SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Securities registered pursuant to Section 12(b) of the Act:

~~(Registrant’s telephone number, including area code)~~

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	☐

~~Non-accelerated filer~~ x		~~Smaller reporting company~~ ¨
		Emerging growth company¨	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨☐ Yes x☒ No

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



Class		~~Oct. 26, 2018~~August 1, 2019
Common Stock, $0.01 par value		100 shares

Public Service Company of Colorado meets the conditions set forth in General Instruction ~~H (1)~~ 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)~~H(2) to such Form 10-Q.



PART I — FINANCIAL INFORMATION

Item l —	Financial Statements (Unaudited)	34
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2420
Item 4 —	Controls and Procedures	2922

PART II — OTHER INFORMATION

Item 1 —	Legal Proceedings	3022
Item 1A —	Risk Factors	3022
Item 6 —	Exhibits	3023

SIGNATURES		3124

Certifications Pursuant to Section 302		1
Certifications Pursuant to Section 906		1
~~Statement Pursuant to Private Litigation~~		1

This Form 10-Q is filed by Public Service Company of Colorado ~~a Colorado corporation~~ (PSCo). PSCo is a wholly owned subsidiary of Xcel Energy Inc. Xcel Energy Inc. wholly owns the following subsidiaries: Northern States Power Company, a Minnesota corporation (NSP-Minnesota); Northern States Power Company, a Wisconsin corporation (NSP-Wisconsin); PSCo; and Southwestern Public Service Company, a New Mexico corporation (SPS). NSP-Minnesota, NSP-Wisconsin, PSCo and SPS are also referred to collectively as utility subsidiaries. Additional information on Xcel Energy ~~Inc. and its subsidiaries (collectively, Xcel Energy)~~ is available onin various filings with the SEC. This report should be read in its entirety.

ABBREVIATIONS AND INDUSTRY TERMS



Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former)
NSP-Minnesota	Northern States Power Company, a Minnesota corporation
NSP-Wisconsin	Northern States Power Company, a Wisconsin corporation
PSCo	Public Service Company of Colorado
SPS	Southwestern Public Service Company
Utility subsidiaries	NSP-Minnesota, NSP-Wisconsin, PSCo and SPS
WYCO	WYCO Development, LLC
Xcel Energy	Xcel Energy Inc. and subsidiaries



Federal and State Regulatory Agencies
CPUC	Colorado Public Utilities Commission
EPA	United States Environmental Protection Agency
IRS	Internal Revenue Service
SEC	Securities and Exchange Commission



Electric, Purchased Gas and Resource Adjustment Clauses
TCA	Transmission cost adjustment



Other
ACE	Affordable Clean Energy
AFUDC	Allowance for funds used during construction
ASC	FASB Accounting Standards Codification
ASU	FASB Accounting Standards Update
C&I	Commercial and Industrial
CACJA	Clean Air Clean Jobs Act
CCR	Coal combustion residual
CCR Rule	Final rule (40 CFR 257.50 - 257.107) published by the EPA regulating the management, storage and disposal of CCRs as a nonhazardous waste
CIG	Colorado Interstate Gas Company, LLC
DRC	Development Recovery Company
ETR	Effective tax rate
FASB	Financial Accounting Standards Board
GAAP	Generally accepted accounting principles
IPP	Independent power producing entity
MGP	Manufactured gas plant
NOL	Net operating loss
O&M	Operating and maintenance
PPA	Purchased power agreement
PTC	Production tax credit
ROE	Return on equity
ROU	Right-of-use
TCJA	2017 federal tax reform enacted as Public Law No: 115-97, commonly referred to as the Tax Cuts and Jobs Act



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 ~~Exchange Commission (SEC).~~assumptions. Such forward-looking statements, assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed elsewhere in this Quarterly Report on Form 10-Q and in other securities filings (including PSCo’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent securities filings), could cause actual results to differ materially from management expectations as suggested by such forward-looking information: changes in environmental laws and regulations; climate change and other weather natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; ability to recover costs from customers; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of PSCo and its subsidiaries to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; tax laws; operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices; costs of potential regulatory penalties; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; fuel costs; and employee work force and third party contractor factors.

PART I — FINANCIAL INFORMATION

Item 1 — FINANCIAL STATEMENTS

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(amounts in ~~thousands)~~millions)

See Notes to Consolidated Financial Statements

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in ~~thousands)~~millions)

Three Months Ended Sept. 30 Nine Months Ended Sept. 30
2018 2017 2018 2017
Net income $ 207,112
$ 186,077
$ 463,129
$ 398,210

Other comprehensive income (loss)

Pension and retiree medical benefits:
Net pension and retiree medical losses arising during the period, net of tax of $(50), $0, $(50) and $0, respectively (153 ) —
(153 ) —
Amortization of losses included in net periodic benefit cost, net of tax of $51, $1, $51, and $3, respectively 155
1
159
3
2
1
6
3

Derivative instruments:

Reclassification of losses to net income, net of tax of $97, $150, $294 and $455, respectively 310
257
913
753

Other comprehensive income 312
258
919
756
Comprehensive income $ 207,424
$ 186,335
$ 464,048
$ 398,966



	Three Months Ended June 30				Six Months Ended June 30
	2019		2018		2019		2018
Net income	$	101.5	$	122.3	$	240.3	$	256.0

Other comprehensive income

Derivative instruments:
Reclassification of losses to net income, net of tax of $0.1, $0.1, $0.2 and $0.2, respectively	0.3		0.3		0.6		0.6

Other comprehensive income	0.3		0.3		0.6		0.6
Comprehensive income	$	101.8	$	122.6	$	240.9	$	256.6

See Notes to Consolidated Financial Statements

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in ~~thousands)~~millions)

See Notes to Consolidated Financial Statements

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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

Common stock — 100 shares authorized at $0.01 par value; 100 shares

outstanding at Sept. 30, 2018 and Dec. 31, 2017, respectively

Common stock — 100 shares authorized at $0.01 par value; 100 shares

outstanding at June 30, 2019 and Dec. 31, 2018, respectively

See Notes to Consolidated Financial Statements

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED)

(amounts in millions, except share data)

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED)

(amounts in millions, except share data)

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

Notes to Consolidated Financial Statements (UNAUDITED)

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly, in accordance with ~~accounting principles generally accepted in the United States of America (GAAP),~~GAAP, the financial position of PSCo and its subsidiaries as of ~~Sept.~~June 30, ~~2018~~2019 and Dec. 31, ~~2017;~~2018; the results of its operations, including the components of net income and comprehensive income, and changes in stockholders’ equity for the three and ~~nine~~six months ended ~~Sept.~~June 30, ~~2018~~2019 and ~~2017;~~2018; and its cash flows for the ~~nine~~six months ended ~~Sept.~~June 30, ~~2018~~2019 and ~~2017.~~2018. All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after ~~Sept.~~June 30, ~~2018~~2019 up to the date of issuance of these consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, ~~2017~~2018 balance sheet information has been derived from the audited ~~2017~~2018 consolidated financial statements included in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, ~~2017.~~2018. These notes to the consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the consolidated financial statements and notes thereto, included in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, ~~2017,~~2018, filed with the SEC on Feb. ~~23, 2018.~~22, 2019. Due to the seasonality of PSCo’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 PSCo Annual Report on Form 10-K for the year ended Dec. 31, ~~2017,~~2018, appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.


2.	Accounting Pronouncements

Recently Issued

~~Leases~~ Credit Losses— In ~~February~~ 2016, the FASB issued Financial ~~Accounting Standards Board (FASB) issued~~ ~~Leases,~~Instruments - Credit Losses, Topic ~~842 (Accounting Standards Update (ASU) No. 2016-02)~~326 (ASC Topic 326), which changes how entities account for ~~lessees~~losses on receivables and certain other assets. The guidance requires ~~balance sheet~~use of a current expected credit loss model, which may result in earlier recognition of ~~right-of-use assets and lease liabilities for most leases. This guidance will be~~credit losses than under previous accounting standards. ASC Topic 326 is effective for interim and annual ~~reporting~~ periods beginning on or after Dec. 15, ~~2018. Adoption~~2019, and will ~~occur~~be applied on a modified-retrospective approach through a cumulative-effect adjustment to retained earnings as of Jan. 1, ~~2019 utilizing~~2020. PSCo is currently evaluating the ~~practical expedients provided by~~impact of adoption of the new standard ~~and included in~~ ~~Targeted Improvements, Topic 842~~ (~~ASU No. 2018-11~~). On Jan. 1, 2019, agreements historically disclosed as operating leases for the use of real estate, equipment and certain fossil-fueled generating facilities operated under purchased power agreements (PPAs) are expected to be recognized on the consolidated balance sheet. Other than first-time recognition of these types of operating leases on the consolidated balance sheet, the implementation is not expected to have a significant impact on PSCo’sits consolidated financial statements.

Recently Adopted

~~Revenue Recognition~~Leases —In ~~May 2014,~~2016, the FASB issued ~~Revenue from Contracts with Customers,~~ Leases, Topic ~~606 (ASU No. 2014-09)~~842(ASC Topic 842), which provides a new ~~framework~~accounting and disclosure guidance for leasing activities, most significantly requiring that operating leases be recognized on the ~~recognition of revenue.~~balance sheet. PSCo ~~implemented~~adopted the guidance on ~~a modified retrospective basis on~~ Jan. 1, ~~2018. Results~~2019 utilizing the package of transition practical expedients provided by the new standard, including carrying forward prior conclusions on whether agreements existing before the adoption date contain leases and whether existing leases are operating or finance leases; ASC Topic 842 refers to capital leases as finance leases.

Specifically for land easement contracts, PSCo has elected the practical expedient provided by ASU No. 2018-01 Leases: Land Easement Practical Expedient for Transition to Topic 842, and as a result, only those easement contracts entered on or after Jan. 1, 2019 will be evaluated to determine if lease treatment is appropriate.

PSCo also utilized the transition practical expedient offered by ASU No. 2018-11 Leases: Targeted Improvements to implement the standard on a prospective basis. As a result, reporting periods in the consolidated financial statements beginning ~~after Dec. 31, 2017 are presented in accordance with~~Jan. 1, 2019 reflect the implementation of ASC Topic ~~606,~~842, while prior ~~period results have not been adjusted and~~periods continue to be reported in accordance with ~~prior accounting guidance.~~Leases, Topic 840 (ASC Topic 840). Other than ~~increased disclosures regarding revenues related to contracts with customers,~~first-time recognition of operating leases on its consolidated balance sheet, the implementation of ASC Topic 842 did not have a ~~material~~significant impact on PSCo’s consolidated financial statements. ~~For related disclosures, see Note 13 to the consolidated financial statements.~~

~~Classification and Measurement~~Adoption resulted in recognition of ~~Financial Instruments —~~ ~~In January 2016, the FASB issued~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities, Subtopic 825-10 (ASU No. 2016-01)~~, which eliminated the available-for-sale classification for marketable equity securities and also replaced the cost method of accounting for non-marketable equity securities with a model for recognizing impairments and observable price changes. Under the new standard, other than when the consolidation or equity method of accounting is utilized, changes in the fair value of equity securities are recognized in earnings. PSCo implemented the guidance on Jan. 1, 2018 and the implementation did not have a material impact on its consolidated financial statements.

~~Presentation of Net Periodic Benefit Cost —~~I~~n March 2017, the FASB issued~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, Topic 715 (ASU No. 2017-07), which establishes that only the service cost element of pension cost may be presented as a component~~approximately $0.7 billion of operating ~~income in the income statement. Also under the guidance, only the service cost component of pension cost is eligible~~lease ROU assets and current/noncurrent operating lease liabilities. See Note 9 for capitalization. As a result of the application of accounting principles for rate regulated entities, a similar amount of pension cost, including non-service components, will be recognized consistent with the historical ratemaking treatment, and the impacts of adoption will be limited to changes in classification of non-service costs in the consolidated statement of income. PSCo implemented the new guidance on Jan. 1, 2018, and as a result, $0.5 million and $1.5 million of pension costs were retrospectively reclassified from operating and maintenance expenses to other income, net on the consolidated income statement for the three and nine months ended Sept. 30, 2017, respectively. Under a practical expedient permitted by the standard, PSCo used benefit cost amounts disclosed for prior periods as the basis for retrospective application.

leasing disclosures.


3.	Selected Balance Sheet Data



(Millions of Dollars)	June 30, 2019			Dec. 31, 2018
Accounts receivable, net
Accounts receivable	$	272.3		$	330.8
Less allowance for bad debts	(19.7		)	(20.5		)
	$	252.6		$	310.3

(Thousands of Dollars) Sept. 30, 2018 Dec. 31, 2017
Accounts receivable, net
Accounts receivable $ 320,572
$ 314,009
Less allowance for bad debts (20,592 ) (19,606 )
$ 299,980
$ 294,403



(Millions of Dollars)	June 30, 2019		Dec. 31, 2018
Inventories
Materials and supplies	$	61.8	$	61.9
Fuel	71.7		69.5
Natural gas	32.0		66.0
	$	165.5	$	197.4

(Thousands of Dollars) Sept. 30, 2018 Dec. 31, 2017
Inventories
Materials and supplies $ 58,198
$ 68,940
Fuel 62,409
73,893
Natural gas 66,805
71,656
$ 187,412
$ 214,489



(Millions of Dollars)	June 30, 2019			Dec. 31, 2018
Property, plant and equipment, net
Electric plant	$	13,922.3		$	13,604.5
Natural gas plant	4,443.0			4,387.6
Common and other property	1,052.3			1,023.7
Plant to be retired ^(a)	290.2			321.9
Construction work in progress	638.9			573.3
Total property, plant and equipment	20,346.7			19,911.0
Less accumulated depreciation	(5,011.0		)	(4,791.0		)
	$	15,335.7		$	15,120.0

(Thousands of Dollars) Sept. 30, 2018 Dec. 31, 2017
Property, plant and equipment, net
Electric plant $ 12,401,598
$ 12,627,592
Natural gas plant 4,269,700
4,102,075
Common and other property 1,046,991
1,022,333
Plant to be retired ^(a)
337,087
10,949
Construction work in progress 1,575,102
1,014,338
Total property, plant and equipment 19,630,478
18,777,287
Less accumulated depreciation (4,791,445 ) (4,751,536 )
$ 14,839,033
$ 14,025,751

^(a)

In ~~the third quarter of~~ 2018, the ~~Colorado Public Utilities Commission (CPUC)~~CPUC approved early retirement of PSCo’s Comanche Units 1 2 and ~~shared Common plant~~2 in approximately 2022 ~~2025~~ and 2025, respectively. PSCo also expects Craig Unit 1 to be retired early ~~retired~~ in ~~approximately~~ 2025. ~~In the third quarter of 2017, PSCo early retired Valmont Unit 5 and converted Cherokee Unit 4 from a coal-fueled generating facility to natural gas.~~ Amounts are presented net of accumulated depreciation.


4.	~~Income Taxes~~

Except to the extent noted below, Note 7 to the consolidated financial statements included in PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, 2017 appropriately represents, in all material respects, the current status of other income tax matters, and are incorporated herein by reference.

Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense. The following reconciles such differences:

Nine Months Ended Sept. 30
2018 2017
Federal statutory rate 21.0 % 35.0 %
State tax (net of federal tax effect) 3.7
3.0
Increases (decreases) in tax from:

Regulatory differences - ARAM ^(a)
(2.5 ) —
Regulatory differences - ARAM deferral ^(b)
2.2
—
Regulatory differences - reversal of prior quarters' ARAM deferral ^(b)
(1.5 ) —
Regulatory differences - other utility plant items (1.3 ) (1.0 )
Tax credits (net of federal income tax expense) (0.9 ) (0.8 )
Other (net) (0.8 ) —
Effective income tax rate 19.9 % 36.2 %


^(a)	~~The average rate assumption method (ARAM); a method to flow back excess deferred taxes to customers.~~


^(b)	ARAM has been deferred when regulatory treatment has not been established. As PSCO received direction from its regulatory commission regarding the return of excess deferred taxes to customers, the ARAM deferral was reversed. This resulted in a reduction to tax expense with a corresponding reduction to revenue.

~~Federal Audits~~— PSCO is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. The statute of limitations applicable to Xcel Energy’s federal income tax returns expire as follows:



~~Tax Year(s)~~		~~Expiration~~
~~2009 - 2014~~		~~October 2019~~
~~2015~~		~~September 2019~~
~~2016~~		~~September 2020~~

In 2012, the Internal Revenue Service (IRS) commenced an examination of tax years 2010 and 2011, including the 2009 carryback claim. In 2017 Xcel Energy and the Office of Appeals (Appeals) reached an agreement and the benefit related to the agreed upon portions was recognized. PSCo did not accrue any income tax benefit related to this adjustment. In the second quarter of 2018, the Joint Committee on Taxation completed its review and took no exception to the agreement. As a result, the remaining unrecognized tax benefit was released and recorded as a payable to the IRS.

In the third quarter of 2015, the IRS commenced an examination of tax years 2012 and 2013. In the third quarter of 2017, the IRS concluded the audit of tax years 2012 and 2013 and proposed an adjustment that would impact Xcel Energy’s net operating loss (NOL) and effective tax rate (ETR). Xcel Energy filed a protest with the IRS. As of Sept. 30, 2018, the case has been forwarded to Appeals and Xcel Energy has recognized its best estimate of income tax expense that will result from a final resolution of this issue; however, the outcome and timing of a resolution is unknown.

~~State Audits~~ — PSCo is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of Sept. 30, 2018, PSCo’s earliest open tax year that is subject to examination by state taxing authorities under applicable statutes of limitations is 2009. There are currently no state income tax audits in progress.

~~Unrecognized Benefits~~— 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 the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the ETR but would accelerate the payment of cash to the taxing authority to an earlier period.

~~A reconciliation of the amount of unrecognized tax benefit is as follows:~~

(Millions of Dollars) Sept. 30, 2018 Dec. 31, 2017
Unrecognized tax benefit — Permanent tax positions $ 5.1
$ 4.0
Unrecognized tax benefit — Temporary tax positions 4.9
6.1
Total unrecognized tax benefit $ 10.0
$ 10.1

The unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryforwards. The amounts of tax benefits associated with NOL and tax credit carryforwards are as follows:

(Millions of Dollars) Sept. 30, 2018 Dec. 31, 2017
NOL and tax credit carryforwards $ (5.5 ) $ (4.0 )

It is reasonably possible that PSCo’s amount of unrecognized tax benefits could significantly change in the next 12 months as the IRS Appeals progresses and the IRS and state audits resume. As the IRS Appeals progresses and the IRS audit resumes, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $8 million.

~~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, 2018 or Dec. 31, 2017.~~


5.	~~Rate Matters~~

Except to the extent noted below, the circumstances set forth in Note 11 to the consolidated financial statements included in PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, 2017 and in Note 5 to the consolidated financial statements to PSCo’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018, appropriately represent, in all material respects, the current status of other rate matters, and are incorporated herein by reference.

~~Tax Reform~~ — ~~Regulatory Proceedings~~

~~The specific impacts of the TCJA on customer rates are subject to regulatory approval. The following details the status of regulatory decisions.~~

~~Natural Gas~~ — In February 2018, the administrative law judge (ALJ) recommended approval of PSCo and the CPUC Staff’s TCJA settlement agreement which included a $20 million reduction to provisional rates effective March 1, 2018. In September 2018, PSCo submitted a TCJA true-up filing and revised its TCJA benefit estimate to $24 million and requested an equity ratio of 56 percent to offset the negative impact of the TCJA on credit metrics. A decision is expected in the fourth quarter of 2018. The true-up of the estimated TCJA benefit is expected to be retroactive to January 2018.

~~Electric~~— In April 2018, PSCo, the CPUC Staff, and the Office of Consumer Counsel (OCC) filed a TCJA settlement agreement for 2018 that included a customer refund of $42 million in 2018, with the remainder of the $59 million of TCJA benefits to be used to accelerate the amortization of an existing prepaid pension asset. In June 2018, the CPUC approved the customer refund of $42 million. In October 2018, the accelerated amortization of the prepaid pension asset was effective by operation of law. For 2019, the expected customer refund is estimated to be $67 million, and amortization of the prepaid pension asset is estimated to be $34 million. Impacts of the TCJA for 2020 and beyond are expected to be addressed in a future electric rate case.

~~Pending Regulatory Proceedings — CPUC~~

~~Colorado 2017 Multi-Year Natural Gas Rate Case~~ — In June 2017, PSCo filed a multi-year request with the CPUC seeking to increase retail natural gas rates approximately $139 million over three years. The request was based on forward test years, a 10.0 percent ROE and an equity ratio of 55.25 percent.

In August 2018, the CPUC issued an interim decision that included application of a 2016 historic test year (HTY), with a 13-month average rate base, an ROE of 9.35 percent, an equity ratio of 54.6 percent and provided no return on the prepaid pension and retiree medical asset. With these adjustments, the total rate increase, prior to TCJA impacts, would be $47 million. PSCo filed an interim rehearing request to preserve its rights and the CPUC decided that any reconsideration can be brought after a final order incorporating TCJA impacts. The CPUC is expected to issue its order on the natural gas rate case and the final decision related to the impacts of the TCJA in the fourth quarter of 2018.

~~PSIA Rider~~

~~In October 2018, PSCo, CPUC Staff, and the OCC filed a settlement agreement to extend the PSIA rider through 2021. The CPUC is expected to rule on the settlement in the fourth quarter of 2018.~~


6.	~~Commitments and Contingencies~~

Except to the extent noted below and in Note 5 to the consolidated financial statements, the circumstances set forth in Notes 11 and 12 to the consolidated financial statements included in PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, 2017 and in Notes 5 and 6 to PSCo’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018, appropriately represent, in all material respects, the current status of commitments and contingent liabilities and are incorporated herein by reference. The following include commitments, contingencies and unresolved contingencies that are material to PSCo’s financial position.

~~PPAs~~

PSCo purchases power from independent power producing entities that own natural gas fueled power plants for which PSCo is required to reimburse natural gas fuel costs, or to participate in tolling arrangements under which PSCo procures the natural gas required to produce the energy that it purchases. These specific PPAs create a variable interest in the associated independent power producing entity.

PSCo had approximately 1,571 Megawatts (MW) of capacity under long-term PPAs as of Sept. 30, 2018 and Dec. 31, 2017, with entities that have been determined to be variable interest entities. PSCo has concluded that these entities are not required to be consolidated in its consolidated financial statements because it does not have the power to direct the activities that most significantly impact the entities’ economic performance. These agreements have various expiration dates through 2032.

~~Environmental Contingencies~~

~~Manufactured Gas Plant (MGP), Landfill or Disposal Sites~~ ~~— PSCo is currently involved in investigating and/or remediating several MGP, landfill or other disposal sites. PSCo has identified four~~sites where investigation and/or remediation activities are currently underway. Other parties may have responsibility for some portion of the investigation and/or remediation activities. PSCo anticipates that these investigation or remediation activities will continue through at least 2019. PSCo accrued $1 million as of Sept. 30, 2018 and an immaterial amount as of Dec. 31, 2017, for these sites. There may be insurance recovery and/or recovery from other responsible parties that will offset any costs incurred.

~~Environmental Requirements~~

~~Water and Waste~~

~~Coal Ash Regulation~~ — PSCo’s operations are subject to federal and state laws that impose requirements for handling, storage, treatment and disposal of solid waste. In 2015, the United States Environmental Protection Agency published a final rule regulating the management, storage, and disposal of coal combustion residuals (CCRs) as a nonhazardous waste (CCR Rule).

Under the CCR Rule, utilities are required to complete certain groundwater sampling around their CCR landfills and surface impoundments. PSCo has identified at least one site where there are impoundments and/or landfills present and where a statistically significant increase of certain constituents exist in the groundwater. However, at that location, closure activities are already underway. PSCo is currently conducting additional groundwater sampling and will evaluate whether corrective action is required at any CCR landfills or surface impoundments. Until PSCo completes additional groundwater sampling, it is uncertain what impact, if any, there will be on the operations, financial position or cash flows. PSCo believes that any associated costs would be recoverable through regulatory mechanisms.

~~Legal Contingencies~~

PSCo is involved in various litigation matters that are being defended and handled 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 such losses that are 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. 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, arising from such current proceedings would have a material effect on PSCo’s financial statements. Unless otherwise required by GAAP, legal fees are expensed as incurred.

~~Employment, Tort and Commercial Litigation~~

~~Line Extension Disputes~~ — In December 2015, Development Recovery Company (DRC) filed a lawsuit in the Denver District Court, stating PSCo failed to award proper allowances and refunds for line extensions to new developments pursuant to the terms of electric and gas service agreements entered into by PSCo and various developers. The dispute involved claims by over fifty developers. In February 2018, the Colorado Supreme Court denied DRC’s petition to appeal the Denver District Court’s dismissal of the lawsuit, effectively terminating this litigation. However, in January 2018, DRC filed a new lawsuit in Boulder County District Court, asserting a single claim that PSCo was required to file its line extension agreements with the CPUC but failed to do so. This claim is substantially similar to the arguments previously raised by DRC. PSCo filed a motion to dismiss this claim, which was granted in May 2018. DRC subsequently filed an appeal to the Colorado Court of Appeals. It is uncertain when a decision will be rendered regarding this appeal.

PSCo has concluded that a loss is remote with respect to this matter as the service agreements were developed to implement CPUC approved tariffs and PSCo has complied with the tariff provisions. Also, if a loss were sustained, PSCo believes it would be allowed to recover these costs through traditional regulatory mechanisms. The amount or range in dispute is presently unknown and no accrual has been recorded for this matter.


7.	Borrowings and Other Financing Instruments

Short-Term Borrowings

PSCo 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 PSCo were as follows:



(Amounts in Millions, Except Interest Rates)	Three Months Ended June 30, 2019			Year Ended Dec. 31, 2018
Borrowing limit	$	250		$	250
Amount outstanding at period end	50			—
Average amount outstanding	3			25
Maximum amount outstanding	50			156
Weighted average interest rate, computed on a daily basis	2.41		%	1.93		%
Weighted average interest rate at period end	2.41			N/A

(Amounts in Millions, Except Interest Rates) Three Months Ended Sept. 30, 2018 Year Ended Dec. 31, 2017
Borrowing limit $ 250
$ 250
Amount outstanding at period end —
—
Average amount outstanding —
—
Maximum amount outstanding —
20
Weighted average interest rate, computed on a daily basis N/A
0.92 %
Weighted average interest rate at period end N/A
N/A

Commercial Paper — ~~PSCo meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility and the money pool.~~ Commercial paper outstanding for PSCo was as follows:



(Amounts in Millions, Except Interest Rates)	Three Months Ended June 30, 2019			Year Ended Dec. 31, 2018
Borrowing limit	$	700		$	700
Amount outstanding at period end	221			307
Average amount outstanding	244			55
Maximum amount outstanding	432			309
Weighted average interest rate, computed on a daily basis	2.65		%	2.28		%
Weighted average interest rate at period end	2.59			2.95

(Amounts in Millions, Except Interest Rates) Three Months Ended Sept. 30, 2018 Year Ended Dec. 31, 2017
Borrowing limit $ 700
$ 700
Amount outstanding at period end —
—
Average amount outstanding —
54
Maximum amount outstanding —
268
Weighted average interest rate, computed on a daily basis N/A
1.08 %
Weighted average interest rate at period end N/A
N/A

Letters of Credit— PSCo uses letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. ~~At Sept. 30, 2018 and Dec. 31, 2017, there~~There were $10 million ~~and $3 million, respectively,~~ of letters of credit outstanding under the credit ~~facility.~~facility at June 30, 2019 and Dec. 31, 2018. The contract amounts of these letters of credit approximate their fair value and are subject to fees.

Credit Facility — In order to use its commercial paper program to fulfill short-term funding needs, PSCo 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 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.

At ~~Sept.~~June 30, ~~2018,~~2019, PSCo had the following committed credit facility available (in millions of dollars):


Credit Facility ^(a)	Credit Facility ^(a)	Drawn ^(b)		Available		Credit Facility ^(a)	Outstanding ^(b)		Available
$	700	$	10	$	690	700	$	231	$	469

^(a) This credit facility expires in June ~~2021.~~2024.

^(b) Includes outstanding commercial paper and letters of credit.

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. PSCo had no direct advances on the credit facility outstanding at ~~Sept.~~June 30, ~~2018~~2019 and Dec. 31, ~~2017.~~2018.

Long-Term Borrowings

During the six months ended June 30, 2019, PSCo issued $400 million of 4.05% first mortgage bonds due Sep. 15, 2049.


8.5.	Revenues

Revenue is classified by the type of goods/services rendered and market/customer type. PSCo’s operating revenues consists of the following:



	Three Months Ended June 30, 2019
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	211.5	$	130.1	$	2.8	$	344.4
C&I	384.4		49.4		5.7		439.5
Other	11.8		—		—		11.8
Total retail	607.7		179.5		8.5		795.7
Wholesale	29.1		—		—		29.1
Transmission	11.6		—		—		11.6
Other	6.5		23.3		—		29.8
Total revenue from contracts with customers	654.9		202.8		8.5		866.2
Alternative revenue and other	37.8		4.8		1.2		43.8
Total revenues	$	692.7	$	207.6	$	9.7	$	910.0



	Three Months Ended June 30, 2018
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	222.7	$	104.0	$	2.6	$	329.3
C&I	383.7		38.9		5.3		427.9
Other	11.4		—		—		11.4
Total retail	617.8		142.9		7.9		768.6
Wholesale	36.2		—		—		36.2
Transmission	13.2		—		—		13.2
Other	14.7		18.8		—		33.5
Total revenue from contracts with customers	681.9		161.7		7.9		851.5
Alternative revenue and other	34.3		25.0		1.1		60.4
Total revenues	$	716.2	$	186.7	$	9.0	$	911.9



	Six Months Ended June 30, 2019
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	456.6	$	441.5	$	5.3	$	903.4
C&I	752.3		169.7		14.5		936.5
Other	24.3		—		—		24.3
Total retail	1,233.2		611.2		19.8		1,864.2
Wholesale	86.4		—		—		86.4
Transmission	25.0		—		—		25.0
Other	18.1		54.9		—		73.0
Total revenue from contracts with customers	1,362.7		666.1		19.8		2,048.6
Alternative revenue and other	71.5		10.6		2.3		84.4
Total revenues	$	1,434.2	$	676.7	$	22.1	$	2,133.0



	Six Months Ended June 30, 2018
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	450.3	$	331.8	$	5.2	$	787.3
C&I	727.0		124.9		12.5		864.4
Other	23.6		—		0.1		23.7
Total retail	1,200.9		456.7		17.8		1,675.4
Wholesale	84.1		—		—		84.1
Transmission	25.4		—		—		25.4
Other	33.5		43.8		—		77.3
Total revenue from contracts with customers	1,343.9		500.5		17.8		1,862.2
Alternative revenue and other	70.6		50.1		2.3		123.0
Total revenues	$	1,414.5	$	550.6	$	20.1	$	1,985.2


6.	Income Taxes

Except to the extent noted below, Note 8 to the consolidated financial statements included in PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, 2018 represents, in all material respects, the current status of other income tax matters, and are incorporated herein by reference.

