UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended Sept. 30, ~~2022~~2023


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

For the transition period from ____________ to ___________

Commission File Number: 001-03280


Public Service Company of Colorado
(Exact Name of Registrant as Specified in its Charter)


Colorado						84-0296600
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

1800 Larimer Street, Suite 1100

Denver

80202

(Address of Principal Executive Offices)

(Zip Code)

(303)

571-7511

(Registrant’s Telephone Number, Including Area Code)


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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/A

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

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

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

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

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

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

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


Class						Outstanding at ~~Oct.~~October 27, ~~2022~~2023
Common Stock, $0.01 par value						100 shares

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

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
Item 1 —	Financial Statements (unaudited)	4
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Consolidated Balance Sheets	7
	Consolidated Statements of Common Stockholder’s Equity	8
	Notes to Consolidated Financial Statements	9
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 4 —	Controls and Procedures	20

PART II — OTHER INFORMATION
Item 1 —	Legal Proceedings	20
Item 1A —	Risk Factors	2021
Item 5 —	Other Information	21
Item 6 —	Exhibits	2021

SIGNATURES		2122

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

Definitions of Abbreviations


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


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


Other
~~ACE~~			~~Affordable Clean Energy~~
~~AMT~~			~~Alternative minimum tax~~
C&I			Commercial and Industrial
CCR			Coal combustion residuals
CCR Rule			Final rule (40 CFR 257.50 - 257.107) published by the EPA regulating the management, storage and disposal of CCRs as a nonhazardous waste
CEO			Chief executive officer
CERCLA			Comprehensive Environmental Response, Compensation, and Liability Act
CFO			Chief financial officer
CORE			CORE Electric Cooperative
~~CPCN~~			~~Certificate of Public Convenience and Necessity~~
CSPV			Crystalline Silicon Photovoltaic
ECA			Retail electric commodity adjustment
ETR			Effective Tax Rate
GAAP			United States generally accepted accounting principles
~~GCA~~			~~Gas cost adjustment~~
IPP			Independent power producing entity
~~IRA~~			~~Inflation Reduction Act~~
~~ITC~~			~~Investment tax credit~~
MGP			Manufactured gas plant
~~NOPR~~			~~Notice of proposed rulemaking~~
O&M			Operating and maintenance
PFAS			Per- and ~~PolyFluoroAlkyl~~Polyfluoroalkyl Substances
~~PIM~~			~~Performance incentive mechanism~~
PPA			Power purchase agreement
PTC			Production tax credit
ROE			Return on equity
RFP			Request for proposal
TCA			Transmission cost adjustment
UCA			Colorado Office of the Utility Consumer Advocate
~~WACC~~			~~Weighted average cost of capital~~


Measurements
MW			Megawatts


Forward-Looking Statements

Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impact on our results of operations, financial condition and cash flows of resettlement calculations and credit losses relating to certain energy transactions, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in PSCo’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, ~~2021~~2022, and subsequent filings with the SEC, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: uncertainty around the impacts and duration of the COVID-19 pandemic, including potential workforce impacts resulting from vaccination requirements, quarantine policies or government restrictions, and sales volatility; 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~~workforce and third-party contractor factors; violations of our Codes of Conduct; our ability to recover costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including recessionary conditions, inflation rates, monetary fluctuations, supply chain constraints and their impact on capital expenditures and/or the ability of PSCo to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; tax laws; uncertainty regarding epidemics, the duration and magnitude of business restrictions including shutdowns (domestically and globally), the potential impact on the workforce, including shortages of employees or third-party contractors due to quarantine policies, vaccination requirements or government restrictions, impacts on the transportation of goods and the generalized impact on the economy; effects of geopolitical events, including war and acts of terrorism; ~~cyber security~~cybersecurity threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other ~~weather;~~weather events; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory ~~changes and~~changes; costs of potential regulatory ~~penalties;~~penalties and wildfire damages in excess of liability insurance coverage; regulatory changes and/or limitations related to the use of natural gas as an energy source; challenging labor market conditions and our ability to attract and retain a qualified workforce; and our ability to execute on our strategies or achieve expectations related to environmental, social and governance matters including as a result of evolving legal, regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(amounts in millions)


		Three Months Ended Sept. 30				Nine Months Ended Sept. 30					Three Months Ended Sept. 30				Nine Months Ended Sept. 30
		2022		2021		2022		2021			2023		2022		2023		2022
Operating revenues	Operating revenues									Operating revenues
Electric	Electric	$	1,137	$	1,048	$	2,849	$	2,608	Electric	$	1,113	$	1,137	$	2,877	$	2,849
Natural gas	Natural gas	235		177		1,087		930		Natural gas	165		235		1,247		1,087
Other	Other	11		12		39		34		Other	12		11		41		39
Total operating revenues	Total operating revenues	1,383		1,237		3,975		3,572		Total operating revenues	1,290		1,383		4,165		3,975

Operating expenses	Operating expenses									Operating expenses
Electric fuel and purchased power	Electric fuel and purchased power	399		403		1,075		1,002		Electric fuel and purchased power	356		399		1,055		1,075
Cost of natural gas sold and transported	Cost of natural gas sold and transported	98		43		549		381		Cost of natural gas sold and transported	44		98		660		549
Cost of sales — other	Cost of sales — other	4		5		13		11		Cost of sales — other	5		4		13		13
O&M expenses		220		210		650		622
Operating and maintenance expenses										Operating and maintenance expenses	196		220		648		650
Demand side management expenses	Demand side management expenses	32		34		97		98		Demand side management expenses	39		32		106		97
Depreciation and amortization	Depreciation and amortization	219		189		627		557		Depreciation and amortization	235		219		693		627
Taxes (other than income taxes)	Taxes (other than income taxes)	70		62		205		192		Taxes (other than income taxes)	71		70		216		205
Loss on Comanche Unit 3 litigation										Loss on Comanche Unit 3 litigation	34		—		34		—
Total operating expenses	Total operating expenses	1,042		946		3,216		2,863		Total operating expenses	980		1,042		3,425		3,216

Operating income	Operating income	341		291		759		709		Operating income	310		341		740		759

Other (expense) income, net		(4)		—		(4)		3
Other income (expense), net										Other income (expense), net	1		(4)		7		(4)
Allowance for funds used during construction — equity	Allowance for funds used during construction — equity	8		7		22		19		Allowance for funds used during construction — equity	12		8		25		22

Interest charges and financing costs	Interest charges and financing costs									Interest charges and financing costs
Interest charges — includes other financing costs of $2, $2, $6 and $6, respectively	Interest charges — includes other financing costs of $2, $2, $6 and $6, respectively	70		62		199		183		Interest charges — includes other financing costs of $2, $2, $6 and $6, respectively	79		70		228		199
Allowance for funds used during construction — debt	Allowance for funds used during construction — debt	(3)		(3)		(8)		(6)		Allowance for funds used during construction — debt	(6)		(3)		(13)		(8)
Total interest charges and financing costs	Total interest charges and financing costs	67		59		191		177		Total interest charges and financing costs	73		67		215		191

Income before income taxes	Income before income taxes	278		239		586		554		Income before income taxes	250		278		557		586
Income tax expense	Income tax expense	31		24		31		38		Income tax expense	21		31		21		31
Net income	Net income	$	247	$	215	$	555	$	516	Net income	$	229	$	247	$	536	$	555

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in millions)


		Three Months Ended Sept. 30				Nine Months Ended Sept. 30					Three Months Ended Sept. 30				Nine Months Ended Sept. 30
		2022		2021		2022		2021			2023		2022		2023		2022
Net income	Net income	$	247	$	215	$	555	$	516	Net income	$	229	$	247	$	536	$	555
Other comprehensive income	Other comprehensive income									Other comprehensive income
Pension and retiree medical benefits:										Pension and retiree medical benefits:
Reclassification of loss to net income, net of tax of $—										Reclassification of loss to net income, net of tax of $—	(1)		—		—		—
Derivative instruments:	Derivative instruments:									Derivative instruments:
Reclassification of loss to net income, net of tax of $—, $—, $— and $— respectively		1		—		1		1
Reclassification of loss to net income, net of tax of $—										Reclassification of loss to net income, net of tax of $—	1		1		1		1

Total other comprehensive income	Total other comprehensive income	1		—		1		1		Total other comprehensive income	—		1		1		1
Total comprehensive income	Total comprehensive income	$	248	$	215	$	556	$	517	Total comprehensive income	$	229	$	248	$	537	$	556

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)


		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
		2022		2021			2023		2022
Operating activities	Operating activities					Operating activities
Net income	Net income	$	555	$	516	Net income	$	536	$	555
Adjustments to reconcile net income to cash provided by operating activities:	Adjustments to reconcile net income to cash provided by operating activities:					Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	631		560		Depreciation and amortization	697		631
Deferred income taxes	Deferred income taxes	16		38		Deferred income taxes	(122)		16

Allowance for equity funds used during construction	Allowance for equity funds used during construction	(22)		(19)		Allowance for equity funds used during construction	(25)		(22)
Provision for bad debts	Provision for bad debts	22		28		Provision for bad debts	25		22

Net realized and unrealized hedging and derivative transactions		(12)		(60)

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(77)		(38)		Accounts receivable	115		(77)
Accrued unbilled revenues	Accrued unbilled revenues	38		49		Accrued unbilled revenues	257		38
Inventories	Inventories	(130)		(58)		Inventories	48		(130)
Other current assets	Other current assets	(10)		2		Other current assets	38		(10)
Accounts payable	Accounts payable	97		25		Accounts payable	(184)		97
Net regulatory assets and liabilities	Net regulatory assets and liabilities	(43)		(544)		Net regulatory assets and liabilities	178		(43)
Other current liabilities	Other current liabilities	(58)		(49)		Other current liabilities	31		(58)
Pension and other employee benefit obligations	Pension and other employee benefit obligations	(14)		(53)		Pension and other employee benefit obligations	1		(14)
Other, net	Other, net	(62)		18		Other, net	(54)		(74)
Net cash provided by operating activities	Net cash provided by operating activities	931		415		Net cash provided by operating activities	1,541		931

Investing activities	Investing activities					Investing activities
Utility capital/construction expenditures	Utility capital/construction expenditures	(1,384)		(1,098)		Utility capital/construction expenditures	(1,631)		(1,384)
Investments in utility money pool arrangement	Investments in utility money pool arrangement	(45)		(273)		Investments in utility money pool arrangement	(367)		(45)
Repayments from utility money pool arrangement	Repayments from utility money pool arrangement	45		243		Repayments from utility money pool arrangement	367		45
Net cash used in investing activities	Net cash used in investing activities	(1,384)		(1,128)		Net cash used in investing activities	(1,631)		(1,384)

Financing activities	Financing activities					Financing activities
Repayments of short-term borrowings, net	Repayments of short-term borrowings, net	(147)		(136)		Repayments of short-term borrowings, net	(294)		(147)
Borrowings under utility money pool arrangement	Borrowings under utility money pool arrangement	1,042		514		Borrowings under utility money pool arrangement	355		1,042
Repayments under utility money pool arrangement	Repayments under utility money pool arrangement	(877)		(571)		Repayments under utility money pool arrangement	(167)		(877)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	686		738		Proceeds from issuance of long-term debt	834		686
Repayments of long-term debt	Repayments of long-term debt	(300)		—		Repayments of long-term debt	(250)		(300)
Capital contributions from parent	Capital contributions from parent	399		567		Capital contributions from parent	118		399
Dividends paid to parent	Dividends paid to parent	(365)		(340)		Dividends paid to parent	(507)		(365)

