| Fair Value of Financial Assets and Liabilities | Fair Value of Financial Assets and Liabilities Fair Value Measurements The accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires certain 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. The three levels in the hierarchy are as follows: Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the measurement date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices. Level 2 — Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reporting date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs. Level 3 — Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those valued with models requiring significant management judgment or estimation. Specific valuation methods include the following: Cash equivalents — The fair values of cash equivalents are generally based on cost plus accrued interest; money market funds are measured using quoted prices. Investments in equity securities and other funds — Equity securities are valued using quoted prices in active markets. The fair values for commingled funds, international equity funds, private equity investments and real estate investments are measured using a NAV methodology, which takes into consideration the value of underlying fund investments, as well as the other accrued assets and liabilities of a fund, in order to determine a per-share market value. The investments in commingled funds and international equity funds may be redeemed for NAV with proper notice. Proper notice varies by fund and can range from daily with one or two days notice to annually with 90 days notice. Private equity investments require approval of the fund for any unscheduled redemption, and such redemptions may be approved or denied by the fund at its sole discretion. Unscheduled distributions from real estate investments may be redeemed with proper notice, which is typically quarterly with 45 - 90 days notice; however, withdrawals from real estate investments may be delayed or discounted as a result of fund illiquidity. Investments in debt securities — Fair values for debt securities are determined by a third party pricing service using recent trades and observable spreads from benchmark interest rates for similar securities. Interest rate derivatives — The fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts. Commodity derivatives — The methods used to measure the fair value of commodity derivative forwards and options utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations, and are generally assigned a Level 2. When contractual settlements extend to periods beyond those readily observable on active exchanges or quoted by brokers, the significance of the use of less observable forecasts of long-term forward prices and volatilities on a valuation is evaluated, and may result in Level 3 classification. Electric commodity derivatives held by NSP-Minnesota and SPS include transmission congestion instruments, referred to as financial transmission rights (FTRs). FTRs purchased from a RTO are financial instruments that entitle or obligate the holder to monthly revenues or charges based on transmission congestion across a given transmission path. The value of an FTR is derived from, and designed to offset, the cost of energy congestion, which is caused by transmission load and transmission constraints. Congestion is also influenced by the operating schedules of power plants and the consumption of electricity. Unplanned plant outages, scheduled plant maintenance, changes in the costs of fuels used in generation, weather and changes in demand for electricity can each impact the operating schedules of the power plants and the value of an FTR. The valuation process for FTRs utilizes complex iterative modeling to predict the impacts of forecasted changes in these drivers of transmission system congestion on the historical pricing of FTR purchases. If forecasted costs of electric transmission congestion increase or decrease for a given FTR path, the value of that particular FTR instrument will likewise increase or decrease. Given the limited observability of management’s forecasts for several of the inputs to this complex valuation model fair value