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, 2020 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-03280
Public Service Company of Colorado
(Exact name of registrant as specified in its charter)
Colorado001-0328084-0296600
(State or Other Jurisdictionother jurisdiction of Incorporationincorporation or Organization)organization)(Commission File Number)(IRSI.R.S. Employer Identification No.)
1800 Larimer Street, Suite 1100DenverCO80202
(Address of Principal Executive Offices)principal executive offices)(Zip Code)
(303)571-7511
(Registrant’s Telephone Number, Including Area Code)telephone number, including area code)
N/A
(Former Name, Former Addressname, former address and Former Fiscal Year,former fiscal year, if Changed Since Last Report)changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolSymbol(s)Name of each exchange on which registered
N/AN/AN/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class Outstanding at July 31, 202029, 2021
Common Stock, $0.01 par value 100 shares

Public Service Company of Colorado meets the conditions set forth in General InstructionInstructions 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 IFINANCIAL INFORMATION
 
Item l1
Item 2 —
Item 4 —
   
PART IIOTHER INFORMATION
 
Item 1 —
Item 1A —
Item 6 —
   
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
This Form 10-Q is filed by Public Service Company of Colorado (PSCo). PSCo is a wholly owned subsidiary of Xcel Energy Inc. Additional information on Xcel Energy is available in various filings with the Securities and Exchange Commission (SEC).Commission. This report should be read in its entirety.



Definitions of Abbreviations
Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former)
e primee prime inc.
NSP-MinnesotaNorthern States Power Company, a Minnesota corporation
NSP-WisconsinNorthern States Power Company, a Wisconsin corporation
PSCoPublic Service Company of Colorado
SPSSouthwestern Public Service Company
Utility subsidiariesNSP-Minnesota, NSP-Wisconsin, PSCo and SPS
Xcel EnergyXcel Energy Inc. and subsidiaries
Federal and State Regulatory Agencies
CPUCColorado Public Utilities Commission
D.C. CircuitUnited States Court of Appeals for the District of Columbia Circuit
EPAUnited States Environmental Protection Agency
FERCFederal Energy Regulatory Commission
IRSInternal Revenue Service
SECSecurities and Exchange Commission
Electric, Purchased Gas and Resource Adjustment Clauses
DSMDemand side management
PSIAPipeline System Integrity Adjustment
Other
AFUDCAGISAllowance for funds used during constructionAdvanced grid intelligence and security
ASCFASB Accounting Standards Codification
CACJAClear air clean jobs act
C&ICommercial and Industrial
CCRCoal combustion residualresiduals
CCR RuleFinal rule (40 CFR 257.50 - 257.107) published by the EPA regulating the management, storage and disposal of CCRs as a nonhazardous waste
CEOChief executive officer
CFOChief financial officer
COVID-19Novel coronavirus
ETREffective tax rate
FASBFinancial Accounting Standards Board
GAAPGenerallyUnited States generally accepted accounting principles
GCAGas cost adjustment
IPPIndependent power producing entity
KEPCOKorea Electric Power Corporation
MDLMulti district litigation
MGPManufactured gas plant
NOLNet operating loss
NOPRNotice of proposed rulemaking
O&MOperating and maintenance
PFASPer- and PolyFluoroAlkyl Substances
PPAPower purchase agreement
PTCProduction tax credit
ROEReturn on equity
RTORegional Transmission Organization
VIEVariable interest entity
WACCWeighted average cost of capital
Measurements
MWMegawatts





Forward-Looking Statements
Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to future sales, future expenses, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impacts on our results of operations, financial condition and cash flows or resettlement calculations and credit losses relating to certain energy transactions, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed elsewhere in this Quarterly Report on Form 10-Q and in other securities filings with the SEC (including PSCo’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 20192020 and subsequent securities filings), could cause actual results to differ materially from management expectations as suggested by such forward-looking information: uncertainty around the impacts and duration of the COVID-19 pandemic; operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee work force and third-party contractor factors; ability to recover costs,costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations 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; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; and costs of potential regulatory penalties.


PART I — FINANCIAL INFORMATION
ITEM 1FINANCIAL STATEMENTS
PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(amounts in millions)
Three Months Ended June 30Six Months Ended June 30 Three Months Ended June 30Six Months Ended June 30
2020201920202019 2021202020212020
Operating revenuesOperating revenues  Operating revenues  
ElectricElectric$715.4  $692.7  $1,427.2  $1,434.2  Electric$827 $715 $1,560 $1,427 
Natural gasNatural gas186.2  207.6  517.7  676.7  Natural gas338 186 753 518 
Steam and other9.5  9.7  22.9  22.1  
OtherOther10 22 23 
Total operating revenuesTotal operating revenues911.1  910.0  1,967.8  2,133.0  Total operating revenues1,174 911 2,335 1,968 
Operating expensesOperating expenses  Operating expenses  
Electric fuel and purchased powerElectric fuel and purchased power258.4  240.7  529.2  544.9  Electric fuel and purchased power328 258 599 529 
Cost of natural gas sold and transportedCost of natural gas sold and transported49.8  69.9  187.4  342.4  Cost of natural gas sold and transported168 50 338 187 
Cost of sales — steam and other3.0  3.9  6.0  8.4  
Cost of sales — otherCost of sales — other
Operating and maintenance expensesOperating and maintenance expenses189.3  200.3  393.8  399.5  Operating and maintenance expenses205 189 412 394 
Demand side management expensesDemand side management expenses36.1  32.2  71.7  64.4  Demand side management expenses32 37 64 71 
Depreciation and amortizationDepreciation and amortization158.1  148.1  314.5  295.0  Depreciation and amortization185 158 368 315 
Taxes (other than income taxes)Taxes (other than income taxes)55.4  52.2  108.6  105.9  Taxes (other than income taxes)64 55 130 109 
Total operating expensesTotal operating expenses750.1  747.3  1,611.2  1,760.5  Total operating expenses985 750 1,917 1,611 
Operating incomeOperating income161.0  162.7  356.6  372.5  Operating income189 161 418 357 
Other income (expense), net1.6  (0.3) (0.2) 0.6  
Other income, netOther income, net
Allowance for funds used during construction — equityAllowance for funds used during construction — equity11.4  5.0  20.0  9.1  Allowance for funds used during construction — equity11 12 20 
Interest charges and financing costsInterest charges and financing costs  Interest charges and financing costs
Interest charges — includes other financing costs of $1.8, $1.6, $3.5 and $3.2, respectively62.9  57.7  123.0  117.1  
Interest charges — includes other financing costs of $2, $2, $4 and $4, respectivelyInterest charges — includes other financing costs of $2, $2, $4 and $4, respectively62 63 121 123 
Allowance for funds used during construction — debtAllowance for funds used during construction — debt(4.7) (2.4) (8.5) (4.9) Allowance for funds used during construction — debt(2)(5)(3)(8)
Total interest charges and financing costsTotal interest charges and financing costs58.2  55.3  114.5  112.2  Total interest charges and financing costs60 58 118 115 
Income before income taxesIncome before income taxes115.8  112.1  261.9  270.0  Income before income taxes137 116 315 262 
Income tax expenseIncome tax expense7.7  10.6  25.1  29.7  Income tax expense14 25 
Net income Net income$108.1  $101.5  $236.8  $240.3  Net income$134 $108 $301 $237 
See Notes to Consolidated Financial Statements
4

Table of Contents
PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(amounts in millions)
Three Months Ended June 30Six Months Ended June 30 Three Months Ended June 30Six Months Ended June 30
2020201920202019 2021202020212020
Net incomeNet income$108.1  $101.5  $236.8  $240.3  Net income$134 $108 $301 $237 
Other comprehensive incomeOther comprehensive income  Other comprehensive income
Derivative instruments:Derivative instruments:  Derivative instruments:
Reclassification of loss to net income, net of tax of $0.1, $0.1, $0.2, and $0.2, respectively0.3  0.3  0.6  0.6  
Reclassification of loss to net income, net of tax of $0, $0, $0 and $0, respectivelyReclassification of loss to net income, net of tax of $0, $0, $0 and $0, respectively
Total other comprehensive incomeTotal other comprehensive income0.3  0.3  0.6  0.6  Total other comprehensive income
Total comprehensive incomeTotal comprehensive income$108.4  $101.8  $237.4  $240.9  Total comprehensive income$134 $108 $302 $238 
See Notes to Consolidated Financial Statements

5

Table of Contents
PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(amounts in millions)
Six Months Ended June 30 Six Months Ended June 30
20202019 20212020
Operating activitiesOperating activities  Operating activities  
Net incomeNet income$236.8  $240.3  Net income$301 $237 
Adjustments to reconcile net income to cash provided by operating activities:Adjustments to reconcile net income to cash provided by operating activities:  Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization316.7  297.4  Depreciation and amortization357 317 
Deferred income taxesDeferred income taxes8.7  2.8  Deferred income taxes
Amortization of investment tax creditsAmortization of investment tax credits(1.2) (1.3) Amortization of investment tax credits(1)(1)
Allowance for equity funds used during constructionAllowance for equity funds used during construction(20.0) (9.1) Allowance for equity funds used during construction(12)(20)
Provision for bad debtsProvision for bad debts10.8  6.8  Provision for bad debts10 11 
Net realized and unrealized hedging and derivative transactions(1.4) (2.2) 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:  Changes in operating assets and liabilities:
Accounts receivableAccounts receivable24.5  56.4  Accounts receivable25 
Accrued unbilled revenuesAccrued unbilled revenues65.3  77.2  Accrued unbilled revenues53 65 
InventoriesInventories20.4  16.5  Inventories20 
Prepayments and other6.6  0.5  
Other current assetsOther current assets13 
Accounts payableAccounts payable(83.4) (111.8) Accounts payable(10)(83)
Net regulatory assets and liabilitiesNet regulatory assets and liabilities41.0  80.0  Net regulatory assets and liabilities(554)41 
Other current liabilitiesOther current liabilities(86.1) (94.6) Other current liabilities(187)(86)
Pension and other employee benefit obligationsPension and other employee benefit obligations(46.7) (43.5) Pension and other employee benefit obligations(50)(47)
Other, netOther, net(8.0) 0.5  Other, net60 (10)
Net cash provided by operating activitiesNet cash provided by operating activities484.0  515.9  Net cash provided by operating activities485 
Investing activitiesInvesting activities  Investing activities
Utility capital/construction expendituresUtility capital/construction expenditures(917.6) (632.5) Utility capital/construction expenditures(705)(918)
Investments in utility money pool arrangementInvestments in utility money pool arrangement(366.0) (131.0) Investments in utility money pool arrangement(240)(366)
Repayments from utility money pool arrangementRepayments from utility money pool arrangement366.0  131.0  Repayments from utility money pool arrangement240 366 
Net cash used in investing activitiesNet cash used in investing activities(917.6) (632.5) Net cash used in investing activities(705)(918)
Financing activitiesFinancing activities  Financing activities
Repayments of short-term borrowings, netRepayments of short-term borrowings, net—  (86.0) Repayments of short-term borrowings, net(136)
Borrowings under utility money pool arrangementBorrowings under utility money pool arrangement1,311.0  58.0  Borrowings under utility money pool arrangement443 1,311 
Repayments under utility money pool arrangementRepayments under utility money pool arrangement(1,350.0) (8.0) Repayments under utility money pool arrangement(500)(1,350)
Proceeds from issuance of long-term debtProceeds from issuance of long-term debt735.2  391.6  Proceeds from issuance of long-term debt738 735 
Repayments of long-term debt—  (400.0) 
Capital contributions from parentCapital contributions from parent778.4  332.2  Capital contributions from parent447 778 
Dividends paid to parentDividends paid to parent(574.1) (190.4) Dividends paid to parent(221)(574)
Other, net(0.3) —  
Net cash provided by financing activitiesNet cash provided by financing activities900.2  97.4  Net cash provided by financing activities771 900 
Net change in cash, cash equivalents and restricted cashNet change in cash, cash equivalents and restricted cash466.6  (19.2) Net change in cash, cash equivalents and restricted cash68 467 
Cash, cash equivalents and restricted cash at beginning of periodCash, cash equivalents and restricted cash at beginning of period11.4  33.4  Cash, cash equivalents and restricted cash at beginning of period28 11 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$478.0  $14.2  Cash, cash equivalents and restricted cash at end of period$96 $478 
Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:  Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)Cash paid for interest (net of amounts capitalized)$(106.9) $(107.4) Cash paid for interest (net of amounts capitalized)$(116)$(107)
Cash paid for income taxes, netCash paid for income taxes, net(17.5) (28.7) Cash paid for income taxes, net(15)(18)
Supplemental disclosure of non-cash investing and financing transactions:Supplemental disclosure of non-cash investing and financing transactions:  Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additionsAccrued property, plant and equipment additions$113.2  $113.1  Accrued property, plant and equipment additions$126 $113 
Inventory transfers to property, plant and equipmentInventory transfers to property, plant and equipment17.4  15.4  Inventory transfers to property, plant and equipment10 17 
Operating lease right-of-use assetsOperating lease right-of-use assets8.2  653.4  Operating lease right-of-use assets
Allowance for equity funds used during constructionAllowance for equity funds used during construction20.0  9.1  Allowance for equity funds used during construction12 20 
See Notes to Consolidated Financial Statements
6

