UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended Sept. 30, ~~2020~~ 2021


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

For the transition period from to

Commission File Number: 001-03280


Public Service Company of Colorado
(Exact name of registrant as specified in its charter)


Colorado	~~001-03280~~	84-0296600
(State or ~~Other Jurisdiction~~other jurisdiction of ~~Incorporation~~incorporation or ~~Organization)~~organization)		(~~Commission File Number)~~	~~(IRS~~I.R.S. Employer Identification No.)

1800 Larimer Street, Suite 1100

Denver

80202

(Address of ~~Principal Executive Offices)~~principal executive offices)

(Zip Code)

(303)

571-7511

(Registrant’s ~~Telephone Number, Including Area Code)~~telephone number, including area code)


N/A
(Former ~~Name, Former Address~~name, former address and ~~Former Fiscal Year,~~former fiscal year, if ~~Changed Since Last Report)~~changed since last report)

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

Title of each class

Trading ~~Symbol~~Symbol(s)

Name of each exchange on which registered

N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

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

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

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


Class						Outstanding at Oct. ~~29, 2020~~28, 2021
Common Stock, $0.01 par value						100 shares

Public Service Company of Colorado meets the conditions set forth in General ~~Instruction~~Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) to such Form 10-Q.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
Item l1 —	Financial Statements (unaudited)	4
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Consolidated Balance Sheets	7
	Consolidated Statements of Common Stockholder’s Equity	8
	Notes to Consolidated Financial Statements	9
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1718
Item 4 —	Controls and Procedures	2021

PART II — OTHER INFORMATION
Item 1 —	Legal Proceedings	2021
Item 1A —	Risk Factors	2021
Item 6 —	Exhibits	2021

SIGNATURES		2123

~~Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

This Form 10-Q is filed by Public Service Company of Colorado (PSCo). PSCo is a wholly owned subsidiary of Xcel Energy Inc. Additional information on Xcel Energy is available in various filings with the Securities and Exchange Commission. This report should be read in its entirety.

Definitions of Abbreviations


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


Federal and State Regulatory Agencies
CPUC			Colorado Public Utilities Commission
D.C. Circuit			United States Court of Appeals for the District of Columbia Circuit
EPA			United States Environmental Protection Agency
FERC			Federal Energy Regulatory Commission
~~IRS~~			~~Internal Revenue Service~~
SEC			Securities and Exchange Commission


Electric, Purchased Gas and Resource Adjustment Clauses
DSM			Demand side management
PSIA			Pipeline System Integrity Adjustment


Other
~~AFUDC~~			~~Allowance for funds used during construction~~
~~AGIS~~			~~Advanced Grid Intelligence and Security~~
~~ALJ~~			~~Administrative Law Judge~~
ASC			FASB Accounting Standards Codification
C&I			Commercial and Industrial
CCR			Coal combustion ~~residual~~residuals
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
CEO			Chief executive officer
CFO			Chief financial officer
COEO			Colorado Energy Office
COVID-19			Novel coronavirus
ETR			Effective tax rate
FASB			Financial Accounting Standards Board
GAAP			~~Generally~~United States generally accepted accounting principles
GCA			Gas cost adjustment
IPP			Independent power producing entity
KEPCO			Korea Electric Power Corporation
MDL			Multi district litigation
MGP			Manufactured gas plant
NOL			Net operating loss
NOPR			Notice of proposed rulemaking
O&M			Operating and maintenance
PFAS			Per- and PolyFluoroAlkyl Substances
PPA			Power purchase agreement
PTC			Production tax credit
ROE			Return on equity
UCA			Colorado Office of the Utility Consumer Advocate
VIE			Variable interest entity


Measurements
MW			Megawatts


Forward-Looking Statements

Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impact on our results of operations, financial condition and cash flows of resettlement calculations and credit losses relating to certain energy transactions, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed ~~elsewhere~~ in ~~this Quarterly Report on Form 10-Q and in other filings with the SEC (including~~ PSCo’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, ~~2019~~2020 and subsequent ~~filings),~~filings with the SEC, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: uncertainty around the impacts and duration of the COVID-19 pandemic; operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee work force and third-party contractor factors; ability to recover costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations, supply chain constraints and their impact on capital expenditures ~~and~~and/or 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; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; and costs of potential regulatory penalties.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(amounts in millions)


		Three Months Ended Sept. 30				Nine Months Ended Sept. 30					Three Months Ended Sept. 30				Nine Months Ended Sept. 30
		2020		2019		2020		2019			2021		2020		2021		2020
Operating revenues	Operating revenues									Operating revenues
Electric	Electric	$	915.9	$	880.7	$	2,343.1	$	2,314.8	Electric	$	1,048	$	916	$	2,608	$	2,343
Natural gas	Natural gas	156.4		153.9		674.1		830.7		Natural gas	177		156		930		674
Other	Other	8.8		9.7		31.7		31.8		Other	12		9		34		32
Total operating revenues	Total operating revenues	1,081.1		1,044.3		3,048.9		3,177.3		Total operating revenues	1,237		1,081		3,572		3,049

Operating expenses	Operating expenses									Operating expenses
Electric fuel and purchased power	Electric fuel and purchased power	299.1		284.7		828.3		829.5		Electric fuel and purchased power	403		299		1,002		828
Cost of natural gas sold and transported	Cost of natural gas sold and transported	34.7		34.3		222.1		376.7		Cost of natural gas sold and transported	43		35		381		222
Cost of sales — steam and other		3.7		3.5		9.7		11.9
Cost of sales — other										Cost of sales — other	5		3		11		10
Operating and maintenance expenses	Operating and maintenance expenses	195.9		198.4		589.7		597.9		Operating and maintenance expenses	210		196		622		590
Demand side management expenses	Demand side management expenses	35.6		36.6		107.3		100.9		Demand side management expenses	34		36		98		107
Depreciation and amortization	Depreciation and amortization	164.4		153.5		478.9		448.6		Depreciation and amortization	189		164		557		479
Taxes (other than income taxes)	Taxes (other than income taxes)	57.9		49.0		166.5		154.8		Taxes (other than income taxes)	62		58		192		167
Total operating expenses	Total operating expenses	791.3		760.0		2,402.5		2,520.3		Total operating expenses	946		791		2,863		2,403

Operating income	Operating income	289.8		284.3		646.4		657.0		Operating income	291		290		709		646

Other (expense) income, net		(0.6)		1.4		(0.8)		1.9
Other income (expense), net										Other income (expense), net	—		(1)		3		(1)
Allowance for funds used during construction — equity	Allowance for funds used during construction — equity	9.5		3.8		29.5		12.9		Allowance for funds used during construction — equity	7		10		19		30

Interest charges and financing costs	Interest charges and financing costs									Interest charges and financing costs
Interest charges — includes other financing costs of $1.9, $1.6, $5.4 and $4.9, respectively		60.3		59.2		183.3		176.3
Interest charges — includes other financing costs of $2, $2, $6 and $5, respectively										Interest charges — includes other financing costs of $2, $2, $6 and $5, respectively	62		60		183		183
Allowance for funds used during construction — debt	Allowance for funds used during construction — debt	(4.0)		(2.2)		(12.5)		(7.0)		Allowance for funds used during construction — debt	(3)		(3)		(6)		(12)
Total interest charges and financing costs	Total interest charges and financing costs	56.3		57.0		170.8		169.3		Total interest charges and financing costs	59		57		177		171

Income before income taxes	Income before income taxes	242.4		232.5		504.3		502.5		Income before income taxes	239		242		554		504
Income tax expense	Income tax expense	24.0		28.0		49.1		57.7		Income tax expense	24		24		38		49
Net income	Net income	$	218.4	$	204.5	$	455.2	$	444.8	Net income	$	215	$	218	$	516	$	455

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in millions)


		Three Months Ended Sept. 30				Nine Months Ended Sept. 30					Three Months Ended Sept. 30				Nine Months Ended Sept. 30
		2020		2019		2020		2019			2021		2020		2021		2020
Net income	Net income	$	218.4	$	204.5	$	455.2	$	444.8	Net income	$	215	$	218	$	516	$	455
Other comprehensive income	Other comprehensive income									Other comprehensive income
Derivative instruments:	Derivative instruments:									Derivative instruments:
Reclassification of loss to net income, net of tax of $0.1, $0.1, $0.3 and $0.3, respectively		0.3		0.3		0.9		0.9
Reclassification of loss to net income, net of tax of $—, $—, $— and $—, respectively										Reclassification of loss to net income, net of tax of $—, $—, $— and $—, respectively	—		—		1		1

Total other comprehensive income	Total other comprehensive income	0.3		0.3		0.9		0.9		Total other comprehensive income	—		—		1		1
Total comprehensive income	Total comprehensive income	$	218.7	$	204.8	$	456.1	$	445.7	Total comprehensive income	$	215	$	218	$	517	$	456

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)


		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
		2020		2019			2021		2020
Operating activities	Operating activities					Operating activities
Net income	Net income	$	455.2	$	444.8	Net income	$	516	$	455
Adjustments to reconcile net income to cash provided by operating activities:	Adjustments to reconcile net income to cash provided by operating activities:					Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	482.2		452.2		Depreciation and amortization	560		482
Deferred income taxes	Deferred income taxes	26.0		24.1		Deferred income taxes	38		26
Amortization of investment tax credits	Amortization of investment tax credits	(1.9)		(1.9)		Amortization of investment tax credits	(2)		(2)
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(29.5)		(12.9)		Allowance for equity funds used during construction	(19)		(30)
Provision for bad debts	Provision for bad debts	16.1		11.4		Provision for bad debts	28		16
Net realized and unrealized hedging and derivative transactions		(11.2)		64.5

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(19.3)		1.7		Accounts receivable	(38)		(19)
Accrued unbilled revenues	Accrued unbilled revenues	72.1		84.8		Accrued unbilled revenues	49		72
Inventories	Inventories	(11.4)		(15.1)		Inventories	(58)		(11)
Other current assets	Other current assets	(9.6)		(12.4)		Other current assets	2		(10)
Accounts payable	Accounts payable	(50.5)		(96.0)		Accounts payable	25		(51)
Net regulatory assets and liabilities	Net regulatory assets and liabilities	31.3		72.3		Net regulatory assets and liabilities	(544)		31
Other current liabilities	Other current liabilities	(40.9)		(66.3)		Other current liabilities	(49)		(41)
Pension and other employee benefit obligations	Pension and other employee benefit obligations	(44.9)		(44.4)		Pension and other employee benefit obligations	(53)		(45)
Other, net	Other, net	(5.9)		(72.4)		Other, net	(40)		(15)
Net cash provided by operating activities	Net cash provided by operating activities	857.8		834.4		Net cash provided by operating activities	415		858

Investing activities	Investing activities					Investing activities
Utility capital/construction expenditures	Utility capital/construction expenditures	(1,292.9)		(1,098.6)		Utility capital/construction expenditures	(1,098)		(1,293)
Investments in utility money pool arrangement	Investments in utility money pool arrangement	(366.0)		(397.0)		Investments in utility money pool arrangement	(273)		(366)
Repayments from utility money pool arrangement	Repayments from utility money pool arrangement	366.0		397.0		Repayments from utility money pool arrangement	243		366
Net cash used in investing activities	Net cash used in investing activities	(1,292.9)		(1,098.6)		Net cash used in investing activities	(1,128)		(1,293)

Financing activities	Financing activities					Financing activities
Repayments of short-term borrowings, net	Repayments of short-term borrowings, net	0		(307.0)		Repayments of short-term borrowings, net	(136)		—
Borrowings under utility money pool arrangement	Borrowings under utility money pool arrangement	1,382.0		58.0		Borrowings under utility money pool arrangement	514		1,382
Repayments under utility money pool arrangement	Repayments under utility money pool arrangement	(1,360.0)		(58.0)		Repayments under utility money pool arrangement	(571)		(1,360)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	734.6		928.6		Proceeds from issuance of long-term debt	738		735
Repayments of long-term debt	Repayments of long-term debt	(400.0)		(400.0)		Repayments of long-term debt	—		(400)
Capital contributions from parent	Capital contributions from parent	787.7		632.7		Capital contributions from parent	567		788
Dividends paid to parent	Dividends paid to parent	(703.7)		(295.4)		Dividends paid to parent	(340)		(704)
Other, net		(0.3)		0

Net cash provided by financing activities	Net cash provided by financing activities	440.3		558.9		Net cash provided by financing activities	772		441

Net change in cash and cash equivalents		5.2		294.7
Cash and cash equivalents at beginning of period		11.4		33.4
Cash and cash equivalents at end of period		$	16.6	$	328.1
Net change in cash, cash equivalents and restricted cash						Net change in cash, cash equivalents and restricted cash	59		6
Cash, cash equivalents and restricted cash at beginning of period						Cash, cash equivalents and restricted cash at beginning of period	28		11
Cash, cash equivalents and restricted cash at end of period						Cash, cash equivalents and restricted cash at end of period	$	87	$	17

