UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, ~~2019~~2020 or



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


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


Colorado	001-03280	84-0296600
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(IRS Employer Identification No.)

1800 Larimer, Suite 1100

Denver

80202

(Address of Principal Executive Offices)

(Zip Code)

~~001-03280~~

(303)

~~84-0296600~~571-7511

(~~Commission File Number)~~Registrant’s Telephone Number, Including Area Code)

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

~~(Registrant, State of Incorporation or Organization, Address of Principal Executive Officers and Telephone Number)~~

~~Public Service Company of Colorado~~

~~Colorado~~

~~1800 Larimer, Suite 1100~~



~~Denver~~N/A
~~Colorado~~			~~80202~~(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)



~~303~~	~~571-7511~~

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

Title of each class

Trading Symbol

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 ~~and~~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, 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						~~August 1, 2019~~July 31, 2020
Common Stock, $0.01 par value						100 shares

Public Service Company of Colorado meets the conditions set forth in General Instruction 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 l —	Financial Statements ~~(Unaudited)~~(unaudited)	4
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Consolidated Balance Sheet	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	2017
Item 4 —	Controls and Procedures	2220

PART II — OTHER INFORMATION
Item 1 —	Legal Proceedings	2220
Item 1A —	Risk Factors	2220
Item 6 —	Exhibits	2321

SIGNATURES			2422

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

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

Definitions of Abbreviations

~~ABBREVIATIONS AND INDUSTRY TERMS~~



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



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



Electric, Purchased Gas and Resource Adjustment Clauses
~~TCA~~DSM			~~Transmission cost adjustment~~Demand side management



Other
~~ACE~~AFUDC		~~Affordable Clean Energy~~
~~AFUDC~~	Allowance for funds used during construction
ASC		FASB Accounting Standards Codification
~~ASU~~C&I		~~FASB Accounting Standards Update~~
~~C&I~~	Commercial and Industrial
~~CACJA~~CCR		~~Clean Air Clean Jobs Act~~
~~CCR~~	Coal combustion residual
CCR Rule		Final rule (40 CFR 257.50 - 257.107) published by the EPA regulating the management, storage and disposal of CCRs as a nonhazardous waste
~~CIG~~CEO		~~Colorado Interstate Gas Company, LLC~~Chief executive officer
~~DRC~~CFO		~~Development Recovery Company~~Chief financial officer
~~ETR~~COVID-19		Novel coronavirus
ETR		Effective tax rate
FASB		Financial Accounting Standards Board
GAAP		Generally accepted accounting principles
IPP		Independent power producing entity
~~MGP~~MDL		Multi district litigation
MGP		Manufactured gas plant
NOL		Net operating loss
O&M		Operating and maintenance
PPA		~~Purchased power~~Power purchase agreement
PTC		Production tax credit
ROE		Return on equity
~~ROU~~RTO		~~Right-of-use~~Regional Transmission Organization
~~TCJA~~VIE		~~2017 federal tax reform enacted as Public Law No: 115-97, commonly referred to as the Tax Cuts and Jobs Act~~Variable interest entity


Measurements
MW			Megawatts



~~Measurements~~
MW	~~Megawatts~~Forward-Looking Statements

~~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, assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed elsewhere in this Quarterly Report on Form 10-Q and in other securities filings (including PSCo’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, ~~2018~~2019 and subsequent securities filings), could cause actual results to differ materially from management expectations as suggested by such forward-looking information: ~~changes in environmental laws~~uncertainty around the impacts and ~~regulations; climate change~~duration of the COVID-19 pandemic; operational safety; successful long-term operational planning; commodity risks associated with energy markets and ~~other weather natural disaster~~production; rising energy prices and ~~resource depletion, including compliance with any accompanying legislative~~fuel costs; qualified employee work force and ~~regulatory changes;~~third-party contractor factors; ability to recover costs, ~~from customers;~~changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of PSCo and its subsidiaries to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; tax laws; ~~operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices; costs of potential regulatory penalties;~~ effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; ~~fuel costs;~~seasonal weather patterns; changes in environmental laws and ~~employee work force~~regulations; climate change and ~~third party contractor factors.~~other weather; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; and costs of potential regulatory penalties.

Table of Contents

PART I — FINANCIAL INFORMATION

~~Item~~ITEM 1 — FINANCIAL STATEMENTS

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(amounts in millions)


	Three Months Ended June 30						Six Months Ended June 30							Three Months Ended June 30						Six Months Ended June 30
	2019			2018			2019			2018				2020		2019		2020		2019
Operating revenues													Operating revenues
Electric	$	692.7		$	716.2		$	1,434.2		$	1,414.5		Electric	$	715.4	$	692.7	$	1,427.2	$	1,434.2
Natural gas	207.6			186.7			676.7			550.6			Natural gas	186.2		207.6		517.7		676.7
Steam and other	9.7			9.0			22.1			20.1			Steam and other	9.5		9.7		22.9		22.1
Total operating revenues	910.0			911.9			2,133.0			1,985.2			Total operating revenues	911.1		910.0		1,967.8		2,133.0

Operating expenses													Operating expenses
Electric fuel and purchased power	240.7			271.9			544.9			553.1			Electric fuel and purchased power	258.4		240.7		529.2		544.9
Cost of natural gas sold and transported	69.9			58.6			342.4			249.8			Cost of natural gas sold and transported	49.8		69.9		187.4		342.4
Cost of sales — steam and other	3.9			3.7			8.4			7.5			Cost of sales — steam and other	3.0		3.9		6.0		8.4
Operating and maintenance expenses	200.3			189.0			399.5			372.1			Operating and maintenance expenses	189.3		200.3		393.8		399.5
Demand side management expenses	32.2			33.2			64.4			65.9			Demand side management expenses	36.1		32.2		71.7		64.4
Depreciation and amortization	148.1			116.5			295.0			238.2			Depreciation and amortization	158.1		148.1		314.5		295.0
Taxes (other than income taxes)	52.2			49.7			105.9			102.4			Taxes (other than income taxes)	55.4		52.2		108.6		105.9
Total operating expenses	747.3			722.6			1,760.5			1,589.0			Total operating expenses	750.1		747.3		1,611.2		1,760.5

Operating income	162.7			189.3			372.5			396.2			Operating income	161.0		162.7		356.6		372.5

Other (expense) income, net	(0.3		)	0.8			0.6			1.0
Other income (expense), net													Other income (expense), net	1.6		(0.3)		(0.2)		0.6

Allowance for funds used during construction — equity	5.0			13.5			9.1			24.5			Allowance for funds used during construction — equity	11.4		5.0		20.0		9.1

Interest charges and financing costs													Interest charges and financing costs
Interest charges — includes other financing costs of $1.6, $1.6, $3.2 and $3.2, respectively	57.7			51.2			117.1			101.2
Interest charges — includes other financing costs of $1.8, $1.6, $3.5 and $3.2, respectively													Interest charges — includes other financing costs of $1.8, $1.6, $3.5 and $3.2, respectively	62.9		57.7		123.0		117.1
Allowance for funds used during construction — debt	(2.4		)	(5.2		)	(4.9		)	(9.8		)	Allowance for funds used during construction — debt	(4.7)		(2.4)		(8.5)		(4.9)
Total interest charges and financing costs	55.3			46.0			112.2			91.4			Total interest charges and financing costs	58.2		55.3		114.5		112.2

Income before income taxes	112.1			157.6			270.0			330.3			Income before income taxes	115.8		112.1		261.9		270.0
Income taxes	10.6			35.3			29.7			74.3
Income tax expense													Income tax expense	7.7		10.6		25.1		29.7
Net income	$	101.5		$	122.3		$	240.3		$	256.0		Net income	$	108.1	$	101.5	$	236.8	$	240.3

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in millions)

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

Other comprehensive income

Derivative instruments:

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

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


	Three Months Ended June 30						Six Months Ended June 30
	2020		2019		2020		2019
Net income	$	108.1	$	101.5	$	236.8	$	240.3
Other comprehensive income



Derivative instruments:

Reclassification of loss to net income, net of tax of $0.1, $0.1, $0.2, and $0.2, respectively	0.3		0.3		0.6		0.6

Total other comprehensive income	0.3		0.3		0.6		0.6
Total comprehensive income	$	108.4	$	101.8	$	237.4	$	240.9

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)

Six Months Ended June 30
2019 2018
Operating activities
Net income $ 240.3
$ 256.0
Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 297.4
240.6
Deferred income taxes 2.8
25.6
Amortization of investment tax credits (1.3 ) (1.4 )
Allowance for equity funds used during construction (9.1 ) (24.5 )
Net realized and unrealized hedging and derivative transactions (2.2 ) (1.9 )
Changes in operating assets and liabilities:

Accounts receivable 63.2
22.0
Accrued unbilled revenues 77.2
66.5
Inventories 16.5
44.8
Prepayments and other 0.5
1.5
Accounts payable (111.8 ) (22.1 )
Net regulatory assets and liabilities 80.0
30.4
Other current liabilities (94.6 ) (119.1 )
Pension and other employee benefit obligations (43.5 ) (27.5 )
Other, net 0.5
(10.7 )
Net cash provided by operating activities 515.9
480.2

Investing activities

Utility capital/construction expenditures (632.5 ) (801.0 )
Investments in utility money pool arrangement (131.0 ) (198.0 )
Repayments from utility money pool arrangement 131.0
56.0
Net cash used in investing activities (632.5 ) (943.0 )

Financing activities

Repayments of short-term borrowings, net (86.0 ) —
Borrowings under utility money pool arrangement 58.0
526.0
Repayments under utility money pool arrangement (8.0 ) (526.0 )
Proceeds from issuance of long-term debt 391.6
692.7
Repayments of long-term debt (400.0 ) —
Capital contributions from parent 332.2
216.5
Dividends paid to parent (190.4 ) (171.5 )
Other, net —
(0.1 )
Net cash provided by financing activities 97.4
737.6

Net change in cash and cash equivalents (19.2 ) 274.8
Cash and cash equivalents at beginning of period 33.4
7.5
Cash and cash equivalents at end of period $ 14.2
$ 282.3

Supplemental disclosure of cash flow information:

Cash paid for interest (net of amounts capitalized) $ (107.4 ) $ (88.9 )
Cash paid for income taxes, net (28.7 ) (96.4 )
Supplemental disclosure of non-cash investing and financing transactions:

Accrued property, plant and equipment additions $ 113.1
$ 131.8
Inventory transfers to property, plant and equipment 15.4
9.3
Operating lease right-of-use assets 653.4
—
Allowance for equity funds used during construction 9.1
24.5