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, 2020Dec. 31, 2019 June 30, 2021Dec. 31, 2020
AssetsAssets  Assets  
Current assetsCurrent assets  Current assets  
Cash and cash equivalentsCash and cash equivalents$478.0  $11.4  Cash and cash equivalents$96 $28 
Accounts receivable, netAccounts receivable, net284.3  303.9  Accounts receivable, net324 342 
Accounts receivable from affiliatesAccounts receivable from affiliates13.0  52.7  Accounts receivable from affiliates
Accrued unbilled revenuesAccrued unbilled revenues227.7  293.9  Accrued unbilled revenues246 298 
InventoriesInventories154.1  192.0  Inventories166 189 
Regulatory assetsRegulatory assets87.2  64.0  Regulatory assets179 121 
Derivative instrumentsDerivative instruments8.0  7.2  Derivative instruments36 21 
Prepayments and otherPrepayments and other57.1  55.9  Prepayments and other69 82 
Total current assetsTotal current assets1,309.4  981.0  Total current assets1,116 1,089 
Property, plant and equipment, netProperty, plant and equipment, net16,927.8  16,155.0  Property, plant and equipment, net17,845 17,470 
Other assetsOther assets  Other assets
Regulatory assetsRegulatory assets1,045.5  1,038.1  Regulatory assets1,637 1,059 
Derivative instrumentsDerivative instruments0.4  —  Derivative instruments40 16 
Operating lease right-of-use assetsOperating lease right-of-use assets541.0  574.0  Operating lease right-of-use assets454 500 
OtherOther257.1  259.4  Other224 231 
Total other assetsTotal other assets1,844.0  1,871.5  Total other assets2,355 1,806 
Total assetsTotal assets$20,081.2  $19,007.5  Total assets$21,316 $20,365 
Liabilities and Equity  
Liabilities and Stockholder's EquityLiabilities and Stockholder's Equity
Current liabilitiesCurrent liabilities  Current liabilities
Current portion of long-term debt$400.0  $400.0  
Borrowings under utility money pool arrangementBorrowings under utility money pool arrangement—  39.0  Borrowings under utility money pool arrangement$$57 
Short-term debtShort-term debt136 
Accounts payableAccounts payable354.6  573.3  Accounts payable430 452 
Accounts payable to affiliatesAccounts payable to affiliates63.8  43.9  Accounts payable to affiliates67 58 
Regulatory liabilitiesRegulatory liabilities103.7  69.2  Regulatory liabilities97 100 
Taxes accruedTaxes accrued123.3  202.1  Taxes accrued139 251 
Accrued interestAccrued interest55.8  53.4  Accrued interest58 61 
Dividends payable to parentDividends payable to parent104.6  111.5  Dividends payable to parent119 105 
Derivative instrumentsDerivative instruments13.2  8.7  Derivative instruments35 27 
Operating lease liabilitiesOperating lease liabilities91.8  85.8  Operating lease liabilities98 97 
OtherOther85.9  98.8  Other90 84 
Total current liabilitiesTotal current liabilities1,396.7  1,685.7  Total current liabilities1,133 1,428 
Deferred credits and other liabilitiesDeferred credits and other liabilities  Deferred credits and other liabilities
Deferred income taxesDeferred income taxes1,880.1  1,850.8  Deferred income taxes1,929 1,897 
Deferred investment tax credits21.6  22.8  
Regulatory liabilitiesRegulatory liabilities2,299.0  2,036.8  Regulatory liabilities2,397 2,337 
Asset retirement obligationsAsset retirement obligations329.5  324.0  Asset retirement obligations407 399 
Derivative instrumentsDerivative instruments47.6  52.5  Derivative instruments46 51 
Customer advancesCustomer advances170.6  173.6  Customer advances163 168 
Pension and employee benefit obligationsPension and employee benefit obligations164.5  211.9  Pension and employee benefit obligations111 161 
Operating lease liabilitiesOperating lease liabilities477.2  517.6  Operating lease liabilities384 432 
OtherOther152.3  150.9  Other183 176 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities5,542.4  5,340.9  Total deferred credits and other liabilities5,620 5,621 
Commitments and contingenciesCommitments and contingenciesCommitments and contingencies00
CapitalizationCapitalization  Capitalization
Long-term debtLong-term debt5,722.0  4,984.7  Long-term debt6,464 5,724 
Common stock — 100 shares authorized at $0.01 par value; 100 shares
outstanding at June 30, 2020 and Dec. 31, 2019, respectively
—  —  
Common stock — 100 shares authorized of $0.01 par value; 100 shares outstanding at June 30, 2021 and Dec. 31, 2020, respectivelyCommon stock — 100 shares authorized of $0.01 par value; 100 shares outstanding at June 30, 2021 and Dec. 31, 2020, respectively
Additional paid in capitalAdditional paid in capital5,693.7  4,939.4  Additional paid in capital6,210 5,770 
Retained earningsRetained earnings1,752.4  2,083.4  Retained earnings1,912 1,846 
Accumulated other comprehensive lossAccumulated other comprehensive loss(26.0) (26.6) Accumulated other comprehensive loss(23)(24)
Total common stockholder’s equity7,420.1  6,996.2  
Total liabilities and equity$20,081.2  $19,007.5  
Total common stockholder's equityTotal common stockholder's equity8,099 7,592 
Total liabilities and stockholder's equityTotal liabilities and stockholder's equity$21,316 $20,365 
See Notes to Consolidated Financial Statements
7

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 IssuedRetained EarningsAccumulated
Other
Comprehensive
Loss
Total
Common
Stockholder’s
Equity
SharesPar ValueAdditional Paid In CapitalTotal
Common
Stockholder’s
Equity
Three Months Ended June 30, 2020 and 2019
Balance at March 31, 2019100  $—  $4,390.5  $2,023.1  $(25.2) $6,388.4  
Net income101.5  101.5  
Other comprehensive income0.3  0.3  
Dividends declared to parent(104.9) (104.9) 
Contribution of capital by parent227.8  227.8  
Balance at June 30, 2019100  $—  $4,618.3  $2,019.7  $(24.9) $6,613.1  
Common Stock IssuedRetained EarningsAccumulated Other Comprehensive LossTotal Common Stockholder's Equity
SharesPar ValueAdditional Paid
In Capital
Three Months Ended June 30, 2021 and 2020Three Months Ended June 30, 2021 and 2020
Balance at March 31, 2020Balance at March 31, 2020100  $—  $4,989.4  $2,108.9  $(26.3) $7,072.0  Balance at March 31, 2020100 $$4,989 $2,109 $(26)$7,072 
Net incomeNet income108.1  108.1  Net income108 108 
Other comprehensive income0.3  0.3  
Dividends declared to parentDividends declared to parent(464.6) (464.6) Dividends declared to parent(465)(465)
Contribution of capital by parentContribution of capital by parent704.3  704.3  Contribution of capital by parent705 705 
Balance at June 30, 2020Balance at June 30, 2020100  $—  $5,693.7  $1,752.4  $(26.0) $7,420.1  Balance at June 30, 2020100 $$5,694 $1,752 $(26)$7,420 
Balance at March 31, 2021Balance at March 31, 2021100 $$6,070 $1,898 $(23)$7,945 
Net incomeNet income134 134 
Common Stock IssuedRetained EarningsAccumulated
Other
Comprehensive
Loss
Total
Common
Stockholder’s
Equity
SharesPar ValueAdditional Paid In CapitalTotal
Common
Stockholder’s
Equity
Six Months Ended June 30, 2020 and 2019
Balance at Dec. 31, 2018100  $—  $4,340.5  $1,983.2  $(25.5) $6,298.2  
Net income240.3  240.3  
Other comprehensive income0.6  0.6  
Dividends declared to parentDividends declared to parent(203.8) (203.8) Dividends declared to parent(120)(120)
Contribution of capital by parentContribution of capital by parent277.8  277.8  Contribution of capital by parent140 140 
Balance at June 30, 2019100  $—  $4,618.3  $2,019.7  $(24.9) $6,613.1  
Balance at Dec. 31, 2019100  $—  $4,939.4  $2,083.4  $(26.6) $6,996.2  
Net income236.8  236.8  
Other comprehensive income0.6  0.6  
Dividends declared to parent(567.1) (567.1) 
Contribution of capital by parent754.3  754.3  
Adoption of ASC Topic 326(0.7) (0.7) 
Balance at June 30, 2020100  $—  $5,693.7  $1,752.4  $(26.0) $7,420.1  
See Notes to Consolidated Financial Statements
Balance at June 30, 2021Balance at June 30, 2021100 $$6,210 $1,912 $(23)$8,099 

Common Stock IssuedRetained EarningsAccumulated Other Comprehensive LossTotal Common Stockholder's Equity
SharesPar ValueAdditional Paid
In Capital
Six Months Ended June 30, 2021 and 2020
Balance at Dec. 31, 2019100 $$4,940 $2,083 $(27)$6,996 
Net income237 237 
Other comprehensive income
Dividends declared to parent(567)(567)
Contribution of capital by parent754 754 
Adoption of ASC Topic 326(1)(1)
Balance at June 30, 2020100 $$5,694 $1,752 $(26)$7,420 
Balance at Dec. 31, 2020100 $$5,770 $1,846 $(24)$7,592 
Net income301 301 
Other comprehensive income
Dividends declared to parent(235)(235)
Contribution of capital by parent440 440 
Balance at June 30, 2021100 $$6,210 $1,912 $(23)$8,099 
See Notes to Consolidated Financial Statements