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	Cash paid for interest (net of amounts capitalized)	$	(183.6)	$	(173.4)	Cash paid for interest (net of amounts capitalized)	$	(195)	$	(184)
Cash paid for income taxes, net	Cash paid for income taxes, net	(16.8)		(43.7)		Cash paid for income taxes, net	(14)		(17)

Supplemental disclosure of non-cash investing and financing transactions:	Supplemental disclosure of non-cash investing and financing transactions:					Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	Accrued property, plant and equipment additions	$	159.0	$	228.5	Accrued property, plant and equipment additions	$	170	$	159
Inventory transfers to property, plant and equipment	Inventory transfers to property, plant and equipment	26.4		24.4		Inventory transfers to property, plant and equipment	11		26
Operating lease right-of-use assets	Operating lease right-of-use assets	14.4		653.8		Operating lease right-of-use assets	4		14
Allowance for equity funds used during construction	Allowance for equity funds used during construction	29.5		12.9		Allowance for equity funds used during construction	19		30

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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


		Sept. 30, 2020		Dec. 31, 2019			Sept. 30, 2021		Dec. 31, 2020
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	16.6	$	11.4	Cash and cash equivalents	$	87	$	28
Accounts receivable, net	Accounts receivable, net	324.9		303.9		Accounts receivable, net	363		342
Accounts receivable from affiliates	Accounts receivable from affiliates	0		52.7		Accounts receivable from affiliates	—		8
Investments under utility money pool arrangement						Investments under utility money pool arrangement	30		—
Accrued unbilled revenues	Accrued unbilled revenues	220.9		293.9		Accrued unbilled revenues	249		298
Inventories	Inventories	177.0		192.0		Inventories	231		189
Regulatory assets	Regulatory assets	96.0		64.0		Regulatory assets	277		121
Derivative instruments	Derivative instruments	19.0		7.2		Derivative instruments	91		21
Prepayments and other	Prepayments and other	77.2		55.9		Prepayments and other	79		82
Total current assets	Total current assets	931.6		981.0		Total current assets	1,407		1,089

Property, plant and equipment, net	Property, plant and equipment, net	17,204.5		16,155.0		Property, plant and equipment, net	18,120		17,470

Other assets	Other assets					Other assets
Regulatory assets	Regulatory assets	1,053.4		1,038.1		Regulatory assets	1,468		1,059
Derivative instruments	Derivative instruments	3.1		0		Derivative instruments	21		16
Operating lease right-of-use assets	Operating lease right-of-use assets	520.5		574.0		Operating lease right-of-use assets	433		500
Other	Other	250.9		259.4		Other	218		231
Total other assets	Total other assets	1,827.9		1,871.5		Total other assets	2,140		1,806
Total assets	Total assets	$	19,964.0	$	19,007.5	Total assets	$	21,667	$	20,365

Liabilities and Stockholder's Equity	Liabilities and Stockholder's Equity					Liabilities and Stockholder's Equity
Current liabilities	Current liabilities					Current liabilities
Current portion of long-term debt	Current portion of long-term debt	$	0	$	400.0	Current portion of long-term debt	$	300	$	—
Borrowings under utility money pool arrangement	Borrowings under utility money pool arrangement	61.0		39.0		Borrowings under utility money pool arrangement	—		57
Short-term debt						Short-term debt	—		136
Accounts payable	Accounts payable	414.8		573.3		Accounts payable	510		452
Accounts payable to affiliates	Accounts payable to affiliates	60.3		43.9		Accounts payable to affiliates	67		58
Regulatory liabilities	Regulatory liabilities	75.0		69.2		Regulatory liabilities	103		100
Taxes accrued	Taxes accrued	186.1		202.1		Taxes accrued	201		251
Accrued interest	Accrued interest	35.8		53.4		Accrued interest	37		61
Dividends payable to parent	Dividends payable to parent	102.9		111.5		Dividends payable to parent	127		105
Derivative instruments	Derivative instruments	20.8		8.7		Derivative instruments	34		27
Operating lease liabilities	Operating lease liabilities	92.1		85.8		Operating lease liabilities	95		97
Other	Other	88.8		98.8		Other	103		84
Total current liabilities	Total current liabilities	1,137.6		1,685.7		Total current liabilities	1,577		1,428

Deferred credits and other liabilities	Deferred credits and other liabilities					Deferred credits and other liabilities
Deferred income taxes	Deferred income taxes	1,911.0		1,850.8		Deferred income taxes	1,969		1,897
Deferred investment tax credits		21.0		22.8

Regulatory liabilities	Regulatory liabilities	2,316.9		2,036.8		Regulatory liabilities	2,394		2,337
Asset retirement obligations	Asset retirement obligations	359.2		324.0		Asset retirement obligations	411		399
Derivative instruments	Derivative instruments	42.5		52.5		Derivative instruments	19		51
Customer advances	Customer advances	170.1		173.6		Customer advances	163		168
Pension and employee benefit obligations	Pension and employee benefit obligations	165.9		211.9		Pension and employee benefit obligations	108		161
Operating lease liabilities	Operating lease liabilities	457.2		517.6		Operating lease liabilities	366		432
Other	Other	149.2		150.9		Other	184		176
Total deferred credits and other liabilities	Total deferred credits and other liabilities	5,593.0		5,340.9		Total deferred credits and other liabilities	5,614		5,621

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Capitalization	Capitalization					Capitalization
Long-term debt	Long-term debt	5,722.7		4,984.7		Long-term debt	6,166		5,724
Common stock — 100 shares authorized of $0.01 par value; 100 shares outstanding at Sept. 30, 2020 and Dec. 31, 2019, respectively		0		0
Common stock — 100 shares authorized of $0.01 par value; 100 shares outstanding at Sept. 30, 2021 and Dec. 31, 2020, respectively						Common stock — 100 shares authorized of $0.01 par value; 100 shares outstanding at Sept. 30, 2021 and Dec. 31, 2020, respectively	—		—
Additional paid in capital	Additional paid in capital	5,693.4		4,939.4		Additional paid in capital	6,333		5,770
Retained earnings	Retained earnings	1,843.0		2,083.4		Retained earnings	2,000		1,846
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(25.7)		(26.6)		Accumulated other comprehensive loss	(23)		(24)
Total common stockholder's equity	Total common stockholder's equity	7,510.7		6,996.2		Total common stockholder's equity	8,310		7,592
Total liabilities and stockholder's equity	Total liabilities and stockholder's equity	$	19,964.0	$	19,007.5	Total liabilities and stockholder's equity	$	21,667	$	20,365

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED)

(amounts in millions, except share data)


		Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholder's Equity
		Shares	Par Value		Additional Paid In Capital
Three Months Ended Sept. 30, 2020 and 2019
Balance at June 30, 2019		100	$	0	$	4,618.3	$	2,019.7	$	(24.9)	$	6,613.1
Net income							204.5				204.5
Other comprehensive income									0.3		0.3
Dividends declared to parent							(97.3)				(97.3)
Contribution of capital by parent					285.0						285.0
Balance at Sept. 30, 2019		100	$	0	$	4,903.3	$	2,126.9	$	(24.6)	$	7,005.6

Balance at June 30, 2020		100	$	0	$	5,693.7	$	1,752.4	$	(26.0)	$	7,420.1
Net income							218.4				218.4
Other comprehensive income									0.3		0.3
Dividends declared to parent							(127.8)				(127.8)
Contribution of capital by parent					(0.3)						(0.3)
Balance at Sept. 30, 2020		100	$	0	$	5,693.4	$	1,843.0	$	(25.7)	$	7,510.7

		Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholder's Equity
		Shares	Par Value		Additional Paid In Capital
Nine Months Ended Sept. 30, 2020 and 2019
Balance at Dec. 31, 2018		100	$	0	$	4,340.5	$	1,983.2	$	(25.5)	$	6,298.2

														Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholder's Equity
														Shares	Par Value		Additional Paid In Capital
Three Months Ended Sept. 30, 2021 and 2020													Three Months Ended Sept. 30, 2021 and 2020
Balance at June 30, 2020													Balance at June 30, 2020	100	$	—	$	5,694	$	1,752	$	(26)	$	7,420
Net income	Net income						444.8				444.8		Net income						218				218
Other comprehensive income									0.9		0.9

Dividends declared to parent													Dividends declared to parent						(127)				(127)

Balance at Sept. 30, 2020													Balance at Sept. 30, 2020	100	$	—	$	5,694	$	1,843	$	(26)	$	7,511

Balance at June 30, 2021													Balance at June 30, 2021	100	$	—	$	6,210	$	1,912	$	(23)	$	8,099
Net income													Net income						215				215

Dividends declared to parent	Dividends declared to parent						(301.1)				(301.1)		Dividends declared to parent						(127)				(127)
Contribution of capital by parent	Contribution of capital by parent				562.8						562.8		Contribution of capital by parent				123						123
Balance at Sept. 30, 2019		100	$	0	$	4,903.3	$	2,126.9	$	(24.6)	$	7,005.6

Balance at Dec. 31, 2019		100	$	0	$	4,939.4	$	2,083.4	$	(26.6)	$	6,996.2
Net income							455.2				455.2
Other comprehensive income									0.9		0.9
Dividends declared to parent							(694.9)				(694.9)
Contribution of capital by parent					754.0						754.0
Adoption of ASC Topic 326							(0.7)				(0.7)
Balance at Sept. 30, 2020		100	$	0	$	5,693.4	$	1,843.0	$	(25.7)	$	7,510.7

See Notes to Consolidated Financial Statements
Balance at Sept. 30, 2021													Balance at Sept. 30, 2021	100	$	—	$	6,333	$	2,000	$	(23)	$	8,310



















	Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholder's Equity
	Shares	Par Value		Additional Paid In Capital
Nine Months Ended Sept 30, 2021 and 2020
Balance at Dec. 31, 2019	100	$	—	$	4,940	$	2,083	$	(27)	$	6,996
Net income						455				455
Other comprehensive income								1		1
Dividends declared to parent						(694)				(694)
Contribution of capital by parent				754						754
Adoption of ASC Topic 326						(1)				(1)
Balance at Sept. 30, 2020	100	$	—	$	5,694	$	1,843	$	(26)	$	7,511

Balance at Dec. 31, 2020	100	$	—	$	5,770	$	1,846	$	(24)	$	7,592
Net income						516				516
Other comprehensive income								1		1
Dividends declared to parent						(362)				(362)
Contribution of capital by parent				563						563
Balance at Sept. 30, 2021	100	$	—	$	6,333	$	2,000	$	(23)	$	8,310

See Notes to Consolidated Financial Statements

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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 ~~U.S.~~ GAAP, the financial position of PSCo and its subsidiaries as of Sept. 30, ~~2020~~2021 and Dec. 31, ~~2019;~~2020; the results of PSCo’s operations, including the components of net income, comprehensive income and changes in stockholder’s equity for the three and nine months ended Sept. 30, ~~2020~~2021 and ~~2019;~~2020; and PSCo’s cash flows for the nine months ended Sept. 30, ~~2020~~2021 and ~~2019.~~2020.

All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after Sept. 30, ~~2020,~~2021, 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, ~~2019~~2020 balance sheet information has been derived from the audited ~~2019~~2020 consolidated financial statements included in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, ~~2019.~~2020.

~~These notes~~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, ~~2019,~~2020, filed with the SEC on Feb. ~~21, 2020.~~17, 2021. 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, ~~2019~~2020 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.

Subsequent Event

On Oct. 25, 2021, PSCo filed a comprehensive settlement with the CPUC Staff and the COEO, which proposes to address four outstanding regulatory items, including recovery of fuel costs related to Winter Storm Uri, disputed revenue associated with the 2020 electric decoupling pilot program year, replacement power costs associated with an extended outage at Comanche Unit 3 during 2020 and deferred customer bad debt balances associated with COVID-19. The UCA has not signed the settlement. A hearing and a CPUC decision on the settlement is expected in the first quarter of 2022.

Key terms of the proposed settlement:

•PSCo would fully recover Winter Storm Uri deferred net natural gas, fuel and purchased energy costs of $263 million (electric utility) and $287 million (natural gas utility) over a 24-month and 30-month period, respectively, with 0 carrying charges through a rider mechanism. Recovery would commence Jan. 1, 2022 for electric costs and April 1, 2022 for natural gas costs.

•PSCo will refund electric customers $41 million (previously deferred) related to the 2020 electric decoupling pilot program.

•PSCo agreed to forego recovery of $14 million for replacement power costs due to an extended outage at Comanche Unit 3 during 2020.

