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, 2023~~March 31, 2024


☐			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: 001-31387


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

Minnesota

41-1967505

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

414 Nicollet Mall

Minneapolis

Minnesota

55401

(Address of Principal Executive Offices)

(Zip Code)


	(612)	330-5500
(Registrant’s Telephone Number, Including Area Code)


N/A
(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/A

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

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

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

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

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

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

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


Class						Outstanding at ~~October 27, 2023~~April 25, 2024
Common Stock, $0.01 par value						1,000,000 shares

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

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION
Item 1 —	Financial Statements (Unaudited)	4
	Consolidated Statements of Income	4
	Consolidated Statements of 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	2018
Item 4 —	Controls and Procedures	2321

PART II	OTHER INFORMATION
Item 1 —	Legal Proceedings	2321
Item 1A —	Risk Factors	2321
Item 5 —	Other Information	2321
Item 6 —	Exhibits	2321

SIGNATURES		2422

This Form 10-Q is filed by NSP-Minnesota. NSP-Minnesota is a wholly owned subsidiary of Xcel Energy Inc. Additional information on Xcel Energy is available in various filings with the SEC. This report should be read in its entirety.

Definitions of Abbreviations


Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former)
NSP-Minnesota			Northern States Power Company, a Minnesota corporation
NSP System			The electric production and transmission system of NSP-Minnesota and NSP-Wisconsin operated on an integrated basis and managed by NSP-Minnesota
NSP-Wisconsin			Northern States Power Company, a Wisconsin corporation
PSCo			Public Service Company of Colorado
SPS			Southwestern Public Service Company
Utility subsidiaries			NSP-Minnesota, NSP-Wisconsin, PSCo and SPS
Xcel Energy			Xcel Energy Inc. and its subsidiaries

Federal and State Regulatory Agencies
D.C. Circuit			United States Court of Appeals for the District of Columbia Circuit
DOC			Minnesota Department of Commerce
EPA			United States Environmental Protection Agency
FERC			Federal Energy Regulatory Commission
MPUC			Minnesota Public Utilities Commission
NDPSC			North Dakota Public Service Commission
OAG			Minnesota Office of Attorney General
SEC			Securities and Exchange Commission
SDPUC			South Dakota Public Utilities Commission







Other
ALJ			Administrative Law Judge

C&I			Commercial and Industrial
CCR			Coal combustion residuals
CCR Rule			Final rule (40 CFR 257.50 - 257.107) published by the EPA regulating the management, storage and disposal of CCRs as nonhazardous waste
CEO			Chief executive officer
CERCLA			Comprehensive Environmental Response, Compensation, and Liability Act
CFO			Chief financial officer
CSPV			Crystalline Silicon Photovoltaic
CUB			Citizens Utility Board
ETR			Effective tax rate
FTR			Financial transmission right
GAAP			United States generally accepted accounting principles
GE			General Electric Company
IPP			Independent power producing entity


MGP			Manufactured gas plant
MISO			Midcontinent Independent System Operator, Inc.
NAV			Net asset value
NOx			Nitrogen Oxides
O&M			Operating and maintenance
PFAS			Per- and Polyfluoroalkyl Substances
PPA			Power purchase agreement
PTC			Production tax credit
RFP			Request for proposal
ROE			Return on equity
RTO			Regional Transmission Organization
SMMPA			Southern Minnesota Municipal Power Agency
~~TOs~~			~~Transmission owners~~

Measurements
MW			Megawatts


Forward-Looking Statements

Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impact on our results of operations, financial condition and cash flows of resettlement calculations and credit losses relating to certain energy transactions, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in NSP-Minnesota’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, ~~2022,~~2023 and subsequent filings with the SEC, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: operational safety, including our nuclear generation facilities and other utility operations; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee workforce and third-party contractor factors; violations of our Codes of Conduct; our ability to recover costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including recessionary conditions, inflation rates, monetary fluctuations, supply chain constraints and their impact on capital expenditures and/or the ability of NSP-Minnesota to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; tax laws; uncertainty regarding epidemics, the duration and magnitude of business restrictions including shutdowns (domestically and globally), the potential impact on the workforce, including shortages of employees or third-party contractors due to quarantine policies, vaccination requirements or government restrictions, impacts on the transportation of goods and the generalized impact on the economy; effects of geopolitical events, including war and acts of terrorism; cybersecurity threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather events; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; costs of potential regulatory penalties and wildfire damages in excess of liability insurance coverage; regulatory changes and/or limitations related to the use of natural gas as an energy source; challenging labor market conditions and our ability to attract and retain a qualified workforce; and our ability to execute on our strategies or achieve expectations related to environmental, social and governance matters including as a result of evolving legal, regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets.

Table of Contents

PART I — FINANCIAL INFORMATION


ITEM 1 — FINANCIAL STATEMENTS

NSP-MINNESOTA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(amounts in millions)


		Three Months Ended Sept. 30				Nine Months Ended Sept. 30
		2023		2022		2023		2022
		Three Months Ended March 31
		Three Months Ended March 31
		Three Months Ended March 31
		2024
		2024
		2024
Operating revenues
Operating revenues
Operating revenues	Operating revenues
Electric, non-affiliates	Electric, non-affiliates	$	1,383	$	1,598	$	3,590	$	3,914
Electric, non-affiliates
Electric, non-affiliates
Electric, affiliates
Electric, affiliates
Electric, affiliates	Electric, affiliates	130		132		368		394
Natural gas	Natural gas	65		102		563		703
Natural gas
Natural gas
Other	Other	13		12		35		33
Other
Other
Total operating revenues
Total operating revenues
Total operating revenues	Total operating revenues	1,591		1,844		4,556		5,044

Operating expenses	Operating expenses

Operating expenses

Operating expenses
Electric fuel and purchased power
Electric fuel and purchased power
Electric fuel and purchased power	Electric fuel and purchased power	570		750		1,593		1,857
Cost of natural gas sold and transported	Cost of natural gas sold and transported	22		65		364		510
Cost of natural gas sold and transported
Cost of natural gas sold and transported
Cost of sales — other
Cost of sales — other
Cost of sales — other	Cost of sales — other	8		7		22		19
Operating and maintenance expenses	Operating and maintenance expenses	306		305		957		915
Operating and maintenance expenses
Operating and maintenance expenses
Conservation program expenses
Conservation program expenses
Conservation program expenses	Conservation program expenses	27		45		83		135
Depreciation and amortization	Depreciation and amortization	249		256		713		759
Depreciation and amortization
Depreciation and amortization
Taxes (other than income taxes)	Taxes (other than income taxes)	62		69		172		210
Taxes (other than income taxes)
Taxes (other than income taxes)
Total operating expenses
Total operating expenses
Total operating expenses	Total operating expenses	1,244		1,497		3,904		4,405

Operating income	Operating income	347		347		652		639

Other expense, net		(7)		(4)		(5)		(9)
Operating income

Operating income

Other income, net

Other income, net

Other income, net
Allowance for funds used during construction — equity
Allowance for funds used during construction — equity
Allowance for funds used during construction — equity	Allowance for funds used during construction — equity	9		9		26		21

Interest charges and financing costs	Interest charges and financing costs
Interest charges — includes other financing costs of $2, $2, $6 and $6, respectively		81		75		241		216

Interest charges and financing costs

Interest charges and financing costs
Interest charges and other financing costs
Interest charges and other financing costs
Interest charges and other financing costs
Allowance for funds used during construction — debt	Allowance for funds used during construction — debt	(5)		(4)		(15)		(9)
Allowance for funds used during construction — debt
Allowance for funds used during construction — debt
Total interest charges and financing costs
Total interest charges and financing costs
Total interest charges and financing costs	Total interest charges and financing costs	76		71		226		207

Income before income taxes	Income before income taxes	273		281		447		444
Income tax expense (benefit)		13		12		(79)		(70)

Income before income taxes

Income before income taxes
Income tax benefit
Income tax benefit
Income tax benefit
Net income	Net income	$	260	$	269	$	526	$	514
Net income
Net income

See Notes to Consolidated Financial Statements

Table of Contents

NSP-MINNESOTA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in millions)


		Three Months Ended Sept. 30				Nine Months Ended Sept. 30
		2023		2022		2023		2022
		Three Months Ended March 31
		Three Months Ended March 31
		Three Months Ended March 31
		2024
		2024
		2024
Net income	Net income	$	260	$	269	$	526	$	514
Net income
Net income
Other comprehensive income
Other comprehensive income
Other comprehensive income	Other comprehensive income

Derivative instruments:	Derivative instruments:
Net fair value increase net of tax of $—, $—, $2 and $— respectively		—		—		3		—
Reclassification of losses to net income, net of tax of $—		$	1	$	—	1		—

Derivative instruments:

Derivative instruments:
Net fair value increase (decrease), net of tax
Net fair value increase (decrease), net of tax
Net fair value increase (decrease), net of tax

Total other comprehensive income

Total other comprehensive income

Total other comprehensive income	Total other comprehensive income	1		—		4		—
Total comprehensive income	Total comprehensive income	$	261	$	269	$	530	$	514
Total comprehensive income
Total comprehensive income

See Notes to Consolidated Financial Statements

Table of Contents

NSP-MINNESOTA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)

Nine Months Ended Sept. 30

2023

2022

Three Months Ended March 31

2024

Operating activities

Net income

526

514

Net income

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization

717

765

Depreciation and amortization

Nuclear fuel amortization

Deferred income taxes

(167)

Deferred income taxes

Allowance for equity funds used during construction

(26)

(21)

Provision for bad debts

Changes in operating assets and liabilities:

Accounts receivable

(19)

(56)

Accounts receivable

Accrued unbilled revenues

117

Inventories

(107)

Inventories

Other current assets

(11)

Accounts payable

(97)

Accounts payable

Net regulatory assets and liabilities

307

325

Other current liabilities

Pension and other employee benefit obligations

(17)

(9)

Other, net

Net cash provided by operating activities

1,766

1,567

Investing activities

Capital/construction expenditures

(1,668)

(1,293)

Purchase of investment securities

(704)

(1,055)

Purchase of investment securities

Proceeds from the sale of investment securities

678

1,029

Investments in utility money pool arrangement

(200)

(1,426)

Investments in utility money pool arrangement

Repayments from utility money pool arrangement

200

1,408

Other, net

(2)

Other, net

Net cash used in investing activities

(1,696)

(1,332)

Financing activities

Repayments of short-term borrowings, net

(207)

—

Borrowings under utility money pool arrangement

189

—

Borrowings under utility money pool arrangement

Repayments under utility money pool arrangement

(189)

—

Proceeds from issuance of long-term debt

783

489

Repayment of long-term debt

(400)

(300)

Proceeds from issuance of long-term debt

Capital contributions from parent

251

Capital contributions from parent

Dividends paid to parent

(413)

(442)

Net cash provided by (used in) financing activities

(249)

Net cash provided by (used in) financing activities

Net change in cash, cash equivalents and restricted cash

(14)

