UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended Sept. 30, 2009

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

Commission File Number: 1-3034

Xcel Energy Inc.

(Exact name of registrant as specified in its charter)

Minnesota		41-0448030
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

414 Nicollet Mall
Minneapolis, Minnesota		55401
(Address of principal executive offices)		(Zip Code)

(612) 330-5500

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 and Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

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

Large accelerated filer x		Accelerated filer £

Non-accelerated filer £ (Do not check if smaller reporting company)		Smaller Reporting company £

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

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

Class		Outstanding at Oct. 26, 2009
Common Stock, $2.50 par value		456,645,598 shares

Table of Contents

TABLE OF CONTENTS

PART I		FINANCIAL INFORMATION
	Item 1 —	Financial Statements (unaudited)
		CONSOLIDATED STATEMENTS OF INCOME	3
		CONSOLIDATED STATEMENTS OF CASH FLOWS	4
		CONSOLIDATED BALANCE SHEETS	5
		CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME	6
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8
	Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
	Item 3 —	Quantitative and Qualitative Disclosures about Market Risk	55
	Item 4 —	Controls and Procedures	55
PART II		OTHER INFORMATION	56
	Item 1 —	Legal Proceedings	56
	Item 1A —	Risk Factors	56
	Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	57
	Item 6 —	Exhibits	58
SIGNATURES
		Certifications Pursuant to Section 302	1
		Certifications Pursuant to Section 906	1
		Statement Pursuant to Private Litigation	1

This Form 10-Q is filed by Xcel Energy Inc. Xcel Energy Inc. wholly owns the following subsidiaries: Northern States Power Company, a Minnesota corporation (NSP-Minnesota); Northern States Power Company, a Wisconsin corporation (NSP-Wisconsin); Public Service Company of Colorado, a Colorado corporation (PSCo); and Southwestern Public Service Company, a New Mexico corporation (SPS). Additional information on the wholly owned subsidiaries is available on various filings with the Securities and Exchange Commission (SEC).

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1 — FINANCIAL STATEMENTS

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

( amounts in thousands, except per share data)

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
	2009			2008			2009			2008
Operating revenues
Electric	$	2,128,955		$	2,576,467		$	5,749,207		$	6,704,164
Natural gas	169,601			258,961			1,224,161			1,736,701
Other	16,006			16,252			52,819			54,718
Total operating revenues	2,314,562			2,851,680			7,026,187			8,495,583

Operating expenses
Electric fuel and purchased power	982,103			1,513,935			2,703,952			3,871,437
Cost of natural gas sold and transported	71,638			155,804			809,791			1,298,731
Cost of sales — other	4,915			4,528			14,268			14,095
Other operating and maintenance expenses	466,465			422,560			1,410,760			1,340,362
Conservation and demand side management program expenses	47,157			27,483			133,793			92,278
Depreciation and amortization	198,222			209,131			609,285			622,512
Taxes (other than income taxes)	78,914			70,245			229,025			218,220
Total operating expenses	1,849,414			2,403,686			5,910,874			7,457,635

Operating income	465,148			447,994			1,115,313			1,037,948

Other income (expense), net	(977		)	9,736			4,394			27,270
Allowance for funds used during construction — equity	18,618			16,319			55,565			45,478

Interest charges and financing costs
Interest charges — includes other financing costs of $5,103, $5,162, $15,255 and $15,294, respectively	139,347			139,777			420,447			405,671
Allowance for funds used during construction — debt	(9,598		)	(9,625		)	(29,671		)	(28,748		)
Total interest charges and financing costs	129,749			130,152			390,776			376,923

Income from continuing operations before income taxes and equity earnings	353,040			343,897			784,496			733,773

Income taxes	135,610			121,551			280,581			252,765
Equity earnings of unconsolidated subsidiaries	4,363			349			10,760			1,154

Income from continuing operations	221,793			222,695			514,675			482,162
Income (loss) from discontinued operations, net of tax	(965		)	94			(2,673		)	(684		)
Net income	220,828			222,789			512,002			481,478
Dividend requirements on preferred stock	1,060			1,060			3,180			3,180
Earnings available to common shareholders	$	219,768		$	221,729		$	508,822		$	478,298

Weighted average common shares outstanding:
Basic	456,769			434,131			456,095			431,511
Diluted	457,453			439,397			456,729			436,716

Earnings per average common share:
Basic	$	0.48		$	0.51		$	1.12		$	1.11
Diluted	0.48			0.51			1.11			1.10
Cash dividends declared per common share	0.25			0.24			0.73			0.71

See Notes to Consolidated Financial Statements

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XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands of dollars)