measurements for FTRs have been assigned a Level 3. Monthly settlements for non-trading FTRs are included in fuel and purchased energy cost recovery mechanisms as applicable in each jurisdiction, and therefore changes in the fair value of the yet to be settled portions of most FTRs are deferred as a regulatory asset or liability. Given this regulatory treatment and the limited magnitude of FTRs relative to the electric utility operations of NSP-Minnesota and SPS, the numerous unobservable quantitative inputs to the complex model used for valuation of FTRs are insignificant to the consolidated financial statements of Xcel Energy. Non-Derivative Instruments Fair Value Measurements Nuclear Decommissioning Fund The Nuclear Regulatory Commission (NRC) requires NSP-Minnesota to maintain a portfolio of investments to fund the costs of decommissioning its nuclear generating plants. Together with all accumulated earnings or losses, the assets of the nuclear decommissioning fund are legally restricted for the purpose of decommissioning the Monticello and PI nuclear generating plants. The fund contains cash equivalents, debt securities, equity securities and other investments – all classified as available-for-sale. NSP-Minnesota plans to reinvest matured securities until decommissioning begins. NSP-Minnesota uses the MPUC approved asset allocation for the escrow and investment targets by asset class for both the escrow and qualified trust. NSP-Minnesota recognizes the costs of funding the decommissioning of its nuclear generating plants over the lives of the plants, assuming rate recovery of all costs. Realized and unrealized gains on fund investments over the life of the fund are deferred as an offset of NSP-Minnesota’s regulatory asset for nuclear decommissioning costs, given the purpose and legal restrictions on the use of nuclear decommissioning fund assets. Consequently, any realized and unrealized gains and losses on securities in the nuclear decommissioning fund, including any other-than-temporary impairments, are deferred as a component of the regulatory asset for nuclear decommissioning. Unrealized gains for the nuclear decommissioning fund were $355.3 million and $328.8 million at Sept. 30, 2016 and Dec. 31, 2015 , respectively, and unrealized losses and amounts recorded as other-than-temporary impairments were $65.8 million and $100.2 million at Sept. 30, 2016 and Dec. 31, 2015 , respectively. The following tables present the cost and fair value of Xcel Energy’s non-derivative instruments with recurring fair value measurements in the nuclear decommissioning fund at Sept. 30, 2016 and Dec. 31, 2015 : Sept. 30, 2016 Fair Value (Thousands of Dollars) Cost Level 1 Level 2 Level 3 Investments Measured at NAV (b) Total Nuclear decommissioning fund (a) Cash equivalents $ 15,055 $ 15,055 $ — $ — $ — $ 15,055 Commingled funds: Non U.S. equities 254,362 — — — 245,481 245,481 Emerging market debt funds 92,472 — — — 101,387 101,387 Commodity funds 99,771 — — — 82,139 82,139 Private equity investments 130,848 — — — 178,768 178,768 Real estate 121,271 — — — 174,552 174,552 Other commingled funds 151,048 — — — 159,230 159,230 Debt securities: Government securities 34,853 — 35,723 — — 35,723 U.S. corporate bonds 95,828 — 93,981 — — 93,981 International corporate bonds 19,877 — 19,860 — — 19,860 Municipal bonds 13,906 — 14,638 — — 14,638 Asset-backed securities 2,847 — 2,948 — — 2,948 Mortgage-backed securities 10,118 — 10,582 — — 10,582 Equity securities: U.S. equities 270,137 455,035 — — — 455,035 Non U.S. equities 213,291 225,782 — — — 225,782 Total $ 1,525,684 $ 695,872 $ 177,732 $ — $ 941,557 $ 1,815,161 (a) Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $134.5 million of equity investments in unconsolidated subsidiaries and $98.8 million of rabbi trust assets and miscellaneous investments. (b) Based on the requirements of ASU 2015-07, investments measured at fair value using a NAV methodology have not been classified in the fair value hierarchy. See Note 2 for further information on the adoption of ASU 2015-07. Dec. 31, 2015 Fair Value (Thousands of Dollars) Cost Level 1 Level 2 Level 3 Investments Measured at NAV (b) Total Nuclear