☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
( |
New Mexico | 001-3034 | 75-0575400 | ||||||||||||||||||||||||
(State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||||||||||||||
790 South Buchanan Street | Amarillo | Texas | 79101 | |||||||||||||||||||||||
( | ||||||||||||||||||||||||||
(Zip Code) |
571-7511 | ||||||||
(Registrant’s Telephone Number, Including Area Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
N/A | N/A | N/A |
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | ||||||||||||||
Non-accelerated Filer | ☒ | Smaller Reporting Company | ☐ | ||||||||||||||
Emerging growth company | ☐ |
Class | ||||||||
Common Stock, $1.00 par value | 100 shares |
PART I | FINANCIAL INFORMATION | ||||||||||
Item | |||||||||||
Statements of Income | |||||||||||
Item 2 — | |||||||||||
Item 4 — | |||||||||||
PART II | OTHER INFORMATION | ||||||||||
Item 1 — | |||||||||||
Item 1A — | |||||||||||
Item 6 — | |||||||||||
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||||
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former) | ||||||||
NSP-Minnesota | Northern States Power Company, a Minnesota corporation | |||||||
NSP-Wisconsin | Northern States Power Company, a Wisconsin corporation | |||||||
PSCo | Public Service Company of Colorado | |||||||
SPS | Southwestern Public Service Company | |||||||
Utility subsidiaries | NSP-Minnesota, NSP-Wisconsin, PSCo and SPS | |||||||
Xcel Energy | Xcel Energy Inc. and its subsidiaries | |||||||
Federal and State Regulatory Agencies | ||||||||
D.C. Circuit | United States Court of Appeals for the District of Columbia Circuit | |||||||
EPA | Environmental Protection Agency | |||||||
FERC | Federal Energy Regulatory Commission | |||||||
IRS | Internal Revenue Service | |||||||
New Mexico Public Regulation Commission | ||||||||
PUCT | Public Utility Commission of Texas | |||||||
SEC | Securities and Exchange Commission | |||||||
Administrative Law Judge | ||||||||
ASC | FASB Accounting Standards Codification | |||||||
C&I | Commercial and Industrial | |||||||
CEO | Chief executive officer | |||||||
CFO | Chief financial officer | |||||||
COVID-19 | Novel coronavirus | |||||||
DSM | Demand side management | |||||||
Effective tax rate | ||||||||
FASB | Financial Accounting Standards Board | |||||||
FPPCAC | Fuel and Purchased Power Cost Adjustment Clause | |||||||
FTR | ||||||||
Financial transmission right | ||||||||
GAAP | Generally accepted accounting principles | |||||||
IPP | Independent power producers | |||||||
NOL | Net operating loss | |||||||
O&M | Operating and maintenance | |||||||
OATT | Open access transmission tariff | |||||||
PPA | Power purchase agreement | |||||||
PTC | Production tax credit | |||||||
ROE | Return on equity | |||||||
RTO | Regional Transmission Organization | |||||||
SPP | Southwest Power Pool, Inc. | |||||||
TCJA | 2017 federal tax reform enacted as Public Law No: 115-97, commonly referred to as the Tax Cuts and Jobs Act | |||||||
VIE | Variable interest entity | |||||||
Measurements | ||||||||
MW | Megawatts | |||||||
MWh | Megawatt hours |
Forward-Looking Statements |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||
Operating revenues | $ | 423.4 | $ | 410.5 | $ | 818.4 | $ | 864.6 | ||||||||||||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||||||||||||||
Electric fuel and purchased power | 198.8 | 179.9 | 386.6 | 410.8 | ||||||||||||||||||||||||||||||||||||||||
Operating and maintenance expenses | 58.3 | 70.1 | 127.9 | 142.5 | ||||||||||||||||||||||||||||||||||||||||
Demand side management expenses | 3.7 | 3.8 | 7.6 | 8.4 | ||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 64.0 | 57.8 | 123.1 | 111.0 | ||||||||||||||||||||||||||||||||||||||||
Taxes (other than income taxes) | 18.3 | 17.0 | 39.7 | 35.5 | ||||||||||||||||||||||||||||||||||||||||
Total operating expenses | 343.1 | 328.6 | 684.9 | 708.2 | ||||||||||||||||||||||||||||||||||||||||
Operating income | 80.3 | 81.9 | 133.5 | 156.4 | ||||||||||||||||||||||||||||||||||||||||
Other income (expense), net | 0.1 | 0.5 | (1.9) | 0.9 | ||||||||||||||||||||||||||||||||||||||||
Allowance for funds used during construction — equity | 7.8 | 8.7 | 13.8 | 19.0 | ||||||||||||||||||||||||||||||||||||||||
Interest charges and financing costs | ||||||||||||||||||||||||||||||||||||||||||||
Interest charges — includes other financing costs of $0.9, $0.8, $1.8 and $1.6, respectively | 25.7 | 25.6 | 49.9 | 50.0 | ||||||||||||||||||||||||||||||||||||||||
Allowance for funds used during construction — debt | (3.4) | (4.2) | (6.0) | (8.7) | ||||||||||||||||||||||||||||||||||||||||
Total interest charges and financing costs | 22.3 | 21.4 | 43.9 | 41.3 | ||||||||||||||||||||||||||||||||||||||||
Income before income taxes | 65.9 | 69.7 | 101.5 | 135.0 | ||||||||||||||||||||||||||||||||||||||||
Income tax (benefit) expense | (5.8) | 10.9 | (12.9) | 22.1 | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 71.7 | $ | 58.8 | $ | 114.4 | $ | 112.9 | ||||||||||||||||||||||||||||||||||||
See Notes to Financial Statements |
Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating revenues | $ | 533.1 | $ | 540.1 | $ | 1,397.7 | $ | 1,468.6 | |||||||
Operating expenses | |||||||||||||||
Electric fuel and purchased power | 240.2 | 284.0 | 651.0 | 795.6 | |||||||||||
Operating and maintenance expenses | 74.1 | 71.5 | 216.6 | 203.7 | |||||||||||
Demand side management expenses | 4.5 | 4.6 | 12.9 | 13.5 | |||||||||||
Depreciation and amortization | 61.3 | 52.2 | 172.3 | 150.2 | |||||||||||
Taxes (other than income taxes) | 17.6 | 16.8 | 53.1 | 50.0 | |||||||||||
Total operating expenses | 397.7 | 429.1 | 1,105.9 | 1,213.0 | |||||||||||
Operating income | 135.4 | 111.0 | 291.8 | 255.6 | |||||||||||
Other income (expense), net | 1.5 | (1.0 | ) | 2.4 | (2.4 | ) | |||||||||
Allowance for funds used during construction — equity | 3.2 | 5.0 | 22.2 | 11.6 | |||||||||||
Interest charges and financing costs | |||||||||||||||
Interest charges — includes other financing costs of $0.9, $0.7, $2.5 and $2.1, respectively | 26.0 | 21.0 | 76.0 | 61.8 | |||||||||||
Allowance for funds used during construction — debt | (1.5 | ) | (2.2 | ) | (10.2 | ) | (5.5 | ) | |||||||
Total interest charges and financing costs | 24.5 | 18.8 | 65.8 | 56.3 | |||||||||||
Income before income taxes | 115.6 | 96.2 | 250.6 | 208.5 | |||||||||||