	Nine Months Ended Sept. 30,
	2009			2008

Operating activities
Net income	$	512,002		$	481,478
Remove loss from discontinued operations	2,673			684
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	644,224			676,691
Nuclear fuel amortization	59,520			46,765
Deferred income taxes	304,707			199,155
Amortization of investment tax credits	(5,213		)	(5,824		)
Allowance for equity funds used during construction	(55,565		)	(45,478		)
Equity earnings of unconsolidated subsidiaries	(10,760		)	(1,154		)
Dividends from equity method investees	20,999			—
Share-based compensation expense	13,252			17,961
Net realized and unrealized hedging and derivative transactions	46,298			(34,049		)
Changes in operating assets and liabilities:
Accounts receivable	265,655			128,186
Accrued unbilled revenues	272,574			237,358
Inventories	111,780			(195,722		)
Recoverable purchased natural gas and electric energy costs	(30,792		)	(25,752		)
Other current assets	(72,817		)	21,794
Accounts payable	(286,019		)	(198,877		)
Net regulatory assets and liabilities	20,422			(47,765		)
Other current liabilities	7,347			11,521
Change in other noncurrent assets	(2,014		)	407
Change in other noncurrent liabilities	(172,291		)	(44,423		)
Operating cash flows used in discontinued operations	(17,166		)	(11,494		)
Net cash provided by operating activities	1,628,816			1,211,462

Investing activities
Utility capital/construction expenditures	(1,310,686		)	(1,523,365		)
Allowance for equity funds used during construction	55,565			45,478
Purchase of investments in external decommissioning fund	(1,278,554		)	(643,497		)
Proceeds from the sale of investments in external decommissioning fund	1,276,417			610,953
Investment in WYCO Development LLC	(38,936		)	(73,038		)
Change in restricted cash	(1,389		)	24,132
Other investments	3,472			(25,678		)
Net cash used in investing activities	(1,294,111		)	(1,585,015		)

Financing activities
Proceeds (repayment) of short-term borrowings, net	38,750			(824,560		)
Proceeds from issuance of long-term debt	394,762			1,682,393
Repayment of long-term debt, including reacquisition premiums	(620,074		)	(200,041		)
Proceeds from issuance of common stock	4,174			351,357
Dividends paid	(309,320		)	(303,157		)
Net cash (used in) provided by financing activities	(491,708		)	705,992

Net increase (decrease) in cash and cash equivalents	(157,003		)	332,439
Net increase (decrease) in cash and cash equivalents — discontinued operations	(1,989		)	416
Cash and cash equivalents at beginning of period	249,198			51,120
Cash and cash equivalents at end of period	$	90,206		$	383,975
Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(400,511	)	$	(363,439	)
Cash received (paid) for income taxes, net	21,857			(49,943		)
Supplemental disclosure of non-cash investing transactions:
Property, plant and equipment additions in accounts payable	$	33,116		$	27,845
Supplemental disclosure of non-cash financing transactions:
Issuance of common stock for reinvested dividends and 401(k) plans	$	44,668		$	48,872

See Notes to Consolidated Financial Statements

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XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in thousands of dollars)

	Sept. 30, 2009		Dec. 31, 2008
Assets
Current assets
Cash and cash equivalents	$	90,206	$	249,198
Accounts receivable, net	635,563		900,781
Accrued unbilled revenues	470,905		743,479
Inventories	554,929		666,709
Recoverable purchased natural gas and electric energy costs	63,635		32,843
Derivative instruments valuation	136,491		101,972
Prepayments and other	311,028		263,906
Current assets held for sale and related to discontinued operations	128,040		56,641
Total current assets	2,390,797		3,015,529

Property, plant and equipment, net	18,514,792		17,688,720

Other assets
Nuclear decommissioning fund and other investments	1,365,601		1,232,081
Regulatory assets	2,216,473		2,357,279
Derivative instruments valuation	308,768		325,688
Other	154,486		157,742
Noncurrent assets held for sale and related to discontinued operations	130,291		181,456
Total other assets	4,175,619		4,254,246
Total assets	$	25,081,208	$	24,958,495

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	184,534	$	558,772
Short-term debt	494,000		455,250
Accounts payable	811,624		1,120,324
Taxes accrued	223,278		220,542
Accrued interest	146,107		168,632
Dividends payable	112,840		108,838
Derivative instruments valuation	59,277		75,539
Other	326,780		331,419
Current liabilities held for sale and related to discontinued operations	28,058		6,929
Total current liabilities	2,386,498		3,046,245

Deferred credits and other liabilities
Deferred income taxes	3,177,595		2,792,560
Deferred investment tax credits	100,503		105,716
Regulatory liabilities	1,265,541		1,194,596
Asset retirement obligations	1,186,690		1,135,182
Derivative instruments valuation	327,691		340,802
Customer advances	304,752		323,445
Pension and employee benefit obligations	902,214		1,030,532
Other	184,885		168,352
Noncurrent liabilities held for sale and related to discontinued operations	3,279		20,656
Total deferred credits and other liabilities	7,453,150		7,111,841