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PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES
Notes to Consolidated Financial Statements (UNAUDITED)
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly, in accordance with U.S. GAAP, the financial position of PSCo and its subsidiaries as of June 30, 20202021 and Dec. 31, 2019;2020; the results of its operations, including the components of net income, comprehensive income and changes in stockholder’s equity for the three and six months ended June 30, 20202021 and 2019;2020; and its cash flows for the six months ended June 30, 20202021 and 2019. 2020.
All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after June 30, 2020,2021, up to the date of issuance of these consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2019,2020 balance sheet information has been derived from the audited 20192020 consolidated financial statements included in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, 2019. These notes2020.
Notes to the consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the consolidated financial statements and notes thereto included in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, 2019,2020, filed with the SEC on Feb. 21, 2020.17, 2021. Due to the seasonality of PSCo’s electric and natural gas sales, interim results are not necessarily an appropriate base from which to project annual results.
1. Summary of Significant Accounting Policies
The significant accounting policies set forth in Note 1 to the consolidated financial statements in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, 2019,2020 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.
2. Accounting Pronouncements
Recently Adopted
Credit Losses In 2016, the FASB issued Financial Instruments - Credit Losses, Topic 326 (ASC Topic 326), which changes how entities account for losses on receivables and certain other assets. The guidance requires use of a current expected credit loss model, which may result in earlier recognition of credit losses than under previous accounting standards.
PSCo implemented the guidance using a modified-retrospective approach, recognizing a cumulative effect charge of $0.7$1 million (after tax) to retained earnings on Jan. 1, 2020. Other than first-time recognition of an allowance for doubtful accountsbad debts on accrued unbilled revenues, the Jan. 1, 2020, adoption of ASC Topic 326 did not have a significant impact on PSCo’s consolidated financial statements.
3. Selected Balance Sheet Data
(Millions of Dollars)(Millions of Dollars)June 30, 2020Dec. 31, 2019(Millions of Dollars)June 30, 2021Dec. 31, 2020
Accounts receivable, netAccounts receivable, netAccounts receivable, net
Accounts receivableAccounts receivable$308.2  $324.9  Accounts receivable$358 $371 
Less allowance for bad debtsLess allowance for bad debts(23.9) (21.0) Less allowance for bad debts(34)(29)
Accounts receivable, netAccounts receivable, net$284.3  $303.9  Accounts receivable, net$324 $342 
(Millions of Dollars)(Millions of Dollars)June 30, 2020Dec. 31, 2019(Millions of Dollars)June 30, 2021Dec. 31, 2020
InventoriesInventoriesInventories
Materials and suppliesMaterials and supplies$62.8  $62.6  Materials and supplies$64 $63 
FuelFuel67.2  77.1  Fuel67 73 
Natural gasNatural gas24.1  52.3  Natural gas35 53 
Total inventoriesTotal inventories$154.1  $192.0  Total inventories$166 $189 
(Millions of Dollars)June 30, 2020Dec. 31, 2019
Property, plant and equipment, net
Electric plant$14,601.5  $14,361.9  
Natural gas plant4,778.1  4,631.4  
Common and other property1,133.3  1,113.5  
Plant to be retired (a)
291.5  259.9  
Construction work in progress1,251.8  912.7  
Total property, plant and equipment22,056.2  21,279.4  
Less accumulated depreciation(5,128.4) (5,124.4) 
Property, plant and equipment, net$16,927.8  $16,155.0  

(Millions of Dollars)June 30, 2021Dec. 31, 2020
Property, plant and equipment, net
Electric plant$16,020 $15,736 
Natural gas plant5,173 5,037 
Common and other property1,201 1,191 
Plant to be retired (a)
200 225 
Construction work in progress721 510 
Total property, plant and equipment23,315 22,699 
Less accumulated depreciation(5,470)(5,229)
Property, plant and equipment, net$17,845 $17,470 
(a)In 2018, the CPUC approved early retirementIncludes regulator-approved retirements of PSCo’s Comanche Units 1 and 2 in approximately 2022 and 2025, respectively. PSCo also expectsjointly owned Craig Unit 1 to be retired early in 2025. Amounts are presented net1. Also includes PSCo’s planned retirement of accumulated depreciation.jointly owned Craig Unit 2.
4. Borrowings and Other Financing Instruments
Short-Term Borrowings
PSCo meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility and the money pool.
Money Pool — Xcel Energy Inc. and its utility subsidiaries have established a money pool arrangement that allows for short-term investments in and borrowings between the utility subsidiaries. Xcel Energy Inc. may make investments in the utility subsidiaries at market-based interest rates; however, the money pool arrangement does not allow the utility subsidiaries to make investments in Xcel Energy Inc.
Money pool borrowings for PSCo were as follows:PSCo:
(Amounts in Millions, Except Interest Rates)(Amounts in Millions, Except Interest Rates)Three Months Ended June 30, 2020Year Ended Dec. 31, 2019(Amounts in Millions, Except Interest Rates)Three Months Ended June 30, 2021Year Ended Dec. 31, 2020
Borrowing limitBorrowing limit$250  $250  Borrowing limit$250 $250 
Amount outstanding at period endAmount outstanding at period end—  39  Amount outstanding at period end57 
Average amount outstandingAverage amount outstanding94   Average amount outstanding59 
Maximum amount outstandingMaximum amount outstanding250  50  Maximum amount outstanding250 
Weighted average interest rate, computed on a daily basisWeighted average interest rate, computed on a daily basis0.92 %2.29 %Weighted average interest rate, computed on a daily basis0.04 %0.60 %
Weighted average interest rate at period endWeighted average interest rate at period endN/A1.63 %Weighted average interest rate at period endN/A0.07 
Commercial Paper — Commercial paper outstanding for PSCo was as follows:PSCo:
(Amounts in Millions, Except Interest Rates)(Amounts in Millions, Except Interest Rates)Three Months Ended June 30, 2020Year Ended Dec. 31, 2019(Amounts in Millions, Except Interest Rates)Three Months Ended June 30, 2021Year Ended Dec. 31, 2020
Borrowing limitBorrowing limit$700  $700  Borrowing limit$700 $700 
Amount outstanding at period endAmount outstanding at period end—  —  Amount outstanding at period end136 
Average amount outstandingAverage amount outstanding24  154  Average amount outstanding30 
Maximum amount outstandingMaximum amount outstanding166  432  Maximum amount outstanding230 
Weighted average interest rate, computed on a daily basisWeighted average interest rate, computed on a daily basis0.71 %2.67 %Weighted average interest rate, computed on a daily basisN/A1.59 %
Weighted average interest rate at period endWeighted average interest rate at period endN/AN/AWeighted average interest rate at period endN/A0.20 
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Letters of Credit — PSCo uses letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. ThereAt both June 30, 2021 and Dec. 31, 2020, there were $8 million and $9 million of letters of credit outstanding under the credit facility at June 30, 2020 and Dec. 31, 2019, respectively. The contract amounts of these letters of creditfacility. Amounts approximate their fair value and are subject to fees.
Revolving Credit Facility — In order to useissue 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, 2020,2021, PSCo had the following committed revolving credit facility available (in millions of dollars):
Credit Facility (a)
Credit Facility (a)
Outstanding (b)
Available
Credit Facility (a)
Drawn (b)
Available
$700  $ $692  700 $$692 
(a)    This credit facility expiresExpires in June 2024.
(b)    Includes outstanding commercial paper and letters of credit.
All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. PSCo had 0 direct advances on the credit facility outstanding at June 30, 20202021 and Dec. 31, 2019.2020.
Long-Term Borrowings
During the six months ended June 30, 2020,2021, PSCo issued $375$750 million in 1.90%of 1.875% first mortgage bonds due Jan.June 15, 2031 and $375 million of 2.70% first mortgage bonds due Jan. 15, 2051.2031.
5. Revenues
Revenue is classified by the type of goods/services rendered and market/customer type. PSCo’s operating revenues consistsconsisted of the following:
Three Months Ended June 30, 2020Three Months Ended June 30, 2021
(Millions of Dollars)(Millions of Dollars)ElectricNatural GasAll OtherTotal(Millions of Dollars)ElectricNatural GasAll OtherTotal
Major revenue typesMajor revenue typesMajor revenue types
Revenue from contracts with customers:Revenue from contracts with customers:Revenue from contracts with customers:
ResidentialResidential$243.8  $117.7  $2.8  $364.3  Residential$272 $204 $$479 
C&IC&I351.5  39.1  5.6  396.2  C&I426 81 513 
OtherOther11.7  —  —  11.7  Other13 13 
Total retailTotal retail607.0  156.8  8.4  772.2  Total retail711 285 1,005 
WholesaleWholesale41.5  —  —  41.5  Wholesale48 48 
TransmissionTransmission13.8  —  —  13.8  Transmission19 19 
OtherOther14.5  23.4  —  37.9  Other14 38 52 
Total revenue from contracts with customersTotal revenue from contracts with customers676.8  180.2  8.4  865.4  Total revenue from contracts with customers792 323 1,124 
Alternative revenue and otherAlternative revenue and other38.6  6.0  1.1  45.7  Alternative revenue and other35 15 50 
Total revenuesTotal revenues$715.4  $186.2  $9.5  $911.1  Total revenues$827 $338 $$1,174 
Three Months Ended June 30, 2019
(Millions of Dollars)ElectricNatural GasAll OtherTotal
Major revenue types
Revenue from contracts with customers:
Residential$211.5  $130.1  $2.8  $344.4  
C&I384.4  49.4  5.7  439.5  
Other11.8  —  —  11.8  
Total retail607.7  179.5  8.5  795.7  
Wholesale29.1  —  —  29.1  
Transmission11.6  —  —  11.6  
Other6.5  23.3  —  29.8  
Total revenue from contracts with customers654.9  202.8  8.5  866.2  
Alternative revenue and other37.8  4.8  1.2  43.8  
Total revenues$692.7  $207.6  $9.7  $910.0  
Six Months Ended June 30, 2020Three Months Ended June 30, 2020
(Millions of Dollars)(Millions of Dollars)ElectricNatural GasAll OtherTotal(Millions of Dollars)ElectricNatural GasAll OtherTotal
Major revenue typesMajor revenue typesMajor revenue types
Revenue from contracts with customers:Revenue from contracts with customers:Revenue from contracts with customers:
ResidentialResidential$481.3  $335.1  $5.9  $822.3  Residential$244 $118 $$365 
C&IC&I703.5  116.9  14.8  835.2  C&I351 39 396 
OtherOther23.9  —  —  23.9  Other12 12 
Total retailTotal retail1,208.7  452.0  20.7  1,681.4  Total retail607 157 773 
WholesaleWholesale88.8  —  —  88.8  Wholesale42 42 
TransmissionTransmission27.2  —  —  27.2  Transmission14 14 
OtherOther29.3  53.2  —  82.5  Other14 23 37 
Total revenue from contracts with customersTotal revenue from contracts with customers1,354.0  505.2  20.7  1,879.9  Total revenue from contracts with customers677 180 866 
Alternative revenue and otherAlternative revenue and other73.2  12.5  2.2  87.9  Alternative revenue and other38 45 
Total revenuesTotal revenues$1,427.2  $517.7  $22.9  $1,967.8  Total revenues$715 $186 $10 $911 
Six Months Ended June 30, 2019
(Millions of Dollars)ElectricNatural GasAll OtherTotal
Major revenue types
Revenue from contracts with customers:
Residential$456.6  $441.5  $5.3  $903.4  
C&I752.3  169.7  14.5  936.5  
Other24.3  —  —  24.3  
Total retail1,233.2  611.2  19.8  1,864.2  
Wholesale86.4  —  —  86.4  
Transmission25.0  —  —  25.0  
Other18.1  54.9  —  73.0  
Total revenue from contracts with customers1,362.7  666.1  19.8  2,048.6  
Alternative revenue and other71.5  10.6  2.3  84.4  
Total revenues$1,434.2  $676.7  $22.1  $2,133.0  

