.5 $147.0 
Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)$(69.1)$(60.3)
Cash received (paid) for income taxes, net4.0 (4.4)
Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions$111.1 $67.5 
Inventory transfers to property, plant and equipment21.9 18.7 
Operating lease right-of-use assets 548.3 
Allowance for equity funds used during construction23.9 22.2 

See Notes to Financial Statements
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SOUTHWESTERN PUBLIC SERVICE COMPANY
BALANCE SHEETS (UNAUDITED)
(amounts in millions, except share and per share data)
 Sept. 30, 2020Dec. 31, 2019
Assets  
Current assets  
Cash and cash equivalents$6.5 $16.2 
Accounts receivable, net110.8 92.7 
Accounts receivable from affiliates11.1 4.2 
Accrued unbilled revenues118.3 115.1 
Inventories33.2 31.0 
Regulatory assets75.4 20.0 
Derivative instruments14.3 15.0 
Prepaid taxes17.5 0.8 
Prepayments and other19.9 21.4 
Total current assets407.0 316.4 
Property, plant and equipment, net7,368.56,631.6 
Other assets
Regulatory assets362.2 364.0 
Derivative instruments10.3 12.6 
Operating lease right-of-use assets497.1 522.4 
Other3.4 3.9 
Total other assets873.0 902.9 
Total assets$8,648.5 $7,850.9 
Liabilities and Equity
Current liabilities
Borrowings under utility money pool arrangement$10.0 $ 
Accounts payable230.6 168.1 
Accounts payable to affiliates16.7 20.4 
Regulatory liabilities77.2 118.1 
Taxes accrued50.9 40.4 
Accrued interest33.4 26.2 
Dividends payable to parent55.0 46.3 
Derivative instruments3.6 3.7 
Operating lease liabilities27.8 26.9 
Other25.2 30.7 
Total current liabilities530.4 480.8 
Deferred credits and other liabilities
Deferred income taxes719.4671.8
Regulatory liabilities715.8 732.3 
Asset retirement obligations80.0 77.3 
Derivative instruments10.1 12.8 
Pension and employee benefit obligations51.9 67.0 
Operating lease liabilities469.3 495.3 
Other12.1 9.4 
Total deferred credits and other liabilities2,058.6 2,065.9 
Commitments and contingencies
Capitalization
Long-term debt2,763.72,419.7
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at Sept. 30, 2020 and Dec. 31, 2019, respectively
  
Additional paid in capital2,786.9 2,350.9 
Retained earnings510.2 535.0 
Accumulated other comprehensive loss(1.3)(1.4)
Total common stockholder's equity3,295.8 2,884.5 
Total liabilities and equity$8,648.5 $7,850.9 
See Notes to Financial Statements
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SOUTHWESTERN PUBLIC SERVICE COMPANY
STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED)
(amounts in millions, except share data)
Common Stock IssuedRetained EarningsAccumulated Other Comprehensive Loss Total Common Stockholder's Equity
SharesPar ValueAdditional Paid
In Capital
Three Months Ended Sept. 30, 2020 and 2019
Balance at June 30, 2019100 $ $2,307.3 $577.7 $(1.3)$2,883.7 
Net income105.1 105.1 
Dividends declared to parent(114.6)(114.6)
Contributions of capital by parent18.0 18.0 
Balance at Sept. 30, 2019100 $ $2,325.3 $568.2 $(1.3)$2,892.2 
Balance at June 30, 2020100 $ $2,786.9 $519.1 $(1.3)$3,304.7 
Net income127.1 127.1 
Dividends declared to parent(136.0)(136.0)
Balance at Sept. 30, 2020100 $ $2,786.9 $510.2 $(1.3)$3,295.8 
Common Stock IssuedRetained EarningsAccumulated Other Comprehensive LossTotal Common Stockholder's Equity
SharesPar ValueAdditional Paid
In Capital
Nine Months Ended Sept. 30, 2020 and 2019
Balance at Dec. 31, 2018100 $ $1,932.3 $605.7 $(1.4)$2,536.6 
Net income218.0 218.0 
Other comprehensive income0.1 0.1 
Dividends declared to parent(255.5)(255.5)
Contributions of capital by parent393.0 393.0 
Balance at Sept. 30, 2019100 $ $2,325.3 $568.2 $(1.3)$2,892.2 
Balance at Dec. 31, 2019100 $ $2,350.9 $535.0 $(1.4)$2,884.5 
Net income241.5 241.5 
Other comprehensive income0.1 0.1 
Dividends declared to parent(266.2)(266.2)
Contributions of capital by parent436.0 436.0 
Adoption of ASC Topic 326(0.1)(0.1)
Balance at Sept. 30, 2020100 $ $2,786.9 $510.2 $(1.3)$3,295.8 
See Notes to Financial Statements