Commitments and contingent liabilities
Capitalization
Long-term debt	7,945,400		7,731,688
Preferred stockholders’ equity — authorized 7,000,000 shares of $100 par value; outstanding shares: 1,049,800	104,980		104,980
Common stockholders’ equity — authorized 1,000,000,000 shares of $2.50 par value; outstanding shares: Sept. 30, 2009 — 456,251,313; Dec. 31, 2008 — 453,791,770	7,191,180		6,963,741
Total liabilities and equity	$	25,081,208	$	24,958,495

See Notes to Consolidated Financial Statements

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XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME (UNAUDITED)

(amounts in thousands)

	Common Stock Issued								Accumulated			Total
				Additional					Other			Common
				Paid In		Retained			Comprehensive			Stockholders’
	Shares	Par Value		Capital		Earnings			Income (Loss)			Equity
Three Months Ended Sept. 30, 2009 and 2008
Balance at June 30, 2008	430,917	$	1,077,292	$	4,306,239	$	1,017,488		$	(26,549	)	$	6,374,470
Net income						222,789						222,789
Changes in unrecognized amounts of pension and retiree medical benefits, net of tax of $195									273			273
Net derivative instrument fair value changes during the period, net of tax of $(1,741)									(2,522		)	(2,522		)
Unrealized loss - marketable securities, net of tax of $(87)									(123		)	(123		)
Comprehensive income for the period												220,417
Dividends declared:
Cumulative preferred stock						(1,060		)				(1,060		)
Common stock						(106,545		)				(106,545		)
Issuances of common stock	17,699	44,247		311,340								355,587
Share-based compensation				5,471								5,471
Balance at Sept. 30, 2008	448,616	$	1,121,539	$	4,623,050	$	1,132,672		$	(28,921	)	$	6,848,340

Balance at June 30, 2009	455,717	$	1,139,292	$	4,727,380	$	1,256,405		$	(49,354	)	$	7,073,723
Net income						220,828						220,828
Changes in unrecognized amounts of pension and retiree medical benefits, net of tax of $260									365			365
Net derivative instrument fair value changes during the period, net of tax of $(3,876)									(5,557		)	(5,557		)
Unrealized gain - marketable securities, net of tax of $62									90			90
Comprehensive income for the period												215,726
Dividends declared:
Cumulative preferred stock						(1,060		)				(1,060		)
Common stock						(112,255		)				(112,255		)
Issuances of common stock	534	1,337		7,485								8,822
Share-based compensation				6,224								6,224
Balance at Sept. 30, 2009	456,251	$	1,140,629	$	4,741,089	$	1,363,918		$	(54,456	)	$	7,191,180

See Notes to Consolidated Financial Statements

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XCEL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME (UNAUDITED)

(amounts in thousands)

	Common Stock Issued								Accumulated			Total
				Additional					Other			Common
				Paid In		Retained			Comprehensive			Stockholders'
	Shares	Par Value		Capital		Earnings			Income (Loss)			Equity
Nine Months Ended Sept. 30, 2009 and 2008
Balance at Dec. 31, 2007	428,783	$	1,071,957	$	4,286,917	$	963,916		$	(21,788	)	$	6,301,002
Adoption of new accounting guidance for endorsement split-dollar life insurance, net of tax of $(1,038)						(1,640		)				(1,640		)
Net income						481,478						481,478
Changes in unrecognized amounts of pension and retiree medical benefits, net of tax of $1,071									330			330
Net derivative instrument fair value changes during the period, net of tax of $(2,808)									(7,240		)	(7,240		)
Unrealized loss - marketable securities, net of tax of $(154)									(223		)	(223		)
Comprehensive income for the period												474,345
Dividends declared:
Cumulative preferred stock						(3,180		)				(3,180		)
Common stock						(307,902		)				(307,902		)
Issuances of common stock	19,833	49,582		318,881								368,463
Share-based compensation				17,252								17,252
Balance at Sept. 30, 2008	448,616	$	1,121,539	$	4,623,050	$	1,132,672		$	(28,921	)	$	6,848,340

Balance at Dec. 31, 2008	453,792	$	1,134,480	$	4,695,019	$	1,187,911		$	(53,669	)	$	6,963,741
Net income						512,002						512,002
Changes in unrecognized amounts of pension and retiree medical benefits, net of tax of $769									1,106			1,106
Net derivative instrument fair value changes during the period, net of tax of $(1,736)									(2,226		)	(2,226		)
Unrealized gain - marketable securities, net of tax of $230									333			333
Comprehensive income for the period												511,215
Dividends declared:
Cumulative preferred stock						(3,180		)				(3,180		)
Common stock						(332,815		)				(332,815		)
Issuances of common stock	2,459	6,149		25,550								31,699
Share-based compensation				20,520								20,520
Balance at Sept. 30, 2009	456,251	$	1,140,629	$	4,741,089	$	1,363,918		$	(54,456	)	$	7,191,180