	Six Months Ended June 30
	2020		2019
Operating activities
Net income	$	236.8	$	240.3
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	316.7		297.4
Deferred income taxes	8.7		2.8
Amortization of investment tax credits	(1.2)		(1.3)
Allowance for equity funds used during construction	(20.0)		(9.1)
Provision for bad debts	10.8		6.8
Net realized and unrealized hedging and derivative transactions	(1.4)		(2.2)
Changes in operating assets and liabilities:
Accounts receivable	24.5		56.4
Accrued unbilled revenues	65.3		77.2
Inventories	20.4		16.5
Prepayments and other	6.6		0.5
Accounts payable	(83.4)		(111.8)
Net regulatory assets and liabilities	41.0		80.0
Other current liabilities	(86.1)		(94.6)
Pension and other employee benefit obligations	(46.7)		(43.5)
Other, net	(8.0)		0.5
Net cash provided by operating activities	484.0		515.9

Investing activities
Utility capital/construction expenditures	(917.6)		(632.5)

Investments in utility money pool arrangement	(366.0)		(131.0)
Repayments from utility money pool arrangement	366.0		131.0

Net cash used in investing activities	(917.6)		(632.5)

Financing activities
Repayments of short-term borrowings, net	—		(86.0)
Borrowings under utility money pool arrangement	1,311.0		58.0
Repayments under utility money pool arrangement	(1,350.0)		(8.0)
Proceeds from issuance of long-term debt	735.2		391.6
Repayments of long-term debt	—		(400.0)
Capital contributions from parent	778.4		332.2
Dividends paid to parent	(574.1)		(190.4)
Other, net	(0.3)		—
Net cash provided by financing activities	900.2		97.4

Net change in cash, cash equivalents and restricted cash	466.6		(19.2)
Cash, cash equivalents and restricted cash at beginning of period	11.4		33.4
Cash, cash equivalents and restricted cash at end of period	$	478.0	$	14.2

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(106.9)	$	(107.4)
Cash paid for income taxes, net	(17.5)		(28.7)
Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	113.2	$	113.1
Inventory transfers to property, plant and equipment	17.4		15.4
Operating lease right-of-use assets	8.2		653.4
Allowance for equity funds used during construction	20.0		9.1

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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

June 30, 2019 Dec. 31, 2018
Assets
Current assets
Cash and cash equivalents $ 14.2
$ 33.4
Accounts receivable, net 252.6
310.3
Accounts receivable from affiliates 21.2
80.8
Accrued unbilled revenues 236.3
313.5
Inventories 165.5
197.4
Regulatory assets 68.4
120.6
Derivative instruments 18.4
42.6
Prepayments and other 26.4
23.8
Total current assets 803.0
1,122.4

Property, plant and equipment, net 15,335.7
15,120.0

Other assets

Regulatory assets 1,052.3
1,010.7
Derivative instruments 2.5
1.2
Operating lease right-of-use assets 613.7
—
Other 175.1
37.2
Total other assets 1,843.6
1,049.1
Total assets $ 17,982.3
$ 17,291.5

Liabilities and Equity

Current liabilities

Current portion of long-term debt $ —
$ 406.2
Short-term debt 221.0
307.0
Borrowings under utility money pool arrangement 50.0
—
Accounts payable 383.5
503.4
Accounts payable to affiliates 43.6
46.0
Regulatory liabilities 116.9
67.3
Taxes accrued 118.5
202.0
Accrued interest 46.4
43.2
Dividends payable to parent 104.9
91.5
Derivative instruments 9.7
34.6
Other 182.5
101.5
Total current liabilities 1,277.0
1,802.7

Deferred credits and other liabilities

Deferred income taxes 1,738.6
1,719.3
Deferred investment tax credits 24.1
25.3
Regulatory liabilities 2,023.4
2,021.5
Asset retirement obligations 346.2
338.7
Derivative instruments 0.6
0.6
Customer advances 169.1
168.1
Pension and employee benefit obligations 231.3
275.3
Operating lease liabilities 560.3
—
Other 152.5
50.4
Total deferred credits and other liabilities 5,246.1
4,599.2

Commitments and contingencies

Capitalization

Long-term debt 4,846.1
4,591.4
Common stock — 100 shares authorized at $0.01 par value; 100 shares
outstanding at June 30, 2019 and Dec. 31, 2018, respectively
—
—
Additional paid in capital 4,618.3
4,340.5
Retained earnings 2,019.7
1,983.2
Accumulated other comprehensive loss (24.9 ) (25.5 )
Total common stockholder’s equity 6,613.1
6,298.2
Total liabilities and equity $ 17,982.3
$ 17,291.5


	June 30, 2020		Dec. 31, 2019
Assets
Current assets
Cash and cash equivalents	$	478.0	$	11.4
Accounts receivable, net	284.3		303.9
Accounts receivable from affiliates	13.0		52.7

Accrued unbilled revenues	227.7		293.9
Inventories	154.1		192.0
Regulatory assets	87.2		64.0
Derivative instruments	8.0		7.2


Prepayments and other	57.1		55.9
Total current assets	1,309.4		981.0

Property, plant and equipment, net	16,927.8		16,155.0

Other assets
Regulatory assets	1,045.5		1,038.1
Derivative instruments	0.4		—
Operating lease right-of-use assets	541.0		574.0
Other	257.1		259.4
Total other assets	1,844.0		1,871.5
Total assets	$	20,081.2	$	19,007.5

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	400.0	$	400.0

Borrowings under utility money pool arrangement	—		39.0
Accounts payable	354.6		573.3
Accounts payable to affiliates	63.8		43.9
Regulatory liabilities	103.7		69.2
Taxes accrued	123.3		202.1
Accrued interest	55.8		53.4
Dividends payable to parent	104.6		111.5
Derivative instruments	13.2		8.7
Operating lease liabilities	91.8		85.8
Other	85.9		98.8
Total current liabilities	1,396.7		1,685.7

Deferred credits and other liabilities
Deferred income taxes	1,880.1		1,850.8
Deferred investment tax credits	21.6		22.8
Regulatory liabilities	2,299.0		2,036.8
Asset retirement obligations	329.5		324.0
Derivative instruments	47.6		52.5
Customer advances	170.6		173.6
Pension and employee benefit obligations	164.5		211.9
Operating lease liabilities	477.2		517.6
Other	152.3		150.9
Total deferred credits and other liabilities	5,542.4		5,340.9

Commitments and contingencies
Capitalization
Long-term debt	5,722.0		4,984.7
Common stock — 100 shares authorized at $0.01 par value; 100 shares outstanding at June 30, 2020 and Dec. 31, 2019, respectively	—		—
Additional paid in capital	5,693.7		4,939.4
Retained earnings	1,752.4		2,083.4
Accumulated other comprehensive loss	(26.0)		(26.6)
Total common stockholder’s equity	7,420.1		6,996.2
Total liabilities and equity	$	20,081.2	$	19,007.5

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED)

(amounts in millions, except share data)


	Common Stock Issued									Retained Earnings		Accumulated Other Comprehensive Loss	Total Common Stockholder’s Equity
	Shares	Par Value		Additional Paid In Capital
Three Months Ended June 30, 2020 and 2019
Balance at March 31, 2019	100	$	—	$	4,390.5	$	2,023.1	$	(25.2)	$	6,388.4
Net income						101.5				101.5
Other comprehensive income								0.3		0.3
Dividends declared to parent						(104.9)				(104.9)
Contribution of capital by parent				227.8						227.8
Balance at June 30, 2019	100	$	—	$	4,618.3	$	2,019.7	$	(24.9)	$	6,613.1

Balance at March 31, 2020	100	$	—	$	4,989.4	$	2,108.9	$	(26.3)	$	7,072.0
Net income						108.1				108.1
Other comprehensive income								0.3		0.3
Dividends declared to parent						(464.6)				(464.6)
Contribution of capital by parent				704.3						704.3
Balance at June 30, 2020	100	$	—	$	5,693.7	$	1,752.4	$	(26.0)	$	7,420.1

	Common Stock Issued									Retained Earnings		Accumulated Other Comprehensive Loss	Total Common Stockholder’s Equity
	Shares	Par Value		Additional Paid In Capital
Six Months Ended June 30, 2020 and 2019
Balance at Dec. 31, 2018	100	$	—	$	4,340.5	$	1,983.2	$	(25.5)	$	6,298.2
Net income						240.3				240.3
Other comprehensive income								0.6		0.6
Dividends declared to parent						(203.8)				(203.8)
Contribution of capital by parent				277.8						277.8
Balance at June 30, 2019	100	$	—	$	4,618.3	$	2,019.7	$	(24.9)	$	6,613.1

Balance at Dec. 31, 2019	100	$	—	$	4,939.4	$	2,083.4	$	(26.6)	$	6,996.2
Net income						236.8				236.8
Other comprehensive income								0.6		0.6
Dividends declared to parent						(567.1)				(567.1)
Contribution of capital by parent				754.3						754.3
Adoption of ASC Topic 326						(0.7)				(0.7)
Balance at June 30, 2020	100	$	—	$	5,693.7	$	1,752.4	$	(26.0)	$	7,420.1

See Notes to Consolidated Financial Statements

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

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

See Notes to Consolidated Financial Statements

~~PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED)~~

~~(amounts in millions, except share data)~~

Common Stock Issued Retained Earnings Accumulated
Other
Comprehensive
Loss Total
Common
Stockholder’s
Equity
Shares Par Value Additional Paid In Capital
Six Months Ended June 30, 2019 and 2018
Balance at Dec. 31, 2017 100
$ —
$ 4,032.8
$ 1,822.2
$ (26.7 ) $ 5,828.3
Net income 256.0
256.0
Other comprehensive income 0.6
0.6
Dividends declared to parent (195.6 ) (195.6 )
Contribution of capital by parent 240.3
240.3
Balance at June 30, 2018 100
$ —
$ 4,273.1
$ 1,882.6
$ (26.1 ) $ 6,129.6

Balance at Dec. 31, 2018 100
$ —
$ 4,340.5
$ 1,983.2
$ (25.5 ) $ 6,298.2
Net income 240.3
240.3
Other comprehensive income 0.6
0.6
Dividends declared to parent (203.8 ) (203.8 )
Contribution of capital by parent 277.8
277.8
Balance at June 30, 2019 100
$ —
$ 4,618.3
$ 2,019.7
$ (24.9 ) $ 6,613.1

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

Notes to Consolidated Financial Statements (UNAUDITED)

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly, in accordance with U.S. GAAP, the financial position of PSCo and its subsidiaries as of June 30, ~~2019~~2020 and Dec. 31, ~~2018;~~2019; the results of its operations, including the components of net income, ~~and~~ comprehensive income and changes in ~~stockholders’~~stockholder’s equity for the three and six months ended June 30, ~~2019~~2020 and ~~2018;~~2019; and its cash flows for the six months ended June 30, ~~2019~~2020 and ~~2018.~~2019. All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after June 30, ~~2019~~2020, 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, ~~2018~~2019, balance sheet information has been derived from the audited ~~2018~~2019 consolidated financial statements included in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, ~~2018.~~2019. These notes to the consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the consolidated financial statements and notes thereto, included in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, ~~2018,~~2019, filed with the SEC on Feb. ~~22, 2019.~~21, 2020. Due to the seasonality of PSCo’s electric and natural gas sales, interim results are not necessarily an appropriate base from which to project annual results.