•PSCo also agreed to not seek recovery of COVID-19 related bad debt expense, previously deferred as a regulatory asset, and recorded an additional $11 million of incremental bad debt expense for the period ended Sept. 30, 2021.


2. Accounting Pronouncements

Recently Adopted

Credit Losses — In 2016, the FASB issued Financial Instruments - Credit Losses, Topic 326 (ASC Topic 326), which changes how entities account for losses on receivables and certain other assets. The guidance requires use of a current expected credit loss model, which may result in earlier recognition of credit losses than under previous accounting standards.

PSCo implemented the guidance using a modified-retrospective approach, recognizing a cumulative effect charge of ~~$0.7~~$1 million (after tax) to retained earnings on Jan. 1, 2020. Other than first-time recognition of an allowance for bad debts on accrued unbilled revenues, the Jan. 1, 2020, adoption of ASC Topic 326 did not have a significant impact on PSCo’s consolidated financial statements.


3. Selected Balance Sheet Data


(Millions of Dollars)	(Millions of Dollars)	Sept. 30, 2020		Dec. 31, 2019		(Millions of Dollars)	Sept. 30, 2021		Dec. 31, 2020
Accounts receivable, net	Accounts receivable, net					Accounts receivable, net
Accounts receivable	Accounts receivable	$	350.6	$	324.9	Accounts receivable	$	401	$	371
Less allowance for bad debts	Less allowance for bad debts	(25.7)		(21.0)		Less allowance for bad debts	(38)		(29)
Accounts receivable, net	Accounts receivable, net	$	324.9	$	303.9	Accounts receivable, net	$	363	$	342


(Millions of Dollars)	(Millions of Dollars)	Sept. 30, 2020		Dec. 31, 2019		(Millions of Dollars)	Sept. 30, 2021		Dec. 31, 2020
Inventories	Inventories					Inventories
Materials and supplies	Materials and supplies	$	63.9	$	62.6	Materials and supplies	$	66	$	63
Fuel	Fuel	63.8		77.1		Fuel	73		73
Natural gas	Natural gas	49.3		52.3		Natural gas	92		53
Total inventories	Total inventories	$	177.0	$	192.0	Total inventories	$	231	$	189


(Millions of Dollars)	(Millions of Dollars)	Sept. 30, 2020		Dec. 31, 2019		(Millions of Dollars)	Sept. 30, 2021		Dec. 31, 2020
Property, plant and equipment, net	Property, plant and equipment, net					Property, plant and equipment, net
Electric plant	Electric plant	$	15,512.7	$	14,361.9	Electric plant	$	16,265	$	15,736
Natural gas plant	Natural gas plant	4,894.2		4,631.4		Natural gas plant	5,267		5,037
Common and other property	Common and other property	1,157.3		1,113.5		Common and other property	1,176		1,191
Plant to be retired (a)	Plant to be retired (a)	286.8		259.9		Plant to be retired (a)	186		225
Construction work in progress	Construction work in progress	613.5		912.7		Construction work in progress	799		510
Total property, plant and equipment	Total property, plant and equipment	22,464.5		21,279.4		Total property, plant and equipment	23,693		22,699
Less accumulated depreciation	Less accumulated depreciation	(5,260.0)		(5,124.4)		Less accumulated depreciation	(5,573)		(5,229)
Property, plant and equipment, net	Property, plant and equipment, net	$	17,204.5	$	16,155.0	Property, plant and equipment, net	$	18,120	$	17,470

(a)~~In 2018, the CPUC approved early retirement~~Includes regulator-approved retirements of ~~PSCo’s~~ Comanche Units 1 and 2 ~~in approximately 2022~~ and ~~2025, respectively. PSCo also expects~~jointly owned Craig Unit ~~1 to be retired early in 2025. Amounts are presented net~~1. Also includes PSCo’s planned retirement of ~~accumulated depreciation.~~jointly owned Craig Unit 2.


4. 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 Sept. 30, 2020 Year Ended Dec. 31, 2019
Borrowing limit $ 250 $ 250
Amount outstanding at period end 61 39
Average amount outstanding 4 7
Maximum amount outstanding 71 50
Weighted average interest rate, computed on a daily basis 0.09 % 2.29 %
Weighted average interest rate at period end 0.90 1.63 %

~~Commercial Paper~~ ~~— Commercial paper outstanding for PSCo was as follows:~~

(Amounts in Millions, Except Interest Rates) Three Months Ended Sept. 30, 2020 Year Ended Dec. 31, 2019
Borrowing limit $ 700 $ 700
Amount outstanding at period end 0 0
Average amount outstanding 0 154
Maximum amount outstanding 0 432
Weighted average interest rate, computed on a daily basis N/A 2.67 %
Weighted average interest rate at period end N/A N/A

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utility subsidiaries to make investments in Xcel Energy Inc.

Money pool borrowings for PSCo:


(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2021			Year Ended Dec. 31, 2020
Borrowing limit	$	250		$	250
Amount outstanding at period end	—			57
Average amount outstanding	2			59
Maximum amount outstanding	38			250
Weighted average interest rate, computed on a daily basis	0.05		%	0.60		%
Weighted average interest rate at period end	N/A			0.07

Commercial Paper — Commercial paper outstanding for PSCo:


(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2021		Year Ended Dec. 31, 2020
Borrowing limit	$	700	$	700
Amount outstanding at period end	—		136
Average amount outstanding	—		30
Maximum amount outstanding	—		230
Weighted average interest rate, computed on a daily basis	N/A		1.59		%
Weighted average interest rate at period end	N/A		0.20

Letters of Credit — PSCo uses letters of credit, generally with terms of one year, to provide financial ~~guarantees~~guarantees for certain ~~operating~~ obligations. ~~There~~At both Sept. 30, 2021 and Dec. 31, 2020, there were ~~$8 million~~ ~~and $9~~$8 million of letters of credit outstanding under the credit ~~facility at Sept. 30, 2020 and Dec. 31, 2019, respectively. The contract amounts of these letters of credit~~facility. Amounts approximate their ~~fair~~fair value and are subject to fees.

Revolving Credit Facility — In order to ~~use~~issue 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.

PSCo has the right to request an extension of the revolving credit facility termination date for 2 additional one-year periods. All extension requests are subject to majority bank group approval.

At Sept. 30, ~~2020,~~2021, PSCo had the following committed revolving credit facility available (in millions of dollars):


Credit Facility (a)		Drawn (b)		Available
$	700	$	8	$	692

(a) Expires in June 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 had0 no direct advances on the credit facility outstanding at Sept. 30, ~~2020~~2021 and Dec. 31, ~~2019.~~2020.

Long-Term Borrowings

During the nine months ended Sept. 30, ~~2020,~~2021, PSCo issued ~~$375~~$750 million ~~in 1.90%~~of 1.875% first mortgage bonds due ~~Jan.~~June 15, ~~2031 and $375 million of 2.70% first mortgage bonds due Jan. 15, 2051.~~2031.


5. Revenues

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


		Three Months Ended Sept. 30, 2020									Three Months Ended Sept. 30, 2021
(Millions of Dollars)	(Millions of Dollars)	Electric		Natural Gas		All Other		Total		(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types	Major revenue types									Major revenue types
Revenue from contracts with customers:	Revenue from contracts with customers:									Revenue from contracts with customers:
Residential	Residential	$	344.1	$	95.5	$	3.1	$	442.7	Residential	$	386	$	97	$	3	$	486
C&I	C&I	431.2		32.8		4.6		468.6		C&I	510		38		7		555
Other	Other	11.3		0		0		11.3		Other	12		—		—		12
Total retail	Total retail	786.6		128.3		7.7		922.6		Total retail	908		135		10		1,053
Wholesale	Wholesale	61.2		0		0		61.2		Wholesale	60		—		—		60
Transmission	Transmission	17.8		0		0		17.8		Transmission	23		—		—		23
Other	Other	13.7		24.1		0		37.8		Other	15		38		—		53
Total revenue from contracts with customers	Total revenue from contracts with customers	879.3		152.4		7.7		1,039.4		Total revenue from contracts with customers	1,006		173		10		1,189
Alternative revenue and other	Alternative revenue and other	36.6		4.0		1.1		41.7		Alternative revenue and other	42		4		2		48
Total revenues	Total revenues	$	915.9	$	156.4	$	8.8	$	1,081.1	Total revenues	$	1,048	$	177	$	12	$	1,237


	Three Months Ended Sept. 30, 2020
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	344	$	95	$	3	$	442
C&I	431		33		5		469
Other	11		—		—		11
Total retail	786		128		8		922
Wholesale	61		—		—		61
Transmission	18		—		—		18
Other	14		24		—		38
Total revenue from contracts with customers	879		152		8		1,039
Alternative revenue and other	37		4		1		42
Total revenues	$	916	$	156	$	9	$	1,081

Three Months Ended Sept. 30, 2019
(Millions of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 315.3 $ 94.1 $ 3.1 $ 412.5
C&I 452.4 32.9 5.5 490.8
Other 11.8 0 0 11.8
Total retail 779.5 127.0 8.6 915.1
Wholesale 40.3 0 0 40.3
Transmission 16.4 0 0 16.4
Other 8.3 21.4 0 29.7
Total revenue from contracts with customers 844.5 148.4 8.6 1,001.5
Alternative revenue and other 36.2 5.5 1.1 42.8
Total revenues $ 880.7 $ 153.9 $ 9.7 $ 1,044.3
Nine Months Ended Sept. 30, 2020
(Millions of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 825.4 $ 430.6 $ 9.0 $ 1,265.0
C&I 1,134.7 149.7 19.4 1,303.8
Other 35.2 0 0 35.2
Total retail 1,995.3 580.3 28.4 2,604.0
Wholesale 150.0 0 0 150.0
Transmission 45.0 0 0 45.0
Other 43.0 77.3 0 120.3
Total revenue from contracts with customers 2,233.3 657.6 28.4 2,919.3
Alternative revenue and other 109.8 16.5 3.3 129.6
Total revenues $ 2,343.1 $ 674.1 $ 31.7 $ 3,048.9
Nine Months Ended Sept. 30, 2019
(Millions of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 771.9 $ 535.6 $ 8.4 $ 1,315.9
C&I 1,204.7 202.6 20.0 1,427.3
Other 36.1 0 0 36.1
Total retail 2,012.7 738.2 28.4 2,779.3
Wholesale 126.7 0 0 126.7
Transmission 41.4 0 0 41.4
Other 26.4 76.3 0 102.7
Total revenue from contracts with customers 2,207.2 814.5 28.4 3,050.1
Alternative revenue and other 107.6 16.2 3.4 127.2
Total revenues $ 2,314.8 $ 830.7 $ 31.8 $ 3,177.3


	Nine Months Ended Sept. 30, 2021
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	904	$	540	$	9	$	1,453
C&I	1,262		203		22		1,487
Other	37		—		—		37
Total retail	2,203		743		31		2,977
Wholesale	195		—		—		195
Transmission	59		—		—		59
Other	37		122		—		159
Total revenue from contracts with customers	2,494		865		31		3,390
Alternative revenue and other	114		65		3		182
Total revenues	$	2,608	$	930	$	34	$	3,572

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	Nine Months Ended Sept. 30, 2020
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	825	$	431	$	9	$	1,265
C&I	1,135		150		20		1,305
Other	35		—		—		35
Total retail	1,995		581		29		2,605
Wholesale	150		—		—		150
Transmission	45		—		—		45
Other	43		77		—		120
Total revenue from contracts with customers	2,233		658		29		2,920
Alternative revenue and other	110		16		3		129
Total revenues	$	2,343	$	674	$	32	$	3,049


6. Income Taxes

Note 7 to the consolidated financial statements included in PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, ~~2019,~~2020 represents, in all material respects, the current status of other income tax matters except to the extent noted below and are incorporated herein by reference.

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


		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
		2020		2019			2021		2020 (a)
Federal statutory rate	Federal statutory rate	21.0	%	21.0	%	Federal statutory rate	21.0	%	21.0	%
State tax (net of federal tax effect)	State tax (net of federal tax effect)	3.7		3.7		State tax (net of federal tax effect)	3.6		3.7
(Decreases) increases in tax from:	(Decreases) increases in tax from:					(Decreases) increases in tax from:
Wind PTCs	Wind PTCs	(8.5)		(7.7)		Wind PTCs	(12.9)		(8.5)
Plant regulatory differences ~~(a)~~(b)	Plant regulatory differences ~~(a)~~(b)	(4.6)		(3.6)		Plant regulatory differences ~~(a)~~(b)	(4.1)		(4.6)
Other tax credits, net NOL & tax credit allowances		(1.1)		(1.3)
Other (net)	Other (net)	(0.8)		(0.6)		Other (net)	(0.7)		(1.9)
Effective income tax rate	Effective income tax rate	9.7	%	11.5	%	Effective income tax rate	6.9	%	9.7	%

(a)Prior periods have been restated to conform to current year presentation.