See Notes to Consolidated Financial Statements

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XCEL ENERGY INC. 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 accounting principles generally accepted in the United States of America (GAAP), the financial position of Xcel Energy Inc. and its subsidiaries (collectively, Xcel Energy) as of Sept. 30, 2009 and Dec. 31, 2008; the results of its operations and changes in stockholders’ equity for the three and nine months ended Sept. 30, 2009 and 2008; and its cash flows for the nine months ended Sept. 30, 2009 and 2008. All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after Sept. 30, 2009 up to Oct. 30, 2009, which is the date of issuance of these consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2008 balance sheet information has been derived from the audited 2008 financial statements. These notes to the consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP 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 Xcel Energy Annual Report on Form 10-K for the year ended Dec. 31, 2008, filed with the SEC on Feb. 27, 2009. Due to the seasonality of Xcel Energy’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

Except to the extent updated or described below, the significant accounting policies set forth in Note 1 to the consolidated financial statements in Xcel Energy’s Annual Report on Form 10-K for the year ended Dec. 31, 2008, appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.

Reclassifications — Equity earnings of Xcel Energy’s unconsolidated subsidiaries were reclassified from interest and other income and income tax expense into a separate line item on the consolidated statements of income. The reclassification did not have an impact on net income or earnings per share.

2. Accounting Pronouncements

Recently Adopted

Business Combinations — In December 2007, the Financial Accounting Standards Board (FASB) issued new guidance on business combinations which establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This new guidance is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of an entity’s fiscal year that begins on or after Dec. 15, 2008. Xcel Energy implemented the guidance on Jan. 1, 2009, and the implementation did not have a material impact on its consolidated financial statements.

Noncontrolling Interests — Also in December 2007, the FASB issued new guidance on noncontrolling interests in consolidated financial statements which establishes accounting and reporting standards that require the ownership interest in subsidiaries held by parties other than the parent be clearly identified and presented in the consolidated balance sheets within equity, but separate from the parent’s equity; the amount of consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of earnings; and changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently as equity transactions. This new guidance was effective for fiscal years beginning on or after Dec. 15, 2008. Xcel Energy implemented the guidance on Jan. 1, 2009, and the implementation did not have a material impact on its consolidated financial statements.

Derivatives and Hedging Disclosures — In March 2008, the FASB issued new guidance on disclosures about derivative instruments and hedging activities which is intended to enhance disclosures to help users of the financial statements better understand how derivative instruments and hedging activities affect an entity’s financial position, financial performance and cash flows. The guidance amends and expands previous disclosure requirements for derivative instruments and hedging activities, including disclosures of objectives and strategies for using derivatives, gains and losses on derivative instruments, and credit-risk-related contingent features in derivative contracts. This new guidance was effective for fiscal years and interim periods beginning after Nov. 15, 2008. Xcel Energy implemented the guidance on Jan. 1, 2009, and the implementation did not have a material impact on its consolidated financial statements. For further discussion and the required disclosures, see Note 10 to the consolidated financial statements.

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Interim Fair Value Disclosures — In April 2009, the FASB issued new guidance on interim disclosures about fair value of financial instruments which requires that disclosures regarding the fair value of financial instruments be included in interim financial statements. This new guidance was effective for interim periods ending after June 15, 2009. Xcel Energy implemented the guidance on April 1, 2009, and the implementation did not have a material impact on its consolidated financial statements. For further discussion and the required disclosures, see Note 11 to the consolidated financial statements.

Fair Value in Inactive Markets — Also in April 2009, the FASB issued new guidance for identifying market transactions that are not orderly and determining fair value when market trading activity has decreased significantly. The new guidance emphasizes that even if there has been a significant decrease in the volume and level of market activity for an asset or liability, fair value still represents the exit price in an orderly transaction between market participants. This new guidance was effective for interim and annual periods ending after June 15, 2009. Xcel Energy implemented the guidance on April 1, 2009, and the implementation did not have a material impact on its consolidated financial statements.

Other-Than-Temporary Impairments — Additionally in April 2009, the FASB issued new guidance on recognition and presentation of other-than-temporary impairments which changes the method for determining whether an other-than-temporary impairment exists for debt securities, and also requires additional disclosures regarding other-than-temporary impairments. This new guidance was effective for interim and annual periods ending after June 15, 2009. Xcel Energy implemented the guidance on April 1, 2009, and the implementation did not have a material impact on its consolidated financial statements.