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

149

Supplemental disclosure of cash flow information:

Cash paid for interest (net of amounts capitalized)

(205)

(198)

Cash received from (paid for) income taxes, net

(53)

Cash paid for interest (net of amounts capitalized)

Cash received from (paid for) income taxes, net; includes proceeds from tax credit transfers

Supplemental disclosure of non-cash investing and financing transactions:

Accrued property, plant and equipment additions

163

162

Accrued property, plant and equipment additions

Inventory transfers to property, plant and equipment

Operating lease right-of-use assets

Allowance for equity funds used during construction

See Notes to Consolidated Financial Statements

Table of Contents

NSP-MINNESOTA AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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


			Sept. 30, 2023		Dec. 31, 2022
		March 31, 2024					March 31, 2024	Dec. 31, 2023
Assets	Assets
Current assets	Current assets
Current assets
Current assets
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents		$	149	$	65
Accounts receivable, net	Accounts receivable, net		508		534
Accounts receivable from affiliates	Accounts receivable from affiliates		27		45

Investments in money pool arrangements
Accrued unbilled revenues	Accrued unbilled revenues		256		372
Inventories	Inventories		336		384
Regulatory assets	Regulatory assets		259		384
Derivative instruments	Derivative instruments		66		89

Prepayments and other	Prepayments and other		82		62
Prepayments and other
Prepayments and other
Total current assets	Total current assets		1,683		1,935

Property, plant and equipment, net	Property, plant and equipment, net		18,300		17,478
Property, plant and equipment, net
Property, plant and equipment, net

Other assets	Other assets
Other assets
Other assets
Nuclear decommissioning fund and other investments
Nuclear decommissioning fund and other investments
Nuclear decommissioning fund and other investments	Nuclear decommissioning fund and other investments		3,063		2,930
Regulatory assets	Regulatory assets		831		894
Derivative instruments	Derivative instruments		58		68
Operating lease right-of-use assets	Operating lease right-of-use assets		307		324
Other	Other		19		29
Total other assets	Total other assets		4,278		4,245
Total assets	Total assets		$	24,261	$	23,658

Liabilities and Equity	Liabilities and Equity
Liabilities and Equity
Liabilities and Equity
Current liabilities	Current liabilities
Current portion of long-term debt			$	—	$	400
Current liabilities
Current liabilities

Short-term debt

Short-term debt

Short-term debt	Short-term debt		—		207
Accounts payable	Accounts payable		521		619
Accounts payable to affiliates	Accounts payable to affiliates		59		89
Regulatory liabilities	Regulatory liabilities		248		191
Taxes accrued	Taxes accrued		255		272
Accrued interest	Accrued interest		91		79
Dividends payable to parent	Dividends payable to parent		135		122
Derivative instruments	Derivative instruments		46		42
Operating lease liabilities	Operating lease liabilities		98		98
Other	Other		369		227
Total current liabilities	Total current liabilities		1,822		2,346

Deferred credits and other liabilities	Deferred credits and other liabilities
Deferred credits and other liabilities
Deferred credits and other liabilities
Deferred income taxes
Deferred income taxes
Deferred income taxes	Deferred income taxes		1,735		1,666
Deferred investment tax credits	Deferred investment tax credits		14		15
Regulatory liabilities	Regulatory liabilities		2,068		1,983
Asset retirement obligations	Asset retirement obligations		2,658		2,727
Derivative instruments	Derivative instruments		81		102
Pension and employee benefit obligations	Pension and employee benefit obligations		138		155
Operating lease liabilities	Operating lease liabilities		233		256
Other	Other		31		30
Total deferred credits and other liabilities	Total deferred credits and other liabilities		6,958		6,934

Commitments and contingencies	Commitments and contingencies
Commitments and contingencies
Commitments and contingencies
Capitalization
Capitalization
Capitalization	Capitalization
Long-term debt	Long-term debt		7,329		6,542
Common stock — 5,000,000 shares authorized of $0.01 par value; 1,000,000 shares outstanding at Sept. 30, 2023 and Dec. 31, 2022, respectively			—		—
Long-term debt
Long-term debt
Common stock — 5,000,000 shares authorized of $0.01 par value; 1,000,000 shares outstanding at March 31, 2024 and Dec. 31, 2023, respectively
Additional paid in capital	Additional paid in capital		5,585		5,374
Retained earnings	Retained earnings		2,581		2,480
Accumulated other comprehensive loss	Accumulated other comprehensive loss		(14)		(18)
Total common stockholder's equity	Total common stockholder's equity		8,152		7,836
Total liabilities and equity	Total liabilities and equity		$	24,261	$	23,658

See Notes to Consolidated Financial Statements

Table of Contents

NSP-MINNESOTA 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, 2023 and 2022
Balance at June 30, 2022		1,000,000	$	—	$	5,213	$	2,355	$	(20)	$	7,548
	Common Stock Issued												Common Stock Issued		Retained Earnings	Accumulated Other Comprehensive Loss	Total Common Stockholder's Equity
	Shares
Three Months Ended March 31, 2024 and 2023
Three Months Ended March 31, 2024 and 2023
Three Months Ended March 31, 2024 and 2023
Balance at Dec. 31, 2022
Balance at Dec. 31, 2022
Balance at Dec. 31, 2022
Net income	Net income						269				269

Dividends declared to parent							(182)				(182)

Balance at Sept. 30, 2022		1,000,000	$	—	$	5,213	$	2,442	$	(20)	$	7,635

Balance at June 30, 2023		1,000,000	$	—	$	5,585	$	2,502	$	(15)	$	8,072
Net income							260				260
Other comprehensive income									1		1
Dividends declared to parent							(181)				(181)

Balance at Sept. 30, 2023		1,000,000	$	—	$	5,585	$	2,581	$	(14)	$	8,152

		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, 2023 and 2022
Balance at Dec. 31, 2021		1,000,000	$	—	$	5,202	$	2,391	$	(20)	$	7,573
Net income							514				514

Other comprehensive loss
Dividends declared to parent	Dividends declared to parent						(463)				(463)
Contribution of capital by parent	Contribution of capital by parent				11						11
Balance at March 31, 2023

Balance at Sept. 30, 2022		1,000,000	$	—	$	5,213	$	2,442	$	(20)	$	7,635

Balance at Dec. 31, 2022		1,000,000	$	—	$	5,374	$	2,480	$	(18)	$	7,836
Balance at Dec. 31, 2023
Balance at Dec. 31, 2023
Balance at Dec. 31, 2023
Net income	Net income						526				526
Other comprehensive income	Other comprehensive income								4		4
Dividends declared to parent	Dividends declared to parent						(425)				(425)
Contribution of capital by parent	Contribution of capital by parent				211						211
Balance at Sept. 30, 2023		1,000,000	$	—	$	5,585	$	2,581	$	(14)	$	8,152
Balance at March 31, 2024
														See Notes to Consolidated Financial Statements
See Notes to Consolidated Financial Statements

See Notes to Consolidated Financial Statements

Table of Contents

NSP-MINNESOTA AND SUBSIDIARIES

Notes to Consolidated Financial Statements (UNAUDITED)

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly, in accordance with GAAP, the financial position of NSP-Minnesota and its subsidiaries as of ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022;~~2023; the results of NSP-Minnesota’s operations, including the components of net income and comprehensive income, cash flows and changes in stockholder’s equity for the three ~~and nine~~ months ended ~~Sept. 30, 2023~~March 31, 2024 and ~~2022; and NSP-Minnesota’s cash flows for the nine months ended Sept. 30, 2023 and 2022.~~2023.

All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after ~~Sept. 30, 2023~~March 31, 2024 up to the date of issuance of these consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, ~~2022~~2023 balance sheet information has been derived from the audited ~~2022~~2023 consolidated financial statements included in the NSP-Minnesota Annual Report on Form 10-K for the year ended Dec. 31, ~~2022.~~2023.

Notes to the consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the consolidated financial statements and notes thereto included in the NSP-Minnesota Annual Report on Form 10-K for the year ended Dec. 31, ~~2022,~~2023, filed with the SEC on Feb. ~~23, 2023.~~21, 2024. Due to the seasonality of NSP-Minnesota’s electric and natural gas sales, interim results are not necessarily an appropriate base from which to project annual results.


1. Summary of Significant Accounting Policies

The significant accounting policies set forth in Note 1 to the consolidated financial statements in the NSP-Minnesota Annual Report on Form 10-K for the year ended Dec. 31, ~~2022~~2023 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.


2. Accounting Pronouncements

Recently Issued

~~As of~~Segment Reporting ~~Sept. 30,~~— In November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, ~~there was no~~which extends the existing requirements for annual disclosures to quarterly periods, and requires that both annual and quarterly disclosures present segment expenses using line items consistent with information regularly provided to the chief operating decision maker. The ASU is effective for annual periods beginning after Dec. 15, 2023 and quarterly periods beginning after Dec. 15, 2024, and Xcel Energy does not expect implementation of the new disclosure guidance to have a material impact ~~from~~to its consolidated financial statements.

Income Taxes — In December 2023, the ~~recent adoption~~FASB issued ASU 2023-09 –Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, with new disclosure requirements including presentation of prescribed line items in the effective tax rate reconciliation and disclosures regarding state and local tax payments. The ASU is effective for annual periods beginning after Dec. 15, 2024, and Xcel Energy does not expect implementation of the new ~~accounting pronouncements, nor expected~~disclosure guidance to have a material impact ~~from recently~~to its consolidated financial statements.

Climate-Related Disclosures — In March 2024, the SEC issued ~~accounting pronouncements yet~~Final Rule 33-11275 – The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule requires registrants to ~~be adopted,~~provide standardized disclosures in Form 10-K related to climate-related risks, Scope 1 and 2 greenhouse gas emissions, as well as to include in a footnote to the consolidated financial statements the financial impact of severe weather events and other natural conditions. The rule requires implementation in phases between 2025 and 2033. In April 2024, the SEC announced that it would voluntarily stay its final climate disclosure rules pending judicial review. Xcel Energy does not expect implementation of the new guidance to have a material impact on ~~NSP-Minnesota’s~~the consolidated financial statements.


