nspm-20240331

Definitions of Abbreviations


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

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







Other
ALJ			Administrative Law Judge

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


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


Measurements
MW			Megawatts


Forward-Looking Statements

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


	Three Months Ended March 31
	2024		2023
Operating activities
Net income	$	211	$	139
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	270		264
Nuclear fuel amortization	20		29
Deferred income taxes	112		(30)
Allowance for equity funds used during construction	(11)		(8)
Provision for bad debts	6		8
Changes in operating assets and liabilities:
Accounts receivable	16		(18)
Accrued unbilled revenues	13		112
Inventories	15		68
Other current assets	(74)		(29)
Accounts payable	(21)		(133)
Net regulatory assets and liabilities	(7)		157
Other current liabilities	(170)		44
Pension and other employee benefit obligations	(42)		(22)
Other, net	12		6
Net cash provided by operating activities	350		587

Investing activities
Capital/construction expenditures	(612)		(532)
Purchase of investment securities	(189)		(236)
Proceeds from the sale of investment securities	179		228
Investments in utility money pool arrangement	(317)		(5)
Repayments from utility money pool arrangement	129		—
Other, net	(2)		(2)
Net cash used in investing activities	(812)		(547)

Financing activities
Repayments of short-term borrowings, net	(165)		(87)
Borrowings under utility money pool arrangement	100		—
Repayments under utility money pool arrangement	(100)		—
Proceeds from issuance of long-term debt	688		—

Capital contributions from parent	347		151
Dividends paid to parent	(121)		(122)

Net cash provided by (used in) financing activities	749		(58)

Net change in cash, cash equivalents and restricted cash	287		(18)
Cash, cash equivalents and restricted cash at beginning of period	34		65
Cash, cash equivalents and restricted cash at end of period	$	321	$	47

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(69)	$	(69)
Cash received from (paid for) income taxes, net; includes proceeds from tax credit transfers	76		(5)

Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	149	$	170
Inventory transfers to property, plant and equipment	9		9
Operating lease right-of-use assets	—		29
Allowance for equity funds used during construction	11		8


	March 31, 2024		Dec. 31, 2023
Assets
Current assets
Cash and cash equivalents	$	321	$	34
Accounts receivable, net	471		490
Accounts receivable from affiliates	12		15
Investments in money pool arrangements	245		57
Accrued unbilled revenues	277		290
Inventories	332		356
Regulatory assets	354		250
Derivative instruments	34		50

Prepayments and other	161		87
Total current assets	2,207		1,629

Property, plant and equipment, net	19,097		18,757

Other assets
Nuclear decommissioning fund and other investments	3,403		3,262
Regulatory assets	817		837
Derivative instruments	71		61
Operating lease right-of-use assets	417		439
Other	11		16
Total other assets	4,719		4,615
Total assets	$	26,023	$	25,001

Liabilities and Equity
Current liabilities

Short-term debt	—		165
Accounts payable	531		579
Accounts payable to affiliates	61		89
Regulatory liabilities	326		300
Taxes accrued	274		223
Accrued interest	90		79
Dividends payable to parent	101		121
Derivative instruments	37		44
Operating lease liabilities	93		91
Other	149		351
Total current liabilities	1,662		2,042

Deferred credits and other liabilities
Deferred income taxes	2,147		1,992
Deferred investment tax credits	14		14
Regulatory liabilities	2,225		2,097
Asset retirement obligations	2,689		2,658
Derivative instruments	90		86
Pension and employee benefit obligations	128		168
Operating lease liabilities	347		372
Other	28		35
Total deferred credits and other liabilities	7,668		7,422

Commitments and contingencies
Capitalization
Long-term debt	8,019		7,330
Common stock — 5,000,000 shares authorized of $0.01 par value; 1,000,000 shares outstanding at March 31, 2024 and Dec. 31, 2023, respectively	—		—
Additional paid in capital	6,031		5,686
Retained earnings	2,651		2,541
Accumulated other comprehensive loss	(8)		(20)
Total common stockholder's equity	8,674		8,207
Total liabilities and equity	$	26,023	$	25,001

NSP-MINNESOTA AND SUBSIDIARIES

Notes to Consolidated Financial Statements (UNAUDITED)

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

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

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


1. Summary of Significant Accounting Policies

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


2. Accounting Pronouncements

Recently Issued

Segment Reporting — In November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, which extends the existing requirements for annual disclosures to quarterly periods, and requires that both annual and quarterly disclosures present segment expenses using line items consistent with information regularly provided to the chief operating decision maker. The ASU is effective for annual periods beginning after Dec. 15, 2023 and quarterly periods beginning after Dec. 15, 2024, and Xcel Energy does not expect implementation of the new disclosure guidance to have a material impact to its consolidated financial statements.