Income taxes | 10.5 | 14.7 | 32.6 | 35.4 | |||||||||||
Net income | $ | 105.1 | $ | 81.5 | $ | 218.0 | $ | 173.1 |
Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | 105.1 | $ | 81.5 | $ | 218.0 | $ | 173.1 | ||||||||
Other comprehensive income | ||||||||||||||||
Pension and retiree medical benefits: | ||||||||||||||||
Amortization of losses included in net periodic benefit cost, net of tax of $0 | — | 0.1 | 0.1 | 0.1 | ||||||||||||
Other comprehensive income | — | 0.1 | 0.1 | 0.1 | ||||||||||||
Comprehensive income | $ | 105.1 | $ | 81.6 | $ | 218.1 | $ | 173.2 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||
Net income | $ | 71.7 | $ | 58.8 | $ | 114.4 | $ | 112.9 | |||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||||||||
Pension and retiree medical benefits: | |||||||||||||||||||||||||||||||||||
Reclassification of loss to net income, net of tax of $— | 0.1 | — | 0.1 | — | |||||||||||||||||||||||||||||||
Derivative instruments: | |||||||||||||||||||||||||||||||||||
Reclassification of loss to net income, net of tax of $— | — | 0.1 | — | 0.1 | |||||||||||||||||||||||||||||||
Total other comprehensive income | 0.1 | 0.1 | 0.1 | 0.1 | |||||||||||||||||||||||||||||||
Total comprehensive income | $ | 71.8 | $ | 58.9 | $ | 114.5 | $ | 113.0 | |||||||||||||||||||||||||||
Six Months Ended June 30 | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
Operating activities | |||||||||||||||||
Net income | $ | 114.4 | $ | 112.9 | |||||||||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||||||
Depreciation and amortization | 124.3 | 112.1 | |||||||||||||||
Deferred income taxes | 11.3 | 3.3 | |||||||||||||||
Allowance for equity funds used during construction | (13.8) | (19.0) | |||||||||||||||
Provision for bad debts | 3.1 | 2.1 | |||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Accounts receivable | (5.8) | (3.4) | |||||||||||||||
Accrued unbilled revenues | (4.3) | (11.3) | |||||||||||||||
Inventories | (16.2) | (9.9) | |||||||||||||||
Prepayments and other | (3.9) | 5.2 | |||||||||||||||
Accounts payable | 4.2 | (24.5) | |||||||||||||||
Net regulatory assets and liabilities | (32.2) | 37.0 | |||||||||||||||
Other current liabilities | (7.7) | 1.1 | |||||||||||||||
Pension and other employee benefit obligations | (14.9) | (16.3) | |||||||||||||||
Other, net | 1.9 | 0.7 | |||||||||||||||
Net cash provided by operating activities | 160.4 | 190.0 | |||||||||||||||
Investing activities | |||||||||||||||||
Utility capital/construction expenditures | (520.4) | (364.2) | |||||||||||||||
Investments in utility money pool arrangement | (4.0) | (100.0) | |||||||||||||||
Repayments from utility money pool arrangement | 4.0 | — | |||||||||||||||
Net cash used in investing activities | (520.4) | (464.2) | |||||||||||||||
Financing activities | |||||||||||||||||
Repayments of short-term borrowings, net | — | (42.0) | |||||||||||||||
Proceeds from issuance of long-term debt, net | 343.3 | 292.8 | |||||||||||||||
Borrowings under utility money pool arrangement | 711.0 | 283.0 | |||||||||||||||
Repayments under utility money pool arrangement | (711.0) | (283.0) | |||||||||||||||
Capital contributions from parent | 436.0 | 378.8 | |||||||||||||||
Dividends paid to parent | (128.9) | (137.7) | |||||||||||||||
Other, net | (0.3) | — | |||||||||||||||
Net cash provided by financing activities | 650.1 | 491.9 | |||||||||||||||
Net change in cash, cash equivalents and restricted cash | 290.1 | 217.7 | |||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 16.2 | 44.0 | |||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 306.3 | $ | 261.7 | |||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||
Cash paid for interest (net of amounts capitalized) | $ | (40.4) | $ | (39.9) | |||||||||||||
Cash received for income taxes, net | 4.6 | — | |||||||||||||||
Supplemental disclosure of non-cash investing and financing transactions: | |||||||||||||||||
Property, plant and equipment additions in accounts payable | $ | 108.4 | $ | 68.6 | |||||||||||||
Inventory transfers to property, plant and equipment | 13.7 | 12.6 | |||||||||||||||
Operating lease right-of-use assets | — | 548.3 | |||||||||||||||
Allowance for equity funds used during construction | 13.8 | 19.0 |
Nine Months Ended Sept. 30, | |||||||
2019 | 2018 | ||||||
Operating activities | |||||||
Net income | $ | 218.0 | $ | 173.1 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | 174.0 | 150.4 | |||||
Demand side management program amortization | — | 1.3 | |||||
Deferred income taxes | 16.2 | 14.4 | |||||
Allowance for equity funds used during construction | (22.2 | ) | (11.6 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (26.5 | ) | (25.1 | ) | |||
Accrued unbilled revenues | (10.4 | ) | 9.6 | ||||
Inventories | (16.3 | ) | 7.0 | ||||
Prepayments and other | 6.0 | 0.6 | |||||
Accounts payable | (15.1 | ) | (0.9 | ) | |||
Net regulatory assets and liabilities | 17.6 | 58.8 | |||||
Other current liabilities | 14.1 | 13.0 | |||||
Pension and other employee benefit obligations | (17.6 | ) | (7.9 | ) | |||
Change in other noncurrent assets | 0.7 | 3.5 | |||||
Change in other noncurrent liabilities | 1.3 | (0.2 | ) | ||||
Net cash provided by operating activities | 339.8 | 386.0 | |||||
Investing activities | |||||||
Utility capital/construction expenditures | (632.8 | ) | (610.0 | ) | |||
Investments in utility money pool arrangement | (133.0 | ) | (46.0 | ) | |||
Repayments from utility money pool arrangement | 133.0 | 111.0 | |||||
Net cash used in investing activities | (632.8 | ) | (545.0 | ) | |||
Financing activities | |||||||
(Repayments of) Proceeds from short-term borrowings, net | (42.0 | ) | 35.0 | ||||
Proceeds from issuance of long-term debt, net | 292.2 | — | |||||
Borrowings under utility money pool arrangement | 283.0 | 446.0 | |||||
Repayments under utility money pool arrangement | (283.0 | ) | (423.0 | ) | |||
Capital contributions from parent | 400.8 | 181.4 | |||||
Dividends paid to parent | (255.0 | ) | (90.7 | ) | |||
Net cash provided by financing activities | 396.0 | 148.7 | |||||
Net change in cash and cash equivalents | 103.0 | (10.3 | ) | ||||
Cash and cash equivalents at beginning of period | 44.0 | 10.9 | |||||