3. Selected Balance Sheet Data

(Millions of Dollars)

Sept. 30, 2023

Dec. 31, 2022

(Millions of Dollars)

March 31, 2024

Dec. 31, 2023

Accounts receivable, net

Accounts receivable

554

580

Accounts receivable

Less allowance for bad debts

(46)

Accounts receivable, net

508

534

(Millions of Dollars)

Sept. 30, 2023

Dec. 31, 2022

(Millions of Dollars)

March 31, 2024

Dec. 31, 2023

Inventories

Materials and supplies

214

200

Materials and supplies

Fuel

103

Natural gas

Total inventories

336

384


(Millions of Dollars)	(Millions of Dollars)	Sept. 30, 2023		Dec. 31, 2022		(Millions of Dollars)	March 31, 2024	Dec. 31, 2023
Property, plant and equipment, net	Property, plant and equipment, net
Electric plant
Electric plant
Electric plant	Electric plant	$	20,716	$	20,114
Natural gas plant	Natural gas plant	2,216		2,100
Common and other property	Common and other property	1,298		1,156
Plant to be retired (a)	Plant to be retired (a)	616		646
Construction work in progress	Construction work in progress	1,133		907
Total property, plant and equipment	Total property, plant and equipment	25,979		24,923
Less accumulated depreciation	Less accumulated depreciation	(7,986)		(7,734)
Nuclear fuel	Nuclear fuel	3,282		3,183
Less accumulated amortization	Less accumulated amortization	(2,975)		(2,894)
Property, plant and equipment, net	Property, plant and equipment, net	$	18,300	$	17,478

(a)Amounts include ~~regulator-approved retirements of~~ Sherco ~~Units~~ 1 2,and 3 and A.S. King. ~~Amounts are reported~~Balance is presented net of accumulated depreciation.

~~Revenue subject to refund of $218 million and $67 million as of Sept. 30, 2023 and Dec. 31, 2022, respectively, is included in other current liabilities.~~


4. Borrowings and Other Financing Instruments

Short-Term Borrowings

NSP-Minnesota 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 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 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.

Table of Contents

Money pool borrowings:

(Amounts in Millions, Except Interest Rates)

Three Months Ended Sept. 30, 2023

Year Ended Dec. 31, 2022

(Amounts in Millions, Except Interest Rates)

Three Months Ended March 31, 2024

Year Ended Dec. 31, 2023

Borrowing limit

250

Amount outstanding at period end

—

Average amount outstanding

—

Maximum amount outstanding

—

Weighted average interest rate, computed on a daily basis

N/A

3.87

Weighted average interest rate, computed on a daily basis

5.33

4.97

Weighted average interest rate at period end

N/A

Weighted average interest rate at period end

N/A

Commercial Paper — Commercial paper outstanding:


(Amounts in Millions, Except Interest Rates)	(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2023		Year Ended Dec. 31, 2022			(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2024		Year Ended Dec. 31, 2023
Borrowing limit	Borrowing limit	$	700	$	700
Amount outstanding at period end	Amount outstanding at period end	—		207
Average amount outstanding	Average amount outstanding	—		21
Maximum amount outstanding	Maximum amount outstanding	—		290
Weighted average interest rate, computed on a daily basis	Weighted average interest rate, computed on a daily basis	N/A		4.14		%	Weighted average interest rate, computed on a daily basis	5.49	%	4.99	%
Weighted average interest rate at period end	Weighted average interest rate at period end	N/A		4.64

Letters of Credit — NSP-Minnesota uses letters of credit, generally with terms of one year, to provide financial guarantees for certain obligations. There were $15 million of letters of credit outstanding under the credit facility at both ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022.~~2023. Amounts approximate their fair value and are subject to fees.

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

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

At ~~Sept. 30, 2023,~~March 31, 2024, NSP-Minnesota had the following committed revolving credit facility available (in millions of dollars):


Credit Facility (a)		Drawn (b)		Available
$	700	$	15	$	685

(a)Expires in September 2027.

(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. NSP-Minnesota had no direct advances on the credit facility outstanding at ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022.~~2023.

Bilateral Credit Agreement — In April ~~2023,~~2024, NSP-Minnesota’s uncommitted bilateral credit agreement was renewed for an additional one-year term. The credit agreement is limited in use to support letters of credit.

As of ~~Sept. 30, 2023,~~March 31, 2024, NSP-Minnesota had ~~$56~~$65 million of outstanding letters of credit under the $75 million bilateral credit agreement.

Long-Term Borrowings

During the ~~nine~~three months ended ~~Sept. 30, 2023,~~March 31, 2024, NSP-Minnesota issued ~~$800~~$700 million of ~~5.10%~~5.40% first mortgage bonds due ~~May~~March 15, ~~2053.~~2054.


5. Revenues

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


			Three Months Ended Sept. 30, 2023
		Three Months Ended March 31, 2024													Three Months Ended March 31, 2024
(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		$	445	$	28	$	11	$	484
C&I	C&I		664		26		—		690
Other	Other		9		—		2		11
Total retail	Total retail		1,118		54		13		1,185
Wholesale	Wholesale		103		—		—		103
Transmission	Transmission		72		—		—		72
Interchange and other			130		4		—		134

Interchange
Other
Total revenue from contracts with customers	Total revenue from contracts with customers		1,423		58		13		1,494
Alternative revenue and other	Alternative revenue and other		90		7		—		97
Total revenues	Total revenues		$	1,513	$	65	$	13	$	1,591


			Three Months Ended Sept. 30, 2022
		Three Months Ended March 31, 2023													Three Months Ended March 31, 2023
(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		$	441	$	37	$	10	$	488
C&I	C&I		714		43		—		757
Other	Other		10		—		2		12
Total retail	Total retail		1,165		80		12		1,257
Wholesale	Wholesale		242		—		—		242
Transmission	Transmission		101		—		—		101
Interchange and other	Interchange and other		140		10		—		150

Total revenue from contracts with customers	Total revenue from contracts with customers		1,648		90		12		1,750
Total revenue from contracts with customers
Total revenue from contracts with customers
Alternative revenue and other	Alternative revenue and other		82		12		—		94
Total revenues	Total revenues		$	1,730	$	102	$	12	$	1,844

Nine Months Ended Sept. 30, 2023
(Millions of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 1,120 $ 277 $ 30 $ 1,427
C&I 1,724 239 — 1,963
Other 26 — 5 31
Total retail 2,870 516 35 3,421
Wholesale 287 — — 287
Transmission 202 — — 202
Interchange and other 364 9 — 373
Total revenue from contracts with customers 3,723 525 35 4,283
Alternative revenue and other 235 38 — 273
Total revenues $ 3,958 $ 563 $ 35 $ 4,556

~~Table of Contents~~

Nine Months Ended Sept. 30, 2022
(Millions of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 1,116 $ 348 $ 19 $ 1,483
C&I 1,816 299 — 2,115
Other 29 — 14 43
Total retail 2,961 647 33 3,641
Wholesale 505 — — 505
Transmission 225 — — 225
Interchange and other 403 15 — 418
Total revenue from contracts with customers 4,094 662 33 4,789
Alternative revenue and other 214 41 — 255
Total revenues $ 4,308 $ 703 $ 33 $ 5,044


6. Income Taxes

Reconciliation between the statutory rate and ETR:


			Nine Months Ended Sept. 30
			2023		2022
		Three Months Ended March 31											Three Months Ended March 31
		2024								2024				2023
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)		7.0		7.0
(Decreases) increases:	(Decreases) increases:
Wind PTCs (a)
Wind PTCs (a)
Wind PTCs (a)	Wind PTCs (a)		(39.5)		(35.9)
Plant regulatory differences (b)	Plant regulatory differences (b)		(5.9)		(7.0)
Other tax credits, net operating loss & tax credit allowances	Other tax credits, net operating loss & tax credit allowances		(1.3)		(1.3)

Other (net)	Other (net)		1.0		0.4
Other (net)
Other (net)
Effective income tax rate	Effective income tax rate		(17.7)	%	(15.8)	%	Effective income tax rate	(12.2)	%		(43.3)	%

(a)Wind PTCs net of estimated transfer discounts are credited to customers (reduction to revenue) and do not materially impact net income.

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

Table of Contents


7. Fair Value of Financial Assets and Liabilities

Fair Value Measurements

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

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

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

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

Specific valuation methods include:

Investments in equity securities and other funds — Equity securities are valued using quoted prices in active markets. The fair values for commingled funds are measured using NAVs. The investments in commingled funds may be redeemed for NAV with proper notice. Private equity commingled funds require approval of the fund for any unscheduled redemption, and such redemptions may be approved or denied by the fund at its sole discretion. Unscheduled distributions from real estate commingled funds may be redeemed with proper notice, however, withdrawals may be delayed or discounted as a result of fund illiquidity.

Investments in debt securities — Fair values for debt securities are determined by a third party pricing service using recent trades and observable spreads from benchmark interest rates for similar securities.

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

Commodity derivatives — Methods used to measure the fair value of commodity derivative forwards and options utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations, and are generally assigned a Level 2 classification.

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

Electric commodity derivatives held by NSP-Minnesota include transmission congestion instruments, generally referred to as FTRs. FTRs purchased from an RTO are financial instruments that entitle or obligate the holder to monthly revenues or charges based on transmission congestion across a given transmission path.

The values of these instruments are derived from, and designed to offset, the costs of transmission congestion. In addition to overall transmission load, congestion is also influenced by the operating schedules of power plants and the consumption of electricity pertinent to a given transmission path. Unplanned plant outages, scheduled plant maintenance, changes in the relative costs of fuels used in generation, weather and overall changes in demand for electricity can each impact the operating schedules of the power plants on the transmission grid and the value of these instruments.

FTRs are recognized at fair value and adjusted each period prior to settlement. Given the limited observability of certain variables underlying the reported auction values of FTRs, these fair value measurements have been assigned a Level 3 classification.

Net congestion costs, including the impact of FTR settlements are shared through fuel and purchased energy cost recovery mechanisms. As such, the fair value of the unsettled instruments (i.e., derivative asset or liability) is offset/deferred as a regulatory asset or liability.

~~Table of Contents~~

Non-Derivative Fair Value Measurements

The Nuclear Regulatory Commission requires NSP-Minnesota to maintain a portfolio of investments to fund the costs of decommissioning its nuclear generating plants. Assets of the nuclear decommissioning fund are legally restricted for the purpose of decommissioning these facilities. The fund contains cash equivalents, debt securities, equity securities and other investments. NSP-Minnesota uses the MPUC approved asset allocation for the investment targets by asset class for the qualified trust.

NSP-Minnesota recognizes the costs of funding the decommissioning over the lives of the nuclear plants, assuming rate recovery of all costs. Realized and unrealized gains on fund investments over the life of the fund are deferred as an offset of NSP-Minnesota’s regulatory asset for nuclear decommissioning costs. Consequently, any realized and unrealized gains and losses on securities in the nuclear decommissioning fund are deferred as a component of the ~~regulatory asset.~~associated nuclear decommissioning costs.

Unrealized gains for the nuclear decommissioning fund were ~~$1.1~~$1.3 billion and $1$1.2 billion as of ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022,~~2023, and unrealized losses were ~~$86~~$34 million and ~~$90~~$29 million as of ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022,~~2023, respectively.