Net cash provided by financing activities	Net cash provided by financing activities	438		772		Net cash provided by financing activities	89		438

Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	(15)		59		Net change in cash, cash equivalents and restricted cash	(1)		(15)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	25		28		Cash, cash equivalents and restricted cash at beginning of period	10		25
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	10	$	87	Cash, cash equivalents and restricted cash at end of period	$	9	$	10

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)	$	(195)	$	(195)	Cash paid for interest (net of amounts capitalized)	$	(197)	$	(195)
Cash paid for income taxes, net	Cash paid for income taxes, net	(70)		(14)		Cash paid for income taxes, net	(119)		(70)

Supplemental disclosure of non-cash investing and financing transactions:	Supplemental disclosure of non-cash investing and financing transactions:					Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	Accrued property, plant and equipment additions	$	144	$	170	Accrued property, plant and equipment additions	$	168	$	144
Inventory transfers to property, plant and equipment	Inventory transfers to property, plant and equipment	15		11		Inventory transfers to property, plant and equipment	17		15
Operating lease right-of-use assets	Operating lease right-of-use assets	16		4		Operating lease right-of-use assets	17		16
Allowance for equity funds used during construction	Allowance for equity funds used during construction	22		19		Allowance for equity funds used during construction	25		22

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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

Sept. 30, 2022 Dec. 31, 2021
Assets
Current assets
Cash and cash equivalents $ 10 $ 25
Accounts receivable, net 430 374
Accounts receivable from affiliates — 13
Accrued unbilled revenues 312 350
Inventories 359 245
Regulatory assets 504 353
Derivative instruments 48 39
Prepayments and other 124 104
Total current assets 1,787 1,503
Property, plant and equipment, net 19,309 18,444
Other assets
Regulatory assets 1,257 1,293
Derivative instruments 12 27
Operating lease right-of-use assets 358 409
Other 270 246
Total other assets 1,897 1,975
Total assets $ 22,993 $ 21,922
Liabilities and Equity
Current liabilities
Current portion of long-term debt $ 250 $ 300
Borrowings under utility money pool arrangement 165 —
Short-term debt — 147
Accounts payable 611 531
Accounts payable to affiliates 87 69
Regulatory liabilities 68 95
Taxes accrued 186 252
Accrued interest 48 58
Dividends payable to parent 127 104
Derivative instruments 37 30
Operating lease liabilities 79 84
Other 119 109
Total current liabilities 1,777 1,779
Deferred credits and other liabilities
Deferred income taxes 2,010 1,960
Regulatory liabilities 2,484 2,397
Asset retirement obligations 448 422
Derivative instruments 7 29
Customer advances 150 160
Pension and employee benefit obligations 4 23
Operating lease liabilities 302 351
Other 204 190
Total deferred credits and other liabilities 5,609 5,532
Commitments and contingencies
Capitalization
Long-term debt 6,608 6,167
Common stock — 100 shares authorized of $0.01 par value; 100 shares outstanding at Sept. 30, 2022 and Dec. 31, 2021, respectively — —
Additional paid in capital 6,813 6,426
Retained earnings 2,207 2,040
Accumulated other comprehensive loss (21) (22)
Total common stockholder's equity 8,999 8,444
Total liabilities and equity $ 22,993 $ 21,922


	Sept. 30, 2023		Dec. 31, 2022
Assets
Current assets
Cash and cash equivalents	$	9	$	10
Accounts receivable, net	423		562
Accounts receivable from affiliates	—		11

Accrued unbilled revenues	262		519
Inventories	254		319
Regulatory assets	370		411
Derivative instruments	13		65
Prepayments and other	75		103
Total current assets	1,406		2,000

Property, plant and equipment, net	20,653		19,652

Other assets
Regulatory assets	1,252		1,277
Derivative instruments	13		22
Operating lease right-of-use assets	388		437
Other	305		231
Total other assets	1,958		1,967
Total assets	$	24,017	$	23,619

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	—	$	250
Borrowings under utility money pool arrangement	188		—
Short-term debt	—		294
Accounts payable	544		764
Accounts payable to affiliates	74		75
Regulatory liabilities	66		59
Taxes accrued	195		242
Accrued interest	69		59
Dividends payable to parent	146		120
Derivative instruments	9		30
Operating lease liabilities	97		80
Other	180		115
Total current liabilities	1,568		2,088

Deferred credits and other liabilities
Deferred income taxes	1,902		1,983

Regulatory liabilities	2,585		2,489
Asset retirement obligations	492		476
Derivative instruments	2		9
Customer advances	129		144
Pension and employee benefit obligations	14		13
Operating lease liabilities	315		379
Other	208		198
Total deferred credits and other liabilities	5,647		5,691

Commitments and contingencies
Capitalization
Long-term debt	7,449		6,610
Common stock — 100 shares authorized of $0.01 par value; 100 shares outstanding at Sept. 30, 2023 and Dec. 31, 2022, respectively	—		—
Additional paid in capital	7,111		6,992
Retained earnings	2,263		2,260
Accumulated other comprehensive loss	(21)		(22)
Total common stockholder's equity	9,353		9,230
Total liabilities and equity	$	24,017	$	23,619

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED)

(amounts in millions, except share data)


		Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholder's Equity				Common Stock Issued								Retained Earnings			Accumulated Other Comprehensive Loss			Total Common Stockholder's Equity
		Shares	Par Value		Additional Paid In Capital								Shares			Par Value			Additional Paid In Capital
Three Months Ended Sept. 30, 2022 and 2021
Balance at June 30, 2021		100	$	—	$	6,210	$	1,912	$	(23)	$	8,099
Net income							215				215

Dividends declared to parent							(127)				(127)
Contribution of capital by parent					123						123
Balance at Sept. 30, 2021		100	$	—	$	6,333	$	2,000	$	(23)	$	8,310

Three Months Ended Sept. 30, 2023 and 2022														Three Months Ended Sept. 30, 2023 and 2022
Balance at June 30, 2022	Balance at June 30, 2022	100	$	—	$	6,623	$	2,087	$	(22)	$	8,688		Balance at June 30, 2022	100		$	—		$	6,623		$	2,087		$	(22)		$	8,688
Net income	Net income						247				247			Net income									247						247
Other comprehensive income	Other comprehensive income								1		1			Other comprehensive income												1			1
Dividends declared to parent	Dividends declared to parent						(127)				(127)			Dividends declared to parent									(127)						(127)
Contribution of capital by parent	Contribution of capital by parent				190						190			Contribution of capital by parent						190									190
Balance at Sept. 30, 2022	Balance at Sept. 30, 2022	100	$	—	$	6,813	$	2,207	$	(21)	$	8,999		Balance at Sept. 30, 2022	100		$	—		$	6,813		$	2,207		$	(21)		$	8,999

Balance at June 30, 2023														Balance at June 30, 2023	100		$	—		$	7,086		$	2,195		$	(21)		$	9,260
Net income														Net income									229						229

Dividends declared to parent														Dividends declared to parent									(161)						(161)
Contribution of capital by parent														Contribution of capital by parent						25									25
Balance at Sept. 30, 2023														Balance at Sept. 30, 2023	100		$	—		$	7,111		$	2,263		$	(21)		$	9,353
		Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholder's Equity
		Shares	Par Value		Additional Paid In Capital								Common Stock Issued									Retained Earnings			Accumulated Other Comprehensive Loss			Total Common Stockholder's Equity
Nine Months Ended Sept. 30, 2022 and 2021
Balance at Dec. 31, 2020		100	$	—	$	5,770	$	1,846	$	(24)	$	7,592
Net income							516				516
Other comprehensive income									1		1
Dividends declared to parent							(362)				(362)
Contribution of capital by parent					563						563
Balance at Sept. 30, 2021		100	$	—	$	6,333	$	2,000	$	(23)	$	8,310
															Shares		Par Value			Additional Paid In Capital						Retained Earnings					Accumulated Other Comprehensive Loss	Total Common Stockholder's Equity
Nine Months Ended Sept. 30, 2023 and 2022														Nine Months Ended Sept. 30, 2023 and 2022
Balance at Dec. 31, 2021	Balance at Dec. 31, 2021	100	$	—	$	6,426	$	2,040	$	(22)	$	8,444		Balance at Dec. 31, 2021	100		$	—		$	6,426		$	2,040		$	(22)		$	8,444
Net income	Net income						555				555			Net income									555						555
Other comprehensive income	Other comprehensive income								1		1			Other comprehensive income												1			1
Dividends declared to parent	Dividends declared to parent						(388)				(388)			Dividends declared to parent									(388)						(388)
Contribution of capital by parent	Contribution of capital by parent				387						387			Contribution of capital by parent						387									387
Balance at Sept. 30, 2022	Balance at Sept. 30, 2022	100	$	—	$	6,813	$	2,207	$	(21)	$	8,999		Balance at Sept. 30, 2022	100		$	—		$	6,813		$	2,207		$	(21)		$	8,999

Balance at Dec. 31, 2022														Balance at Dec. 31, 2022	100		$	—		$	6,992		$	2,260		$	(22)		$	9,230
Net income														Net income									536						536
Other comprehensive income														Other comprehensive income												1			1
Dividends declared to parent														Dividends declared to parent									(533)						(533)
Contribution of capital by parent														Contribution of capital by parent						119									119
Balance at Sept. 30, 2023														Balance at Sept. 30, 2023	100		$	—		$	7,111		$	2,263		$	(21)		$	9,353

See Notes to Consolidated Financial Statements

Table of Contents

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES

Notes to Consolidated Financial Statements (UNAUDITED)

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly, in accordance with GAAP, the financial position of PSCo and its subsidiaries as of Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021;~~2022; the results of PSCo’s operations, including the components of net income, comprehensive income and changes in stockholder’s equity for the three and nine months ended Sept. 30, ~~2022~~2023 and ~~2021;~~2022; and PSCo’s cash flows for the nine months ended Sept. 30, ~~2022~~2023 and ~~2021.~~2022.

All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after Sept. 30, ~~2022,~~2023, 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, ~~2021~~2022 balance sheet information has been derived from the audited ~~2021~~2022 consolidated financial statements included in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, ~~2021.~~2022.

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, ~~2021,~~2022, filed with the SEC on Feb. 23, ~~2022.~~2023. 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, ~~2021~~2022 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.


2. Accounting Pronouncements

As of Sept. 30, ~~2022~~2023, there was no material impact from the recent adoption of new accounting pronouncements, nor expected material impact from recently issued accounting pronouncements yet to be adopted, on ~~PSCO’s~~PSCo’s consolidated financial statements.