decommissioning fund (a) Cash equivalents $ 27,484 $ 27,484 $ — $ — $ — $ 27,484 Commingled funds: Non U.S. equities 259,114 — — — 231,122 231,122 Emerging market debt funds 88,987 — — — 88,467 88,467 Commodity funds 99,771 — — — 77,338 77,338 Private equity investments 105,965 — — — 157,528 157,528 Real estate 115,019 — — — 165,190 165,190 Other commingled funds 150,877 — — — 164,389 164,389 Debt securities: Government securities 24,444 — 21,356 — — 21,356 U.S. corporate bonds 73,061 — 65,276 — — 65,276 International corporate bonds 13,726 — 12,801 — — 12,801 Municipal bonds 49,255 — 51,589 — — 51,589 Asset-backed securities 2,837 — 2,830 — — 2,830 Mortgage-backed securities 11,444 — 11,621 — — 11,621 Equity securities: U.S. equities 273,106 432,495 — — — 432,495 Non U.S. equities 200,509 214,664 — — — 214,664 Total $ 1,495,599 $ 674,643 $ 165,473 $ — $ 884,034 $ 1,724,150 (a) Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $130.0 million of equity investments in unconsolidated subsidiaries and $48.9 million of miscellaneous investments. (b) Based on the requirements of ASU 2015-07, investments measured at fair value using a NAV methodology have not been classified in the fair value hierarchy. See Note 2 for further information on the adoption of ASU 2015-07. For the nine months ended Sept. 30, 2016 and 2015 there were no Level 3 nuclear decommissioning fund investments and no transfers of amounts between levels. The following table summarizes the final contractual maturity dates of the debt securities in the nuclear decommissioning fund, by asset class, at Sept. 30, 2016 : Final Contractual Maturity (Thousands of Dollars) Due in 1 Year or Less Due in 1 to 5 Years Due in 5 to 10 Years Due after 10 Years Total Government securities $ — $ 10,583 $ 971 $ 24,169 $ 35,723 U.S. corporate bonds 257 28,245 59,451 6,028 93,981 International corporate bonds — 5,043 11,606 3,211 19,860 Municipal bonds — 210 5,773 8,655 14,638 Asset-backed securities — — 2,948 — 2,948 Mortgage-backed securities — — — 10,582 10,582 Debt securities $ 257 $ 44,081 $ 80,749 $ 52,645 $ 177,732 Rabbi Trusts In June 2016, Xcel Energy established rabbi trusts to provide funding for future distributions of its supplemental executive retirement plan and nonqualified pension plans. The following table presents the cost and fair value of the assets held in rabbi trusts at Sept. 30, 2016: Sept. 30, 2016 Fair Value (Thousands of Dollars) Cost Level 1 Level 2 Level 3 Total Rabbi Trusts (a) Cash equivalents $ 47,762 $ 47,762 $ — $ — $ 47,762 Mutual funds 1,594 1,867 — — 1,867 Total $ 49,356 $ 49,629 $ — $ — $ 49,629 (a) Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet. An immaterial amount of mutual funds were held in rabbi trusts at Dec. 31, 2015. Derivative Instruments Fair Value Measurements Xcel Energy enters into derivative instruments, including forward contracts, futures, swaps and options, for trading purposes and to manage risk in connection with changes in interest rates, utility commodity prices and vehicle fuel prices. Interest Rate Derivatives — Xcel Energy enters into various instruments that effectively fix the interest payments on certain floating rate debt obligations or effectively fix the yield or price on a specified benchmark interest rate for an anticipated debt issuance for a specific period. These derivative instruments are generally designated as cash flow hedges for accounting purposes. At Sept. 30, 2016 , accumulated other comprehensive losses related to interest rate derivatives included $3.4 million of net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings, including forecasted amounts for unsettled hedges, as applicable. Wholesale and Commodity Trading Risk — Xcel Energy Inc.’s utility subsidiaries conduct various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy and energy-related instruments. Xcel Energy’s risk management policy allows management to conduct these activities within guidelines and limitations as approved by its risk management committee. Commodity Derivatives — Xcel Energy enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric and natural gas operations, as well as for trading purposes. This could include the