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 ~~June~~Sept. 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-03140


Northern States Power Company
(Exact Name of Registrant as Specified in its Charter)

Wisconsin

39-0508315

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S Employer Identification No.)

1414 West Hamilton Avenue

Eau Claire

Wisconsin

54701

(Address of Principal Executive Offices)

(Zip Code)


(715)			737-2625
(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 class

Trading Symbol(s)

Name of each exchange on which registered

N/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 filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

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 ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at ~~July~~October 27, 2023
Common Stock, $100 par value						933,000 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 —	Financial Statements (unaudited)	4
	Consolidated Statements of Income	4
	Consolidated Statements of Cash Flows	5
	Consolidated Balance Sheets	6
	Consolidated Statements of Common Stockholder's Equity	7
	Notes to Consolidated Financial Statements	8
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 4 —	Controls and Procedures	14

PART II	OTHER INFORMATION
Item 1 —	Legal Proceedings	1415
Item 1A —	Risk Factors	1415
Item 5 —	Other Information	1415
Item 6 —	Exhibits	15

SIGNATURES		16

This Form 10-Q is filed by NSP-Wisconsin. NSP-Wisconsin 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.

Definitions of Abbreviations


Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former)
e prime			e prime inc.
NSP-Minnesota			Northern States Power Company, a Minnesota corporation
NSP System			The electric production and transmission system of NSP-Minnesota and NSP-Wisconsin operated on an integrated basis and managed by NSP-Minnesota
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
EPA			United States Environmental Protection Agency
FERC			Federal Energy Regulatory Commission
PSCW			Public Service Commission of Wisconsin
SEC			Securities and Exchange Commission


Other
C&I			Commercial and Industrial
CEO			Chief executive officer
CERCLA			Comprehensive Environmental Response, Compensation, and Liability Act
CFO			Chief financial officer
GAAP			United States generally accepted accounting principles
IRP			Integrated Resource Plan
MGP			Manufactured gas plant
MISO			Midcontinent Independent System Operator, Inc.
NOx			Nitrogen Oxides
PFAS			Per- and Polyfluoroalkyl Substances
O&M			Operating and maintenance
RFP			Request for proposal
ROE			Return on equity
RTO			Regional Transmission Organization
TOs			Transmission owners

Measurements
MW			Megawatts


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, including those relating to future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impact on our results of operations, financial condition and cash flows of resettlement calculations and credit losses relating to certain energy transactions, as well as 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 in NSP-Wisconsin's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2022, and subsequent filings with the SEC, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: 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~~workforce and third-party contractor factors; violations of our Codes of Conduct; our ability to recover costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including recessionary conditions, inflation rates, monetary fluctuations, supply chain constraints and their impact on capital expenditures and/or the ability of NSP-Wisconsin 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; uncertainty regarding epidemics, the duration and magnitude of business restrictions including shutdowns (domestically and globally), the potential impact on the workforce, including shortages of employees or third-party contractors due to quarantine policies, vaccination requirements or government restrictions, impacts on the transportation of goods and the generalized impact on the economy; effects of geopolitical events, including war and acts of terrorism; ~~cyber security~~cybersecurity threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather events; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; costs of potential regulatory penalties and wildfire damages in excess of liability insurance coverage; regulatory changes and/or limitations related to the use of natural gas as an energy source; challenging labor market conditions and our ability to attract and retain a qualified workforce; and our ability to execute on our strategies or achieve expectations related to environmental, social and governance matters including as a result of evolving legal, regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

NSP-WISCONSIN AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(amounts in millions)


		Three Months Ended June 30				Six Months Ended June 30					Three Months Ended Sept. 30				Nine Months Ended Sept. 30
		2023		2022		2023		2022			2023		2022		2023		2022
Operating revenues	Operating revenues									Operating revenues
Electric, non-affiliates	Electric, non-affiliates	$	185	$	191	$	389	$	394	Electric, non-affiliates	$	213	$	223	$	602	$	617
Electric, affiliates	Electric, affiliates	51		52		101		99		Electric, affiliates	50		51		151		150
Natural gas	Natural gas	24		35		101		113		Natural gas	15		20		116		133

Other										Other	1		—		1		—
Total operating revenues	Total operating revenues	260		278		591		606		Total operating revenues	279		294		870		900

Operating expenses	Operating expenses									Operating expenses
Electric fuel and purchased power, non-affiliates	Electric fuel and purchased power, non-affiliates	3		4		7		8		Electric fuel and purchased power, non-affiliates	3		5		10		13
Purchased power, affiliates	Purchased power, affiliates	93		120		196		228		Purchased power, affiliates	109		115		305		343
Cost of natural gas sold and transported	Cost of natural gas sold and transported	9		20		55		65		Cost of natural gas sold and transported	6		10		61		75
Operating and maintenance expenses	Operating and maintenance expenses	57		54		115		107		Operating and maintenance expenses	58		53		173		160
Conservation program expenses	Conservation program expenses	4		3		7		6		Conservation program expenses	3		4		10		10
Depreciation and amortization	Depreciation and amortization	42		40		83		78		Depreciation and amortization	43		39		126		117
Taxes (other than income taxes)	Taxes (other than income taxes)	9		7		17		15		Taxes (other than income taxes)	8		8		25		23
Total operating expenses	Total operating expenses	217		248		480		507		Total operating expenses	230		234		710		741

Operating income	Operating income	43		30		111		99		Operating income	49		60		160		159

Other income (expense), net	Other income (expense), net	1		(1)		1		(1)		Other income (expense), net	1		(1)		2		(2)
Allowance for funds used during construction — equity	Allowance for funds used during construction — equity	2		1		4		3		Allowance for funds used during construction — equity	3		2		7		5

Interest charges and financing costs	Interest charges and financing costs									Interest charges and financing costs
Interest charges and other financing costs	Interest charges and other financing costs	13		11		26		22		Interest charges and other financing costs	14		11		40		33
Allowance for funds used during construction — debt	Allowance for funds used during construction — debt	(1)		—		(2)		(1)		Allowance for funds used during construction — debt	(1)		(1)		(3)		(2)
Total interest charges and financing costs	Total interest charges and financing costs	12		11		24		21		Total interest charges and financing costs	13		10		37		31

Income before income taxes	Income before income taxes	34		19		92		80		Income before income taxes	40		51		132		131
Income tax expense	Income tax expense	8		4		21		18		Income tax expense	9		11		30		29
Net income	Net income	$	26	$	15	$	71	$	62	Net income	$	31	$	40	$	102	$	102

See Notes to Consolidated Financial Statements

Table of Contents

NSP-WISCONSIN AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)