Income Taxes — In December 2023, the FASB issued ASU 2023-09 – Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, with new disclosure requirements including presentation of prescribed line items in the effective tax rate reconciliation and disclosures regarding state and local tax payments. The ASU is effective for annual periods beginning after Dec. 15, 2024, and Xcel Energy does not expect implementation of the new disclosure guidance to have a material impact to its consolidated financial statements.

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


3. Selected Balance Sheet Data


(Millions of Dollars)	March 31, 2024		Dec. 31, 2023
Accounts receivable, net
Accounts receivable	$	516	$	538
Less allowance for bad debts	(45)		(48)
Accounts receivable, net	$	471	$	490


(Millions of Dollars)	March 31, 2024		Dec. 31, 2023
Inventories
Materials and supplies	$	222	$	219
Fuel	104		105
Natural gas	6		32
Total inventories	$	332	$	356


(Millions of Dollars)	March 31, 2024		Dec. 31, 2023
Property, plant and equipment, net
Electric plant	$	21,437	$	21,206
Natural gas plant	2,273		2,256
Common and other property	1,316		1,301
Plant to be retired (a)	589		604
Construction work in progress	1,315		1,085
Total property, plant and equipment	26,930		26,452
Less accumulated depreciation	(8,204)		(8,044)
Nuclear fuel	3,379		3,337
Less accumulated amortization	(3,008)		(2,988)
Property, plant and equipment, net	$	19,097	$	18,757

(a)Amounts include Sherco 1 and 3 and A.S. King. Balance is presented net of accumulated depreciation.


4. Borrowings and Other Financing Instruments

Short-Term Borrowings

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

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

Money pool borrowings:


(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2024			Year Ended Dec. 31, 2023
Borrowing limit	$	250		$	250
Amount outstanding at period end	—			—
Average amount outstanding	11			17
Maximum amount outstanding	100			135
Weighted average interest rate, computed on a daily basis	5.33		%	4.97		%
Weighted average interest rate at period end	N/A			N/A

Commercial Paper — Commercial paper outstanding:


(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2024			Year Ended Dec. 31, 2023
Borrowing limit	$	700		$	700
Amount outstanding at period end	—			165
Average amount outstanding	195			92
Maximum amount outstanding	400			441
Weighted average interest rate, computed on a daily basis	5.49		%	4.99		%
Weighted average interest rate at period end	N/A			5.47

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

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

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

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


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

(a)Expires in September 2027.

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

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. NSP-Minnesota had no direct advances on the credit facility outstanding at March 31, 2024 and Dec. 31, 2023.

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

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

Long-Term Borrowings

During the three months ended March 31, 2024, NSP-Minnesota issued $700 million of 5.40% first mortgage bonds due March 15, 2054.


5. Revenues

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


	Three Months Ended March 31, 2024
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	368	$	138	$	7	$	513
C&I	522		90		—		612
Other	9		—		1		10
Total retail	899		228		8		1,135
Wholesale	75		—		—		75
Transmission	63		—		—		63
Interchange	122		—		—		122
Other	3		17		—		20
Total revenue from contracts with customers	1,162		245		8		1,415
Alternative revenue and other	93		28		—		121
Total revenues	$	1,255	$	273	$	8	$	1,536


	Three Months Ended March 31, 2023
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	358	$	207	$	9	$	574
C&I	543		173		—		716
Other	8		—		1		9
Total retail	909		380		10		1,299
Wholesale	104		—		—		104
Transmission	64		—		—		64
Interchange and other	126		2		—		128

Total revenue from contracts with customers	1,203		382		10		1,595
Alternative revenue and other	53		18		—		71
Total revenues	$	1,256	$	400	$	10	$	1,666


6. Income Taxes

Reconciliation between the statutory rate and ETR:


	Three Months Ended March 31
	2024		2023
Federal statutory rate	21.0	%	21.0	%
State tax (net of federal tax effect)	7.0		7.0
(Decreases) increases:
Wind PTCs (a)	(35.1)		(65.1)
Plant regulatory differences (b)	(5.2)		(6.2)
Other tax credits, net operating loss & tax credit allowances	(1.0)		(1.3)

Other (net)	1.1		1.3
Effective income tax rate	(12.2)	%	(43.3)	%

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

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


7. Fair Value of Financial Assets and Liabilities

Fair Value Measurements

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

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

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

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

Specific valuation methods include:

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

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

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

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

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

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

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

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

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

Non-Derivative Fair Value Measurements

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

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

Unrealized gains for the nuclear decommissioning fund were $1.3 billion and $1.2 billion as of March 31, 2024 and Dec. 31, 2023, and unrealized losses were $34 million and $29 million as of March 31, 2024 and Dec. 31, 2023, respectively.