1.			Summary of Significant Accounting Policies

The significant accounting policies set forth in Note 1 to the consolidated financial statements in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, ~~2018,~~2019, appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.


2.			Accounting Pronouncements

~~Recently Issued~~

~~Credit Losses~~— ~~In 2016, the FASB issued~~ ~~Financial Instruments - Credit Losses, Topic 326 (ASC Topic 326),~~ which changes how entities account for losses on receivables and certain other assets. The guidance requires use of a current expected credit loss model, which may result in earlier recognition of credit losses than under previous accounting standards. ASC Topic 326 is effective for interim and annual periods beginning on or after Dec. 15, 2019, and will be applied on a modified-retrospective approach through a cumulative-effect adjustment to retained earnings as of Jan. 1, 2020. PSCo is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

Recently Adopted

~~Leases~~Credit Losses —In 2016, the FASB issued ~~Leases~~Financial Instruments - Credit Losses, Topic 326 (ASC Topic 326), ~~Topic 842(ASC Topic 842)~~, which ~~provides new~~changes how entities account for losses on receivables and certain other assets. The guidance requires use of a current expected credit loss model, which may result in earlier recognition of credit losses than under previous accounting ~~and disclosure guidance for leasing activities, most significantly requiring that operating leases be recognized on the balance sheet.~~ standards.

PSCo ~~adopted~~implemented the guidance using a modified-retrospective approach, recognizing a cumulative effect charge of $0.7 million (after tax) to retained earnings on Jan. 1, 2019 utilizing the package of transition practical expedients provided by the new standard, including carrying forward prior conclusions on whether agreements existing before the adoption date contain leases and whether existing leases are operating or finance leases; ASC Topic 842 refers to capital leases as finance leases.

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

~~PSCo also utilized the transition practical expedient offered by~~ ~~ASU No. 2018-11 Leases: Targeted Improvements~~ to implement the standard on a prospective basis. As a result, reporting periods in the consolidated financial statements beginning Jan. 1, 2019 reflect the implementation of ASC Topic 842, while prior periods continue to be reported in accordance with ~~Leases, Topic 840 (ASC Topic 840)~~.2020. Other than first-time recognition of ~~operating leases~~an allowance for doubtful accounts on ~~its consolidated balance sheet,~~accrued unbilled revenues, the ~~implementation~~Jan. 1, 2020, adoption of ASC Topic ~~842~~326 did not have a significant impact on PSCo’s consolidated financial statements. ~~Adoption resulted in recognition of approximately $0.7 billion of operating lease ROU assets and current/noncurrent operating lease liabilities. See Note 9 for leasing disclosures.~~


3.			Selected Balance Sheet Data


(Millions of Dollars)	June 30, 2020		Dec. 31, 2019
Accounts receivable, net
Accounts receivable	$	308.2	$	324.9
Less allowance for bad debts	(23.9)		(21.0)
Accounts receivable, net	$	284.3	$	303.9

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


(Millions of Dollars)	June 30, 2020		Dec. 31, 2019
Inventories
Materials and supplies	$	62.8	$	62.6
Fuel	67.2		77.1
Natural gas	24.1		52.3
Total inventories	$	154.1	$	192.0


(Millions of Dollars)	June 30, 2020		Dec. 31, 2019
Property, plant and equipment, net
Electric plant	$	14,601.5	$	14,361.9
Natural gas plant	4,778.1		4,631.4
Common and other property	1,133.3		1,113.5
Plant to be retired ^(a)	291.5		259.9
Construction work in progress	1,251.8		912.7
Total property, plant and equipment	22,056.2		21,279.4
Less accumulated depreciation	(5,128.4)		(5,124.4)
Property, plant and equipment, net	$	16,927.8	$	16,155.0

^(a)
In 2018, the CPUC approved early retirement of PSCo’s Comanche Units 1 and 2 in approximately 2022 and 2025, respectively. PSCo also expects Craig Unit 1 to be retired early in 2025. Amounts are presented net of accumulated depreciation.

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

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


^(a)	In 2018, the CPUC approved early retirement of PSCo’s Comanche Units 1 and 2 in approximately 2022 and 2025, respectively. PSCo also expects Craig Unit 1 to be retired early in 2025. Amounts are presented net of accumulated depreciation.


4.			Borrowings and Other Financing Instruments

Short-Term Borrowings

PSCo meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility and the money pool.

Money Pool —— Xcel Energy Inc. and its utility subsidiaries have established a money pool arrangement that allows for short-term investments in and borrowings between the utility subsidiaries. Xcel Energy Inc. may make investments in the utility subsidiaries at market-based interest rates; however, the money pool arrangement does not allow the utility subsidiaries to make investments in Xcel Energy Inc.

Money pool borrowings for PSCo were as follows:

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


(Amounts in Millions, Except Interest Rates)	Three Months Ended June 30, 2020			Year Ended Dec. 31, 2019
Borrowing limit	$	250		$	250
Amount outstanding at period end	—			39
Average amount outstanding	94			7
Maximum amount outstanding	250			50
Weighted average interest rate, computed on a daily basis	0.92		%	2.29		%
Weighted average interest rate at period end	N/A			1.63		%

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


(Amounts in Millions, Except Interest Rates)	Three Months Ended June 30, 2020			Year Ended Dec. 31, 2019
Borrowing limit	$	700		$	700
Amount outstanding at period end	—			—
Average amount outstanding	24			154
Maximum amount outstanding	166			432
Weighted average interest rate, computed on a daily basis	0.71		%	2.67		%
Weighted average interest rate at period end	N/A			N/A

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

Table of Contents

Letters of Credit — PSCo uses letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. There were ~~$10~~$8 million and $9 million of letters of credit outstanding under the credit facility at June 30, ~~2019~~2020 and Dec. 31, ~~2018.~~2019, respectively. The contract amounts of these letters of credit approximate their fair value and are subject to fees.

Revolving Credit Facility — In order to use its commercial paper program to fulfill short-term funding needs, PSCo must have a revolving credit facility in place at least equal to the amount of its commercial paper borrowing limit and cannot issue commercial paper in an aggregate amount exceeding available capacity under this credit facility. The credit facility provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

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

At June 30, ~~2019,~~2020, PSCo had the following committed revolving credit facility available (in millions of dollars):


Credit Facility ^(a)		Outstanding ^(b)		Available
$	700	$	8	$	692

Credit Facility ^(a)

Outstanding ^(b)
Available
$ 700
$ 231
$ 469

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

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

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. PSCo had no0 direct advances on the credit facility outstanding at June 30, ~~2019~~2020 and Dec. 31, ~~2018.~~2019.

Long-Term Borrowings

During the six months ended June 30, ~~2019,~~2020, PSCo issued ~~$400~~$375 million ~~of 4.05%~~in 1.90% first mortgage bonds due ~~Sep.~~Jan. 15, ~~2049.~~2031 and $375 million of 2.70% first mortgage bonds due Jan. 15, 2051.


5.			Revenues

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


	Three Months Ended June 30, 2020
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	243.8	$	117.7	$	2.8	$	364.3
C&I	351.5		39.1		5.6		396.2
Other	11.7		—		—		11.7
Total retail	607.0		156.8		8.4		772.2
Wholesale	41.5		—		—		41.5
Transmission	13.8		—		—		13.8
Other	14.5		23.4		—		37.9
Total revenue from contracts with customers	676.8		180.2		8.4		865.4
Alternative revenue and other	38.6		6.0		1.1		45.7
Total revenues	$	715.4	$	186.2	$	9.5	$	911.1

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

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


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

	Six Months Ended June 30, 2020
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	481.3	$	335.1	$	5.9	$	822.3
C&I	703.5		116.9		14.8		835.2
Other	23.9		—		—		23.9
Total retail	1,208.7		452.0		20.7		1,681.4
Wholesale	88.8		—		—		88.8
Transmission	27.2		—		—		27.2
Other	29.3		53.2		—		82.5
Total revenue from contracts with customers	1,354.0		505.2		20.7		1,879.9
Alternative revenue and other	73.2		12.5		2.2		87.9
Total revenues	$	1,427.2	$	517.7	$	22.9	$	1,967.8


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

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

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

Table of Contents


6.			Income Taxes

~~Except to the extent noted below,~~ Note 87 to the consolidated financial statements included in PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, ~~2018~~2019, represents, in all material respects, the current status of other income tax matters except to the extent noted below and are incorporated herein by reference.

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


	Six Months Ended June 30
	2020		2019
Federal statutory rate	21.0	%	21.0	%
State tax (net of federal tax effect)	3.7		3.7
(Decreases) increases in tax from:
Wind PTCs	(9.8)		(9.4)
Plant regulatory differences ^(a)	(4.7)		(3.4)
Other tax credits, net of NOL & tax credit allowances	(1.1)		(1.0)
Other (net)	0.5		0.1
Effective income tax rate	9.6	%	11.0	%

Six Months Ended June 30
2019 2018
Federal statutory rate 21.0 % 21.0 %
State tax (net of federal tax effect) 3.7
3.7
Increases (decreases) in tax from:

Wind PTCs (9.4 ) —
Plant regulatory differences ^(a)
(3.4 ) (1.5 )
Other tax credits and allowances (net) (1.0 ) (1.0 )
Other (net) 0.1
0.3
Effective income tax rate 11.0 % 22.5 %

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

^(a)

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

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



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

~~In 2015, the IRS commenced an examination of tax years 2012 and 2013.~~ In 2017, the IRS concluded the audit of tax years 2012 and 2013 and proposed an adjustment that would impact Xcel Energy’s NOL and ETR. Xcel Energy filed a protest with the IRS. ~~As of June 30, 2019, the case has been forwarded to Office of Appeals and~~In April 2020, Xcel Energy ~~has recognized its best estimate of income tax expense that will result from a final resolution of this issue; however, the outcome~~ and ~~timing of a resolution is unknown.~~Appeals reached an agreement and no material adjustments were required.