		Six Months Ended June 30					Nine Months Ended Sept. 30
		2023		2022			2023		2022
Operating activities	Operating activities					Operating activities
Net income	Net income	$	71	$	62	Net income	$	102	$	102
Adjustments to reconcile net income to cash provided by operating activities:	Adjustments to reconcile net income to cash provided by operating activities:					Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	84		78		Depreciation and amortization	128		118
Deferred income taxes	Deferred income taxes	(6)		(1)		Deferred income taxes	(17)		—
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(4)		(3)		Allowance for equity funds used during construction	(7)		(5)
Provision for bad debts	Provision for bad debts	2		2		Provision for bad debts	3		2
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	1		5		Accounts receivable	1		(1)
Accrued unbilled revenues	Accrued unbilled revenues	24		18		Accrued unbilled revenues	23		19
Inventories	Inventories	10		(4)		Inventories	4		(21)
Other current assets	Other current assets	9		(8)		Other current assets	28		(2)
Accounts payable	Accounts payable	(17)		2		Accounts payable	12		2
Net regulatory assets and liabilities	Net regulatory assets and liabilities	38		4		Net regulatory assets and liabilities	61		5
Other current liabilities	Other current liabilities	(2)		6		Other current liabilities	3		6
Pension and other employee benefit obligations	Pension and other employee benefit obligations	(2)		(1)		Pension and other employee benefit obligations	(2)		(3)
Other, net	Other, net	4		(2)		Other, net	4		(3)
Net cash provided by operating activities	Net cash provided by operating activities	212		158		Net cash provided by operating activities	343		219

Investing activities	Investing activities					Investing activities
Capital/construction expenditures	Capital/construction expenditures	(209)		(155)		Capital/construction expenditures	(343)		(244)

Investments in utility money pool arrangement						Investments in utility money pool arrangement	(88)		(36)
Repayments from utility money pool arrangement						Repayments from utility money pool arrangement	88		—

Net cash used in investing activities	Net cash used in investing activities	(209)		(155)		Net cash used in investing activities	(343)		(280)

Financing activities	Financing activities					Financing activities

Repayments of short-term borrowings, net	Repayments of short-term borrowings, net	(47)		(83)		Repayments of short-term borrowings, net	(47)		(83)
Borrowings under utility money pool arrangement	Borrowings under utility money pool arrangement	73		471		Borrowings under utility money pool arrangement	73		575
Repayments under utility money pool arrangement	Repayments under utility money pool arrangement	(73)		(404)		Repayments under utility money pool arrangement	(73)		(575)
Proceeds from long-term debt	Proceeds from long-term debt	124		—		Proceeds from long-term debt	124		99
Capital contributions from parent	Capital contributions from parent	46		51		Capital contributions from parent	57		111
Dividends paid to parent	Dividends paid to parent	(47)		(48)		Dividends paid to parent	(72)		(67)

Net cash provided by (used in) financing activities		76		(13)
Net cash provided by financing activities						Net cash provided by financing activities	62		60

Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	79		(10)		Net change in cash, cash equivalents and restricted cash	62		(1)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	2		11		Cash, cash equivalents and restricted cash at beginning of period	2		11
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	81	$	1	Cash, cash equivalents and restricted cash at end of period	$	64	$	10

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	Cash paid for interest (net of amounts capitalized)	$	(22)	$	(20)	Cash paid for interest (net of amounts capitalized)	$	(34)	$	(30)
Cash paid for income taxes, net	Cash paid for income taxes, net	(22)		(17)		Cash paid for income taxes, net	(30)		(26)

Supplemental disclosure of non-cash investing and financing transactions:	Supplemental disclosure of non-cash investing and financing transactions:					Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	Accrued property, plant and equipment additions	$	35	$	23	Accrued property, plant and equipment additions	$	31	$	30
Inventory transfers to property, plant and equipment	Inventory transfers to property, plant and equipment	5		2		Inventory transfers to property, plant and equipment	5		2
Allowance for equity funds used during construction	Allowance for equity funds used during construction	4		3		Allowance for equity funds used during construction	7		5

See Notes to Consolidated Financial Statements

Table of Contents

NSP-WISCONSIN AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in millions, except share and per share data)


		June 30, 2023		Dec. 31, 2022			Sept. 30, 2023		Dec. 31, 2022
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	81	$	2	Cash and cash equivalents	$	64	$	2
Accounts receivable, net	Accounts receivable, net	80		84		Accounts receivable, net	74		84

Accrued unbilled revenues	Accrued unbilled revenues	50		74		Accrued unbilled revenues	51		74
Other receivables	Other receivables	12		19		Other receivables	—		19
Inventories	Inventories	24		39		Inventories	29		39
Regulatory assets	Regulatory assets	32		44		Regulatory assets	28		44
Prepaid taxes	Prepaid taxes	28		27		Prepaid taxes	22		27
Prepayments and other	Prepayments and other	5		11		Prepayments and other	6		11
Total current assets	Total current assets	312		300		Total current assets	274		300

Property, plant and equipment, net	Property, plant and equipment, net	3,055		2,914		Property, plant and equipment, net	3,155		2,914

Other assets	Other assets					Other assets
Regulatory assets	Regulatory assets	187		193		Regulatory assets	181		193

Other	Other	3		3		Other	3		3
Total other assets	Total other assets	190		196		Total other assets	184		196
Total assets	Total assets	$	3,557	$	3,410	Total assets	$	3,613	$	3,410

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current liabilities	Current liabilities					Current liabilities
Current portion of long-term debt	Current portion of long-term debt	$	200	$	—	Current portion of long-term debt	$	200	$	—
Short-term debt	Short-term debt	—		47		Short-term debt	—		47

Accounts payable	Accounts payable	58		92		Accounts payable	70		92
Accounts payable to affiliates	Accounts payable to affiliates	21		19		Accounts payable to affiliates	26		19
Dividends payable to parent	Dividends payable to parent	25		23		Dividends payable to parent	24		23
Regulatory liabilities	Regulatory liabilities	28		21		Regulatory liabilities	47		21
Taxes accrued	Taxes accrued	17		13		Taxes accrued	20		13

Accrued interest	Accrued interest	12		12		Accrued interest	13		12
Other	Other	20		28		Other	20		28
Total current liabilities	Total current liabilities	381		255		Total current liabilities	420		255

Deferred credits and other liabilities	Deferred credits and other liabilities					Deferred credits and other liabilities
Deferred income taxes	Deferred income taxes	331		333		Deferred income taxes	324		333
Deferred investment tax credits	Deferred investment tax credits	5		5		Deferred investment tax credits	5		5
Regulatory liabilities	Regulatory liabilities	415		383		Regulatory liabilities	417		383

Customer advances	Customer advances	24		23		Customer advances	25		23
Pension and employee benefit obligations	Pension and employee benefit obligations	21		23		Pension and employee benefit obligations	22		23
Other	Other	43		43		Other	42		43
Total deferred credits and other liabilities	Total deferred credits and other liabilities	839		810		Total deferred credits and other liabilities	835		810

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Capitalization	Capitalization					Capitalization
Long-term debt	Long-term debt	1,011		1,086		Long-term debt	1,011		1,086
Common stock — 1,000,000 shares authorized of $100 par value; 933,000 shares outstanding at June 30, 2023 and Dec. 31, 2022, respectively		93		93
Common stock — 1,000,000 shares authorized of $100 par value; 933,000 shares outstanding at Sept. 30, 2023 and Dec. 31, 2022, respectively						Common stock — 1,000,000 shares authorized of $100 par value; 933,000 shares outstanding at Sept. 30, 2023 and Dec. 31, 2022, respectively	93		93
Additional paid in capital	Additional paid in capital	806		761		Additional paid in capital	820		761
Retained earnings	Retained earnings	427		405		Retained earnings	434		405
Total common stockholder's equity	Total common stockholder's equity	1,326		1,259		Total common stockholder's equity	1,347		1,259
Total liabilities and equity	Total liabilities and equity	$	3,557	$	3,410	Total liabilities and equity	$	3,613	$	3,410