The following table reconciles the difference between the statutory rate and the ETR:



	Six Months Ended June 30
	2019		2018
Federal statutory rate	21.0	%	21.0	%
State tax (net of federal tax effect)	3.7		3.7
Increases (decreases) in tax from:
Wind PTCs	(9.4	)	—
Plant regulatory differences ^(a)	(3.4	)	(1.5	)
Other tax credits and allowances (net)	(1.0	)	(1.0	)
Other (net)	0.1		0.3
Effective income tax rate	11.0	%	22.5	%

^(a)

Regulatory differences for income tax primarily relate to the flow back of excess deferred taxes to customers through the average rate assumption method and the impact of AFUDC - Equity. Year-to-date variations primarily relates to the deferral of the flow back of excess deferred taxes in 2018, as a result of pending regulatory decisions. Treatment of most tax reform items was established prior to the first quarter of 2019, resulting in a reduction in deferred amounts. Income tax benefits associated with the flow back of excess deferred credits are offset by corresponding revenue reductions and additional prepaid pension asset amortization.

Federal Audits— PSCO is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. Statute of limitations applicable to Xcel Energy’s federal income tax returns expire as follows:



Tax Year(s)		Expiration
2009 - 2013		June 2020
2014 - 2016		September 2020
2017		September 2021

In 2015, the IRS commenced an examination of tax years 2012 and 2013. 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. As of June 30, 2019, the case has been forwarded to Office of Appeals and Xcel Energy has recognized its best estimate of income tax expense that will result from a final resolution of this issue; however, the outcome and timing of a resolution is unknown.

In 2018, the IRS began an audit of tax years 2014 - 2016. As of June 30, 2019 no adjustments have been proposed.

State Audits — PSCo is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of June 30, 2019, PSCo’s earliest open tax year that is subject to examination by state taxing authorities under applicable statutes of limitations is 2009. There are currently no state income tax audits in progress.

Unrecognized Benefits — Unrecognized tax benefit balance includes permanent tax positions, which if recognized would affect the annual ETR. In addition, the unrecognized tax benefit balance includes temporary tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the ETR but would accelerate the payment to the taxing authority to an earlier period.

Unrecognized tax benefits - permanent vs temporary:



(Millions of Dollars)	June 30, 2019		Dec. 31, 2018
Unrecognized tax benefit — Permanent tax positions	$	6.0	$	5.4
Unrecognized tax benefit — Temporary tax positions	4.7		4.9
Total unrecognized tax benefit	$	10.7	$	10.3

Unrecognized tax benefits were reduced by tax benefits associated with NOL and tax credit carryforwards:



(Millions of Dollars)	June 30, 2019			Dec. 31, 2018
NOL and tax credit carryforwards	$	(6.1	)	$	(5.6	)

Net deferred tax liability associated with the unrecognized tax benefit amounts and related NOLs and tax credits carryforwards were $2.6 million and $2.0 million for June 30, 2019 and Dec. 31, 2018, respectively.

As the IRS Appeals and federal audit progress, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $8.7 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 June 30, 2019 or Dec. 31, 2018.


7.	Fair Value of Financial Assets and Liabilities

Fair Value Measurements

The accounting guidance for fair value measurements and disclosures provides a single definition of fair value, hierarchical framework for measuring assets and liabilities and requires ~~certain disclosures~~disclosure 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. The three levels in the hierarchy are as follows:

Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices.

Level 2 — Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reporting date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs.

Level 3 — Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those valued with models requiring significant management judgment or estimation.

Specific valuation methods ~~include the following:~~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 generally utilize observable forward prices and volatilities, as well as observable pricing adjustments for specific delivery locations, and are generally assigned a Level 2 classification. When contractual settlements relate to delivery locations for which pricing is relatively unobservable, or extend to periods beyond those readily observable on active exchanges or quoted by brokers, the significance of the use of less observable ~~forecasts of long-term forward prices and volatilities~~inputs on a valuation is evaluated, and may result in Level 3 classification.

Derivative Instruments Fair Value Measurements

PSCo enters into derivative instruments, including forward contracts, futures, swaps and options, for trading purposes and to manage risk in connection with changes in interest rates, utility commodity prices and vehicle fuel prices.

Interest Rate Derivatives — PSCo enters into various instruments that ~~effectively fix the interest payments on certain floating rate debt obligations or~~ effectively fix the yield or price on a specified benchmark interest rate for an anticipated debt issuance for a specific period. These derivative instruments are generally designated as cash flow hedges for accounting purposes.

At ~~Sept.~~June 30, ~~2018,~~2019, accumulated other comprehensive ~~losses~~loss related to interest rate derivatives included $1.2 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 — PSCo conducts various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy, energy-related instruments and natural ~~gas related~~gas-related instruments, including derivatives. ~~PSCo’s risk management policy allows management~~PSCo is allowed to conduct these activities within guidelines and limitations as approved by its risk management committee, ~~which is made up~~comprised of management personnel not directly involved in ~~the~~ activities governed by this policy.

Commodity Derivatives — PSCo enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric and natural gas operations, as well as for trading purposes. This could include the purchase or sale of energy or energy-related products, natural gas to generate electric energy, natural gas for resale, and vehicle fuel.

PSCo ~~enters~~may enter into derivative instruments that mitigate commodity price risk on behalf of electric and natural gas customers but may not be designated as qualifying hedging transactions. Changes in the fair value of non-trading commodity derivative instruments are recorded inas other comprehensive income or deferred as a regulatory asset or liability. The classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms.

As of June 30, 2019, PSCo had no ~~income related to the ineffectiveness of~~commodity contracts designated as cash flow ~~hedges for the three and nine months ended Sept. 30, 2018 and 2017.~~hedges.

~~Additionally,~~ PSCo also enters into commodity derivative instruments for trading purposes not directly related to commodity price risks associated with serving its electric and natural gas customers. Changes in the fair value of these commodity derivatives are recorded in electric operating revenues, net of amounts credited to customers under margin-sharing mechanisms.

~~The following table details the gross~~Gross notional amounts of commodity forwards and ~~options at Sept. 30, 2018 and Dec. 31, 2017:~~options:


(Amounts in Thousands) ^(a)(b)	Sept. 30, 2018	Dec. 31, 2017
(Amounts in Millions) ^(a)(b)			June 30, 2019	Dec. 31, 2018
Megawatt hours of electricity	21,474	22,260	16.3	24.4
Million British thermal units of natural gas	30,763	13,410	51.3	48.4


^(a)	Amounts are not reflective of net positions in the underlying commodities.


^(b)	Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise.

Consideration of Credit Risk and Concentrations — PSCo continuously monitors the creditworthiness of the 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. The ~~following tables detail the~~ impact of ~~derivative activity during~~credit risk was immaterial to the ~~three~~fair value of unsettled commodity derivatives presented in the consolidated balance sheets. PSCo’s most significant concentrations of credit risk with particular entities or industries are contracts with counterparties to its wholesale, trading and ~~nine months ended Sept. 30, 2018 and 2017 on accumulated other comprehensive loss, regulatory assets and liabilities, and income:~~

non-trading commodity activities.

Three Months Ended Sept. 30, 2018

Pre-Tax Fair Value
(Losses) Recognized
During the Period in:

Pre-Tax Losses
Reclassified into Income
During the Period from:

(Thousands of Dollars)
Accumulated
Other
Comprehensive
Loss

Regulatory
(Assets) and
Liabilities

Accumulated
Other
Comprehensive
Loss

Regulatory
Assets and
(Liabilities)

Pre-Tax Gains
Recognized
During the Period
in Income

Derivatives designated as cash flow hedges
Interest rate $ —
$ —
$ 407
^(a)
$ —
$ —

Total $ —
$ —
$ 407
$ —
$ —

Other derivative instruments
Commodity trading $ —
$ —
$ —
$ —
$ 2,004
^(b)
Natural gas commodity —
(1,187 ) —
—
^(c)
—
^(c)
Total $ —
$ (1,187 ) $ —
$ —
$ 2,004

At June 30, 2019, six of PSCo’s 10 most significant counterparties for these activities, comprising $33.0 million or 49% of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. Three of the 10 most significant counterparties, comprising $7.7 million or 11% of this credit exposure, were not rated by these external agencies, but based on PSCo’s internal analysis, had credit quality consistent with investment grade. One of these significant counterparties, comprising $8.4 million or 12% of this credit exposure, had credit quality less than investment grade, based on external analysis. Seven of these significant counterparties are municipal or cooperative electric entities, or other utilities.

Impact of derivative activity:



	Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:
(Millions of Dollars)	Accumulated Other Comprehensive Loss		Regulatory(Assets) and Liabilities
Three Months Ended June 30, 2019
Other derivative instruments
Natural gas commodity	$	—	$	(1.5	)
Total	$	—	$	(1.5	)

Six Months Ended June 30, 2019
Other derivative instruments
Natural gas commodity	$	—	$	(1.5	)
Total	$	—	$	(1.5	)

Three Months Ended June 30, 2018
Other derivative instruments
Natural gas commodity	$	—	$	(0.2	)
Total	$	—	$	(0.2	)

Six Months Ended June 30, 2018
Other derivative instruments
Natural gas commodity	$	—	$	(0.4	)
Total	$	—	$	(0.4	)

Nine Months Ended Sept. 30, 2018

Pre-Tax Fair Value
(Losses) Recognized
During the Period in:

Pre-Tax Losses
Reclassified into Income
During the Period from:

Pre-Tax Gains (Losses)
Recognized
During the Period
in Income

(Thousands of Dollars)
Accumulated
Other
Comprehensive
Loss

Regulatory
(Assets) and
Liabilities

Accumulated
Other
Comprehensive
Loss

Regulatory
Assets and
(Liabilities)

Derivatives designated as cash flow hedges
Interest rate $ —
$ —
$ 1,207
^(a)
$ —
$ —

Total $ —
$ —
$ 1,207
$ —
$ —

Other derivative instruments

Commodity trading $ —
$ —
$ —
$ —
$ 2,728
^(b)
Natural gas commodity —
(1,607 ) —
2,749
^(c)
(1,581 )
^(c)
Total $ —
$ (1,607 ) $ —
$ 2,749
$ 1,147



	Pre-Tax (Gains) Losses Reclassified into Income During the Period from:							Pre-Tax Gains (Losses) Recognized During the Period in Income
(Millions of Dollars)	Accumulated Other Comprehensive Loss			Regulatory Assets and (Liabilities)
Three Months Ended June 30, 2019
Derivatives designated as cash flow hedges
Interest rate	$	0.4	^(a)	$	—			$	—
Total	$	0.4		$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—			$	3.3		^(b)
Total	$	—		$	—			$	3.3

Six Months Ended June 30, 2019
Derivatives designated as cash flow hedges
Interest rate	$	0.8	^(a)	$	—			$	—
Total	$	0.8		$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—			$	4.7		^(b)
Natural gas commodity	—			(1.3		)	^(c)	(2.0		)	^(c)
Total	$	—		$	(1.3	)		$	2.7

Three Months Ended June 30, 2018
Derivatives designated as cash flow hedges
Interest rate	$	0.4	^(a)	$	—			$	—
Total	$	0.4		$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—			$	0.2		^(b)
Total	$	—		$	—			$	0.2

Six Months Ended June 30, 2018
Derivatives designated as cash flow hedges
Interest rate	$	0.8	^(a)	$	—			$	—
Total	$	0.8		$	—			$	—
Other derivative instruments
Commodity trading	$	—		$	—			$	0.7		^(b)
Natural gas commodity	—			2.7			^(c)	(1.6		)	^(c)
Total	$	—		$	2.7			$	(0.9	)

Three Months Ended Sept. 30, 2017

Pre-Tax Fair Value
(Losses) Recognized
During the Period in:

Pre-Tax Losses
Reclassified into Income
During the Period from:

(Thousands of Dollars)
Accumulated
Other
Comprehensive
Loss

Regulatory
(Assets) and
Liabilities

Accumulated
Other
Comprehensive
Loss

Regulatory
Assets and
(Liabilities)

Pre-Tax Losses
Recognized
During the Period
in Income

Derivatives designated as cash flow hedges
Interest rate $ —
$ —
$ 407
^(a)
$ —
$ —

Total $ —
$ —
$ 407
$ —
$ —

Other derivative instruments
Commodity trading $ —
$ —
$ —
$ —
$ (211 )
^(b)
Natural gas commodity —
(1,635 ) —
—
—
^(c)
Total $ —
$ (1,635 ) $ —
$ —
$ (211 )

Nine Months Ended Sept. 30, 2017

Pre-Tax Fair Value
(Losses) Recognized
During the Period in:

Pre-Tax Losses
Reclassified into Income
During the Period from:

(Thousands of Dollars)
Accumulated
Other
Comprehensive
Loss

Regulatory
(Assets) and
Liabilities

Accumulated
Other
Comprehensive
Loss

Regulatory
Assets and
(Liabilities)

Pre-Tax Losses
Recognized
During the Period
in Income

Derivatives designated as cash flow hedges
Interest rate $ —
$ —
$ 1,208
^(a)
$ —
$ —

Total $ —
$ —
$ 1,208
$ —
$ —

Other derivative instruments
Commodity trading $ —
$ —
$ —
$ —
$ (23 )
^(b)
Natural gas commodity —
(8,643 ) —
282
^(c)
(2,990 )
^(c)
Total $ —
$ (8,643 ) $ —
$ 282
$ (3,013 )


^(a)	Amounts are recorded to interest charges.


^(b)	Amounts are recorded to interest charges. Amounts are recorded to electric operating revenues. Portions of these gains and losses are subject to sharing with electric customers through margin-sharing mechanisms and deducted from gross revenue as appropriate.

^(c)

~~Certain~~Amounts for both the three and six months ended June 30, 2019 included no settlement gain or losses on derivatives ~~are utilized~~entered to mitigate natural gas price risk for electric generation ~~and are~~ recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. Amounts for the three and ~~nine~~six months ended ~~Sept.~~June 30, 2018 included no such settlement gains or losses and $1.2 million of such settlement losses, respectively. ~~Amounts for the three and nine months ended Sept. 30, 2017 included no settlement gains or losses and $0.9 million of settlement gains, respectively. The remaining~~Remaining derivative settlement ~~gains and~~ losses for the three and ~~nine~~six months ended ~~Sept.~~June 30, ~~2018~~2019 and ~~2017~~2018 relate to natural gas operations and are recorded to cost of natural gas sold and transported. These gains and losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset or liability, as appropriate.

PSCo had no derivative instruments designated as fair value hedges during the three and ~~nine~~six months ended ~~Sept.~~June 30, ~~2018~~2019 and ~~2017. Therefore, no gains or losses from fair value hedges or related hedged transactions were recognized for these periods.~~2018.

~~Consideration of Credit Risk and Concentrations —~~ PSCo continuously monitors the creditworthiness of the 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. Given this assessment, as well as an assessment of the impact of PSCo’s own credit risk when determining the fair value of derivative liabilities, the impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented in the consolidated balance sheets.

PSCo employs additional credit risk control mechanisms when appropriate, such as letters of credit, parental guarantees, standardized master netting agreements and termination provisions that allow for offsetting of positive and negative exposures. Credit exposure is monitored and, when necessary, the activity with a specific counterparty is limited until credit enhancement is provided.