purchase or sale of energy or energy-related products, natural gas to generate electric energy, natural gas for resale, FTRs, vehicle fuel and weather derivatives. At Sept. 30, 2016 , Xcel Energy had various vehicle fuel contracts designated as cash flow hedges extending through December 2016. Xcel Energy also enters into derivative instruments that mitigate commodity price risk on behalf of electric and natural gas customers but are not designated as qualifying hedging transactions. Changes in the fair value of non-trading commodity derivative instruments are recorded in other comprehensive income or deferred as a regulatory asset or liability. The classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms. Xcel Energy recorded immaterial amounts to income related to the ineffectiveness of cash flow hedges for the three and nine months ended Sept. 30, 2016 and 2015 . At Sept. 30, 2016 , net losses related to commodity derivative cash flow hedges recorded as a component of accumulated other comprehensive losses included immaterial net losses expected to be reclassified into earnings during the next 12 months as the hedged transactions occur. Additionally, Xcel Energy 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. The following table details the gross notional amounts of commodity forwards, options and FTRs at Sept. 30, 2016 and Dec. 31, 2015 : (Amounts in Thousands) (a)(b) Sept. 30, 2016 Dec. 31, 2015 Megawatt hours of electricity 64,040 50,487 Million British thermal units of natural gas 116,144 20,874 Gallons of vehicle fuel 35 141 (a) Amounts are not reflective of net positions in the underlying commodities. (b) Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise. The following tables detail the impact of derivative activity during the three and nine months ended Sept. 30, 2016 and 2015, on accumulated other comprehensive loss, regulatory assets and liabilities, and income: Three Months Ended Sept. 30, 2016 Pre-Tax Fair Value Gains (Losses) Recognized During the Period in: Pre-Tax Losses Reclassified into Income During the Period from: Pre-Tax Gains (Losses) Recognized (Thousands of Dollars) Accumulated Other Regulatory Accumulated Other Regulatory Assets and (Liabilities) Derivatives designated as cash flow hedges Interest rate $ — $ — $ 1,502 (a) $ — $ — Vehicle fuel and other commodity (6 ) — 46 (b) — — Total $ (6 ) $ — $ 1,548 $ — $ — Other derivative instruments Commodity trading $ — $ — $ — $ — $ 1,779 (c) Electric commodity — 15,497 — 2,491 (d) — Natural gas commodity — (5,737 ) — — (6 ) (e) Total $ — $ 9,760 $ — $ 2,491 $ 1,773 Nine Months Ended Sept. 30, 2016 Pre-Tax Fair Value Gains (Losses) Recognized During the Period in: Pre-Tax Losses Reclassified into Income During the Period from: Pre-Tax Gains (Losses) Recognized (Thousands of Dollars) Accumulated Other Regulatory Accumulated Other Regulatory Assets and (Liabilities) Derivatives designated as cash flow hedges Interest rate $ — $ — $ 4,470 (a) $ — $ — Vehicle fuel and other commodity 7 — 150 (b) — — Total $ 7 $ — $ 4,620 $ — $ — Other derivative instruments Commodity trading $ — $ — $ — $ — $ 3,269 (c) Electric commodity — 14,528 — 30,024 (d) — Natural gas commodity — (2,376 ) — 11,666 (e) (5,005 ) (e) Total $ — $ 12,152 $ — $ 41,690 $ (1,736 ) Three Months Ended Sept. 30, 2015 Pre-Tax Fair Value Losses Recognized During the Period in: Pre-Tax Losses Reclassified into Income During the Period from: Pre-Tax Losses Recognized (Thousands of Dollars) Accumulated Other Regulatory Accumulated Other Regulatory Assets and (Liabilities) Derivatives designated as cash flow hedges Interest rate $ — $ — $ 1,118 (a) $ — $ — Vehicle fuel and other commodity (70 ) — 34 (b) — — Total $ (70 ) $ — $ 1,152 $ — $ — Other derivative instruments Commodity trading $ — $ — $ — $ — $ (3,460 ) (c) Electric commodity — (2,403 ) — 2,860 (d) — Natural gas commodity — (2,978 ) — — (405 ) (e) Total $ — $ (5,381 ) $ — $ 2,860 $ (3,865 ) Nine Months Ended Sept. 30, 2015 Pre-Tax Fair Value Losses Recognized During the Period in: Pre-Tax Losses Reclassified into Income During the Period from: Pre-Tax Losses Recognized (Thousands of Dollars) Accumulated Other Regulatory Accumulated