See Notes to Consolidated Financial Statements

Table of Contents

NSP-WISCONSIN AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)

(amounts in millions, except share data)


		Common Stock Issued					Retained Earnings			Total Common Stockholder's Equity			Common Stock Issued						Retained Earnings		Total Common Stockholder's Equity
		Shares	Par Value		Additional Paid In Capital				Shares					Par Value		Additional Paid In Capital
Three Months Ended June 30, 2023 and 2022
Balance at March 31, 2022		933,000	$	93	$	672	$	393		$	1,158
Three Months Ended Sept. 30, 2023 and 2022												Three Months Ended Sept. 30, 2023 and 2022
Balance at June 30, 2022												Balance at June 30, 2022	933,000		$	93	$	702	$	389	$	1,184
Net income	Net income						15			15		Net income							40		40
Common dividends declared to parent	Common dividends declared to parent						(19)			(19)		Common dividends declared to parent							(23)		(23)
Contribution of capital by parent	Contribution of capital by parent				30					30		Contribution of capital by parent					50				50
Balance at June 30, 2022		933,000	$	93	$	702	$	389		$	1,184
Balance at Sept. 30, 2022												Balance at Sept. 30, 2022	933,000		$	93	$	752	$	406	$	1,251

Balance at March 31, 2023		933,000	$	93	$	791	$	426		$	1,310
Balance at June 30, 2023												Balance at June 30, 2023	933,000		$	93	$	806	$	427	$	1,326
Net income	Net income						26			26		Net income							31		31
Common dividends declared to parent	Common dividends declared to parent						(25)			(25)		Common dividends declared to parent							(24)		(24)
Contribution of capital by parent	Contribution of capital by parent				15					15		Contribution of capital by parent					14				14
Balance at June 30, 2023		933,000	$	93	$	806	$	427		$	1,326
Balance at Sept. 30, 2023												Balance at Sept. 30, 2023	933,000		$	93	$	820	$	434	$	1,347


										Total Common Stockholder's Equity											Total Common Stockholder's Equity
		Common Stock Issued					Retained Earnings						Common Stock Issued						Retained Earnings
		Shares	Par Value		Additional Paid In Capital				Shares					Par Value		Additional Paid In Capital
Six Months Ended June 30, 2023 and 2022
Nine Months Ended Sept. 30, 2023 and 2022												Nine Months Ended Sept. 30, 2023 and 2022
Balance at Dec. 31, 2021	Balance at Dec. 31, 2021	933,000	$	93	$	642	$	368		$	1,103	Balance at Dec. 31, 2021	933,000		$	93	$	642	$	368	$	1,103
Net income	Net income						62			62		Net income							102		102
Common dividends declared to parent	Common dividends declared to parent						(41)			(41)		Common dividends declared to parent							(64)		(64)
Contribution of capital by parent	Contribution of capital by parent				60					60		Contribution of capital by parent					110				110
Balance at June 30, 2022		933,000	$	93	$	702	$	389		$	1,184
Balance at Sept. 30, 2022												Balance at Sept. 30, 2022	933,000		$	93	$	752	$	406	$	1,251

Balance at Dec. 31, 2022	Balance at Dec. 31, 2022	933,000	$	93	$	761	$	405		$	1,259	Balance at Dec. 31, 2022	933,000		$	93	$	761	$	405	$	1,259
Net income	Net income						71			71		Net income							102		102
Common dividends declared to parent	Common dividends declared to parent						(49)			(49)		Common dividends declared to parent							(73)		(73)
Contribution of capital by parent	Contribution of capital by parent				45					45		Contribution of capital by parent					59				59
Balance at June 30, 2023		933,000	$	93	$	806	$	427		$	1,326
Balance at Sept. 30, 2023												Balance at Sept. 30, 2023	933,000		$	93	$	820	$	434	$	1,347

See Notes to Consolidated Financial Statements	See Notes to Consolidated Financial Statements											See Notes to Consolidated Financial Statements

Table of Contents

NSP-WISCONSIN 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 GAAP, the financial position of NSP-Wisconsin and its subsidiaries as of ~~June~~Sept. 30, 2023 and Dec. 31, 2022; the results of NSP-Wisconsin's operations, including the components of net income, changes in stockholder's equity and comprehensive income for the three and ~~six~~nine months ended ~~June~~Sept. 30, 2023 and 2022; and NSP-Wisconsin's cash flows for the ~~six~~nine months ended ~~June~~Sept. 30, 2023 and 2022.

All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after ~~June~~Sept. 30, 2023 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, 2022 balance sheet information has been derived from the audited 2022 consolidated financial statements included in the NSP-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2022.

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-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2022, filed with the SEC on Feb. 23, 2023. Due to the seasonality of NSP-Wisconsin’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-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2022 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.


2. Accounting Pronouncements

As of ~~June~~Sept. 30, 2023, there was no material impact from the recent adoption of new accounting pronouncements, nor expected material impact from recently issued accounting pronouncements yet to be adopted, on ~~NSP-Wisconsin's~~NSP-Wisconsin’s consolidated financial statements.

3. Selected Balance Sheet Data


(Millions of dollars)	(Millions of dollars)	June 30, 2023		Dec. 31, 2022		(Millions of dollars)	Sept. 30, 2023		Dec. 31, 2022
Accounts receivable, net	Accounts receivable, net					Accounts receivable, net
Accounts receivable	Accounts receivable	$	88	$	93	Accounts receivable	$	82	$	93
Less allowance for bad debts	Less allowance for bad debts	(8)		(9)		Less allowance for bad debts	(8)		(9)
Accounts receivable, net	Accounts receivable, net	$	80	$	84	Accounts receivable, net	$	74	$	84


(Millions of dollars)	(Millions of dollars)	June 30, 2023		Dec. 31, 2022		(Millions of dollars)	Sept. 30, 2023		Dec. 31, 2022
Inventories	Inventories					Inventories
Materials and supplies	Materials and supplies	$	10	$	8	Materials and supplies	$	11	$	8
Fuel	Fuel	11		11		Fuel	10		11
Natural gas	Natural gas	3		20		Natural gas	8		20
Total inventories	Total inventories	$	24	$	39	Total inventories	$	29	$	39


(Millions of dollars)	(Millions of dollars)	June 30, 2023		Dec. 31, 2022		(Millions of dollars)	Sept. 30, 2023		Dec. 31, 2022
Property, plant and equipment, net	Property, plant and equipment, net					Property, plant and equipment, net
Electric plant	Electric plant	$	3,708	$	3,579	Electric plant	$	3,767	$	3,579
Natural gas plant	Natural gas plant	478		465		Natural gas plant	496		465
Common and other property	Common and other property	270		260		Common and other property	290		260
Construction work in progress	Construction work in progress	210		174		Construction work in progress	237		174
Total property, plant and equipment	Total property, plant and equipment	4,666		4,478		Total property, plant and equipment	4,790		4,478
Less accumulated depreciation	Less accumulated depreciation	(1,611)		(1,564)		Less accumulated depreciation	(1,635)		(1,564)
Property, plant and equipment, net	Property, plant and equipment, net	$	3,055	$	2,914	Property, plant and equipment, net	$	3,155	$	2,914