PSCo’s most significant concentrations of credit risk with particular entities or industries are contracts with counterparties to its wholesale, trading and non-trading commodity activities. At Sept. 30, 2018, four of PSCo’s 10 most significant counterparties for these activities, comprising $24.1 million or 42 percent of this credit exposure, had investment grade credit ratings from Standard & Poor’s, Moody’s or Fitch Ratings. Five of the 10 most significant counterparties, comprising $16.6 million or 29 percent of this credit exposure, were not rated by these external agencies, but based on PSCo’s internal analysis, had credit quality consistent with investment grade. The one remaining significant counterparty, comprising $1.1 million or 2 percent of this credit exposure, had credit quality less than investment grade, based on ratings from external analysis. Eight of these significant counterparties are municipal or cooperative electric entities, or other utilities.

Credit Related Contingent Features—Contract provisions for derivative instruments that PSCo enters into, including those accounted for as normal purchase-normal sale contracts and therefore not reflected on the consolidated balance ~~sheet,~~sheets, may require the posting of collateral or settlement of the contracts for various reasons, including if PSCo’s credit ratings are downgraded below its investment grade credit rating by any of the major credit rating agencies, or for cross-default contractual provisions ~~that could result in the settlement of such contracts~~ if there was a failure under other financing arrangements related to payment terms or other covenants. At ~~Sept.~~June 30, ~~2018~~2019 and Dec. 31, ~~2017,~~2018, there were no derivative instruments in a ~~material~~ liability position with such underlying contract ~~provisions.~~provisions with no offsetting positions or posted collateral.

Certain derivative instruments are also subject to contract provisions that contain adequate assurance clauses. These provisions allow counterparties to seek performance assurance, including cash collateral, in the event that PSCo’s ability to fulfill its contractual obligations is reasonably expected to be impaired. PSCo had no collateral posted related to adequate assurance clauses in derivative contracts as of ~~Sept.~~June 30, ~~2018~~2019 and Dec. 31, ~~2017.~~2018.

Recurring Fair Value Measurements—~~The following table presents, for each of the fair value hierarchy levels,~~ PSCo’s assets and liabilities measured at fair value on a recurring ~~basis at Sept. 30, 2018:~~basis:



	June 30, 2019													Dec. 31, 2018
	Fair Value						Fair Value Total		Netting ^(a)					Fair Value						Fair Value Total		Netting ^(a)
(Millions of Dollars)	Level 1		Level 2		Level 3		Fair Value Total		Netting ^(a)			Total		Level 1		Level 2		Level 3		Fair Value Total		Netting ^(a)			Total
Current derivative assets
Other derivative instruments:
Commodity trading	$	5.4	$	33.3	$	0.2	$	38.9	$	(20.9	)	$	18.0	$	2.3	$	65.0	$	0.1	$	67.4	$	(28.2	)	$	39.2
Natural gas commodity	—		0.4		—		0.4		—			0.4		—		3.4		—		3.4		—			3.4
Total current derivative assets	$	5.4	$	33.7	$	0.2	$	39.3	$	(20.9	)	18.4		$	2.3	$	68.4	$	0.1	$	70.8	$	(28.2	)	42.6
PPAs ^(b)												—													—
Current derivative instruments												$	18.4												$	42.6
Noncurrent derivative assets
Other derivative instruments:
Commodity trading	$	0.2	$	4.6	$	—	$	4.8	$	(2.3	)	$	2.5	$	—	$	1.6	$	—	$	1.6	$	(0.4	)	$	1.2
Total noncurrent derivative assets	$	0.2	$	4.6	$	—	$	4.8	$	(2.3	)	2.5		$	—	$	1.6	$	—	$	1.6	$	(0.4	)	1.2
PPAs ^(b)												—													—
Noncurrent derivative instruments												$	2.5												$	1.2

Sept. 30, 2018
Fair Value
Fair Value
Total

Counterparty
Netting ^(b)

(Thousands of Dollars) Level 1 Level 2 Level 3 Total
Current derivative assets
Other derivative instruments:
Commodity trading $ 695
$ 21,035
$ —
$ 21,730
$ (6,861 ) $ 14,869
Natural gas commodity —
1,233
—
1,233
—
1,233
Total current derivative assets $ 695
$ 22,268
$ —
$ 22,963
$ (6,861 ) 16,102
PPAs ^(a)
460
Current derivative instruments $ 16,562
Noncurrent derivative assets
Other derivative instruments:
Commodity trading $ 6
$ 3,682
$ —
$ 3,688
$ —
$ 3,688
Total noncurrent derivative assets $ 6
$ 3,682
$ —
$ 3,688
$ —
3,688
PPAs ^(a)
—
Noncurrent derivative instruments $ 3,688

~~During 2006, PSCo qualified these contracts under the normal purchase exception. Based on~~this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts is being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

~~The following table presents, for each of the fair value hierarchy levels, PSCo’s assets and liabilities measured at fair value on a recurring basis at Dec. 31, 2017:~~

Dec. 31, 2017
Fair Value
Fair Value
Total

Counterparty
Netting ^(b)

(Thousands of Dollars) Level 1 Level 2 Level 3 Total
Current derivative assets
Other derivative instruments:
Commodity trading $ 528
$ 4,488
$ 12
$ 5,028
$ (3,554 ) $ 1,474
Natural gas commodity —
18
—
18
(10 ) 8
Total current derivative assets $ 528
$ 4,506
$ 12
$ 5,046
$ (3,564 ) 1,482
PPAs ^(a)
1,715
Current derivative instruments $ 3,197
Noncurrent derivative assets
Other derivative instruments:

Commodity trading $ —
$ 1,541
$ —
$ 1,541
$ (563 ) $ 978
Total noncurrent derivative assets $ —
$ 1,541
$ —
$ 1,541
$ (563 ) 978
PPAs ^(a)
31
Noncurrent derivative instruments $ 1,009

Dec. 31, 2017
Fair Value
Fair Value
Total

Counterparty
Netting ^(b)

(Thousands of Dollars) Level 1 Level 2 Level 3 Total
Current derivative liabilities
Other derivative instruments:
Commodity trading $ 446
$ 4,285
$ 6
$ 4,737
$ (3,431 ) $ 1,306
Natural gas commodity —
1,016
—
1,016
(10 ) 1,006
Total current derivative liabilities $ 446
$ 5,301
$ 6
$ 5,753
$ (3,441 ) 2,312
PPAs ^(a)
5,036
Current derivative instruments $ 7,348
Noncurrent derivative liabilities
Commodity trading $ —
$ 1,362
$ —
$ 1,362
$ (563 ) $ 799
Total noncurrent derivative liabilities $ —
$ 1,362
$ —
$ 1,362
$ (563 ) 799
PPAs ^(a)
$ 2,669
Noncurrent derivative instruments $ 3,468

During 2006, PSCo qualified these contracts under the normal purchase exception. Based onthis qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts ~~is being~~will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

There were ~~immaterial~~$0.3 million and $1.0 million of gains ~~and losses~~ recognized in earnings for Level 3 commodity trading derivatives in the three and ~~nine~~six months ended ~~Sept.~~June 30, ~~2018~~2019, respectively. There were $0.1 million of gains recognized in earnings for Level 3 commodity trading derivatives in both the three and ~~2017.~~

six months ended June 30, 2018.

PSCo recognizes transfers between fair value hierarchy levels as of the beginning of each period. There were no transfers of amounts between levels for derivative instruments for the three and ~~nine~~six months ended ~~Sept.~~June 30, ~~2018~~2019 and ~~2017.~~2018.

Fair Value of Long-Term Debt

~~As of Sept. 30, 2018 and Dec. 31, 2017, other~~Other financial instruments for which the carrying amount did not equal fair ~~value were as follows:~~value:



	June 30, 2019				Dec. 31, 2018
(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	4,846.1	$	5,333.3	$	4,997.6	$	5,123.2

Sept. 30, 2018 Dec. 31, 2017
(Thousands of Dollars)
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Long-term debt, including current portion $ 4,998,403
$ 5,090,696
$ 4,608,275
$ 5,024,840

~~The fair~~Fair value of PSCo’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. ~~The fair~~Fair value estimates are based on information available to management as of ~~Sept.~~June 30, ~~2018~~2019 and Dec. 31, ~~2017,~~2018, and given the observability of the inputs, ~~to these estimates, the~~ fair values presented for long-term debt ~~have been~~were assigned aas Level 2.


8.	Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost (Credit)



	Three Months Ended June 30
	2019			2018			2019			2018
(Millions of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	6.4		$	7.3		$	0.1		$	0.2
Interest cost ^(a)	12.9			11.8			3.9			3.8
Expected return on plan assets ^(a)	(17.1		)	(17.1		)	(4.7		)	(5.7		)
Amortization of prior service credit ^(a)	(0.8		)	(0.9		)	(1.3		)	(1.6		)
Amortization of net loss ^(a)	6.3			7.8			0.7			1.0
Net periodic benefit cost (credit)	7.7			8.9			(1.3		)	(2.3		)
Credits not recognized due to the effects of regulation	1.8			0.9			0.2			—
Net benefit cost (credit) recognized for financial reporting	$	9.5		$	9.8		$	(1.1	)	$	(2.3	)



	Six Months Ended June 30
	2019			2018			2019			2018
(Millions of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	12.8		$	14.6		$	0.2		$	0.3
Interest cost ^(a)	25.8			23.6			7.8			7.5
Expected return on plan assets ^(a)	(34.2		)	(34.3		)	(9.4		)	(11.3		)
Amortization of prior service credit ^(a)	(1.7		)	(1.7		)	(2.7		)	(3.1		)
Amortization of net loss ^(a)	12.7			15.6			1.5			2.0
Net periodic benefit cost (credit)	15.4			17.8			(2.6		)	(4.6		)
Credits not recognized due to the effects of regulation	3.6			2.4			0.5			—
Net benefit cost (credit) recognized for financial reporting	$	19.0		$	20.2		$	(2.1	)	$	(4.6	)


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

In January 2019, contributions of $150 million were made across four of Xcel Energy’s pension plans, of which $43 million was attributable to PSCo. On July 1, 2019, Xcel Energy made a $4 million contribution to the Xcel Energy Inc. Non-Bargaining Pension Plan (South), of which $3 million was attributable to PSCo, and does not expect any additional pension contributions during 2019.


9.	~~Other Income, Net~~Commitments and Contingencies

Legal Contingencies

PSCo 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. 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 PSCo’s financial statements. Unless otherwise required by GAAP, legal fees are 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 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.

Two cases remain active which include an MDL matter consisting of a Colorado purported class (Breckenridge) and a Wisconsin purported class (Arandell Corp.).

Breckenridge/Colorado - The MDL panel remanded Breckenridge back to the U.S. District Court in Colorado and assigned to a judge.

~~Other income, net consisted~~

Arandell Corp. - In February 2019, Xcel Energy filed a no opposition motion to have the case remanded back to the U.S. District Court in Wisconsin. The motion was granted and the case has been remanded back to the District Court.

Xcel Energy has concluded that a loss is remote for both remaining lawsuits.

Employment, Tort and Commercial Litigation

Line Extension Disputes — In December 2015, the DRC filed a lawsuit seeking monetary damages in the Denver District Court, stating PSCo failed to award proper allowances and refunds for line extensions to new developments pursuant to the terms of electric and gas service agreements. The dispute involves claims by over fifty developers. In February 2018, the Colorado Supreme Court denied DRC’s petition to appeal the Denver District Court’s dismissal of the ~~following:~~lawsuit, effectively terminating this litigation. However, in January 2018, DRC filed a new lawsuit in Boulder County District Court, asserting a single claim that PSCo was required to file its line extension agreements with the CPUC but failed to do so.

This claim is similar to the arguments previously raised by DRC. PSCo filed a motion to dismiss this claim, which was granted in May 2018. DRC subsequently filed an appeal to the Colorado Court of Appeals. Briefs have been filed and it is uncertain when a decision will be rendered.

PSCo has concluded that a loss is remote with respect to both of these matters as the service agreements were developed to implement CPUC approved tariffs and PSCo has complied with the tariff provisions. If a loss were sustained, PSCo believes it would be allowed to recover costs through traditional regulatory mechanisms. Amount or range in dispute is presently unknown and no accrual has been recorded for this matter.

Environmental

MGP, Landfill or Disposal Sites — PSCo is cooperating with the City of Denver on an environmental investigation of the Rice Yards Site in the Central Platte Valley of Denver, Colorado, which had various historic industrial uses by multiple parties, including railroad, maintenance shop, scrap metal yard, and MGP operations. In the 1990’s, environmental remediation activities took place at the site under state oversight to accommodate the development of an amusement park and parking lots. The area is being redeveloped into residential and commercial mixed uses, and PSCo is in discussions with the current property owner regarding legal claims related to the Rice Yards Site.

In addition, PSCo is currently investigating or remediating two other MGP, landfill or other disposal sites across its service territories.

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

Environmental Requirements — Water and Waste

Coal Ash Regulation— PSCo’s operations are subject to federal and state laws that impose requirements for handling, storage, treatment and disposal of solid waste.

Under the CCR Rule, utilities are required to complete groundwater sampling around their CCR landfills and surface impoundments. By the end of 2019, only six of PSCo’s regulated ash units are expected to be in operation. PSCo is conducting groundwater sampling, and where appropriate, initiating the assessment of corrective measures and evaluating whether corrective action is required at any CCR landfills or surface impoundments.

Until PSCo completes its assessment, it is uncertain what impact, if any, there will be on the operations, financial condition or cash flows.

Leases

PSCo evaluates contracts that may contain leases, including PPAs and arrangements for the use of office space and other facilities, vehicles and equipment. Under ASC Topic 842, adopted by PSCo on Jan. 1, 2019, a contract contains a lease if it conveys the exclusive right to control the use of a specific asset. A contract determined to contain a lease is evaluated further to determine if the arrangement is a finance lease.

ROU assets represent PSCo's rights to use leased assets. Starting in 2019, the present value of future operating lease payments are recognized in other current liabilities and noncurrent operating lease liabilities. These amounts, adjusted for any prepayments or incentives, are recognized as operating lease ROU assets.

Most of PSCo’s leases do not contain a readily determinable discount rate. Therefore, the present value of future lease payments is calculated using the estimated incremental borrowing rate (weighted-average of 4.1%). PSCo has elected to utilize the practical expedient under which non-lease components, such as asset maintenance costs included in payments, are not deducted from minimum lease payments for the purposes of lease accounting and disclosure.

Leases with an initial term of 12 months or less are classified as short-term leases and are not recognized on the consolidated balance sheet.

Operating lease ROU assets:



(Millions of Dollars)	June 30, 2019
PPAs	$	585.1
Other	68.3
Gross operating lease ROU assets	653.4
Accumulated amortization	(39.7		)
Net operating lease ROU assets	$	613.7

In 2019, ROU assets for finance leases are included in other noncurrent assets, and the present value of future finance lease payments is included in other current liabilities and other noncurrent liabilities. Prior to 2019, finance leases were included in property, plant and equipment, the current portion of long-term debt and long-term debt.

PSCo’s most significant finance lease activities are related to WYCO.WYCO is a joint venture with CIG to develop and lease natural gas pipeline, storage and compression facilities. Xcel Energy Inc. has a 50% ownership interest in WYCO. WYCO leases its facilities to CIG, and CIG operates the facilities, providing natural gas storage and transportation services to PSCo under separate service agreements.

PSCo accounts for its Totem natural gas storage service and Front Range pipeline arrangements with CIG and WYCO, respectively, as finance leases.