Six Months Ended June 30, 2021
(Millions of Dollars)ElectricNatural GasAll OtherTotal
Major revenue types
Revenue from contracts with customers:
Residential$518 $443 $$967 
C&I752 165 15 932 
Other25 25 
Total retail1,295 608 21 1,924 
Wholesale135 135 
Transmission37 37 
Other23 83 106 
Total revenue from contracts with customers1,490 691 21 2,202 
Alternative revenue and other70 62 133 
Total revenues$1,560 $753 $22 $2,335 


10
Six Months Ended June 30, 2020
(Millions of Dollars)ElectricNatural GasAll OtherTotal
Major revenue types
Revenue from contracts with customers:
Residential$481 $335 $$822 
C&I704 117 15 836 
Other24 24 
Total retail1,209 452 21 1,682 
Wholesale89 89 
Transmission27 27 
Other29 53 82 
Total revenue from contracts with customers1,354 505 21 1,880 
Alternative revenue and other73 13 88 
Total revenues$1,427 $518 $23 $1,968 

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6. Income Taxes
Note 7 to the consolidated financial statements included in PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, 2019,2020 represents, in all material respects, the current status of other income tax matters except to the extent noted below and are incorporated herein by reference.
The following table reconciles the difference
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Difference between the statutory rate and the ETR:
Six Months Ended June 30Six Months Ended June 30
202020192021
2020 (a)
Federal statutory rateFederal statutory rate21.0 %21.0 %Federal statutory rate21.0 %21.0 %
State tax (net of federal tax effect)State tax (net of federal tax effect)3.7  3.7  State tax (net of federal tax effect)3.6 3.7 
(Decreases) increases in tax from:(Decreases) increases in tax from:(Decreases) increases in tax from:
Wind PTCsWind PTCs(9.8) (9.4) Wind PTCs(15.1)(9.8)
Plant regulatory differences (a)(b)
Plant regulatory differences (a)(b)
(4.7) (3.4) 
Plant regulatory differences (a)(b)
(4.5)(4.7)
Other tax credits, net of NOL & tax credit allowances(1.1) (1.0) 
Other (net)Other (net)0.5  0.1  Other (net)(0.6)(0.7)
Effective income tax rateEffective income tax rate9.6 %11.0 %Effective income tax rate4.4 %9.5 %
(a)Prior periods have been restated to conform to current year presentation.
(b)Regulatory differences for income tax primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions.
Federal Audits  PSCOPSCo is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. Statute of limitations applicable to Xcel Energy’s consolidated federal income tax returns expire as follows:
Tax YearsExpiration
2009 - 20132014 — 2016January 2022
2017September 2020
2014 - 2016June 2021
In 2017,Additionally, the IRS concluded the auditstatute of limitations related to a federal tax years 2012 and 2013 and proposed an adjustment that would impact Xcel Energy’s NOL and ETR.loss carryback claim filed in 2020 has been extended. Xcel Energy filedhas recognized its best estimate of income tax expense that will result from a protest withfinal resolution of this issue; however, the IRS. outcome and timing of a resolution is unknownIn April 2020,. Xcel Energy and 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, 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, 2020,2021, PSCo’s earliest open tax year subject to examination by state taxing authorities under applicable statutes of limitations is 2009. ThereAs of June 30, 2021, there are currently no0 state income tax audits in progress.
Unrecognized BenefitsUnrecognizedThe unrecognized tax benefit balance includes permanent tax positions, which if recognized would affect the annual ETR. In addition, the unrecognized tax benefit balance includes temporary tax positions for which ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility.timing. A change in the periodtiming of deductibility would not affect the ETR but would accelerate the payment to the taxing authority to an earlier period.authority.
Unrecognized tax benefits — permanent vs temporary:
(Millions of Dollars)(Millions of Dollars)June 30, 2020Dec. 31, 2019(Millions of Dollars)June 30, 2021Dec. 31, 2020
Unrecognized tax benefit — Permanent tax positionsUnrecognized tax benefit — Permanent tax positions$8.0  $7.4  Unrecognized tax benefit — Permanent tax positions$$
Unrecognized tax benefit — Temporary tax positionsUnrecognized tax benefit — Temporary tax positions4.5  4.6  Unrecognized tax benefit — Temporary tax positions
Total unrecognized tax benefitTotal unrecognized tax benefit$12.5  $12.0  Total unrecognized tax benefit$10 $
Unrecognized tax benefits were reduced by tax benefits associated with NOL and tax credit carryforwards:
(Millions of Dollars)June 30, 2020Dec. 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 $5.7 million and $5.0 million for June 30, 2020 and Dec. 31, 2019, respectively.
(Millions of Dollars)June 30, 2021Dec. 31, 2020
NOL and tax credit carryforwards$(9)$(8)
As the IRS audit progresses and state audits resume, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $7.6$3 million in the next 12 months.
Payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with NOL and tax credit carryforwards.

Interest payable related to unrecognized tax benefits:
(Millions of Dollars)(Millions of Dollars)June 30, 2020Dec. 31, 2019(Millions of Dollars)June 30, 2021Dec. 31, 2020
Payable for interest related to unrecognized tax benefits at beginning of periodPayable for interest related to unrecognized tax benefits at beginning of period$(1.1) $(0.7) Payable for interest related to unrecognized tax benefits at beginning of period$$(1)
Interest expense related to unrecognized tax benefits(0.9) (0.4) 
Interest benefit related to unrecognized tax benefitsInterest benefit related to unrecognized tax benefits
Payable for interest related to unrecognized tax benefits at end of periodPayable for interest related to unrecognized tax benefits at end of period$(2.0) $(1.1) Payable for interest related to unrecognized tax benefits at end of period$$
NaN amounts were accrued for penalties related to unrecognized tax benefits as of June 30, 2020 and2021 or Dec. 31, 2019.2020.
7. Fair Value of Financial Assets and Liabilities
Fair Value Measurements
Accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires disclosures about assets and liabilities measured at fair value. A hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance.
Level 1 Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices;prices.
Level 2 Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reporting date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs; andinputs.
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 utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations and are generally assigned a Level 2 classification. When contractual settlements relate to inactive delivery locations or extend to periods beyond those readily observable on active exchanges or quoted by brokers, the significance of the use of less observable forecasts of forward prices and volatilitiesinputs on a valuation is evaluated and may result in Level 3 classification.
Derivative Instruments Fair Value Measurements
PSCo enters into derivative instruments, including forward contracts, futures, swaps and options, for trading purposes and to manage risk in connection with changes in interest rates, utility commodity prices and vehicle fuel prices.
Interest Rate Derivatives — PSCo enters into various instruments that effectively fix the yield or price on a specified benchmark interest rate for an anticipated debt issuance for a specific period. These derivative instruments are generally designated as cash flow hedges for accounting purposes, with changes in fair value prior to settlement recorded as other comprehensive income.
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At June 30, 2020,2021, accumulated other comprehensive loss related to settled interest rate derivatives included $1.2$1 million of net losses expected to be reclassified into earnings during the next 12 months as the hedged transactions impact earnings, including forecasted amounts for unsettled hedges, as applicable.
Wholesale and Commodity Trading Risk — PSCo conducts various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy, energy-related instruments and natural gas-related instruments, including derivatives. PSCo is allowed to conduct these activities within guidelines and limitations as approved by its risk management committee, comprised of management personnel not directly involved in the activities governed by this policy. Sharing of any margins is determined through state regulatory proceedings as well as the operation of the FERC approved joint operating agreement.
Commodity Derivatives — PSCo enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric and natural gas operations, as well as for trading purposes. This could include the purchase or sale of energy or energy-related products, natural gas to generate electric energy, natural gas for resale and vehicle fuel.
PSCo enters into derivative instruments that mitigate commodity price risk on behalf of electric and natural gas customers but may not be designated as qualifying hedging transactions. 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, if applicable, is based on commission approved regulatory recovery mechanisms.
As of June 30, 2020,2021, PSCo had 0 commodity contracts designated as cash flow hedges.
PSCo enters into commodity derivative instruments for trading purposes not directly related to commodity price risks associated with serving its electric and natural gas customers. Changes in the fair value of these commodity derivatives are recorded in electric operating revenues, net of amounts credited to customers under margin-sharing mechanisms.




Gross notional amounts of commodity forwards and options:
(Amounts in Millions) (a)(b)
(Amounts in Millions) (a)(b)
June 30, 2020Dec. 31, 2019
(Amounts in Millions) (a)(b)
June 30, 2021Dec. 31, 2020
Megawatt hours of electricityMegawatt hours of electricity19.3  9.3  Megawatt hours of electricity20 17 
Million British thermal units of natural gasMillion British thermal units of natural gas69.2  32.2  Million British thermal units of natural gas86 93 
(a)Amounts are not reflective of net positions in the underlying commodities.
(b)Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise.
Consideration of Credit Risk and Concentrations — PSCo continuously monitors the creditworthiness of the counterparties to its interest rate derivatives and commodity derivative contracts prior to settlement and assesses each counterparty’s ability to perform on the transactions set forth in the contracts. The impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented inon 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, 2020,2021, 5 of PSCo’s 10 most significant counterparties for these activities, comprising $112.3$80 million, or 77%49%, of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. NaN of the 10 most significant counterparties, comprising $15.0$16 million, or 10%, of this credit exposure, were not rated by these external ratings agencies, but based on PSCo’s internal analysis, had credit quality consistent with investment grade. TwoNaN of these significant counterparties, comprising $6.7$46 million, or 5%28%, of this credit exposure, had credit quality less than investment grade, based on external and internal analysis. NaN of these significant counterparties are independent system operators, municipal or cooperative electric entities, RTO’sRegional Transmission Organizations or other utilities.
The impactImpact of derivative activity:Derivative Activity —
Pre-Tax Fair Value
Gains (Losses) Recognized
During the Period in:
(Millions of Dollars)Accumulated Other
Comprehensive Loss
Regulatory (Assets) and Liabilities
Three Months Ended June 30, 2020
Other derivative instruments
Natural gas commodity$— $(2.8)
Total$— $(2.8)
Six Months Ended June 30, 2020
Other derivative instruments
Natural gas commodity$— $(2.8)
Total$— $(2.8)
Three Months Ended June 30, 2019
Other derivative instruments
Natural gas commodity$— $(1.5)
Total$— $(1.5)
Six Months Ended June 30, 2019
Other derivative instruments
Natural gas commodity$— $(1.5)
Total$— $(1.5)
Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:
(Millions of Dollars)Accumulated Other Comprehensive LossRegulatory (Assets) and Liabilities
Three Months Ended June 30, 2021
Other derivative instruments
Natural gas commodity$$(2)
Total$$(2)
Six Months Ended June 30, 2021
Other derivative instruments
Natural gas commodity$$(2)
Total$$(2)
Three Months Ended June 30, 2020
Other derivative instruments
Natural gas commodity$$(3)
Total$$(3)
Six Months Ended June 30, 2020
Other derivative instruments
Natural gas commodity$$(3)
Total$$(3)
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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) 

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 LossRegulatory Assets and (Liabilities)
Three Months Ended June 30, 2021
Other derivative instruments
Commodity trading$$$10 (b)
Total$$$10 
Six Months Ended June 30, 2021
Derivatives designated as cash flow hedges
Interest rate$(a)$$
Total$$$
Other derivative instruments
Commodity trading$$$14 (b)
Natural gas commodity(c)(6)(c)
Total$$$
Three Months Ended June 30, 2020
Other derivative instruments
Commodity trading$$$(1)(b)
Total$$$(1)
Six Months Ended June 30, 2020
Derivatives designated as cash flow hedges
Interest rate$(a)$$
Total$$$
Other derivative instruments
Commodity trading$$$(5)(b)
Natural gas commodity(c)(3)(c)
Total$$$(8)
(a)    Amounts are recorded to interest charges.
(b)    Amounts are recorded to electric operating revenues. Portions of these gains and losses are subject to sharing with electric customers through margin-sharing mechanisms and deducted from gross revenue as appropriate.
(c)    Amounts for both the three and six months ended June 30, 2021 and 2020, included 0 settlement gaingains 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. RemainingThe derivative settlement losses for both the three and six months ended June 30, 2021 and 2020 relate to natural gas operations and arewere recorded to cost of natural gas sold and transported. These gains and losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset or liability, as appropriate.





