Non-derivative instruments with recurring fair value measurements in the nuclear decommissioning fund:


			Sept. 30, 2023
						Fair Value
		March 31, 2024																				March 31, 2024
					Fair Value																			Fair Value
(Millions of Dollars)	(Millions of Dollars)		Cost			Level 1		Level 2		Level 3		NAV		Total		(Millions of Dollars)	Cost	Level 1	Level 2	Level 3	NAV		Total
Nuclear decommissioning fund (a)	Nuclear decommissioning fund (a)															Nuclear decommissioning fund (a)
Cash equivalents	Cash equivalents		$	27		$	27	$	—	$	—	$	—	$	27
Commingled funds	Commingled funds		731			—		—		—		1,059		1,059
Debt securities	Debt securities		782			—		719		7		—		726
Equity securities	Equity securities		509			1,200		2		—		—		1,202
Total	Total		$	2,049		$	1,227	$	721	$	7	$	1,059	$	3,014

(a)Reported in nuclear decommissioning fund and other investments on the consolidated balance sheets, which also includes ~~$49~~$55 million of other investments, including the rabbi trust.


			Dec. 31, 2022
						Fair Value
		Dec. 31, 2023																				Dec. 31, 2023
					Fair Value																			Fair Value
(Millions of Dollars)	(Millions of Dollars)		Cost			Level 1		Level 2		Level 3		NAV		Total		(Millions of Dollars)	Cost	Level 1	Level 2	Level 3	NAV		Total
Nuclear decommissioning fund (a)	Nuclear decommissioning fund (a)															Nuclear decommissioning fund (a)
Cash equivalents	Cash equivalents		$	29		$	29	$	—	$	—	$	—	$	29
Commingled funds	Commingled funds		803			—		—		—		1,178		1,178
Debt securities	Debt securities		738			—		669		6		—		675
Equity securities	Equity securities		406			999		1		—		—		1,000
Total	Total		$	1,976		$	1,028	$	670	$	6	$	1,178	$	2,882

(a)Reported in nuclear decommissioning fund and other investments on the consolidated balance sheets, which also includes ~~$48~~$51 million of other investments, including the rabbi trust.

Table of Contents

For the three ~~and nine~~ months ended ~~Sept. 30,~~March 31, 2024 and 2023, ~~and 2022,~~ there were ~~immaterial~~no Level 3 nuclear decommissioning fund investments or transfer of amounts between levels.

Contractual maturity dates of debt securities in the nuclear decommissioning fund as of ~~Sept. 30, 2023:~~March 31, 2024:

Final Contractual Maturity

(Millions of Dollars)

Due in 1 Year or Less

Due in 1 to 5 Years

Due in 5 to 10 Years

Due after 10 Years

Total

(Millions of Dollars)

Due in 1 Year or Less

Due in 1 to 5 Years

Due in 5 to 10 Years

Due after 10 Years

Total

Debt securities

236

257

223

726

Derivative Activities and Fair Value Measurements

NSP-Minnesota 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 and utility commodity prices.

Interest Rate Derivatives — NSP-Minnesota enters into contracts that effectively fix the interest rate on a specified principal amount of a hypothetical future debt issuance. These financial swaps net settle based on changes in a specified benchmark interest rate, acting as a hedge of changes in market interest rates that will impact specified anticipated debt issuances. These derivative instruments are designated as cash flow hedges for accounting purposes, with changes in fair value prior to occurrence of the hedged transactions recorded as other comprehensive income.

As of ~~Sept. 30, 2023,~~March 31, 2024, accumulated other comprehensive loss related to interest rate derivatives included ~~$1 million of~~immaterial net losses expected to be reclassified into earnings during the next 12 months as the hedged transactions impact earnings. As of ~~Sept. 30, 2023,~~March 31, 2024, NSP-Minnesota had no unsettled interest rate derivatives.

See Note 10 for the financial impact of qualifying interest rate cash flow hedges on NSP-Minnesota’s accumulated other comprehensive loss included in the consolidated statements of common stockholder’s equity and in the consolidated statements of comprehensive income.

Wholesale and Commodity Trading — NSP-Minnesota 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. NSP-Minnesota 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.

Results of derivative instrument transactions entered into for trading purposes are presented in the consolidated statements of income as electric revenues, net of any sharing with customers. These activities are not intended to mitigate commodity price risk associated with regulated electric and natural gas operations. Sharing of these margins is determined through state regulatory proceedings as well as the operation of the FERC-approved joint operating agreement.

~~Table of Contents~~

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

The most significant derivative positions outstanding at ~~Sept. 30, 2023~~March 31, 2024 for this purpose relate to FTR instruments administered by MISO. These instruments are intended to offset the impacts of transmission system congestion. Higher congestion costs in recent years have led to an increase in the fair value of FTRs. Settlements of FTRs are shared with electric customers through fuel and purchased energy cost-recovery mechanisms.

When NSP-Minnesota enters into derivative instruments that mitigate commodity price risk on behalf of electric and natural gas customers, the instruments are not typically designated as qualifying hedging transactions. The classification of unrealized losses or gains on these instruments as a regulatory asset or liability, if applicable, is based on approved regulatory recovery mechanisms.

As of ~~Sept. 30, 2023,~~March 31, 2024, NSP-Minnesota had no commodity contracts designated as cash flow hedges.

Gross notional amounts of commodity forwards, options and FTRs:

(Amounts in Millions) (a)(b)

Sept. 30, 2023

Dec. 31, 2022

(Amounts in Millions) (a)(b)

March 31, 2024

Dec. 31, 2023

Megawatt hours of electricity

Million British thermal units of natural gas

(a)Not reflective of net positions in the underlying commodities.

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

Consideration of Credit Risk and Concentrations — NSP-Minnesota continuously monitors the creditworthiness of counterparties to its interest rate derivatives and commodity derivative contracts prior to settlement and assesses each counterparty’s ability to perform on the transactions set forth in the contracts. Impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented on the consolidated balance sheets.

NSP-Minnesota’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.

As of ~~Sept. 30, 2023,~~March 31, 2024, four of NSP-Minnesota’s ten most significant counterparties for these activities, comprising ~~$26~~$23 million, or ~~27%~~21%, of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings.

~~Four~~Three of the ten most significant counterparties, comprising ~~$26~~$31 million, or ~~27%~~28%, of this credit exposure, were not rated by these external ratings agencies, but based on NSP-Minnesota’s internal analysis, had credit quality consistent with investment grade.

~~Two~~Three of these significant counterparties, comprising ~~$45~~$55 million or ~~45%~~50% of this credit exposure, had credit quality less than investment grade, based on internal analysis. ~~Four~~

Five of these significant counterparties are municipal or cooperative electric entities, RTOs or other utilities.

Credit Related Contingent Features — Contract provisions for derivative instruments that NSP-Minnesota enters into, including those accounted for as normal purchase and 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 the applicable utility subsidiary’s credit ratings are downgraded below its investment grade credit rating by any of the major credit rating agencies.

As of ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022,~~2023, there were ~~$10~~$14 million and $4$12 million, respectively, of derivative liabilities with such underlying contract ~~provisions, respectively.~~provisions.

Table of Contents

Certain contracts also contain cross default provisions that may require the posting of collateral or settlement of the contracts if there was a failure under other financing arrangements related to payment terms or other covenants.

As of both ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022,~~2023, there were approximately ~~$76~~$84 million and $80 million, respectively of derivative 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 a given utility subsidiary’s ability to fulfill its contractual obligations is reasonably expected to be impaired. NSP-Minnesota had no collateral posted related to adequate assurance clauses in derivative contracts as of ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022.~~2023.

~~Table of Contents~~

Recurring Derivative Fair Value Measurements

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, 2023~~March 31, 2024



~~Other derivative instruments:~~
~~Electric commodity~~	$	—		$	~~(19)~~
~~Natural gas commodity~~	—			~~(3)~~
~~Total~~	$	—		$	~~(22)~~

~~Nine Months Ended Sept. 30, 2023~~
Derivatives designated as cash flow hedges:
Interest rate	$	516		$	—
Total	$	16		$	—
Other derivative instruments:
Electric commodity	$	—		$	1
Natural gas commodity	—			3
Total	$	—		$	4










Three Months Ended March 31, 2023
Derivatives designated as cash flow hedges:
Interest rate	$	(4)		$	—
Total	$	5 (4)		$	—
Other derivative instruments:
Electric commodity	$	—		$	~~(47)~~(17)
Natural gas commodity	—			~~(1)~~2
Total	$	—		$	~~(48)~~(15)

~~Three Months Ended Sept. 30, 2022~~
~~Other derivative instruments:~~
~~Electric commodity~~	$		—				$	20
~~Natural gas commodity~~	—					~~(2)~~
~~Total~~	$		—				$	18

~~Nine Months Ended Sept. 30, 2022~~
~~Other derivative instruments:~~
~~Electric commodity~~	$	—		$	26

~~Total~~	$	—		$	26


					Pre-Tax Losses Reclassified into Income During the Period from:
					Pre-Tax Losses Reclassified into Income During the Period from:
					Pre-Tax Losses Reclassified into Income During the Period from:
(Millions of Dollars)
(Millions of Dollars)
(Millions of Dollars)
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024

		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, 2023
Derivatives designated as cash flow hedges
Interest rate		$	1	(a)	$	—		$	—
Total		$	1		$	—		$	—

Other derivative instruments:

Other derivative instruments:

Other derivative instruments:	Other derivative instruments:
Commodity trading	Commodity trading	$	—		$	—		$	(2)	(b)
Electric commodity		—			10		(c)	—

Total		$	—		$	10		$	(2)

Nine Months Ended Sept. 30, 2023
Derivatives designated as cash flow hedges
Interest rate		$	1	(a)	$	—		$	—
Total		$	1		$	—		$	—
Other derivative instruments:
Commodity trading
Commodity trading	Commodity trading	$	—		$	—		$	(3)	(b)			$	—			$		$	1		(a)	(a)
Electric commodity	Electric commodity	—			31		(c)	—
Natural gas commodity	Natural gas commodity	—			—			(5)		(d)(e)
Natural gas commodity
Natural gas commodity															—						(5)			(c)(d)
Total	Total	$	—		$	31		$	(8)

Three Months Ended Sept. 30, 2022

Three Months Ended March 31, 2023

Three Months Ended March 31, 2023

Three Months Ended March 31, 2023

Other derivative instruments:

Other derivative instruments:
												Other derivative instruments:
Commodity trading	Commodity trading	$	—		$	—		$	11	(b)	Commodity trading				$	—		$			$	(1)		(a)	(a)
Electric commodity	Electric commodity	—			(2)		(c)	—

Natural gas commodity
Natural gas commodity
Natural gas commodity															—						(5)			(c)(d)
Total	Total	$	—		$	(2)		$	11

Nine Months Ended Sept. 30, 2022
Other derivative instruments:
Commodity trading		$	—		$	—		$	17	(b)
Electric commodity		—			(5)		(c)	—
Natural gas commodity		—			2		(d)	(5)		(d)(e)
Total		$	—		$	(3)		$	12

(a)~~Recorded to interest charges.~~

~~(b)~~Recorded to electric revenues. Presented amounts do not reflect non-derivative transactions or margin sharing with customers.

~~(c)~~(b)Recorded to electric fuel and purchased power. These derivative settlement gains and losses are shared with electric customers through fuel and purchased energy cost-recovery mechanisms, and reclassified out of income as regulatory assets or liabilities, as appropriate. FTR settlements are shared with customers and do not have a material impact on net income. Presented amounts reflect changes in fair value between auction and settlement dates, but exclude the original auction fair value.