Finance lease ROU assets:



(Millions of Dollars)	June 30, 2019
Gas storage facilities	$	200.5
Gas pipeline	20.7
Gross finance lease ROU assets	221.2
Accumulated amortization	(79.2		)
Net finance lease ROU assets	$	142.0

Components of lease expense:

Three Months Ended Sept. 30 Nine Months Ended Sept. 30
(Thousands of Dollars) 2018 2017 2018 2017
Interest income $ 1,366
$ 1,422
$ 1,738
$ 2,406
Other nonoperating income 1,098
193
2,051
4,940
Other nonoperating expense (3 ) —
—
—
Insurance policy expense (74 ) (79 ) (224 ) (261 )
Benefits non-service cost (988 ) (513 ) (1,136 ) (1,539 )
Other income, net $ 1,399
$ 1,023
$ 2,429
$ 5,546



(Millions of Dollars)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating leases
PPA capacity payments	$	24.7	$	49.0
Other operating leases ^(a)	3.6		7.2
Total operating lease expense ^(b)	$	28.3	$	56.2

Finance leases
Amortization of ROU assets	$	1.5	$	3.0
Interest expense on lease liability	4.7		9.5
Total finance lease expense	$	6.2	$	12.5


^(a)	Includes short-term lease expense of $0.3 million for three months ended June 30, 2019 and $0.7 million for six months ended June 30, 2019.


^(b)	PPA capacity payments are included in electric fuel and purchased power on the consolidated statements of income. Expense for other operating leases is included in O&M expense and electric fuel and purchased power.

Future commitments under operating and finance leases as of June 30, 2019:



(Millions of Dollars)	PPA ^{(a) (b)} Operating Leases			Other Operating Leases			Total Operating Leases			Finance Leases
2019	$	47.8		$	6.5		$	54.3		$	12.4
2020	95.9			13.2			109.1			24.8
2021	96.4			12.1			108.5			23.6
2022	82.6			11.2			93.8			20.5
2023	70.0			10.9			80.9			20.3
Thereafter	288.6			29.2			317.8			420.4
Total minimum obligation	681.3			83.1			764.4			522.0
Interest component of obligation	(106.4		)	(13.8		)	(120.2		)	(380.0		)
Present value of minimum obligation	$	574.9		$	69.3		644.2			142.0
Less current portion							(83.9		)	(6.5		)
Noncurrent operating and finance lease liabilities							$	560.3		$	135.5

Weighted-average remaining lease term in years							8.3			39.0


^(a)	Amounts do not include PPAs accounted for as executory contracts and/or contingent payments, such as energy payments on renewable PPAs.


^(b)	PPA operating leases contractually expire at various dates through 2032.

Future commitments under operating and finance leases as of Dec. 31, 2018:



(Millions of Dollars)	PPA ^{(a) (b)} Operating Leases		Other Operating Leases		Total Operating Leases		Finance Leases
2019	$	95.5	$	10.8	$	106.3	$	24.9
2020	95.9		10.7		106.6		24.8
2021	96.4		9.5		105.9		23.6
2022	82.6		8.4		91.0		20.5
2023	70.0		8.1		78.1		20.3
Thereafter	288.6		53.4		342.0		420.4
Total minimum obligation							534.5
Interest component of obligation							(389.5		)
Present value of minimum obligation							$	145.0


^(a)	Amounts do not include PPAs accounted for as executory contracts and/or contingent payments, such as energy payments on renewable PPAs.


^(b)	PPA operating leases contractually expire at various dates through 2032.

Variable Interest Entities

Under certain PPAs, PSCo purchases power from IPPs and is required to reimburse the IPPs for fuel costs, or to participate in tolling arrangements under which PSCo procures the natural gas required to produce the energy that it purchases. These specific PPAs create a variable interest in the associated IPP.

PSCo had approximately 1,442 MW and 1,571 MW of capacity under long-term PPAs as of June 30, 2019 and Dec. 31, 2018, respectively, with entities that have been determined to be VIEs. PSCo concluded that these entities are not required to be consolidated in its financial statements because it does not have the power to direct the activities that significantly impact the entities’ economic performance. These agreements have various expiration dates through 2032.

Changes in accumulated other comprehensive loss, net of tax, for the three and six months ended June 30, 2019 and 2018:



	Three Months Ended June 30, 2019									Three Months Ended June 30, 2018
(Millions of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension and Postretirement Items			Total			Gains and Losses on Cash Flow Hedges			Defined Benefit Pension and Postretirement Items			Total
Accumulated other comprehensive loss at April 1	$	(25.0	)	$	(0.2	)	$	(25.2	)	$	(26.1	)	$	(0.3	)	$	(26.4	)
Losses reclassified from net accumulated other comprehensive loss:
Interest rate derivatives (net of taxes of $0.1, $0, $0.1 and $0, respectively)^(a)	0.3			—			0.3			0.3			—			0.3
Net current period other comprehensive income	0.3			—			0.3			0.3			—			0.3
Accumulated other comprehensive loss at June 30	$	(24.7	)	$	(0.2	)	$	(24.9	)	$	(25.8	)	$	(0.3	)	$	(26.1	)



	Six Months Ended June 30, 2019									Six Months Ended June 30, 2018
(Millions of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension and Postretirement Items			Total			Gains and Losses on Cash Flow Hedges			Defined Benefit Pension and Postretirement Items			Total
Accumulated other comprehensive loss at Jan. 1	$	(25.3	)	$	(0.2	)	$	(25.5	)	$	(26.4	)	$	(0.3	)	$	(26.7	)
Losses reclassified from net accumulated other comprehensive loss:
Interest rate derivatives (net of taxes of $0.1, $0, $0.2 and $0, respectively)^(a)	0.6			—			0.6			0.6			—			0.6
Net current period other comprehensive income	0.6			—			0.6			0.6			—			0.6
Accumulated other comprehensive loss at June 30	$	(24.7	)	$	(0.2	)	$	(24.9	)	$	(25.8	)	$	(0.3	)	$	(26.1	)


^(a)	Included in interest charges.


11.	Segment Information

Operating results from the regulated electric utility and regulated natural gas utility are each separately and regularly reviewed by PSCo’s chief operating decision maker. PSCo 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.

PSCo has the following reportable segments: regulated electric utility, regulated natural gas utility and all other.

PSCo’s regulated electric utility segment generates, transmits and distributes electricity primarily in portions of Colorado. In addition, this segment includes sales for resale and provides wholesale transmission service to various entities in the United States. Regulated electric utility also includes PSCo’s commodity trading operations.

~~PSCo’s regulated natural gas utility segment transports, stores and distributes natural gas primarily in portions of Colorado.~~

Revenues from operating segments not included above are below the necessary quantitative thresholds and are therefore included in the all other category. Those primarily include steam revenue, appliance repair services and nonutility real estate activities.


•	Regulated Electric - The regulated electric utility segment generates electricity which is transmitted and distributed in Colorado. This segment includes sales for resale and provides wholesale transmission service to various entities in the United States. Regulated electric utility also includes PSCo’s wholesale commodity and trading operations.


•	Regulated Natural Gas - The regulated natural gas utility segment transports, stores and distributes natural gas in portions of Colorado.


•	All Other - Revenues from operating segments not included above are below the necessary quantitative thresholds are included in the all other category. Those primarily include steam revenue, appliance repair services and nonutility real estate activities.

Asset and capital expenditure information is not provided for PSCo’s reportable segments because as an integrated electric and natural gas utility, PSCo operates significant assets that are not dedicated to a specific business segment, and 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.

~~To report income from operations for regulated electric and regulated natural gas utility segments, the majority of costs are directly assigned to each segment. However, some~~Certain costs, such as common depreciation, common ~~operating and maintenance (O&M)~~O&M expenses and interest expense are allocated based on cost causation ~~allocators. A~~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.

PSCo’s segment information for the three and six months ended June 30:

(Thousands of Dollars) Regulated Electric Regulated Natural Gas All Other Reconciling Eliminations Consolidated Total
Three Months Ended Sept. 30, 2018
Operating revenues ^(a)(b)
$ 894,786
$ 157,205
$ 8,688
$ —
$ 1,060,679
Intersegment revenues 32
292
—
(324 ) —
Total revenues $ 894,818
$ 157,497
$ 8,688
$ (324 ) $ 1,060,679
Net income $ 191,742
$ 15,070
$ 300
$ —
$ 207,112

(Thousands of Dollars) Regulated Electric Regulated Natural Gas All Other Reconciling Eliminations Consolidated Total
Three Months Ended Sept. 30, 2017
Operating revenues ^(a)(b)
$ 877,604
$ 142,389
$ 10,300
$ —
$ 1,030,293
Intersegment revenues 47
222
—
(269 ) —
Total revenues $ 877,651
$ 142,611
$ 10,300
$ (269 ) $ 1,030,293
Net income $ 178,648
$ 5,815
$ 1,614
$ —
$ 186,077

^(a)~~Operating revenues include an immaterial amount of affiliate electric revenue for the three months ended Sept. 30, 2018 and 2017.~~

^(b)~~Operating revenues include $1 million of other affiliate revenue for the three months ended Sept. 30, 2018 and 2017.~~

(Thousands of Dollars) Regulated
Electric Regulated
Natural Gas All
Other Reconciling
Eliminations Consolidated
Total
Nine Months Ended Sept. 30, 2018
Operating revenues (a)(b) $ 2,309,255
$ 707,852
$ 28,736
$ —
$ 3,045,843
Intersegment revenues 220
435
—
(655 ) —
Total revenues $ 2,309,475
$ 708,287
$ 28,736
$ (655 ) $ 3,045,843
Net income $ 373,249
$ 89,745
$ 135
$ —
$ 463,129

(Thousands of Dollars) Regulated
Electric Regulated
Natural Gas All
Other Reconciling
Eliminations Consolidated
Total
Nine Months Ended Sept. 30, 2017

Operating revenues (a)(b) $ 2,318,912
$ 691,302
$ 31,529
$ —
$ 3,041,743
Intersegment revenues 206
318
—
(524 ) —
Total revenues $ 2,319,118
$ 691,620
$ 31,529
$ (524 ) $ 3,041,743
Net income $ 342,195
$ 53,133
$ 2,882
$ —
$ 398,210

^(a)~~Operating revenues include an immaterial amount and $1 million of affiliate electric revenue for the nine months ended Sept. 30, 2018 and 2017.~~

^(b)~~Operating revenues include $3 million of other affiliate revenue for the nine months ended Sept. 30, 2018 and 2017.~~


~~11.~~	~~Benefit Plans and Other Postretirement Benefits~~

~~Components of Net Periodic Benefit Cost (Credit)~~

Three Months Ended Sept. 30
2018 2017 2018 2017
(Thousands of Dollars) Pension Benefits
Postretirement Health
Care Benefits
Service cost $ 7,272
$ 6,820
$ 153
$ 192
Interest cost ^(a)
11,813
12,639
3,748
4,191
Expected return on plan assets ^(a)
(17,130 ) (17,134 ) (5,675 ) (5,476 )
Amortization of prior service credit ^(a)
(844 ) (803 ) (1,545 ) (1,562 )
Amortization of net loss ^(a)
7,814
7,089
1,021
961
Net periodic benefit cost (credit) 8,925
8,611
(2,298 ) (1,694 )
(Costs) credits not recognized due to the effects of regulation (4,088 ) 736
1,426
—
Net benefit cost (credit) recognized for financial reporting $ 4,837
$ 9,347
$ (872 ) $ (1,694 )

Nine Months Ended Sept. 30
2018 2017 2018 2017
(Thousands of Dollars) Pension Benefits Postretirement Health
Care Benefits
Service cost $ 21,814
$ 20,460
$ 457
$ 576
Interest cost ^(a)
35,441
37,919
11,245
12,573
Expected return on plan assets ^(a)
(51,390 ) (51,402 ) (17,024 ) (16,428 )
Amortization of prior service credit ^(a)
(2,534 ) (2,409 ) (4,634 ) (4,686 )
Amortization of net loss ^(a)
23,444
21,267
3,063
2,883
Net periodic benefit cost (credit) 26,775
25,835
(6,893 ) (5,082 )
(Costs) credits not recognized due to the effects of regulation (1,718 ) 1,898
1,426
—
Net benefit cost (credit) recognized for financial reporting $ 25,057
$ 27,733
$ (5,467 ) $ (5,082 )



	Three Months Ended June 30
(Millions of Dollars)	2019			2018
Regulated Electric
Operating revenues	$	692.7		$	716.2
Intersegment revenues	0.1			0.1
Total revenue	692.8			716.3
Net income	84.8			101.9
Regulated Natural Gas
Operating revenues	$	207.6		$	186.7
Intersegment revenues	—			0.1
Total revenue	207.6			186.8
Net income	17.6			21.0
All Other
Operating revenues^(a)	$	9.7		$	9.0
Net loss	(0.9		)	(0.6		)
Consolidated Total
Operating revenues^(a)	$	910.1		$	912.1
Reconciling eliminations	(0.1		)	(0.2		)
Total revenue	$	910.0		$	911.9
Net income	101.5			122.3


^(a)	~~The components~~Operating revenues include $1.1 million of ~~net periodic cost~~ other ~~than~~affiliate revenue for the ~~service cost component are included in the line item “other income, net” in the income statement or capitalized on the balance sheet as a regulatory asset.~~three months ended June 30, 2019 and 2018.

In January 2018, contributions of $150 million were made across four of Xcel Energy’s pension plans, of which $22.0 million was attributable to PSCo. Xcel Energy does not expect additional pension contributions during 2018.