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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 U.S. GAAP, the financial position of SPS as of Sept. 30, 2020 and Dec. 31, 2019; the results of its operations, including the components of net income and comprehensive income, and changes in stockholder’s equity for the three and nine months ended Sept. 30, 2020 and 2019; and its cash flows for the nine months ended Sept. 30, 2020 and 2019.
All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after Sept. 30, 2020 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, 2019 balance sheet information has been derived from the audited 2019 financial statements included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2019.
These 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, 2019, filed with the SEC on Feb. 21, 2020. 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, 2019 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.
2. Accounting Pronouncements
Recently Adopted
Credit Losses In 2016, the FASB issued Financial Instruments - Credit Losses, Topic 326 (ASC Topic 326), which changes how entities account for losses on receivables and certain other assets. The guidance requires use of a current expected credit loss model, which may result in earlier recognition of credit losses than under previous accounting standards.
SPS implemented the guidance using a modified-retrospective approach, recognizing a cumulative effect charge of $0.1 million (after tax) to retained earnings on Jan. 1, 2020. Other than first-time recognition of an allowance for bad debts on accrued unbilled revenues, the Jan. 1, 2020 adoption of ASC Topic 326 did not have a significant impact on SPS’ financial statements.
3. Selected Balance Sheet Data
(Millions of Dollars)Sept. 30, 2020Dec. 31, 2019
Accounts receivable, net
Accounts receivable$117.9 $98.0 
Less allowance for bad debts(7.1)(5.3)
Accounts receivable, net$110.8 $92.7 
(Millions of Dollars)Sept. 30, 2020Dec. 31, 2019
Inventories
Materials and supplies$26.2 $24.7 
Fuel7.0 6.3 
Total inventories$33.2 $31.0 

(Millions of Dollars)Sept. 30, 2020Dec. 31, 2019
Property, plant and equipment, net
Electric plant$8,751.8 $8,453.0 
Construction work in progress1,075.1 485.4 
Total property, plant and equipment9,826.9 8,938.4 
Less accumulated depreciation(2,458.4)(2,306.8)
Property, plant and equipment, net$7,368.5 $6,631.6 

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 were as follows:
(Amounts in Millions, Except Interest Rates)Three Months Ended Sept. 30, 2020Year Ended Dec. 31, 2019
Borrowing limit$100 $100 
Amount outstanding at period end10  
Average amount outstanding 8 
Maximum amount outstanding10 100 
Weighted average interest rate, computed on a daily basis0.09 %2.42 %
Weighted average interest rate at period end0.90 N/A
Commercial Paper Commercial paper outstanding for SPS was as follows:
(Amounts in Millions, Except Interest Rates)Three Months Ended Sept. 30, 2020Year Ended Dec. 31, 2019
Borrowing limit$500 $500 
Amount outstanding at period end  
Average amount outstanding 72 
Maximum amount outstanding 316 
Weighted average interest rate, computed on a daily basisN/A2.68 %
Weighted average interest rate at period endN/AN/A
Letters of Credit — SPS uses letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. At both Sept. 30, 2020 and Dec. 31, 2019, there were $2 million 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.
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Revolving Credit Facility — 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 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.
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 Sept. 30, 2020, SPS had the following committed revolving credit facility available (in millions of dollars):
Credit Facility (a)
Drawn (b)
Available
$500 $2 $498 
(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 Sept. 30, 2020 and Dec. 31, 2019.
Long-Term Borrowings
During the nine months ended Sept. 30, 2020, SPS issued $350 million of 3.15% first mortgage bonds due May 1, 2050.
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 Sept. 30
(Millions of Dollars)20202019
Major revenue types
Revenue from contracts with customers:
Residential$120.6 $119.3 
C&I219.5 222.4 
Other12.9 12.8 
Total retail353.0 354.5 
Wholesale109.4 106.6 
Transmission73.5 64.4 
Other1.4 0.6 
Total revenue from contracts with customers537.3 526.1 
Alternative revenue and other78.0 7.0 
Total revenues$615.3 $533.1 
Nine Months Ended Sept. 30
(Millions of Dollars)20202019
Major revenue types
Revenue from contracts with customers:
Residential$278.3 $277.8 
C&I552.3 619.6 
Other29.5 32.3 
Total retail860.1 929.7 
Wholesale264.2 263.4 
Transmission212.1 181.8 
Other2.6 2.0 
Total revenue from contracts with customers1,339.0 1,376.9 
Alternative revenue and other94.7 20.8 
Total revenues$1,433.7 $1,397.7 
6.    Income Taxes
Note 7 to the financial statements included in SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2019 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.
The following table reconciles the difference between the statutory rate and the ETR:
Nine Months Ended Sept. 30
20202019
Federal statutory rate21.0 %21.0 %
State tax (net of federal tax effect)2.4 2.2 
Decreases in tax from:
Wind PTCs(15.6)(3.9)
Plant regulatory differences (a)
(6.2)(4.7)
Prior period adjustments(1.5)(0.5)
Other tax credits, net NOL & tax credit allowances(0.7)(0.6)
Other (net)(0.3)(0.5)
Effective income tax rate(0.9)%13.0 %
(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.
Federal Tax Loss Carryback Claims In 2020, Xcel Energy identified certain expenses related to tax years 2009-2011 that qualify for an extended carryback claim. SPS is not expected to accrue any income tax expense related to this adjustment.