Subsequent Events — In May 2009, the FASB issued new guidance on subsequent events which establishes general standards of accounting and disclosure for events that occur after the balance sheet date but before financial statements are issued. The guidance is consistent with the auditing literature historically used for accounting and disclosure of subsequent events, however, it requires an entity to disclose the date through which subsequent events have been evaluated. This new guidance was effective for interim and annual periods ending after June 15, 2009. Xcel Energy implemented the guidance on April 1, 2009, and the implementation did not have a material impact on its consolidated financial statements.

Accounting Standards Codification — In June 2009, the FASB issued Topic 105 — Generally Accepted Accounting Principles Amendments Based on Statement of Financial Accounting Standards No. 168 — The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (Accounting Standards Update (ASU) No. 2009-01) , which updates the FASB Accounting Standards Codification (ASC or Codification) to state that the Codification is to be the single source of authoritative GAAP, other than the guidance put forth by the SEC. All other accounting literature not included in the Codification is to be considered non-authoritative. The updates to the Codification contained in ASU No. 2009-01 were effective for interim and annual periods ending after Sept. 15, 2009. Xcel Energy implemented the guidance set forth by ASU No. 2009-01, recognizing the Codification as the single source of authoritative GAAP, other than the guidance put forth by the SEC, on July 1, 2009. The implementation did not have a material impact on Xcel Energy’s consolidated financial statements.

Recently Issued

Postretirement Benefit Plans — In December 2008, the FASB issued new guidance on employers’ disclosures about postretirement benefit plan assets. The guidance will amend and expand previous disclosure requirements for plan assets of a defined benefit pension or other postretirement plan to include investment policies and strategies, major categories of plan assets, information regarding fair value measurements, and significant concentrations of credit risk. This new guidance is effective for disclosures for fiscal years ending after Dec. 15, 2009. Xcel Energy does not expect the implementation of the guidance to have a material impact on its consolidated financial statements.

Consolidation of Variable Interest Entities — In June 2009, the FASB issued new guidance on consolidation of variable interest entities. The guidance will significantly affect various elements of consolidation under existing accounting standards, including the determination of whether an entity is a variable interest entity and whether an enterprise is a variable interest entity’s primary beneficiary. This new guidance is effective for fiscal years beginning after Nov. 15, 2009. Xcel Energy is currently evaluating the impact of this guidance on its consolidated financial statements.

Fair Value of Liabilities — In August 2009, the FASB issued Fair Value Measurements and Disclosures (Topic 820) — Measuring Liabilities at Fair Value (ASU No. 2009-05) , which will update the Codification with clarifications for measuring the fair value of liabilities. The liability-specific guidance includes clarifications and guidelines for using, when available, the most observable prices in active markets for identical liabilities or similar liabilities, or the prices of identical liabilities or similar liabilities traded as assets, rather than more complex and less observable valuation techniques and inputs such as those used in a present value model. The updates to the Codification contained in ASU No. 2009-05 are effective for interim and annual periods beginning after its August, 2009 issuance. Xcel Energy does not expect the implementation of these changes in the Codification to have a material impact on its consolidated financial statements.

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3. Selected Balance Sheet Data

(Thousands of Dollars)	Sept. 30, 2009			Dec. 31, 2008
Accounts receivable, net
Accounts receivable	$	693,419		$	965,020
Less allowance for bad debts	(57,856		)	(64,239		)
	$	635,563		$	900,781
Inventories
Materials and supplies	$	173,674		$	158,709
Fuel	214,792			227,462
Natural gas	166,463			280,538
	$	554,929		$	666,709
Property, plant and equipment, net
Electric plant	$	22,650,906		$	21,601,094
Natural gas plant	3,231,528			3,004,088
Common and other property	1,491,664			1,497,162
Construction work in progress	1,688,560			1,832,022
Total property, plant and equipment	29,062,658			27,934,366
Less accumulated depreciation	(10,843,820		)	(10,501,266		)
Nuclear fuel	1,711,047			1,611,193
Less accumulated amortization	(1,415,093		)	(1,355,573		)
	$	18,514,792		$	17,688,720

4. Discontinued Operations

Results of operations for divested businesses and the results of businesses held for sale are reported, for all periods presented, as discontinued operations. In addition, the assets and liabilities of the businesses divested and held for sale have been reclassified to assets and liabilities held for sale in the consolidated balance sheets. The majority of current and noncurrent assets related to discontinued operations are deferred tax assets associated with temporary differences and net operating loss (NOL) and tax credit carryforwards that will be deductible in future years.