~~12.~~	~~Other Comprehensive Income (Loss)~~

~~Changes in accumulated other comprehensive loss, net of tax, for the three and nine months ended Sept. 30, 2018 and 2017 were as follows:~~

Three Months Ended Sept. 30, 2018
(Thousands of Dollars) Gains and Losses on Cash Flow Hedges Defined Benefit and Postretirement Items Total
Accumulated other comprehensive loss at July 1 $ (25,862 ) $ (263 ) $ (26,125 )
Other comprehensive loss before reclassifications —
(153 ) (153 )
Losses reclassified from net accumulated other comprehensive loss 310
155
465
Net current period other comprehensive income 310
2
312
Accumulated other comprehensive loss at Sept. 30 $ (25,552 ) $ (261 ) $ (25,813 )

Three Months Ended Sept. 30, 2017
(Thousands of Dollars) Gains and Losses on Cash Flow Hedges Defined Benefit and Postretirement Items Total
Accumulated other comprehensive loss at July 1 $ (22,284 ) $ (218 ) $ (22,502 )
Losses reclassified from net accumulated other comprehensive loss 257
1
258
Net current period other comprehensive income 257
1
258
Accumulated other comprehensive loss at Sept. 30 $ (22,027 ) $ (217 ) $ (22,244 )

Nine Months Ended Sept. 30, 2018
(Thousands of Dollars) Gains and Losses on Cash Flow Hedges Defined Benefit and Postretirement Items Total
Accumulated other comprehensive loss at Jan. 1 $ (26,465 ) $ (267 ) $ (26,732 )
Other comprehensive loss before reclassifications —
(153 ) (153 )
Losses reclassified from net accumulated other comprehensive loss 913
159
1,072
Net current period other comprehensive income 913
6
919
Accumulated other comprehensive loss at Sept. 30 $ (25,552 ) $ (261 ) $ (25,813 )

Nine Months Ended Sept. 30, 2017
(Thousands of Dollars) Gains and Losses on Cash Flow Hedges Defined Benefit and Postretirement Items Total
Accumulated other comprehensive loss at Jan. 1 $ (22,780 ) $ (220 ) $ (23,000 )
Losses reclassified from net accumulated other comprehensive loss 753
3
756
Net current period other comprehensive income 753
3
756
Accumulated other comprehensive loss at Sept. 30 $ (22,027 ) $ (217 ) $ (22,244 )

~~Reclassifications from accumulated other comprehensive loss for the three and nine months ended Sept. 30, 2018 and 2017 were as follows:~~



	Six Months Ended June 30
(Millions of Dollars)	2019			2018
Regulated Electric
Operating revenues	$	1,434.2		$	1,414.5
Intersegment revenues	0.2			0.2
Total revenue	1,434.4			1,414.7
Net income	167.2			181.5
Regulated Natural Gas
Operating revenues	$	676.7		$	550.6
Intersegment revenues	0.1			0.1
Total revenue	676.8			550.7
Net income	76.8			74.7
All Other
Operating revenues^(a)	$	22.1		$	20.1
Net loss	(3.7		)	(0.2		)
Consolidated Total
Operating revenues^(a)	$	2,133.3		$	1,985.5
Reconciling eliminations	(0.3		)	(0.3		)
Total revenue	$	2,133.0		$	1,985.2
Net income	240.3			256.0

Amounts Reclassified from Accumulated Other
Comprehensive Loss
(Thousands of Dollars) Three Months Ended Sept. 30, 2018 Three Months Ended Sept. 30, 2017
Losses on cash flow hedges:

Interest rate derivatives $ 407
^(a)
$ 407
^(a)
Total, pre-tax 407
407

Tax benefit (97 ) (150 )
Total, net of tax 310
257

Defined benefit pension and postretirement losses:
Amortization of net loss 206
^(b)
2
^(b)
Total, pre-tax 206
2

Tax benefit (51 ) (1 )
Total, net of tax 155
1

Total amounts reclassified, net of tax $ 465
$ 258

Amounts Reclassified from Accumulated
Other Comprehensive Loss

(Thousands of Dollars) Nine Months Ended Sept. 30, 2018 Nine Months Ended Sept. 30, 2017
Losses on cash flow hedges:
Interest rate derivatives $ 1,207
^(a)
$ 1,208
^(a)
Total, pre-tax 1,207
1,208

Tax benefit (294 ) (455 )
Total, net of tax $ 913
$ 753

Defined benefit pension and postretirement losses:
Amortization of net loss $ 210
^(b)
$ 6
^(b)
Total, pre-tax 210
6

Tax benefit (51 ) (3 )
Total, net of tax 159
3

Total amounts reclassified, net of tax $ 1,072
$ 756


^(a)	~~Included in interest charges.~~Operating revenues include $2.2 million of other affiliate revenue for the six months ended June 30, 2019 and 2018.


^(b)	~~Included in the computation of net periodic pension and postretirement benefit costs. See Note 11 to the consolidated financial statements for details regarding these benefit plans.~~


~~13.~~	~~Revenues~~

PSCo principally generates revenue from the generation, transmission, distribution and sale of electricity and the transportation, distribution and sale of natural gas to wholesale and retail customers. Performance obligations related to the sale of energy are satisfied as energy is delivered to customers. PSCo recognizes revenue in an amount that corresponds directly to the price of the energy delivered to the customer. The measurement of energy sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, amounts of energy delivered to customers since the date of the last meter reading are estimated, and the corresponding unbilled revenue is recognized. Contract terms are generally short-term in nature, and as such PSCo does not recognize a separate financing component of its collections from customers. PSCo presents its revenues net of any excise or other fiduciary-type taxes or fees.

PSCo has various rate-adjustment mechanisms in place that provide for the recovery of natural gas, electric fuel and purchased energy costs. These cost-adjustment tariffs may increase or decrease the level of revenue collected from customers and are revised periodically for differences between the total amount collected under the clauses and the costs incurred. When applicable, under governing regulatory commission rate orders, fuel cost over-recoveries (the excess of fuel revenue billed to customers over fuel costs incurred) are deferred as regulatory liabilities and under-recoveries (the excess of fuel costs incurred over fuel revenues billed to customers) are deferred as regulatory assets.

Certain rate rider mechanisms qualify as alternative revenue programs under GAAP. These mechanisms arise from costs imposed upon the utility by action of a regulator or legislative body related to an environmental, public safety or other mandate. When certain criteria are met (including collection within 24 months), revenue is recognized equal to the revenue requirement, which may include return on rate base items and incentives. The mechanisms are revised periodically for differences between the total amount collected and the revenue recognized, which may increase or decrease the level of revenue collected from customers. Alternative revenue is recorded on a gross basis and is disclosed separate from revenue from contracts with customers in the period earned.

~~In the following tables, revenue is classified by the type of goods/services rendered and market/customer type. The tables also reconcile revenue to the reportable segments.~~

Three Months Ended Sept. 30, 2018
(Thousands of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 315,726
$ 84,411
$ 2,668
$ 402,805
Commercial and industrial (C&I) 458,448
29,111
4,897
492,456
Other 11,822
—
—
11,822
Total retail 785,996
113,522
7,565
907,083
Wholesale 41,200
—
—
41,200
Transmission 16,298
—
—
16,298
Other 10,593
18,332
—
28,925
Total revenue from contracts with customers 854,087
131,854
7,565
993,506
Alternative revenue and other 40,699
25,351
1,123
67,173
Total revenues $ 894,786
$ 157,205
$ 8,688
$ 1,060,679

Three Months Ended Sept. 30, 2017
(Thousands of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 302,371
$ 83,000
$ 3,184
$ 388,555
C&I 457,285
30,651
5,993
493,929
Other 12,237
—
—
12,237
Total retail 771,893
113,651
9,177
894,721
Wholesale 40,443
—
—
40,443
Transmission 14,541
—
—
14,541
Other 17,616
17,564
—
35,180
Total revenue from contracts with customers 844,493
131,215
9,177
984,885
Alternative revenue and other 33,111
11,174
1,123
45,408
Total revenues $ 877,604
$ 142,389
$ 10,300
$ 1,030,293

Nine Months Ended Sept. 30, 2018
(Thousands of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 766,062
$ 416,157
$ 7,924
$ 1,190,143
C&I 1,185,381
154,043
17,382
1,356,806
Other 35,453
—
60
35,513
Total retail 1,986,896
570,200
25,366
2,582,462
Wholesale 125,238
—
—
125,238
Transmission 41,709
—
—
41,709
Other 44,120
62,106
—
106,226
Total revenue from contracts with customers 2,197,963
632,306
25,366
2,855,635
Alternative revenue and other 111,292
75,546
3,370
190,208
Total revenues $ 2,309,255
$ 707,852
$ 28,736
$ 3,045,843

Nine Months Ended Sept. 30, 2017
(Thousands of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 762,726
$ 426,303
$ 8,387
$ 1,197,416
C&I 1,209,262
161,925
19,710
1,390,897
Other 36,623
—
63
36,686
Total retail 2,008,611
588,228
28,160
2,624,999
Wholesale 125,598
—
—
125,598
Transmission 42,360
—
—
42,360
Other 51,148
60,214
—
111,362
Total revenue from contracts with customers 2,227,717
648,442
28,160
2,904,319
Alternative revenue and other 91,195
42,860
3,369
137,424
Total revenues $ 2,318,912
$ 691,302
$ 31,529
$ 3,041,743

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

Discussion of financial condition and liquidity for PSCo is omitted per conditions set forth in general instructions ~~H (1)~~ 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 instructions ~~H (2)~~ H(2)(a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).

~~Financial Review~~

The following discussion and analysis by management focuses on those factors that had a material effect on PSCo’s financial condition, results of operations and cash flows during the periods presented, or are expected to have a material impact in the future. It should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes to the consolidated financial statements. Due to the seasonality of PSCo’s electric and natural gas sales, such interim results are not necessarily an appropriate base from which to project annual results.

~~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 the TCJA’s impact to PSCo and its customers, 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 elsewhere in this Quarterly Report on Form 10-Q and in other securities filings (including PSCo’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent securities filings), could cause actual results to differ materially from management expectations as suggested by such forward-looking information: changes in environmental laws and regulations; unusual weather and climate change, including compliance with any accompanying legislative and regulatory changes; ability to recover costs from customers; actions of credit rating agencies; general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of PSCo and its subsidiaries to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits;; tax laws; operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; costs of potential regulatory penalties; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; fuel costs; and employee work force factors.

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 electric margin, ~~and~~ natural gas ~~margin.~~margin and ongoing earnings. Generally, a non-GAAP financial measure is a ~~numerical~~ measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are adjusted from ~~the most directly comparable measure~~measures calculated and presented in accordance with GAAP. PSCo’s management uses non-GAAP measures ~~internally~~ for financial planning and analysis, for reporting of results, ~~to the Board of Directors~~in determining performance-based compensation and ~~when~~ communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our ~~operating~~ 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.

Electric and Natural Gas Margins

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

Management believes electric and natural gas margins provide the most meaningful basis for evaluating our operations because they exclude the revenue impact of fluctuations in these expenses.

These margins can be reconciled to operating income, a GAAP measure, by including ~~steam and~~ other operating revenues, cost of ~~sales - steam and other,~~sales-other, O&M expenses, conservation and demand side management ~~(DSM)~~ expenses, depreciation and amortization and taxes (other than income taxes).

Results of Operations

PSCo’s net income was approximately ~~$463~~$240.3 million for the ~~third~~second quarter of ~~2018,~~2019, compared with approximately ~~$398~~$256.0 million for the same period of ~~2017.~~2018. The ~~increase~~decrease in year-to-date earnings was driven by higher ~~natural gas margins due to the impact of a natural gas rate increase, higher electric margins reflecting favorable weather~~O&M and ~~sales growth, and increased allowance for funds used during construction (AFUDC) primarily related to the Rush Creek wind project. These items were~~depreciation partially offset by the timing of gas rates in 2018 and higher ~~operating and maintenance (O&M) expenses, interest charges, depreciation expense and property taxes.~~

gas sales.

Electric ~~Revenues and~~ Margin

Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas and coal used in the generation of electricity. However, these price fluctuations have minimal impact on electric margin due to fuel recovery mechanisms that recover fuel expenses. ~~The following table details the~~In addition, electric customers receive a credit for PTCs that are generated in a particular period.

Electric revenues and margin:


	Nine Months Ended Sept. 30						Six Months Ended June 30
(Millions of Dollars)	2018			2017			2019			2018
Electric revenues before impact of the TCJA	$	2,358		$	2,319
Electric revenues							$	1,434.2		$	1,414.5
Electric fuel and purchased power	(842		)	(857		)	(544.9		)	(553.1		)
Electric margin before impact of the TCJA	$	1,516		$	1,462
Impact of the TCJA (offset as a reduction in income tax expense)	(49		)	—
Electric margin	$	1,467		$	1,462		$	889.3		$	861.4

~~The following tables summarize the components of the changes~~Changes in electric ~~revenues and electric margin for the nine months ended Sept. 30:~~

~~Electric Revenues~~margin:

(Millions of Dollars) 2018 vs. 2017
DSM program revenues (offset by expenses) $ 11
Estimated impact of weather 9
Retail sales growth, excluding weather impact 8
Non-fuel riders 7
Trading 3
Firm wholesale 3
DSM incentive 2
Fuel and purchased power cost recovery (7 )
Other, net 3
Total increase in electric revenues before impact of the TCJA $ 39
Impact of the TCJA (offset as a reduction in income tax expense) (49 )
Total decrease in electric revenues $ (10 )

~~Electric Margin~~

(Millions of Dollars) 2018 vs. 2017
DSM program revenues (offset by expenses) $ 11
Estimated impact of weather 9
Retail sales growth (excluding weather impact) 8
Non-fuel riders 7
Firm wholesale 3
DSM incentive 2
Trading 2
Other, net 12
Total increase in electric margin before impact of the TCJA $ 54
Impact of the TCJA (offset as a reduction in income tax expense) (49 )
Total increase in electric margin $ 5



(Millions of Dollars)	Three Months Ended June 30, 2019 vs. 2018
Non-fuel riders	$	32.5
Finance leases (offset in interest expense and amortization)	10.9
Timing of tax reform regulatory decisions (offset in income tax and amortization)	6.0
Estimated impact of weather	(11.0		)
Wholesale transmission revenue (net)	(2.5		)
Other, net	(8.0		)
Total increase in electric margin	$	27.9

Natural Gas ~~Revenues and~~ Margin

Total natural gas expense varies with changing sales and the cost of natural gas. However, fluctuations in the cost of natural gas ~~has~~have minimal impact on natural gas margin due to natural gas cost recovery mechanisms. ~~The following table details natural~~

Natural gas revenues and margin:



	Six Months Ended June 30
(Millions of Dollars)	2019			2018
Natural gas revenues	$	676.7		$	550.6
Cost of natural gas sold and transported	(342.4		)	(249.8		)
Natural gas margin	$	334.3		$	300.8

Nine Months Ended Sept. 30
(Millions of Dollars) 2018 2017
Natural gas revenues before impact of the TCJA $ 728
$ 691
Cost of natural gas sold and transported (282 ) (304 )
Natural gas margin before impact of the TCJA $ 446
$ 387
Impact of the TCJA (offset as a reduction in income tax expense) (20 ) —
Natural gas margin $ 426
$ 387

~~The following tables summarize the components of the changes~~

Changes in natural gas ~~revenues and natural gas margin for the nine months ended Sept. 30:~~

~~Natural Gas Revenues~~margin:

(Millions of Dollars) 2018 vs. 2017
Retail rate increase $ 36
Infrastructure and integrity riders 13
Estimated impact of weather 4
Retail sales growth (excluding weather impact) 2
Purchased natural gas adjustment clause recovery (21 )
Other, net 3
Total increase in natural gas revenues before impact of the TCJA $ 37
Impact of the TCJA (offset as a reduction in income tax expense) (20 )
Total increase in natural gas revenues $ 17

~~Natural Gas Margin~~


(Millions of Dollars)	2018 vs. 2017			Three Months Ended June 30, 2019 vs. 2018
Retail rate increase	$	36		$	11.9
Estimated impact of weather				8.7
Infrastructure and integrity riders	13			5.2
Estimated impact of weather	4
Transport sales				3.7
Retail sales growth (excluding weather impact)	2			3.5
Other, net	4			0.5
Total increase in natural gas margin before impact of the TCJA	$	59
Impact of the TCJA (offset as a reduction in income tax expense)	(20		)
Total increase in natural gas margin	$	39		$	33.5

Non-Fuel Operating Expenses and Other Items

O&M Expenses— O&M expenses increased 28$27.4 million, or ~~5.1 percent,~~7.4%, for ~~2018~~2019 year-to-date. ~~The year-to-date change largely reflects expense timing~~Increase was primarily driven by distribution, plant generation and ~~increased system maintenance~~natural gas operations costs. Distribution costs were higher due to ~~hot summer weather. The significant changes are summarized in the table below:~~

(Millions of Dollars) 2018 vs. 2017
Distribution costs $ 10
Natural gas systems damage prevention 7
Business systems and contract labor 4
Plant generation costs (4 )
Other, net 11
Total increase in O&M expenses $ 28

~~Distribution costs reflect high maintenance expenses, including~~storms, meters and vegetation ~~management; and~~

~~Business systems and contract labor~~management. Plant generation costs increased due to ~~growing network~~the Rush Creek wind project being placed in-service and ~~storage needs, cybersecurity initiatives, to support our customer strategy,~~the timing of planned maintenance and ~~various projects and initiatives to improve business processes.~~

~~DSM Program Expenses~~ — ~~DSM program~~overhauls. Natural gas operation expenses increased ~~$13 million, or 13.8 percent, for 2018 year-to-date. The increase was~~ due to increases in conservation programs to help customers reduce energy use. DSM expenses are generally recovered concurrently through riders and base rates. Timing of recovery may not correspond to the period in which costs were incurred.pipeline maintenance.