~~(d)~~(c)Recorded to cost of natural gas sold and transported. These losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset, as appropriate.

~~(e)~~(d)Relates primarily to option premium amortization.

NSP-Minnesota had no derivative instruments designated as fair value hedges during the ~~nine~~three months ended ~~Sept. 30, 2023~~March 31, 2024 and ~~2022.~~2023.

1413

Table of Contents

Derivative assets and liabilities measured at fair value on a recurring basis were as follows:


			Sept. 30, 2023																		Dec. 31, 2022
			Fair Value						Fair Value Total			Netting (a)				Total					Fair Value															Fair Value Total						Netting (a)					Total
		March 31, 2024																																																						March 31, 2024					Dec. 31, 2023
		Fair Value																																																					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				Fair Value Total						Netting (a)					Total					Level 1					Level 2							Level 3											Fair Value Total			Netting (a)	Total
Current derivative assets	Current derivative assets
Current derivative assets
Current derivative assets
Other derivative instruments:	Other derivative instruments:
Other derivative instruments:
Other derivative instruments:
Commodity trading
Commodity trading
Commodity trading	Commodity trading		$	5	$	37	$	37	$	79				$	(49)				$	30				$	15				$	38				$	33					$	86				$	(58)					$	28
Electric commodity	Electric commodity		—		—		36		36			(4)				32						—					—					58					58						(2)					56
Natural gas commodity	Natural gas commodity		—		4		—		4			—				4					—					5					—					5						—					5
Total current derivative assets	Total current derivative assets		$	5	$	41	$	73	$	119		$	(53)			$		66				$	15				$	43				$	91				$	149					$	(60)				$	89

Noncurrent derivative assets	Noncurrent derivative assets

Noncurrent derivative assets

Noncurrent derivative assets
Other derivative instruments:	Other derivative instruments:
Other derivative instruments:
Other derivative instruments:
Commodity trading
Commodity trading
Commodity trading	Commodity trading		$	11	$	33	$	49	$	93		$	(35)			$	58				$	21				$	40				$	66				$	127					$	(59)				$	68
Total noncurrent derivative assets	Total noncurrent derivative assets		$	11	$	33	$	49	$	93		$	(35)			$	58				$	21				$	40				$	66				$	127					$	(59)				$	68


			Sept. 30, 2023																		Dec. 31, 2022
			Fair Value						Fair Value Total			Netting (a)				Total					Fair Value												Fair Value Total					Netting (a)				Total
		March 31, 2024																																																	March 31, 2024					Dec. 31, 2023
		Fair Value																																																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				Fair Value Total						Netting (a)					Total				Level 1				Level 2					Level 3										Fair Value Total			Netting (a)	Total
Current derivative liabilities	Current derivative liabilities

Current derivative liabilities
Current derivative liabilities
Derivatives designated as cash flow hedges:
Derivatives designated as cash flow hedges:
Derivatives designated as cash flow hedges:
Interest rate
Interest rate
Interest rate
Other derivative instruments:	Other derivative instruments:
Commodity trading
Commodity trading
Commodity trading	Commodity trading		$	8	$	65	$	7	$	80				$	(49)				$	31			$	23			$	60			$	6				$	89			$	(63)					$	26
Electric commodity	Electric commodity		—		—		4		4			(4)				—						—				—				2				2					(2)				—
Natural gas commodity	Natural gas commodity		—		—		—		—			—				—					—				2				—				2					—				2
Total current derivative liabilities	Total current derivative liabilities		$	8	$	65	$	11	$	84		$	(53)			31					$	23			$	62			$	8			$	93				$	(65)			28
PPAs (b)	PPAs (b)															15																										14
Current derivative instruments	Current derivative instruments															$		46																									$	42
Noncurrent derivative liabilities	Noncurrent derivative liabilities
Other derivative instruments:	Other derivative instruments:
Other derivative instruments:
Other derivative instruments:
Commodity trading
Commodity trading
Commodity trading	Commodity trading		$	18	$	37	$	42	$	97		$	(40)			$	57				$	37			$	55			$	42			$	134				$	(60)			$	74
Total noncurrent derivative liabilities	Total noncurrent derivative liabilities		$	18	$	37	$	42	$	97		$	(40)			57					$	37			$	55			$	42			$	134				$	(60)			74
PPAs (b)	PPAs (b)															24																										28
Noncurrent derivative instruments	Noncurrent derivative instruments															$	81																									$	102

(a)NSP-Minnesota nets derivative instruments and related collateral on its consolidated balance sheets when supported by a legally enforceable master netting agreement. At ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022,~~2023, derivative assets and liabilities include no obligations to return cash collateral. At both ~~Sept. 30, 2023~~March 31, 2024 and Dec. 31, ~~2022~~2023 derivative assets and liabilities include rights to reclaim cash collateral of ~~$5 million and $6 million, respectively.~~$3 million. Counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

(b)NSP-Minnesota currently applies the normal purchase exception to qualifying PPAs. Balance relates to specific contracts that were previously recognized at fair value prior to applying the normal purchase exception, and are being amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

1514

Table of Contents

Changes in Level 3 commodity derivatives:

Three Months Ended Sept. 30
(Millions of Dollars) 2023 2022
Balance at July 1 $ 117 $ 230
Settlements (a)
(32) (88)
Net transactions recorded during the period:
Gains recognized in earnings (b)
17 15
Net (losses) gains recognized as regulatory assets and liabilities (a)
(33) 35
Balance at Sept. 30 $ 69 $ 192
Nine Months Ended Sept. 30
(Millions of Dollars) 2023 2022
Balance at Jan. 1 $ 107 $ 56
Purchases (a)
98 157
Settlements (a)
(60) (180)
Net transactions recorded during the period:
Gains recognized in earnings (b)
15 106
Net (losses) gains recognized as regulatory assets and liabilities (a)
(91) 53
Balance at Sept. 30 $ 69 $ 192












	Three Months Ended March 31
(Millions of Dollars)	2024		2023
Balance at Jan. 1	$	51	$	107

Settlements (a)	(15)		(13)
Net transactions recorded during the period:
Losses recognized in earnings (b)	—		(14)
Net gains (losses) recognized as regulatory assets and liabilities (a)	3		(34)
Balance at March 31	$	39	$	46

(a)Relates primarily to FTR instruments administered by MISO.

(b)Relates to commodity trading and is subject to substantial offsetting losses and gains on derivative instruments categorized as levels 1 and 2 in the consolidated income statement. See above tables for the income statement impact of derivative activity, including commodity trading gains and losses.

Fair Value of Long-Term Debt

As of ~~Sept. 30, 2023,~~March 31, 2024, other financial instruments for which the carrying amount did not equal fair value:

Sept. 30, 2023

Dec. 31, 2022

March 31, 2024

Dec. 31, 2023

(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

7,329

5,913

6,942

5,995

Fair value of NSP-Minnesota’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, 2023~~March 31, 2024 and Dec. 31, ~~2022,~~2023, and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.


8. Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost


			Three Months Ended Sept. 30
			2023		2022		2023		2022

			Three Months Ended March 31

			Three Months Ended March 31

			Three Months Ended March 31
		2024											2024		2023	2024	2023
(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		$	5	$	6	$	—	$	—
Interest cost (a)	Interest cost (a)		9		7		1		—
Expected return on plan assets (a)	Expected return on plan assets (a)		(11)		(12)		—		—
Amortization of prior service credit (a)			—		—		—		(1)

Amortization of net loss (a)	Amortization of net loss (a)		3		6		—		1
Settlement charge (b)			—		29		—		—
Amortization of net loss (a)
Amortization of net loss (a)

Net periodic benefit cost
Net periodic benefit cost
Net periodic benefit cost	Net periodic benefit cost		6		36		1		—
Effects of regulation	Effects of regulation		8		(32)		—		—
Net benefit cost recognized for financial reporting	Net benefit cost recognized for financial reporting		$	14	$	4	$	1	$	—

			Nine Months Ended Sept. 30
			2023		2022		2023		2022
(Millions of Dollars)			Pension Benefits				Postretirement Health Care Benefits
Service cost			$	15	$	20	$	—	$	—
Interest cost (a)			27		19		2		1
Expected return on plan assets (a)			(34)		(36)		—		—
Amortization of prior service credit (a)			—		—		—		(2)
Amortization of net loss (a)			9		18		—		1
Settlement charge (b)			—		28		—		—
Net periodic benefit cost			17		49		2		—
Effects of regulation			13		(31)		—		—
Net benefit cost recognized for financial reporting			$	30	$	18	$	2	$	—

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

~~(b)~~In the third quarter of 2022, as a result of lump-sum distributions during the 2022 plan year, NSP-Minnesota recorded a pension settlement charge of $29 million, which was not recognized in earnings due to the effects of rate making.

In January ~~2023,~~2024, contributions totaling ~~$50~~$100 million were made across Xcel Energy’s pension plans, of which ~~$23~~$41 million was attributable to NSP-Minnesota. Xcel Energy does not expect additional pension contributions during ~~2023.~~2024.

~~Table of Contents~~


9. Commitments and Contingencies

Legal

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

Rate Matters and Other

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

Sherco — In 2018, NSP-Minnesota and SMMPA (Co-owner of Sherco Unit 3) reached a settlement with GE related to a 2011 incident, which damaged the turbine at Sherco Unit 3 and resulted in an extended outage for repair. NSP-Minnesota notified the MPUC of its proposal to refund settlement proceeds to customers through the fuel clause adjustment.

In March 2019, the MPUC approved NSP-Minnesota’s settlement refund proposal. Additionally, the MPUC decided to withhold any decision as to NSP-Minnesota’s prudence in connection with the incident at Sherco Unit 3 until after conclusion of an appeal pending between GE and NSP-Minnesota’s insurers. In February 2020, the Minnesota Court of Appeals affirmed the district court’s judgment in favor of GE. In March 2020, NSP-Minnesota’s insurers filed a petition seeking additional review by the Minnesota Supreme Court. In April 2020, the Minnesota Supreme Court denied the insurers’ petition for further review, ending the litigation.

In January 2021, the OAG and DOC recommended that NSP-Minnesota refund approximately $17 million of replacement power costs previously recovered through the ~~fuel clause adjustment.~~FCA. NSP-Minnesota ~~subsequently filed its response, asserting~~responded that it acted prudently in connection with the Sherco Unit 3 outage, the MPUC has previously disallowed $22 million of related costs and no additional refund or disallowance is appropriate.

In July 2022, the MPUC referred the matter to the Office of Administrative Hearings to conduct a contested case on the prudence of the replacement power costs incurred by NSP-Minnesota. In ~~June~~ 2023, NSP-Minnesota and various parties filed recommendations, including the DOC ~~filed direct testimony. In September 2023, NSP-Minnesota, the DOC and the Office~~which recommended a $56 million customer refund. The Xcel Large Industrial customer group recommended a refund of ~~the Attorney General filed rebuttal testimony. The DOC updated its recommendation to $56~~$72 million. A final decision by the MPUC is expected in mid-2024. A loss related to this matter is deemed remote.