4. Borrowings and Other Financing Instruments

Short-Term Borrowings

NSP-Wisconsin 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:


(Amounts in Millions, Except Interest Rates)	(Amounts in Millions, Except Interest Rates)	Three Months Ended June 30, 2023			Year Ended Dec. 31, 2022			(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2023		Year Ended Dec. 31, 2022
Borrowing limit	Borrowing limit	$	150		$	150		Borrowing limit	$	150	$	150
Amount outstanding at period end	Amount outstanding at period end	—			—			Amount outstanding at period end	—		—
Average amount outstanding	Average amount outstanding	18			25			Average amount outstanding	—		25
Maximum amount outstanding	Maximum amount outstanding	43			81			Maximum amount outstanding	—		81
Weighted average interest rate, computed on a daily basis	Weighted average interest rate, computed on a daily basis	4.84		%	1.10		%	Weighted average interest rate, computed on a daily basis	N/A		1.10		%
Weighted average interest rate at period end	Weighted average interest rate at period end	N/A			N/A			Weighted average interest rate at period end	N/A		N/A

Commercial Paper — Commercial paper outstanding:


(Amounts in Millions, Except Interest Rates)	(Amounts in Millions, Except Interest Rates)	Three Months Ended June 30, 2023			Year Ended Dec. 31, 2022			(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2023		Year Ended Dec. 31, 2022
Borrowing limit	Borrowing limit	$	150		$	150		Borrowing limit	$	150	$	150
Amount outstanding at period end	Amount outstanding at period end	—			47			Amount outstanding at period end	—		47
Average amount outstanding	Average amount outstanding	4			18			Average amount outstanding	—		18
Maximum amount outstanding	Maximum amount outstanding	30			123			Maximum amount outstanding	—		123
Weighted average interest rate, computed on a daily basis	Weighted average interest rate, computed on a daily basis	5.01		%	1.03		%	Weighted average interest rate, computed on a daily basis	N/A		1.03		%
Weighted average interest rate at period end	Weighted average interest rate at period end	N/A			4.55			Weighted average interest rate at period end	N/A		4.55

Letters of Credit — NSP-Wisconsin uses letters of credit, generally with terms of one year, to provide financial guarantees for certain obligations. At both ~~June~~Sept. 30, 2023 and Dec. 31, 2022, there were no letters of credit outstanding under the credit facility.

Revolving Credit Facility — In order to issue its commercial paper, NSP-Wisconsin must have a revolving credit facility equal to or greater than the commercial paper borrowing limit and cannot issue commercial paper exceeding available capacity under this credit facility. The credit facility provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

NSP-Wisconsin has the right to request an extension of the revolving credit facility termination date for an additional one-year period. All extension requests are subject to majority bank group approval.

Table of Contents

As of ~~June~~Sept. 30, 2023, NSP-Wisconsin had the following committed revolving credit facility available (in millions of dollars):


Credit Facility (a)		Outstanding (b)		Available
$	150	$	—	$	150

(a)Expires in September 2027.

(b)Includes outstanding commercial paper.

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. NSP-Wisconsin had no direct advances on the credit facility outstanding at ~~June~~Sept. 30, 2023 and Dec. 31, 2022.

Other Short-Term Borrowings — Clearwater Investments, Inc., a NSP-Wisconsin subsidiary, had an immaterial note payable to Xcel Energy Inc. as of ~~June~~Sept. 30, 2023 and Dec. 31, 2022, respectively.

Long-Term Borrowings and Other Financing Instruments

During the ~~six~~nine months ended ~~June~~Sept. 30, 2023, NSP-Wisconsin issued $125 million of 5.30% private placement first mortgage bonds due June 15, 2053.

5. Revenues

Revenue is classified by the type of goods/services rendered and market/customer type. NSP-Wisconsin’s operating revenues consisted of the following:


		Three Months Ended June 30, 2023						Three Months Ended Sept. 30, 2023
(Millions of Dollars)	(Millions of Dollars)	Electric		Natural Gas		Total			(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types	Major revenue types								Major revenue types
Revenue from contracts with customers:	Revenue from contracts with customers:								Revenue from contracts with customers:
Residential	Residential	$	68	$	13	$	81		Residential	$	79	$	8	$	—	$	87
C&I	C&I	122		9		131			C&I	136		5		—		141
Other	Other	2		—		2			Other	2		—		1		3
Total retail	Total retail	192		22		214			Total retail	217		13		1		231
Interchange and other	Interchange and other	41		—		41			Interchange and other	43		1		—		44

Total revenue from contracts with customers	Total revenue from contracts with customers	233		22		255			Total revenue from contracts with customers	260		14		1		275
Alternative revenue and other	Alternative revenue and other	3		2		5			Alternative revenue and other	3		1		—		4
Total revenues	Total revenues	$	236	$	24	$	260		Total revenues	$	263	$	15	$	1	$	279


		Three Months Ended June 30, 2022						Three Months Ended Sept. 30, 2022
(Millions of Dollars)	(Millions of Dollars)	Electric		Natural Gas		Total			(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types	Major revenue types								Major revenue types
Revenue from contracts with customers:	Revenue from contracts with customers:								Revenue from contracts with customers:
Residential	Residential	$	67	$	18	$	85		Residential	$	78	$	9	$	—	$	87
C&I	C&I	119		15		134			C&I	139		9		—		148
Other	Other	2		—		2			Other	2		—		—		2
Total retail	Total retail	188		33		221			Total retail	219		18		—		237
Interchange and other	Interchange and other	53		1		54			Interchange and other	52		1		—		53

Total revenue from contracts with customers	Total revenue from contracts with customers	241		34		275			Total revenue from contracts with customers	271		19		—		290
Alternative revenue and other	Alternative revenue and other	2		1		3			Alternative revenue and other	3		1		—		4
Total revenues	Total revenues	$	243	$	35	$	278		Total revenues	$	274	$	20	$	—	$	294


		Six Months Ended June 30, 2023						Nine Months Ended Sept. 30, 2023
(Millions of Dollars)	(Millions of Dollars)	Electric		Natural Gas		Total			(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types	Major revenue types								Major revenue types
Revenue from contracts with customers:	Revenue from contracts with customers:								Revenue from contracts with customers:
Residential	Residential	$	150	$	54	$	204		Residential	$	229	$	62	$	—	$	291
C&I	C&I	242		43		285			C&I	378		48		—		426
Other	Other	4		—		4			Other	6		—		1		7
Total retail	Total retail	396		97		493			Total retail	613		110		1		724
Interchange and other	Interchange and other	88		1		89			Interchange and other	131		2		—		133