(b)Regulatory differences for income tax primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions.

Federal ~~Tax Loss Carryback Claims~~—In 2020, Xcel Energy identified certain expenses related to tax years 2009-2011 that qualify for an extended carryback claim. PSCo is not expected to accrue any income tax expense related to this adjustment.

~~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 consolidated federal income tax returns expire as follows:


Tax Years						Expiration
2014 — 2016						~~July 2021~~December 2022
2018						September 2022

Additionally, the statute of limitations related to certain federal tax credit carryforwards will remain open until those credits are utilized in subsequent returns. Further, the statute of limitations related to a federal tax loss carryback claim ~~referenced above~~filed in 2020 has been extended. Xcel Energy has recognized its best estimate of income tax expense that will result from a final resolution of this issue; however, the outcome and timing of a resolution is unknown.

~~In 2017, the IRS concluded the audit of tax years 2012 and 2013 and proposed an adjustment that would impact Xcel Energy’s NOL and ETR. Xcel Energy filed a protest with the IRS.~~ ~~In April 2020,~~ ~~Xcel Energy and Office of Appeals reached an agreement and 0 material adjustments were required.~~

~~In 2018, the IRS began an audit of tax years 2014 - 2016. In July 2020, Xcel Energy and the IRS reached an agreement and the related benefit was recognized.~~

State Audits — PSCo is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of Sept. 30, ~~2020,~~2021, PSCo’s earliest open tax year subject to examination by state taxing authorities under applicable statutes of limitations is ~~2009.~~2014. As of Sept. 30, ~~2020,~~2021, there are 0no state income tax audits in progress.

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

Unrecognized tax benefits — permanent vs temporary:


(Millions of Dollars)	(Millions of Dollars)	Sept. 30, 2020		Dec. 31, 2019		(Millions of Dollars)	Sept. 30, 2021		Dec. 31, 2020
Unrecognized tax benefit — Permanent tax positions	Unrecognized tax benefit — Permanent tax positions	$	7.1	$	7.4	Unrecognized tax benefit — Permanent tax positions	$	9	$	7
Unrecognized tax benefit — Temporary tax positions	Unrecognized tax benefit — Temporary tax positions	1.3		4.6		Unrecognized tax benefit — Temporary tax positions	2		2
Total unrecognized tax benefit	Total unrecognized tax benefit	$	8.4	$	12.0	Total unrecognized tax benefit	$	11	$	9

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

(Millions of Dollars) Sept. 30, 2020 Dec. 31, 2019
NOL and tax credit carryforwards $ (7.0) $ (8.3)

Net deferred tax liability associated with the unrecognized tax benefit amounts and related NOLs and tax credit carryforwards were $5.7 million and $5.0 million for Sept. 30, 2020 and Dec. 31, 2019, respectively.


(Millions of Dollars)	Sept. 30, 2021		Dec. 31, 2020
NOL and tax credit carryforwards	$	(10)	$	(8)

As the ~~IRS~~Internal Revenue Service and state audits resume, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately ~~$2.8~~$2 million in the next 12 months.

Payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with NOL and tax credit carryforwards.

Interest payable related to unrecognized tax benefits:

(Millions of Dollars) Sept. 30, 2020 Dec. 31, 2019
Payable for interest related to unrecognized tax benefits at beginning of period $ (1.1) $ (0.7)
Interest benefit (expense) related to unrecognized tax benefits 1.1 (0.4)
Payable for interest related to unrecognized tax benefits at end of period $ 0 $ (1.1)


(Millions of Dollars)	Sept. 30, 2021		Dec. 31, 2020
Payable for interest related to unrecognized tax benefits at beginning of period	$	—	$	(1)
Interest benefit related to unrecognized tax benefits	—		1
Payable for interest related to unrecognized tax benefits at end of period	$	—	$	—

~~NaN~~No amounts were accrued for penalties related to unrecognized tax benefits as of Sept. 30, ~~2020 and~~2021 or Dec. 31, ~~2019.~~2020.


7. Fair Value of Financial Assets and Liabilities

Fair Value Measurements

Accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires disclosures about assets and liabilities measured at fair value. A hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance.

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

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

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Specific valuation methods include:

Cash equivalents — The fair values of cash equivalents are generally based on cost plus accrued interest; money market funds are measured using quoted net asset value.

Interest rate derivatives — The fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts.

Commodity derivatives — The methods used to measure the fair value of commodity derivative forwards and options utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations and are generally assigned a Level 2 classification. When contractual settlements relate to inactive delivery locations or extend to periods beyond those readily observable on active exchanges or quoted by brokers, the significance of the use of less observable ~~forecasts of forward prices and volatilities~~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 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, with changes in fair value prior to settlement recorded as other comprehensive income.

At Sept. 30, ~~2020,~~2021, accumulated other comprehensive loss related to ~~settled~~ interest rate derivatives included ~~$1.2~~$1 million of net losses expected to be reclassified into earnings during the next 12 months as the hedged 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 instruments, including derivatives. PSCo is allowed to conduct these activities within guidelines and limitations as approved by its risk management committee, comprised of management personnel not directly involved in the activities governed by this policy. Sharing of any margins is determined through state regulatory proceedings as well as the operation of the FERC approved joint operating agreement.

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 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. The classification of gains or losses for these instruments as a regulatory asset or liability, if applicable, is based on approved regulatory recovery mechanisms.

As of Sept. 30, ~~2020,~~2021, PSCo had 0no commodity contracts designated as cash flow hedges.

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

Gross notional amounts of commodity forwards and options:

(Amounts in Millions) (a)(b)

Sept. 30, 2020

Dec. 31, 2019

(Amounts in Millions) (a)(b)

Sept. 30, 2021

Dec. 31, 2020

Megawatt hours of electricity

18.1

9.3

Megawatt hours of electricity

Million British thermal units of natural gas

92.8

32.2

Million British thermal units of natural gas

(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 impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented on 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 non-trading commodity activities.

At Sept. 30, ~~2020, 5~~2021, 8 of PSCo’s 10 most significant counterparties for these activities, comprising ~~$108.3~~$99 million, or ~~74%~~55%, of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. NaN of the 10 most significant counterparties, comprising ~~$22.6~~$11 million, or ~~15%~~6%, of this credit exposure, ~~were~~was not rated by these external ratings agencies, but based on PSCo’s internal analysis, had credit quality consistent with investment grade. NaN of these significant counterparties, comprising ~~$2.9~~$27 million, or 2%15%, of this credit exposure, had credit quality less than investment grade, based on ~~external~~internal analysis. NaN of these significant counterparties are independent system operators, municipal or cooperative electric entities, Regional Transmission Organizations or other utilities.

~~The 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 Sept. 30, 2020
Other derivative instruments
Natural gas commodity $ 0 $ 0.6
Total $ 0 $ 0.6
Nine Months Ended Sept. 30, 2020
Other derivative instruments
Natural gas commodity $ 0 $ (2.2)
Total $ 0 $ (2.2)
Three Months Ended Sept. 30, 2019
Other derivative instruments
Natural gas commodity $ 0 $ (2.2)
Total $ 0 $ (2.2)
Nine Months Ended Sept. 30, 2019
Other derivative instruments
Natural gas commodity $ 0 $ (3.7)
Total $ 0 $ (3.7)

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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 Sept. 30, 2020
Derivatives designated as cash flow hedges
Interest rate $ 0.4 (a) $ 0 $ 0
Total $ 0.4 $ 0 $ 0
Other derivative instruments
Commodity trading $ 0 $ 0 $ 3.2 (b)
Total $ 0 $ 0 $ 3.2
Nine Months Ended Sept. 30, 2020
Derivatives designated as cash flow hedges
Interest rate $ 1.2 (a) $ 0 $ 0
Total $ 1.2 $ 0 $ 0
Other derivative instruments
Commodity trading $ 0 $ 0 $ (2.1) (b)
Natural gas commodity 0 3.4 (c) (3.4) (c)
Total $ 0 $ 3.4 $ (5.5)
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 Sept. 30, 2021
Other derivative instruments
Natural gas commodity	$	—	$	37
Total	$	—	$	37

Nine Months Ended Sept. 30, 2021
Other derivative instruments
Natural gas commodity	$	—	$	36
Total	$	—	$	36

Three Months Ended Sept. 30, 2020
Other derivative instruments
Natural gas commodity	$	—	$	1
Total	$	—	$	1

Nine Months Ended Sept. 30, 2020
Other derivative instruments
Natural gas commodity	$	—	$	(2)
Total	$	—	$	(2)


	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 Sept. 30, 2021



Other derivative instruments
Commodity trading	$	—		$	—		$	11	(b)
Total	$	—		$	—		$	11

Nine Months Ended Sept. 30, 2021
Derivatives designated as cash flow hedges
Interest rate	$	1	(a)	$	—		$	—
Total	$	1		$	—		$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	25	(b)
Natural gas commodity	—			6		(c)	(6)		(c)
Total	$	—		$	6		$	19


	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 Sept. 30, 2020



Other derivative instruments
Commodity trading	$	—		$	—		$	3	(b)
Total	$	—		$	—		$	3

Nine Months Ended Sept. 30, 2020
Derivatives designated as cash flow hedges
Interest rate	$	1	(a)	$	—		$	—
Total	$	1		$	—		$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	(2)	(b)
Natural gas commodity	—			3		(c)	(3)		(c)
Total	$	—		$	3		$	(5)

(a) Amounts are recorded to interest charges.

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

(c) Amounts for both the three and nine months ended Sept. 30, 2021 and 2020, included 0no settlement ~~gain~~gains or losses on derivatives entered to mitigate natural gas price risk for electric generation recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. ~~Remaining~~The derivative settlement losses for both the three and nine months ended Sept. 30, 2021 and 2020 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.

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 Sept. 30, 2019
Derivatives designated as cash flow hedges
Interest rate $ 0.4 (a) $ 0 $ 0
Total $ 0.4 $ 0 $ 0
Other derivative instruments
Commodity trading $ 0 $ 0 $ 0.6 (b)
Total $ 0 $ 0 $ 0.6
Nine Months Ended Sept. 30, 2019
Derivatives designated as cash flow hedges
Interest rate $ 1.2 (a) $ 0 $ 0
Total $ 1.2 $ 0 $ 0
Other derivative instruments
Commodity trading $ 0 $ 0 $ 5.3 (b)
Natural gas commodity 0 (1.3) (c) (2.1) (c)
Total $ 0 $ (1.3) $ 3.2

~~(a)~~ ~~Amounts are recorded to interest charges.~~

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

~~(c)~~ Amounts for the three and nine months ended Sept. 30, 2019, included 0 settlement gain or losses on derivatives entered to mitigate natural gas price risk for electric generation recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. Remaining derivative settlement losses for the three and nine months ended Sept. 30, 2019, relate to natural gas operations and arewere 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 0no derivative instruments designated as fair value hedges during the three and nine months ended Sept. 30, ~~2020~~2021 and ~~2019.~~2020.

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 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,~~agencies. At Sept. 30, 2021 and Dec. 31, 2020, there were no derivative liabilities with such underlying contract provisions. Certain contracts also contain cross default provisions that may require the posting of collateral or ~~for cross-default contractual provisions~~settlement of the contracts if there was a failure under the other financing arrangements related to payment terms or other covenants. AtAs of Sept. 30, ~~2020~~2021 and Dec. 31, ~~2019,~~2020, there were ~~$0.1~~approximately $18 million and 0$46 million, respectively, of derivative ~~instruments in a liability position~~liabilities with such underlying contract ~~provisions, respectively.~~provisions.

Certain derivative instruments are also subject to contract provisions that contain adequate assurance clauses. These provisions allow counterparties to seek performance assurance, including cash collateral, in the event that PSCo’s ability to fulfill its contractual obligations is reasonably expected to be impaired. PSCo had 0no collateral posted related to adequate assurance clauses in derivative contracts as of Sept. 30, ~~2020~~2021 and Dec. 31, ~~2019.~~

2020.