Cash and cash equivalents at end of period | $ | 147.0 | $ | 0.6 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest (net of amounts capitalized) | $ | (60.3 | ) | $ | (57.9 | ) | |
Cash paid for income taxes, net | (4.4 | ) | (15.3 | ) | |||
Supplemental disclosure of non-cash investing and financing transactions: | |||||||
Property, plant and equipment additions in accounts payable | $ | 67.5 | $ | 54.6 | |||
Inventory transfer additions in PPE | 18.7 | 17.0 | |||||
Operating lease right-of-use assets | 548.3 | — | |||||
Allowance for equity funds used during construction | 22.2 | 11.6 |
Sept. 30, 2019 | Dec. 31, 2018 | June 30, 2020 | Dec. 31, 2019 | |||||||||||||||
Assets | Assets | |||||||||||||||||
Current assets | Current assets | |||||||||||||||||
Cash and cash equivalents | $ | 147.0 | $ | 44.0 | Cash and cash equivalents | $ | 306.3 | $ | 16.2 | |||||||||
Accounts receivable, net | 113.9 | 90.7 | Accounts receivable, net | 90.1 | 92.7 | |||||||||||||
Accounts receivable from affiliates | 6.1 | 10.5 | Accounts receivable from affiliates | 7.3 | 4.2 | |||||||||||||
Accrued unbilled revenues | 124.9 | 114.5 | Accrued unbilled revenues | 119.2 | 115.1 | |||||||||||||
Inventories | 31.4 | 33.9 | Inventories | 33.5 | 31.0 | |||||||||||||
Regulatory assets | 20.8 | 26.0 | Regulatory assets | 21.9 | 20.0 | |||||||||||||
Derivative instruments | 20.4 | 17.8 | Derivative instruments | 18.8 | 15.0 | |||||||||||||
Prepaid taxes | 1.5 | 14.2 | Prepaid taxes | 12.3 | 0.8 | |||||||||||||
Prepayments and other | 17.6 | 10.7 | Prepayments and other | 14.1 | 21.4 | |||||||||||||
Total current assets | 483.6 | 362.3 | Total current assets | 623.5 | 316.4 | |||||||||||||
Property, plant and equipment, net | 6,441.9 | 5,946.4 | Property, plant and equipment, net | 7,105.4 | 6,631.6 | |||||||||||||
Other assets | Other assets | |||||||||||||||||
Regulatory assets | 362.0 | 366.2 | Regulatory assets | 392.2 | 364.0 | |||||||||||||
Derivative instruments | 13.4 | 15.8 | Derivative instruments | 11.1 | 12.6 | |||||||||||||
Operating lease right-of-use assets | 529.0 | — | Operating lease right-of-use assets | 503.8 | 522.4 | |||||||||||||
Other | 4.4 | 5.1 | Other | 3.6 | 3.9 | |||||||||||||
Total other assets | 908.8 | 387.1 | Total other assets | 910.7 | 902.9 | |||||||||||||
Total assets | $ | 7,834.3 | $ | 6,695.8 | Total assets | $ | 8,639.6 | $ | 7,850.9 | |||||||||
Liabilities and Equity | Liabilities and Equity | |||||||||||||||||
Current liabilities | Current liabilities | |||||||||||||||||
Short-term debt | $ | — | $ | 42.0 | ||||||||||||||
Accounts payable | 168.3 | 191.8 | Accounts payable | $ | 235.9 | $ | 168.1 | |||||||||||
Accounts payable to affiliates | 14.9 | 19.9 | Accounts payable to affiliates | 16.5 | 20.4 | |||||||||||||
Regulatory liabilities | 116.8 | 85.8 | Regulatory liabilities | 98.9 | 118.1 | |||||||||||||
Taxes accrued | 51.5 | 41.6 | Taxes accrued | 32.8 | 40.4 | |||||||||||||
Accrued interest | 29.1 | 25.8 | Accrued interest | 27.7 | 26.2 | |||||||||||||
Dividends payable to parent | 45.6 | 45.2 | Dividends payable to parent | 47.6 | 46.3 | |||||||||||||
Derivative instruments | 3.7 | 3.6 | Derivative instruments | 3.6 | 3.7 | |||||||||||||
Current obligation under operating lease | Current obligation under operating lease | 27.5 | 26.9 | |||||||||||||||
Other | 53.0 | 28.3 | Other | 26.6 | 30.7 | |||||||||||||
Total current liabilities | 482.9 | 484.0 | Total current liabilities | 517.1 | 480.8 | |||||||||||||
Deferred credits and other liabilities | Deferred credits and other liabilities | |||||||||||||||||
Deferred income taxes | 653.4 | 619.1 | Deferred income taxes | 695.9 | 671.8 | |||||||||||||
Regulatory liabilities | 736.5 | 780.9 | Regulatory liabilities | 729.0 | 732.3 | |||||||||||||
Asset retirement obligations | 49.9 | 32.4 | Asset retirement obligations | 79.1 | 77.3 | |||||||||||||
Derivative instruments | 13.7 | 16.4 | Derivative instruments | 11.0 | 12.8 | |||||||||||||
Pension and employee benefit obligations | 75.2 | 92.4 | Pension and employee benefit obligations | 52.1 | 67.0 | |||||||||||||
Operating lease liabilities | 502.2 | — | Operating lease liabilities | 476.4 | 495.3 | |||||||||||||
Other | 9.0 | 7.9 | Other | 10.5 | 9.4 | |||||||||||||
Total deferred credits and other liabilities | 2,039.9 | 1,549.1 | Total deferred credits and other liabilities | 2,054.0 | 2,065.9 | |||||||||||||
Commitments and contingencies | Commitments and contingencies | |||||||||||||||||
Capitalization | Capitalization | |||||||||||||||||
Long-term debt | 2,419.3 | 2,126.1 | Long-term debt | 2,763.8 | 2,419.7 | |||||||||||||
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at Sept. 30, 2019 and Dec. 31, 2018, respectively | — | — | ||||||||||||||||
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at June 30, 2020 and Dec. 31, 2019, respectively | Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at June 30, 2020 and Dec. 31, 2019, respectively | — | — | |||||||||||||||
Additional paid in capital | 2,325.3 | 1,932.3 | Additional paid in capital | 2,786.9 | 2,350.9 | |||||||||||||
Retained earnings | 568.2 | 605.7 | Retained earnings | 519.1 | 535.0 | |||||||||||||
Accumulated other comprehensive loss | (1.3 | ) | (1.4 | ) | Accumulated other comprehensive loss | (1.3) | (1.4) | |||||||||||
Total common stockholder’s equity | 2,892.2 | 2,536.6 | Total common stockholder’s equity | 3,304.7 | 2,884.5 | |||||||||||||
Total liabilities and equity | $ | 7,834.3 | $ | 6,695.8 | Total liabilities and equity | $ | 8,639.6 | $ | 7,850.9 |