3. Selected Balance Sheet Data


(Millions of Dollars)	(Millions of Dollars)	Sept. 30, 2022		Dec. 31, 2021		(Millions of Dollars)	Sept. 30, 2023		Dec. 31, 2022
Accounts receivable, net	Accounts receivable, net					Accounts receivable, net
Accounts receivable	Accounts receivable	$	478	$	414	Accounts receivable	$	480	$	616
Less allowance for bad debts	Less allowance for bad debts	(48)		(40)		Less allowance for bad debts	(57)		(54)
Accounts receivable, net	Accounts receivable, net	$	430	$	374	Accounts receivable, net	$	423	$	562


(Millions of Dollars)	(Millions of Dollars)	Sept. 30, 2022		Dec. 31, 2021		(Millions of Dollars)	Sept. 30, 2023		Dec. 31, 2022
Inventories	Inventories					Inventories
Materials and supplies	Materials and supplies	$	77	$	70	Materials and supplies	$	86	$	80
Fuel	Fuel	85		71		Fuel	78		68
Natural gas	Natural gas	197		104		Natural gas	90		171
Total inventories	Total inventories	$	359	$	245	Total inventories	$	254	$	319


(Millions of Dollars)	(Millions of Dollars)	Sept. 30, 2022		Dec. 31, 2021		(Millions of Dollars)	Sept. 30, 2023		Dec. 31, 2022
Property, plant and equipment, net	Property, plant and equipment, net					Property, plant and equipment, net
Electric plant	Electric plant	$	15,468	$	16,543	Electric plant	$	16,343	$	15,771
Natural gas plant	Natural gas plant	5,760		5,471		Natural gas plant	6,293		5,949
Common and other property	Common and other property	1,341		1,224		Common and other property	1,500		1,415
Plant to be retired (a)	Plant to be retired (a)	1,326		182		Plant to be retired (a)	1,242		1,305
Construction work in progress	Construction work in progress	956		681		Construction work in progress	1,288		877
Total property, plant and equipment	Total property, plant and equipment	24,851		24,101		Total property, plant and equipment	26,666		25,317
Less accumulated depreciation	Less accumulated depreciation	(5,542)		(5,657)		Less accumulated depreciation	(6,013)		(5,665)
Property, plant and equipment, net	Property, plant and equipment, net	$	19,309	$	18,444	Property, plant and equipment, net	$	20,653	$	19,652

(a)Amounts ~~as of Dec. 31, 2021~~ include Comanche ~~Unit 1~~Units 2 and ~~2 and~~3, Craig Units 1 and ~~2. Following the June 2022 approval of PSCo’s revised resource plan settlement, amounts as of Sept. 30, 2022 include the addition of Comanche Unit 3,~~2, Hayden Units 1 and 2 and coal generation assets at Pawnee pending facility gas conversion. Amounts are ~~reported~~presented net of accumulated depreciation.


4. Borrowings and Other Financing Instruments

Short-Term Borrowings

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

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

Money pool ~~borrowings for PSCo:~~borrowings:


(Amounts in Millions, Except Interest Rates)	(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2022			Year Ended Dec. 31, 2021			(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2023			Year Ended Dec. 31, 2022
Borrowing limit	Borrowing limit	$	250		$	250		Borrowing limit	$	250		$	250
Amount outstanding at period end	Amount outstanding at period end	165			—			Amount outstanding at period end	188			—
Average amount outstanding	Average amount outstanding	49			12			Average amount outstanding	27			29
Maximum amount outstanding	Maximum amount outstanding	197			243			Maximum amount outstanding	188			250
Weighted average interest rate, computed on a daily basis	Weighted average interest rate, computed on a daily basis	2.06		%	0.07		%	Weighted average interest rate, computed on a daily basis	5.26		%	1.66		%
Weighted average interest rate at period end	Weighted average interest rate at period end	2.33			N/A			Weighted average interest rate at period end	5.30			N/A

Commercial Paper — Commercial paper ~~outstanding for PSCo:~~outstanding:


(Amounts in Millions, Except Interest Rates)	(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2022			Year Ended Dec. 31, 2021			(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2023			Year Ended Dec. 31, 2022
Borrowing limit	Borrowing limit	$	700		$	700		Borrowing limit	$	700		$	700
Amount outstanding at period end	Amount outstanding at period end	—			147			Amount outstanding at period end	—			294
Average amount outstanding	Average amount outstanding	14			26			Average amount outstanding	5			71
Maximum amount outstanding	Maximum amount outstanding	170			322			Maximum amount outstanding	72			328
Weighted average interest rate, computed on a daily basis	Weighted average interest rate, computed on a daily basis	2.07		%	0.19		%	Weighted average interest rate, computed on a daily basis	5.45		%	2.56		%
Weighted average interest rate at period end	Weighted average interest rate at period end	N/A			0.22			Weighted average interest rate at period end	N/A			4.73

Letters of Credit — PSCo uses letters of credit, generally with terms of one year, to provide financial ~~guarantee~~sguarantees for certain obligations. At Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021,~~2022, there were $29 million and $27 million, respectively,~~$26 million~~ ~~and $8 million~~ of letters of credit outstanding under the credit ~~facility, respectively.~~facility. Amounts approximate their fair value and are subject to fees.

~~Table of Contents~~

Revolving Credit Facility — In order to issue its commercial paper, PSCo must have a revolving credit facility ~~in place at least~~ equal to or greater than the amount of its commercial paper borrowing limit and cannot issue commercial paper exceeding available capacity under this credit facility.

Table of Contents

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.

In September 2022, PSCo entered into an amended five-year credit agreement with a syndicate of banks, with substantially the same terms and conditions as the prior credit agreements. The maturity was extended from June 2024 to September 2027.

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

At Sept. 30, ~~2022,~~2023, PSCo had the following committed revolving credit facility available (in millions of dollars):


Credit Facility (a)	Credit Facility (a)	Drawn (b)		Available		Credit Facility (a)	Drawn (b)		Available
$	700	$	26	$	674	700	$	29	$	671

(a) Expires in September 2027.

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

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. PSCo had no direct advances on the credit facility outstanding at Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021.~~2022.

Long-Term Borrowings

During the nine months ended Sept. 30, ~~2022,~~2023, PSCo issued ~~$300~~$850 million of ~~4.10%~~5.25% first mortgage bonds due ~~June~~April 1, ~~2032 and $400 million of 4.50% first mortgage bonds due June 1, 2052.~~2053.


5. Revenues

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


		Three Months Ended Sept. 30, 2022									Three Months Ended Sept. 30, 2023
(Millions of Dollars)	(Millions of Dollars)	Electric		Natural Gas		All Other		Total		(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types	Major revenue types									Major revenue types
Revenue from contracts with customers:	Revenue from contracts with customers:									Revenue from contracts with customers:
Residential	Residential	$	431	$	136	$	4	$	571	Residential	$	398	$	88	$	5	$	491
C&I	C&I	556		64		7		627		C&I	538		44		7		589
Other	Other	13		—		—		13		Other	13		—		—		13
Total retail	Total retail	1,000		200		11		1,211		Total retail	949		132		12		1,093
Wholesale	Wholesale	63		—		—		63		Wholesale	53		—		—		53
Transmission	Transmission	25		—		—		25		Transmission	25		—		—		25
Other	Other	15		30		—		45		Other	16		27		—		43
Total revenue from contracts with customers	Total revenue from contracts with customers	1,103		230		11		1,344		Total revenue from contracts with customers	1,043		159		12		1,214
Alternative revenue and other	Alternative revenue and other	34		5		—		39		Alternative revenue and other	70		6		—		76
Total revenues	Total revenues	$	1,137	$	235	$	11	$	1,383	Total revenues	$	1,113	$	165	$	12	$	1,290


	Three Months Ended Sept. 30, 2022
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	431	$	136	$	4	$	571
C&I	556		64		7		627
Other	13		—		—		13
Total retail	1,000		200		11		1,211
Wholesale	63		—		—		63
Transmission	25		—		—		25
Other	15		30		—		45
Total revenue from contracts with customers	1,103		230		11		1,344
Alternative revenue and other	34		5		—		39
Total revenues	$	1,137	$	235	$	11	$	1,383

Three Months Ended Sept. 30, 2021
(Millions of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 386 $ 97 $ 3 $ 486
C&I 510 38 7 555
Other 12 — — 12
Total retail 908 135 10 1,053
Wholesale 60 — — 60
Transmission 23 — — 23
Other 15 38 — 53
Total revenue from contracts with customers 1,006 173 10 1,189
Alternative revenue and other 42 4 2 48
Total revenues $ 1,048 $ 177 $ 12 $ 1,237
Nine Months Ended Sept. 30, 2022
(Millions of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 1,025 $ 686 $ 11 $ 1,722
C&I 1,383 279 16 1,678
Other 38 — — 38
Total retail 2,446 965 27 3,438
Wholesale 200 — — 200
Transmission 65 — — 65
Other 39 106 — 145
Total revenue from contracts with customers 2,750 1,071 27 3,848
Alternative revenue and other 99 16 12 127
Total revenues $ 2,849 $ 1,087 $ 39 $ 3,975
Nine Months Ended Sept. 30, 2021
(Millions of Dollars) Electric Natural Gas All Other Total
Major revenue types
Revenue from contracts with customers:
Residential $ 904 $ 540 $ 9 $ 1,453
C&I 1,262 203 22 1,487
Other 37 — — 37
Total retail 2,203 743 31 2,977
Wholesale 195 — — 195
Transmission 59 — — 59
Other 37 122 — 159
Total revenue from contracts with customers 2,494 865 31 3,390
Alternative revenue and other 114 65 3 182
Total revenues $ 2,608 $ 930 $ 34 $ 3,572


	Nine Months Ended Sept. 30, 2023
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	1,003	$	790	$	14	$	1,807
C&I	1,403		335		27		1,765
Other	40		—		—		40
Total retail	2,446		1,125		41		3,612
Wholesale	170		—		—		170
Transmission	68		—		—		68
Other	44		99		—		143
Total revenue from contracts with customers	2,728		1,224		41		3,993
Alternative revenue and other	149		23		—		172
Total revenues	$	2,877	$	1,247	$	41	$	4,165

	Nine Months Ended Sept. 30, 2022
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	1,025	$	686	$	11	$	1,722
C&I	1,383		279		16		1,678
Other	38		—		—		38
Total retail	2,446		965		27		3,438
Wholesale	200		—		—		200
Transmission	65		—		—		65
Other	39		106		—		145
Total revenue from contracts with customers	2,750		1,071		27		3,848
Alternative revenue and other	99		16		12		127
Total revenues	$	2,849	$	1,087	$	39	$	3,975

~~Table of Contents~~


6. Income Taxes

Reconciliation between the statutory rate and ETR:


		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
		2022		2021			2023		2022
Federal statutory rate	Federal statutory rate	21.0	%	21.0	%	Federal statutory rate	21.0	%	21.0	%
State tax (net of federal tax effect)	State tax (net of federal tax effect)	3.6		3.6		State tax (net of federal tax effect)	3.5		3.6
Increases (decreases):
(Decreases) increases:						(Decreases) increases:
Wind PTCs (a)	Wind PTCs (a)	(14.2)		(12.9)		Wind PTCs (a)	(14.9)		(14.2)
Plant regulatory differences (b)	Plant regulatory differences (b)	(4.4)		(4.1)		Plant regulatory differences (b)	(5.4)		(4.4)
Other tax credits, net operating loss & tax credit allowances	Other tax credits, net operating loss & tax credit allowances	(1.1)		(0.7)		Other tax credits, net operating loss & tax credit allowances	(1.0)		(1.1)
Other (net)	Other (net)	0.4		—		Other (net)	0.6		0.4
Effective income tax rate	Effective income tax rate	5.3	%	6.9	%	Effective income tax rate	3.8	%	5.3	%

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

(b)~~Regulatory~~Plant 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 taxes~~ are offset by corresponding revenue reductions.

Table of Contents


7. Fair Value of Financial Assets and Liabilities

Fair Value Measurements

Accounting guidance for fair value measurements and disclosures provides a ~~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.~~value.

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

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

•Level 3 — Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 ~~are~~include 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 NAV.~~

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

Commodity derivatives — Methods used to measure the fair value of commodity derivative forwards and options utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations, and are generally assigned a Level 2 classification. When ~~contractual settlements~~contracts 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 inputs on a valuation is evaluated and may result in Level 3 classification.

Derivative ~~Instruments~~Activities and 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 and utility commodity ~~prices and vehicle fuel~~ prices.