~~MISO ROE Complaints~~Table of Contents — ~~In November 2013~~

Environmental

New and ~~February~~ ~~2015, customer groups filed two ROE complaints against MISO TOs,~~changing federal and state environmental mandates can create financial liabilities for NSP-Minnesota, which ~~includes~~are normally recovered through the regulated rate process.

Site Remediation

Various federal and state environmental laws impose liability where hazardous substances or other regulated materials have been released to the environment. NSP-Minnesota ~~and NSP-Wisconsin. The first complaint requested~~may sometimes pay all or a ~~reduction in base ROE transmission formula rates from 12.38%~~portion of the cost to ~~9.15% for the time period~~remediate sites where past activities of ~~Nov. 12, 2013 to Feb. 11, 2015, and removal of ROE adders (including those for RTO membership).The second complaint requested, for a subsequent time period, a base ROE reduction from 12.38% to 8.67%.~~

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

~~The MISO TOs and various~~their predecessors or other parties have ~~filed petitions~~caused environmental contamination.

Environmental contingencies could arise from various situations, including sites of former MGPs; and third-party sites, such as landfills, for ~~review of the FERC’s most recent applicable opinions at the D.C. Circuit. In August 2022, the D.C. Circuit ruled~~which NSP-Minnesota is alleged to have sent wastes to that FERC had not adequately supported its conclusions, vacated FERC’s related orders, and remanded the issue back to FERC for further proceedings, which remain pending. Additional exposure, if any related to this matter is expected to be immaterial.

~~Environmental~~site.

MGP, Landfill and Disposal Sites

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

NSP-Minnesota has recognized ~~its best estimate~~approximately $1 million of costs/liabilities from final resolution of these issues, however, the outcome and timing are unknown. In addition, there may be regulatory recovery, insurance recovery and/or recovery from other potentially responsible parties, offsetting a portion of costs incurred.

Environmental Requirements — Water and Waste

Coal Ash Regulation — NSP-Minnesota’s operations are subject to federal and state regulations that impose requirements for handling, storage, treatment and disposal of solid ~~waste.Under~~waste, including the CCR Rule. As a specific requirement of the CCR Rule, utilities ~~are required to~~must complete groundwater sampling around their applicable landfills and surface ~~impoundments. Currently, NSP-Minnesota~~impoundments as well as perform corrective actions where offsite groundwater has ~~three regulated ash units in operation.~~been impacted.

If certain impacts to groundwater are detected, utilities are required to perform additional groundwater investigations and/or perform corrective actions beginning with an Assessment of Corrective Measures.

NSP-Minnesota is conducting groundwater sampling and monitoring and implementing assessment of corrective measures at certain CCR landfills and surface impoundments. No results above the groundwater protection standards in the rule were identified.

Federal Clean Water Act Section 316(b) — The Federal Clean Water Act requires the EPA to regulate cooling water intake structures to assure they reflect the best technology available for minimizing impingement and entrainment of aquatic species.

NSP-Minnesota estimates capital expenditures of approximately $45 million may be required to comply with the requirements. NSP-Minnesota anticipates these costs will be recoverable through regulatory mechanisms.

~~Table of Contents~~

~~Monticello Tritium~~ — Monticello regularly monitors onsite tritium levels (a weak radioactive isotope that is a byproduct of plant operations) from releases in groundwater monitoring wells onsite. In late 2022, Xcel Energy detected a release of tritium to groundwater and reported the event to the NRC and the State of Minnesota. Xcel Energy has completed repairs, replaced the source of the release and is in the process of mitigating the impact to groundwater, while continuing to monitor onsite wells and evaluating potential future actions for additional containment. The release does not represent a risk to human health or the environment.

Environmental Requirements — Air

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

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

NSP-Minnesota has joined other ~~impacted~~ companies in litigation challenging the EPA’s disapproval of Minnesota’s state implementation plan. Currently, the regulation is under a judicial stay for ~~Minnesota and not~~Minnesota. The regulation may become applicable ~~to NSP-Minnesota until litigation concludes.~~in the future, depending on the outcome of the litigation.

Leases

NSP-Minnesota 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
		Three Months Ended March 31								Three Months Ended March 31
(Millions of Dollars)	(Millions of Dollars)		2023		2022		(Millions of Dollars)	2024	2023
Operating leases	Operating leases
PPA capacity payments	PPA capacity payments		$	25	$	25
PPA capacity payments
PPA capacity payments
Other operating leases (a)	Other operating leases (a)		3		2		Other operating leases (a)	5	4
Total operating lease expense (b)	Total operating lease expense (b)		$	28	$	27

(a)Includes immaterial short-term lease expense for both ~~2023 and 2022.~~

~~(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) 2023 2022
Operating leases
PPA capacity payments $ 74 $ 74
Other operating leases (a)
12 6
Total operating lease expense (b)
$ 86 $ 80

~~(a)Includesshort-term lease expense of $3 million~~2024 and ~~$2 million for~~ 2023 ~~and 2022, respectively.~~.

(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.

Commitments under operating leases as of ~~Sept. 30, 2023:~~March 31, 2024:


(Millions of Dollars)	(Millions of Dollars)	PPA Operating Leases		Other Operating Leases		Total Operating Leases		(Millions of Dollars)	PPA Operating Leases	Other Operating Leases	Total Operating Leases
Total minimum obligation	Total minimum obligation	$	244	$	179	$	423
Interest component of obligation	Interest component of obligation	(11)		(81)		(92)
Present value of minimum obligation	Present value of minimum obligation	$	233	$	98	331
Less current portion	Less current portion					(98)
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities					$	233

Table of Contents

Variable Interest Entities

Under certain PPAs, NSP-Minnesota purchases power from IPPs for which NSP-Minnesota is required to reimburse fuel costs, or to participate in tolling arrangements under which NSP-Minnesota procures the natural gas required to produce the energy that ~~they purchase. These specific PPAs create a variable interest in~~it purchases. NSP-Minnesota has determined that certain IPPs are VIEs, however NSP-Minnesota is not subject to risk of loss from the ~~IPP.~~operations of these entities, and no significant financial support is required other than contractual payments for energy and capacity.

NSP-Minnesota ~~had~~ ~~approximately 1,347~~ MWevaluated each of these VIEs for possible consolidation, including review of qualitative factors such as the length and ~~1,322~~ MWterms of ~~capacity under long-term PPAs at Sept. 30, 2023~~the contract, control over O&M, control over dispatch of electricity, historical and ~~Dec. 31, 2022, respectively, with entities that have been determined to be variable interest entities.~~estimated future fuel and electricity prices and financing activities. NSP-Minnesota concluded that these entities are not required to be consolidated in its consolidated financial statements because itNSP-Minnesota does not have the power to direct the activities that most significantly impact the ~~entities’~~entities’ economic performance. ~~The~~

NSP-Minnesota had approximately 1,347 MW of capacity under long-term PPAs at both March 31, 2024 and Dec. 31, 2023, with entities that have been determined to be VIEs. These agreements have expiration dates through 2039.

~~Table of Contents~~


10. Other Comprehensive Loss

Changes in accumulated other comprehensive loss, net of tax:


			Three Months Ended Sept. 30, 2023						Three Months Ended Sept. 30, 2022
		Three Months Ended March 31, 2024																	Three Months Ended March 31, 2024			Three Months Ended March 31, 2023
(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			$	(13)	$	(2)	$	(15)	$	(17)	$	(3)	$	(20)

Accumulated other comprehensive loss at Jan. 1
Gains reclassified from net accumulated other comprehensive income:
Other comprehensive gain before reclassifications
Other comprehensive gain before reclassifications
Other comprehensive gain before reclassifications	Other comprehensive gain before reclassifications		—		—		—		—		—		—
Losses reclassified from net accumulated other comprehensive loss:	Losses reclassified from net accumulated other comprehensive loss:
Interest rate derivatives (a)	Interest rate derivatives (a)		—		1		1		—		—		—
Net current period other comprehensive income			—		1		1		—		—		—
Accumulated other comprehensive loss at Sept. 30			$	(13)	$	(1)	$	(14)	$	(17)	$	(3)	$	(20)
Interest rate derivatives (a)
Interest rate derivatives (a)
Net current period other comprehensive income (loss)
Accumulated other comprehensive loss at March 31

Nine Months Ended Sept. 30, 2023 Nine Months Ended Sept. 30, 2022
(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 $ (16) $ (2) $ (18) $ (17) $ (3) $ (20)
Other comprehensive gain before reclassifications 3 — 3 — — —
Losses reclassified from net accumulated other comprehensive loss:
Interest rate derivatives (a)
— 1 1 — — —
Net current period other comprehensive income 3 1 4 — — —
Accumulated other comprehensive loss at Sept. 30 $ (13) $ (1) $ (14) $ (17) $ (3) $ (20)

(a)Included in interest charges.


11. Segment Information

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

NSP-Minnesota has the following reportable segments:

•Regulated Electric — The regulated electric utility segment generates electricity which is transmitted and distributed in Minnesota, North Dakota and South Dakota. In addition, this segment includes sales for resale and provides wholesale transmission service to various entities in the United States. The regulated electric utility segment also includes NSP-Minnesota’s wholesale commodity and trading operations.

•Regulated Natural Gas — The regulated natural gas utility segment transports, stores and distributes natural gas in portions of Minnesota and North Dakota.

NSP-Minnesota also presents All Other, which includes operating segments with revenues below the necessary quantitative thresholds. Those operating segments primarily include appliance repair, ~~services,~~ non-utility real estate activities and revenues associated with processing solid waste into refuse-derived fuel.

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

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

Table of Contents

NSP-Minnesota’s segment information:


		Three Months Ended March 31								Three Months Ended March 31
(Millions of Dollars)							(Millions of Dollars)	2024	2023
Regulated Electric

			Three Months Ended Sept. 30
(Millions of Dollars)			2023		2022
Regulated Electric
Total revenues (a)

Total revenues (a)

Total revenues (a)	Total revenues (a)		$	1,513	$	1,730
Net income	Net income		263		275
Regulated Natural Gas	Regulated Natural Gas
Operating revenues (b)	Operating revenues (b)		$	65	$	102
Operating revenues (b)
Operating revenues (b)
Intersegment revenue	Intersegment revenue		1		—
Total revenues	Total revenues		$	66	$	102
Net loss			(8)		(12)
Net income
All Other	All Other
Total revenues	Total revenues		$	13	$	12
Net income			5		6
Total revenues
Total revenues
Net income (loss)
Consolidated Total	Consolidated Total
Operating revenues (a)(b)
Operating revenues (a)(b)
Operating revenues (a)(b)	Operating revenues (a)(b)		$	1,592	$	1,844
Reconciling eliminations	Reconciling eliminations		(1)		—
Total operating revenues	Total operating revenues		$	1,591	$	1,844
Net income	Net income		260		269

(a)Operating revenues include ~~$130~~$122 million and ~~$132~~$125 million of affiliate electric revenue for the three months ended ~~Sept. 30, 2023~~March 31, 2024 and ~~2022.~~2023.