Other Regulatory Derivatives designated as cash flow hedges Interest rate $ — $ — $ 3,013 (a) $ — $ — Vehicle fuel and other commodity (59 ) — 88 (b) — — Total $ (59 ) $ — $ 3,101 $ — $ — Other derivative instruments Commodity trading $ — $ — $ — $ — $ (5,896 ) (c) Electric commodity — (16,611 ) — 16,020 (d) — Natural gas commodity — (3,366 ) — 8,685 (e) (9,455 ) (e) Total $ — $ (19,977 ) $ — $ 24,705 $ (15,351 ) (a) Amounts are recorded to interest charges. (b) Amounts are recorded to O&M expenses. (c) Amounts are recorded to electric operating revenues. Portions of these gains and losses are subject to sharing with electric customers through margin-sharing mechanisms and deducted from gross revenue, as appropriate. (d) Amounts are recorded to electric fuel and purchased power. These derivative settlement gain and loss amounts are shared with electric customers through fuel and purchased energy cost-recovery mechanisms, and reclassified out of income as regulatory assets or liabilities, as appropriate. (e) Amounts for the three and nine months ended Sept. 30, 2016 included no settlement gains or losses on derivatives entered to mitigate natural gas price risk for electric generation, recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. Amounts for the three and nine months ended Sept. 30, 2015 included $0.4 million and $0.5 million , respectively, of settlement losses on derivatives entered to mitigate natural gas price risk for electric generation, recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. The remaining derivative settlement gains and losses for the three and nine months ended Sept. 30, 2016 and 2015 relate to natural gas operations and are recorded to cost of natural gas sold and transported. These gains and losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset or liability, as appropriate. Xcel Energy had no derivative instruments designated as fair value hedges during the three and nine months ended Sept. 30, 2016 and 2015 . Therefore, no gains or losses from fair value hedges or related hedged transactions were recognized for these periods. Consideration of Credit Risk and Concentrations — Xcel Energy 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. Given this assessment, as well as an assessment of the impact of Xcel Energy’s own credit risk when determining the fair value of derivative liabilities, the impact of considering credit risk was immaterial to the fair value of unsettled commodity derivatives presented in the consolidated balance sheets. Xcel Energy Inc. and its subsidiaries employ additional credit risk control mechanisms, such as letters of credit, parental guarantees, standardized master netting agreements and termination provisions that allow for offsetting of positive and negative exposures. Credit exposure is monitored and, when necessary, the activity with a specific counterparty is limited until credit enhancement is provided. Xcel Energy’s utility subsidiaries’ most significant concentrations of credit risk are contracts with counterparties to their wholesale, trading and non-trading commodity activities. At Sept. 30, 2016 , one of Xcel Energy’s 10 most significant counterparties for these activities, comprising $14.1 million or 6 percent of this credit exposure, had investment grade credit ratings from Standard & Poor’s Ratings Services, Moody’s Investor Services or Fitch Ratings. Nine of the 10 most significant counterparties, comprising $73.4 million or 33 percent of this credit exposure, were not rated by these external agencies, but based on Xcel Energy’s internal analysis, had credit quality consistent with investment grade. All ten of these significant counterparties are RTOs, municipal or cooperative electric entities or other utilities. Credit Related Contingent Features — Contract provisions for derivative instruments that the utility subsidiaries enter, including those recorded to the consolidated balance sheet at fair value, as well as those accounted for as normal purchase-normal sale contracts and therefore not reflected on the balance sheet, may require the posting of collateral or settlement of the contracts for various reasons, including if the applicable