In 2018, the IRS began an audit of tax years 2014 - 2016. As of June 30, ~~2019 no~~2020, 0 adjustments have been proposed.

State Audits — PSCo is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of June 30, ~~2019,~~2020, PSCo’s earliest open tax year ~~that is~~ subject to examination by state taxing authorities under applicable statutes of limitations is 2009. There are currently no state income tax audits in progress.

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

Unrecognized tax benefits -— permanent vs temporary:

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


(Millions of Dollars)	June 30, 2020		Dec. 31, 2019
Unrecognized tax benefit — Permanent tax positions	$	8.0	$	7.4
Unrecognized tax benefit — Temporary tax positions	4.5		4.6
Total unrecognized tax benefit	$	12.5	$	12.0

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

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


(Millions of Dollars)	June 30, 2020		Dec. 31, 2019
NOL and tax credit carryforwards	$	(8.1)	$	(8.3)

Net deferred tax liability associated with the unrecognized tax benefit amounts and related NOLs and tax credits carryforwards were ~~$2.6~~$5.7 million and ~~$2.0~~$5.0 million for June 30, ~~2019~~2020 and Dec. 31, ~~2018,~~2019, respectively.

As the IRS ~~Appeals~~audit progresses and ~~federal audit progress,~~state audits resume, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately ~~$8.7~~$7.6 million in the next 12 months.

~~Payables~~Payable for interest related to unrecognized tax benefits ~~were not material~~is partially offset by the interest benefit associated with NOL and notax credit carryforwards.

Interest payable related to unrecognized tax benefits:


(Millions of Dollars)	June 30, 2020		Dec. 31, 2019
Payable for interest related to unrecognized tax benefits at beginning of period	$	(1.1)	$	(0.7)
Interest expense related to unrecognized tax benefits	(0.9)		(0.4)
Payable for interest related to unrecognized tax benefits at end of period	$	(2.0)	$	(1.1)

NaN amounts were accrued for penalties related to unrecognized tax benefits as of June 30, ~~2019 or~~2020 and Dec. 31, ~~2018.~~2019.


7.			Fair Value of Financial Assets and Liabilities

Fair Value Measurements

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

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

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

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

Specific valuation methods include:

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

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

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Commodity derivatives — The methods used to measure the fair value of commodity derivative forwards and options ~~generally~~ utilize ~~observable~~ forward prices and volatilities, as well as ~~observable~~ pricing adjustments for specific delivery locations and are generally assigned a Level 2 classification. When contractual settlements relate to inactive delivery locations ~~for which pricing is relatively unobservable,~~ or extend to periods beyond those readily observable on active exchanges or quoted by brokers, the significance of the use of less observable ~~inputs~~forecasts of forward prices and volatilities on a valuation is evaluated and may result in Level 3 classification.

Derivative Instruments Fair Value Measurements

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

Interest Rate Derivatives — PSCo enters into various instruments that effectively fix the yield or price on a specified benchmark interest rate for an anticipated debt issuance for a specific period. These derivative instruments are generally designated as cash flow hedges for accounting ~~purposes.~~purposes, with changes in fair value prior to settlement recorded as other comprehensive income.

At June 30, ~~2019,~~2020, accumulated other comprehensive loss related to settled interest rate derivatives included $1.2 million of net losses expected to be reclassified into earnings during the next 12 months as the ~~related~~ hedged ~~interest rate~~ transactions impact earnings, including forecasted amounts for unsettled hedges, as applicable.

Wholesale and Commodity Trading Risk — PSCo conducts various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy, energy-related instruments and natural gas-related instruments, including derivatives. PSCo is allowed to conduct these activities within guidelines and limitations as approved by its risk management committee, comprised of management personnel not directly involved in activities governed by this policy.

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

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

As of June 30, ~~2019,~~2020, PSCo had no0 commodity contracts designated as cash flow hedges.

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

Gross notional amounts of commodity forwards and options:


(Amounts in Millions) ^(a)(b)	June 30, 2020	Dec. 31, 2019
Megawatt hours of electricity	19.3	9.3
Million British thermal units of natural gas	69.2	32.2

(Amounts in Millions) ^(a)(b)
June 30, 2019 Dec. 31, 2018
Megawatt hours of electricity 16.3
24.4
Million British thermal units of natural gas 51.3
48.4
^(a)Amounts are not reflective of net positions in the underlying commodities.


^(a) ^(b)Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise.	~~Amounts are not reflective of net positions in the underlying commodities.~~


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

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

PSCo’s most significant concentrations of credit risk with particular entities or industries are contracts with counterparties to its wholesale, trading and non-trading commodity activities.

At June 30, ~~2019, six~~2020, 5 of PSCo’s 10 most significant counterparties for these activities, comprising ~~$33.0~~$112.3 million, or ~~49%~~77%, of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. ~~Three~~NaN of the 10 most significant counterparties, comprising ~~$7.7~~$15.0 million, or ~~11%~~10%, of this credit exposure, were not rated by these external agencies, but based on PSCo’s internal analysis, had credit quality consistent with investment grade. ~~One~~Two of these significant counterparties, comprising ~~$8.4~~$6.7 million, or ~~12%~~5%, of this credit exposure, had credit quality less than investment grade, based on external and internal analysis. ~~Seven~~NaN of these significant counterparties are independent system operators, municipal or cooperative electric entities, RTO’s or other utilities.

~~Impact~~The impact of derivative activity:

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

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

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

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

Pre-Tax (Gains) Losses
Reclassified into Income
During the Period from:
Pre-Tax Gains
(Losses) Recognized
During the Period in Income

(Millions of Dollars) Accumulated
Other
Comprehensive Loss Regulatory
Assets and (Liabilities)
Three Months Ended June 30, 2019
Derivatives designated as cash flow hedges
Interest rate $ 0.4
^(a)
$ —
$ —

Total $ 0.4
$ —
$ —

Other derivative instruments
Commodity trading $ —
$ —
$ 3.3
^(b)
Total $ —
$ —
$ 3.3

Six Months Ended June 30, 2019
Derivatives designated as cash flow hedges
Interest rate $ 0.8
^(a)
$ —
$ —

Total $ 0.8
$ —
$ —

Other derivative instruments
Commodity trading $ —
$ —
$ 4.7
^(b)
Natural gas commodity —
(1.3 )
^(c)
(2.0 )
^(c)
Total $ —
$ (1.3 ) $ 2.7

Three Months Ended June 30, 2018
Derivatives designated as cash flow hedges
Interest rate $ 0.4
^(a)
$ —
$ —

Total $ 0.4
$ —
$ —

Other derivative instruments
Commodity trading $ —
$ —
$ 0.2
^(b)
Total $ —
$ —
$ 0.2

Six Months Ended June 30, 2018
Derivatives designated as cash flow hedges
Interest rate $ 0.8
^(a)
$ —
$ —

Total $ 0.8
$ —
$ —

Other derivative instruments
Commodity trading $ —
$ —
$ 0.7
^(b)
Natural gas commodity —
2.7
^(c)
(1.6 )
^(c)
Total $ —
$ 2.7
$ (0.9 )

^(a)

~~Amounts are recorded to interest charges.~~

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

^(b)(Millions of Dollars)

~~Amounts are recorded to interest charges. Amounts are recorded to electric operating revenues. Portions of these gains~~

Accumulated Other
Comprehensive Loss

Regulatory (Assets) and ~~losses are subject to sharing with electric customers through margin-sharing mechanisms and deducted from gross revenue as appropriate.~~Liabilities

Three Months Ended June 30, 2020
^(c) Other derivative instruments	~~Amounts for both the three and six months ended~~
Natural gas commodity		$	—	$	(2.8)
Total		$	—	$	(2.8)

Six Months Ended June 30, ~~2019 included no settlement gain or losses on derivatives entered to mitigate natural~~2020
Other derivative instruments
Natural gas price risk for electric generation recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. Amounts for the three and six months endedcommodity		$	—	$	(2.8)
Total		$	—	$	(2.8)

Three Months Ended June 30, ~~2018 included no such settlement gains or losses and $1.2 million of such settlement losses, respectively. Remaining~~2019
Other derivative ~~settlement losses for the three and six months ended~~instruments
Natural gas commodity		$	—	$	(1.5)
Total		$	—	$	(1.5)

Six Months Ended June 30, 2019 ~~and 2018 relate to natural~~
Other derivative instruments
Natural gas operations and are recorded to cost of natural gas sold and transported. These gains and losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset or liability, as appropriate.commodity		$	—	$	(1.5)
Total		$	—	$	(1.5)

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	Pre-Tax (Gains) Losses Reclassified into Income During the Period from:									Pre-Tax Gains (Losses) Recognized During the Period in Income
(Millions of Dollars)	Accumulated Other Comprehensive Loss			Regulatory Assets and (Liabilities)
Three Months Ended June 30, 2020
Derivatives designated as cash flow hedges
Interest rate	$	0.4	^(a)	$	—		$	—
Total	$	0.4		$	—		$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	(1.4)	^(b)
Total	$	—		$	—		$	(1.4)

Six Months Ended June 30, 2020
Derivatives designated as cash flow hedges
Interest rate	$	0.8	^(a)	$	—		$	—
Total	$	0.8		$	—		$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	(5.3)	^(b)
Natural gas commodity	—			3.4		^(c)	(3.4)		^(c)
Total	$	—		$	3.4		$	(8.7)

^(a)Amounts are recorded to interest charges.

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

^(c)Amounts for the three and six months ended June 30, 2020, included 0 settlement gain or losses on derivatives entered to mitigate natural gas price risk for electric generation recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. Remaining derivative settlement losses for the three and six months ended June 30, 2020, relate to natural gas operations and are recorded to cost of natural gas sold and transported. These gains and losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset or liability, as appropriate.


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

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

^(a)Amounts are recorded to interest charges.

^(c)Amounts for the three and six months ended June 30, 2019, included 0 settlement gain or losses on derivatives entered to mitigate natural gas price risk for electric generation recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. Remaining derivative settlement losses for the three and six months ended June 30, 2019, relate to natural gas operations and are recorded to cost of natural gas sold and transported. These gains and losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset or liability, as appropriate.