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


	March 31, 2024
			Fair Value
(Millions of Dollars)	Cost		Level 1		Level 2		Level 3		NAV		Total
Nuclear decommissioning fund (a)
Cash equivalents	$	57	$	57	$	—	$	—	$	—	$	57
Commingled funds	718		—		—		—		1,042		1,042
Debt securities	804		—		781		9		—		790
Equity securities	511		1,457		2		—		—		1,459
Total	$	2,090	$	1,514	$	783	$	9	$	1,042	$	3,348

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


	Dec. 31, 2023
			Fair Value
(Millions of Dollars)	Cost		Level 1		Level 2		Level 3		NAV		Total
Nuclear decommissioning fund (a)
Cash equivalents	$	41	$	41	$	—	$	—	$	—	$	41
Commingled funds	721		—		—		—		1,049		1,049
Debt securities	784		—		771		9		—		780
Equity securities	508		1,339		2		—		—		1,341
Total	$	2,054	$	1,380	$	773	$	9	$	1,049	$	3,211

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

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

Contractual maturity dates of debt securities in the nuclear decommissioning fund as of March 31, 2024:


	Final Contractual Maturity
(Millions of Dollars)	Due in 1 Year or Less		Due in 1 to 5 Years		Due in 5 to 10 Years		Due after 10 Years		Total
Debt securities	$	6	$	276	$	257	$	251	$	790

Derivative Activities and Fair Value Measurements

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

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

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

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

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

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

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

The most significant derivative positions outstanding at March 31, 2024 for this purpose relate to FTR instruments administered by MISO. These instruments are intended to offset the impacts of transmission system congestion.

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

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

Gross notional amounts of commodity forwards, options and FTRs:


(Amounts in Millions) (a)(b)	March 31, 2024	Dec. 31, 2023
Megawatt hours of electricity	24	38
Million British thermal units of natural gas	61	64

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

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

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

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

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

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

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

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

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

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

Changes in Level 3 commodity derivatives:












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

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

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

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

Fair Value of Long-Term Debt

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


	March 31, 2024				Dec. 31, 2023
(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	8,019	$	6,993	$	7,330	$	6,561

Fair value of NSP-Minnesota’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of March 31, 2024 and Dec. 31, 2023, and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.


8. Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost















	Three Months Ended March 31
	2024		2023		2024		2023
(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits
Service cost	$	5	$	5	$	—	$	—
Interest cost (a)	9		9		1		1
Expected return on plan assets (a)	(11)		(11)		—		—

Amortization of net loss (a)	3		3		—		—

Net periodic benefit cost	6		6		1		1
Effects of regulation	3		1		—		—
Net benefit cost recognized for financial reporting	$	9	$	7	$	1	$	1

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

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


9. Commitments and Contingencies

Legal

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

In such cases, there is considerable uncertainty regarding the timing or ultimate resolution, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on NSP-Minnesota’s consolidated financial statements. Legal fees are generally expensed as incurred.

Rate Matters and Other

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

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

In March 2019, the MPUC approved NSP-Minnesota’s settlement refund proposal. Additionally, the MPUC decided to withhold any decision as to NSP-Minnesota’s prudence in connection with the incident at Sherco Unit 3 until after conclusion of an appeal pending between GE and NSP-Minnesota’s insurers. In February 2020, the Minnesota Court of Appeals affirmed the district court’s judgment in favor of GE.

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

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

Environmental

New and changing federal and state environmental mandates can create financial liabilities for NSP-Minnesota, which are normally recovered through the regulated rate process.

Site Remediation

Various federal and state environmental laws impose liability where hazardous substances or other regulated materials have been released to the environment. NSP-Minnesota may sometimes pay all or a portion of the cost to remediate sites where past activities of their predecessors or other parties have caused environmental contamination.

Environmental contingencies could arise from various situations, including sites of former MGPs; and third-party sites, such as landfills, for which NSP-Minnesota is alleged to have sent wastes to that site.