Common Stock Issued | Retained Earnings | Accumulated Other Comprehensive Loss | Total Common Stockholder’s Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Additional Paid In Capital | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2020 and 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 100 | $ | — | $ | 1,932.3 | $ | 602.3 | $ | (1.4) | $ | 2,533.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 58.8 | 58.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | 0.1 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to parent | (83.4) | (83.4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions of capital by parent | 375.0 | 375.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | 100 | $ | — | $ | 2,307.3 | $ | 577.7 | $ | (1.3) | $ | 2,883.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 100 | $ | — | $ | 2,382.9 | $ | 502.0 | $ | (1.4) | $ | 2,883.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 71.7 | 71.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | 0.1 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to parent | (54.6) | (54.6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions of capital by parent | 404.0 | 404.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 100 | $ | — | $ | 2,786.9 | $ | 519.1 | $ | (1.3) | $ | 3,304.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Issued | Retained Earnings | Accumulated Other Comprehensive Loss | Total Common Stockholder’s Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Additional Paid In Capital | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2020 and 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at Dec. 31, 2018 | 100 | $ | — | $ | 1,932.3 | $ | 605.7 | $ | (1.4) | $ | 2,536.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 112.9 | 112.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | 0.1 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to parent | (140.9) | (140.9) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions of capital by parent | 375.0 | 375.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | 100 | $ | — | $ | 2,307.3 | $ | 577.7 | $ | (1.3) | $ | 2,883.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at Dec. 31, 2019 | 100 | $ | — | $ | 2,350.9 | $ | 535.0 | $ | (1.4) | $ | 2,884.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 114.4 | 114.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | 0.1 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to parent | (130.2) | (130.2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions of capital by parent | 436.0 | 436.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adoption of ASC Topic 326 | (0.1) | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 100 | $ | — | $ | 2,786.9 | $ | 519.1 | $ | (1.3) | $ | 3,304.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See Notes to Financial Statements |
SOUTHWESTERN PUBLIC SERVICE COMPANY STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED) (amounts in millions, except share data) | ||||||||||||||||||||||
Common Stock Issued | Retained Earnings | Accumulated Other Comprehensive Loss | Total Common Stockholders’ Equity | |||||||||||||||||||
Shares | Par Value | Additional Paid In Capital | ||||||||||||||||||||
Three Months Ended Sept. 30, 2019 and 2018 | ||||||||||||||||||||||
Balance at June 30, 2018 | 100 | $ | — | $ | 1,591.4 | $ | 569.2 | $ | (1.5 | ) | $ | 2,159.1 | ||||||||||
Net income | 81.5 | 81.5 | ||||||||||||||||||||
Other comprehensive income | 0.1 | 0.1 | ||||||||||||||||||||
Dividends declared to parent | (40.0 | ) | (40.0 | ) | ||||||||||||||||||
Contributions of capital by parent | 180.0 | 180.0 | ||||||||||||||||||||
Balance at Sept. 30, 2018 | 100 | $ | — | $ | 1,771.4 | $ | 610.7 | $ | (1.4 | ) | $ | 2,380.7 | ||||||||||
Balance at June 30, 2019 | 100 | $ | — | $ | 2,307.3 | $ | 577.7 | $ | (1.3 | ) | $ | 2,883.7 | ||||||||||
Net income | 105.1 | 105.1 | ||||||||||||||||||||
Dividends declared to parent | (114.6 | ) | (114.6 | ) | ||||||||||||||||||
Contributions of capital by parent | 18.0 | 18.0 | ||||||||||||||||||||
Balance at Sept. 30, 2019 | 100 | $ | — | $ | 2,325.3 | $ | 568.2 | $ | (1.3 | ) | $ | 2,892.2 | ||||||||||
See Notes to Financial Statements |
SOUTHWESTERN PUBLIC SERVICE COMPANY STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED) (amounts in millions, except share data) | ||||||||||||||||||||||
Common Stock Issued | Retained Earnings | Accumulated Other Comprehensive Loss | Total Common Stockholders’ Equity | |||||||||||||||||||
Shares | Par Value | Additional Paid In Capital | ||||||||||||||||||||
Nine Months Ended Sept. 30, 2019 and 2018 | ||||||||||||||||||||||
Balance at Dec. 31, 2017 | 100 | $ | — | $ | 1,590.2 | $ | 541.6 | $ | (1.5 | ) | $ | 2,130.3 | ||||||||||
Net income | 173.1 | 173.1 | ||||||||||||||||||||
Other comprehensive income | 0.1 | 0.1 | ||||||||||||||||||||
Dividends declared to parent | (104.0 | ) | (104.0 | ) | ||||||||||||||||||
Contributions of capital by parent | — | — | 181.2 | 181.2 | ||||||||||||||||||
Balance at Sept. 30, 2018 | 100 | $ | — | $ | 1,771.4 | $ | 610.7 | $ | (1.4 | ) | $ | 2,380.7 | ||||||||||
Balance at Dec. 31, 2018 | 100 | $ | — | $ | 1,932.3 | $ | 605.7 | $ | (1.4 | ) | $ | 2,536.6 | ||||||||||
Net income | 218.0 | 218.0 | ||||||||||||||||||||
Other comprehensive income | 0.1 | 0.1 | ||||||||||||||||||||
Dividends declared to parent | (255.5 | ) | (255.5 | ) | ||||||||||||||||||
Contributions of capital by parent | 393.0 | 393.0 | ||||||||||||||||||||
Balance at Sept. 30, 2019 | 100 | $ | — | $ | 2,325.3 | $ | 568.2 | $ | (1.3 | ) | $ | 2,892.2 | ||||||||||
See Notes to Financial Statements |
1. | Summary of Significant Accounting Policies |
2. | Accounting Pronouncements |
3. | Selected Balance Sheet Data |
(Millions of Dollars) | June 30, 2020 | Dec. 31, 2019 | ||||||||||||
Accounts receivable, net | ||||||||||||||
Accounts receivable | $ | 96.6 | $ | 98.0 | ||||||||||
Less allowance for bad debts | (6.5) | (5.3) | ||||||||||||
Accounts receivable, net | $ | 90.1 | $ | 92.7 |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Accounts receivable, net | ||||||||
Accounts receivable | $ | 119.5 | $ | 96.3 | ||||
Less allowance for bad debts | (5.6 | ) | (5.6 | ) | ||||
Accounts receivable, net | $ | 113.9 | $ | 90.7 |
(Millions of Dollars) | June 30, 2020 | Dec. 31, 2019 | ||||||||||||
Inventories | ||||||||||||||
Materials and supplies | $ | 26.8 | $ | 24.7 | ||||||||||
Fuel | 6.7 | 6.3 | ||||||||||||
Total inventories | $ | 33.5 | $ | 31.0 |
(Millions of Dollars) | June 30, 2020 | Dec. 31, 2019 | ||||||||||||
Property, plant and equipment, net | ||||||||||||||
Electric plant | $ | 8,690.9 | $ | 8,453.0 | ||||||||||
Construction work in progress | 802.4 | 485.4 | ||||||||||||
Total property, plant and equipment | 9,493.3 | 8,938.4 | ||||||||||||
Less accumulated depreciation | (2,387.9) | (2,306.8) | ||||||||||||
Property, plant and equipment, net | $ | 7,105.4 | $ | 6,631.6 |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Inventories | ||||||||
Materials and supplies | $ | 24.8 | $ | 25.7 | ||||
Fuel | 6.6 | 8.2 | ||||||