Depreciation and Amortization— Depreciation and amortization expense increased ~~$55~~$56.8 million, or ~~15.8 percent,~~23.8%, for ~~2018~~2019 year-to-date. ~~The increase~~Increase was primarily driven by ~~capital expenditures due to planned system investments and~~the Rush Creek wind project being placed in-service (recovered in riders), additional amortization of a prepaid pension asset in Colorado related to ~~the electric TCJA settlement, which is offset by lower income taxes (approximately $46 million year-to-date).~~

~~Taxes (Other than Income Taxes)~~— ~~Taxes (other than~~tax reform settlements (offset in income taxes) ~~increased 6.7 million, or 4.6 percent, for 2018 year-to-date. The increase was primarily due to higher property taxes in Colorado.~~and other capital investments.

AFUDC, Equity and Debt— AFUDC ~~increased $30~~decreased $20.3 million for ~~2018~~2019 year-to-date. ~~The increase~~Decrease was primarily due to the Rush Creek wind ~~project.~~project being placed in-service in 2018.

Interest Charges— Interest charges increased ~~$13~~$15.9 million, or ~~9.1 percent,~~15.7%, for ~~2018~~2019 year-to-date. ~~The increase~~Increase was ~~primarily due~~related to higher debt levels to fund capital investments, ~~partially offset by refinancings at lower~~changes in short-term interest ~~rates.~~rates and implementation of lease accounting standard (offset in electric margin).

Income Taxes — Income tax expense decreased ~~$111~~$44.6 million for the ~~first nine months~~second quarter of ~~2018~~2019 compared with ~~the same period in 2017. The decrease~~2018. Decrease was primarily driven by ~~a lower federal tax rate due to the TCJA and~~wind PTCs, lower pretax earnings and an increase in plant-related regulatory ~~differences related~~differences. Wind PTCs flow back to ~~ARAM (net of deferrals). The~~customers (recorded as a reduction to revenue) and do not have a material impact on net income. ETR was ~~19.9 percent~~11.0% for the first ~~nine~~six months of ~~2018~~2019 compared with ~~36.2 percent~~22.5% for the same period of ~~2017. The lower ETR in~~ 2018, ~~is primarily~~largely due to the ~~lower federal tax rate.~~adjustments above. See Note 46 to the consolidated financial statements.

Regulation

FERC and State Regulation — The FERC has jurisdiction over rates for electric transmission service in interstate commerce and electricity sold at wholesale, hydro facility licensing, natural gas transportation, asset transactions and mergers, accounting practices and certain other activities of PSCo, including enforcement of North American Electric Reliability Corporation mandatory electric reliability standards. State and local agencies have jurisdiction over many of PSCo’s activities, including regulation of retail rates and environmental matters.

Xcel Energy, which includes PSCo, attempts to mitigate the risk of regulatory penalties through formal training on prohibited practices and a compliance function that reviews interaction with the markets under FERC and Commodity Futures Trading Commission jurisdictions. Public campaigns are conducted to raise awareness of the public safety issues of interacting with our electric systems. While programs to comply with regulatory requirements are in place, there is no guarantee the compliance programs or other measures will be sufficient to ensure against violations. Decisions by these regulators can significantly impact PSCo’s results of operations.

Colorado 2019 Electric Rate Case — In May 2019, PSCo filed a request with the CPUC seeking a net rate increase of $158.3 million, or 5.7%. The filing also requests the transfer of $249.4 million of rider revenue to base rates, which will not impact overall customer bills as the revenue is currently being recovered through various riders. The request is based on a ROE of 10.35%, an equity ratio of 56.46%, a historic test year ended Dec. 31, 2018 (adjusted for 2019 capital investment) and incorporates the full impact of tax reform. PSCo has requested rates effective Jan. 1, 2020.



Revenue Request (Millions of Dollars)	2020
Changes since 2014 rate case:
Plant-related growth 2013-2018	$	85.3
O&M savings, sales growth and other cost reductions	(89.1		)
Forecasted 2019 capital additions	48.9
Advanced Grid Intelligence and Security grid modernization	39.1
Updated cost of capital	31.7
Previously approved depreciation rates	28.1
Incremental wildfire mitigation	14.3
Net increase to revenue	158.3
Previously authorized costs:
CACJA, TCA and Rush Creek ^(a)	249.4
Total base revenue request	$	407.7

Expected year-end rate base ^(b)	$	8,221.1


^(a)	Roll-in of CACJA, TCA and Rush Creek Wind Project (excluding PTCs) amounts into base rates will not impact total revenue as costs are currently recovered from customers through riders or the fuel clause.


^(b)	Base rate request does not include the impact of the proposed Colorado Energy Plan.

The procedural schedule is as follows:

Answer testimony — Sept. 6, 2019

Rebuttal testimony — Oct. 8, 2019

Evidentiary hearing — Nov. 4-13, 2019

Statement of position — Nov. 22, 2019

Other Pending and Recently Concluded Regulatory Proceedings



Mechanism	Utility Service	Amount Requested (in millions)	Filing Date	Approval	Additional Information
CPUC
Rate Case	Steam	$7	May 2019	Pending	In May 2019, PSCo filed an unopposed Settlement Agreement with CPUC Staff and the City of Denver. The settlement reflects a ROE of 9.67% for AFUDC purposes, an equity ratio of 56.04% and utilization of tax reform benefits. Final rates would be effective in October 2020, with an initial step increase in October 2019. In July 2019, the Administrative Law Judge recommended that the settlement agreement be approved without modification. Settlement is pending a CPUC decision.
Rate Case Appeal	Natural Gas	N/A	April 2019	Pending	In April 2019, PSCo filed an appeal seeking judicial review of the CPUC’s prior ruling regarding PSCo’s last natural gas rate case (approved in December 2018). Appeal requests review of the following: denial of a return on the prepaid pension and retiree medical assets; the use of a capital structure that is not based on the actual historical test year level; and the use of an average rate base methodology rather than a year-end rate base methodology. The District Court of Denver County has adopted a briefing schedule that will conclude in October 2019. Timeline on a final ruling is unknown at this point.

Public Utility Regulation

Except to the extent noted ~~below and~~ in ~~Note 5 to the consolidated financial statements,~~Regulation above, the circumstances set forth in Public Utility Regulation included in Item 1 of PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, ~~2017~~2018 and ~~Public Utility Regulation included~~ in Item 2 of ~~PSCo’s~~PSCo's Quarterly Report on Form 10-Q for the quarterly ~~periods~~period ended March 31, ~~2018 and June 30, 2018,~~2019, appropriately represent, in all material respects, the current status of public utility regulation and are incorporated ~~herein~~ by reference.

~~Colorado Energy Plan (CEP)~~ — In September 2018, the CPUC issued a written order approving PSCo’s preferred CEP portfolio, which included the retirement of the two coal-fired generation units, Comanche Unit 1 (in 2022) and Comanche Unit 2 (in 2025), and the following additions:



	~~Total Capacity~~	~~PSCo's Ownership~~
~~Wind generation~~	~~1,100 MW~~	~~500 MW~~
~~Solar generation~~	~~700 MW~~	—
~~Battery storage~~	~~275 MW~~	—
~~Natural gas generation~~	~~380 MW~~	~~380 MW~~

PSCo is required to file a CPCN for the owned wind generation, the purchase of natural gas generation facility and the transmission investment, which is anticipated for later this year. PSCo’s investment is expected to be approximately $1 billion, including investments in required transmission to support the significant increase in renewable generation in the state.

~~EVRAZ~~ — In October 2018, the CPUC approved the application for an agreement with EVRAZ, a steelmaker in Colorado, to stabilize its rates for over 23 years through a specific customer contract and the development of a 240 MW, customer-sited solar facility. EVRAZ is PSCo’s largest customer and sought a long-term solution from state and local authorities in order to maintain and grow its operations in Colorado.

~~Boulder, Colorado Municipalization~~ — In 2011, City of Boulder, Colorado (Boulder) voters passed a ballot measure authorizing the formation of an electric municipal utility, subject to certain conditions. Since that time, there have been various legal proceedings in multiple venues with jurisdiction over Boulder’s plan. In 2014, the Boulder City Council passed an ordinance to establish an electric utility. PSCo challenged the formation of this utility as premature and the Colorado Court of Appeals ruled in PSCo’s favor, vacating a lower court decision. In June 2018, the Colorado Supreme Court rejected Boulder’s request to dismiss the case and remanded it to Boulder District Court where the litigation process has started.

Boulder has filed multiple separation applications with the CPUC, which have been challenged by PSCo and other intervenors. In September 2017, the CPUC issued a written decision, agreeing with several key aspects of PSCo’s position. The CPUC approved the designation of some electrical distribution assets for transfer, subject to Boulder completing certain filings. Those filings are due to be submitted in the fourth quarter of 2018. Boulder does not have authorization from the CPUC to initiate a condemnation proceeding at this time.

~~Summary~~Environmental Matters

In June 2019, the EPA issued the final ACE rule to replace the Obama-era Clean Power Plan. The final ACE rule may require implementation of ~~Recent Federal Regulatory Developments~~

~~FERC~~

~~The FERC has jurisdiction over rates for electric transmission service in interstate commerce and electricity sold~~heat rate improvement projects at ~~wholesale, hydro facility licensing, natural gas transportation, asset transactions and mergers, accounting practices and certain other activities~~some of PSCo, including enforcement of North American Electric Reliability Corporation mandatory electric reliability standards. State and local agencies have jurisdiction over many of PSCo’s activities, including regulation of retail rates and environmental matters. See additional discussion inour coal-fired power plants. It is not known what the summary of recent federal regulatory developments and public utility regulation sections of the PSCo Annual Report on Form 10-K for the year ended Dec. 31, 2017 and Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018. In addition to the matters discussed below, see Note 5 to the consolidated financial statements for a discussion of other regulatory matters.

~~Xcel Energy, which includes PSCo, attempts to mitigate the risk of regulatory penalties through formal training on prohibited practices and a compliance function that reviews interaction~~costs associated with the ~~markets under FERC and Commodity Futures Trading Commission jurisdictions. Public campaigns~~final rule might be until state plans are ~~conducted~~developed to ~~raise awareness~~implement the final regulation. PSCo believes, based on prior state commission practice, the cost of ~~the public safety issues of interacting with our electric systems. While programs to comply with regulatory requirements are in place, there is no guarantee the compliance programs~~these initiatives or ~~other measures will~~replacement generation would be ~~sufficient to ensure against violations.~~

recoverable through rates.

Item 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

PSCo 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 chief executive officer (CEO) and chief financial officer (CFO), allowing timely decisions regarding required disclosure. As of ~~Sept.~~June 30, ~~2018,~~2019, based on an evaluation carried out under the supervision and with the participation of PSCo’s management, including the CEO and CFO, of the effectiveness of its disclosure controls and the procedures, the CEO and CFO have concluded that PSCo’s disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

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

Part II — OTHER INFORMATION

Item 1—~~LEGAL PROCEEDINGS~~Legal Proceedings

~~PSCo~~PSCO is involved in various litigation matters that are being defended and handled in the ordinary course of business. ~~The assessment~~Assessment of whether a loss is probable or is a reasonable possibility, and whether ~~the~~a loss or a range of loss is estimable, often involves a series of complex judgments ~~about~~regarding future events. Management maintains accruals for ~~such~~ losses that are probable of being incurred and subject to reasonable estimation. Management ~~is sometimes~~may be 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.

~~Additional Information~~

See Note 69 to the consolidated financial statements ~~for further discussion of legal claims~~ and ~~environmental proceedings. See~~ Part I Item 2 ~~and Note 5 to the consolidated financial statements~~ for ~~a discussion of proceedings involving utility rates and other regulatory matters.~~

further information.

Item 1A — RISK FACTORS

PSCo’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, ~~2017,~~2018, which is incorporated herein by reference. There have been no material changes from the risk factors previously disclosed in the Form ~~10-K.~~10-K.

Item 6— EXHIBITS



*	~~Indicates incorporation by reference~~

* Indicates incorporation by reference

+ Executive Compensation Arrangements and Benefit Plans Covering Executive Officers and Directors



Exhibit Number	Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference
3.01*	Amended and Restated Articles of Incorporation dated July 15, 1998 ~~(Exhibit 3.01 to~~	PSCo Form 10-Q for the quarter ended Sept. 30, 2017 ~~(file no. 001-03280)).~~	001-03280	3.01
3.02*	By-Laws of PSCo as Amended and Restated on ~~Sept. 26, 2013 (Exhibit 3.02 to~~Jan. 25, 2019	PSCo Form ~~10-Q/A~~10-K for the ~~quarter~~year ended ~~Sept. 30, 2013 (file no. 001-03280)).~~Dec. 31, 2018	001-03280	3.02
10.01*	Third Amended and Restated Credit Agreement, dated as of June 7, 2019 among PSCo, as Borrower, the several lenders from time to time parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and Barclays Bank Plc, as Syndication Agents, Wells Fargo Bank, National Association, MUFG Bank, Ltd., and Citibank, N.A., as Documentation Agents	Xcel Energy Inc. Form 8-K dated June 7, 2019	001-03034	99.03
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	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~99.01~~	~~Statement pursuant to Private Securities Litigation Reform Act of 1995.~~
101	The following materials from PSCo’s Quarterly Report on Form 10-Q for the quarter ended ~~Sept.~~June 30, ~~2018~~2019 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Balance Sheets, (v) Notes to Consolidated Financial Statements, and (vi) document and entity information.

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.



		Public Service Company of Colorado

~~Oct. 26, 2018~~Aug. 1, 2019	By:	/s/ JEFFREY S. SAVAGE
		Jeffrey S. Savage
		Senior Vice President, Controller
		(Principal Accounting Officer)

		/s/ ROBERT C. FRENZEL
		Robert C. Frenzel
		Executive Vice President, Chief Financial Officer and Director
		(Principal Financial Officer)

3124



001-03280		84-0296600
(Commission File Number)		(I.R.S. Employer Identification No.)