MGP, Landfill and Disposal Sites

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

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

Environmental Requirements — Water and Waste

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

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

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

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

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

Environmental Requirements — Air

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

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

NSP-Minnesota has joined other companies in litigation challenging the EPA’s disapproval of Minnesota’s state implementation plan. Currently, the regulation is under a judicial stay for Minnesota. The regulation may become applicable in the future, depending on the outcome of the litigation.

Leases

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

Components of lease expense:


	Three Months Ended March 31
(Millions of Dollars)	2024		2023
Operating leases
PPA capacity payments	$	23	$	25
Other operating leases (a)	5		4
Total operating lease expense (b)	$	28	$	29

(a)Includes immaterial short-term lease expense for both 2024 and 2023.

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

Commitments under operating leases as of March 31, 2024:


(Millions of Dollars)	PPA Operating Leases		Other Operating Leases		Total Operating Leases
Total minimum obligation	$	377	$	174	$	551
Interest component of obligation	(32)		(79)		(111)
Present value of minimum obligation	$	345	$	95	440
Less current portion					(93)
Noncurrent operating lease liabilities					$	347

Variable Interest Entities

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

NSP-Minnesota evaluated each of these VIEs for possible consolidation, including review of qualitative factors such as the length and terms of the contract, control over O&M, control over dispatch of electricity, historical and estimated future fuel and electricity prices and financing activities. NSP-Minnesota concluded that these entities are not required to be consolidated in its consolidated financial statements because NSP-Minnesota does not have the power to direct the activities that most significantly impact the entities’ economic performance.

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


11. Segment Information

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

NSP-Minnesota has the following reportable segments:

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

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

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

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

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

NSP-Minnesota’s segment information:


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


Total revenues (a)	$	1,255	$	1,256
Net income	145		111
Regulated Natural Gas
Operating revenues (b)	$	273	$	400
Intersegment revenue	1		1
Total revenues	$	274	$	401
Net income	51		30
All Other
Total revenues	$	8	$	10
Net income (loss)	15		(2)
Consolidated Total
Operating revenues (a)(b)	$	1,537	$	1,667
Reconciling eliminations	(1)		(1)
Total operating revenues	$	1,536	$	1,666
Net income	211		139

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

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

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

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

Non-GAAP Financial Measures

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

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


Results of Operations

NSP-Minnesota’s net income was $211 million for the three months ended March 31, 2024 compared with $139 million for the prior year. The change was driven by increased recovery of electric and natural gas infrastructure investments and lower O&M expenses, partially offset by higher interest expenses and depreciation.

Electric Revenue

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


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

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

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

Natural Gas Revenues

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


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

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

Electric fuel and purchased power expenses decreased $46 million for the first quarter of 2024. The decrease is primarily due to decreased volumes and timing of fuel recovery, partially offset by higher commodity prices.

Cost of Natural Gas Sold and Transported — Expenses incurred for the cost of natural gas sold are impacted by market prices and seasonality. These costs are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues and have minimal earnings impact.

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

Non-Fuel Operating Expenses and Other Items

O&M Expenses — O&M expenses decreased $30 million for the first quarter. The decrease was primarily due to decreased labor and benefit costs, gain on the sale of land and lower bad debt expenses.

Depreciation and Amortization — Depreciation and amortization expense increased $6 million for the first quarter as a result of system expansion offset by depreciation life extensions implemented in the Minnesota Electric Rate Case.

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

Public Utility Regulation and Other

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

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

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

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

Pending and Recently Concluded Regulatory Proceedings

2024 Minnesota Natural Gas Rate Case — In November 2023, NSP-Minnesota filed a request with the MPUC for an annual natural gas rate increase of approximately $59 million, or 9.6%. The request is based on a ROE of 10.2%, a 52.5% equity ratio and a 2024 forward test year with rate base of approximately $1.27 billion. In December 2023, the MPUC approved NSP-Minnesota’s request for interim rates, subject to refund, of approximately $51 million (implemented on Jan. 1, 2024).

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

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


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

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

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


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

Procedural schedule:

•Mediation: May 17, 2024 (day subject to availability)

•Rebuttal testimony: May 24, 2024

•Evidentiary hearings: July 10-12, 2024

•ALJ report: October 28, 2024

•MPUC Order Due: March 14, 2025

2024 North Dakota Natural Gas Rate Case — In December 2023, NSP-Minnesota filed a request with the NDPSC seeking an increase in natural gas rates of $8.5 million (9.4%), a 2024 test year, ROE of 10.20%, an equity ratio of 52.5% and rate base of $168 million. In February 2024, the NDPSC approved interim rates of $8 million, effective March 1, 2024.