(b)Operating revenues include an immaterial amount of affiliate gas revenue for the three months ended ~~Sept. 30, 2023~~March 31, 2024 and ~~2022.~~

~~Table of Contents~~

Nine Months Ended Sept. 30
(Millions of Dollars) 2023 2022
Regulated Electric
Total revenues (a)
$ 3,958 $ 4,308
Net income 508 486
Regulated Natural Gas
Operating revenues (b)
$ 563 $ 703
Intersegment revenue 2 1
Total revenues $ 565 $ 704
Net income 13 21
All Other
Total revenues $ 35 $ 33
Net income 5 7
Consolidated Total
Operating revenues (a)(b)
$ 4,558 $ 5,045
Reconciling eliminations (2) (1)
Total operating revenues $ 4,556 $ 5,044
Net income 526 514

~~(a)~~ ~~Operating revenues include $368 million and $394 million of affiliate electric revenue for the six months ended Sept. 30, 2023 and 2022.~~

~~(b)~~ ~~Operating revenues include an immaterial amount of affiliate gas revenue for the nine months ended Sept. 30, 2023 and 2022.~~2023.

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

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

Non-GAAP Financial Measures

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

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

~~Earnings Adjusted for Certain Items (Ongoing Earnings)~~

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

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


Results of Operations

NSP-Minnesota’s net income was ~~approximately $526~~$211 million for the ~~nine~~three months ended ~~Sept. 30, 2023~~March 31, 2024 compared with ~~approximately $514~~$139 million for the prior year. The ~~increase is primarily~~change was driven by increased recovery of electric and natural gas infrastructure investments and lower O&M expenses, partially offset by higher ~~O&M~~interest expenses ~~interest charges~~ and ~~unfavorable weather.~~depreciation.

Electric Revenue

Electric ~~Margin~~

~~Electric margin is presented as~~revenues are impacted by fluctuations in the price of natural gas, coal and uranium, regulatory outcomes, market prices and seasonality. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and income taxes. In the first quarter, electric revenues ~~less~~decreased $1 million.


(Millions of Dollars)	Three Months Ended March 30, 2024 vs. 2023
Recovery of lower electric fuel and purchased power expenses	$	(46)
PTCs flowed back to customers	(6)
Interchange agreement revenue from NSP-Wisconsin	(3)
Regulatory rate outcomes	28
Conservation and demand side management	18
Non-fuel riders	14
Sales and demand (a)	8

Other (net)	(14)
Total decrease	$	(1)

(a)Sales excludes weather impact, net of sales true-up mechanism in Minnesota.

Natural Gas Revenues

Natural gas revenues vary with changing sales, the cost of natural gas and ~~purchased power expenses.~~ regulatory outcomes. In the first quarter, natural gas revenues decreased $127 million for the first quarter.


(Millions of Dollars)	Three Months Ended March 30, 2024 vs. 2023
Recovery of lower natural gas costs (sold and transported)	$	(158)
Regulatory rate outcomes	20
Infrastructure and integrity riders	3
Estimated impact of weather (net of decoupling)	2
Retail sales growth (net of decoupling)	2
Other (net)	4
Total	$	(127)

Electric Fuel and Purchased Power — Expenses incurred for electric fuel and purchased power are impacted by fluctuations in market prices of natural gas, coal and uranium, as well as seasonality. However, these incurred expenses are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating ~~revenues.~~revenues and have minimal earnings impact.

Electric ~~revenues and~~ fuel and purchased power expenses ~~are impacted by fluctuations in~~decreased $46 million for the ~~price~~first quarter of ~~natural gas, coal and uranium. However, these price fluctuations generally have minimal earnings impact~~2024. The decrease is primarily due to decreased volumes and timing of fuel recovery, ~~mechanisms. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and income taxes.~~

~~Electric revenues, fuel and purchased power and margin:~~

Nine Months Ended Sept. 30
(Millions of Dollars) 2023 2022
Electric revenues $ 3,958 $ 4,308
Electric fuel and purchased power (1,593) (1,857)
Electric margin $ 2,365 $ 2,451


~~(Millions of Dollars)~~	~~Nine Months Ended Sept. 30, 2023 vs. 2022~~
~~Conservation and demand side revenues (offset in expense)~~	$	~~(49)~~
~~Regulatory rate outcomes (Minnesota, South Dakota)~~ ~~(a)~~	~~(45)~~

~~PTCs flowed back to customers (offset by lower ETR)~~	~~(19)~~
~~Wholesale transmission (net)~~	~~(13)~~
~~Non-fuel riders~~	52
~~Sales and demand (net)~~ ~~(b)~~	11

~~Other (net)~~	~~(23)~~
~~Total decrease~~	$	~~(86)~~

~~(a)Decrease primarily relates to the Minnesota Electric Rate Case (approximately $60 million — see Public Utility Regulation). Reduced electric margin was~~partially offset by ~~corresponding reductions in depreciation expense, taxes (other than income taxes) and other items.~~higher commodity prices.

~~(b)Sales excludes weather impact, net~~Cost of ~~sales true-up mechanism in Minnesota.~~

Natural Gas ~~Margin~~

~~Natural gas margin is presented as natural gas revenues less the cost of natural gas sold~~Sold and ~~transported.~~ Transported — Expenses incurred for the cost of natural gas sold are impacted by market prices and seasonality. These costs are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating ~~revenues.~~

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

impact.

~~Table of Contents~~

Natural ~~gas revenues, cost of natural~~ gas sold and transported decreased $158 million for the first quarter of 2024. The decrease is primarily due to timing of fuel recovery, lower commodity prices and ~~margin:~~

Nine Months Ended Sept. 30
(Millions of Dollars) 2023 2022
Natural gas revenues $ 563 $ 703
Cost of natural gas sold and transported (364) (510)
Natural gas margin $ 199 $ 193


~~(Millions of Dollars)~~	~~Nine Months Ended Sept. 30, 2023 vs. 2022~~
~~Estimated impact of weather~~	$	~~(7)~~
~~Infrastructure and integrity riders~~	3



~~Other (net)~~	10
~~Total~~	$	6

volumes.

Non-Fuel Operating Expenses and Other Items

O&M Expenses — O&M expenses ~~increased $42~~decreased $30 million ~~year-to-date.~~for the first quarter. The ~~increase is~~decrease was primarily due to ~~generation outages; additional~~decreased labor and benefit costs, gain on the sale of land and lower bad debt ~~expenses; and the impact~~expenses.

Table of ~~inflationary pressures, including labor increases.~~Contents

Depreciation and Amortization — Depreciation and amortization expense ~~decreased $46~~increased $6 million ~~year-to-date. The decrease was primarily due to~~for the first quarter as a result of system expansion offset by depreciation life extensions implemented in ~~the Minnesota Electric Rate Case, partially offset by system expansion.~~

~~Taxes (other than Income Taxes) —~~ ~~Taxes decreased $38 million year-to-date. The decrease is primarily associated with of deferrals related to~~ the Minnesota Electric Rate Case.

Interest Charges — Interest charges increased ~~$25~~$11 million year-to-date, largely due to ~~higher interest rates and~~ increased long-term debt levels and higher interest rates to fund capital investments.

Public Utility Regulation and Other

The FERC and various state and local regulatory commissions regulate NSP-Minnesota. NSP-Minnesota is subject to rate regulation by state utility regulatory agencies, which have jurisdiction with respect to the rates of electric and natural gas distribution companies in Minnesota, North Dakota and South Dakota.

Rates are designed to recover plant investment, operating costs and an allowed return on investment. NSP-Minnesota requests changes in utility rates through commission filings. Changes in operating costs can affect NSP-Minnesota’s financial results, depending on the timing of rate cases and implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and demand side management efforts, and the cost of capital.

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

Except to the extent noted below, the circumstances set forth in Public Utility Regulation included in Item 7 of NSP-Minnesota’s Annual Report on Form 10-K for the year ended Dec. 31, ~~2022~~2023 appropriately represent, in all material respects, the current status of public utility regulation and are incorporated herein by reference.

~~Upcoming,~~ Pending and Recently Concluded Regulatory Proceedings

~~2022~~2024 Minnesota ~~Electric~~Natural Gas Rate Case — — In ~~October 2021,~~November 2023, NSP-Minnesota filed a ~~three-year electric rate case~~request with the ~~Minnesota Public Utilities Commission (MPUC)~~MPUC for an annual natural gas rate increase of approximately $59 million, or 9.6%. The ~~rate~~ request ~~was~~is based on a ROE of 10.2%, a 52.5% equity ratio and a 2024 forward test ~~years.~~year with rate base of approximately $1.27 billion. In December ~~2021,~~2023, the MPUC approved NSP-Minnesota’s request for interim rates, subject to refund, of ~~$247~~approximately $51 million ~~effective~~(implemented on Jan. 1, ~~2022. In November 2022, NSP-Minnesota revised its~~2024).

On April 19, 2024, four parties filed direct testimony. The DOC, OAG, and CUB were the only parties to quantify recommended financial adjustments. The OAG and CUB provided limited comments, recommending a reduction of approximately $1 million of O&M expenses each. The CUB additionally recommended a reduction to ROE.

Proposed DOC modifications to NSP-Minnesota’s request were as follows:


(Millions of Dollars)
NSP-Minnesota’s filed base revenue request	$	59

Recommended adjustments:
Rate of return	(7)
Operating & maintenance expenses	(4)
Plant investments	(3)
Other, net	(2)
Total adjustments	$	(16)
Total proposed revenue change	$	43

Positions on NSP-Minnesota’s filed rate request were as follows:


Recommended Position	DOC		CUB
ROE	9.40	%	9.00-9.40%
Equity ratio	52.50	%	N/A

Procedural schedule:

•Mediation: May 17, 2024 (day subject to ~~$498 million over three years.~~availability)

In•Rebuttal testimony: May 24, 2024

•Evidentiary hearings: July ~~2023, the~~ 10-12, 2024

•ALJ report: October 28, 2024

•MPUC approved a three-year rate increase of approximately $316 million for 2022-2024, based on a ROE of 9.25% and an equity ratio of 52.5%. The MPUC also approved a continuation of the sales true-up mechanism.

In October 2023, the MPUC denied NSP-Minnesota’s request for reconsideration of certain aspects of the decision. NSP-Minnesota plans to file an appeal of the decision to the Minnesota Court of Appeals in November 2023.