The major classes of assets and liabilities held for sale and related to discontinued operations are as follows:

(Thousands of Dollars)	Sept. 30, 2009		Dec. 31, 2008
Cash	$	8,656	$	10,645
Deferred income tax benefits	91,174		39,422
Other current assets	28,210		6,574
Current assets held for sale and related to discontinued operations	$	128,040	$	56,641

Deferred income tax benefits	$	117,217	$	150,912
Other noncurrent assets	13,074		30,544
Noncurrent assets held for sale and related to discontinued operations	$	130,291	$	181,456

Accounts payable	$	680	$	760
Other current liabilities	27,378		6,169
Current liabilities held for sale and related to discontinued operations	$	28,058	$	6,929

Noncurrent liabilities held for sale and related to discontinued operations	$	3,279	$	20,656

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5. Income Taxes

Xcel Energy files a consolidated federal income tax return and state tax returns based on income in its major operating jurisdictions of Colorado, Minnesota, Texas, and Wisconsin, and various other state income-based tax returns.

Federal Audit — In the first quarter of 2008, the Internal Revenue Service (IRS) completed an examination of Xcel Energy’s federal income tax returns for 2004 and 2005 (and research credits for 2003). The IRS did not propose any material adjustments for those tax years. Tax year 2004 is the earliest open year and the statute of limitations applicable to Xcel Energy’s 2004 federal income tax return remains open until Dec. 31, 2009. The IRS commenced an examination of tax years 2006 and 2007 in the third quarter of 2008, and this audit is expected to be completed in the first quarter of 2010. As of Sept. 30, 2009, the IRS had not proposed any material adjustments to tax years 2006 and 2007.

State Audits — In the first quarter of 2008, the state of Minnesota concluded an income tax audit through tax year 2001 and the state of Texas concluded an income tax audit through tax year 2005. No material adjustments were proposed for these state audits. As of Sept. 30, 2009, Xcel Energy’s earliest open tax years that are subject to examination by state taxing authorities in its major operating jurisdictions are as follows:

State		Earliest Open Tax Year in Which an Audit Can Be Initiated
Colorado		2004
Minnesota		2004
Texas		2004
Wisconsin		2004

There currently are no state income tax audits in progress.

Unrecognized Tax Benefits — The amount of unrecognized tax benefits reported in continuing operations was $40.8 million on Sept. 30, 2009 and $35.5 million on Dec. 31, 2008. The amount of unrecognized tax benefits reported in discontinued operations was $6.6 million on both Sept. 30, 2009 and Dec. 31, 2008. The unrecognized tax benefit amounts reported in continuing operations were reduced by the tax benefits associated with NOL and tax credit carryovers of $13.2 million on Sept. 30, 2009 and $13.1 million on Dec. 31, 2008. The unrecognized tax benefit amounts reported in discontinued operations were reduced by the tax benefits associated with NOL and tax credit carryovers of $31.7 million on Sept. 30, 2009 and $26.5 million on Dec. 31, 2008.

The unrecognized tax benefit balance reported in continuing operations included $8.8 million and $9.2 million of tax positions on Sept. 30, 2009 and Dec. 31, 2008, respectively, which if recognized would affect the annual effective tax rate. In addition, the unrecognized tax benefit balance reported in continuing operations included $32.0 million and $26.3 million of tax positions on Sept. 30, 2009 and Dec. 31, 2008, respectively, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

The increase in the unrecognized tax benefit balance reported in continuing operations of $7.3 million from June 30, 2009 to Sept. 30, 2009, was due to the addition of similar uncertain tax positions related to ongoing activity. Xcel Energy’s amount of unrecognized tax benefits for continuing operations could significantly change in the next 12 months as the IRS audit progresses and when state audits resume. As the IRS examination moves closer to completion, it is reasonably possible that the amount of unrecognized tax benefits in continuing operations could decrease up to approximately $20 million.

The liability for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with NOL and tax credit carryovers. The amount of interest expense related to unrecognized tax benefits reported within interest charges in continuing operations in the third quarter of 2009 was $0.7 million. The amount of interest expense related to unrecognized tax benefits reported within interest charges in continuing operations in the third quarter of 2008 was $0.3 million. The liability for interest related to unrecognized tax benefits reported in continuing operations was $2.9 million on Sept. 30, 2009 and $1.9 million on Dec. 31, 2008. The amount reported within interest charges related to unrecognized tax benefits in discontinued operations in the third quarter of 2009 reduced interest expense by $0.6 million. The amount reported within interest charges related to unrecognized tax benefits in discontinued operations in the third quarter of 2008 reduced interest expense by $0.2 million. The receivable for interest related to unrecognized tax benefits reported in discontinued operations was $2.4 million on Sept. 30, 2009 and $1.5 million on Dec. 31, 2008.

No amounts were accrued for penalties as of Sept. 30, 2009 or Dec. 31, 2008.

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6. Rate Matters

Except to the extent noted below, the circumstances set forth in Note 16 to the consolidated financial statements included in Xcel Energy’s Annual Report on Form 10-K for the year ended Dec. 31, 2008 appropriately represent, in all material respects, the current status of other rate matters, and are incorporated herein by reference. The following discussion includes unresolved proceedings that are material to Xcel Energy’s financial position.