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

NSP System

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

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

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

•In October 2023, NSP-Minnesota issued an RFP seeking approximately 1,200 MW of wind development assets to replace capacity and reutilize interconnection rights associated with the retiring Sherco coal facilities. The RFP closed in December 2023 and NSP-Minnesota expects to file for approval of recommended projects by mid-2024.

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

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

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

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

•Adds 600 MWs of battery energy storage by 2030.

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

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

Nuclear Power Operations

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

Other

Supply Chain

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

Solar Resources

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

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

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

Emerging Environmental Regulation

Clean Air Act

Power Plant Greenhouse Gas Regulations — In April 2024, the EPA published final rules addressing control of CO2 emissions from the power sector. The rules regulate new natural gas generating units and emission guidelines for existing coal and certain natural gas generation. The 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. NSP-Minnesota continues to evaluate the impact of these rules and believes that the cost of these initiatives or replacement generation would be recoverable through rates based on prior state commission practices.

Coal Ash Regulation

In April 2024, the EPA published final rules to regulate additional areas under the CCR Rule for the first time, including legacy CCR surface impoundments at inactive facilities and previously exempt areas where CCR was placed directly on land at regulated CCR facilities. The rule subjects these areas to groundwater monitoring, corrective action and closure and post-closure care requirements, among other requirements, with several of the deadlines accelerated. NSP-Minnesota believes that the cost of these requirements would be recoverable through rates based on prior state commission practices.

Emerging Contaminants of Concern

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

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

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

In February 2024, the EPA proposed to change the Resource Conservation and Recovery Act by adding nine PFAS to its list of hazardous constituents.

Final rules for all three proposals are expected in 2024 which could result in new obligations. Potential costs are uncertain until final rules are published and/or agency action is taken.

Effluent Limitation Guidelines

In April 2024, the EPA published final rules under the Clean Water Act, setting forth Effluent Limitations Guidelines and Standards for steam generating coal plants. This 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. NSP-Minnesota continues to evaluate the impact of these rules and believes that any costs associated with these requirements would be recoverable through rates based on prior state commission practices.

Nuclear Fuel Supply

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


ITEM 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

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

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

Internal Control Over Financial Reporting

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

PART II — OTHER INFORMATION


ITEM 1 — LEGAL PROCEEDINGS

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

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

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


ITEM 1A — RISK FACTORS

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


ITEM 5 — OTHER INFORMATION

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


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


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	18
Item 4 —	Controls and Procedures	21

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

SIGNATURES		22


	Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholder's Equity
	Shares	Par Value		Additional Paid In Capital
Three Months Ended March 31, 2024 and 2023
Balance at Dec. 31, 2022	1,000,000	$	—	$	5,374	$	2,480	$	(18)	$	7,836
Net income						139				139
Other comprehensive loss								(3)		(3)
Dividends declared to parent						(132)				(132)
Contribution of capital by parent				110						110
Balance at March 31, 2023	1,000,000	$	—	$	5,484	$	2,487	$	(21)	$	7,950

Balance at Dec. 31, 2023	1,000,000	$	—	$	5,686	$	2,541	$	(20)	$	8,207
Net income						211				211
Other comprehensive income								12		12
Dividends declared to parent						(101)				(101)
Contribution of capital by parent				345						345
Balance at March 31, 2024	1,000,000	$	—	$	6,031	$	2,651	$	(8)	$	8,674




















See Notes to Consolidated Financial Statements


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


		Northern States Power Company (a Minnesota corporation)

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


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


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


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


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


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


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


	Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:
(Millions of Dollars)	Accumulated Other Comprehensive Loss		Regulatory Assets and Liabilities
Three Months Ended March 31, 2024
Derivatives designated as cash flow hedges:
Interest rate	$	16	$	—
Total	$	16	$	—
Other derivative instruments:
Electric commodity	$	—	$	1
Natural gas commodity	—		3
Total	$	—	$	4










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


	Pre-Tax Losses Reclassified into Income During the Period from:			Pre-Tax Gains (Losses) Recognized During the Period in Income
(Millions of Dollars)	Regulatory Assets and Liabilities
Three Months Ended March 31, 2024



Other derivative instruments:
Commodity trading	$	—		$	1	(a)
Electric commodity	4		(b)	—
Natural gas commodity	—			(5)		(c)(d)
Total	$	4		$	(4)











Three Months Ended March 31, 2023



Other derivative instruments:
Commodity trading	$	—		$	(1)	(a)
Electric commodity	14		(b)	—
Natural gas commodity	—			(5)		(c)(d)
Total	$	14		$	(6)