utility subsidiary is unable to maintain its credit ratings. At Sept. 30, 2016 and Dec. 31, 2015, there were no derivative instruments in a liability position that would have required the posting of collateral or settlement of applicable outstanding contracts if the credit ratings of Xcel Energy Inc.’s utility subsidiaries were downgraded below investment grade. Certain derivative instruments are also subject to contract provisions that contain adequate assurance clauses. These provisions allow counterparties to seek performance assurance, including cash collateral, in the event that a utility subsidiary’s ability to fulfill its contractual obligations is reasonably expected to be impaired. Xcel Energy had no collateral posted related to adequate assurance clauses in derivative contracts as of Sept. 30, 2016 and Dec. 31, 2015 . Recurring Fair Value Measurements — The following table presents for each of the fair value hierarchy levels, Xcel Energy’s derivative assets and liabilities measured at fair value on a recurring basis at Sept. 30, 2016 : Sept. 30, 2016 Fair Value Fair Value Total Counterparty Netting (b) Total (Thousands of Dollars) Level 1 Level 2 Level 3 Current derivative assets Other derivative instruments: Commodity trading $ 3,846 $ 11,239 $ — $ 15,085 $ (9,440 ) $ 5,645 Electric commodity — — 27,775 27,775 (3,180 ) 24,595 Natural gas commodity — 6,034 — 6,034 (15 ) 6,019 Total current derivative assets $ 3,846 $ 17,273 $ 27,775 $ 48,894 $ (12,635 ) 36,259 PPAs (a) 6,601 Current derivative instruments $ 42,860 Noncurrent derivative assets Other derivative instruments: Commodity trading $ 501 $ 32,538 $ — $ 33,039 $ (8,306 ) $ 24,733 Natural gas commodity — 681 — 681 — 681 Total noncurrent derivative assets $ 501 $ 33,219 $ — $ 33,720 $ (8,306 ) 25,414 PPAs (a) 25,955 Noncurrent derivative instruments $ 51,369 Sept. 30, 2016 Fair Value Fair Value Total Counterparty Netting (b) Total (Thousands of Dollars) Level 1 Level 2 Level 3 Current derivative liabilities Derivatives designated as cash flow hedges: Vehicle fuel and other commodity $ — $ 41 $ — $ 41 $ — $ 41 Other derivative instruments: Commodity trading 3,921 8,000 — 11,921 (9,527 ) 2,394 Electric commodity — — 3,180 3,180 (3,180 ) — Natural gas commodity — 15 — 15 (15 ) — Total current derivative liabilities $ 3,921 $ 8,056 $ 3,180 $ 15,157 $ (12,722 ) 2,435 PPAs (a) 22,766 Current derivative instruments $ 25,201 Noncurrent derivative liabilities Other derivative instruments: Commodity trading $ 538 $ 24,114 $ — $ 24,652 $ (11,005 ) $ 13,647 Total noncurrent derivative liabilities $ 538 $ 24,114 $ — $ 24,652 $ (11,005 ) 13,647 PPAs (a) 141,003 Noncurrent derivative instruments $ 154,650 (a) In 2003, as a result of implementing new guidance on the normal purchase exception for derivative accounting, Xcel Energy began recording several long-term PPAs at fair value due to accounting requirements related to underlying price adjustments. As these purchases are recovered through normal regulatory recovery mechanisms in the respective jurisdictions, the changes in fair value for these contracts were offset by regulatory assets and liabilities. During 2006, Xcel Energy qualified these contracts under the normal purchase exception. Based on this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities. (b) Xcel Energy nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at Sept. 30, 2016 . At Sept. 30, 2016 , derivative assets and liabilities include no obligations to return cash collateral and the rights to reclaim cash collateral of $2.8 million . The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements. The following table presents for each of the fair value hierarchy levels, Xcel Energy’s derivative assets and liabilities measured at fair value on a recurring basis at Dec. 31, 2015 : Dec. 31, 2015 Fair Value Fair Value Total Counterparty Netting (b) Total (Thousands of Dollars) Level 1 Level 2 Level 3 Current derivative assets Other derivative instruments: Commodity trading $ 225 $ 10,620 $ 1,250 $ 12,095 $ (5,865 ) $ 6,230 Electric commodity — — 21,421 21,421 (4,088 ) 17,333 Natural gas commodity — 496 — 496 (303 ) 193 Total current derivative assets $ 