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

AtAs of Sept. 30, ~~2022,~~2023, accumulated other comprehensive loss related to interest rate derivatives included $1 million of net losses expected to be reclassified into earnings during the next 12 months as the hedged transactions impact earnings. As of Sept. 30, ~~2022,~~2023, PSCo had no unsettled interest rate derivatives.

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.

Results of derivative instrument transactions entered into for trading purposes are presented in the consolidated statements of income as electric revenues, net of any sharing with customers. These activities are not intended to mitigate commodity price risk associated with regulated electric and natural gas operations. Sharing of ~~any~~these margins is determined through state regulatory proceedings as well as the operation of the ~~FERC approved~~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.~~operations. This could include the purchase or sale of energy or energy-related products, natural gas to generate electric energy, natural gas for resale, and vehicle fuel.

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

As of Sept. 30, ~~2022,~~2023, PSCo had no commodity contracts designated as cash flow hedges.

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

Gross notional amounts of commodity forwards and options:

(Amounts in Millions) (a)(b)

Sept. 30, 2022

Dec. 31, 2021

(Amounts in Millions) (a)(b)

Sept. 30, 2023

Dec. 31, 2022

Megawatt hours of electricity

Million British thermal units of natural gas

(a)~~Amounts are not~~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.

~~Table of Contents~~

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~~Impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented on the consolidated balance sheets.

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

AtAs of Sept. 30, ~~2022,~~2023, four of PSCo’s ten most significant counterparties for these activities, comprising ~~$53~~$32 million, or 45%, of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. ~~Four~~

Six of the ten most significant counterparties, comprising ~~$26~~$25 million, or ~~22%~~35%, 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. ~~Two~~

None of these significant counterparties, ~~comprising $16 million, or 13%, of this credit exposure,~~ had credit quality less than investment grade, based on internal analysis. ~~Six~~Seven of these significant counterparties are independent system operators, municipal or cooperative electric entities, Regional Transmission Organizations or other utilities.

~~Impact~~

Table of ~~Derivative Activity —~~

Changes in the fair value of natural gas commodity derivatives resulted in net losses of $4 million and $2 million for the three and nine months ended Sept. 30, 2022, respectively, which were recognized as regulatory assets and liabilities. Changes in the fair value of natural gas commodity derivatives resulted in net gains of $37 million and $36 million for the three and nine months ended Sept. 30, 2021, respectively. The classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms.Contents

Pre-Tax (Gains) Losses Reclassified into Income During the Period from: Pre-Tax Gains (Losses) Recognized During the Period in Income
(Millions of Dollars) Accumulated Other Comprehensive Loss Regulatory Assets and (Liabilities)
Three Months Ended Sept. 30, 2022
Derivatives designated as cash flow hedges
Interest rate $ 1 (a) $ — $ —
Total $ 1 $ — $ —
Other derivative instruments
Commodity trading $ — $ — $ 2 (b)
Total $ — $ — $ 2
Nine Months Ended Sept. 30, 2022
Derivatives designated as cash flow hedges
Interest rate $ 1 (a) $ — $ —
Total $ 1 $ — $ —
Other derivative instruments
Commodity trading $ — $ — $ 3 (b)
Natural gas commodity — 2 (c) (11) (c)(d)
Total $ — $ 2 $ (8)
Three Months Ended Sept. 30, 2021
Other derivative instruments
Commodity trading $ — $ — $ 11 (b)
Total $ — $ — $ 11
Nine Months Ended Sept. 30, 2021
Derivatives designated as cash flow hedges
Interest rate $ 1 (a) $ — $ —
Total $ 1 $ — $ —
Other derivative instruments
Commodity trading $ — $ — $ 25 (b)
Natural gas commodity — 6 (c) (6) (c)(d)
Total $ — $ 6 $ 19

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

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

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

~~PSCo had no derivative instruments designated as fair value hedges during the three and nine months ended Sept. 30, 2022 and 2021.~~

Credit Related Contingent Features —— Contract provisions for derivative instruments that PSCo enters into, including those accounted for as normal ~~purchase-normal~~purchase and normal sale contracts and therefore not reflected on the consolidated balance sheets, may require the posting of collateral or settlement of the contracts for various reasons, including if PSCo’s credit ratings are downgraded below its investment grade credit rating by any of the major credit rating agencies.

AtAs of Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021,~~2022, there were no derivative liabilities position with such underlying contract provisions.

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

As of Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021,~~2022, there were ~~approximately $2~~$1 million and ~~$16 million, respectively, of~~no derivative ~~liabilities~~instruments in a liability position with such underlying contract ~~provisions.~~

~~Table of Contents~~

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 no collateral posted related to adequate assurance clauses in derivative contracts as of Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021.~~2022.

Recurring Derivative Fair Value Measurements

Changes in the fair value of natural gas commodity derivatives recognized as regulatory assets and liabilities included immaterial net gains and losses for the three and nine months ended Sept. 30, 2023 and 2022. The classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms.


	Pre-Tax Losses Reclassified into Income During the Period from:						Pre-Tax Gains (Losses) Recognized During the Period in Income
(Millions of Dollars)	Accumulated Other Comprehensive Loss			Regulatory Assets and Liabilities
Three Months Ended Sept. 30, 2023
Derivatives designated as cash flow hedges
Interest rate	$	1	(b)	$	—		$	—
Total	$	1		$	—		$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	2	(a)
Total	$	—		$	—		$	2
Nine Months Ended Sept. 30, 2023
Derivatives designated as cash flow hedges
Interest rate	$	1	(b)	$	—		$	—
Total	$	1		$	—		$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	(3)	(a)
Natural gas commodity	—			10		(c)	(12)		(c)(d)
Total	$	—		$	10		$	(15)
Three Months Ended Sept. 30, 2022
Derivatives designated as cash flow hedges
Interest rate	$	1	(b)	$	—		$	—
Total	$	1		$	—		$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	2	(a)
Total	$	—		$	—		$	2
Nine Months Ended Sept. 30, 2022
Derivatives designated as cash flow hedges
Interest rate	$	1	(b)	$	—		$	—
Total	$	1		$	—		$	—
Other derivative instruments
Commodity trading	$	—		$	—		$	3	(a)
Natural gas commodity	—			2		(c)	(11)		(c)(d)
Total	$	—		$	2		$	(8)

(a) ~~— PSCo’s~~Recorded to electric revenues. Presented amounts do not reflect non-derivative transactions or margin sharing with customers.

(b)Recorded to interest charges.

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

(d)Relates primarily to option premium amortization.

PSCo had no derivative instruments designated as fair value hedges during

the nine months ended Sept. 30, 2023 and 2022.

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


		Sept. 30, 2022													Dec. 31, 2021																Sept. 30, 2023																			Dec. 31, 2022
		Fair Value						Fair Value Total		Netting (a)			Total		Fair Value						Fair Value Total			Netting (a)			Total				Fair Value								Fair Value Total				Netting (a)			Total				Fair Value										Fair Value Total			Netting (a)			Total
(Millions of Dollars)	(Millions of Dollars)	Level 1		Level 2		Level 3						Level 1			Level 2		Level 3						(Millions of Dollars)			Level 1				Level 2				Level 3								Level 1							Level 2				Level 3
Current derivative assets	Current derivative assets																																Current derivative assets
Other derivative instruments:	Other derivative instruments:																								Other derivative instruments:
Commodity trading	Commodity trading	$	28	$	116	$	—	$	144	$	(114)		$	30	$	12	$	97	$	—	$	109		$	(81)		$	28	Commodity trading		$	3			$	42	$	3		$	48			$	(37)		$	11			$	16			$	220		$	1		$	237		$	(184)		$	53
Natural gas commodity	Natural gas commodity	—		18		—		18		—			18		—		11		—		11			—			11		Natural gas commodity		—				2		—		2				—			2				—				12			—			12			—			12
Total current derivative assets	Total current derivative assets	$	28	$	134	$	—	$	162	$	(114)		$	48	$	12	$	108	$	—	$	120		$	(81)		$	39	Total current derivative assets		$	3			$	44	$	3	$	50			$	(37)		$	13			$	16			$	232		$	1		$	249		$	(184)		$	65
Noncurrent derivative assets	Noncurrent derivative assets																												Noncurrent derivative assets
Other derivative instruments:	Other derivative instruments:																								Other derivative instruments:
Commodity trading	Commodity trading	$	20	$	22	$	16	$	58	$	(46)		$	12	$	10	$	28	$	54	$	92		$	(65)		$	27	Commodity trading		$	8			$	2	$	8	$	18			$	(5)		$	13			$	12			$	32		$	9		$	53		$	(31)		$	22
Total noncurrent derivative assets	Total noncurrent derivative assets	$	20	$	22	$	16	$	58	$	(46)		$	12	$	10	$	28	$	54	$	92		$	(65)		$	27	Total noncurrent derivative assets		$	8			$	2	$	8	$	18			$	(5)		$	13			$	12			$	32		$	9		$	53		$	(31)		$	22


		Sept. 30, 2022													Dec. 31, 2021																					Sept. 30, 2023																									Dec. 31, 2022
		Fair Value						Fair Value Total		Netting (a)			Total		Fair Value						Fair Value Total				Netting (a)					Total						Fair Value													Fair Value Total				Netting (a)				Total				Fair Value												Fair Value Total				Netting (a)			Total
(Millions of Dollars)	(Millions of Dollars)	Level 1		Level 2		Level 3						Level 1			Level 2		Level 3						(Millions of Dollars)				Level 1								Level 2					Level 3												Level 1								Level 2				Level 3
Current derivative liabilities	Current derivative liabilities																																						Current derivative liabilities
Other derivative instruments:	Other derivative instruments:																									Other derivative instruments:
Commodity trading	Commodity trading	$	12	$	123	$	14	$	149	$	(120)		$	29	$	6	$	90	$	16	$	112			$	(85)				$	27	Commodity trading				$	1				$	51			$	—				$	52			$	(43)			$	9			$	5			$	237			$	1			$	243			$	(223)		$	20
Natural gas commodity	Natural gas commodity	—		8		—		8		—			8		—		3		—		3				—					3		Natural gas commodity				—					—				—				—				—				—				—				10				—				10				—			10
Total current derivative liabilities	Total current derivative liabilities	$	12	$	131	$	14	$	157	$	(120)		$	37	$	6	$	93	$	16	$	115			$	(85)				$	30	Total current derivative liabilities				$	1				$	51			$	—			$	52			$	(43)			$	9			$	5			$	247			$	1			$	253			$	(223)		$	30
Noncurrent derivative liabilities	Noncurrent derivative liabilities																															Noncurrent derivative liabilities
Other derivative instruments:	Other derivative instruments:																									Other derivative instruments:
Commodity trading	Commodity trading	$	9	$	25	$	26	$	60	$	(53)		$	7	$	3	$	—	$	101	$	104			$	(75)				$	29	Commodity trading				$	4				$	4			$	—			$	8			$	(6)			$	2			$	7			$	40			$	—			$	47			$	(38)		$	9
Total noncurrent derivative assets		$	9	$	25	$	26	$	60	$	(53)		$	7	$	3	$	—	$	101	$	104			$	(75)				$	29
Total noncurrent derivative liabilities																								Total noncurrent derivative liabilities				$	4				$	4				$	—				$	8			$	(6)			$	2			$	7			$	40			$	—			$	47			$	(38)			$	9

(a)PSCo nets derivative instruments and related collateral on its consolidated balance sheets when supported by a legally enforceable master netting agreement. At ~~both~~ Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021,~~2022, derivative assets and liabilities include no obligations to return cash collateral. At Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021,~~2022, derivative assets and liabilities include rights to reclaim cash collateral of ~~$13~~$7 million and ~~$14~~$46 million, respectively. Counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

Changes in Level 3 commodity derivatives:


		Three Months Ended Sept. 30					Three Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2022		2021		(Millions of Dollars)	2023		2022
Balance at July 1	Balance at July 1	$	(30)	$	(61)	Balance at July 1	$	9	$	(30)
Settlements		5		4
Settlements (a)						Settlements (a)	—		5
Net transactions recorded during the period:	Net transactions recorded during the period:					Net transactions recorded during the period:
Gains (losses) recognized in earnings (a)		1		(11)
Gains recognized in earnings (a)						Gains recognized in earnings (a)	2		1
Balance at Sept. 30	Balance at Sept. 30	$	(24)	$	(68)	Balance at Sept. 30	$	11	$	(24)

		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2022		2021		(Millions of Dollars)	2023		2022
Balance at Jan. 1	Balance at Jan. 1	$	(63)	$	(44)	Balance at Jan. 1	$	9	$	(63)
Settlements		9		3
Settlements (a)						Settlements (a)	—		9
Net transactions recorded during the period:	Net transactions recorded during the period:					Net transactions recorded during the period:
Gains (losses) recognized in earnings (a)		30		(27)
Gains recognized in earnings (a)						Gains recognized in earnings (a)	2		30
Balance at Sept. 30	Balance at Sept. 30	$	(24)	$	(68)	Balance at Sept. 30	$	11	$	(24)

(a)~~Level 3 net gains recognized in earnings are~~Relates to commodity trading and is subject to substantial offsetting ~~net~~ losses ofand gains on derivative instruments categorized as levels 1 and 2 in the consolidated income statement.