Total revenue from contracts with customers	Total revenue from contracts with customers	484		98		582			Total revenue from contracts with customers	744		112		1		857
Alternative revenue and other	Alternative revenue and other	6		3		9			Alternative revenue and other	9		4		—		13
Total revenues	Total revenues	$	490	$	101	$	591		Total revenues	$	753	$	116	$	1	$	870


		Six Months Ended June 30, 2022						Nine Months Ended Sept. 30, 2022
(Millions of Dollars)	(Millions of Dollars)	Electric		Natural Gas		Total			(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types	Major revenue types								Major revenue types
Revenue from contracts with customers:	Revenue from contracts with customers:								Revenue from contracts with customers:
Residential	Residential	$	148	$	60	$	208		Residential	$	226	$	69	$	—	$	295
C&I	C&I	235		49		284			C&I	374		58		—		432
Other	Other	4		—		4			Other	6		—		—		6
Total retail	Total retail	387		109		496			Total retail	606		127		—		733
Interchange and other	Interchange and other	101		2		103			Interchange and other	153		3		—		156

Total revenue from contracts with customers	Total revenue from contracts with customers	488		111		599			Total revenue from contracts with customers	759		130		—		889
Alternative revenue and other	Alternative revenue and other	5		2		7			Alternative revenue and other	8		3		—		11
Total revenues	Total revenues	$	493	$	113	$	606		Total revenues	$	767	$	133	$	—	$	900


6. Income Taxes

Reconciliation between the statutory rate and effective tax rate:


		Six Months Ended June 30					Nine Months Ended Sept. 30
		2023		2022			2023		2022
Federal statutory rate	Federal statutory rate	21.0	%	21.0	%	Federal statutory rate	21.0	%	21.0	%
State tax (net of federal tax effect)	State tax (net of federal tax effect)	6.2		6.2		State tax (net of federal tax effect)	6.2		6.2
Decreases:	Decreases:					Decreases:
Plant regulatory differences (a)	Plant regulatory differences (a)	(3.5)		(4.0)		Plant regulatory differences (a)	(3.4)		(3.7)

Other (net)	Other (net)	(0.9)		(0.7)		Other (net)	(1.1)		(1.4)
Effective income tax rate	Effective income tax rate	22.8	%	22.5	%	Effective income tax rate	22.7	%	22.1	%

(a)Plant regulatory differences primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit are offset by corresponding revenue reductions.

Table of Contents


7. Fair Value of Financial Assets and Liabilities

Fair Value Measurements

Accounting guidance for fair value measurements and disclosures provides a hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value.

•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 actively traded instruments with observable actual trading prices.

•Level 2 — Pricing inputs are other than actual trading 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.

~~Table of Contents~~

•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 include those valued with models requiring significant judgment or estimation.

Specific valuation methods include:

Commodity Derivatives — 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 contracts relate to inactive delivery locations or extend to periods beyond those readily observable on active exchanges, the significance of the use of less observable inputs on a valuation is evaluated, and may result in Level 3 classification.

Derivative Activities and Fair Value Measurements

NSP-Wisconsin enters into derivative instruments, including forward contracts, futures, swaps and options, to manage risk in connection with changes in utility commodity prices.

Commodity Derivatives — NSP-Wisconsin enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric and natural gas operations. This could include the purchase or sale of natural gas to generate electric energy and natural gas for resale.

As of ~~June~~Sept. 30, 2023, NSP-Wisconsin had no commodity contracts designated as cash flow hedges.

Consideration of Credit Risk and Concentrations — NSP-Wisconsin 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 consolidated balance sheets.

Recurring Derivative Fair Value Measurements

Impact of derivative activity:

Changes in the fair value of natural gas commodity derivatives resulted in immaterial net losses and gains for the three and ~~six~~nine months ended ~~June~~Sept. 30, 2023 and 2022, which were recognized as regulatory assets and liabilities. The classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms.

During the three and ~~six~~nine months ended ~~June~~Sept. 30, 2023 and 2022, there were immaterial natural gas commodity derivatives settlement losses and gains.

During the three and ~~six~~nine months ended ~~June~~Sept. 30, 2023 and 2022, immaterial pre-tax losses were recognized during the period in income related to option premium amortization.

NSP-Wisconsin had immaterial outstanding derivative assets or liabilities measured at fair value as of ~~June~~Sept. 30, 2023 and Dec. 31, 2022.

Fair Value of Long-Term Debt

As of ~~June~~Sept. 30, 2023, other financial instruments for which the carrying amount did not equal fair value:


		June 30, 2023				Dec. 31, 2022					Sept. 30, 2023				Dec. 31, 2022
(Millions of Dollars)	(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	Long-term debt, including current portion	$	1,211	$	1,107	$	1,086	$	980	Long-term debt, including current portion	$	1,211	$	1,062	$	1,086	$	980

Fair value of NSP-Wisconsin’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of ~~June~~Sept. 30, 2023 and Dec. 31, 2022, and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.

Table of Contents

8. Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost


		Three Months Ended June 30				Three Months Ended Sept. 30
		2023		2022						2023		2022
(Millions of Dollars)	(Millions of Dollars)	Pension Benefits					(Millions of Dollars)	Pension Benefits
Service cost	Service cost	$	1	$	1				Service cost	$	1	$	2
Interest cost (a)	Interest cost (a)	2		1					Interest cost (a)	2		1
Expected return on plan assets (a)	Expected return on plan assets (a)	(2)		(2)					Expected return on plan assets (a)	(2)		(2)

Amortization of net loss (a)	Amortization of net loss (a)	—		1					Amortization of net loss (a)	—		1

Settlement charge (b)									Settlement charge (b)	—		4
Net periodic benefit cost									Net periodic benefit cost	$	1	$	6
Effects of regulation									Effects of regulation	—		(2)
Net benefit cost recognized for financial reporting	Net benefit cost recognized for financial reporting	$	1	$	1				Net benefit cost recognized for financial reporting	$	1	$	4


		Six Months Ended June 30				Nine Months Ended Sept. 30
		2023		2022						2023		2022
(Millions of Dollars)	(Millions of Dollars)	Pension Benefits					(Millions of Dollars)	Pension Benefits
Service cost	Service cost	$	2	$	2				Service cost	$	3	$	4
Interest cost (a)	Interest cost (a)	3		2					Interest cost (a)	5		3
Expected return on plan assets (a)	Expected return on plan assets (a)	(4)		(4)					Expected return on plan assets (a)	(6)		(6)

Amortization of net loss (a)	Amortization of net loss (a)	1		2					Amortization of net loss (a)	1		3

Settlement charge (b)									Settlement charge (b)	—		4
Net periodic benefit cost									Net periodic benefit cost	$	3	$	8
Effects of regulation									Effects of regulation	—		(2)
Net benefit cost recognized for financial reporting	Net benefit cost recognized for financial reporting	$	2	$	2				Net benefit cost recognized for financial reporting	$	3	$	6

(a)The components of net periodic cost other than the service cost component are included in the line item “Other income (expense), net” in the consolidated statements of income or capitalized on the consolidated balance sheets as a regulatory asset.