~~Interim rate refunds are scheduled to begin in the first quarter of 2024.~~Order Due: March 14, 2025

2024 ~~Minnesota~~North Dakota Natural Gas Rate Case ~~— NSP-Minnesota plans to file a request with the MPUC for an annual natural gas rate case in November 2023.~~

~~2022 Minnesota Electric Vehicle Proposal~~ — In ~~August 2022,~~December 2023, NSP-Minnesota filed a request with the ~~MPUC for approval~~NDPSC seeking an increase in natural gas rates of ~~approximately $320~~$8.5 million (9.4%), a 2024 test year, ROE of ~~capital investments (2022 through 2026) to support a public charging network, electric school bus pilot,~~10.20%, an equity ratio of 52.5% and ~~other expansions and modifications to its residential and commercial electric vehicle programs.~~rate base of $168 million. In February 2024, the NDPSC approved interim rates of $8 million, effective March 1, 2024.

Minnesota 2023 Fuel Clause Adjustment — In ~~June 2023,~~March 2024, NSP-Minnesota ~~filed~~submitted an annual fuel clause adjustment true-up petition to ~~withdraw its request, which~~ the MPUC, ~~approved~~with a requested refund of $126 million for fuel over-recoveries in ~~August.~~2023. In April 2024, the DOC recommended the MPUC approve the non-nuclear aspects of the petition. The DOC stated it intends to submit supplemental comments in the second quarter of 2024 with recommendations related to costs associated with operation of NSP-Minnesota’s nuclear units, which includes costs associated with an outage at the Prairie Island generating station.

NSP System

2022 Upper Midwest IRP Resource Acquisition

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

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

•In the second quarter of 2023, NSP-Minnesota initiated the process with the MPUC for acquisition of 800 MW of firm dispatchable resources. In January 2024, NSP-Minnesota and other companies ~~can submit~~submitted proposed resources ~~by January 2024.~~and filed for project approval with the MPUC. NSP-Minnesota expects a decision by the ~~fourth~~second quarter of ~~2024.~~2025.

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

•In October 2023, NSP-Minnesota issued an RFP seeking approximately 1,200 MW of wind development assets to replace capacity and reutilize interconnection rights associated with the ~~company’s~~ retiring Sherco coal facilities. The RFP ~~is scheduled to close~~closed in December 2023 and ~~the Company~~NSP-Minnesota expects to file for approval of recommended projects ~~when contract negotiations with selected bidders are complete~~ by mid-2024.

2119

Table of Contents

2024 Upper Midwest Resource Plan — In February 2024, NSP filed its Upper Midwest Resource Plan with the MPUC which included the following key items:

•Reduced carbon emissions by more than 80%, potentially up to 88%, by 2030.

•Extends the operation of Prairie Island and Monticello through the early 2050s.

•Adds 3,600 MWs of new wind and solar resources by 2030.

•Adds 600 MWs of battery energy storage by 2030.

•Adds more than 2,200 MWs of dispatchable resources by 2030.

These proposed resources are in addition to projects already approved by the MPUC. NSP-Minnesota anticipates a MPUC decision in 2025.

Nuclear Power Operations

NSP-Minnesota owns two nuclear generating plants: the Monticello plant and the Prairie Island plant. See Note 10 to the consolidated financial statements of NSP-Minnesota’s Annual Report on Form 10-K for the year ended Dec. 31, ~~2022~~2023 for further information. The circumstances set forth in Nuclear Power Operations included in Item 7 of NSP-Minnesota’s Annual Report on Form 10-K for the year ended Dec. 31, ~~2022,~~2023, appropriately represent, in all material respects, the current status of nuclear power operations.

Other

Supply Chain

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

~~Electric Meters and Transformers~~

Supply chain issues associated with semi-conductors have delayed the availability of advanced infrastructure meters, which led to a reduced number of meters deployed in 2022. While there have been improvements in the 2023 deployment plan, the supply chain challenges persist. As a result of delays, NSP-Minnesota projects impacts to deployment schedules into 2025.

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

Solar Resources

In August 2023, the U.S. Department of Commerce completed its anti-circumvention investigation and concluded that CSPV solar panels and cells imported from Malaysia, Vietnam, Thailand, and Cambodia would be subject to incremental tariffs ranging from 50% to 250%. These countries account for more than 80% of CSPV panel imports.

An interim stay on tariffs remains in effect until June 2024 and many significant solar projects have resumed with modified costs and projected in-service dates, including the Sherco Solar facility. Further policy action, a change in the interim stay of tariffs, or other restrictions on solar imports (e.g., as a result of implementation of the Uyghur Forced Labor Protection Act) or, disruptions in solar imports from key suppliers or any new trade complaint could impact project timelines and costs.

On April 24, 2024, the American Alliance for Solar Manufacturing Trade Committee filed a petition related to new anti-dumping and countervailing duty cases targeting solar products from Cambodia, Malaysia, Thailand and Vietnam with the United States Department of Commerce and the United States International Trade Commission. NSP-Minnesota continues to assess the impacts (if any) of this trade complaint on its business.

Emerging Environmental Regulation

Clean Air Act

Power Plant Greenhouse Gas Regulations — In ~~May 2023,~~April 2024, the EPA published ~~proposed~~final rules addressing control of CO2 emissions from the power sector. The ~~rule proposed regulations for~~rules regulate new natural gas generating units ~~under Clean Air Act Section 111(b)~~ and emission guidelines for existing coal and certain natural gas ~~generation under Clean Air Act~~

~~Section 111(d).~~generation. The ~~proposed~~ rules create subcategories of coal units based on planned retirement date and subcategories of natural gas combustion turbines and combined cycle units based on utilization. The CO2 control requirements vary by subcategory. ~~Until final rules are issued, it is not certain what~~NSP-Minnesota continues to evaluate the impact ~~will be on NSP-Minnesota. NSP-Minnesota~~of these rules and believes that the cost of these initiatives or replacement generation would be recoverable through rates based on prior state commission practices.

Coal Ash Regulation

In ~~May 2023,~~April 2024, the EPA published ~~proposed~~final rules to regulate additional areas under the CCR Rule for the first time, including legacy CCR surface impoundments at inactive facilities and previously exempt areas where CCR was placed directly on land at regulated CCR ~~facilities under the CCR Rule for the first time.~~facilities. The ~~proposed~~ rule ~~would subject~~subjects these areas to ~~the CCR Rule requirements, including~~ groundwater monitoring, corrective action and closure and post-closure care requirements, among other requirements, with several of the deadlines accelerated.

The EPA has committed to a May 2024 effective date for those new rules. It is also anticipated that the EPA may issue other CCR proposed rules in 2023 that further expand the scope of the CCR Rule. Until final rules are issued, it is not certain what the impact will be on NSP-Minnesota. NSP-Minnesota believes that the cost of these ~~initiatives~~requirements would be recoverable through rates based on prior state commission practices.

Emerging Contaminants of Concern

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

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

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

~~NSP-Minnesota provided comments related~~In February 2024, the EPA proposed to ~~both efforts described above through~~change the Resource Conservation and Recovery Act by adding nine PFAS to its ~~regulatory coalitions.~~ list of hazardous constituents.

Final rules for all three proposals are expected in ~~2024. Costs are uncertain until a final rule is published.~~

~~The proposed rules~~2024 which could result in new ~~obligations for investigation and cleanup. NSP-Minnesota~~obligations. Potential costs are uncertain until final rules are published and/or agency action is ~~monitoring changes to state laws addressing PFAS. The impact of these proposed regulations is uncertain.~~taken.

Effluent Limitation Guidelines

In ~~March 2023,~~April 2024, the EPA ~~released a proposed rule~~published final rules under the Clean Water Act, setting forth ~~proposed~~ Effluent Limitations Guidelines and Standards for steam generating coal plants. This ~~proposed~~ rule establishes more stringent wastewater discharge standards for bottom ash transport water, flue-gas desulfurization wastewater, and combustion residuals leachate from steam electric power plants, particularly coal-fired power plants. ~~Comments~~NSP-Minnesota continues to evaluate the ~~proposed regulations were submitted on May 30, 2023. The~~ impact of these ~~proposed regulations is uncertain until a final rule is published~~rules and believes that any costs associated with these requirements would be recoverable through rates based on prior state commission practices.

2220

Table of Contents

Nuclear Fuel Supply

~~NSP-Minnesota has contracted for its 2023, 2024 and 2025 enriched nuclear material requirements, which are in various stages of processing in Canada, Europe and the United States. NSP-Minnesota~~NSP-Minnesota is scheduled to take delivery of approximately ~~28%~~29% of its average ~~enriched~~enriched nuclear material requirements from Russia through 2030. Given the evolving situation in Ukraine and its global impacts, ~~NSP-Minnesota has~~we have entered into additional ~~new~~ contracts that cover potential supply interruptions of nuclear material from Russia. With these contracts, NSP-Minnesota has secured its enriched nuclear material requirements through 2028 with non-Russian material, which are in various stages of processing in Canada, Europe and the United States.


ITEM 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

NSP-Minnesota 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, 2023,~~March 31, 2024, based on an evaluation carried out under the supervision and with the participation of NSP-Minnesota’s management, including the CEO and CFO, of the effectiveness of its disclosure controls and procedures, the CEO and CFO have concluded that NSP-Minnesota’s disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

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

PART II — OTHER INFORMATION


ITEM 1 — LEGAL PROCEEDINGS

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

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

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


ITEM 1A — RISK FACTORS

NSP-Minnesota’s risk factors are documented in Item 1A of Part I of its Annual Report on Form 10-K for the year ended Dec. 31, ~~2022,~~2023, which is incorporated herein by reference. There have been no material changes from the risk factors previously disclosed in the Form 10-K.


ITEM 5 — OTHER INFORMATION

None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended ~~Sept. 30, 2023.~~March 31, 2024.


ITEM 6 — EXHIBITS

* Indicates incorporation by reference


Exhibit Number	Description	Report or Registration Statement	Exhibit Reference
3.01*	Articles of Incorporation and Amendments of Northern Power Corp. (renamed NSP-Minnesota on Aug. 21, 2000)	NSP-Minnesota Form 10-12G dated Oct. 5, 2000	3.01
3.02*	Amended and Restated Bylaws of NSP-Minnesota, dated Jan. 25, 2019	NSP-Minnesota Form 10-K for the year ended Dec. 31, 2018	3.02
4.01*	Supplemental Trust Indenture dated as of February 1, 2024 between Northern States Power Company and The Bank of New York Mellon Trust Company, N.A., as successor Trustee, creating $700,000,000 aggregate principal amount of 5.40% First Mortgage Bonds, Series due March 15, 2054.	NSP-Minnesota Form 8-K dated February 29, 2024	4.01
31.01	Principal Executive Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.02	Principal Financial Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.01	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Schema
101.CAL	Inline XBRL Calculation
101.DEF	Inline XBRL Definition
101.LAB	Inline XBRL Label
101.PRE	Inline XBRL Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

2321

Table of Contents

SIGNATURES

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


		Northern States Power Company (a Minnesota corporation)

4/25/2024	By:	/s/ MELISSA L. OSTROM
		~~10/27/23~~Melissa L. Ostrom
		Vice President, Controller
		(Principal Accounting Officer)


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

2422