~~PSCo recognizes transfers between levels as of the beginning of each period. There were no transfers of amounts between levels for derivative instruments~~ See above tables for the ~~three~~income statement impact of derivative activity, including commodity trading gains and ~~nine months ended Sept. 30, 2022 and 2021.~~losses.

Fair Value of Long-Term Debt

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


		Sept. 30, 2022				Dec. 31, 2021					Sept. 30, 2023				Dec. 31, 2022
(Millions of Dollars)	(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	Long-term debt, including current portion	$	6,858	$	5,785	$	6,467	$	7,291	Long-term debt, including current portion	$	7,449	$	5,932	$	6,860	$	5,881

Fair value of PSCo’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021~~2022, and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.

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8. Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost (Credit)


		Three Months Ended Sept. 30									Three Months Ended Sept. 30
		2022		2021		2022		2021			2023		2022		2023		2022
(Millions of Dollars)	(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits				(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits
Service cost	Service cost	$	7	$	8	$	1	$	—	Service cost	$	5	$	7	$	—	$	1
Interest cost (a)	Interest cost (a)	10		9		2		2		Interest cost (a)	14		10		4		2
Expected return on plan assets (a)	Expected return on plan assets (a)	(19)		(18)		(4)		(4)		Expected return on plan assets (a)	(19)		(19)		(3)		(4)
Amortization of prior service credit (a)	Amortization of prior service credit (a)	—		—		(1)		(1)		Amortization of prior service credit (a)	—		—		—		(1)
Amortization of net loss (a)	Amortization of net loss (a)	6		9		—		1		Amortization of net loss (a)	1		6		—		—
Settlement charge (b)	Settlement charge (b)	2		—		—		—		Settlement charge (b)	—		2		—		—
Net periodic benefit cost (credit)		6		8		(2)		(2)
Net periodic benefit (credit) cost										Net periodic benefit (credit) cost	1		6		1		(2)
Effects of regulation	Effects of regulation	(2)		(2)		1		1		Effects of regulation	3		(2)		—		1
Net benefit cost (credit) recognized for financial reporting	Net benefit cost (credit) recognized for financial reporting	$	4	$	6	$	(1)	$	(1)	Net benefit cost (credit) recognized for financial reporting	$	4	$	4	$	1	$	(1)

		Nine Months Ended Sept. 30									Nine Months Ended Sept. 30
		2022		2021		2022		2021			2023		2022		2023		2022
(Millions of Dollars)	(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits				(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits
Service cost	Service cost	$	22	$	24	$	1	$	—	Service cost	$	14	$	22	$	—	$	1
Interest cost (a)	Interest cost (a)	31		29		8		8		Interest cost (a)	43		31		12		8
Expected return on plan assets (a)	Expected return on plan assets (a)	(58)		(54)		(12)		(12)		Expected return on plan assets (a)	(57)		(58)		(11)		(12)
Amortization of prior service credit (a)	Amortization of prior service credit (a)	—		—		(2)		(3)		Amortization of prior service credit (a)	—		—		—		(2)
Amortization of net loss (a)	Amortization of net loss (a)	17		24		1		3		Amortization of net loss (a)	2		17		1		1
Settlement charge (b)	Settlement charge (b)	2		—		—		—		Settlement charge (b)	—		2		—		—
Net periodic benefit cost (credit)		14		23		(4)		(4)
Net periodic benefit (credit) cost										Net periodic benefit (credit) cost	2		14		2		(4)
Effects of regulation	Effects of regulation	3		—		2		2		Effects of regulation	9		3		—		2
Net benefit cost (credit) recognized for financial reporting	Net benefit cost (credit) recognized for financial reporting	$	17	$	23	$	(2)	$	(2)	Net benefit cost (credit) recognized for financial reporting	$	11	$	17	$	2	$	(2)

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

(b)A settlement charge is required when the amount of all lump-sum distributions during the year is greater than the sum of the service and interest cost components of the annual net periodic pension cost. In the third quarter of 2022 as a result of lump-sum distributions during the 2022 plan year, ~~PSCO~~PSCo recorded a pension settlement charge of $2 million, the majority of which was not recognized due to the effects of regulation.

In January ~~2022,~~2023, contributions oftotaling $50 million were made across ~~four of~~ Xcel Energy’s pension plans, of which ~~$40 million~~none was attributable to PSCo. Xcel Energy does not expect additional pension contributions during ~~2022.~~2023.


9. Commitments and Contingencies

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

Legal

PSCo is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories.

In such cases, there is considerable uncertainty regarding the timing or ultimate resolution, 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. Legal fees are generally expensed as incurred.

Comanche Unit 3 Litigation — In ~~September~~ 2021, CORE filed a lawsuit in Denver County District ~~Court. CORE alleges~~Court, alleging PSCo breached ownership agreement terms by failing to operate Comanche Unit 3 in accordance with prudent utility practices. In January 2022, the Court granted PSCo’s motion and dismissed CORE’s claims for unjust enrichment, declaratory judgment and damages for replacement power costs. In February 2022, CORE disclosed that it is claiming in excess of ~~$125 million~~ ~~in total damages.~~

In April 2022, CORE filed a supplement to include ~~the January~~damages related to a 2022 outage. ItAlso in 2022, CORE sent notice of withdrawal from the ownership agreement based on the same alleged breaches.

In February 2023, the court granted PSCo’s motion precluding CORE from seeking damages related to its withdrawal as part of the lawsuit. In September 2023, the court denied PSCo’s motion for summary judgment on other categories of damages and allowed CORE to seek approximately $253 million at trial (before interest), including an alleged $187 million reduction in the value of CORE’s ownership interest in the Comanche 3 facility and $60 million of alleged lost power costs.

On Oct. 25, 2023, the jury awarded CORE lost power damages of $26 million. PSCo recognized $34 million for the verdict in the third quarter of 2023, including estimated interest and other costs. PSCo intends to file an appeal of this decision.

Marshall Wildfire

In December 2021, a wildfire ignited in Boulder County, Colorado (the “Marshall Fire”), which burned over 6,000 acres and destroyed or damaged over 1,000 structures. On June 8, 2023, the Boulder County Sheriff’s Office released its Marshall Fire Investigative Summary and Review and its supporting documents (the “Sheriff’s Report”). According to an October 2022 statement from the Colorado Insurance Commissioner, the Marshall Fire is estimated to have caused more than $2 billion in property losses.

According to the Sheriff’s Report, on Dec. 30, 2021, a fire ignited on a residential property in Boulder, Colorado, located in PSCo’s service territory, for reasons unrelated to PSCo’s power lines. According to the Sheriff’s Report, approximately one hour and 20 minutes after the first ignition, a second fire ignited just south of the Marshall Mesa Trailhead in unincorporated Boulder County, Colorado, also located in PSCo’s service territory. According to the Sheriff’s Report, the second ignition started approximately 80 to 110 feet away from PSCo’s power lines in the area.

The Sheriff’s Report states that the most probable cause of the second ignition was hot particles discharged from PSCo’s power lines after one of the power lines detached from its insulator in strong winds, and further states that it cannot be ruled out that the second ignition was caused by an underground coal fire. According to the Sheriff’s Report, no design, installation or maintenance defects or deficiencies were identified on PSCo’s electrical circuit in the area of the second ignition. PSCo disputes that its power lines caused the second ignition.

Table of Contents

As of Oct. 24, 2023, PSCo is aware of 14 complaints, certain of which have also named Xcel Energy Inc. as a defendant, on behalf of at least 675 plaintiffs relating to the Marshall Fire and expects that it may receive further complaints. The complaints generally allege that PSCo’s equipment ignited the Marshall Fire and assert various causes of action under Colorado law, including negligence, premises liability, trespass, nuisance, and inverse condemnation. In September 2023, the Boulder County District Court Judge consolidated eight lawsuits that were pending at that time into a single action for pretrial purposes and has subsequently consolidated additional lawsuits that have been filed.

Colorado courts do not apply strict liability in determining an electric utility company’s liability for fire-related damages. For inverse condemnation claims, ~~additional undisclosed~~Colorado courts assess whether a defendant acted with intent to take a plaintiff’s property or intentionally took an action which has the natural consequence of taking the property. For negligence claims, Colorado courts look to whether electric power companies have operated their system with a heightened duty of care consistent with the practical conduct of its business, and liability does not extend to occurrences that cannot be reasonably anticipated.

Under Colorado law, in a civil action other than a medical malpractice action, the total award for noneconomic loss is capped at $0.6 million per defendant for claims that accrued at the time of the Marshall Fire unless the court finds justification to exceed that amount by clear and convincing evidence, in which case the maximum doubles. Colorado law does not impose joint and several liability in tort actions. Instead, under Colorado law, a defendant is liable for the degree or percentage of the negligence or fault attributable to that defendant, except where the defendant conspired with another defendant. A jury’s verdict in a Colorado civil case must be unanimous.

Colorado law caps punitive or exemplary damages ~~arising from~~to an amount equal to the amount of the actual damages awarded to the injured party, except the court may increase any award of punitive damages to a sum up to three times the amount of actual damages if the conduct that is the subject of the claim has continued during the pendency of the case or the defendant has acted in a willful and wanton manner during the action which further aggravated plaintiff’s damages.

In the event Xcel Energy Inc. or PSCo was found liable related to this ~~event.~~litigation and were required to pay damages, such amounts could exceed our insurance coverage of approximately $500 million and have a material adverse effect on our financial condition, results of operations or cash flows. However, due to uncertainty as to the cause of the fire and the extent and magnitude of potential damages, Xcel Energy Inc. and PSCo ~~continues~~are unable to ~~believe CORE’s claims are without merit.~~estimate the amount or range of possible losses in connection with the Marshall Fire.

Rate Matters

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

Environmental

MGP, Landfill and Disposal Sites

PSCo is investigating, remediating or performing post-closure actions at two MGP, landfill or other disposal sites across its service ~~territory.~~territory, excluding sites that are being addressed under coal ash regulations.