Total inventories | $ | 31.4 | $ | 33.9 |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Property, plant and equipment, net | ||||||||
Electric plant | $ | 8,296.6 | $ | 7,227.7 | ||||
Construction work in progress | 419.2 | 847.3 | ||||||
Total property, plant and equipment | 8,715.8 | 8,075.0 | ||||||
Less accumulated depreciation | (2,273.9 | ) | (2,128.6 | ) | ||||
Property, plant and equipment, net | $ | 6,441.9 | $ | 5,946.4 |
4. Borrowings and Other Financing Instruments |
(Amounts in Millions, Except Interest Rates) | Three Months Ended Sept. 30, 2019 | Year Ended Dec. 31, 2018 | ||||||
Borrowing limit | $ | 100 | $ | 100 | ||||
Amount outstanding at period end | — | — | ||||||
Average amount outstanding | — | 29 | ||||||
Maximum amount outstanding | — | 100 | ||||||
Weighted average interest rate, computed on a daily basis | N/A | 1.96 | % | |||||
Weighted average interest rate at period end | N/A | N/A |
(Amounts in Millions, Except Interest Rates) | Three Months Ended June 30, 2020 | Year Ended Dec. 31, 2019 | ||||||||||||
Borrowing limit | $ | 100 | $ | 100 | ||||||||||
Amount outstanding at period end | — | — | ||||||||||||
Average amount outstanding | 62 | 8 | ||||||||||||
Maximum amount outstanding | 100 | 100 | ||||||||||||
Weighted average interest rate, computed on a daily basis | 0.83 | % | 2.42 | % | ||||||||||
Weighted average interest rate at period end | N/A | N/A |
(Amounts in Millions, Except Interest Rates) | Three Months Ended Sept. 30, 2019 | Year Ended Dec. 31, 2018 | ||||||
Borrowing limit | $ | 500 | $ | 400 | ||||
Amount outstanding at period end | — | 42 | ||||||
Average amount outstanding | — | 30 | ||||||
Maximum amount outstanding | — | 144 | ||||||
Weighted average interest rate, computed on a daily basis | N/A | 2.27 | % | |||||
Weighted average interest rate at period end | N/A | 2.80 |
(Amounts in Millions, Except Interest Rates) | Three Months Ended June 30, 2020 | Year Ended Dec. 31, 2019 | ||||||||||||
Borrowing limit | $ | 500 | $ | 500 | ||||||||||
Amount outstanding at period end | — | — | ||||||||||||
Average amount outstanding | 53 | 72 | ||||||||||||
Maximum amount outstanding | 138 | 316 | ||||||||||||
Weighted average interest rate, computed on a daily basis | 1.09 | % | 2.68 | % | ||||||||||
Weighted average interest rate at period end | N/A | N/A |
Credit Facility (a) | Outstanding (b) | Available | ||||||||||||
$ | 500 | $ | 2 | $ | 498 |
Credit Facility (a) | Outstanding (b) | Available | ||||||||
$ | 500 | $ | 2 | $ | 498 |
(b)Includes outstanding letters of credit. |
5. Revenues |
Three Months Ended | ||||||||||||||||||||
(Millions of Dollars) | June 30, 2020 | June 30, 2019 | ||||||||||||||||||
Major revenue types | ||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||
Residential | $ | 84.8 | $ | 70.4 | ||||||||||||||||
C&I | 163.7 | 191.4 | ||||||||||||||||||
Other | 8.7 | 9.9 | ||||||||||||||||||
Total retail | 257.2 | 271.7 | ||||||||||||||||||
Wholesale | 81.6 | 72.0 | ||||||||||||||||||
Transmission | 76.0 | 60.0 | ||||||||||||||||||
Other | 0.6 | 0.4 | ||||||||||||||||||
Total revenue from contracts with customers | 415.4 | 404.1 | ||||||||||||||||||
Alternative revenue and other | 8.0 | 6.4 | ||||||||||||||||||
Total revenues | $ | 423.4 | $ | 410.5 | ||||||||||||||||
Six Months Ended | ||||||||||||||||||||
(Millions of Dollars) | June 30, 2020 | June 30, 2019 | ||||||||||||||||||
Major revenue types | ||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||
Residential | $ | 157.7 | $ | 158.5 | ||||||||||||||||
C&I | 332.8 | 397.2 | ||||||||||||||||||
Other | 16.6 | 19.5 | ||||||||||||||||||
Total retail | 507.1 | 575.2 | ||||||||||||||||||
Wholesale | 154.8 | 156.8 | ||||||||||||||||||
Transmission | 138.6 | 117.4 | ||||||||||||||||||
Other | 1.2 | 1.4 | ||||||||||||||||||
Total revenue from contracts with customers | 801.7 | 850.8 | ||||||||||||||||||
Alternative revenue and other | 16.7 | 13.8 | ||||||||||||||||||
Total revenues | $ | 818.4 | $ | 864.6 |
Three Months Ended | ||||||||
(Millions of Dollars) | Sept. 30, 2019 | Sept. 30, 2018 | ||||||
Major revenue types | ||||||||
Revenue from contracts with customers: | ||||||||
Residential | $ | 119.3 | $ | 114.4 | ||||
C&I | 222.4 | 229.4 | ||||||
Other | 12.8 | 13.0 | ||||||
Total retail | 354.5 | 356.8 | ||||||
Wholesale | 106.6 | 118.0 | ||||||
Transmission | 64.4 | 60.7 | ||||||
Other | 0.6 | 1.8 | ||||||
Total revenue from contracts with customers | 526.1 | 537.3 | ||||||
Alternative revenue and other | 7.0 | 2.8 | ||||||
Total revenues | $ | 533.1 | $ | 540.1 |
Nine Months Ended | ||||||||
(Millions of Dollars) | Sept. 30, 2019 | Sept. 30, 2018 | ||||||
Major revenue types | ||||||||
Revenue from contracts with customers: | ||||||||
Residential | $ | 277.8 | $ | 279.5 | ||||
C&I | 619.6 | 626.0 | ||||||
Other | 32.3 | 34.0 | ||||||
Total retail | 929.7 | 939.5 | ||||||
Wholesale | 263.4 | 326.8 | ||||||
Transmission | 181.8 | 175.4 | ||||||
Other | 2.0 | 12.2 | ||||||
Total revenue from contracts with customers | 1,376.9 | 1,453.9 | ||||||
Alternative revenue and other | 20.8 | 14.7 | ||||||
Total revenues | $ | 1,397.7 | $ | 1,468.6 |
6. | Income Taxes |
Six Months Ended June 30, | ||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||
Federal statutory rate | 21.0 | % | 21.0 | % | ||||||||||||||||
State tax (net of federal tax effect) | 2.3 | 2.1 | ||||||||||||||||||
Decreases in tax from: | ||||||||||||||||||||
Wind PTCs | (26.7) | (0.2) | ||||||||||||||||||
Plant regulatory differences (a) | (6.4) | (4.8) | ||||||||||||||||||
Prior period adjustments | (2.0) | (0.7) | ||||||||||||||||||
Other tax credits, net of NOL & tax credit allowances | (0.7) | (0.6) | ||||||||||||||||||
Other (net) | (0.2) | (0.4) | ||||||||||||||||||
Effective income tax rate | (12.7) | % | 16.4 | % |
Nine Months Ended Sept. 30, | ||||||
2019 | 2018 | |||||
Federal statutory rate | 21.0 | % | 21.0 | % | ||
State tax (net of federal tax effect) | 2.2 | 2.3 | ||||
Decreases in tax from: | ||||||
Plant regulatory differences (a) | (4.7 | ) | (3.8 | ) | ||
Wind PTCs | (3.9 | ) | — | |||
Other tax credits and tax credit and NOL allowances (net) | (0.6 | ) | (0.7 | ) | ||
Prior period adjustments | (0.5 | ) | (1.8 | ) | ||
Other (net) | (0.5 | ) | — | |||
Effective income tax rate | 13.0 | % | 17.0 | % |