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.
(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, 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 0 derivative instruments designated as fair value hedges during the three and six months ended June 30, 20202021 and 2019.2020.
Credit Related Contingent Features Contract provisions for derivative instruments that PSCo enters into, including those accounted for as normal purchase-normal sale contracts and therefore not reflected on the consolidated balance sheets, may require the posting of collateral or settlement of the contracts for various reasons, including if PSCo’s credit ratings are downgraded below its investment grade credit rating by any of the major credit rating agencies,agencies. At June 30, 2021 and Dec. 31, 2020, there were 0 derivative liabilities with such underlying contract provisions. Certain contracts also contain cross default provisions that may require the posting of collateral or for cross-default contractual provisionssettlement of the contracts if there was a failure under the other financing arrangements related to payment terms or other covenants. AtAs of June 30, 20202021 and Dec. 31, 2019,2020, there were 0approximately $20 million and $46 million of derivative instruments in a liability positionliabilities with such underlying contract provisions.provisions, respectively.
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 0 collateral posted related to adequate assurance clauses in derivative contracts as of June 30, 20202021 and Dec. 31, 2019.
2020.


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Recurring Fair Value Measurements — PSCo’s derivative assets and liabilities measured at fair value on a recurring basis:
June 30, 2020Dec. 31, 2019June 30, 2021Dec. 31, 2020
Fair ValueFair Value
Total
Netting (a)
Fair ValueFair Value
Total
Netting (a)
Fair ValueFair Value Total
Netting (a)
TotalFair ValueFair Value Total
Netting (a)
Total
(Millions of Dollars)(Millions of Dollars)Level 1Level 2Level 3TotalLevel 1Level 2Level 3TotalFair Value
Total
(Millions of Dollars)Level 1Level 2Level 3Fair Value Total
Netting (a)
Level 3Fair Value Total
Netting (a)
Current derivative assetsCurrent derivative assetsCurrent derivative assets
Other derivative instruments:Other derivative instruments:Other derivative instruments:
Commodity tradingCommodity 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  Commodity trading$11 $145 $$157 $(129)$28 $$41 $$43 $(28)$15 
Natural gas commodityNatural gas commodity—  5.3  —  5.3  —  5.3  —  3.4  —  3.4  —  3.4  Natural gas commodity
Total current derivative assetsTotal current derivative assets$2.9  $22.3  $1.0  $26.2  $(18.2) $8.0  $1.9  $14.5  $0.9  $17.3  $(10.1) $7.2  Total current derivative assets$11 $153 $$165 $(129)$36 $$47 $$49 $(28)$21 
Noncurrent derivative assetsNoncurrent derivative assetsNoncurrent derivative assets
Other derivative instruments:Other derivative instruments:Other derivative instruments:
Commodity tradingCommodity trading$1.1  $10.8  $—  $11.9  $(11.5) $0.4  $0.4  $8.1  $1.1  $9.6  $(9.6) $—  Commodity trading$$80 $29 $114 $(74)$40 $$27 $$36 $(20)$16 
Total noncurrent derivative assetsTotal noncurrent derivative assets$1.1  $10.8  $—  $11.9  $(11.5) $0.4  $0.4  $8.1  $1.1  $9.6  $(9.6) $—  Total noncurrent derivative assets$$80 $29 $114 $(74)$40 $$27 $$36 $(20)$16 
June 30, 2020Dec. 31, 2019June 30, 2021Dec. 31, 2020
Fair ValueFair Value
Total
Netting (a)
Fair ValueFair Value
Total
Netting (a)
Fair ValueFair Value Total
Netting (a)
TotalFair ValueFair Value Total
Netting (a)
Total
(Millions of Dollars)(Millions of Dollars)Level 1Level 2Level 3TotalLevel 1Level 2Level 3TotalFair Value
Total
(Millions of Dollars)Level 1Level 2Level 3Fair Value Total
Netting (a)
Level 3Fair Value Total
Netting (a)
Current derivative liabilitiesCurrent derivative liabilitiesCurrent derivative liabilities
Other derivative instruments:Other derivative instruments:Other derivative instruments:
Commodity tradingCommodity trading$2.5  $24.8  $0.1  $27.4  $(18.2) $9.2  $1.7  $16.7  $—  $18.4  $(13.1) $5.3  Commodity trading$$148 $10 $165 $(133)$32 $$46 $$54 $(33)$21 
Natural gas commodityNatural gas commodity—  4.0  —  4.0  —  4.0  —  3.4  —  3.4  —  3.4  Natural gas commodity
Total current derivative liabilitiesTotal current derivative liabilities$2.5  $28.8  $0.1  $31.4  $(18.2) $13.2  $1.7  $20.1  $—  $21.8  $(13.1) $8.7  Total current derivative liabilities$$151 $10 $168 $(133)$35 $$52 $$60 $(33)$27 
Noncurrent derivative liabilitiesNoncurrent derivative liabilitiesNoncurrent derivative liabilities
Other derivative instruments:Other derivative instruments:Other derivative instruments:
Commodity tradingCommodity 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  Commodity trading$$50 $81 $133 $(87)$46 $$24 $46 $71 $(20)$51 
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  
Total noncurrent derivative assetsTotal noncurrent derivative assets$$50 $81 $133 $(87)$46 $$24 $46 $71 $(20)$51 
(a)PSCo nets derivative instruments and related collateral inon its consolidated balance sheetsheets 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, 20202021 and Dec. 31, 2019.2020. At both June 30, 20202021 and Dec. 31, 2019,2020, derivative assets and liabilities include 0 obligations to return cash collateralcollateral. At June 30, 2021 and the rightDec. 31, 2020, derivative assets and liabilities include rights to reclaim cash collateral of $3.2$16 million and $3.0$5 million, respectively. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

Changes in Level 3 commodity derivatives:
Three Months Ended June 30Three Months Ended June 30
(Millions of Dollars)(Millions of Dollars)20202019(Millions of Dollars)20212020
Balance at April 1Balance at April 1$(14.6) $(0.1) Balance at April 1$(38)$(15)
SettlementsSettlements(0.3) —  Settlements
Net transactions recorded during the period:Net transactions recorded during the period: Net transactions recorded during the period:
(Losses) gains recognized in earnings (a)
(2.2) 0.3  
Losses recognized in earnings (a)
Losses recognized in earnings (a)
(23)(2)
Balance at June 30Balance at June 30$(17.1) $0.2  Balance at June 30$(61)$(17)
Six Months Ended June 30Six Months Ended June 30
(Millions of Dollars)(Millions of Dollars)20202019(Millions of Dollars)20212020
Balance at Jan. 1Balance at Jan. 1$(12.7) $0.1  Balance at Jan. 1$(44)$(13)
SettlementsSettlements(1.1) (0.9) Settlements(1)(1)
Net transactions recorded during the period:Net transactions recorded during the period:Net transactions recorded during the period:
(Losses) gains recognized in earnings (a)
(3.3) 1.0  
Losses recognized in earnings (a)
Losses recognized in earnings (a)
(16)(3)
Balance at June 30Balance at June 30$(17.1) $0.2  Balance at June 30$(61)$(17)
(a)AmountsPresented amounts relate to commodity derivativesinstruments held at the end of the period. The consolidated income statement also includes gains and losses on Level 1 and 2 instruments, and Level 3 instruments settled during the period.
PSCo recognizes transfers between levels as of the beginning of each period. There were 0 transfers of amounts between levels for derivative instruments for the three and six months ended June 30, 20202021 and 2019.



2020.

Fair Value of Long-Term Debt
Other financial instruments for which the carrying amount did not equal fair value:
June 30, 2020Dec. 31, 2019June 30, 2021Dec. 31, 2020
(Millions of Dollars)(Millions of Dollars)Carrying
Amount
Fair ValueCarrying
Amount
Fair Value(Millions of Dollars)Carrying AmountFair ValueCarrying AmountFair Value
Long-term debt, including current portionLong-term debt, including current portion$6,122.0  $7,250.8  $5,384.7  $6,039.3  Long-term debt, including current portion$6,464 $7,426 $5,724 $7,040 
Fair value of PSCo’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of June 30, 20202021 and Dec. 31, 2019,2020 and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.