NSP-Minnesota

Pending and Recently Concluded Regulatory Proceedings — Minnesota Public Utilities Commission (MPUC)

Base Rate

NSP-Minnesota Electric Rate Case — In November 2008, NSP-Minnesota filed a request with the MPUC to increase Minnesota electric rates by $156 million annually. This request was later modified to $136 million.

In September 2009, the MPUC voted to approve a rate increase of approximately $91.4 million. As part of its decision, the MPUC approved a 10-year life extension of the Prairie Island nuclear plant for purposes of determining depreciation and decommissioning expenses, effective Jan. 1, 2009. This decision reduced NSP-Minnesota’s overall revenue deficiency by approximately $40 million, while at the same time reducing expense accruals by a corresponding amount. A summary of the key terms is listed below:

	Revised Request			Approved
Rate increase	$	136 million		$	91 million
Return on equity	11.0		%	10.88		%
Equity ratio	52.5		%	52.5		%
Electric rate base	$	4.1 billion		$	4.1 billion
Depreciation life extension for Prairie Island nuclear plant	0 years			10 years

As of Sept. 30, 2009, NSP-Minnesota accrued a customer refund of approximately $30.2 million to reflect the difference between interim rates that were implemented Jan. 2, 2009 and the amount approved by the MPUC. The written order was issued Oct. 23, 2009.

Electric, Purchased Gas and Resource Adjustment Clauses

Transmission Cost Recovery (TCR) Rider — The MPUC has approved a TCR rider, which allows annual adjustments to retail electric rates to provide recovery of incremental transmission investments between rate cases. In October 2008, NSP-Minnesota submitted its proposed revised TCR rate factors, seeking to recover $14 million in 2009. A portion of amounts previously collected through the TCR rider prior to 2009 has been included for recovery in the NSP-Minnesota electric rate case described above. In June 2009, the MPUC approved the rider request. The revised TCR rate recovery factors were placed into effect in July 2009. In September 2009, NSP-Minnesota submitted its proposed revised rate factors, seeking to recover an additional $15.6 million in TCR rates in 2010. The request is pending MPUC action.

Renewable Energy Standard (RES) Rider — The MPUC has approved an RES rider to recover the costs for utility-owned projects implemented in compliance with the RES. Under the rider, NSP-Minnesota recovered approximately $14.5 million in 2008 attributable to the Grand Meadow wind farm. In 2008, NSP-Minnesota submitted the RES rider for recovery of approximately $22 million in 2009 attributable to the Grand Meadow wind farm. In February 2009, the MPUC approved the rider request. The revised RES rate recovery factors were placed into effect in March 2009. In September 2009, NSP-Minnesota submitted its proposed revised rate factors, seeking to recover an additional $44.4 million in RES rates in 2010. The request is pending MPUC action.

Metropolitan Emissions Reduction Project (MERP) Rider — In October 2008, NSP-Minnesota filed a proposed MERP rider for 2009 designed to recover costs related to MERP environmental improvement projects. Under this rider, NSP-Minnesota proposes to recover $113.7 million in 2009, an increase of approximately $18.1 million over 2008. New rates went into effect automatically on Jan. 1, 2009, as stipulated. MPUC approval is still pending. On Oct. 1, 2009, NSP-Minnesota filed its proposed MERP rider for 2010 designed to recover costs related to MERP environmental improvement projects of $116.7 million. These new rates are expected to go into effect automatically on Jan. 1, 2010. NSP-Minnesota received comments on its 2009 MERP rider on Oct. 19, 2009, recommending the MPUC approve the 2009 proposed rates.

State Energy Policy (SEP) Rider — In March 2009, NSP-Minnesota filed a proposed SEP rider for 2009 designed to recover costs related to state energy policy mandates and a cast iron natural gas pipe replacement project that is intended to reduce greenhouse gas (GHG) emissions. Under this rider, NSP-Minnesota proposes to recover approximately $2.5 million from its electric customers and

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$0.1 million from its natural gas customers in 2009. In September 2009, the MPUC approved the rider request. The revised SEP rate recovery factors were placed into effect in October 2009.

Annual Automatic Adjustment Report for 2007/2008 — In September 2008, NSP-Minnesota filed its annual automatic adjustment reports for July 1, 2007 through June 30, 2008. During that time period, $848.5 million in fuel and purchased energy costs, including $258.8 million of Midwest Independent Transmission System Operator, Inc. (MISO) charges, were recovered from Minnesota electric customers through the fuel clause adjustment (FCA). In addition, approximately $680 million of purchased natural gas and transportation costs were recovered through the purchased gas adjustment (PGA). NSP-Minnesota received comments on its 2008 electric annual automatic adjustment report in August 2009, which sought clarifications in the areas of transmission maintenance expenses, MISO revenue neutrality uplift charges and costs, and contractor non-performance responsibility for replacement energy costs. NSP-Minnesota received comments on its 2008 natural gas annual automatic adjustment report in June 2009, which recommends that the MPUC accept the 2008 report and PGA true up, and authorize its implementation. MPUC approval of both reports is pending.