Title of each class		~~84-0296600~~
~~(State or other jurisdiction of incorporation or organization)~~Trading Symbol		~~(I.R.S. Employer Identification No.)~~Name of each exchange on which registered
N/A
~~1800 Larimer, Suite 1100~~N/A
~~Denver, Colorado~~		~~80202~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~N/A


	Three Months Ended Sept. 30						Nine Months Ended Sept. 30						Three Months Ended June 30						Six Months Ended June 30
	2018			2017			2018			2017			2019			2018			2019			2018
Operating revenues
Electric	$	894,786		$	877,604		$	2,309,255		$	2,318,912		$	692.7		$	716.2		$	1,434.2		$	1,414.5
Natural gas	157,205			142,389			707,852			691,302			207.6			186.7			676.7			550.6
Steam and other	8,688			10,300			28,736			31,529			9.7			9.0			22.1			20.1
Total operating revenues	1,060,679			1,030,293			3,045,843			3,041,743			910.0			911.9			2,133.0			1,985.2

Operating expenses
Electric fuel and purchased power	288,589			288,997			841,650			857,346			240.7			271.9			544.9			553.1
Cost of natural gas sold and transported	32,310			37,243			282,134			303,903			69.9			58.6			342.4			249.8
Cost of sales — steam and other	3,327			4,098			10,867			11,991			3.9			3.7			8.4			7.5
Operating and maintenance expenses	201,390			173,392			573,456			545,874			200.3			189.0			399.5			372.1
Demand side management expenses	39,391			34,520			105,345			92,552			32.2			33.2			64.4			65.9
Depreciation and amortization	167,961			118,289			406,121			350,796			148.1			116.5			295.0			238.2
Taxes (other than income taxes)	50,820			47,213			153,220			146,481			52.2			49.7			105.9			102.4
Total operating expenses	783,788			703,752			2,372,793			2,308,943			747.3			722.6			1,760.5			1,589.0

Operating income	276,891			326,541			673,050			732,800			162.7			189.3			372.5			396.2

Other income, net	1,399			1,023			2,429			5,546
Other (expense) income, net													(0.3		)	0.8			0.6			1.0
Allowance for funds used during construction — equity	16,353			8,642			40,851			19,591			5.0			13.5			9.1			24.5

Interest charges and financing costs
Interest charges — includes other financing costs of $1,682 and $1,605, $4,855, and $4,669 respectively	53,182			49,097			154,324			141,403
Interest charges — includes other financing costs of $1.6, $1.6, $3.2 and $3.2, respectively													57.7			51.2			117.1			101.2
Allowance for funds used during construction — debt	(6,370		)	(3,266		)	(16,156		)	(7,610		)	(2.4		)	(5.2		)	(4.9		)	(9.8		)
Total interest charges and financing costs	46,812			45,831			138,168			133,793			55.3			46.0			112.2			91.4

Income before income taxes	247,831			290,375			578,162			624,144			112.1			157.6			270.0			330.3
Income taxes	40,719			104,298			115,033			225,934			10.6			35.3			29.7			74.3
Net income	$	207,112		$	186,077		$	463,129		$	398,210		$	101.5		$	122.3		$	240.3		$	256.0


	Nine Months Ended Sept. 30						Six Months Ended June 30
	2018			2017			2019			2018
Operating activities
Net income	$	463,129		$	398,210		$	240.3		$	256.0
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	409,836			353,653			297.4			240.6
Demand side management program amortization
Deferred income taxes	66,563			223,121			2.8			25.6
Amortization of investment tax credits	(2,099		)	(2,102		)	(1.3		)	(1.4		)
Allowance for equity funds used during construction	(40,851		)	(19,591		)	(9.1		)	(24.5		)
Net realized and unrealized hedging and derivative transactions	(9,852		)	907			(2.2		)	(1.9		)
Other	1			661
Changes in operating assets and liabilities:
Accounts receivable	(737		)	4,431			63.2			22.0
Accrued unbilled revenues	60,079			74,918			77.2			66.5
Inventories	13,557			(250		)	16.5			44.8
Prepayments and other	12,633			11,717			0.5			1.5
Accounts payable	25,303			(53,706		)	(111.8		)	(22.1		)
Net regulatory assets and liabilities	(23,604		)	(28,594		)	80.0			30.4
Other current liabilities	(87,867		)	(40,789		)	(94.6		)	(119.1		)
Pension and other employee benefit obligations	(28,958		)	(16,691		)	(43.5		)	(27.5		)
Change in other noncurrent assets	6,551			(1,149		)
Change in other noncurrent liabilities	(26,296		)	(1,916		)
Other, net							0.5			(10.7		)
Net cash provided by operating activities	837,388			902,830			515.9			480.2

Investing activities
Utility capital/construction expenditures	(1,231,585		)	(995,680		)	(632.5		)	(801.0		)
Allowance for equity funds used during construction	40,851			19,591
Investments in utility money pool arrangement	(578,000		)	(659,000		)	(131.0		)	(198.0		)
Repayments from utility money pool arrangement	575,000			609,000			131.0			56.0
Other, net	—			(657		)
Net cash used in investing activities	(1,193,734		)	(1,026,746		)	(632.5		)	(943.0		)

Financing activities
Repayments of short-term borrowings, net	—			(129,000		)	(86.0		)	—
Borrowings under utility money pool arrangement	526,000			40,000			58.0			526.0
Repayments under utility money pool arrangement	(526,000		)	(40,000		)	(8.0		)	(526.0		)
Proceeds from issuance of long-term debt	691,439			393,795			391.6			692.7
Repayments of long-term debt	(300,000		)	—			(400.0		)	—
Capital contributions from parent	246,829			158,080			332.2			216.5
Dividends paid to parent	(271,884		)	(245,291		)	(190.4		)	(171.5		)
Other	(118		)	(110		)
Other, net							—			(0.1		)
Net cash provided by financing activities	366,266			177,474			97.4			737.6

Net change in cash and cash equivalents	9,920			53,558			(19.2		)	274.8
Cash and cash equivalents at beginning of period	7,513			5,926			33.4			7.5
Cash and cash equivalents at end of period	$	17,433		$	59,484		$	14.2		$	282.3

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(145,251	)	$	(145,461	)	$	(107.4	)	$	(88.9	)
Cash paid for income taxes, net	(86,418		)	(7,752		)	(28.7		)	(96.4		)
Supplemental disclosure of non-cash investing transactions:
Property, plant and equipment additions in accounts payable	$	134,994		$	133,933
Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions							$	113.1		$	131.8
Inventory transfers to property, plant and equipment							15.4			9.3
Operating lease right-of-use assets							653.4			—
Allowance for equity funds used during construction							9.1			24.5


	Sept. 30, 2018			Dec. 31, 2017			June 30, 2019			Dec. 31, 2018
Assets
Current assets
Cash and cash equivalents	$	17,433		$	7,513		$	14.2		$	33.4
Accounts receivable, net	299,980			294,403			252.6			310.3
Accounts receivable from affiliates	8,605			14,719			21.2			80.8
Investments in utility money pool arrangement	23,000			20,000
Accrued unbilled revenues	235,722			295,801			236.3			313.5
Inventories	187,412			214,489			165.5			197.4
Regulatory assets	111,996			77,337			68.4			120.6
Derivative instruments	16,562			3,197			18.4			42.6
Prepayments and other	28,207			35,720			26.4			23.8
Total current assets	928,917			963,179			803.0			1,122.4

Property, plant and equipment, net	14,839,033			14,025,751			15,335.7			15,120.0

Other assets
Regulatory assets	987,696			950,258			1,052.3			1,010.7
Derivative instruments	3,688			1,009			2.5			1.2
Operating lease right-of-use assets							613.7			—
Other	20,542			27,429			175.1			37.2
Total other assets	1,011,926			978,696			1,843.6			1,049.1
Total assets	$	16,779,876		$	15,967,626		$	17,982.3		$	17,291.5

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	406,021		$	305,577		$	—		$	406.2
Short-term debt							221.0			307.0
Borrowings under utility money pool arrangement							50.0			—
Accounts payable	467,173			492,829			383.5			503.4
Accounts payable to affiliates	48,220			58,749			43.6			46.0
Regulatory liabilities	55,587			66,126			116.9			67.3
Taxes accrued	155,131			222,517			118.5			202.0
Accrued interest	38,881			48,552			46.4			43.2
Dividends payable to parent	103,470			76,195			104.9			91.5
Derivative instruments	8,918			7,348			9.7			34.6
Other	88,500			92,333			182.5			101.5
Total current liabilities	1,371,901			1,370,226			1,277.0			1,802.7

Deferred credits and other liabilities
Deferred income taxes	1,732,686			1,644,476			1,738.6			1,719.3
Deferred investment tax credits	25,759			27,858			24.1			25.3
Regulatory liabilities	1,982,649			1,933,488			2,023.4			2,021.5
Asset retirement obligations	358,715			347,769			346.2			338.7
Derivative instruments	3,156			3,468			0.6			0.6
Customer advances	166,325			162,614			169.1			168.1
Pension and employee benefit obligations	258,509			287,783			231.3			275.3
Operating lease liabilities							560.3			—
Other	49,028			58,923			152.5			50.4
Total deferred credits and other liabilities	4,576,827			4,466,379			5,246.1			4,599.2

Commitments and contingencies
Capitalization
Long-term debt	4,592,382			4,302,698			4,846.1			4,591.4
Common stock — 100 shares authorized at $0.01 par value; 100 shares outstanding at Sept. 30, 2018 and Dec. 31, 2017, respectively	—			—
Common stock — 100 shares authorized at $0.01 par value; 100 shares outstanding at June 30, 2019 and Dec. 31, 2018, respectively							—			—
Additional paid in capital	4,278,380			4,032,826			4,618.3			4,340.5
Retained earnings	1,986,199			1,822,229			2,019.7			1,983.2
Accumulated other comprehensive loss	(25,813		)	(26,732		)	(24.9		)	(25.5		)
Total common stockholder’s equity	6,238,766			5,828,323			6,613.1			6,298.2
Total liabilities and equity	$	16,779,876		$	15,967,626		$	17,982.3		$	17,291.5



x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



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



	Common Stock Issued					Retained Earnings			Accumulated Other Comprehensive Loss			Total Common Stockholder’s Equity
	Shares	Par Value		Additional Paid In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Common Stockholder’s Equity
Three Months Ended June 30, 2019 and 2018
Balance at March 31, 2018	100	$	—	$	4,032.8	$	1,860.6		$	(26.4	)	$	5,867.0
Net income						122.3						122.3
Other comprehensive income									0.3			0.3
Dividends declared to parent						(100.3		)				(100.3		)
Contribution of capital by parent				240.3								240.3
Balance at June 30, 2018	100	$	—	$	4,273.1	$	1,882.6		$	(26.1	)	$	6,129.6

Balance at March 31, 2019	100	$	—	$	4,390.5	$	2,023.1		$	(25.2	)	$	6,388.4
Net income						101.5						101.5
Other comprehensive income									0.3			0.3
Dividends declared to parent						(104.9		)				(104.9		)
Contribution of capital by parent				227.8								227.8
Balance at June 30, 2019	100	$	—	$	4,618.3	$	2,019.7		$	(24.9	)	$	6,613.1

See Notes to Consolidated Financial Statements



(Thousands of Dollars)	Sept. 30, 2018			Dec. 31, 2017
Accounts receivable, net
Accounts receivable	$	320,572		$	314,009
Less allowance for bad debts	(20,592		)	(19,606		)
	$	299,980		$	294,403



(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2018		Year Ended Dec. 31, 2017
Borrowing limit	$	250	$	250
Amount outstanding at period end	—		—
Average amount outstanding	—		—
Maximum amount outstanding	—		20
Weighted average interest rate, computed on a daily basis	N/A		0.92		%
Weighted average interest rate at period end	N/A		N/A



	Three Months Ended Sept. 30, 2018
	Pre-Tax Fair Value (Losses) Recognized During the Period in:					Pre-Tax Losses Reclassified into Income During the Period from:
(Thousands of Dollars)	Accumulated Other Comprehensive Loss		Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss			Regulatory Assets and (Liabilities)			Pre-Tax Gains Recognized During the Period in Income
Derivatives designated as cash flow hedges
Interest rate	$	—	$	—		$	407	^(a)	$	—		$	—
Total	$	—	$	—		$	407		$	—		$	—
Other derivative instruments
Commodity trading	$	—	$	—		$	—		$	—		$	2,004	^(b)
Natural gas commodity	—		(1,187		)	—			—		^(c)	—		^(c)
Total	$	—	$	(1,187	)	$	—		$	—		$	2,004



	Nine Months Ended Sept. 30, 2018
	Pre-Tax Fair Value (Losses) Recognized During the Period in:					Pre-Tax Losses Reclassified into Income During the Period from:						Pre-Tax Gains (Losses) Recognized During the Period in Income
(Thousands of Dollars)	Accumulated Other Comprehensive Loss		Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss			Regulatory Assets and (Liabilities)
Derivatives designated as cash flow hedges
Interest rate	$	—	$	—		$	1,207	^(a)	$	—		$	—
Total	$	—	$	—		$	1,207		$	—		$	—
Other derivative instruments
Commodity trading	$	—	$	—		$	—		$	—		$	2,728		^(b)
Natural gas commodity	—		(1,607		)	—			2,749		^(c)	(1,581		)	^(c)
Total	$	—	$	(1,607	)	$	—		$	2,749		$	1,147



	Three Months Ended Sept. 30, 2017
	Pre-Tax Fair Value (Losses) Recognized During the Period in:					Pre-Tax Losses Reclassified into Income During the Period from:
(Thousands of Dollars)	Accumulated Other Comprehensive Loss		Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss			Regulatory Assets and (Liabilities)		Pre-Tax Losses Recognized During the Period in Income
Derivatives designated as cash flow hedges
Interest rate	$	—	$	—		$	407	^(a)	$	—	$	—
Total	$	—	$	—		$	407		$	—	$	—
Other derivative instruments
Commodity trading	$	—	$	—		$	—		$	—	$	(211	)	^(b)
Natural gas commodity	—		(1,635		)	—			—		—			^(c)
Total	$	—	$	(1,635	)	$	—		$	—	$	(211	)



	Nine Months Ended Sept. 30, 2017
	Pre-Tax Fair Value (Losses) Recognized During the Period in:					Pre-Tax Losses Reclassified into Income During the Period from:
(Thousands of Dollars)	Accumulated Other Comprehensive Loss		Regulatory (Assets) and Liabilities			Accumulated Other Comprehensive Loss			Regulatory Assets and (Liabilities)			Pre-Tax Losses Recognized During the Period in Income
Derivatives designated as cash flow hedges
Interest rate	$	—	$	—		$	1,208	^(a)	$	—		$	—
Total	$	—	$	—		$	1,208		$	—		$	—
Other derivative instruments
Commodity trading	$	—	$	—		$	—		$	—		$	(23	)	^(b)
Natural gas commodity	—		(8,643		)	—			282		^(c)	(2,990		)	^(c)
Total	$	—	$	(8,643	)	$	—		$	282		$	(3,013	)


^(a)(b)	During 2006, PSCo qualified these contracts under the normal purchase exception. Based onthis qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts ~~is being~~will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.



303	571-7511



(Thousands of Dollars)	Regulated Electric		Regulated Natural Gas		All Other		Reconciling Eliminations			Consolidated Total
Nine Months Ended Sept. 30, 2018
Operating revenues (a)(b)	$	2,309,255	$	707,852	$	28,736	$	—		$	3,045,843
Intersegment revenues	220		435		—		(655		)	—
Total revenues	$	2,309,475	$	708,287	$	28,736	$	(655	)	$	3,045,843
Net income	$	373,249	$	89,745	$	135	$	—		$	463,129



	Three Months Ended Sept. 30, 2018
(Thousands of Dollars)	Gains and Losses on Cash Flow Hedges			Defined Benefit and Postretirement Items			Total
Accumulated other comprehensive loss at July 1	$	(25,862	)	$	(263	)	$	(26,125	)
Other comprehensive loss before reclassifications	—			(153		)	(153		)
Losses reclassified from net accumulated other comprehensive loss	310			155			465
Net current period other comprehensive income	310			2			312
Accumulated other comprehensive loss at Sept. 30	$	(25,552	)	$	(261	)	$	(25,813	)



(Millions of Dollars)	2018 vs. 2017
DSM program revenues (offset by expenses)	$	11
Estimated impact of weather	9
Retail sales growth, excluding weather impact	8
Non-fuel riders	7
Trading	3
Firm wholesale	3
DSM incentive	2
Fuel and purchased power cost recovery	(7		)
Other, net	3
Total increase in electric revenues before impact of the TCJA	$	39
Impact of the TCJA (offset as a reduction in income tax expense)	(49		)
Total decrease in electric revenues	$	(10	)



(Millions of Dollars)	2018 vs. 2017
Distribution costs	$	10
Natural gas systems damage prevention	7
Business systems and contract labor	4
Plant generation costs	(4		)
Other, net	11
Total increase in O&M expenses	$	28