(b)A settlement charge is required when the amount of all lump-sum distributions during the year is greater than the sum of the service and interest cost components of the net periodic pension cost. In the third quarter of 2022 as a result of lump-sum distributions during the 2022 plan year, NSP-Wisconsin recorded a pension settlement charge of $4 million, the majority of which was not recognized in earnings due to the effects of regulation.

In January 2023, contributions totaling $50 million were made across Xcel Energy’s pension plans, of which $4 million was attributable to NSP-Wisconsin. Xcel Energy does not expect additional pension contributions during 2023.

9. Commitments and Contingencies

Legal

NSP-Wisconsin is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories.

~~Table of Contents~~

In such cases, there is considerable uncertainty regarding the timing or ultimate resolution, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on NSP-Wisconsin’s consolidated financial statements. Legal fees are generally expensed as incurred.

Gas Trading Litigation — e prime is a wholly owned subsidiary of Xcel Energy. e prime was in the business of natural gas trading and marketing but has not engaged in natural gas trading or marketing activities since 2003. Multiple lawsuits involving multiple plaintiffs seeking monetary damages were commenced against e prime and its affiliates, including Xcel Energy, between 2003 and 2009 alleging fraud and anticompetitive activities in conspiring to restrain the trade of natural gas and manipulate natural gas prices. Cases were all consolidated in the U.S. District Court in Nevada.

One case remains active which includes a multi-district litigation matter consisting of a Wisconsin purported class (Arandell Corp.). The Court issued a ruling in June 2022 granting plaintiffs’ class certification. In April 2023, the Seventh Circuit Court of Appeals heard the defendants’ appeal challenging whether the district court properly assessed class certification. A decision relating to class certification is expected later this year. Xcel Energy considers the reasonably possible loss associated with this litigation to be immaterial.

Rate Matters

NSP-Wisconsin is involved in various regulatory proceedings arising in the ordinary course of business. Until resolution, typically in the form of a rate order, uncertainties may exist regarding the ultimate rate treatment for certain activities and transactions. Amounts have been recognized for probable and reasonably estimable losses that may result. Unless otherwise disclosed, any reasonably possible range of loss in excess of any recognized amount is not expected to have a material effect on the financial statements.

MISO ROE Complaints — In November 2013 and February 2015, customer groups filed two ROE complaints against MISO TOs, which includes NSP-Minnesota and NSP-Wisconsin. The first complaint requested a reduction in base ROE transmission formula rates from 12.38% to 9.15% for the time period of Nov. 12, 2013 to Feb. 11, 2015, and removal of ROE adders (including those for RTO membership). The second complaint requested, for a subsequent time period, a base ROE reduction from 12.38% to 8.67%.

The FERC subsequently issued various related orders (including Opinion Nos. 569, 569A and 569B) related to ROE methodology/calculations and timing. NSP-Minnesota has processed refunds to customers for applicable complaint periods based on the ROE in the most recent applicable opinions on behalf of the NSP System.

The MISO TOs and various other parties have filed petitions for review of the FERC’s most recent applicable opinions at the D.C. Circuit. In August 2022, the D.C. Circuit ruled that FERC had not adequately supported its conclusions, vacated FERC’s related orders, and remanded the issue back to FERC for further proceedings, which remain pending. Additional exposure, if any, related to this matter is expected to be immaterial.

Table of Contents

Environmental

MGP, Landfill and Disposal Sites

NSP-Wisconsin is investigating, remediating or performing post-closure actions at one MGP, landfill or other disposal sites across its service territories.

NSP-Wisconsin has recognized its best estimate of costs/liabilities from final resolution of these issues, however, the outcome and timing are unknown. In addition, there may be insurance recovery and/or recovery from other potentially responsible parties, offsetting a portion of costs incurred.

Environmental Requirements — Water and Waste

Federal Clean Water Act Section 316(b) — The Federal Clean Water Act requires the EPA to regulate cooling water intake structures to assure they reflect the best technology available for minimizing impingement and entrainment of aquatic species. NSP-Wisconsin estimates capital expenditures of approximately $5 million may be required to comply with the requirements. NSP-Wisconsin believes two plants could be required to make improvements to reduce impingement and entrainment. NSP-Wisconsin anticipates these costs will be recoverable through regulatory mechanisms.

Environmental Requirements — Air

Clean Air Act NOx Allowance Allocations — In June 2023, after disapproving state implementation plans, the EPA published final regulations under the "Good Neighbor" provisions of the Clean Air Act. The final rule applies to generation facilities in Wisconsin, as well as other states outside of our service territory. The rule establishes an allowance trading program for NOx that will impact NSP-Wisconsin’s fossil fuel-fired electric generating facilities. Applicable facilities will have to secure additional allowances, install NOx controls and/or develop a strategy of operations that utilizes the existing allowance allocations. Guidelines are also established for allowance banking and emission limit backstops.

While the financial impacts of the final rule are uncertain and dependent on market forces and anticipated generation, NSP-Wisconsin anticipates the costs would be recoverable through regulatory mechanisms.

10. Segment Information

NSP-Wisconsin evaluates performance based on profit or loss generated from the product or service provided. These segments are managed separately because the revenue streams are dependent upon regulated rate recovery, which is separately determined for each segment.

NSP-Wisconsin has the following reportable segments:

•Regulated Electric — The regulated electric utility segment generates electricity, which is transmitted and distributed in Wisconsin and Michigan.

•Regulated Natural Gas — The regulated natural gas utility segment purchases, transports, stores and distributes natural gas in portions of Wisconsin and Michigan.

Asset and capital expenditure information is not provided for NSP-Wisconsin's reportable segments. As an integrated electric and natural gas utility, NSP-Wisconsin operates significant assets that are not dedicated to a specific business segment. Reporting assets and capital expenditures by business segment would require arbitrary and potentially misleading allocations, which may not necessarily reflect the assets that would be required for the operation of the business segments on a stand-alone basis.

~~Table of Contents~~

Certain costs, such as common depreciation, common O&M expenses and interest expense are allocated based on cost causation allocators across each segment. In addition, a general allocator is used for certain general and administrative expenses, including office supplies, rent, property insurance and general advertising.

NSP-Wisconsin's segment information:


		Three Months Ended June 30					Three Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2023		2022		(Millions of Dollars)	2023		2022
Regulated Electric	Regulated Electric					Regulated Electric

Total revenues (a)	Total revenues (a)	$	236	$	243	Total revenues (a)	$	263	$	274
Net income	Net income	30		15		Net income	32		42
Regulated Natural Gas	Regulated Natural Gas					Regulated Natural Gas

Total revenues	Total revenues	$	24	$	35	Total revenues	$	15	$	20
Net loss	Net loss	(3)		(1)		Net loss	(3)		(3)
All Other	All Other					All Other

Net (loss) income		$	(1)	$	1
Total revenues						Total revenues	$	1	$	—
Net income						Net income	$	2	$	1
Consolidated Total	Consolidated Total					Consolidated Total

Total operating revenues(a)	Total operating revenues(a)	$	260	$	278	Total operating revenues(a)	$	279	$	294
Net income	Net income	26		15		Net income	31		40

(a)Total revenues include ~~$51~~$50 million and ~~$52~~$51 million of affiliate electric revenue for the three months ended ~~June~~Sept. 30, 2023 and 2022, respectively.