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8. Benefit Plans and Other Postretirement Benefits
Components of Net Periodic Benefit Cost (Credit)
Three Months Ended June 30 Three Months Ended June 30
2020201920202019 2021202020212020
(Millions of Dollars)(Millions of Dollars)Pension BenefitsPostretirement Health
Care Benefits
(Millions of Dollars)Pension BenefitsPostretirement Health
Care Benefits
Service costService cost$7.6  $6.4  $0.1  $0.1  Service cost$$$$
Interest cost (a)
Interest cost (a)
11.4  12.9  3.2  3.9  
Interest cost (a)
11 
Expected return on plan assets (a)
Expected return on plan assets (a)
(17.6) (17.1) (4.4) (4.7) 
Expected return on plan assets (a)
(18)(18)(4)(4)
Amortization of prior service credit (a)
Amortization of prior service credit (a)
(0.7) (0.8) (1.0) (1.3) 
Amortization of prior service credit (a)
(1)(1)(1)
Amortization of net loss (a)
Amortization of net loss (a)
7.5  6.3  0.4  0.7  
Amortization of net loss (a)
Net periodic benefit cost (credit)Net periodic benefit cost (credit)8.2  7.7  (1.7) (1.3) Net periodic benefit cost (credit)(1)(2)
Credits not recognized due to effects of regulation(0.3) 1.8  1.0  0.2  
Effects of regulationEffects of regulation
Net benefit cost (credit) recognized for financial reportingNet benefit cost (credit) recognized for financial reporting$7.9  $9.5  $(0.7) $(1.1) Net benefit cost (credit) recognized for financial reporting$$$(1)$(1)
Six Months Ended June 30Six Months Ended June 30
20202019202020192021202020212020
(Millions of Dollars)(Millions of Dollars)Pension BenefitsPostretirement Health
Care Benefits
(Millions of Dollars)Pension BenefitsPostretirement Health
Care Benefits
Service costService cost$15.3  $12.8  $0.1  $0.2  Service cost$16 $15 $$
Interest cost (a)
Interest cost (a)
22.9  25.8  6.4  7.8  
Interest cost (a)
19 23 
Expected return on plan assets (a)
Expected return on plan assets (a)
(35.3) (34.2) (8.7) (9.4) 
Expected return on plan assets (a)
(36)(35)(8)(9)
Amortization of prior service credit (a)
Amortization of prior service credit (a)
(1.4) (1.7) (1.9) (2.7) 
Amortization of prior service credit (a)
(1)(2)(2)
Amortization of net loss (a)
Amortization of net loss (a)
14.9  12.7  0.8  1.5  
Amortization of net loss (a)
16 15 
Net periodic benefit cost (credit)Net periodic benefit cost (credit)16.4  15.4  (3.3) (2.6) Net periodic benefit cost (credit)15 17 (2)(3)
Credits not recognized due to effects of regulation0.3  3.6  1.6  0.5  
Effects of regulationEffects of regulation
Net benefit cost (credit) recognized for financial reportingNet benefit cost (credit) recognized for financial reporting$16.7  $19.0  $(1.7) $(2.1) Net benefit cost (credit) recognized for financial reporting$17 $17 $(1)$(2)
(a)     The components of net periodic cost other than the service cost component are included in the line item “other“Other income, (expense), net” in the consolidated statementstatements of income or capitalized on the consolidated balance sheetsheets as a regulatory asset.
In January 2020,2021, contributions of $150.0$125 million were made across 4 of Xcel Energy’s pension plans, of which $50.0$45 million was attributable to PSCo. Xcel Energy does not expect additional pension contributions during 2020.2021.
9. Commitments and Contingencies
The following includeincludes commitments, contingencies and unresolved contingencies that are material to PSCo’s financial position.
Legal
PSCo is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation.
Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories.
In such cases, there is considerable uncertainty regarding the timing or ultimate resolution, of such matters, including a possible eventual loss.
For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on PSCo’s consolidated financial statements. Unless otherwise required by GAAP, legalLegal fees are generally expensed as incurred.

Gas Trading Litigation e prime is a wholly owned subsidiary of Xcel Energy. e prime was in the business of natural gas trading and marketing but has not engaged in natural gas trading or marketing activities since 2003. Multiple lawsuits involving multiple plaintiffs seeking monetary damages were commenced against e prime and its affiliates, including Xcel Energy, 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.
NaNTwo cases remain active which include an MDL matter consisting of a Colorado purported class (Breckenridge) and a Wisconsin purported class (Arandell Corp.).
Breckenridge/Colorado — In February 2019, the MDL panel remanded Breckenridge back to the U.S. District Court in Colorado. Settlement of approximately $3 million was reached in February 2021. The parties have sought and are awaiting court approval of the settlement. A hearing was held on July 22, 2021. A decision is anticipated in Q3.
Arandell Corp.In February 2019,The trial has been vacated and will be rescheduled after the case was remanded back tocourt rules on the U.S. District Court in Wisconsin. Plaintiffs are seekingpending motions for reconsideration and for class certification. It is uncertain when the court will rule on this issue.
Xcel Energy has concluded that a loss is remote for boththe remaining lawsuits.lawsuit.
Rate Matters
Gas Cost Adjustment NOPR In June 2021, the CPUC issued a NOPR addressing the recovery of costs through the GCA. The proposed rule would establish an annual forecast of GCA costs for each utility and allow each utility to recover only 90%-95% of any costs in excess of the forecasted amount. The proposed rule would allow utilities to earn an incentive equal to an undefined portion of any savings relative to forecasted costs. Initial comments were due July 23, 2021, reply comments are due Aug. 6, 2021 and a hearing is scheduled for Aug. 26, 2021. A CPUC decision in expected in the third quarter of 2021.
Environmental
MGP, Landfill and Disposal Sites
PSCo is cooperating with the City of Denver on an environmental investigation of the Rice Yards Site in Denver, Colorado, which had various historic industrial uses by multiple parties, including railroad, maintenance shop, scrap metal yard and MGP operations.
In June 2020, PSCo resolved claims by the current property owner 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, PSCo is currently investigating, remediating or performing post-closure actions at 2 other3 MGP, landfill or other disposal sites across its service territory.
PSCo has recognized its best estimate of costs/liabilities that will result from final resolution of these issues, however, the outcome and timing is unknown. In addition, there may be insurance recovery and/or recovery from other potentially responsible parties, offsetting a portion of costs incurred.
Environmental Requirements — Water and Waste
Coal Ash Regulation PSCo’s operations are subject to federal and state regulations that impose requirements for handling, storage, treatment and disposal of solid waste. Under the CCR Rule, utilities are required to complete groundwater sampling around their CCR landfills and surface impoundments. Currently, PSCo has 65 regulated ash units in operation.
PSCo is conducting groundwater sampling and where appropriate,monitoring and implementing assessment of corrective measures at certain CCR landfills and surface impoundments. In 2019, groundwater monitoring consistent with the CCR Rule was conducted. Statistically significant levelsIncreases above background concentrations were detected at 4 locations. Based on further assessments, PSCo is evaluating options for corrective action at 2 locations, 1 of which indicates potential offsite impacts to groundwater. The total cost is uncertain, but could be up to $35 million. PSCo is continuing to assess the financial and regulatory impacts.
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Subsequently, assessment monitoring samples were collected at these locations and, based on the results, PSCo is evaluating options for corrective action at 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.
In August 2018, the United States Court of Appeals for the District of Columbia Circuit ruled that2020, the EPA cannot allow utilitiespublished its final rule to continue to use unlinedimplement closure by April 2021 for all CCR impoundments (including clay lined impoundments) foraffected by the storage or disposal of coal ash. In November 2019, the EPA proposed rules in response to this decision that, if finalized in their current form, may requireAugust 2018 D.C. Circuit ruling. This final rule required PSCo to expedite closure plans for 1 impoundment.
PSCo also built an alternative collection and treatment system to remove the Comanche Station bottom ash pond from service. The total cost of 1 coal ash impoundment thatthe alternate treatment system is approximately $25 million. PSCo worked expeditiously to meet the April 11, 2021 deadline, but was not previously requiredable to close. In March 2020,remove the EPA publishedpond from service until June 18, 2021. PSCo expects to negotiate 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 consistentcompliance order with the CCR Rule untilEPA. PSCo will also now proceed with closure of the generating units are retired in 2025.pond, with an estimated cost of $3 million.
Closure costs for existing impoundments are included in the calculation of the asset retirement obligation liability.obligation.
Leases
PSCo evaluates contracts that may contain leases, including PPAs and arrangements for the use of office space and other facilities, vehicles and equipment. A contract contains a lease if it conveys the exclusive right to control the use of a specific asset.
Components of lease expense:
Three Months Ended June 30
(Millions of Dollars)20212020
Operating leases
PPA capacity payments$26 $25 
Other operating leases (a)
Total operating lease expense (b)
$29 $28 
Finance leases
Amortization of ROU assets$$
Interest expense on lease liability
Total finance lease expense$$
(a)Includes immaterial short-term lease expense for 2021 and 2020.
(b)PPA capacity payments are included in electric fuel and purchased power on the consolidated statements of income. Expense for other operating leases is included in O&M expense and electric fuel and purchased power.

Six Months Ended June 30
(Millions of Dollars)20212020
Operating leases
PPA capacity payments$51 $49 
Other operating leases (a)
77
Total operating lease expense (b)
$58 $56 
Finance leases
Amortization of ROU assets$$
Interest expense on lease liability89
Total finance lease expense$12 $12 
(a)Includes short-term lease expense of $1 million for 2021 and 2020, respectively.
(b)PPA capacity payments are included in electric fuel and purchased power on the consolidated statements of income. Expense for other operating leases is included in O&M expense and electric fuel and purchased power.
Commitments under operating and finance leases as of June 30, 2021:
(Millions of Dollars)PPA Operating LeasesOther Operating LeaseTotal Operating LeasesFinance Leases
Total minimum obligation$493 $61 $554 $472 
Interest component of obligation(65)(7)(72)(344)
Present value of minimum obligation$428 $54 482 128 
Less current portion(98)(5)
Noncurrent operating and finance lease liabilities$384 $123 
VIEs 
Under certain PPAs, PSCo purchases power from IPPs for which PSCo is required to reimburse fuel costs, or to participate in tolling arrangements under which PSCo procures the natural gas required to produce the energy that it purchases. These specific PPAs create a variable interest in the IPP.
PSCo had approximately 1,518 MW and 1,442 MW of capacity under long-term PPAs at both June 30, 20202021 and Dec. 31, 2019, respectively,2020 with entities that have been determined to be VIEs. PSCo concluded that these entities are not required to be consolidated in its consolidated financial statements because it does not have the power to direct the activities that most significantly impact the entities’ economic performance. AgreementsThe PPAs have 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, 20202021 and 2019:2020:
Three Months Ended June 30, 2020Three Months Ended June 30, 2019Three Months Ended June 30, 2021Three Months Ended June 30, 2020
(Millions of Dollars)(Millions of Dollars)Gains and Losses
on Cash Flow Hedges
Defined Benefit Pension and
Postretirement Items
TotalGains and Losses
on Cash Flow Hedges
Defined Benefit Pension and
Postretirement Items
Total(Millions of Dollars)Gains and Losses on Cash Flow HedgesDefined Benefit Pension and Postretirement ItemsTotalGains and Losses on Cash Flow HedgesDefined Benefit Pension and Postretirement ItemsTotal
Accumulated other comprehensive loss at April 1Accumulated other comprehensive loss at April 1$(23.8) $(2.5) $(26.3) $(25.0) $(0.2) $(25.2) Accumulated other comprehensive loss at April 1$(22)$(1)$(23)$(24)$(2)$(26)
Losses reclassified from net accumulated other comprehensive loss:Losses reclassified from net accumulated other comprehensive loss:Losses reclassified from net accumulated other comprehensive loss:
Interest rate derivatives (net of taxes of $0.1, $—, $0.1 and $—, respectively) (a)
0.3  —  0.3  0.3  —  0.3  
Interest rate derivatives (net of taxes of $0, $0, $0 and $0, respectively) (a)
Interest rate derivatives (net of taxes of $0, $0, $0 and $0, respectively) (a)
Net current period other comprehensive incomeNet current period other comprehensive income0.3  —  0.3  0.3  —  0.3  Net current period other comprehensive income
Accumulated other comprehensive loss at June 30Accumulated other comprehensive loss at June 30$(23.5) $(2.5) $(26.0) $(24.7) $(0.2) $(24.9) Accumulated other comprehensive loss at June 30$(22)$(1)$(23)$(24)$(2)$(26)
(a)Included in interest charges.charges
Six Months Ended June 30, 2020Six Months Ended June 30, 2019
(Millions of Dollars)Gains and Losses
on Cash Flow Hedges
Defined Benefit Pension and
Postretirement Items
TotalGains 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 income0.6  —  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) 
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Six Months Ended June 30, 2021Six Months Ended June 30, 2020
(Millions of Dollars)Gains and Losses on Cash Flow HedgesDefined Benefit Pension and Postretirement ItemsTotalGains and Losses on Cash Flow HedgesDefined Benefit Pension and Postretirement ItemsTotal
Accumulated other comprehensive loss at Jan. 1$(23)$(1)$(24)$(25)$(2)$(27)
Losses reclassified from net accumulated other comprehensive loss:
Interest rate derivatives (net of taxes of $0, $0, $0 and $0, respectively) (a)
Net current period other comprehensive income
Accumulated other comprehensive loss at June 30$(22)$(1)$(23)$(24)$(2)$(26)
(a)Included in interest charges.charges
11. Segment Information
PSCo evaluates performance based on profit or loss generated from the product or service provided. These segments are managed separately because the revenue streams are dependent upon regulated rate recovery, which is separately determined for each segment.
PSCo has the following reportable segments:
Regulated Electric — The regulated electric utility segment generates electricity which is transmitted and distributed in Colorado. This segment includes sales for resale and provides wholesale transmission service to various entities in the United States. Regulated electric utility also includes PSCo’s wholesale commodity and trading operations; andoperations.
Regulated Natural Gas — The regulated natural gas utility segment transports, stores and distributes natural gas in portions of Colorado.
PSCo also presents All Other, which includes operating segments with revenues below the necessary quantitative thresholds. Those operating segments primarily include steam revenue, appliance repair services and non-utility real estate activities.
Asset and capital expenditure information is not provided for PSCo’s reportable segments because, as an integrated electric and natural gas utility, PSCo operates significant assets that are not dedicated to a specific business segment and reporting assets and capital expenditures by business segment would require arbitrary and potentially misleading allocations, which may not necessarily reflect the assets that would be required for the operation of the business segments on a stand-alone basis.
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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. 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:information:
Three Months Ended June 30
(Millions of Dollars)20202019
Regulated Electric
Operating revenues$715.4  $692.7  
Intersegment revenues0.1  0.1  
Total revenue$715.5  $692.8  
Net income89.0  84.8  
Regulated Natural Gas
Operating revenues$186.2  $207.6  
Net income16.0  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 income108.1  101.5  
Three Months Ended June 30
(Millions of Dollars)20212020
Regulated Electric
Total revenues$827 $715 
Net income107 89 
Regulated Natural Gas
Total revenues$338 $186 
Net income30 16 
All Other
Total revenues (a)
$$10 
Net (loss) income(3)
Consolidated Total
Total revenues (a)
$1,174 $911 
Net income134 108 
(a)    OperatingTotal revenues include $1.1$1 million of other affiliate revenue for both the three months ended June 30, 20202021 and 2019.2020.
Six Months Ended June 30
(Millions of Dollars)20202019
Regulated Electric
Operating revenues$1,427.2  $1,434.2  
Intersegment revenues0.2  0.2  
Total revenue$1,427.4  $1,434.4  
Net income163.0  167.2  
Regulated Natural Gas
Operating revenues$517.7  $676.7  
Intersegment revenues(0.1) 0.1  
Total revenue$517.6  $676.8  
Net income68.1  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 income236.8  240.3  