PSCo had no0 derivative instruments designated as fair value hedges during the three and six months ended June 30, ~~2019~~2020 and ~~2018.~~2019.

Credit Related Contingent Features — Contract provisions for derivative instruments that PSCo enters into, including those accounted for as normal purchase-normal sale contracts and therefore not reflected on the consolidated balance sheets, may require the posting of collateral or settlement of the contracts for various reasons, including if PSCo’s credit ratings are downgraded below its investment grade credit rating by any of the major credit rating agencies, or for cross-default contractual provisions if there was a failure under other financing arrangements related to payment terms or other covenants. At June 30, ~~2019~~2020 and Dec. 31, ~~2018,~~2019, there were no0 derivative instruments in a liability position with such underlying contract ~~provisions with no offsetting positions or posted collateral.~~provisions.

Certain derivative instruments are also subject to contract provisions that contain adequate assurance clauses. These provisions allow counterparties to seek performance assurance, including cash collateral, in the event that PSCo’s ability to fulfill its contractual obligations is reasonably expected to be impaired. PSCo had no0 collateral posted related to adequate assurance clauses in derivative contracts as of June 30, ~~2019~~2020 and Dec. 31, ~~2018.~~2019.

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


	June 30, 2019														Dec. 31, 2018																					June 30, 2020																																		Dec. 31, 2019
	Fair Value						Fair Value Total			Netting ^(a)					Fair Value							Fair Value Total			Netting ^(a)											Fair Value															Fair Value Total				Netting ^(a)						Fair Value													Fair Value Total	Netting ^(a)
(Millions of Dollars)	Level 1		Level 2		Level 3				Total				Level 1		Level 2		Level 3				Total			(Millions of Dollars)							Level 1					Level 2			Level 3									Total						Level 1				Level 2			Level 3									Total			Fair Value Total
Current derivative assets																																			Current derivative assets
Other derivative instruments:																																		Other derivative instruments:
Commodity trading	$	5.4	$	33.3	$	0.2	$	38.9		$	(20.9	)	$	18.0	$	2.3	$	65.0	$	0.1		$	67.4			$	(28.2	)		$	39.2		Commodity trading				$	2.9		$	17.0		$	1.0		$	20.9		$	(18.2)		$	2.7			$	1.9		$	11.1		$	0.9		$	13.9		$	(10.1)		$	3.8
Natural gas commodity	—		0.4		—		0.4			—			0.4		—		3.4		—			3.4			—				3.4			Natural gas commodity				—			5.3			—			5.3			—			5.3				—			3.4			—			3.4			—			3.4
Total current derivative assets	$	5.4	$	33.7	$	0.2	$	39.3		$	(20.9	)	18.4		$	2.3	$	68.4	$	0.1		$	70.8		$	(28.2	)		42.6			Total current derivative assets				$	2.9		$	22.3		$	1.0		$	26.2		$	(18.2)		$	8.0			$	1.9		$	14.5		$	0.9		$	17.3		$	(10.1)		$	7.2
PPAs ^(b)													—																—
Current derivative instruments													$	18.4															$	42.6
Noncurrent derivative assets																																Noncurrent derivative assets
Other derivative instruments:																																Other derivative instruments:
Commodity trading	$	0.2	$	4.6	$	—	$	4.8		$	(2.3	)	$	2.5	$	—	$	1.6	$	—		$	1.6		$	(0.4	)		$	1.2		Commodity trading				$	1.1		$	10.8		$	—		$	11.9		$	(11.5)		$	0.4			$	0.4		$	8.1		$	1.1		$	9.6		$	(9.6)		$	—
Total noncurrent derivative assets	$	0.2	$	4.6	$	—	$	4.8		$	(2.3	)	2.5		$	—	$	1.6	$	—		$	1.6		$	(0.4	)		1.2			Total noncurrent derivative assets				$	1.1		$	10.8		$	—		$	11.9		$	(11.5)		$	0.4			$	0.4		$	8.1		$	1.1		$	9.6		$	(9.6)		$	—
PPAs ^(b)													—																—
Noncurrent derivative instruments													$	2.5															$	1.2


	June 30, 2020																							Dec. 31, 2019
	Fair Value										Fair Value Total			Netting ^(a)				Fair Value									Fair Value Total	Netting ^(a)
(Millions of Dollars)	Level 1		Level 2		Level 3								Total			Level 1		Level 2		Level 3						Total
Current derivative liabilities
Other derivative instruments:
Commodity trading	$	2.5	$	24.8	$	0.1	$	27.4	$	(18.2)	$	9.2		$	1.7	$	16.7	$	—	$	18.4	$	(13.1)	$	5.3
Natural gas commodity	—		4.0		—		4.0		—		4.0			—		3.4		—		3.4		—		3.4
Total current derivative liabilities	$	2.5	$	28.8	$	0.1	$	31.4	$	(18.2)	$	13.2		$	1.7	$	20.1	$	—	$	21.8	$	(13.1)	$	8.7
Noncurrent derivative liabilities
Other derivative instruments:
Commodity trading	$	1.2	$	43.1	$	18.0	$	62.3	$	(14.7)	$	47.6		$	0.4	$	47.0	$	14.7	$	62.1	$	(9.6)	$	52.5
Total noncurrent derivative liabilities	$	1.2	$	43.1	$	18.0	$	62.3	$	(14.7)	$	47.6		$	0.4	$	47.0	$	14.7	$	62.1	$	(9.6)	$	52.5

June 30, 2019 Dec. 31, 2018
Fair Value Fair Value
Total
Netting ^(a)
Fair Value Fair Value
Total
Netting ^(a)

(Millions of Dollars) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Current derivative liabilities
Other derivative instruments:
Commodity trading $ 5.5
$ 31.4
$ —
$ 36.9
$ (27.3 ) $ 9.6
$ 2.4
$ 64.2
$ —
$ 66.6
$ (34.7 ) $ 31.9
Total current derivative liabilities $ 5.5
$ 31.4
$ —
$ 36.9
$ (27.3 ) 9.6
$ 2.4
$ 64.2
$ —
$ 66.6
$ (34.7 ) 31.9
PPAs ^(b)
0.1
2.7
Current derivative instruments $ 9.7
$ 34.6
Noncurrent derivative liabilities
Other derivative instruments:
Commodity trading $ 0.2
$ 2.7
$ —
$ 2.9
$ (2.3 ) $ 0.6
$ —
$ 1.1
$ —
$ 1.1
$ (0.5 ) $ 0.6
Total noncurrent derivative liabilities $ 0.2
$ 2.7
$ —
$ 2.9
$ (2.3 ) 0.6
$ —
$ 1.1
$ —
$ 1.1
$ (0.5 ) 0.6
PPAs ^(b)
—
—
Noncurrent derivative instruments $ 0.6
$ 0.6
^(a)PSCo nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at June 30, 2020 and Dec. 31, 2019. At both June 30, 2020 and Dec. 31, 2019, derivative liabilities include 0 obligations to return cash collateral and the right to reclaim cash collateral of $3.2 million and $3.0 million, respectively. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

^(a)

PSCo nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at June 30, 2019 and Dec. 31, 2018. At both June 30, 2019 and Dec. 31, 2018, derivative assets and liabilities include no obligations to return cash collateral. At June 30, 2019 and Dec. 31, 2018, derivative assets and liabilities include the rights to reclaim cash collateral of $6.4 million and $6.5 million, respectively. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.


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

~~There were $0.3 million and $1.0 million of gains recognized~~Changes in ~~earnings for~~ Level 3 commodity ~~trading~~derivatives:


	Three Months Ended June 30
(Millions of Dollars)	2020		2019
Balance at April 1	$	(14.6)	$	(0.1)

Settlements	(0.3)		—
Net transactions recorded during the period:
(Losses) gains recognized in earnings ^(a)	(2.2)		0.3

Balance at June 30	$	(17.1)	$	0.2

	Six Months Ended June 30
(Millions of Dollars)	2020		2019
Balance at Jan. 1	$	(12.7)	$	0.1

Settlements	(1.1)		(0.9)
Net transactions recorded during the period:
(Losses) gains recognized in earnings ^(a)	(3.3)		1.0

Balance at June 30	$	(17.1)	$	0.2

^(a)Amounts relate to commodity derivatives inheld at the ~~three and six months ended June 30, 2019, respectively. There were $0.1 million~~end of ~~gains recognized in earnings for Level 3 commodity trading derivatives in both~~ the ~~three and six months ended June 30, 2018.~~period.

PSCo recognizes transfers between ~~fair value hierarchy~~ levels as of the beginning of each period. There were no0 transfers of amounts between levels for derivative instruments for the three and six months ended June 30, ~~2019~~2020 and ~~2018.~~2019.

Fair Value of Long-Term Debt

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

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


	June 30, 2020						Dec. 31, 2019
(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	6,122.0	$	7,250.8	$	5,384.7	$	6,039.3

Fair value of PSCo’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of June 30, ~~2019~~2020 and Dec. 31, ~~2018,~~2019, and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.

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8.			Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost (Credit)

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


	Three Months Ended June 30
	2020		2019		2020		2019
(Millions of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	7.6	$	6.4	$	0.1	$	0.1
Interest cost ^(a)	11.4		12.9		3.2		3.9
Expected return on plan assets ^(a)	(17.6)		(17.1)		(4.4)		(4.7)

Amortization of prior service credit ^(a)	(0.7)		(0.8)		(1.0)		(1.3)
Amortization of net loss ^(a)	7.5		6.3		0.4		0.7
Net periodic benefit cost (credit)	8.2		7.7		(1.7)		(1.3)
Credits not recognized due to effects of regulation	(0.3)		1.8		1.0		0.2
Net benefit cost (credit) recognized for financial reporting	$	7.9	$	9.5	$	(0.7)	$	(1.1)

	Six Months Ended June 30
	2020		2019		2020		2019
(Millions of Dollars)	Pension Benefits						Postretirement Health Care Benefits
Service cost	$	15.3	$	12.8	$	0.1	$	0.2
Interest cost ^(a)	22.9		25.8		6.4		7.8
Expected return on plan assets^(a)	(35.3)		(34.2)		(8.7)		(9.4)

Amortization of prior service credit ^(a)	(1.4)		(1.7)		(1.9)		(2.7)
Amortization of net loss^(a)	14.9		12.7		0.8		1.5
Net periodic benefit cost (credit)	16.4		15.4		(3.3)		(2.6)
Credits not recognized due to effects of regulation	0.3		3.6		1.6		0.5
Net benefit cost (credit) recognized for financial reporting	$	16.7	$	19.0	$	(1.7)	$	(2.1)

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

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


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

In January ~~2019,~~2020, contributions of ~~$150~~$150.0 million were made across ~~four~~4 of Xcel Energy’s pension plans, of which ~~$43~~$50.0 million was attributable to PSCo. ~~On July 1, 2019,~~ Xcel Energy ~~made a $4 million contribution to the Xcel Energy Inc. Non-Bargaining Pension Plan (South), of which $3 million was attributable to PSCo, and~~ does not expect ~~any~~ additional pension contributions during ~~2019.~~2020.