225 $ 11,116 $ 22,671 $ 34,012 $ (10,256 ) 23,756 PPAs (a) 10,086 Current derivative instruments $ 33,842 Noncurrent derivative assets Other derivative instruments: Commodity trading $ — $ 27,416 $ — $ 27,416 $ (6,555 ) $ 20,861 Total noncurrent derivative assets $ — $ 27,416 $ — $ 27,416 $ (6,555 ) 20,861 PPAs (a) 30,222 Noncurrent derivative instruments $ 51,083 Dec. 31, 2015 Fair Value Fair Value Total Counterparty Netting (b) Total (Thousands of Dollars) Level 1 Level 2 Level 3 Current derivative liabilities Derivatives designated as cash flow hedges: Vehicle fuel and other commodity $ — $ 205 $ — $ 205 $ — $ 205 Other derivative instruments: Commodity trading 152 7,866 555 8,573 (6,904 ) 1,669 Electric commodity — — 4,088 4,088 (4,088 ) — Natural gas commodity — 5,407 — 5,407 (303 ) 5,104 Total current derivative liabilities $ 152 $ 13,478 $ 4,643 $ 18,273 $ (11,295 ) 6,978 PPAs (a) 22,861 Current derivative instruments $ 29,839 Noncurrent derivative liabilities Other derivative instruments: Commodity trading $ — $ 19,898 $ — $ 19,898 $ (9,780 ) $ 10,118 Total noncurrent derivative liabilities $ — $ 19,898 $ — $ 19,898 $ (9,780 ) 10,118 PPAs (a) 158,193 Noncurrent derivative instruments $ 168,311 (a) In 2003, as a result of implementing new guidance on the normal purchase exception for derivative accounting, Xcel Energy began recording several long-term PPAs at fair value due to accounting requirements related to underlying price adjustments. As these purchases are recovered through normal regulatory recovery mechanisms in the respective jurisdictions, the changes in fair value for these contracts were offset by regulatory assets and liabilities. During 2006, Xcel Energy qualified these contracts under the normal purchase exception. Based on this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities. (b) Xcel Energy nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at Dec. 31, 2015 . At Dec. 31, 2015 , derivative assets and liabilities include no obligations to return cash collateral and rights to reclaim cash collateral of $4.3 million . The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements. The following table presents the changes in Level 3 commodity derivatives for the three and nine months ended Sept. 30, 2016 and 2015 : Three Months Ended Sept. 30 (Thousands of Dollars) 2016 2015 Balance at July 1 $ 24,517 $ 46,826 Purchases 274 486 Settlements (33,982 ) (20,216 ) Net transactions recorded during the period: Gains recognized in earnings (a) 9 121 Gains recognized as regulatory assets and liabilities 33,777 3,966 Balance at Sept. 30 $ 24,595 $ 31,183 Nine Months Ended Sept. 30 (Thousands of Dollars) 2016 2015 Balance at Jan. 1 $ 18,028 $ 56,155 Purchases 33,296 63,724 Settlements (60,707 ) (57,462 ) Net transactions recorded during the period: (Losses) gains recognized in earnings (a) (33 ) 1,401 Gains (losses) recognized as regulatory assets and liabilities 34,011 (32,635 ) Balance at Sept. 30 $ 24,595 $ 31,183 (a) These amounts relate to commodity derivatives held at the end of the period. Xcel Energy recognizes transfers between levels as of the beginning of each period. There were no transfers of amounts between levels for derivative instruments for the three and nine months ended Sept. 30, 2016 and 2015. Fair Value of Long-Term Debt As of Sept. 30, 2016 and Dec. 31, 2015 , other financial instruments for which the carrying amount did not equal fair value were as follows: Sept. 30, 2016 Dec. 31, 2015 (Thousands of Dollars) Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, including current portion (a) $ 14,112,150 $ 16,127,060 $ 13,055,901 $ 14,094,744 (a) Amounts reflect the classification of debt issuance costs as a deduction from the carrying amount of the related debt. See Note 2, Accounting Pronouncements for more information on the adoption of ASU 2015-03. The fair value of Xcel Energy’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. The fair value estimates are based on information available to management as of Sept. 30, 2016 and Dec. 31, 2015 , and given the observability of the inputs to these estimates, the fair values presented for long-term debt have been assigned a Level 2. |