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Recurring Fair Value Measurements — PSCo’s derivative assets and liabilities measured at fair value on a recurring basis:


		Sept. 30, 2020													Dec. 31, 2019																Sept. 30, 2021																			Dec. 31, 2020
		Fair Value						Fair Value Total		Netting (a)			Total		Fair Value						Fair Value Total			Netting (a)			Total				Fair Value								Fair Value Total				Netting (a)			Total				Fair Value										Fair Value Total			Netting (a)			Total
(Millions of Dollars)	(Millions of Dollars)	Level 1		Level 2		Level 3						Level 1			Level 2		Level 3						(Millions of Dollars)			Level 1				Level 2				Level 3								Level 1							Level 2				Level 3
Current derivative assets	Current derivative assets																																Current derivative assets
Other derivative instruments:	Other derivative instruments:																								Other derivative instruments:
Commodity trading	Commodity trading	$	7.0	$	27.6	$	1.0	$	35.6	$	(27.0)		$	8.6	$	1.9	$	11.1	$	0.9	$	13.9		$	(10.1)		$	3.8	Commodity trading		$	35			$	167	$	—		$	202			$	(163)		$	39			$	1			$	41		$	1		$	43		$	(28)		$	15
Natural gas commodity	Natural gas commodity	0		10.4		0		10.4		0			10.4		0		3.4		0		3.4			0			3.4		Natural gas commodity		—				52		—		52				—			52				—				6			—			6			—			6
Total current derivative assets	Total current derivative assets	$	7.0	$	38.0	$	1.0	$	46.0	$	(27.0)		$	19.0	$	1.9	$	14.5	$	0.9	$	17.3		$	(10.1)		$	7.2	Total current derivative assets		$	35			$	219	$	—	$	254			$	(163)		$	91			$	1			$	47		$	1		$	49		$	(28)		$	21
Noncurrent derivative assets	Noncurrent derivative assets																												Noncurrent derivative assets
Other derivative instruments:	Other derivative instruments:																								Other derivative instruments:
Commodity trading	Commodity trading	$	1.6	$	9.1	$	2.5	$	13.2	$	(10.1)		$	3.1	$	0.4	$	8.1	$	1.1	$	9.6		$	(9.6)		$	0	Commodity trading		$	14			$	36	$	47	$	97			$	(76)		$	21			$	1			$	27		$	8		$	36		$	(20)		$	16
Total noncurrent derivative assets	Total noncurrent derivative assets	$	1.6	$	9.1	$	2.5	$	13.2	$	(10.1)		$	3.1	$	0.4	$	8.1	$	1.1	$	9.6		$	(9.6)		$	0	Total noncurrent derivative assets		$	14			$	36	$	47	$	97			$	(76)		$	21			$	1			$	27		$	8		$	36		$	(20)		$	16


		Sept. 30, 2020													Dec. 31, 2019																Sept. 30, 2021																			Dec. 31, 2020
		Fair Value						Fair Value Total		Netting (a)			Total		Fair Value						Fair Value Total			Netting (a)			Total				Fair Value								Fair Value Total				Netting (a)			Total				Fair Value										Fair Value Total			Netting (a)			Total
(Millions of Dollars)	(Millions of Dollars)	Level 1		Level 2		Level 3						Level 1			Level 2		Level 3						(Millions of Dollars)			Level 1				Level 2				Level 3								Level 1							Level 2				Level 3
Current derivative liabilities	Current derivative liabilities																																Current derivative liabilities
Other derivative instruments:	Other derivative instruments:																								Other derivative instruments:
Commodity trading	Commodity trading	$	7.0	$	31.6	$	6.3	$	44.9	$	(27.0)		$	17.9	$	1.7	$	16.7	$	0	$	18.4		$	(13.1)		$	5.3	Commodity trading		$	25			$	152	$	20		$	197			$	(163)		$	34			$	1			$	46		$	7		$	54		$	(33)		$	21
Natural gas commodity	Natural gas commodity	0		2.9		0		2.9		0			2.9		0		3.4		0		3.4			0			3.4		Natural gas commodity		—				—		—		—				—			—				—				6			—			6			—			6
Total current derivative liabilities	Total current derivative liabilities	$	7.0	$	34.5	$	6.3	$	47.8	$	(27.0)		$	20.8	$	1.7	$	20.1	$	0	$	21.8		$	(13.1)		$	8.7	Total current derivative liabilities		$	25			$	152	$	20	$	197			$	(163)		$	34			$	1			$	52		$	7		$	60		$	(33)		$	27
Noncurrent derivative liabilities	Noncurrent derivative liabilities																												Noncurrent derivative liabilities
Other derivative instruments:	Other derivative instruments:																								Other derivative instruments:
Commodity trading	Commodity trading	$	0.9	$	21.4	$	35.5	$	57.8	$	(15.3)		$	42.5	$	0.4	$	47.0	$	14.7	$	62.1		$	(9.6)		$	52.5	Commodity trading		$	4			$	14	$	95	$	113			$	(94)		$	19			$	1			$	24		$	46		$	71		$	(20)		$	51
Total noncurrent derivative assets	Total noncurrent derivative assets	$	0.9	$	21.4	$	35.5	$	57.8	$	(15.3)		$	42.5	$	0.4	$	47.0	$	14.7	$	62.1		$	(9.6)		$	52.5	Total noncurrent derivative assets		$	4			$	14	$	95	$	113			$	(94)		$	19			$	1			$	24		$	46		$	71		$	(20)		$	51

(a)PSCo nets derivative instruments and related collateral on its consolidated balance sheets when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at Sept. 30, ~~2020~~2021 and Dec. 31, ~~2019.~~2020. At both Sept. 30, ~~2020~~2021 and Dec. 31, ~~2019,~~2020, derivative assets and liabilities include 0no obligations to return cash ~~collateral~~collateral. At Sept. 30, 2021 and ~~the right~~Dec. 31, 2020, derivative assets and liabilities include rights to reclaim cash collateral of ~~$5.2~~$18 million and ~~$3.0~~$5 million, respectively. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

Changes in Level 3 commodity derivatives:


		Three Months Ended Sept. 30					Three Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2020		2019		(Millions of Dollars)	2021		2020
Balance at July 1	Balance at July 1	$	(17.1)	$	0.2	Balance at July 1	$	(61)	$	(17)
Settlements	Settlements	0.5		(0.5)		Settlements	4		1
Net transactions recorded during the period:	Net transactions recorded during the period:					Net transactions recorded during the period:
(Losses) gains recognized in earnings (a)		(21.7)		0.5
Losses recognized in earnings (a)						Losses recognized in earnings (a)	(11)		(22)
Balance at Sept. 30	Balance at Sept. 30	$	(38.3)	$	0.2	Balance at Sept. 30	$	(68)	$	(38)

		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2020		2019		(Millions of Dollars)	2021		2020
Balance at Jan. 1	Balance at Jan. 1	$	(12.7)	$	0.1	Balance at Jan. 1	$	(44)	$	(13)
Settlements	Settlements	(0.6)		(1.4)		Settlements	3		—
Net transactions recorded during the period:	Net transactions recorded during the period:					Net transactions recorded during the period:
(Losses) gains recognized in earnings (a)		(25.0)		1.5
Losses recognized in earnings (a)						Losses recognized in earnings (a)	(27)		(25)
Balance at Sept. 30	Balance at Sept. 30	$	(38.3)	$	0.2	Balance at Sept. 30	$	(68)	$	(38)

(a)~~Amounts~~Presented amounts relate to ~~commodity derivatives~~instruments held at the end of the period. The consolidated income statement also includes gains and losses on Level 1 and 2 instruments, and Level 3 instruments settled during the period.

PSCo recognizes transfers between levels as of the beginning of each period. There were 0no transfers of amounts between levels for derivative instruments for the three and nine months ended Sept. 30, ~~2020~~2021 and ~~2019.~~

2020.

Fair Value of Long-Term Debt

Other financial instruments for which the carrying amount did not equal fair value:


		Sept. 30, 2020				Dec. 31, 2019					Sept. 30, 2021				Dec. 31, 2020
(Millions of Dollars)	(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	Long-term debt, including current portion	$	5,722.7	$	6,932.2	$	5,384.7	$	6,039.3	Long-term debt, including current portion	$	6,466	$	7,371	$	5,724	$	7,040

Fair value of PSCo’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of Sept. 30, ~~2020~~2021 and Dec. 31, ~~2019~~2020 and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.

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8. Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost (Credit)


		Three Months Ended Sept. 30									Three Months Ended Sept. 30
		2020		2019		2020		2019			2021		2020		2021		2020
(Millions of Dollars)	(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits				(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits
Service cost	Service cost	$	7.6	$	6.4	$	0.1	$	0.1	Service cost	$	8	$	8	$	—	$	—
Interest cost (a)	Interest cost (a)	11.4		12.9		3.2		3.9		Interest cost (a)	9		11		2		3
Expected return on plan assets (a)	Expected return on plan assets (a)	(17.6)		(17.1)		(4.4)		(4.7)		Expected return on plan assets (a)	(18)		(18)		(4)		(4)
Amortization of prior service credit (a)	Amortization of prior service credit (a)	(0.7)		(0.8)		(1.0)		(1.3)		Amortization of prior service credit (a)	—		(1)		(1)		(1)
Amortization of net loss (a)	Amortization of net loss (a)	7.5		6.3		0.4		0.7		Amortization of net loss (a)	9		8		1		—
Net periodic benefit cost (credit)	Net periodic benefit cost (credit)	8.2		7.7		(1.7)		(1.3)		Net periodic benefit cost (credit)	8		8		(2)		(2)
Effects of regulation	Effects of regulation	2.9		0.8		0.6		0.4		Effects of regulation	(2)		3		1		1
Net benefit cost (credit) recognized for financial reporting	Net benefit cost (credit) recognized for financial reporting	$	11.1	$	8.5	$	(1.1)	$	(0.9)	Net benefit cost (credit) recognized for financial reporting	$	6	$	11	$	(1)	$	(1)

		Nine Months Ended Sept. 30									Nine Months Ended Sept. 30
		2020		2019		2020		2019			2021		2020		2021		2020
(Millions of Dollars)	(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits				(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits
Service cost	Service cost	$	22.9	$	19.2	$	0.2	$	0.4	Service cost	$	24	$	23	$	—	$	—
Interest cost (a)	Interest cost (a)	34.3		38.7		9.5		11.7		Interest cost (a)	29		34		8		10
Expected return on plan assets (a)	Expected return on plan assets (a)	(52.9)		(51.4)		(13.1)		(14.2)		Expected return on plan assets (a)	(54)		(53)		(12)		(13)
Amortization of prior service credit (a)	Amortization of prior service credit (a)	(2.1)		(2.5)		(2.8)		(4.1)		Amortization of prior service credit (a)	—		(2)		(3)		(3)
Amortization of net loss (a)	Amortization of net loss (a)	22.4		19.1		1.2		2.2		Amortization of net loss (a)	24		23		3		1
Net periodic benefit cost (credit)	Net periodic benefit cost (credit)	24.6		23.1		(5.0)		(4.0)		Net periodic benefit cost (credit)	23		25		(4)		(5)
Effects of regulation	Effects of regulation	3.3		4.4		2.2		0.9		Effects of regulation	—		3		2		2
Net benefit cost (credit) recognized for financial reporting	Net benefit cost (credit) recognized for financial reporting	$	27.9	$	27.5	$	(2.8)	$	(3.1)	Net benefit cost (credit) recognized for financial reporting	$	23	$	28	$	(2)	$	(3)

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

In January ~~2020,~~2021, contributions of ~~$150.0~~$125 million were made across 4 of Xcel Energy’s pension plans, of which ~~$50.0~~$45 million was attributable to PSCo. Xcel Energy does not expect additional pension contributions during ~~2020.~~2021.


9. Commitments and Contingencies

The following ~~include~~includes commitments, contingencies and unresolved contingencies that are material to PSCo’s financial position.

Legal

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 consolidated financial statements. ~~Unless otherwise required by GAAP, legal~~Legal fees are generally expensed as incurred.

Gas Trading Litigation — e prime is a wholly owned subsidiary of Xcel Energy. e prime was in the business of natural gas trading and marketing but has not engaged in natural gas trading or marketing activities since 2003. Multiple lawsuits involving multiple plaintiffs seeking monetary damages were commenced against e prime and its affiliates, including Xcel Energy, ~~Inc.,~~ 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.

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

Breckenridge/Colorado — In February 2019, the MDL panel remanded Breckenridge back to the U.S. District Court in Colorado. Settlement of approximately $3 million was reached in February 2021. In July 2021, the settlement was approved.

Arandell Corp. — ~~In February 2019,~~The trial has been vacated and will be rescheduled after the ~~case was remanded back to~~court rules on the ~~U.S. District Court in Wisconsin. Plaintiffs are seeking~~pending motions for reconsideration and for class certification. ~~It is uncertain when the court will rule on this issue.~~

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

Rate Matters

Comanche Unit 3 Litigation — In February 2021, the joint owners of Comanche Unit 3 (CORE Electric Cooperative, formerly known as Intermountain Rural Electrical Association, and Holy Cross Electric) served PSCo with a notice of claim related to Comanche Unit 3's operation and availability.

Discussions with Holy Cross Electric are proceeding pursuant to a contractual dispute resolution process and the amount of any alleged damages depends on multiple factors and is currently unknown.