9.			Commitments and Contingencies

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

Legal ~~Contingencies~~

PSCo is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation.

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

For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on PSCo’s financial statements. Unless otherwise required by GAAP, legal fees are expensed as incurred.

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

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

Breckenridge/Colorado ~~- The~~— In February 2019, the MDL panel remanded Breckenridge back to the U.S. District Court in ~~Colorado and assigned to a judge.~~Colorado.

Arandell Corp. -— In February 2019, ~~Xcel Energy filed a no opposition motion to have~~ the case was remanded back to the U.S. District Court in Wisconsin. ~~The motion was granted and~~Plaintiffs are seeking class certification. It is uncertain when the ~~case has been remanded back to the District Court.~~court will rule on this issue.

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

~~Employment, Tort and Commercial Litigation~~

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

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

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

Environmental

MGP, Landfill orand Disposal Sites —

PSCo is cooperating with the City of Denver on an environmental investigation of the Rice Yards Site in ~~the Central Platte Valley of~~ Denver, Colorado, which had various historic industrial uses by multiple parties, including railroad, maintenance shop, scrap metal yard and MGP operations.

In the 1990’s, environmental remediation activities took place at the site under state oversight to accommodate the development of an amusement park and parking lots. The area is being redeveloped into residential and commercial mixed uses, andJune 2020, PSCo ~~is in discussions with~~resolved claims by the current property owner ~~regarding legal claims related~~and agreed to contribute up to a maximum of $9.3 million towards future environmental investigation, remediation and mitigation measures over the next 15 years.

In addition to the Rice Yards ~~Site.~~

~~In addition,~~Site, PSCo is currently investigating, remediating or ~~remediating two~~performing post-closure actions at 2 other MGP, landfill or other disposal sites across its service ~~territories.~~territory.

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

Environmental Requirements — Water and Waste

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

Under the CCR Rule, utilities are required to complete groundwater sampling around their CCR landfills and surface impoundments. ~~By the end of 2019, only six of PSCo’s~~Currently, PSCo has 6 regulated ash units ~~are expected to be~~ in operation.

PSCo is conducting groundwater sampling and where appropriate, ~~initiating the~~implementing assessment of corrective measures at certain CCR landfills and surface impoundments. In 2019, groundwater monitoring consistent with the CCR Rule was conducted. Statistically significant levels above background concentrations were detected at 4 locations.

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Subsequently, assessment monitoring samples were collected at these locations and, based on the results, PSCo is evaluating ~~whether~~options for corrective action ~~is required~~ at ~~any CCR landfills or surface impoundments.~~

2 locations. At 1 location, monitoring results indicate potential offsite impacts to groundwater. Until PSCo completes its assessment, it is uncertain what impact, if any, there will be on the operations, financial condition or cash flows.

~~Leases~~

~~PSCo evaluates contracts that may contain leases, including PPAs and arrangements~~In August 2018, the United States Court of Appeals for the ~~use~~District of ~~office space and other facilities, vehicles and equipment. Under ASC Topic 842, adopted by PSCo on Jan. 1, 2019, a contract contains a lease if it conveys~~Columbia Circuit ruled that the ~~exclusive right~~EPA cannot allow utilities to ~~control the use of a specific asset. A contract determined to contain a lease is evaluated further to determine if the arrangement is a finance lease.~~

~~ROU assets represent PSCo's rights~~continue to use ~~leased assets. Starting in~~unlined impoundments (including clay lined impoundments) for the storage or disposal of coal ash. In November 2019, the ~~present value~~EPA proposed rules in response to this decision that, if finalized in their current form, may require PSCo to expedite closure of ~~future operating lease payments~~1 coal ash impoundment that was not previously required to close. In March 2020, the EPA published a proposed CCR Rule amendment that, if adopted, would allow unlined impoundments that ‘perform as effectively’ as lined ones to continue to operate under a state or federal CCR permit program. PSCo is pursuing options to provide alternative storage capacity consistent with the CCR Rule until the generating units are ~~recognized~~retired in ~~other current liabilities and noncurrent operating lease liabilities. These amounts, adjusted~~2025.

Closure costs for ~~any prepayments or incentives, are recognized as operating lease ROU assets.~~

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

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

~~Operating lease ROU assets:~~

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

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

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

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

~~Finance lease ROU assets:~~

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

~~Components of lease expense:~~

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

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


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


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

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

(Millions of Dollars)
PPA ^{(a) (b)}
Operating
Leases

Other Operating
Leases

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

Weighted-average remaining lease term in years 8.3
39.0


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


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

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

(Millions of Dollars)
PPA ^{(a) (b)}
Operating
Leases

Other Operating
Leases

Total
Operating
Leases
Finance Leases
2019 $ 95.5
$ 10.8
$ 106.3
$ 24.9
2020 95.9
10.7
106.6
24.8
2021 96.4
9.5
105.9
23.6
2022 82.6
8.4
91.0
20.5
2023 70.0
8.1
78.1
20.3
Thereafter 288.6
53.4
342.0
420.4
Total minimum obligation

534.5
Interest component of obligation (389.5 )
Present value of minimum obligation $ 145.0


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


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

~~Variable Interest Entities~~VIEs

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

PSCo had approximately ~~1,442~~1,518 MW and ~~1,571~~1,442 MW of capacity under long-term PPAs ~~as of~~at June 30, ~~2019~~2020 and Dec. 31, ~~2018,~~2019, respectively, with entities that have been determined to be VIEs. PSCo concluded that these entities are not required to be consolidated in its consolidated financial statements because it does not have the power to direct the activities that most significantly impact the entities’ economic performance. ~~These agreements~~Agreements have ~~various~~ expiration dates through 2032.


10.			Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive loss, net of tax, for the three and six months ended June 30, ~~2019~~2020 and ~~2018:~~2019:


	Three Months Ended June 30, 2020								Three Months Ended June 30, 2019
(Millions of Dollars)	Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total		Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total
Accumulated other comprehensive loss at April 1	$	(23.8)	$	(2.5)	$	(26.3)	$	(25.0)	$	(0.2)	$	(25.2)

Losses reclassified from net accumulated other comprehensive loss:
Interest rate derivatives (net of taxes of $0.1, $—, $0.1 and $—, respectively) ^(a)	0.3		—		0.3		0.3		—		0.3

Net current period other comprehensive income	0.3		—		0.3		0.3		—		0.3
Accumulated other comprehensive loss at June 30	$	(23.5)	$	(2.5)	$	(26.0)	$	(24.7)	$	(0.2)	$	(24.9)

Three Months Ended June 30, 2019 Three Months Ended June 30, 2018
(Millions of Dollars)
Gains and Losses
on Cash Flow Hedges

Defined Benefit Pension and
Postretirement Items
Total
Gains and Losses
on Cash Flow Hedges

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

^(a)
Included in interest charges.


	Six Months Ended June 30, 2020								Six Months Ended June 30, 2019
(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	$	(24.1)	$	(2.5)	$	(26.6)	$	(25.3)	$	(0.2)	$	(25.5)

Losses reclassified from net accumulated other comprehensive loss:
Interest rate derivatives (net of taxes of $0.2, $—, $0.1 and $—, respectively) ^(a)	0.6		—		0.6		0.6		—		0.6

Net current period other comprehensive income	0.6		—		0.6		0.6		—		0.6
Accumulated other comprehensive loss at June 30	$	(23.5)	$	(2.5)	$	(26.0)	$	(24.7)	$	(0.2)	$	(24.9)

Six Months Ended June 30, 2019 Six Months Ended June 30, 2018
(Millions of Dollars)
Gains and Losses
on Cash Flow Hedges

Defined Benefit Pension and
Postretirement Items
Total
Gains and Losses
on Cash Flow Hedges

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

^(a)
Included in interest charges.


^(a)	~~Included in interest charges.~~


11.			Segment Information

~~Operating results from the regulated electric utility and regulated natural gas utility are each separately and regularly reviewed by PSCo’s chief operating decision maker.~~ PSCo evaluates performance based on profit or loss generated from the product or service provided. These segments are managed separately because the revenue streams are dependent upon regulated rate recovery, which is separately determined for each segment.

PSCo has the following reportable segments:

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

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

•

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

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


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


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

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

~~Certain~~

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To report income from operations for regulated electric and regulated natural gas utility segments, the majority of costs are directly assigned to each segment. However, some 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~~allocators. A general allocator is used for certain general and administrative expenses, including office supplies, rent, property insurance and general advertising.

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


	Three Months Ended June 30
(Millions of Dollars)	2020		2019
Regulated Electric
Operating revenues	$	715.4	$	692.7
Intersegment revenues	0.1		0.1
Total revenue	$	715.5	$	692.8
Net income	89.0		84.8
Regulated Natural Gas
Operating revenues	$	186.2	$	207.6


Net income	16.0		17.6
All Other
Operating revenues^(a)	$	9.5	$	9.7


Net income (loss)	3.1		(0.9)
Consolidated Total
Operating revenues^(a)	$	911.2	$	910.1
Reconciling eliminations	(0.1)		(0.1)
Total operating revenues	$	911.1	$	910.0
Net income	108.1		101.5

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


	Six Months Ended June 30
(Millions of Dollars)	2020		2019
Regulated Electric
Operating revenues	$	1,427.2	$	1,434.2
Intersegment revenues	0.2		0.2
Total revenue	$	1,427.4	$	1,434.4
Net income	163.0		167.2
Regulated Natural Gas
Operating revenues	$	517.7	$	676.7
Intersegment revenues	(0.1)		0.1
Total revenue	$	517.6	$	676.8
Net income	68.1		76.8
All Other
Operating revenues^(a)	$	22.9	$	22.1


Net income (loss)	5.7		(3.7)
Consolidated Total
Operating revenues^(a)	$	1,967.9	$	2,133.3
Reconciling eliminations	(0.1)		(0.3)
Total operating revenues	$	1,967.8	$	2,133.0
Net income	236.8		240.3

^(a)Operating revenues include $2.2 million of other affiliate revenue for the six months ended June 30, 2020 and 2019.