Federal Audits — SPS 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 YearsExpiration
2014 2016
July 2021
Additionally, the statute of limitations related to the federal tax loss carryback claim referenced above has been extended. 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 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. In April 2020, Xcel Energy and Office of Appeals reached an agreement and no material adjustments were required.
In 2018, the IRS began an audit of tax years 2014 - 2016. In July 2020, Xcel Energy and the IRS reached an agreement and the related benefit was recognized.
State Audits — SPS is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of Sept. 30, 2020, SPS’ earliest open tax year subject to examination by state taxing authorities under applicable statutes of limitations is 2011. As of Sept. 30, 2020, there are no state income tax audits in progress.
Unrecognized Benefits — The 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 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.
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Unrecognized tax benefits — permanent vs temporary:
(Millions of Dollars)Sept. 30, 2020Dec. 31, 2019
Unrecognized tax benefit — Permanent tax positions$2.9 $3.7 
Unrecognized tax benefit — Temporary tax positions0.1 1.5 
Total unrecognized tax benefit$3.0 $5.2 
Unrecognized tax benefits were reduced by tax benefits associated with NOL and tax credit carryforwards:
(Millions of Dollars)Sept. 30, 2020Dec. 31, 2019
NOL and tax credit carryforwards$(2.2)$(4.4)
Net deferred tax liability associated with the unrecognized tax benefit amounts and related NOLs and tax credit carryforwards were $2.1 million and $1.4 million at Sept. 30, 2020 and Dec. 31, 2019, respectively.
As the IRS and state audits resume, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $0.6 million in the next 12 months.
Payables for interest related to unrecognized tax benefits were not material and no amounts were accrued for penalties related to unrecognized tax benefits as of Sept. 30, 2020 and Dec. 31, 2019, respectively.
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; and
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 forecasts of forward prices and volatilities 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 an 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 insignificant 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 Sept. 30, 2020, accumulated other comprehensive loss related to interest rate derivatives included $0.1 million of net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings, including forecasted amounts for unsettled hedges, as applicable.
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.
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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)
Sept. 30, 2020Dec. 31, 2019
Megawatt hours of electricity8.3 6.4 
(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 on 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 Sept. 30, 2020, three of the 10 most significant counterparties for these activities, comprising $17.9 million, or 41%, of this credit exposure, had investment grade ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. Six of the 10 most significant counterparties, comprising $25.5 million, or 59%, of this credit exposure, were not rated by external rating agencies, but based on SPS’ internal analysis, had credit quality consistent with investment grade. One of these significant counterparties, comprising $0.1 million or 0.3% of this credit exposure, had credit quality less than investment grade, based on internal analysis. 10 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 losses and immaterial losses related to interest rate derivatives reclassified from accumulated other comprehensive loss into earnings for the three and nine months ended Sept. 30, 2020 and 2019, respectively.
Changes in the fair value of FTRs resulting in pre-tax net losses of $2.5 million and $5.0 million were recognized for the three and nine months ended Sept. 30, 2020, respectively, which were reclassified as regulatory assets and liabilities. There were immaterial and $4.7 million of pre-tax net gains recognized for the three and nine months ended Sept. 30, 2019, respectively, which were reclassified as regulatory assets and 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 gains of $2.3 million and $3.6 million were recognized for the three and nine months ended Sept. 30, 2020, respectively and were recorded to electric fuel and purchased power. Settlement gains of $1.7 million and $1.5 million were recognized for the three and nine months ended Sept. 30, 2019, 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 and nine months ended Sept. 30, 2020 and 2019.

Recurring Fair Value Measurements — SPS’ derivative assets and liabilities measured at fair value on a recurring basis:
Sept. 30, 2020Dec. 31, 2019
Fair ValueFair Value Total
Netting (a)
TotalFair ValueFair Value Total
Netting (a)
Total
(Millions of Dollars)Level 1Level 2Level 3Level 1Level 2Level 3
Current derivative assets
Other derivative instruments:
Electric commodity$ $ $11.2 $11.2 $(0.1)$11.1 $ $ $11.8 $11.8 $ $11.8 
Total current derivative assets$ $ $11.2 $11.2 $(0.1)11.1 $ $ $11.8 $11.8 $ 11.8 
PPAs (b)
3.2 3.2 
Current derivative instruments$14.3 $15.0 
Noncurrent derivative assets
PPAs (b)
$10.3 $12.6 
Noncurrent derivative instruments$10.3 $12.6 
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