		Six Months Ended June 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2023		2022		(Millions of Dollars)	2023		2022
Regulated Electric	Regulated Electric					Regulated Electric

Total revenues (a)	Total revenues (a)	$	490	$	493	Total revenues (a)	$	753	$	767
Net income	Net income	63		47		Net income	95		89
Regulated Natural Gas	Regulated Natural Gas					Regulated Natural Gas
Operating revenues	Operating revenues	$	101	$	113	Operating revenues	$	116	$	133
Intersegment revenue	Intersegment revenue	1		—		Intersegment revenue	1		—
Total revenues	Total revenues	$	102	$	113	Total revenues	$	117	$	133
Net income	Net income	8		14		Net income	5		11
All Other	All Other					All Other

Total revenues						Total revenues	$	1	$	—
Net income	Net income	$	—	$	1	Net income	$	2	$	2
Consolidated Total	Consolidated Total					Consolidated Total
Operating revenues (a)	Operating revenues (a)	$	592	$	606	Operating revenues (a)	$	871	$	900
Reconciling eliminations	Reconciling eliminations	(1)		—		Reconciling eliminations	(1)		—
Total operating revenues	Total operating revenues	$	591	$	606	Total operating revenues	$	870	$	900
Net income	Net income	71		62		Net income	102		102

(a)Total revenues include ~~$101~~$151 million and ~~$99~~$150 million of affiliate electric revenue for the ~~six~~nine months ended ~~June~~Sept. 30, 2023 and 2022, respectively.

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Discussion of financial condition and liquidity for NSP-Wisconsin is omitted per conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management’s narrative analysis of the results of operations set forth in General Instruction H(2)(a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).

Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with GAAP, as well as certain non-GAAP financial measures such as ongoing earnings. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that adjusts ~~amounts that are adjusted from~~ measures calculated and presented in accordance with GAAP.

Table of Contents

NSP-Wisconsin’s management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.

Earnings Adjusted for Certain Items (Ongoing Earnings)

Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items.

We use this non-GAAP financial measure to evaluate and provide details of NSP-Wisconsin’s core earnings and underlying performance. We believe this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of NSP-Wisconsin. For the three and ~~six~~nine months ended ~~June~~Sept. 30, 2023 and 2022, there were no such adjustments to GAAP earnings and therefore GAAP earnings equal ongoing earnings.

Results of Operations

NSP-Wisconsin's net income was ~~$71~~$102 million for both the ~~six~~nine months ended ~~June~~Sept. 30, 2023 ~~compared to $62 million for the prior year.~~and 2022. Additional electric and natural gas infrastructure investment recoveries were ~~partially~~ offset by ~~unfavorable weather,~~ higher depreciation, O&M expenses and ~~O&M~~interest expenses.

Electric Margin

Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Expenses incurred for electric fuel and purchased power are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues.

Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas, coal and uranium. However, these price fluctuations generally have minimal earnings impact due to fuel recovery mechanisms. In addition, electric customers receive a credit for production tax credits generated, which reduce electric revenue and income taxes.

Electric revenues, fuel and purchased power and margin:


		Six Months Ended June 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2023		2022		(Millions of Dollars)	2023		2022
Electric revenues	Electric revenues	$	490	$	493	Electric revenues	$	753	$	767
Electric fuel and purchased power	Electric fuel and purchased power	(203)		(236)		Electric fuel and purchased power	(315)		(356)
Electric margin	Electric margin	$	287	$	257	Electric margin	$	438	$	411


(Millions of Dollars)	~~Six~~Nine Months Ended ~~June~~Sept. 30, 2023 vs. 2022
~~Regulatory rate outcomes~~	$	16
Interchange agreement billings with NSP-Minnesota	$	15
Regulatory rate outcomes	4

Estimated impact of weather	~~(4)~~(3)
Other (net)	311
Total increase	$	3027

~~Table of Contents~~

Natural Gas Margin

Natural gas margin is presented as natural gas revenues less the cost of natural gas sold and transported. Expenses incurred for the cost of natural gas sold are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues.

Natural gas expense varies with changing sales and the cost of natural gas. However, fluctuations in the cost of natural gas generally have minimal earnings impact due to cost recovery mechanisms.

Natural gas revenues, cost of natural gas sold and transported and margin:


		Six Months Ended June 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2023		2022		(Millions of Dollars)	2023		2022
Natural gas revenues	Natural gas revenues	$	101	$	113	Natural gas revenues	$	116	$	133
Cost of natural gas sold and transported	Cost of natural gas sold and transported	(55)		(65)		Cost of natural gas sold and transported	(61)		(75)
Natural gas margin	Natural gas margin	$	46	$	48	Natural gas margin	$	55	$	58


(Millions of Dollars)	~~Six~~Nine Months Ended ~~June~~Sept. 30, 2023 vs. 2022
Estimated impact of weather	$	(4)
Natural gas sales and transport (excluding weather impact)	(1)
Regulatory rate outcomes (Wisconsin)	$		2
~~Estimated impact of weather~~	~~(4)~~

Total decrease	$	~~(2)~~(3)

Non-Fuel Operating Expenses and Other Items

O&M Expenses — O&M costs increased $8$13 million year to date. Increase ~~was~~is primarily due to vegetation management, higher cost for storms and inflationary pressures including labor and insurance increases, ~~and supply chain challenges.~~partially offset by lower employee benefits.

Depreciation and Amortization — Depreciation and amortization increased $5$9 million year to date, primarily due to system expansion.

Interest Charges — Interest charges increased $7 million year to date, largely due to increased long-term debt levels.

Public Utility Regulation and Other

The FERC and various state and local regulatory commissions regulate NSP-Wisconsin. The electric and natural gas rates charged to customers of NSP-Wisconsin are approved by the FERC or the regulatory commissions in the states in which it operates.

Rates are designed to recover plant investment, operating costs and an allowed return on investment. NSP-Wisconsin requests changes in utility rates through commission filings.

Changes in operating costs can affect NSP-Wisconsin’s financial results, depending on the timing of rate case filings and implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and demand side management efforts, and the cost of capital. In addition, the regulatory commissions authorize the ROE, capital structure and depreciation rates in rate proceedings. Decisions by these regulators can significantly impact NSP-Wisconsin’s results of operations.

Except to the extent noted below, the circumstances set forth in Public Utility Regulation included in Item 7 of NSP-Wisconsin’s Annual Report on Form 10-K for the year ended Dec. 31, 2022 appropriately represent, in all material respects, the current status of public utility regulation and are incorporated herein by reference.

Table of Contents

Pending Regulatory Proceedings

Wisconsin Rate Case — In April 2023, NSP-Wisconsin filed a Wisconsin rate case seeking an electric increase of $40 million (rate increase of 4.8%) and a natural gas increase of $9 million (rate increase of 5.3%). The rate ~~request~~filing is based on a 2024 forecast test year, a ROE of 10.25%, an equity ratio of 52.5% and a forecasted average net rate base of approximately $2.1 billion for the electric utility and $284 million for the natural gas utility.