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


^(a)			~~Operating revenues include $1.1 million of other affiliate revenue for the three months ended June 30, 2019 and 2018.~~

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


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

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

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

Non-GAAP Financial Measures

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

Electric and Natural Gas Margins

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

Management believes electric and natural gas margins provide the most meaningful basis for evaluating our operations because they exclude the revenue impact of fluctuations in these expenses. These margins can be reconciled to operating income, a GAAP measure, by including other operating revenues, cost of sales-other, O&M expenses, conservation and ~~demand side management~~DSM expenses, depreciation and amortization and taxes (other than income taxes).


Results of Operations

PSCo’s net income was approximately $236.8 million for the six months ended June 30, 2020, compared with approximately $240.3 million for the ~~second quarter of 2019, compared with approximately $256.0 million for the same period of 2018.~~prior year. The decrease in year-to-date earnings was driven by lower sales and demand revenue primarily due to COVID-19, higher ~~O&M~~depreciation, interest charges and ~~depreciation~~lower natural gas margins due to unfavorable weather, partially offset by ~~the timing of gas rates~~higher AFUDC, an increase in ~~2018~~electric margins (regulatory outcomes offset lower sales due to COVID-19) and ~~higher gas sales.~~lower O&M.

Electric Margin

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

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Electric revenues and margin:


	Six Months Ended June 30							Six Months Ended June 30
(Millions of Dollars)	2019			2018			(Millions of Dollars)	2020		2019
Electric revenues	$	1,434.2		$	1,414.5		Electric revenues	$	1,427.2	$	1,434.2
Electric fuel and purchased power	(544.9		)	(553.1		)	Electric fuel and purchased power	(529.2)		(544.9)
Electric margin	$	889.3		$	861.4		Electric margin	$	898.0	$	889.3

Changes in electric margin:


(Millions of Dollars)	2020 vs. 2019
Regulatory rate outcome	$	15.5
Estimated impact of weather	5.3
Wholesale transmission revenue (net)	3.4
PTCs	0.5
Sales and demand ^(a)	(23.7)
Other, net	7.7
Total increase in electric margin	$	8.7

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

Natural Gas Margin

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

Natural gas revenues and margin:


	Six Months Ended June 30							Six Months Ended June 30
(Millions of Dollars)	2019			2018			(Millions of Dollars)	2020		2019
Natural gas revenues	$	676.7		$	550.6		Natural gas revenues	$	517.7	$	676.7
Cost of natural gas sold and transported	(342.4		)	(249.8		)	Cost of natural gas sold and transported	(187.4)		(342.4)
Natural gas margin	$	334.3		$	300.8		Natural gas margin	$	330.3	$	334.3

Changes in natural gas margin:

(Millions of Dollars) Three Months Ended June 30, 2019 vs. 2018
Retail rate increase $ 11.9
Estimated impact of weather 8.7
Infrastructure and integrity riders 5.2
Transport sales 3.7
Retail sales growth (excluding weather impact) 3.5
Other, net 0.5
Total increase in natural gas margin $ 33.5


(Millions of Dollars)	2020 vs. 2019
Estimated impact of weather	$	(6.2)
Sales decline	(2.9)
Transport sales	(2.3)
Infrastructure and integrity riders	6.5
Other, net	0.9
Total decrease in natural gas margin	$	(4.0)

Non-Fuel Operating Expenses and Other Items

O&M Expenses — O&M expenses ~~increased $27.4~~decreased $5.7 million, or ~~7.4%~~1.4%, for ~~2019 year-to-date. Increase~~the six months ended June 30, 2020, compared with the prior year. The decrease was primarily ~~driven by distribution, plant generation and natural gas operations costs. Distribution costs were higher~~ due to ~~storms, meters~~cost mitigation efforts to offset the negative impacts of COVID-19 including allocation of workforce, material and ~~vegetation management. Plant generation~~supply management, performance of maintenance, as well as, the outcome of the CPUC’s rehearing of the Colorado 2019 electric rate case. Decreases were partially offset by increased gas emergency response costs and strategic initiative amounts including increased ~~due to the Rush Creek wind project being placed in-service~~spending on customer experience transformation and ~~the timing of planned maintenance and overhauls. Natural gas operation expenses increased due to pipeline maintenance.~~advanced grid infrastructure.

Depreciation and Amortization — Depreciation and amortization expense increased ~~$56.8~~$19.5 million, or ~~23.8%~~6.6%, for ~~2019 year-to-date. Increase~~the six months ended June 30, 2020, compared with the prior year. The increase was primarily ~~driven~~due to normal system expansion and new electric rates implemented in March 2020, partially offset by ~~the Rush Creek wind project being placed in-service (recovered~~a decrease in ~~riders), additional~~ amortization of ~~a prepaid~~ pension ~~asset in Colorado related to tax reform settlements (offset in income taxes) and other capital investments.~~regulatory assets.

AFUDC, Equity and Debt — AFUDC ~~decreased $20.3~~increased $14.5 million for ~~2019 year-to-date. Decrease~~the six months ended June 30, 2020, compared with the prior year. The increase was primarily due to the ~~Rush Creek~~Cheyenne Ridge wind ~~project being placed in-service in 2018.~~farm.

Interest Charges — Interest charges increased ~~$15.9~~$5.9 million, or ~~15.7%~~5.0%, for ~~2019 year-to-date. Increase~~the six months ended June 30, 2020, compared with the prior year. The increase was ~~related~~primarily due to higher debt levels to fund capital investments, ~~changes in~~partially offset by lower long-term and short-term interest ~~rates and implementation of lease accounting standard (offset in electric margin).~~rates.

Income Taxes — Income tax expense decreased ~~$44.6~~$4.6 million for the ~~second quarter of 2019~~six months ended June 30, 2020, compared with ~~2018. Decrease~~the same period in 2019. The decrease was primarily driven by ~~wind PTCs, lower pretax earnings and~~ an increase in ~~plant-related~~plant regulatory ~~differences. Wind PTCs flow back to customers (recorded as a reduction to revenue)~~differences and ~~do not have a material impact on net income.~~lower pretax earnings. ETR was ~~11.0%~~9.6% for the ~~first~~ six months ~~of 2019~~ended June 30, 2020, compared with ~~22.5%~~11.0% for the same period ~~of 2018,~~in 2019, largely due to the ~~adjustments~~items referenced above.

See Note 6 to the consolidated financial statements.


Public Utility Regulation

The FERC and ~~State Regulation~~ — various state and local regulatory commissions regulate PSCo. The electric and natural gas rates charged to PSCo’s customers are approved by the FERC ~~has jurisdiction over~~or the regulatory commissions in the states in which they operate.

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

Changes in ~~interstate commerce~~operating costs can affect PSCo’s financial results, depending on the timing of rate case filings and ~~electricity sold at wholesale, hydro facility licensing, natural gas transportation, asset transactions~~implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and ~~mergers, accounting practices~~DSM efforts, and ~~certain other activities~~the cost of ~~PSCo, including enforcement of North American Electric Reliability Corporation mandatory electric reliability standards. State~~capital. In addition, the regulatory commissions authorize the ROE, capital structure and ~~local agencies have jurisdiction over many of PSCo’s activities, including regulation of retail~~depreciation rates ~~and environmental matters.~~

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

~~Colorado 2019 Electric Rate Case~~Except to the extent noted in Regulation above, the circumstances set forth in Public Utility Regulation included in Item 7 of PSCo’s Annual Report on ~~— In May 2019, PSCo filed a request with~~Form 10-K for the CPUC seeking a net rate increase of $158.3 million, or 5.7%. The filing also requests the transfer of $249.4 million of rider revenue to base rates, which will not impact overall customer bills as the revenue is currently being recovered through various riders. The request is based on a ROE of 10.35%, an equity ratio of 56.46%, a historic test year ended Dec. 31, ~~2018 (adjusted~~2019 and in Item 2 of PSCo’s Quarterly Report on Form 10-Q for ~~2019 capital investment)~~the quarterly period ended March 31, 2020, appropriately represent, in all material respects, the current status of public utility regulation and ~~incorporates the full impact of tax reform. PSCo has requested rates effective Jan. 1, 2020.~~are incorporated by reference.

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

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


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


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

~~The procedural schedule is as follows:~~

~~Answer testimony — Sept. 6, 2019~~

~~Rebuttal testimony — Oct. 8, 2019~~

~~Evidentiary hearing — Nov. 4-13, 2019~~

~~Statement of position — Nov. 22, 2019~~

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~~Other~~ Pending and Recently Concluded Regulatory Proceedings

Mechanism

Utility Service

Amount Requested

(in millions)

Filing

Date

Approval

Additional Information

CPUC

Rate Case

~~Steam~~Natural Gas

$7127

February 2020

Pending

~~May~~

~~2019~~

~~Pending~~

In ~~May 2019,~~February 2020, PSCo filed ~~an unopposed Settlement Agreement~~a rate case with the CPUC ~~Staff and~~seeking a net increase to retail gas rates of $126.8 million, reflecting a $144.5 million increase in base rate revenue, partially offset by $17.7 million of costs previously authorized through the ~~City of Denver.~~Pipeline Integrity rider. The ~~settlement reflects~~request was based on a 9.95% ROE, ~~of 9.67% for AFUDC purposes,~~ an equity ratio of ~~56.04%~~55.81% and ~~utilization~~a historic test year as of ~~tax reform benefits. Final~~Sept. 30, 2019, adjusted for known and measurable differences for the 12-month period ended Sept. 30, 2020. In June 2020, PSCo revised its net increase to $121 million.

In July 2020, PSCo, the CPUC Staff and various intervenors filed a comprehensive unopposed settlement, which results in a net increase to retail gas rates ~~would be effective in October 2020, with an initial step~~of $77.3 million, reflecting a $94.1 million increase in ~~October 2019.~~base rate revenue, partially offset by $16.8 million of costs previously authorized through the Pipeline Integrity rider. The settlement is based on:

•A ROE of 9.20%;

•An equity ratio of 55.62%; and

•A historic test year as of Sept. 30, 2019, utilizing a year-end rate base, and incorporating a known and measurable adjustment for the Tungsten to Black Hawk pipeline as of April 30, 2020.