PSCo has recognized its best estimate of costs/liabilities from final resolution of these issues, however, the outcome and timing are 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 applicable landfills and surface impoundments as well as perform corrective actions where offsite groundwater has been impacted.

As of Sept. 30, ~~2022,~~2023, PSCo has five regulated ash units in ~~operation with two sites being evaluated for corrective actions.~~operation.

PSCo ~~is currently exploring~~has executed an agreement with a third party that ~~would~~will excavate and process ash for beneficial use (at two sites) at a cost of approximately ~~$43~~$45 million. An estimated liability has been recorded ~~for this amount. PSCo anticipates these costs will~~and amounts are expected to be fully recoverable through regulatory mechanisms.

Investigation and feasibility studies for additional corrective action related to offsite groundwater are ongoing (at ~~two~~three sites). While the results are uncertain, additional costs are estimated to be ~~up to $35~~at least $40 million. ~~An estimated~~A liability has been recorded ~~for the portion of these actions that are estimable,~~ and ~~are~~is expected to be fully recoverable through regulatory mechanisms.

~~Table of Contents~~

Leases

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

Components of lease expense:


		Three Months Ended Sept. 30					Three Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2022		2021		(Millions of Dollars)	2023		2022
Operating leases	Operating leases					Operating leases
PPA capacity payments	PPA capacity payments	$	22	$	26	PPA capacity payments	$	23	$	22
Other operating leases (a)	Other operating leases (a)	3		2		Other operating leases (a)	5		3
Total operating lease expense (b)	Total operating lease expense (b)	$	25	$	28	Total operating lease expense (b)	$	28	$	25
Finance leases	Finance leases					Finance leases
Amortization of ROU assets	Amortization of ROU assets	$	1	$	2	Amortization of ROU assets	$	1	$	1
Interest expense on lease liability	Interest expense on lease liability	4		4		Interest expense on lease liability	4		4
Total finance lease expense	Total finance lease expense	$	5	$	6	Total finance lease expense	$	5	$	5

(a)Includes immaterial short-term lease expense for ~~2022~~both 2023 and ~~2021.~~2022.

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

Nine Months Ended Sept. 30
(Millions of Dollars) 2022 2021
Operating leases
PPA capacity payments $ 70 $ 77
Other operating leases (a)
13 9
Total operating lease expense (b)
$ 83 $ 86
Finance leases
Amortization of ROU assets $ 3 $ 6
Interest expense on lease liability 12 12
Total finance lease expense $ 15 $ 18

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	Nine Months Ended Sept. 30
(Millions of Dollars)	2023		2022
Operating leases
PPA capacity payments	$	68	$	70
Other operating leases (a)	15		13
Total operating lease expense (b)	$	83	$	83
Finance leases
Amortization of ROU assets	$	2	$	3
Interest expense on lease liability	12		12
Total finance lease expense	$	14	$	15

(a)Includes immaterial short-term lease expense ~~of $1 million for 2022~~for both 2023 and ~~2021, respectively.~~2022.

Commitments under operating and finance leases as of Sept. 30, ~~2022:~~2023:


(Millions of Dollars)	(Millions of Dollars)	PPA Operating Leases		Other Operating Lease		Total Operating Leases		Finance Leases		(Millions of Dollars)	PPA Operating Leases		Other Operating Lease		Total Operating Leases		Finance Leases
Total minimum obligation	Total minimum obligation	$	388	$	44	$	432	$	454	Total minimum obligation	$	394	$	63	$	457	$	423
Interest component of obligation	Interest component of obligation	(46)		(5)		(51)		(332)		Interest component of obligation	(38)		(7)		(45)		(308)
Present value of minimum obligation	Present value of minimum obligation	$	342	$	39	381		122		Present value of minimum obligation	$	356	$	56	412		115
Less current portion	Less current portion					(79)		(5)		Less current portion					(97)		(3)
Noncurrent operating and finance lease liabilities	Noncurrent operating and finance lease liabilities					$	302	$	117	Noncurrent operating and finance lease liabilities					$	315	$	112

Variable Interest Entities

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 they purchase. These specific PPAs create a variable interest in the IPP.

PSCo had ~~approximately 1,442~~approximately 1,509 MW and ~~1518~~1,442 MW of capacity under long-term PPAs at Sept. 30, ~~2022~~2023 and Dec. 31, ~~2021~~2022 with entities that have been determined to be variable interest entities. PSCo concluded that these entities are not required to be consolidated in its financial statements because it does not have the power to direct the activities that most significantly impact the entities’ economic performance. The PPAs have expiration dates through 2032.


10. Other Comprehensive Income

Changes in accumulated other comprehensive loss, net of ~~tax, for the three and nine months ended Sept. 30, 2022 and 2021:~~tax:


		Three Months Ended Sept. 30, 2022						Three Months Ended Sept. 30, 2021							Three Months Ended Sept. 30, 2023						Three Months Ended Sept. 30, 2022
(Millions of Dollars)	(Millions of Dollars)	Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total		Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total		(Millions of Dollars)	Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total		Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total
Accumulated other comprehensive loss at July 1	Accumulated other comprehensive loss at July 1	$	(21)	$	(1)	$	(22)	$	(22)	$	(1)	$	(23)	Accumulated other comprehensive loss at July 1	$	(20)	$	(1)	$	(21)	$	(21)	$	(1)	$	(22)
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 (a)		1		—		1		—		—		—
Amortization of net actuarial loss (a)														Amortization of net actuarial loss (a)	—		(1)		(1)		—		—		—
Interest rate derivatives (b)														Interest rate derivatives (b)	1		—		1		1		—		1
Net current period other comprehensive income	Net current period other comprehensive income	1		—		1		—		—		—		Net current period other comprehensive income	1		(1)		—		1		—		1
Accumulated other comprehensive loss at Sept. 30	Accumulated other comprehensive loss at Sept. 30	$	(20)	$	(1)	$	(21)	$	(22)	$	(1)	$	(23)	Accumulated other comprehensive loss at Sept. 30	$	(19)	$	(2)	$	(21)	$	(20)	$	(1)	$	(21)


		Nine Months Ended Sept. 30, 2022						Nine Months Ended Sept. 30, 2021							Nine Months Ended Sept. 30, 2023						Nine Months Ended Sept. 30, 2022
(Millions of Dollars)	(Millions of Dollars)	Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total		Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total		(Millions of Dollars)	Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total		Gains and Losses on Cash Flow Hedges		Defined Benefit Pension and Postretirement Items		Total
Accumulated other comprehensive loss at Jan. 1	Accumulated other comprehensive loss at Jan. 1	$	(21)	$	(1)	$	(22)	$	(23)	$	(1)	$	(24)	Accumulated other comprehensive loss at Jan. 1	$	(20)	$	(2)	$	(22)	$	(21)	$	(1)	$	(22)
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 (a)		1		—		1		1		—		1

Interest rate derivatives (b)														Interest rate derivatives (b)	1		—		1		1		—		1
Net current period other comprehensive income	Net current period other comprehensive income	1		—		1		1		—		1		Net current period other comprehensive income	1		—		1		1		—		1
Accumulated other comprehensive loss at Sept. 30	Accumulated other comprehensive loss at Sept. 30	$	(20)	$	(1)	$	(21)	$	(22)	$	(1)	$	(23)	Accumulated other comprehensive loss at Sept. 30	$	(19)	$	(2)	$	(21)	$	(20)	$	(1)	$	(21)

(a)Included in the computation of net periodic pension and postretirement benefit costs. See Note 8 for further information.

(b)Included in interest charges.

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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. The regulated electric utility segment also includes PSCo’s wholesale commodity and trading operations.

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

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

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

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

PSCo’s segment information:


		Three Months Ended Sept. 30					Three Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2022		2021		(Millions of Dollars)	2023		2022
Regulated Electric	Regulated Electric					Regulated Electric

Total revenues	Total revenues	$	1,137	$	1,048	Total revenues	$	1,113	$	1,137
Net income	Net income	243		212		Net income	247		243
Regulated Natural Gas	Regulated Natural Gas					Regulated Natural Gas

Total revenues	Total revenues	$	235	$	177	Total revenues	$	165	$	235
Net income		4		8
Net (loss) income						Net (loss) income	(16)		4
All Other	All Other					All Other
Total revenues (a)	Total revenues (a)	$	11	$	12	Total revenues (a)	$	12	$	11
Net loss	Net loss	—		(5)		Net loss	(2)		—
Consolidated Total	Consolidated Total					Consolidated Total
Total revenues (a)		$	1,383	$	1,237

Total operating revenues (a)						Total operating revenues (a)	$	1,290	$	1,383
Net income	Net income	247		215		Net income	229		247

(a) Total revenues include $2$1 million and $1$2 million of other affiliate revenue for the three months ended Sept. 30, ~~2022~~2023 and ~~2021.~~2022.


		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2022		2021		(Millions of Dollars)	2023		2022
Regulated Electric	Regulated Electric					Regulated Electric

Operating revenues — external		$	2,849	$	2,608
Intersegment revenue		—		1
Total revenues	Total revenues	2,849		2,609		Total revenues	$	2,877	$	2,849
Net income	Net income	455		400		Net income	449		455
Regulated Natural Gas	Regulated Natural Gas					Regulated Natural Gas

Total revenues	Total revenues	$	1,087	$	930	Total revenues	$	1,247	$	1,087
Net income	Net income	99		121		Net income	81		99
All Other	All Other					All Other
Total revenues (a)	Total revenues (a)	$	39	$	34	Total revenues (a)	$	41	$	39
Net income (loss)		1		(5)
Net income						Net income	6		1
Consolidated Total	Consolidated Total					Consolidated Total
Total revenues (a)		$	3,975	$	3,573
Reconciling eliminations		—		(1)
Total operating revenues		$	3,975	$	3,572

Total operating revenues (a)						Total operating revenues (a)	$	4,165	$	3,975
Net income	Net income	555		516		Net income	536		555

(a) Total revenues include $4$3 million and $3$4 million of other affiliate revenue for the nine months ended Sept. 30, ~~2022~~2023 and ~~2021.~~2022.


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

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

Non-GAAP Financial Measures

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

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

Earnings Adjusted for Certain Items (Ongoing Earnings)

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

We use this non-GAAP financial measure to evaluate and provide details of ~~PSCo’s~~Xcel Energy’s core earnings and underlying performance. For instance, to present ongoing earnings, we may adjust the related GAAP amounts for certain items that are non-recurring in nature. We believe this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of ~~PSCo. For the three~~our subsidiaries. This non-GAAP financial measure should not be considered as an alternative to measures calculated and ~~nine months ended Sept. 30, 2022 and 2021, there were no such adjustments to GAAP earnings and therefore GAAP earnings equal ongoing earnings.~~reported in accordance with GAAP.

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The following table provides a reconciliation of GAAP earnings (net income) to ongoing earnings:


	Three Months Ended Sept. 30				Nine Months Ended Sept. 30
(Millions of Dollars)	2023		2022		2023		2022
GAAP net income	$	229	$	247	$	536	$	555
Loss on Comanche Unit 3 litigation	34		—		34		—
Less: tax effect of adjustment	(8)		—		(8)		—
Ongoing earnings	$	255	$	247	$	562	$	555

Comanche Unit 3 Litigation— As a result of an Oct. 25, 2023 jury verdict in Denver County District Court awarding CORE lost power damages and other costs, PSCo recognized a $34 million loss for the matter in the third quarter of 2023. Given the non-recurring nature of this specific item, it has been excluded from ongoing earnings.