On Sept. 1, 2023, the PSCW Staff recommended an electric base rate decrease of $3 million or (0.3)% when including depreciation, fuel and purchased power adjustments and a natural gas rate increase of $5 million, or 3.1%. The recommendation was based on a ROE of ~~10.25%, a 52.5%~~9.7% and an equity ratio of 52.5%.

In September 2023, NSP-Wisconsin filed rebuttal testimony and updated its request for depreciation life extensions and other updates. NSP-Wisconsin revised its requested rate increase to $25 million for the electric utility and $7 million for the natural gas utility. NSP-Wisconsin will update forecasted fuel costs before the Commission decision. Prudently incurred 2024 ~~forward-looking test year.~~ fuel costs will be trued up to actuals in a fuel reconciliation process, subject to a 2% band.

A ~~final~~PSCW decision ~~by the PSCW~~ is ~~expected in~~anticipated late fourth quarter 2023 with new rates effective in January 2024.

2022 Upper Midwest IRP Resource Acquisition

Following the MPUC’s approval of NSP-Minnesota and NSP-Wisconsin’s latest IRP in April 2022, NSP-Minnesota and NSP-Wisconsin have been engaged in multiple resource acquisition processes and proceedings to meet the need identified in the IRP.

•In August 2022, NSP-Minnesota and NSP-Wisconsin jointly filed an RFP seeking at least 900 MW of solar or solar plus storage capacity. In May 2023, NSP-Minnesota filed a recommended portfolio, which proposed an additional 250 MW of self-build solar generation at the site of our retiring Sherco coal units and a 100 MW solar PPA located in Wisconsin as part of the resource plan RFP. In September 2023, the MPUC approved the request, subject to a cost cap based on projected costs for the Sherco solar project.

•In July 2023, NSP-Wisconsin issued an RFP seeking approximately 650 MW of solar and/or solar plus storage development assets that will be developed in the 2027-2029 timeframe to replace the nameplate capacity associated with NSP-Minnesota’s retiring King Generating Station. The RFP closed in September 2023.

Other

Supply Chain

NSP-Wisconsin’s ability to meet customer energy requirements, respond to storm-related disruptions and execute our capital expenditure program are dependent on maintaining an efficient supply chain. Manufacturing processes have experienced disruptions related to scarcity of certain raw materials and interruptions in production and shipping. These disruptions have been further exacerbated by inflationary pressures, labor shortages and the impact of international conflicts/issues. NSP-Wisconsin continues to monitor the situation as it remains fluid and seeks to mitigate the impacts by securing alternative suppliers, modifying design standards, and adjusting the timing of work.

Electric Meters and Transformers

Supply chain issues associated with semi-conductors have delayed the availability of advanced infrastructure meters. As a result of delays, NSP-Wisconsin projects impacts to deployment schedules into 2025.

Additionally, the availability of certain transformers is an industry-wide issue that has significantly impacted and in some cases may result in delays in projects and new customer connections. Proposed governmental actions related to transformer efficiency standards may compound these delays in the future. NSP-Wisconsin continues to seek alternative suppliers and prioritize work plans to mitigate impacts of supply constraints.

~~Table of Contents~~


Environmental

Clean Air Act

Power Plant Greenhouse Gas Regulations — In May 2023, the EPA published proposed rules addressing control of CO2 emissions from the power sector. The rule proposed regulations for new natural gas generating units under Clean Air Act Section 111(b) and emission guidelines for existing coal and certain natural gas generation under Clean Air ~~Action~~Act Section 111(d). The proposed rules create subcategories of coal units based on planned retirement date and subcategories of natural gas combustion turbines and combined cycle units based on utilization. The CO2 control requirements vary by subcategory. Until final rules are issued, it is not certain what the impact will be on NSP-Wisconsin. NSP-Wisconsin believes that the cost of these initiatives or replacement generation would be recoverable through rates based on prior state commission practices.

Emerging Contaminants of Concern

PFAS are man-made chemicals that are widely used in consumer products and can persist and bio-accumulate in the environment. NSP-Wisconsin does not manufacture PFAS but because PFAS are so ubiquitous in products and the environment, it may impact our operations.

In September 2022, the EPA proposed to designate two types of PFAS as “hazardous substances” under the CERCLA.

In March 2023, the EPA published a proposed rule that would establish enforceable drinking water standards for certain PFAS chemicals.

NSP-Wisconsin provided comments related to both efforts described above through its regulatory coalitions. Final rules are expected in 2024. Costs are uncertain until a final rule is published.

The proposed rules could result in new obligations for investigation and cleanup. NSP-Wisconsin is monitoring changes to state laws addressing PFAS. The impact of these proposed regulations is uncertain.


ITEM 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

NSP-Wisconsin maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.

In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the CEO and CFO, allowing timely decisions regarding required disclosure.

As of ~~June~~Sept. 30, 2023, based on an evaluation carried out under the supervision and with the participation of NSP-Wisconsin’s management, including the CEO and CFO, of the effectiveness of its disclosure controls and procedures, the CEO and CFO have concluded that NSP-Wisconsin’s disclosure controls and procedures were effective.

Table of Contents

Internal Control Over Financial Reporting

No changes in NSP-Wisconsin’s internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, NSP-Wisconsin’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to, when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss.

For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on NSP-Wisconsin’s consolidated financial statements. Legal fees are generally expensed as incurred.

See Note 9 to the consolidated financial statements and Part I Item 2 for further information.

ITEM 1A — RISK FACTORS

NSP-Wisconsin's risk factors are documented in Item 1A of Part I of its Annual Report on Form 10-K for the year ended Dec. 31, 2022, which is incorporated herein by reference. There have been no material changes from the risk factors previously disclosed in the Form 10-K.


ITEM 5 — OTHER INFORMATION

None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended ~~June~~Sept. 30, 2023.

~~Table of Contents~~

ITEM 6 — EXHIBITS

* Indicates incorporation by reference


Exhibit Number	Description	Report or Registration Statement	Exhibit Reference
3.01*	Amended and Restated Articles of Incorporation of NSP-Wisconsin, dated May 28, 1998	NSP-Wisconsin Form S-4 dated Jan. 21, 2004	3.01
3.02*	Amended and Restated Bylaws of NSP-Wisconsin, dated Jan. 25, 2019	NSP-Wisconsin Form 10-K for the year ended Dec. 31, 2018	3.02
~~4.0~~1*	Supplemental Indenture dated as of May 10, 2023 between NSP-Wisconsin and U.S. Bank Trust Company, National Association, as successor Trustee, creating 5.30% First Mortgage Bonds, Series due June 15, 2053	~~NSP-Wisconsin Form 8-K dated May 10, 2023~~	~~4.01~~
31.01	Principal Executive Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.02	Principal Financial Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.01	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Schema
101.CAL	Inline XBRL Calculation
101.DEF	Inline XBRL Definition
101.LAB	Inline XBRL Label
101.PRE	Inline XBRL Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Northern States Power Company (a Wisconsin corporation)

7/10/27/~~2023~~23	By:	/s/ BRIAN J. VAN ABEL
		Brian J. Van Abel
		Executive Vice President, Chief Financial Officer
		(Principal Accounting Officer and Principal Financial Officer)