Six Months Ended June 30
(Millions of Dollars)20212020
Regulated Electric
Total revenues$1,560 $1,427 
Net income188 163 
Regulated Natural Gas
Total revenues$753 $518 
Net income114 68 
All Other
Total revenues (a)
$22 $23 
Net (loss) income(1)
Consolidated Total
Total revenues (a)
$2,335 $1,968 
Net income301 237 
(a)    OperatingTotal revenues include $2.2$2 million of other affiliate revenue for both the six months ended June 30, 20202021 and 2019.2020.


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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 instructionsGeneral 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 instructionsGeneral Instruction H(2)(a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).
Non-GAAP Financial Measures
The following discussion includes financial information prepared in accordance with GAAP, as well as certain non-GAAP financial measures such as electric margin and natural gas margin and ongoing earnings. margin. 
Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are adjusted from measures calculated and presented in accordance with GAAP. PSCo’s management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.
Electric and Natural Gas Margins
Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Natural gas margin is presented as natural gas revenues less the cost of natural gas sold and transported. Expenses incurred for electric fuel and purchased power and the cost of natural gas are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues.
Management believes electric and natural gas margins provide the most meaningful basis for evaluating our operations because they exclude the revenue impact of fluctuations in these expenses. These margins can be reconciled to operating income, a GAAP measure, by including other operating revenues, cost of sales-other, O&M expenses, conservation and DSM expenses, depreciation and amortization and taxes (other than income taxes).
Results of Operations
PSCo’s net income was approximately $236.8$301 million for the six months ended June 30, 2020,year-to-date, compared with approximately $240.3$237 million for the prior year. The decreaseincrease in year-to-date earnings was driven by lower sales and demand revenue primarily due to COVID-19, higher depreciation, interest charges and lower natural gas and electric margins due to unfavorable weather,(primarily capital investment recovery and regulatory outcomes), partially offset by higher AFUDC, an increase in electric margins (regulatory outcomes offset lower sales due to COVID-19)additional depreciation and lower O&M.other taxes (other than income taxes).
Electric Margin
Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas and coal used in the generation of electricity. However, these price fluctuations have minimal impact on electric margin due to fuel recovery mechanisms that recover fuel expenses. In addition, electric customers receive a credit for PTCs that are generated, in a particular period.
which reduce electric revenue and margin.
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Electric revenues and margin:
Six Months Ended June 30Six Months Ended June 30
(Millions of Dollars)(Millions of Dollars)20202019(Millions of Dollars)20212020
Electric revenuesElectric revenues$1,427.2  $1,434.2  Electric revenues$1,560 $1,427 
Electric fuel and purchased powerElectric fuel and purchased power(529.2) (544.9) Electric fuel and purchased power(599)(529)
Electric marginElectric margin$898.0  $889.3  Electric margin$961 $898 
Changes in electric margin:
(Millions of Dollars)2020Six Months Ended June 30, 2021 vs. 20192020
Non-fuel riders$65 
Regulatory rate outcome$18 15.5 
Estimated impactProprietary commodity trading, net of weathersharing – Winter Storm Uri5.311 
Wholesale transmission revenue (net)3.4 
PTCs flowed back to customers (offset by lower ETR)(27)
0.5 Demand side management revenues (offset in expense)(6)
Sales and demand (a)
(4)(23.7)
Other net(net)(2)7.7 
Total increase in electric margin$8.763 
(a)     Sales decline excludes weather impact, net of decoupling, and demand revenue is not impacted by decoupling.
Natural Gas Margin
Natural gas expense varies with changing sales requirements and the cost of natural gas. However, fluctuations in the cost of natural gas have minimal impact on natural gas margin due to natural gas cost recovery mechanisms.
Natural gas revenues and margin:
Six Months Ended June 30Six Months Ended June 30
(Millions of Dollars)(Millions of Dollars)20202019(Millions of Dollars)20212020
Natural gas revenuesNatural gas revenues$517.7  $676.7  Natural gas revenues$753 $518 
Cost of natural gas sold and transportedCost of natural gas sold and transported(187.4) (342.4) Cost of natural gas sold and transported(338)(187)
Natural gas marginNatural gas margin$330.3  $334.3  Natural gas margin$415 $331 
Changes in natural gas margin:
(Millions of Dollars)2020Six Months Ended June 30, 2021 vs. 20192020
Regulatory rate outcomes$71 
Estimated impact of weather$(6.2)
Sales decline(2.9)
Transport sales(2.3)
Infrastructure and integrity riders
6.5 Retail sales growth2 
Other, net0.9 
Total decreaseincrease in natural gas margin$(4.0)84 
Non-Fuel Operating Expenses and Other Items

O&M Expenses— O&M expenses decreased $5.7 million, or 1.4%, for the six months ended June 30, 2020, compared with the prior year. The decrease was primarily due to cost mitigation efforts to offset the negative impacts of COVID-19 including allocation of workforce, material and 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 spending on customer experience transformation and advanced grid infrastructure.
Depreciation and Amortization Depreciation and amortization expense increased $19.5$53 million, or 6.6%, for the six months ended June 30, 2020, compared with the prior year.16.8% year-to-date. The increase was primarily due to the in-servicing of the Cheyenne Ridge wind farm, new deprecation rates, normal system expansion and new electric rates implemented in March 2020,Comanche related regulatory asset amortization, partially offset by a decrease in amortization of pension regulatory assets.
AFUDC, Equity and Debt AFUDC increased $14.5 million for the six months ended June 30, 2020, compared with the prior year. The increase was primarily due to the Cheyenne Ridge wind farm.
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Interest ChargesInterest charges increased $5.9 million, or 5.0%, for the six months ended June 30, 2020, compared with the prior year. The increase was primarily due to higher debt levels to fund capital investments, partially offset by lower long-term and short-term interest rates.Table of Contents
Income Taxes — Income tax expense decreased $4.6$11 million for the first six months ended June 30, 2020, compared with the same period in 2019.of 2021. The decrease was primarily driven by an increase in plant regulatory differenceswind PTCs. Wind PTCs are credited to customers (recorded as a reduction to revenue) and lowerdo not have a material impact on net income. These were partially offset by higher pretax earnings. ETR was 9.6% for the six months ended June 30, 2020, compared with 11.0% for the same periodearnings in 2019, largely due to the items referenced above.2021.
See Note 6 to the consolidated financial statements.
Other
Winter Storm Uri
In February 2021, the central portion of the United States experienced a major winter storm (Winter Storm Uri). Extreme cold temperatures impacted certain operational assets as well as the availability of renewable generation across the region. The cold weather also affected the country’s supply and demand for natural gas. These factors contributed to extremely high market prices for natural gas and electricity.
As a result of the extremely high market prices, PSCo incurred net natural gas, fuel and purchased energy costs of approximately $610 million (largely deferred as regulatory assets) in the first quarter. Certain energy transactions are subject to final/settlement calculation adjustments, including the impacts of credit losses shared among market participants. Such adjustments are not expected to be material to our results of operations, financial condition or cash flows.