(a)Regulatory differences for income tax primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions. |
Tax | Expiration | |||||||
2009 - 2013 | ||||||||
2014 - 2016 |
(Millions of Dollars) | June 30, 2020 | Dec. 31, 2019 | ||||||||||||
Unrecognized tax benefit — Permanent tax positions | $ | 3.6 | $ | 3.7 | ||||||||||
Unrecognized tax benefit — Temporary tax positions | 1.5 | 1.5 | ||||||||||||
Total unrecognized tax benefit | $ | 5.1 | $ | 5.2 |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Unrecognized tax benefit — Permanent tax positions | $ | 3.5 | $ | 3.0 | ||||
Unrecognized tax benefit — Temporary tax positions | 1.5 | 1.5 | ||||||
Total unrecognized tax benefit | $ | 5.0 | $ | 4.5 |
(Millions of Dollars) | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
NOL and tax credit carryforwards | $ | (4.4 | ) | $ | (3.8 | ) |
(Millions of Dollars) | June 30, 2020 | Dec. 31, 2019 | ||||||||||||
NOL and tax credit carryforwards | $ | (4.5) | $ | (4.4) |
7. | Fair Value of Financial Assets and Liabilities |
(Amounts in Millions) (a) | June 30, 2020 | Dec. 31, 2019 | ||||||||||||
MWh of electricity | 11.9 | 6.4 |
(Amounts in Millions) (a) | Sept. 30, 2019 | Dec. 31, 2018 | ||||
Mwh of electricity | 9.4 | 5.5 |
June 30, 2020 | Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Level 1 | Level 2 | Level 3 | Fair Value Total | Netting (a) | Total | Level 1 | Level 2 | Level 3 | Fair Value Total | Netting (a) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current derivative assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Electric commodity | $ | — | $ | — | $ | 15.9 | $ | 15.9 | $ | (0.2) | $ | 15.7 | $ | — | $ | — | $ | 11.8 | $ | 11.8 | $ | — | $ | 11.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total current derivative assets | $ | — | $ | — | $ | 15.9 | $ | 15.9 | $ | (0.2) | 15.7 | $ | — | $ | — | $ | 11.8 | $ | 11.8 | $ | — | 11.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PPAs (b) | 3.1 | 3.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current derivative instruments | $ | 18.8 | $ | 15.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PPAs (b) | $ | 11.1 | $ | 12.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative instruments | $ | 11.1 | $ | 12.6 |
June 30, 2020 | Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Level 1 | Level 2 | Level 3 | Fair Value Total | Netting (a) | Total | Level 1 | Level 2 | Level 3 | Fair Value Total | Netting (a) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current derivative liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Electric commodity | $ | — | $ | — | $ | 0.2 | $ | 0.2 | $ | (0.2) | $ | — | $ | — | $ | — | $ | 0.1 | $ | 0.1 | $ | — | $ | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total current derivative liabilities | $ | — | $ | — | $ | 0.2 | $ | 0.2 | $ | (0.2) | — | $ | — | $ | — | $ | 0.1 | $ | 0.1 | $ | — | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PPAs (b) | 3.6 | . | 3.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current derivative instruments | $ | 3.6 | $ | 3.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PPAs (b) | $ | 11.0 | $ | 12.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative instruments | $ | 11.0 | $ | 12.8 |
Sept. 30, 2019 | Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Level 1 | Level 2 | Level 3 | Fair Value Total | Netting (a) | Total | Level 1 | Level 2 | Level 3 | Fair Value Total | Netting (a) | Total | ||||||||||||||||||||||||||||||||||||
Current derivative assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||||||||||||||||||||||||||
Electric commodity | $ | — | $ | — | $ | 17.3 | $ | 17.3 | $ | — | $ | 17.3 | $ | — | $ | — | $ | 14.9 | $ | 14.9 | $ | (0.2 | ) | $ | 14.7 | |||||||||||||||||||||||
Total current derivative assets | $ | — | $ | — | $ | 17.3 | $ | 17.3 | $ | — | 17.3 | $ | — | $ | — | $ | 14.9 | $ | 14.9 | $ | (0.2 | ) | 14.7 | |||||||||||||||||||||||||
PPAs (b) | 3.1 | 3.1 | ||||||||||||||||||||||||||||||||||||||||||||||
Current derivative instruments | $ | 20.4 | $ | 17.8 | ||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative assets | ||||||||||||||||||||||||||||||||||||||||||||||||
PPAs (b) | 13.4 | 15.8 | ||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative instruments | $ | 13.4 | $ | 15.8 | ||||||||||||||||||||||||||||||||||||||||||||
Current derivative liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||||||||||||||||||||||||||
Electric commodity | $ | — | $ | — | $ | 0.2 | $ | 0.2 | $ | — | $ | 0.2 | $ | — | $ | — | $ | 0.2 | $ | 0.2 | $ | (0.2 | ) | $ | — | |||||||||||||||||||||||
Total current derivative liabilities | $ | — | $ | — | $ | 0.2 | $ | 0.2 | $ | — | 0.2 | $ | — | $ | — | $ | 0.2 | $ | 0.2 | $ | (0.2 | ) | — | |||||||||||||||||||||||||
PPAs (b) | 3.5 | . | 3.6 | |||||||||||||||||||||||||||||||||||||||||||||
Current derivative instruments | $ | 3.7 | $ | 3.6 | ||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
PPAs (b) | 13.7 | 16.4 | ||||||||||||||||||||||||||||||||||||||||||||||
Noncurrent derivative instruments | $ | 13.7 | $ | 16.4 |
Three Months Ended Sept. 30, | ||||||||
(Millions of Dollars) | 2019 | 2018 | ||||||
Balance at July 1 | $ | 22.2 | $ | 35.4 | ||||
Purchases | 4.4 | 3.2 | ||||||
Settlements | (5.2 | ) | (10.1 | ) | ||||
Net transactions recorded during the period: | ||||||||
Net losses recognized as regulatory assets and liabilities | (4.3 | ) | (3.2 | ) | ||||
Balance at Sept. 30 | $ | 17.1 | $ | 25.3 |
Nine Months Ended Sept. 30, | ||||||||
(Millions of Dollars) | 2019 | 2018 | ||||||
Balance at Jan. 1 | $ | 14.7 | $ | 12.7 | ||||
Purchases | 25.5 | 22.5 | ||||||
Settlements | (24.9 | ) | (35.3 | ) | ||||
Net transactions recorded during the period: | ||||||||
Net gains recognized as regulatory assets and liabilities | 1.8 | 25.4 | ||||||
Balance at Sept. 30 | $ | 17.1 | $ | 25.3 |
Three Months Ended June 30 | ||||||||||||||||||||
(Millions of Dollars) | 2020 | 2019 | ||||||||||||||||||
Balance at April 1 | $ | 16.3 | $ | 3.1 | ||||||||||||||||
Purchases | 9.0 | 17.1 | ||||||||||||||||||
Settlements | (11.9) | (13.1) | ||||||||||||||||||
Net transactions recorded during the period: | ||||||||||||||||||||
Net gains recognized as regulatory assets and liabilities | 2.3 | 15.1 | ||||||||||||||||||
Balance at June 30 | $ | 15.7 | $ | 22.2 | ||||||||||||||||
Six Months Ended June 30 | ||||||||||||||||||||