Results of Operations

PSCo’s GAAP net income was ~~$555~~$536 million for the nine months ended Sept. 30, ~~2022,~~2023, compared to ~~$516~~$555 million for the prior year. Ongoing net income was $562 million for the nine months ended Sept. 30, 2023, compared to $555 million for the prior year. The ~~increase reflects regulatory rate outcomes, partially~~higher ongoing earnings primarily reflect higher recovery of infrastructure investment (electric and natural gas), which were offset by increased depreciation and ~~O&M expenses.~~interest charges.

Electric Margin

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

Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas and coal. However, these fluctuations have minimal impact on margin due to fuel recovery mechanisms. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and margin (offset by lower tax expense).

Electric revenues, fuel and purchased power and electric margin and explanation of the changes are listed as follows:


		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2022		2021		(Millions of Dollars)	2023		2022
Electric revenues	Electric revenues	$	2,849	$	2,608	Electric revenues	$	2,877	$	2,849
Electric fuel and purchased power	Electric fuel and purchased power	(1,075)		(1,002)		Electric fuel and purchased power	(1,055)		(1,075)
Electric margin	Electric margin	$	1,774	$	1,606	Electric margin	$	1,822	$	1,774


(Millions of Dollars)		Nine Months Ended Sept. 30, ~~2022~~2023 vs. ~~2021~~2022
Regulatory rate outcomes		$	~~110~~
~~Sales and demand~~ ~~(a)~~		3930
Non-fuel riders		1819

~~Proprietary commodity trading, net of sharing~~ Wholesale transmission (net)~~(b)~~		~~(13)~~8
Estimated impact of weather (net of decoupling)
	(18)

Other, net		149
Total increase		$	~~168~~48

~~(a)Sales excludes weather impact, net of decoupling.~~

~~(b)Includes $11 million of trading margin recognized in the first quarter of 2021, driven by market changes associated with Winter Storm Uri.~~

Natural Gas Margin

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

Natural gas revenues, cost of natural gas sold and transported and natural gas margin and explanation of the changes are listed as follows:


		Nine Months Ended Sept. 30					Nine Months Ended Sept. 30
(Millions of Dollars)	(Millions of Dollars)	2022		2021		(Millions of Dollars)	2023		2022
Natural gas revenues	Natural gas revenues	$	1,087	$	930	Natural gas revenues	$	1,247	$	1,087
Cost of natural gas sold and transported	Cost of natural gas sold and transported	(549)		(381)		Cost of natural gas sold and transported	(660)		(549)
Natural gas margin	Natural gas margin	$	538	$	549	Natural gas margin	$	587	$	538


(Millions of Dollars)	Nine Months Ended Sept. 30, ~~2022~~2023 vs. ~~2021~~2022
~~Infrastructure and integrity riders~~Regulatory rate outcomes	$	247
~~Regulatory rate outcomes~~ ~~(a)~~	~~(10)~~
~~Winter Storm Uri disallowance~~Estimated impact of weather	~~(4)~~16

Other, net	1 (14)
Total ~~decrease~~increase	$	~~(11)~~49

~~(a)Impact is due to a favorable regulatory rate outcome recognized in the second quarter of 2021.~~

Non-Fuel Operating Expenses and Other Items

~~O&M Expenses~~ — O&M costs increased $28 million year-to-date. The increase is due to additional investments in technology and customer programs, higher regulatory fees, increased costs for vegetation management and inflation, offset by a reduction in employee benefit costs.

Depreciation and Amortization — Depreciation and amortization expense increased ~~$70~~$66 million year-to-date. The increase was primarily due to normal system expansion and new electric and natural gas depreciation rates.

Interest Charges — Interest charges increased ~~$16~~$29 million year-to-date, largely due to higher interest rates and increased long-term debt levels to fund capital investments.

~~Income Taxes~~ — Income tax expense decreased $7 million year-to-date. The decrease was primarily driven by an increase in wind PTCs due to greater production. Wind PTCs are credited to customers (recorded as a reduction to revenue) and do not have a material impact on net income. These were partially offset by higher pretax earnings.

~~See Note 6 to the consolidated financial statements.~~


Public Utility Regulation and Other

The FERC and state and local regulatory commissions regulate PSCo. PSCo is subject to rate regulation by state utility regulatory agencies, which have jurisdiction with respect to the rates of electric and natural gas distribution companies in Colorado.

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

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

Except to the extent noted 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, ~~2021,~~2022, 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

Colorado ~~Natural Gas~~Electric Rate Case — In ~~January~~November 2022, PSCo filed a ~~request with the CPUC~~Colorado electric rate case seeking a net increase ~~to retail natural gas rates~~ of ~~$107 million.~~$262 million, or 8.2%. The total ~~change~~request reflects a $312 million increase (subsequently adjusted to ~~base rates is $215~~$303 million in rebuttal), which ~~reflects the transfer~~includes $50 million of ~~$108 million~~authorized costs previously recovered ~~from customers~~ through ~~the pipeline system integrity adjustment rider.~~various rider mechanisms. The request iswas based on a 10.25% ROE, an equity ratio of ~~55.66%~~55.7% and a ~~2022 current~~2023 forecast test year with a ~~projected~~2023 average rate base of ~~$3.6~~$11.3 billion. ~~PSCo has requested a proposed effective date of Nov. 1, 2022.~~

~~Additionally, PSCo’s request includes step revenue increases of $40 million (effective Nov. 1, 2023) and $41 million (effective Nov. 1, 2024) related to continued capital investment.~~

In ~~October 2022,~~September 2023, the CPUC ~~issued~~approved a ~~written decision approving~~settlement between PSCo and various parties, which included the following terms:

•Retail revenue increase (excluding rider roll-ins) of $95 million (increase of 2.96%), based on a ~~rate increase net of rider roll-ins of $64 million. The decision reflects a stated WACC of 6.7%, a~~2022 historic test year ~~with a~~using year-end rate base with forward looking known and $16 million of incremental depreciation expense. PSCo has the option to determine its ROE within a range of 9.2% to 9.5% and its equity ratio within a range of 52% to 55%, as long as it results in a WACC of 6.7%. PSCo anticipates using a ROE of 9.2% and an equity ratio of 53.8%. The CPUC denied the 2023-2024 step increases.

~~Power Pathway Settlement~~— ~~In June 2022, the CPUC issued a final written order issuing the CPCN for the Pathway Project. Key decisions include:~~measurable adjustments.

•~~The CPUC approved PSCo’s~~Weighted-average cost ~~estimate~~ of ~~$1.7 billion~~capital of 6.95% (based on 55.69% equity ratio and ~~recovery through the transmission rider.~~9.3% ROE).

•~~The CPUC modified the PIMs proposed in the settlement agreement, which focused on cost controls, to add a separate mechanism to further incentivize timely delivery~~Termination of the ~~Pathway Project segments. The CPUC also increased the magnitude~~revenue decoupling pilot with implementation of ~~the PIMs.~~new rates.

•~~The CPUC granted conditional approval for the 345 kilovolt May Valley-Longhorn line extension, pending the level~~Continuation of ~~renewables being added in that region through PSCo’s resource plan. The initial cost estimate for the extension is approximately $250 million.~~previously authorized trackers and deferrals.

•Collection of PSCo’s requested 2023 TCA revenues, previously suspended by the CPUC. Beginning in 2024, projects eligible for recovery will be limited to projects which increase transmission capacity or are part of an approved wildfire mitigation plan.

Rates became effective in September 2023.

Colorado Resource Plan ~~Settlement~~ — In August 2022, the CPUC ~~issued~~approved a ~~written approval of a revised~~ settlement ~~which will result in~~for the ~~further acceleration of the retirement of the Comanche Unit 3 coal plant,~~Colorado Resource Plan among PSCo and various intervenors. This settlement provides for an expected carbon reduction and the retirement of ~~at least 85%~~PSCo’s remaining coal plant by the end of 2030.

In September 2023, PSCo filed its recommended Preferred Plan. The filing also includes several other alternative scenarios. PSCo’s Preferred Plan results in the exit of coal by the end of 2030, roughly doubling wind and solar energy from 2022 levels, and reduction of greenhouse gas emissions by more than 80% from 2005 levels. It also reflects an ~~80%~~average annual rate impact of approximately 2.3% which is inclusive of generation and transmission network and interconnection costs.

The Preferred Plan includes the following resources:


Generation Resource (in MW)	Company Owned	PPAs	Total
Wind Resources	2,531	875	3,406
Solar	1,109	860	1,969
Storage	500	670	1,170
Natural Gas	628	—	628
Biomass	19	—	19
Total	4,787	2,405	7,192

If approved by the CPUC, Xcel Energy expects to invest $7.9 billion in generation resources. In addition, the plan requires approximately $2.9 billion of incremental investments in transmission capacity upgrades and new lines to fully integrate the renewable ~~mix by 2030.~~ generation.

The CPUC ~~deferred~~is expected to render a decision on the ~~method~~recommended Preferred Plan by the end of cost recovery for the retiring coal units to a separate docket, which will consider accelerated depreciation, creation of regulatory assets and securitization. PSCo expects to commence the request for proposal process for generation resources and file a recovery method docket2023 or in ~~the fourth quarter of 2022.~~

~~Key settlement terms include:~~early 2024.

•~~Early retirement of Hayden: Unit 2 in 2027 (was 2036); and Unit 1 in 2028 (was 2030).~~

•~~Conversion of the Pawnee coal plant to natural gas by no later than Jan. 1, 2026.~~

•~~Early retirement of Comanche Unit 3 by Jan. 1, 2031 (was 2070) with reduced operations beginning in 2025.~~

•~~Addition of ~2,400 MW of wind.~~

•~~Addition of ~1,600 MW of universal-scale solar.~~

•~~Addition of 400 MW of storage.~~

•~~Addition of 1,300 MW of flexible, dispatchable generation.~~

•~~Addition of ~1,200 MW of distributed solar resources through our renewable energy programs.~~

~~Partial Settlement~~ECA Fuel Recovery —~~In October~~ ~~2021,~~In December 2022, PSCo filed ~~a comprehensive settlement with the CPUC Staff and the Colorado Energy Office,~~its first quarter 2023 ECA Advice Letter, which ~~proposed~~sought to ~~address four outstanding regulatory items, including recovery~~recover $123 million of under-recovered 2022 fuel costs related to Winter Storm Uri, disputed revenue associated with the 2020 electric decoupling pilot program year, replacement power costs associated with an extended outage at Comanche Unit 3 during 2020 and deferred customer bad debt balances associated with COVID-19.over two quarters (instead of one quarter, as more typical). In ~~July 2022, the CPUC approved the settlement, with an $8 million disallowance relating to the Winter Storm Uri fuel costs.~~

~~Decoupling Filing~~— PSCo has 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 October 2021, a settlement was reached on Winter Storm Uri costs and also addressed certain components of decoupling. See Partial Settlement disclosure above.~~

~~As of Sept. 30, 2022, PSCo has recognized a refund for Residential customers and a surcharge for small C&I customers based on 2020, 2021 and the first, second and third quarters of 2022 results.~~

In April 2022, PSCo made its annual filing. In May 2022, the UCA filed a protest raising issues relating to the Winter Storm Uri settlement and the soft cap components of the decoupling program. On May 25,December 2022, the CPUC found ~~merit~~that the $123 million should be removed from the proposed ECA rates, and required PSCo to file a separate application to recover these costs.

In February 2023 and May 2023, PSCo submitted interim ECA filings which included $70 million and $25 million, respectively, of the 2022 under-recovered costs to be collected over the remainder of 2023.