In September 2021, CORE Electric Cooperative filed a lawsuit in Colorado state court seeking an unspecified amount of damages. CORE Electric Cooperative alleges PSCo breached ownership agreement terms by failing to operate Comanche Unit 3 in accordance with prudent utility practices. PSCo is continuing to assess legal options in response to the Complaint including assertions of affirmative defenses.

GCA NOPR — In June 2021, the CPUC issued a NOPR addressing the recovery of costs through the GCA. The proposed rule would establish an annual forecast of GCA costs for each utility and allow each utility to recover only 90%-95% of any costs in excess of the forecasted amount. The proposed rule would allow utilities to earn an incentive equal to an undefined portion of any savings relative to forecasted costs. Comments were filed and requested that the CPUC delay the rule making process until after the 2021-2022 heating season; in part because utilities have already proceeded with purchasing gas for the upcoming heating season in accordance with prior CPUC decisions. In August 2021, the CPUC announced they would postpone a decision to a future date.

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Environmental

MGP, Landfill and Disposal Sites

PSCo is ~~currently~~ investigating, remediating or performing post-closure actions at 3 MGP, landfill or other disposal sites across its service territory.

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 costs incurred.

Environmental Requirements — Water and Waste

Coal Ash Regulation — PSCo’s operations are subject to federal and state regulations 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. Currently, PSCo has 65 regulated ash units in operation.

PSCo is conducting groundwater sampling and ~~where appropriate,~~monitoring and implementing assessment of corrective measures at certain CCR landfills and surface impoundments. ~~Groundwater monitoring consistent with the CCR Rule continued in 2020. Statistically significant increases~~Increases above background concentrations were detected at 4 locations.

~~Subsequently, assessment monitoring samples were collected at these locations and, based~~ Based on ~~the results,~~further assessments, PSCo is evaluating options for corrective action at 2 ~~locations. At~~locations, 1 ~~location, monitoring results indicate~~of which indicates potential offsite impacts to groundwater. ~~Until PSCo completes its assessment, it~~The total cost is uncertain, ~~what impact, if any, there will~~but could be onup to $35 million. PSCo is continuing to assess the ~~operations,~~ financial ~~condition or cash flows.~~

and regulatory impacts.

~~Table of Contents~~

~~On Aug. 28,~~In August 2020, the EPA published its final rule to implement ~~a cease receipt and initiate a~~ closure ~~date of~~by April ~~11,~~ 2021 for all CCR impoundments affected by anthe August 2018 D.C. Circuit ruling. ~~The D.C. Circuit concluded that the EPA cannot allow utilities~~This final rule required PSCo to ~~continue to use unlined impoundments (including clay lined impoundments)~~expedite closure plans for ~~the storage or disposal of coal ash.~~1 impoundment.

PSCo also built an alternative collection and treatment system to remove the Comanche Station bottom ash pond from service. The total cost of the alternate treatment system is ~~pursuing options~~approximately $25 million. PSCo worked expeditiously to ~~provide alternative storage capacity consistent~~meet the April 11, 2021 deadline, but was not able to remove the pond from service until June 18, 2021. PSCo expects to negotiate a compliance order with the ~~CCR Rule at 1 facility until~~EPA. PSCo will also now proceed with closure of the ~~affected generating units are retired in 2025.~~pond, with an estimated cost of $3 million.

Closure costs for existing impoundments are included in the calculation of the asset retirement obligation.

Leases

PSCo evaluates contracts that may contain leases, including PPAs and arrangements for the use of office space and other facilities, vehicles and equipment. A contract contains a lease if it conveys the exclusive right to control the use of a specific asset.

Components of lease expense:


	Three Months Ended Sept. 30
(Millions of Dollars)	2021		2020
Operating leases
PPA capacity payments	$	26	$	26
Other operating leases (a)	2		3
Total operating lease expense (b)	$	28	$	29
Finance leases
Amortization of ROU assets	$	2	$	2
Interest expense on lease liability	4		4
Total finance lease expense	$	6	$	6

(a)Includes immaterial short-term lease expense for 2021 and 2020.

(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.


	Nine Months Ended Sept. 30
(Millions of Dollars)	2021		2020
Operating leases
PPA capacity payments	$	77	$	75
Other operating leases (a)	9		11
Total operating lease expense (b)	$	86	$	86
Finance leases
Amortization of ROU assets	$	6	$	5
Interest expense on lease liability	12		13
Total finance lease expense	$	18	$	18

(a)Includes short-term lease expense of $1 million for 2021 and 2020, respectively.

Commitments under operating and finance leases as of Sept. 30, 2021:


(Millions of Dollars)	PPA Operating Leases		Other Operating Lease		Total Operating Leases		Finance Leases
Total minimum obligation	$	468	$	61	$	529	$	466
Interest component of obligation	(61)		(7)		(68)		(340)
Present value of minimum obligation	$	407	$	54	461		126
Less current portion					(95)		(4)
Noncurrent operating and finance lease liabilities					$	366	$	122

VIEs

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

PSCo had ~~approximately~~approximately 1,518 ~~MW and 1,442~~ MW of capacity under long-term PPAs at both Sept. 30, ~~2020~~2021 and Dec. 31, ~~2019, respectively,~~2020 with entities that have been determined to be VIEs. PSCo 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. The PPAs have expiration dates through 2032.

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

Changes in accumulated other comprehensive loss, net of tax, for the three and nine months ended Sept. 30, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended Sept. 30, 2020						Three Months Ended Sept. 30, 2019							Three Months Ended Sept. 30, 2021						Three Months Ended Sept. 30, 2020
(Millions of Dollars)	(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		(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 July 1	Accumulated other comprehensive loss at July 1	$	(23.5)	$	(2.5)	$	(26.0)	$	(24.7)	$	(0.2)	$	(24.9)	Accumulated other comprehensive loss at July 1	$	(22)	$	(1)	$	(23)	$	(24)	$	(2)	$	(26)
Losses reclassified from net accumulated other comprehensive loss:	Losses reclassified from net accumulated other comprehensive loss:													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		0.3		0.3		0		0.3
Interest rate derivatives (net of taxes of $—, $—, $— and $—, respectively) (a)														Interest rate derivatives (net of taxes of $—, $—, $— and $—, respectively) (a)	—		—		—		—		—		—
Net current period other comprehensive income	Net current period other comprehensive income	0.3		0		0.3		0.3		0		0.3		Net current period other comprehensive income	—		—		—		—		—		—
Accumulated other comprehensive loss at Sept. 30	Accumulated other comprehensive loss at Sept. 30	$	(23.2)	$	(2.5)	$	(25.7)	$	(24.4)	$	(0.2)	$	(24.6)	Accumulated other comprehensive loss at Sept. 30	$	(22)	$	(1)	$	(23)	$	(24)	$	(2)	$	(26)

(a)Included in interest charges.


		Nine Months Ended Sept. 30, 2020						Nine Months Ended Sept. 30, 2019							Nine Months Ended Sept. 30, 2021						Nine Months Ended Sept. 30, 2020
(Millions of Dollars)	(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		(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	Accumulated other comprehensive loss at Jan. 1	$	(24.1)	$	(2.5)	$	(26.6)	$	(25.3)	$	(0.2)	$	(25.5)	Accumulated other comprehensive loss at Jan. 1	$	(23)	$	(1)	$	(24)	$	(25)	$	(2)	$	(27)
Losses reclassified from net accumulated other comprehensive loss:	Losses reclassified from net accumulated other comprehensive loss:													Losses reclassified from net accumulated other comprehensive loss:
Interest rate derivatives (net of taxes of $0.3, $0, $0.3 and $0, respectively) (a)		0.9		0		0.9		0.9		0		0.9
Interest rate derivatives (net of taxes of $—, $—, $— and $—, respectively) (a)														Interest rate derivatives (net of taxes of $—, $—, $— and $—, respectively) (a)	1		—		1		1		—		1
Net current period other comprehensive income	Net current period other comprehensive income	0.9		0		0.9		0.9		0		0.9		Net current period other comprehensive income	1		—		1		1		—		1
Accumulated other comprehensive loss at Sept. 30	Accumulated other comprehensive loss at Sept. 30	$	(23.2)	$	(2.5)	$	(25.7)	$	(24.4)	$	(0.2)	$	(24.6)	Accumulated other comprehensive loss at Sept. 30	$	(22)	$	(1)	$	(23)	$	(24)	$	(2)	$	(26)

(a)Included in interest charges.


11. Segment Information

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 — 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~~The regulated electric utility segment 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.

PSCo also presents All Other, which includes operating segments with revenues below the necessary quantitative thresholds. Those operating segments primarily include steam revenue, appliance repair services and non-utility 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 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:


	Three Months Ended Sept. 30
(Millions of Dollars)	2021		2020
Regulated Electric


Total revenues	$	1,048	$	916
Net income	212		215
Regulated Natural Gas


Total revenues	$	177	$	156
Net income	8		4
All Other
Total revenues (a)	$	12	$	9
Net loss	(5)		(1)
Consolidated Total
Total revenues (a)	$	1,237	$	1,081


Net income	215		218

(a) Total revenues include $1 million of other affiliate revenue for both the three months ended Sept. 30, 2021 and 2020.

1617

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~~PSCo’s segment information for the three and nine months ended Sept. 30:~~


		Three Months Ended Sept. 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2020		2019		(Millions of Dollars)	2021		2020
Regulated Electric	Regulated Electric					Regulated Electric
Operating revenues		$	915.9	$	880.7
Operating revenues — external						Operating revenues — external	$	2,608	$	2,343
Intersegment revenue	Intersegment revenue	0.1		0.1		Intersegment revenue	1		—
Total revenues	Total revenues	$	916.0	$	880.8	Total revenues	$	2,609	$	2,343
Net income	Net income	214.5		204.7		Net income	400		378
Regulated Natural Gas	Regulated Natural Gas					Regulated Natural Gas
Operating revenues		$	156.4	$	153.9
Intersegment revenue		0.1		0.1

Total revenues	Total revenues	$	156.5	$	154.0	Total revenues	$	930	$	674
Net income	Net income	4.4		0.7		Net income	121		72
All Other	All Other					All Other
Operating revenues (a)		$	8.8	$	9.7
Net loss		(0.5)		(0.9)
Total revenues (a)						Total revenues (a)	$	34	$	32
Net (loss) income						Net (loss) income	(5)		5
Consolidated Total	Consolidated Total					Consolidated Total
Operating revenues (a)		$	1,081.3	$	1,044.5
Total revenues (a)						Total revenues (a)	$	3,573	$	3,049
Reconciling eliminations	Reconciling eliminations	(0.2)		(0.2)		Reconciling eliminations	(1)		—
Total operating revenues	Total operating revenues	$	1,081.1	$	1,044.3	Total operating revenues	$	3,572	$	3,049
Net income	Net income	218.4		204.5		Net income	516		455

(a) ~~Operating~~Total revenues include ~~$1.1~~$3 million of other affiliate revenue for ~~the three months ended Sept. 30, 2020 and 2019.~~

Nine Months Ended Sept. 30
(Millions of Dollars) 2020 2019
Regulated Electric
Operating revenues $ 2,343.1 $ 2,314.8
Intersegment revenue 0.3 0.3
Total revenues $ 2,343.4 $ 2,315.1
Net income 377.5 371.9
Regulated Natural Gas
Operating revenues $ 674.1 $ 830.7
Intersegment revenues 0 0.2
Total revenues $ 674.1 $ 830.9
Net income 72.5 77.5
All Other
Operating revenues (a)
$ 31.7 $ 31.8
Net income (loss) 5.2 (4.6)
Consolidated Total
Operating revenues (a)
$ 3,049.2 $ 3,177.8
Reconciling eliminations (0.3) (0.5)
Total operating revenues $ 3,048.9 $ 3,177.3
Net income 455.2 444.8

~~(a)~~ ~~Operating revenues include $3.3 million of other affiliate revenue for~~both the nine months ended Sept. 30, ~~2020~~2021 and ~~2019.~~

2020.


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~~General Instructions H(1)(a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management’s narrative analysis of the results of operations set forth in ~~general instructions~~General Instruction H(2)(a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).

Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with GAAP, as well as certain non-GAAP financial measures such as electric margin and natural gas ~~margin and ongoing earnings.~~margin. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that ~~excludes (or includes) amounts that are adjusted from~~adjusts measures calculated and presented in accordance with GAAP. PSCo’s management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.

Electric and Natural Gas Margins

Electric margin is presented as electric revenues less electric fuel and purchased power 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 are generally recovered through various regulatory recovery 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 other operating revenues, cost of sales-other, O&M expenses, conservation and DSM expenses, depreciation and amortization and taxes (other than income taxes).