Rates will be implemented on April 1, 2021 and will be retroactively effective back to November 2020. In July ~~2019,~~2020, the Administrative Law Judge ~~recommended that~~granted an unopposed motion to schedule a hearing for Aug. 13, 2020 to review the ~~settlement agreement be approved without modification. Settlement is pending a CPUC decision.~~settlement.

Rate Case

Electric

$158

May 2019

Received

In 2019, PSCo filed a request with the CPUC seeking a net rate increase of $108.4 million, based on a requested ROE of 10.2% and an equity ratio of 55.6%.

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

In May 2020, the CPUC deliberated on PSCo’s request for rehearing and revised its prior decision on the test year calculation, return on prepaid pension and medical assets, a disallowance of a capital investment for the Comanche Unit 3 superheater and Board compensation. In July 2020, the CPUC’s written decision was received. As a result, electric rates will increase approximately $12 million, retroactive back to Feb. 25, 2020. In addition, as a part of the rehearing, the CPUC plans to discuss the merits of opening an investigation of Comanche Unit 3 performance.

Rate Case Appeal

Natural Gas

N/A

April 2019

Pending

In April 2019, PSCo filed an appeal seeking judicial review of the CPUC’s prior ruling regarding PSCo’s last natural gas rate case (approved in December 2018). ~~Appeal requests~~The appeal requested review of the following: denial of a return on the prepaid pension and retiree medical assets; the use of a capital structure ~~that is~~ not based on the actual historical test ~~year level;~~year; and ~~the~~ use of an average rate base methodology rather than a year-end rate base methodology.

In March 2020, The District Court of Denver County ~~has adopted a briefing schedule that will conclude~~ruled in ~~October 2019. Timeline on a final ruling is unknown at this point.~~favor of allowing the prepaid pension assets to be included in rate base; but it upheld the CPUC treatment of the retiree medical assets and capital structure methodology. The CPUC did not appeal the decision allowing inclusion of the prepaid pension assets in rate base.

~~Public Utility~~

PSCo 2020 Rider Filings

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

Wildfire Protection Rider—Seeks to establish a Wildfire Protection Rider to recover incremental costs associated with system investments to reduce wildfire risk. The rider would be effective no later than June 2021 and continue through 2025. Wildfire Protection capital additions are projected to total approximately $325 million. Forecasted annual revenue requirements from 2021 through 2025 are as follows:


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

Advanced Grid Rider—Seeks to establish an Advanced Grid Rider to recover incremental costs associated with the Advanced Grid Intelligence and Security Initiative (AGIS). The rider would be effective no later than May 2021 and continue through 2025. The PSCo portion of the AGIS initiative is projected to total approximately $850 million of capital additions. Forecasted annual revenue requirements from 2021 through 2025 are as follows:


(in Millions)	2021		2022		2023		2024		2025
Forecasted annual revenue requirement	$	53	$	69	$	83	$	89	$	99

PSCo — Comanche Unit 3

PSCo is part owner of Comanche Unit 3, a 750 MW, coal-fueled electric generating unit. PSCo is the operating agent under the joint ownership agreement. In June 2020, the unit experienced loss of turbine oil during start-up which damaged the plant. It is currently anticipated that Comanche Unit 3 will recommence operations in the fourth quarter of 2020. Replacement and repair of damaged systems in excess of a $2 million deductible are expected to be recovered through insurance policies. PSCo has obtained replacement power for a portion of the unit’s output through purchase power agreements.

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Boulder Municipalization

In 2011, Boulder passed a ballot measure authorizing the formation of an electric municipal utility, subject to certain conditions. Subsequently, there have been various legal proceedings in multiple venues with jurisdiction over Boulder’s plan. In 2014, the Boulder City Council passed an ordinance to establish an electric utility. PSCo challenged the formation of this utility and the Colorado Court of Appeals ruled in PSCo’s favor, vacating a lower court decision. In June 2018, the Colorado Supreme Court rejected Boulder’s request to dismiss the case and remanded it to the Boulder District Court. The case was then settled in June 2019 after Boulder agreed to repeal the ordinance establishing the utility.

Boulder has filed multiple separation applications with the CPUC, which have been challenged by PSCo and other intervenors. In September 2017, the CPUC issued a written decision, agreeing with several key aspects of PSCo’s position. The CPUC has approved the designation of some electrical distribution assets for transfer, subject to Boulder completing certain filings.

In the fourth quarter of 2018, the Boulder City Council also adopted an Ordinance authorizing Boulder to begin negotiations for the acquisition of certain property or to otherwise condemn that property after Feb. 1, 2019. In the first quarter of 2019, Boulder sent PSCo a notice of intent to acquire certain electric distribution assets. In the third quarter of 2019, Boulder filed its condemnation litigation, which was later dismissed by the Boulder District Court in September 2019 on the grounds that Boulder had not completed the pre-requisite CPUC process and filings. Boulder is currently appealing this order. In October 2019, the CPUC approved the subsequent filings regarding asset transfers outside of substations, reaffirmed its 2017 decision on assets outside of substations and closed the CPUC proceeding.

In December 2019, Boulder filed a new condemnation action despite its ongoing appeal of the last condemnation case. PSCo subsequently filed a motion to dismiss or stay the new condemnation action. In February 2020, Boulder filed an application under section 210 of the Federal Power Act asking FERC to order PSCo to interconnect its facilities with a future Boulder municipal utility under Boulder’s preferred terms and conditions.

In July 2020, PSCo reached a settlement with certain Boulder officials that would end the city’s effort to municipalize. The settlement, if approved, would result in a 20-year franchise arrangement (with multiple opt-out conditions), an energy partnership, an undergrounding agreement and establish how the municipalization would move forward if Boulder exercised an opt-out. The settlement will require approval by the Boulder City Council in August 2020 and will further require approval by the citizens of Boulder in a ballot referendum in November 2020.

Environmental

Environmental Regulation

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

~~Environmental Matters~~

In ~~June~~July 2019, the EPA ~~issued~~adopted the ~~final ACE~~Affordable Clean Energy rule, which requires states to ~~replace~~develop plans for greenhouse gas reductions from coal-fired power plants. The state plans, due to the ~~Obama-era Clean Power Plan. The final ACE rule may~~EPA in July 2022, will evaluate and potentially require ~~implementation of~~ heat rate ~~improvement projects~~improvements at ~~some of our~~existing coal-fired ~~power~~ plants. It is not yet known ~~what the costs associated with the final rule might be until~~how these state plans ~~are developed to implement the final regulation.~~will affect our existing coal plants, but they could require substantial additional investment, even in plants slated for retirement. PSCo believes, based on prior state commission practice, the cost of these initiatives or replacement generation would be recoverable through rates.

~~Item 4 — CONTROLS AND PROCEDURES~~


ITEM 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the ~~chief executive officer (CEO)~~CEO and ~~chief financial officer (CFO),~~CFO, allowing timely decisions regarding required disclosure.

As of June 30, ~~2019,~~2020, based on an evaluation carried out under the supervision and with the participation of PSCo’s management, including the CEO and CFO, of the effectiveness of its disclosure controls and the procedures, the CEO and CFO have concluded that PSCo’s disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

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

~~Part~~PART II — OTHER INFORMATION

~~Item~~


ITEM 1—~~Legal Proceedings~~—LEGAL PROCEEDINGS

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

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

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

~~Item~~

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ITEM 1A — RISK FACTORS

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

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

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

We cannot ultimately predict whether it will have a material impact on our liquidity, financial condition, or results of operations. Nor can we predict the impact of the virus on the health of our employees, our supply chain or our ability to recover higher costs associated with managing through the pandemic.

PSCo’s risk factors are documented in Item 1A of Part I of its Annual Report on Form 10-K for the year ended Dec. 31, ~~2018,~~2019, which is incorporated herein by ~~reference. There~~reference, as well as other information set forth in this report, which could have ~~been no~~a material ~~changes from the risk factors previously disclosed in the~~ impact on our financial condition, results of operations and cash flows.~~Form 10-K~~.

~~Item~~


ITEM 6 — EXHIBITS

* Indicates incorporation by reference

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

Exhibit Number

Description

Report or Registration Statement

SEC File or Registration Number

Exhibit Reference

3.01*

Amended and Restated Articles of Incorporation dated July 15, 1998

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

001-03280

3.01

3.02*

~~By-Laws of PSCo as~~ Amended and Restated onBylaws of PSCo, dated Jan. 25, 2019

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

001-03280

3.02

~~10.01~~4.01*

~~Third Amended and Restated Credit Agreement,~~Supplemental Indenture dated as of ~~June 7, 2019 among~~May 1, 2020, between PSCo ~~as Borrower, the several lenders from time to time parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A.~~ and ~~Barclays Bank Plc, as Syndication Agents, Wells Fargo~~U.S. Bank National Association, ~~MUFG Bank, Ltd.,~~as successor Trustee, creating $375 million principal amount of 2.70% First Mortgage Bonds, Series No. 35 due 2051, and ~~Citibank, N.A., as Documentation Agents~~$375 million principal amount of 1.90% First Mortgage Bonds, Series No. 36 due 2031

~~Xcel Energy Inc.~~PSCo Form 8-K dated ~~June 7, 2019~~May 15, 2020

~~001-03034~~

001-03280

~~99.03~~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

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

~~101~~101.INS

~~The following materials from PSCo’s Quarterly Report on Form 10-Q for~~Inline XBRL Instance Document - the ~~quarter ended June 30, 2019~~instance document does not appear in the Interactive Data File because its XBRL tags are ~~formatted~~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 XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Balance Sheets, (v) Notes to Consolidated Financial Statements, and (vi) document and entity information.Exhibit 101)

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SIGNATURES

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


				Public Service Company of Colorado

July 31, 2020			By:	~~Public Service Company of Colorado~~

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

				/s/ ~~ROBERT C. FRENZEL~~BRIAN J. VAN ABEL
				~~Robert C. Frenzel~~Brian J. Van Abel
				Executive Vice President, Chief Financial Officer and Director
				(Principal Financial Officer)



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



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



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



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



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



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

Weighted-average remaining lease term in years							8.3			39.0



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



(Millions of Dollars)	Three Months Ended June 30, 2019 vs. 2018
Retail rate increase	$	11.9
Estimated impact of weather	8.7
Infrastructure and integrity riders	5.2
Transport sales	3.7
Retail sales growth (excluding weather impact)	3.5
Other, net	0.5
Total increase in natural gas margin	$	33.5



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

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