In the third quarter, PSCo and CPUC Staff filed a settlement allowing for collection of the remaining amount, which after final adjustments was $37 million. This was opposed by the UCA. The ALJ held a hearing in ~~UCA’s protest, suspended PSCo’s advice letter~~October 2023 and ~~referred the matter to the ALJ. A hearing~~ is expected to ~~take place~~issue a recommended decision in ~~the fourth quarter of 2022 and an ALJ recommendation is expected in the first quarter of 2023.~~late 2023 or early 2024.

~~2019 Electric Rate Case Appeal~~Colorado Legislation — In ~~August 2020, PSCo filed an appeal with the Denver District Court seeking~~May 2023, Colorado Senate Bill 23-291 passed and was signed into law. The bill includes a ~~review~~number of ~~CPUC decisions on gains~~topics including natural gas and ~~losses on sales~~electric fuel incentive mechanisms, natural gas planning rules, regulatory filing requirements, and non-recovery of ~~assets, and other items. In January 2022, the court~~ ~~issued its decision that the CPUC’s approach to gains and losses on~~ certain ~~sales of assets was legally erroneous and confiscatory to PSCo and set aside and remanded the issue for further consideration.~~ ~~In October 2022,~~expenses (e.g., certain organizational or membership dues, tax penalties or fines). This legislation will require additional rulemaking from the CPUC ~~approved PSCo’s proposed methodology~~prior to ~~allocate gains and losses.~~

~~GCA NOPR~~—implementation. In ~~June 2021,~~particular, the ~~CPUC issued~~legislation calls for gas utilities to file a NOPR addressing the recovery of costs through the GCA. The CPUC has reopened the GCA NOPR matter and proposed a 2 step process aimed at 1) considering near term process changes to the GCA used by various utilities and 2) a longer term process to evaluate potential performance incentive GCA structures to be filedgas price risk management plan by Nov. 1, ~~2022.~~2023. In ~~step 1, consensus proposed rule amendments to update~~addition, the ~~process and filing requirements~~legislation calls for ~~GCA and related filings have been submitted to~~ the CPUC ~~for consideration.~~to adopt rules by Jan. 1, 2025 to establish fuel cost mechanisms to align the financial incentives of a utility with the interests of the utility’s customers.

~~Natural Gas Planning NOPR~~ — In October 2021, the CPUC issued a NOPR to implement recent state legislation requiring natural gas utilities to develop clean heat plans as a means to meet state greenhouse gas emission reduction targets, as well as updated demand-side management criteria. Additionally, the proposed rules included new comprehensive natural gas infrastructure planning requirements and related CPCN application procedures, changes in natural gas line extension policy, and details on emission accounting related to clean heat plans. The CPUC staff will provide proposed rules in the fourth quarter of 2022.

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Other

Supply Chain

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. Manufacturing processes have experienced disruptions related to scarcity of certain raw materials and interruptions in production and shipping. ~~For example, availability of certain types of transformers has been significantly impacted and in some cases may result in delays in new customer connections as we work to address the shortage.~~ These disruptions have been further exacerbated by inflationary pressures, labor shortages and the impact of international conflicts/issues. PSCo continues to monitor the situation as it remains fluid and seeks to mitigate the impacts by securing alternative suppliers, modifying design standards, and adjusting the timing of work.

~~Advanced Metering Infrastructure Implementation~~Electric Meters and Transformers

Supply chain issues associated with semi-conductors have delayed the availability of advanced infrastructure ~~electric~~ meters, which ~~has~~ led to a reduced number of meters deployed in 2022. ~~Impacts to~~While there have been improvements in the 2023 deployment ~~schedule are currently being evaluated.~~plan, the supply chain challenges persist. As a result of delays, PSCo projects impacts to deployment schedules into 2025.

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

Solar Resources

In ~~April 2022,~~August 2023, the U.S. Department of Commerce ~~initiated an~~completed its anti-circumvention investigation and concluded that ~~would subject~~ CSPV solar panels and cells imported from Malaysia, Vietnam, Thailand, and Cambodia ~~with potential~~would be subject to incremental tariffs ranging from 50% to 250%. These countries account for more than 80% of CSPV panel imports.

~~Since that time, an~~

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An interim stay on tariffs ~~has been issued~~remains in effect until June 2024 and many significant solar projects have resumed with modified costs and projected in-service dates, including certain PPAs in ~~PSCo which are pending regulatory approval.~~

~~Marshall Wildfire~~

~~In December 2021,~~PSCo. Further policy action, a wildfire ignited in Boulder County, Colorado (the “Marshall Fire”), which burned over 6,000 acres and destroyed or damaged over 1,000 structures. Boulder County authorities are currently investigating the fire and have not yet determined a cause. There were no downed power lineschange in the ~~ignition area, and nothing the Company has seen to this point indicates that our equipment~~interim stay of tariffs, or ~~operations caused the fire.~~

In Colorado, the standard of review governing liability differs from the “inverse condemnation” or strict liability standard utilized in California. In Colorado, courts look to whether electric power companies have operated their system with a heightened duty of care consistent with the practical conduct of its business, and liability does not extend to occurrences that cannot be reasonably anticipated. In addition, PSCo has been operating under ~~a commission approved wildfire mitigation plan and carries wildfire liability insurance.~~

In March 2022, a class action suit was filed in Boulder County pertaining to the Marshall Fire. In the remote event PSCo was found liable related to this litigation and were required to pay damages, such amounts could exceed our insurance coverage and have a material adverse effectother restrictions on ~~our financial condition, results of operations or cash flows. In June 2022, Plaintiffs served the class action lawsuit. In July 2022, PSCo filed a Motion to Dismiss.~~

~~Comanche Unit 3 Outage~~

~~In late January 2022, PSCo experienced an outage at the Comanche Unit 3 coal plant.~~The plant returned to service in June 2022. PSCo will not seek recovery of the $10 million of incremental replacement power costs incurred during the outage, which reflects a true-up to final incurred costs in the third quarter of 2022.

~~Inflation Reduction Act —~~ ~~In August 2022, the IRA was signed into law.~~

~~Key provisions impacting PSCo include:~~

•~~Extends current PTC and ITC for renewable technologies~~solar imports (e.g., ~~wind and solar).~~

•~~Restores full value of the PTC and ITC for qualifying facilities placed in-service after 2021.~~

•~~Creates a PTC for solar, clean hydrogen and nuclear.~~

•~~Establishes an ITC for energy storage, microgrids, interconnection facilities, etc.~~

•~~Allows companies to monetize or sell credits to unrelated parties.~~

PSCo anticipates the IRA will drive significant customer savings for both new and existing Company owned renewable projects, assuming appropriate regulatory mechanisms and development of a market for the sale of tax credits. The IRA is expected to allow PSCo to monetize tax credits more efficiently with the incremental benefits passed through to customers.

~~In addition, the IRA created a new corporate AMT. PSCo does not anticipate AMT having a material cash impact based on current estimates and our interpretation of AMT application.~~

~~Winter Storm Uri~~

~~In February 2021, the United States experienced Winter Storm Uri. Extreme cold temperatures impacted certain operational assets~~ as well as the availability of renewable generation. The cold weather also affected the country’s supply and demand for natural gas. These factors contributed to extremely high market prices for natural gas and electricity. As a result of implementation of the ~~extremely high market prices, PSCo incurred net natural gas, fuel~~Uyghur Forced Labor Protection Act) or disruptions in solar imports from key suppliers could impact project timelines and ~~purchased energy costs of approximately $610 million (largely deferred as regulatory assets).~~

In May 2021, PSCo filed a request with the CPUC to recover $263 million in weather-related electric costs, $287 million in incremental natural gas costs and $4 million in incremental steam costs over 24 months with no financing charge.

In May 2022, an ALJ recommended full recovery of all costs with no cost disallowances. In July 2022, the CPUC approved a partial settlement providing full recovery of fuel costs with the exception of an $8 million disallowance.costs.

Environmental

~~CERCLA~~Clean Air Act

Power Plant Greenhouse Gas Regulations— In May 2023, the EPA published proposed rules addressing control of CO2 emissions from the power sector. The rule proposed regulations for new natural gas generating units under Clean Air Act Section 111(b) and emission guidelines for existing coal and certain natural gas generation under Clean Air Act Section 111(d). The proposed rules create subcategories of coal units based on planned retirement date and subcategories of natural gas combustion turbines and combined cycle units based on utilization. The CO2 control requirements vary by subcategory. Until final rules are issued, it is not certain what the impact will be on PSCo. PSCo believes that the cost of these initiatives or replacement generation would be recoverable through rates based on prior state commission practices.

Coal Ash Regulation

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

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

Emerging Contaminants of Concern

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

In September 2022, the EPA proposed to designate two types of PFAS as “hazardous substances” under the ~~CERCLA, specifically perfluorooctanoic acid and perfluorooctanesulfonic acid. This~~CERCLA.

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

PSCo provided comments related to both efforts described above through its regulatory coalitions. Final rules are expected in 2024. Costs are uncertain until a final rule is published.

The proposed rules could result in new obligations for investigation and ~~cleanup wherever PFAS are found~~cleanup. PSCo is monitoring changes to ~~be present.~~state laws addressing PFAS. The impact of these proposed regulations is uncertain.

Effluent Limitation Guidelines

In March 2023, the EPA released a proposed rule under the Clean Water Act, setting forth proposed Effluent Limitations Guidelines and Standards for steam generating coal plants. This proposed rule establishes more stringent wastewater discharge standards for bottom ash transport water, flue-gas desulfurization wastewater, and combustion residuals leachate from steam electric power plants, particularly coal-fired power plants. Comments to the proposed ~~regulation may have~~regulations were submitted on ~~electric and gas utilities~~May 30, 2023. The impact of these proposed regulations is ~~currently uncertain.~~

uncertain until a final rule is published.

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ITEM 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the CEO and CFO, allowing timely decisions regarding required disclosure.

As of Sept. 30, ~~2022,~~2023, 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 procedures, the CEO and CFO have concluded that PSCo’s disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

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

PART II — OTHER INFORMATION


ITEM 1 — LEGAL PROCEEDINGS

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

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. Legal 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

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, ~~2021,~~2022, which is incorporated herein by reference. There have been no material changes from the risk factors previously disclosed in the Form 10-K.


ITEM 5—OTHER INFORMATION

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


ITEM 6 — EXHIBITS

* Indicates incorporation by reference


Exhibit Number	Description	Report or Registration Statement	Exhibit Reference
3.01*	Amended and Restated Articles of Incorporation, dated July 15, 1998	PSCo Form 10-Q for the quarter ended Sept. 30, 2017	3.01
3.02*	Amended and Restated Bylaws of PSCo, dated Jan. 25, 2019	PSCo Form 10-K for the year ended Dec. 31, 2018	3.02
~~10.~~01*	Fourth Amended and Restated Credit Agreement, dated as of September 19, 2022, among Public Service Company of Colorado, as Borrower, the several lenders from time to time parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and Barclays Bank PLC, as Syndication Agents, and Citibank, N.A., MUFG Bank, Ltd. and Wells Fargo Bank, National Association, as Documentation Agents	~~Xcel Energy Inc. Form 8-K dated September 19, 2022~~	~~99.03~~
31.01	Principal Executive Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
31.02	Principal Financial Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
32.01	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL ~~document.~~document
101.SCH	Inline XBRL Schema
101.CAL	Inline XBRL Calculation
101.DEF	Inline XBRL Definition
101.LAB	Inline XBRL Label
101.PRE	Inline XBRL Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

2021

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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

10/27/~~2022~~23	By:	/s/ BRIAN J. VAN ABEL
		Brian J. Van Abel
		Executive Vice President, Chief Financial Officer
		(~~Duly Authorized~~Principal Accounting Officer and Principal Financial Officer)

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