Regulatory Overview
— PSCo has natural gas, fuel and purchased energy mechanisms for recovering incurred costs. In May, PSCo filed a request with the CPUC to recover $263 million in weather-related electric costs, $287 million in incremental gas costs and $4 million in incremental steam costs over 24 months with no financing charge. A decision is expected in the first quarter of 2022. In addition, the CPUC is considering prospective changes in fuel cost recovery.
Supply Chain and Capital Expenditures
PSCo’s ability to meet customer energy requirements, respond to storm-related disruptions and execute our capital expenditure program are dependent on maintaining an efficient supply chain. Overall, as a result of COVID-19, manufacturing processes have experienced disruptions related to scarcity of raw materials and interruptions in production and shipping. These disruptions have been further exacerbated by inflationary pressures, storms and labor shortages. The Company continues to monitor the availability of materials and seek alternative suppliers as necessary.
Public Utility Regulation
The FERC and various state and local regulatory commissions regulate PSCo. ThePSCo is subject to rate regulation by state utility regulatory agencies, which have jurisdiction with respect to the rates of electric and natural gas rates charged to PSCo’s customers are approved by the FERC or the regulatory commissionsdistribution companies in the states in which they operate.Colorado.
The ratesRates are designed to recover plant investment, operating costs and an allowed return on investment. PSCo requestrequests changes in utility rates for utility services through filings with governing commissions.
commission filings. Changes in operating costs can affect PSCo’s financial results, depending on the timing of rate case filings and implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and DSM efforts, and the cost of capital.
In addition, the regulatory commissions authorize the ROE,return on equity, capital structure and depreciation rates in rate proceedings. Decisions by these regulators can significantly impact PSCo’s results of operations.
Except to the extent noted in Regulation above,below, the circumstances set forth in Public Utility Regulation included in Item 7 of PSCo’s Annual Report on Form 10-K for the year ended Dec. 31, 20192020 and in Item 2 of PSCo’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020,2021, appropriately represent, in all material respects, the current status of public utility regulation and are incorporated herein by reference.
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Pending and Recently Concluded Regulatory Proceedings
MechanismUtility ServiceProceedingAmount Requested
(in millions)
Filing
Date
Approval
PSIA ExtensionAdditional Information$464February 2021Pending
CPUCElectric Rate Case$470July 2021Pending
Additional Information:
PSIA Rider Extension In February 2021, PSCo requested to extend its PSIA rider for three years (through the end of 2024), which would recover $464 million in project costs. The extension is intended to allow for a wind down of the rider and transition of recovery of the projects included in the rider to base rates in 2025. The Staff and OCC have recommended the CPUC deny the extension of the rider. However, if the CPUC were to allow the rider extension, the scope of the rider would be limited and only allow a return on debt. A CPUC decision is expected in the fourth quarter of 2021.
Colorado Electric Rate RequestIn July 2021, PSCo filed a request with the CPUC seeking a net increase to retail electric base rate revenue of $343 million (or 12.4%). The total request reflects a $470 million increase, which includes $127 million of previously authorized costs currently recovered through various rider mechanisms. The request is based on a 10.0% ROE, an equity ratio of 55.64% and a 2022 forecast test year. The request also includes impacts of a new depreciation study. A required historical test year, including a 10.5% ROE, was also filed. Rates are expected to be effective April 9, 2022.
Rate CaseRevenue Request (millions of dollars)Natural Gas2022
Changes since 2019 rate case:
Plant-related growth$12795 
 AGISFebruary 202073 
Updated cost of capitalPending53 
In February 2020, PSCo filed a rate case with the CPUC 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 Pipeline Integrity rider. The request was based on a 9.95% ROE, an equity ratio of 55.81% and a historic test year as of 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 of $77.3 million, reflecting a $94.1 million increase in 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 2020, the Administrative Law Judge granted an unopposed motion to schedule a hearing for Aug. 13, 2020 to review the settlement.
Rate CaseNew depreciation ratesElectric43 
Wildfire mitigation25
Property taxes25
Amortization of previously approved deferrals17 
Other12 
Net increase to revenue343
Roll-in of previously authorized costs:
TCA rider revenues and Cheyenne Ridge costs127 
Total base revenue request$158470
Expected average 2022 rate base (billions of dollars)May 2019$Received10.3
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 AppealNatural GasN/AApril 2019Pending
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). 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 not based on the actual historical test year; and use of an average rate base methodology rather than a year-end rate base methodology.
In March 2020, The District Court of Denver County ruled in favor of allowing the prepaid pension assets to be included in rate base; but it upheld the CPUC treatment of the retiree medical assets and capital structure methodology. The CPUC did not appeal the decision allowing inclusion of the prepaid pension assets in rate base.

2019 Electric Rate Case Appeal
PSCo 2020 Rider Filings
In JulyAugust 2020, PSCo filed Wildfire and Advanced Grid rider requestsan appeal with the Denver District Court seeking a review of CPUC insteaddecisions on gains and losses on sales of assets, oil and gas royalty revenues, Board of Directors equity compensation and a true-up surcharge to collect the difference between what rates should have been in place from February through August 2020 (based onthe CPUC’s decision on the Company’s Application for Reconsideration, Rehearing or Reargument) and what rates were actually in place. Briefing was completed on July 9, 2021 and a decision is pending.
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2017 Natural Gas Rate Case Appeal — In April 2019, PSCo filed an appeal of the CPUC’s ruling regarding PSCo’s natural gas rate case. In March 2020, The District Court of Denver County ruled in favor of allowing the prepaid pension assets to be included in rate base; but it upheld the CPUC treatment of the retiree medical assets and capital structure methodology. In July 2021, the CPUC approved a weighted average cost of capital return for the applicable period of Jan. 1, 2018 through Oct. 31, 2020.
Decoupling FilingPSCo's 2019 Electric Rate Case included a decoupling program, effective April 1, 2020 through Dec. 31, 2023. The program applies to Residential and metered small C&I customers who do not pay a demand charge. The program includes a refund and surcharge cap not to exceed 3% of forecasted base rate revenue for a specified period.
In April 2021, PSCo made its annual filing a comprehensive electric ratefor 2020, and the revised tariff went into effect by operation of law on June 1, 2021. In the annual filing review, the CPUC indicated they may pursue reopening the case in 2020.order to revisit the cap. As of June 30, 2021, PSCo has recognized a refund for Residential customers and a surcharge for C&I customers based on 2020 results and 2021 estimated amounts to date.
Wildfire Protection RiderColorado’s Power Pathway Transmission Expansion In March 2021, PSCo filed for a Certificate of Public Convenience and Necessity for the Power Pathway transmission project, proposing a 560-mile, 345 kilovolt double circuit transmission network to enable approximately 4,000-5,000 MW of renewable generation in eastern Colorado with an estimated cost of approximately $1.7 billion.
PSCo also presented an extension of the Power Pathway project into southeast Colorado, referred to as the May Valley - Longhorn Extension ($0.3 billion). PSCo expects future filings for related network upgrades, voltage support and interconnection facilities, which with the May Valley - Longhorn Extension, could result in an incremental investment of $0.5 - $0.8 billion. A CPUC decision regarding the Power Pathway project, as well as the May Valley - Longhorn Extension, is expected by February 2022.
PSCo KEPCO Filing SeeksIn September 2020, PSCo filed with the CPUC for approval to terminate a solar PPA with KEPCO Solar of Alamosa, Inc. and establish a Wildfire Protection Riderregulatory asset to recover incrementaltransaction costs associated with system investments to reduce wildfire risk. The riderof approximately $41 million. By terminating the PPA, customers would be effective no later than Junesave approximately $38 million over an 11-year period. However, the Administrative Law Judge ruled against approval of the Termination Agreement. In July 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)20212022202320242025
Forecasted annual revenue requirement$17  $24  $29  $32  $34  

the CPUC upheld the Administrative Law Judge’s recommended decision. PSCo anticipates filing an Application for Reconsideration.

Electric Resource Plan








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

Major components of PSCo's proposed preferred plan include:
Advanced Grid RiderEarly retirement of Comanche Generating Station: Unit 3 in 2040 (currently 2070).
Early retirement of Hayden Generating Station: Unit 1 in 2028 (currently 2030); Unit 2 in 2027 (currently 2036).
Conversion of Pawnee Generating Station from coal to natural gas in 2028 with retirement in 2041.
2,300 MW of wind power.
1,600 MW of large-scale solar power.
400 MW of energy storage.
1,300 MW of flexible dispatchable resources (including natural gas).
The preferred plan proposes to create a regulatory asset to recover costs over their original depreciation lives for the Hayden power plant and the coal handling equipment at Pawnee. It also proposes the use of securitization to finance and recover the remaining book value and decommissioning costs for Comanche Unit 3 upon retirement in 2040.
A CPUC decision on the resource plan is expected in January of 2022 with the competitive solicitation for resource additions expected in Q2 2022. Incremental generation system costs to meet carbon emission reduction targets are proposed to be recovered through a Clean Energy Plan Rider.
PSCo 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)20212022202320242025
Forecasted annual revenue requirement$53  $69  $83  $89  $99  
PSCo — Comanche Unit 3
PSCo is part owner and operator of Comanche Unit 3, a 750 MW, coal-fueled electric generating unit. PSCo is the operating agent under the joint ownership agreement. In JuneJanuary 2020, the unit experienced a turbine failure causing the unit to be taken offline for repairs, which were completed in June 2020. During start-up, the unit experienced a loss of turbine oil, during start-up which damaged the plant. It is currently anticipated that Comanche Unit 3 will recommencerecommenced operations in the fourth quarter of 2020.January 2021. Replacement and repair of damaged systems in excess of a $2 million deductible are expected to be recovered through insurance policies. PSCo has obtainedincurred replacement power forcosts of approximately $16 million during the outage.
In October 2020, the CPUC initiated a portionnon-adjudicatory review of Comanche Unit 3’s performance. A report on performance was issued in March 2021. The CPUC Staff’s report noted higher-than average outages and included some criticisms of PSCo’s operations of Comanche Unit 3 over the last ten years. The report recommended thorough explanation of the unit’s output through purchase power agreements.future of Comanche Unit 3 operations in the next resource plan, performance standards for all company-owned generation and a review of outage and repair costs in the upcoming proceedings.

In February 2021, the joint owners of Comanche Unit 3 (Intermountain Rural Electric Association and Holy Cross Electric) served PSCo with a notice of claim related to Comanche Unit 3's operation and availability.
Discussions are proceeding pursuant to a contractual dispute resolution process and the amount of any alleged damages depends on multiple factors and is currently unknown.

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

New regulations and legislation are being considered to regulate PFAS in drinking water, water discharges, commercial products, wastes, and other areas. PFAS are man-made chemicals found in many consumer products that can persist and accumulate in the environment. These chemicals have received heightened attention by environmental regulators. Increased regulation of PFAS and other emerging contaminants at the federal, state, and local level could have a potential adverse effect on our operations but at this time, it is uncertain what impact, if any, there will be on our results of operations, financial condition or cash flows. PSCo will continue to monitor these regulatory developments and their potential impact on its operations.
ITEM 4 — CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
PSCo maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.
In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the CEO and CFO, allowing timely decisions regarding required disclosure.

As of June 30, 2020,2021, based on an evaluation carried out under the supervision and with the participation of PSCo’s management, including the CEO and CFO, of the effectiveness of its disclosure controls and the procedures, the CEO and CFO have concluded that PSCo’s disclosure controls and procedures were effective.
Internal Control Over Financial Reporting
No changes in PSCo’s internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, PSCo’s internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
PSCo is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation.
Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to, when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss.
For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on PSCo’s consolidated financial statements. Unless otherwise required by GAAP, legalLegal fees are generally expensed as incurred.
See Note 9 to the consolidated financial statements and Part I Item 2 for further information.









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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, 2019,2020, which is incorporated herein by reference, as well as other information set forthreference. There have been no material changes from the risk factors previously disclosed in this report, which could have a material impact on our financial condition, results of operations and cash flows.the Form 10-K.




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ITEM 6 — EXHIBITS
* Indicates incorporation by reference
Exhibit NumberDescriptionReport or Registration StatementSEC File or Registration NumberExhibit Reference
PSCo Form 10-Q for the quarter ended Sept. 30, 2017001-032803.01
PSCo Form 10-K for the year ended Dec. 31, 2018001-032803.02
PSCo Form 8-K dated May 15, 2020001-032804.01
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Schema
101.CALInline XBRL Calculation
101.DEFInline XBRL Definition
101.LABInline XBRL Label
101.PREInline XBRL Presentation
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in 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, 202029, 2021By:/s/ JEFFREY S. SAVAGE
  Jeffrey S. Savage
  Senior Vice President, Controller
(Principal Accounting Officer)
   
  /s/ BRIAN J. VAN ABEL
  Brian J. Van Abel
  Executive Vice President, Chief Financial Officer and Director
(Principal Financial Officer)

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