Results of Operations

PSCo’s net income was ~~$455.2~~$516 million year-to-date, compared with ~~$444.8~~$455 million for the prior year. The increase in year-to-date earnings was driven by higher natural gas and electric ~~margin~~ ~~(regulatory~~margins (regulatory outcomes to primarily recover capital investments), partially offset ~~lower sales due to COVID-19),~~ ~~increased AFUDC and reduced~~by additional depreciation, O&M expenses ~~partially offset by higher depreciation~~ and ~~interest expense.~~other taxes (other than income taxes).

Electric 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 generally have minimal impact on electric margin due to fuel recovery mechanisms that recover fuel expenses. In addition, electric customers receive a credit for PTCs ~~that are~~ generated, ~~in a particular period.~~which reduce electric revenue and margin.

Electric revenues and margin:


		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2020		2019		(Millions of Dollars)	2021		2020
Electric revenues	Electric revenues	$	2,343.1	$	2,314.8	Electric revenues	$	2,608	$	2,343
Electric fuel and purchased power	Electric fuel and purchased power	(828.3)		(829.5)		Electric fuel and purchased power	(1,002)		(828)
Electric margin	Electric margin	$	1,514.8	$	1,485.3	Electric margin	$	1,606	$	1,515

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Changes in electric margin:


(Millions of Dollars)	~~2020~~Nine Months Ended Sept. 30, 2021 vs. ~~2019~~2020
Non-fuel riders	$	99
Regulatory rate outcome	$20
~~49.0~~Proprietary commodity trading, net of sharing (a)	20
Wholesale transmission revenue (net)	~~5.0~~
~~Conservation and demand side management~~	~~4.0~~
~~Sales and demand~~ ~~(a)~~	~~(37.0)~~18
PTCs flowed back to customers (offset by lower ETR)	~~(3.1)~~(37)
Comanche Station alternate treatment system	(11)
Sales and demand	(7)
Other, ~~(net)~~net	~~11.6~~ (11)
Total increase in electric margin	$	~~29.5~~91

(a)Includes $11 million of net gains previously recognized in the first quarter of 2021, driven by market changes associated with Winter Storm Uri. Additional amounts are primarily related to long-term physical generation contracts, which have increased in value as a result of higher energy prices.

(b)Sales decline excludes weather impact, net of decoupling, and demand revenue is not impacted by decoupling.

Natural Gas Margin

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

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Natural gas revenues and margin:


		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2020		2019		(Millions of Dollars)	2021		2020
Natural gas revenues	Natural gas revenues	$	674.1	$	830.7	Natural gas revenues	$	930	$	674
Cost of natural gas sold and transported	Cost of natural gas sold and transported	(222.1)		(376.7)		Cost of natural gas sold and transported	(381)		(222)
Natural gas margin	Natural gas margin	$	452.0	$	454.0	Natural gas margin	$	549	$	452

Changes in natural gas margin:


(Millions of Dollars)	~~2020~~Nine Months Ended Sept. 30, 2021 vs. ~~2019~~2020
Regulatory rate outcomes	$	84
Estimated impact of weather	$		~~(5.6)~~
~~Retail sales decline~~	~~(4.1)~~7
Infrastructure and integrity riders	~~9.3~~4
Other, ~~(net)~~net	~~(1.6)~~2
Total ~~decrease~~increase in natural gas margin	$	~~(2.0)~~97

Non-Fuel Operating Expenses and Other Items

~~O&M Expenses— O&M expenses decreased $8.2 million, or 1.4% year-to-date, largely reflecting management actions to reduce costs to offset the impact of lower sales from COVID-19.~~ Management actions included allocation of workforce, material and supply management, timing of maintenance activities. In addition, O&M expense decreased due to the outcome of the CPUC's rehearing of the 2019 electric rate case.

Depreciation and Amortization — Depreciation and amortization expense increased ~~$30.3~~$78 million, or ~~6.8%~~16.3% year-to-date. The increase was primarily due to ~~normal system expansion, new electric rates implemented in March 2020 and~~ the in-servicing of the Cheyenne Ridge wind farm, new depreciation rates, normal system expansion and Comanche related regulatory asset amortization, partially offset by a decrease in amortization of pension regulatory assets.

Income Taxes — Income tax expense decreased ~~$8.6~~$11 million ~~year-to-date.~~for the first nine months of 2021. The decrease was primarily driven by an increase in ~~plant regulatory differences and increased~~ wind PTCs. Wind PTCs are credited to customers (recorded as a reduction to revenue) and do not have a material impact on net income. ~~The ETR was 9.7% year-to-date compared with 11.5% for 2019, largely due to the items referenced above.~~These were partially offset by higher pretax earnings in 2021.

See Note 6 to the consolidated financial statements.


Other

Winter Storm Uri

In February 2021, the United States experienced Winter Storm Uri. Extreme cold temperatures impacted certain operational assets as well as the availability of renewable generation. The cold weather also affected the country’s supply and demand for natural gas. These factors contributed to extremely high market prices for natural gas and electricity. As a result of the extremely high market prices, PSCo incurred net natural gas, fuel and purchased energy costs of approximately $610 million (largely deferred as regulatory assets) in the first quarter.

Regulatory Overview — PSCo has natural gas, fuel and purchased energy mechanisms for recovering incurred costs. However, the utility subsidiaries have deferred February cost increases for future recovery and are proposing to recover the cost increases over a period of up to 30 months to mitigate the impact to customer bills. Additionally, we are not requesting recovery of financing costs in order to further limit the impact to our customers.

In May, PSCo filed a request with the CPUC to recover $263 million in weather-related electric costs, $287 million in incremental gas costs and $4 million in incremental steam costs over 24 months with no financing charge.

In September, intervenors filed testimony. The CPUC Staff recommended disallowances of approximately $99 million (electric) and $105 million (natural gas). Additionally, they proposed to net approximately $50 million of regulatory liabilities (decoupling related) from electric costs. The UCA recommended disallowances of approximately $131 million. The COEO recommended disallowances of approximately $46 million for not utilizing

demand response programs during the event. In October, a partial settlement was reached with the CPUC Staff and the COEO. See Note 1 of the accompanying consolidated financial statements for further discussion.

A decision is expected in the first quarter of 2022. In addition, the CPUC is considering prospective changes in fuel cost recovery.

Supply Chain and Capital Expenditures

PSCo’s ability to meet customer energy requirements, respond to storm-related disruptions and execute our capital expenditure program are dependent on maintaining an efficient supply chain. Overall, as a result of COVID-19, manufacturing processes have experienced disruptions related to scarcity of raw materials and interruptions in production and shipping. These disruptions have been further exacerbated by inflationary pressures, storms and labor shortages. PSCo continues to monitor the availability of materials and seek alternative suppliers as necessary.


Public Utility Regulation

The FERC and ~~various~~ state and local regulatory commissions regulate PSCo. ~~The~~PSCo is subject to rate regulation by state utility regulatory agencies, which have jurisdiction with respect to the rates of electric and natural gas ~~rates charged to PSCo’s customers are approved by the FERC or the regulatory commissions~~distribution companies in ~~the states in which they operate.~~

Colorado.

~~The rates~~Rates are designed to recover plant investment, operating costs and an allowed return on investment. PSCo ~~request~~requests changes in utility rates ~~for utility services~~ through ~~filings with governing commissions.~~

commission filings. Changes in operating costs can affect PSCo’s financial results, depending on the timing of rate ~~case filings~~cases and implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and DSM efforts, and the cost of capital.

In addition, the regulatory commissions authorize the ROE, capital structure and depreciation rates in rate proceedings. Decisions by these regulators can significantly impact PSCo’s results of operations.

Except to the extent noted ~~in Regulation above,~~below, the circumstances set forth in Public Utility Regulation included in Item 7 of PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, ~~2019~~2020 and in Item 2 of PSCo’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2020~~2021 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, ~~2020,~~2021, appropriately represent, in all material respects, the current status of public utility regulation and are incorporated herein by reference.

Pending and Recently Concluded Regulatory Proceedings

Proceeding

Amount
(in millions)

Filing
Date

Approval

~~2020 Natural Gas Rate Case~~PSIA Extension

$~~127~~9

February ~~2020~~2021

Received

~~2019~~ Electric Rate Case

$~~158~~

~~May 2019~~

~~Received~~

~~2019 Natural Gas Rate Case Appeal~~

~~N/A~~

~~April 2019~~

~~Pending~~

~~Wildfire Protection Rider~~

~~$325~~470

July ~~2020~~

~~Pending~~

~~Advanced Grid Rider~~

~~$850~~

~~July 2020~~2021

Pending

Additional Information:

~~2020 Natural Gas Rate Case~~ PSIA Rider Extension— In February 2021, PSCo requested to extend its PSIA rider for three years (through the end of 2024), which would recover $464 million in project costs over a three year period. The extension is intended to allow for a wind down of the rider and transition of recovery of the projects included in the rider to base rates in 2025. In October ~~2020,~~2021, the CPUC ~~accepted~~approved a ~~recommended decision by the ALJ to approve a comprehensive~~ settlement ~~without modification between PSCo, the~~agreement with CPUC Staff and ~~various intervenors. The rate outcome results in a net increase~~the COEO to ~~retail gas~~allow the rider to end at the end of 2021, transfer the investments recovered under the rider to base rates ~~of $77 million, reflecting a $94 million increase in base rate revenue, partially offset by $17~~January 1, 2022, and defer $9 million of depreciation expense and return on $143 million in project costs ~~previously authorized through the Pipeline Integrity rider. Rates will be implemented on April 1, 2021 and will be retroactively effective back to November 2020. The settlement is based on:~~in 2022.

•~~A ROE~~Table of ~~9.20%;~~Contents

•~~An equity ratio of 55.62%; and~~

•~~A historic test year as of Sept. 30, 2019, utilizing a year-end rate base, and incorporating a known and measurable adjustment for the Tungsten to Black Hawk pipeline.~~

~~2019~~Colorado Electric Rate ~~Case~~ Request— In ~~2019,~~July 2021, PSCo filed a request with the CPUC seeking a net electric rate increase of ~~$108.4~~$343 million (or 12.4%). The total request reflects a $470 million increase, which includes $127 million of previously authorized costs currently recovered through various rider mechanisms. The request is based on a ~~requested ROE of 10.2% and an equity ratio of 55.6%.~~

~~In February 2020, the CPUC issued a written decision, resulting in an estimated $34.9 million net base rate revenue increase. The CPUC decision included a 9.3%~~10.0% ROE, an equity ratio of ~~55.61%~~55.64%, ~~based on~~ a ~~current~~2022 forecast test year, ~~ended Aug. 31, 2019, implementation~~a rate base of ~~decoupling in 2020~~$10.3 billion and ~~other items.~~

~~Table~~impacts of ~~Contents~~

~~In May 2020, the CPUC deliberated on PSCo’s request for rehearing and revised its prior decision on the~~a new depreciation study. A historical test year ~~calculation, return on prepaid pension and medical assets,~~was filed with a ~~disallowance~~revenue deficiency of $404 million, including a capital investment for the Comanche Unit 3 superheater and Board compensation. In July 2020, the CPUC’s written decision was received. As a result, electric rates will increase approximately $12 million. In October 2020, the CPUC initiated a non-adjudicatory review of Comanche Unit 3’s performance10.5% ROE. Rates are expected to be ~~handled by the CPUC Staff, consistent with what was signaled during the~~ effective April 9, 2022.


Revenue Request (millions of dollars)	2022
Changes since 2019 rate case:
Plant-related growth	$	95
Advanced grid intelligence and security	73
Updated cost of capital	53
New depreciation rates	43
Wildfire mitigation	25
Property taxes	25
Amortization of previously approved deferrals	17
Other	12
Net increase to revenue	343
Roll-in of previously authorized costs:
TCA rider revenues and Cheyenne Ridge costs	127
Total base revenue request	$	470


Expected average 2022 rate base (billions of dollars)	$	10.3

2019 Electric Rate Case ~~rehearing. A report is expected to be issued in the first half of 2021.~~

~~2019 Natural Gas Rate Case~~ Appeal — In ~~April 2019,~~August 2020, PSCo filed an appeal with the Denver District Court seeking ~~judicial~~a review of CPUC decisions on gains and losses on sales of assets, oil and gas royalty revenues, Board of Directors equity compensation and a true-up surcharge to collect the ~~CPUC’s prior ruling regarding PSCo’s last natural gas rate case (approved~~difference between what rates should have been in ~~December 2018). The appeal requested review of the following: denial of a return~~place from February through August 2020 (based on the prepaid pension and retiree medical assets; the use of a capital structure not based on the actual historical test year; and use of an average rate base methodology rather than a year-end rate base methodology.