(Millions of Dollars) | 2020 | 2019 | ||||||||||||||||||
Balance at Jan. 1 | $ | 11.7 | $ | 14.7 | ||||||||||||||||
Purchases | 20.8 | 21.0 | ||||||||||||||||||
Settlements | (16.8) | (19.7) | ||||||||||||||||||
Net transactions recorded during the period: | ||||||||||||||||||||
Net gains recognized as regulatory assets and liabilities | — | 6.2 | ||||||||||||||||||
Balance at June 30 | $ | 15.7 | $ | 22.2 |
Sept. 30, 2019 | Dec. 31, 2018 | |||||||||||||||
(Millions of Dollars) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Long-term debt | $ | 2,419.3 | $ | 2,763.2 | $ | 2,126.1 | $ | 2,139.8 |
June 30, 2020 | Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||||||||||||||||
Long-term debt | $ | 2,763.8 | $ | 3,249.4 | $ | 2,419.7 | $ | 2,706.1 |
8. | Benefit Plans and Other Postretirement Benefits |
Three Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||||||||||||||||||||||||||||||
Service cost | $ | 2.4 | $ | 2.2 | $ | 0.2 | $ | 0.2 | ||||||||||||||||||||||||||||||||||||
Interest cost (a) | 4.5 | 5.0 | 0.4 | 0.4 | ||||||||||||||||||||||||||||||||||||||||
Expected return on plan assets (a) | (7.4) | (7.2) | (0.5) | (0.5) | ||||||||||||||||||||||||||||||||||||||||
Amortization of prior service credit (a) | — | — | (0.1) | (0.1) | ||||||||||||||||||||||||||||||||||||||||
Amortization of net loss (gain) (a) | 3.3 | 2.9 | (0.1) | (0.1) | ||||||||||||||||||||||||||||||||||||||||
Net periodic benefit cost (credit) | 2.8 | 2.9 | (0.1) | (0.1) | ||||||||||||||||||||||||||||||||||||||||
Credits not recognized due to effects of regulation | 0.5 | 0.4 | — | — | ||||||||||||||||||||||||||||||||||||||||
Net benefit cost (credit) recognized for financial reporting | $ | 3.3 | $ | 3.3 | $ | (0.1) | $ | (0.1) |
Three Months Ended Sept. 30 | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Millions of Dollars) | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||
Service cost | $ | 2.2 | $ | 2.4 | $ | 0.2 | $ | 0.3 | ||||||||
Interest cost (a) | 5.0 | 4.6 | 0.4 | 0.4 | ||||||||||||
Expected return on plan assets (a) | (7.1 | ) | (7.1 | ) | (0.5 | ) | (0.6 | ) | ||||||||
Amortization of prior service credit (a) | — | — | (0.1 | ) | (0.1 | ) | ||||||||||
Amortization of net loss (gain) (a) | 2.8 | 3.5 | (0.1 | ) | (0.1 | ) | ||||||||||
Net periodic benefit cost (credit) | 2.9 | 3.4 | (0.1 | ) | (0.1 | ) | ||||||||||
Credits (costs) not recognized due to the effects of regulation | 0.5 | (0.4 | ) | — | — | |||||||||||
Net benefit cost (credit) recognized for financial reporting | $ | 3.4 | $ | 3.0 | $ | (0.1 | ) | $ | (0.1 | ) |
Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||||||||||||||||||||||||||||||
Service cost | $ | 4.8 | $ | 4.4 | $ | 0.5 | $ | 0.4 | ||||||||||||||||||||||||||||||||||||
Interest cost (a) | 9.0 | 10.1 | 0.7 | 0.9 | ||||||||||||||||||||||||||||||||||||||||
Expected return on plan assets (a) | (14.7) | (14.3) | (0.9) | (1.0) | ||||||||||||||||||||||||||||||||||||||||
Amortization of prior service credit (a) | (0.1) | (0.1) | (0.2) | (0.3) | ||||||||||||||||||||||||||||||||||||||||
Amortization of net loss (gain) (a) | 6.6 | 5.7 | (0.2) | (0.2) | ||||||||||||||||||||||||||||||||||||||||
Net periodic benefit cost (credit) | 5.6 | 5.8 | (0.1) | (0.2) | ||||||||||||||||||||||||||||||||||||||||
Credits not recognized due to effects of regulation | 1.0 | 0.8 | — | — | ||||||||||||||||||||||||||||||||||||||||
Net benefit cost (credit) recognized for financial reporting | $ | 6.6 | $ | 6.6 | $ | (0.1) | $ | (0.2) |
Nine Months Ended Sept. 30 | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Millions of Dollars) | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||
Service cost | $ | 6.6 | $ | 7.3 | $ | 0.7 | $ | 0.8 | ||||||||
Interest cost (a) | 15.1 | 13.8 | 1.3 | 1.2 | ||||||||||||
Expected return on plan assets (a) | (21.5 | ) | (21.2 | ) | (1.5 | ) | (1.8 | ) | ||||||||
Amortization of prior service credit (a) | (0.1 | ) | (0.1 | ) | (0.4 | ) | (0.3 | ) | ||||||||
Amortization of net loss (gain) (a) | 8.5 | 10.5 | (0.3 | ) | (0.3 | ) | ||||||||||
Net periodic benefit cost (credit) | 8.6 | 10.3 | (0.2 | ) | (0.4 | ) | ||||||||||
Credits not recognized due to the effects of regulation | 1.3 | 1.3 | — | — | ||||||||||||
Net benefit cost (credit) recognized for financial reporting | $ | 9.9 | $ | 11.6 | $ | (0.2 | ) | $ | (0.4 | ) |
9. | Commitments and Contingencies |
(Millions of Dollars) | Sept. 30, 2019 | |||
PPAs | $ | 500.3 | ||
Other | 48.0 | |||
Gross operating lease ROU assets | 548.3 | |||
Accumulated amortization | (19.3 | ) | ||
Net operating lease ROU assets | $ | 529.0 |
(Millions of Dollars) | Three Months Ended Sept. 30, 2019 | Nine Months Ended Sept. 30, 2019 | ||||||
Operating leases | ||||||||
PPA capacity payments | $ | 11.4 | $ | 36.8 | ||||
Other operating leases (a) | 1.2 | 3.7 | ||||||
Total operating lease expense (b) | $ | 12.6 | $ | 40.5 |
(Millions of Dollars) | PPA (a) (b) Operating Leases | Other Operating Leases | Total Operating Leases | |||||||||
2019 | $ | 11.6 | $ | 0.8 | $ | 12.4 | ||||||
2020 | 46.2 | 3.4 | 49.6 | |||||||||
2021 | 46.2 | 3.3 | 49.5 | |||||||||
2022 | 46.2 | 3.4 | 49.6 | |||||||||
2023 | 46.2 | 3.4 | 49.6 | |||||||||
Thereafter | 450.8 | 54.8 | 505.6 | |||||||||
Total minimum obligation | 647.2 | 69.1 | 716.3 | |||||||||
Interest component of obligation | (165.3 | ) | (22.0 | ) | (187.3 | ) | ||||||
Present value of minimum obligation | 481.9 | 47.1 | 529.0 | |||||||||
Less current portion | (26.8 | ) | ||||||||||
Noncurrent operating lease liabilities | $ | 502.2 | ||||||||||
Weighted-average remaining lease term in years | 14.3 |
(Millions of Dollars) | PPA (a) (b) Operating Leases | Other Operating Leases | Total Operating Leases | |||||||||
2019 | $ | 46.7 | $ | 5.2 | $ | 51.9 | ||||||
2020 | 46.2 | 5.2 | 51.4 | |||||||||
2021 | 46.2 | 5.1 | 51.3 | |||||||||
2022 | 46.2 | 5.1 | 51.3 | |||||||||
2023 | 46.2 | 5.1 | 51.3 | |||||||||
Thereafter | 450.8 | 56.3 | 507.1 |
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Results of Operations |
Nine Months Ended Sept. 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||
(Millions of Dollars) | 2019 | 2018 | (Millions of Dollars) | 2020 | 2019 | |||||||||||||||||||||||
Electric revenues | $ | 1,397.7 | $ | 1,468.6 | Electric revenues | $ | 818.4 | $ | 864.6 | |||||||||||||||||||