In March 2020, The District Court of Denver County ruled in favor of allowing the prepaid pension assets to be included in rate base; but it upheld the CPUC treatment of the retiree medical assets and capital structure methodology. The CPUC did not appeal the decision allowing inclusion of the prepaid pension assets in rate base.

~~PSCo 2020 Rider Filings~~

~~In July 2020, PSCo filed rider requests with the CPUC instead of filing a comprehensive electric rate case in 2020.~~

~~Wildfire Protection Rider~~ — ~~Seeks~~the CPUC’s decision on the Company’s Application for Reconsideration, Rehearing or Reargument) and what rates were actually in place. A decision is pending.

Decoupling Filing— PSCo's 2019 Electric Rate Case included a decoupling program, effective April 1, 2020 through Dec. 31, 2023. The program applies to ~~establish~~Residential and metered small C&I customers who do not pay a ~~rider~~demand charge. The program includes a refund and surcharge cap not to ~~recover incremental costs associated with system investments to reduce wildfire risk.~~ exceed 3% of forecasted base rate revenue for a specified period.

In ~~August~~April 2021, PSCo made its annual filing for 2020, and the revised tariff went into effect by operation of law on June 1, 2021. In the annual filing review, the CPUC ~~referred it~~indicated they may pursue reopening the case in order to ~~an ALJ.~~revisit the cap. As of Sept. 30, 2021, PSCo has recognized a refund for Residential customers and a surcharge for C&I customers based on 2020 results and 2021 estimated amounts to date.

~~Procedural schedule:~~In October 2021, a settlement was reached on Winter Storm Uri costs and also addressed certain components of decoupling. See Note 1 of the accompanying consolidated financial statements for further discussion.

•Colorado’s Power Pathway Transmission Expansion ~~Answer testimony Nov. 20, 2020;~~

•— ~~Rebuttal testimony Dec. 18, 2020;~~

•~~Settlement by Jan. 8, 2021;~~

•~~Hearing Jan. 14,~~In March 2021, ~~- Jan. 15, 2021;~~PSCo filed for a Certificate of Public Convenience and

•~~Statutory deadline March 24, 2021.~~

~~The rider is expected~~ Necessity for the Power Pathway transmission project, proposing a 560-mile, 345 kilovolt double circuit transmission network to ~~be effective~~enable approximately 4,000-5,000 MW of renewable generation in ~~June 2021 and continue through 2025. Wildfire Protection capital investment is projected to be~~eastern Colorado with an estimated cost of approximately ~~$325 million. Forecasted annual revenue requirements from 2021 through 2025 are as follows:~~

(Millions of Dollars) 2021 2022 2023 2024 2025
Forecasted annual revenue requirement $ 17 $ 24 $ 29 $ 32 $ 34

~~Advanced Grid Rider —~~Seeks to establish a rider to recover incremental costs associated with the AGIS initiative. In August 2020, the CPUC referred the matter to an ALJ. In September 2020, the Office of Consumer Counsel filed a motion to dismiss the Advanced Grid Rider.

~~Procedural schedule:~~

•~~Answer testimony Dec. 9, 2020;~~

•~~Rebuttal Jan. 8, 2021;~~

•~~Settlement by Jan. 20, 2021;~~

•~~Hearing Jan. 25, 2021 - Jan 28, 2021; and~~

•~~Statutory deadline April 24, 2021.~~

$1.7 billion.

~~The rider~~PSCo also presented an extension of the Power Pathway project into southeast Colorado, referred to as the May Valley - Longhorn Extension ($0.3 billion). PSCo expects future filings for related network upgrades, voltage support and interconnection facilities, which with the May Valley - Longhorn Extension, could result in an incremental investment of $0.5 - $1.0 billion. A CPUC decision regarding the Power Pathway project, as well as the May Valley - Longhorn Extension, is expected to be effective in May 2021 and continue through 2025. The PSCo portion of the AGIS capital investment is projected to be approximately $850 million. Forecasted annual revenue requirements from 2021 through 2025 are as follows:

(Millions of Dollars) 2021 2022 2023 2024 2025
Forecasted annual revenue requirement $ 53 $ 69 $ 83 $ 89 $ 99
by February 2022.

~~PSCo~~ KEPCO Filing — In September 2020, PSCo filed with the CPUC for approval to terminate a solar PPA with KEPCO Solar of Alamosa, Inc. and establish a regulatory asset to recover transaction costs of approximately $41 million. ~~By terminating~~However, the ~~PPA, customers would save approximately $38 million~~Administrative Law Judge ruled against approval of the Termination Agreement. In July 2021, the CPUC upheld the Administrative Law Judge’s recommended decision.

Electric Resource Plan —In March 2021, PSCo filed its 2021 Electric Resource Plan with the CPUC. The filing outlines the proposed future retirements/conversions of PSCo’s remaining coal plants and is expected to result in an 80% renewable fuel mix and an 85% carbon emissions reduction target by 2030 (from 2005 levels).

Major components of PSCo's proposed preferred plan include:

•Early retirement of Comanche Generating Station: Unit 3 in 2040 (currently 2070).

•Early retirement of Hayden Generating Station: Unit 1 in 2028 (currently 2030); Unit 2 in 2027 (currently 2036).

•Conversion of Pawnee Generating Station from coal to natural gas in 2028 with retirement in 2041.

•2,300 MW of wind power.

•1,600 MW of large-scale solar power.

•400 MW of energy storage.

•1,300 MW of flexible dispatchable resources (including natural gas).

The preferred plan proposes to create a regulatory asset to recover costs over ~~an 11-year period.~~ their original depreciation lives for the Hayden power plant and the coal handling equipment at Pawnee. It also proposes the use of securitization to finance and recover the remaining book value and decommissioning costs for Comanche Unit 3 upon retirement in 2040.

In October 2021, intervenors filed varying proposals related to Comanche Unit 3’s retirement date and commencement of Comanche Unit 3 reduced operations.

A CPUC decision on the resource plan is expected in the first quarter of 2022 with the competitive solicitation for resource additions expected in the second quarter ~~of 2021.~~2022. Incremental generation system costs to meet carbon emission reduction targets are proposed to be recovered through a Clean Energy Plan Rider.

PSCo — Comanche Unit 3

— PSCo is part owner and operator of Comanche Unit 3, a 750 MW, coal-fueled electric generating unit. ~~PSCo is the operating agent under the joint ownership agreement.~~ In ~~June~~January 2020, the unit experienced a turbine failure causing the unit to be taken offline for repairs, which were completed in June 2020. During start-up, the unit experienced a loss of turbine oil, ~~during start-up~~ which damaged the ~~plant. It is currently anticipated that~~unit. Comanche Unit 3 ~~will recommence~~recommenced operations in ~~the fourth quarter of 2020.~~January 2021. Replacement and repair of damaged systems in excess of a $2 million deductible are expected to be recovered through insurance policies. PSCo ~~has obtained~~incurred replacement power ~~for a portion~~costs of approximately $16 million during the ~~unit’s output through PPAs.~~ outage.

Table of Contents

In October 2020, the CPUC initiated a ~~non-adjudicatory~~ review of Comanche Unit 3’s ~~performance to be handled by~~performance. In March 2021, the CPUC Staff ~~consistent with what was signaled during~~issued a report, which noted higher-than average outages and included criticisms of PSCo’s operations of Comanche Unit 3 over the ~~2019 Electric Rate Case rehearing. A~~last ten years. The report ~~is expected to be issued~~recommended thorough explanation of the future of Comanche Unit 3 operations in the ~~first half~~next resource plan, performance standards for all company-owned generation and a review of ~~2021.~~

~~Boulder Municipalization~~outage and repair costs in the upcoming proceedings.

In ~~2011, Boulder passed~~October 2021, a ~~ballot measure authorizing~~comprehensive settlement on several regulatory issues was reached, which also addressed treatment of Comanche Unit 3 replacement power costs. See Note 1 of the ~~formation of an electric municipal utility, subject to certain conditions. Subsequently, there have been various legal proceedings in multiple venues.~~

In September 2020, the City Council voted to approve a settlement between PSCo and Boulder officials to end the city’s municipalization effort. The settlement would result in a 20-year franchise arrangement (with multiple opt-out conditions), an energy partnership and an undergrounding agreement. It also established the municipalization process if Boulder exercised an opt-out. The citizens of Boulder will vote on Nov. 3, 2020, whether to approve or deny the franchise agreement.

~~PSCo — Natural Gas LDC and Emission Reductions —~~ ~~In October 2020, the CPUC opened a docket to investigate topics related to natural gas emissions in relation to statewide emission reduction goals.~~

The first meeting will be scheduled in the fourth quarter of 2020, in which subject matter experts will discuss greenhouse emission reductions required from the natural gas industry in regard to the statewide goals.accompanying consolidated financial statements for further discussion.

Environmental

~~Environmental Regulation~~Affordable Clean Energy

In July 2019, the EPA adopted the Affordable Clean Energy rule, which requires states to develop plans by 2022 for greenhouse gas reductions from coal-fired power plants. ~~The state plans, due to~~In January 2021, the U.S. Court of Appeals for the D.C. Circuit issued a decision vacating and remanding the Affordable Clean Energy rule. That decision would allow the EPA ~~in July 2022, will evaluate and potentially~~to proceed with alternate regulation of coal-fired power plants. If the new rules require ~~heat rate improvements at existing coal-fired plants. It is not yet known how these state plans will affect our existing coal plants, but they could require substantial~~ additional investment, ~~even in plants slated for retirement.~~ PSCo believes ~~based on prior state commission practice,~~that the cost of these initiatives or replacement generation would be recoverable through ~~rates.~~

rates based on prior state commission practices.

Emerging Regulation

New regulations and legislation are being considered to regulate PFAS in drinking water, water discharges, commercial products, wastes, and other areas. PFAS are man-made chemicals found in many consumer products that can persist and accumulate in the environment. These chemicals have received heightened attention by environmental regulators. Increased regulation of PFAS and other emerging contaminants at the federal, state, and local level could have a potential adverse effect on our operations but at this time, it is uncertain what impact, if any, there will be on our operations, financial condition or cash flows. PSCo will continue to monitor these regulatory developments and their potential impact on its operations.

~~Table of Contents~~


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 CEO and CFO, allowing timely decisions regarding required disclosure.

As of Sept. 30, ~~2020,~~2021, 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

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.

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


ITEM 1A — RISK FACTORS

~~There have been no material changes from the risk factors disclosed in our~~ ~~Form 10-K~~ ~~for the year ended Dec. 31, 2019 except as follows:~~

~~We face risks related to health epidemics and other outbreaks, which may have a material effect on our financial condition, results of operations and cash flows.~~

The global outbreak of COVID-19 is currently impacting countries, communities, supply chains and markets. A high degree of uncertainty continues to exist regarding COVID-19, the duration and magnitude of business restrictions, re-shut downs, if any, and the level and pace of economic recovery. While we are implementing contingency plans, there are no guarantees these plans will be sufficient to offset the impact of COVID-19.

Although we do not expect the impact of COVID-19 to be material to the 2020 results, we cannot ultimately predict whether it will have a material impact on our future liquidity, financial condition, or results of operations. Nor can we predict the impact of the virus on the health of our employees, our supply chain or our ability to recover higher costs associated with managing through the pandemic.

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, ~~2019,~~2020, which is incorporated herein by ~~reference, as well as other information set forth~~reference. There have been no material changes from the risk factors previously disclosed in ~~this report, which could have a material impact on our financial condition, results of operations and cash flows.~~the

Form 10-K.

Table of Contents


ITEM 6 — EXHIBITS

* Indicates incorporation by reference

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

PSCo Form 10-Q for the quarter ended Sept. 30, 2017

~~001-03280~~

3.01

3.02*

Amended and Restated Bylaws of PSCo, dated Jan. 25, 2019

PSCo Form 10-K for the year ended Dec. 31, 2018

~~001-03280~~

3.02

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~~Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Schema

101.CAL

Inline XBRL Calculation

101.DEF

Inline XBRL Definition

101.LAB

Inline XBRL Label

101.PRE

Inline XBRL Presentation

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

2022

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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. 29, 2020~~October 28, 2021	By:	/s/ JEFFREY S. SAVAGE
		Jeffrey S. Savage
		Senior Vice President, Controller
		(Principal Accounting Officer)

		/s/ BRIAN J. VAN ABEL
		Brian J. Van Abel
		Executive Vice President, Chief Financial Officer and Director
		(Principal Financial Officer)

2123


(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2020			Year Ended Dec. 31, 2019
Borrowing limit	$	250		$	250
Amount outstanding at period end	61			39
Average amount outstanding	4			7
Maximum amount outstanding	71			50
Weighted average interest rate, computed on a daily basis	0.09		%	2.29		%
Weighted average interest rate at period end	0.90			1.63		%