Electric fuel and purchased power | (651.0 | ) | (795.6 | ) | Electric fuel and purchased power | (386.6) | (410.8) | |||||||||||||||||||||
Electric margin | $ | 746.7 | $ | 673.0 | Electric margin | $ | 431.8 | $ | 453.8 |
(Millions of Dollars) | 2020 vs 2019 | |||||||
PTCs flowed back to customers (offset by a lower ETR) | $ | (26.4) | ||||||
Firm wholesale generation | (10.7) | |||||||
New Mexico tax reform related regulatory settlement (2019) | (10.2) | |||||||
Sales and demand (a) | (5.8) | |||||||
Wholesale transmission revenue (net) | 13.8 | |||||||
Purchased capacity costs | 10.5 | |||||||
Estimated impact of weather | 6.4 | |||||||
Regulatory rate outcomes (New Mexico) | 4.1 | |||||||
Other (net) | (3.7) | |||||||
Total decrease in electric margin | $ | (22.0) |
(Millions of Dollars) | 2019 vs 2018 | |||
Purchased capacity costs | $ | 31.9 | ||
Regulatory rate outcomes | 23.7 | |||
Demand revenue | 19.2 | |||
Wholesale transmission, net | 14.5 | |||
Non-fuel riders | 9.8 | |||
Retail sales growth | 3.4 | |||
Firm wholesale | (16.9 | ) | ||
PTC sharing | (4.4 | ) | ||
Estimated weather impact | (4.2 | ) | ||
Other, net | (3.3 | ) | ||
Total increase in electric margin | $ | 73.7 |
Public Utility Regulation |
Mechanism | Utility Service | Amount Requested (in millions) | Filing Date | Approval | Additional Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NMPRC | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rate Case | Electric | $31 | July 2019 | Received | In July 2019, SPS filed an electric rate case with the NMPRC seeking an increase in retail electric base rates of approximately $51 million. The rate request was based on an ROE of 10.35%, an equity ratio of 54.77%, a rate base of approximately $1.3 billion and a historic test year with rate base additions through Aug. 31, 2019. In December 2019, SPS revised its base rate increase request to approximately $47 million, based on a ROE of 10.10% and updated information. The request also included an increase of $14.6 million for accelerated depreciation including the early retirement of the Tolk coal plant in 2032. On Jan. 13, 2020, SPS and various parties filed an uncontested comprehensive stipulation. The stipulation includes a base rate revenue increase of $31 million, based on an ROE of 9.45% and an equity ratio of 54.77%. The stipulation also includes an acceleration of depreciation on the Tolk coal plant to reflect early retirement in 2037, which results in a total increase in depreciation expense of $8 million. The parties to the stipulation agreed not to oppose the full application of depreciation rates associated with the 2032 retirement date in SPS’ next base rate case. On May 11, 2020, the Hearing Examiner issued a Certification of Stipulation recommending approval of the uncontested comprehensive stipulation without modification. On May 20, 2020, the NMPRC approved the stipulation without modification. New rates and tariffs were effective beginning May 28, 2020. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PUCT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rate Case | Electric | $141 | August 2019 | Pending | In August 2019, SPS filed an electric rate case with the PUCT seeking an increase in retail electric base rates of approximately $141 million. The filing requests an ROE of 10.35%, a 54.65% equity ratio, rate base of approximately $2.6 billion and utilizes a historic 12 month period that ended June 30, 2019. SPS’ request was subsequently revised in March 2020 to approximately $130 million, based on a requested ROE of 10.1%, a 54.62% equity ratio, rate base of approximately $2.6 billion and historic test year ended June 30, 2019. On May 20, 2020, SPS, the PUCT Staff and various intervenors reached an uncontested settlement, which includes: •An electric rate increase of $88 million and a reset of the Transmission Cost Recovery Factor to zero; •ROE of 9.45% and equity ratio of 54.62% for allowance for funds used during construction purposes; •Depreciation rates: ◦Tolk - 2037 end-of-life date; ◦Hale - 25-year end-of-life date; ◦All other generating units - end-of-life dates as proposed by SPS; and ◦Transmission - 35% of the incremental change between existing depreciation rates and rates proposed by SPS. •Ring-fencing measures like those in other recent PUCT settlements, including: ◦Credit agreements and indentures (e.g., no cross-default provisions); ◦Financial covenants; ◦Restrictions on pledging of assets and securing debt; ◦Maintaining stand-alone credit facility and ratings; and ◦Affiliate and non-affiliate limitations. Final rates are expected to be retroactively applied as of Sept. 12, 2019. A decision from the PUCT is anticipated in the third quarter of 2020. |
Revenue Request (Millions of Dollars) | ||||
Hale Wind Farm | $ | 62 | ||
Capital investments | 47 | |||
Depreciation rate change (including Tolk) | 34 | |||
Cost of capital | 10 | |||
Expiring purchased power contracts | (28 | ) | ||
Other, net | 11 | |||
New revenue request | $ | 136 |
Revenue Request (Millions of Dollars) | ||||
Hale Wind Farm | $ | 28 | ||
Other plant investment | 22 | |||
Wholesale sales reduction | 17 | |||
Allocator changes due to load growth | 15 | |||
Depreciation rate change (including Tolk) | 15 | |||
Base rate sales growth | (41 | ) | ||
Other, net | (5 | ) | ||
New revenue request | $ | 51 |
Environmental |
ITEM 4 — CONTROLS AND PROCEDURES |
ITEM 1 — LEGAL PROCEEDINGS |
ITEM 1A — RISK FACTORS |
ITEM 6 — EXHIBITS |
Exhibit Number | Description | Report or Registration Statement | SEC File or Registration Number | Exhibit Reference | |||||||||||||||||||
3.01* | SPS Form 10-Q for the quarter ended Sept. 30, 2017 | 001-03789 | 3.01 | ||||||||||||||||||||
3.02* | SPS Form 10-K for the year ended Dec. 31, 2018 | 001-03789 | 3.02 | ||||||||||||||||||||
4.01 | SPS Form 8-K dated May 18, 2020 | 001-03789 | 4.02 | ||||||||||||||||||||
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) |
Southwestern Public Service Company | ||||||||
July 31, 2020 | By: | |||||||
/s/ JEFFREY S. SAVAGE | ||||||||
Jeffrey S. Savage | ||||||||
Senior Vice President, Controller | ||||||||
(Principal Accounting Officer) | ||||||||
/s/ | ||||||||
Executive Vice President, Chief Financial Officer and Director | ||||||||
(Principal Financial Officer) |