Annual Automatic Adjustment Report for 2008/2009 — In September 2009, NSP-Minnesota filed its annual automatic adjustment reports for July 1, 2008 through June 30, 2009. During that time period, $803.6 million in fuel and purchased energy costs were recovered from Minnesota electric customers through the FCA. In addition, approximately $499.4 million of purchased natural gas and transportation costs were recovered through the PGA. MPUC approval is pending.

Conservation Incentive Filing — Minnesota state agencies convened a work group to review the current energy efficiency incentive mechanism. The work group reached a consensus in the spring of 2009 that a shared savings model was the best structure for incenting cost-effective conservation. In July 2009, NSP-Minnesota filed its proposed incentive plan for achieving significantly higher demand side management (DSM) goals. The incentive would allow for sharing of savings of up to 15 percent of the net present value of benefits, depending on the level of savings achieved. NSP-Minnesota received comments on its proposed incentive mechanism in September 2009, which recommended minor modifications that do not significantly impact the potential award scale. An MPUC decision on the proposed plan is pending.

Gas Meter Module Failures — Approximately 8,700 customers in the St. Cloud and East Grand Forks areas of Minnesota and about 4,000 customers in the Fargo, N.D. area were under billed for a period of time during the 2007-2008 heating season due to the failure of the automated meter reading (AMR) module installed on their natural gas meters. While the modules failed to register usage, the meters continued to function. In 2008, NSP-Minnesota rebilled approximately 5,000 of these customers for their estimated consumption and then ceased rebilling as both the MPUC and North Dakota Public Service Commission (NDPSC) opened investigations into this matter. NSP-Minnesota has initiated dispute resolution with its provider of the AMR modules and meter reading services.

Pursuant to the NDPSC-approved plan, which provided customers with a $50 service quality credit for each customer experiencing a module failure NSP-Minnesota began implementing the service quality credits and the rebilling of remaining North Dakota customers in June 2009. In total, NSP-Minnesota rebilled North Dakota customers approximately $1.5 million for the estimated gas usage during the module failure period.

In March 2009, NSP-Minnesota filed with the MPUC for a proposed $50 service quality credit for each customer experiencing a module failure. On July 15, 2009, NSP-Minnesota filed an application to withdraw its request to rebill affected customers as too much time would have lapsed from the time of meter failures to the expected time (if approved) for rebilling. Although the MPUC order is still pending, the MPUC approved NSP-Minnesota’s withdrawal of its request to rebill affected customers at its hearing in September 2009. NSP-Minnesota has determined that a number of AMR modules designed for commercial customers are defective and as a result is broadening efforts to evaluate the performance of both gas and electric AMR modules. As of Sept. 30, 2009, NSP-Minnesota has accrued an amount sufficient to cover the estimated impact.

Annual Review of Remaining Lives — In February 2009, NSP-Minnesota filed a petition with the MPUC requesting an increase in proposed service lives, salvage rates and resulting depreciation rates for its electric and gas production facilities and a depreciation study for other gas and electric assets, effective Jan 1, 2009. The Office of Energy Security (OES) recommended a 10-year lengthening of depreciation life of the Prairie Island nuclear plant. In July 2009, the MPUC approved the proposed service lives, salvage rates, and resulting depreciation rates effective Jan. 1, 2009, for plant in service, with the exception of the Prairie Island nuclear plant. The MPUC deferred the determination of the appropriate depreciation rates for the Prairie Island nuclear plant to the pending NSP-Minnesota electric rate case. In the electric rate case, the MPUC extended the depreciation life of the Prairie Island nuclear plant by 10 years beyond the current license life in light of NSP-Minnesota’s application to extend the life of its nuclear plants by 20 years.

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Nuclear Decommissioning Expenses — In June 2009, the MPUC issued its order in its review of NSP-Minnesota’s 2009 nuclear plant decommissioning accruals. The order extended the decommissioning life for the Prairie Island nuclear plant by 10 years. The order reduced the amount of future nuclear decommissioning expenses that must be collected from customers from $32 million to zero, effective Jan. 1, 2009.

In August 2009, NSP-Minnesota filed a proposal with the MPUC to provide one-time refunds to return to customers their contributions of $22.8 million made to the external escrow decommissioning fund for the Monticello nuclear plant. In October 2009, NSP-Minnesota received comments on its proposed refund plan, which recommends approval with minor modifications to the proposed refund mechanics. MPUC action is pending.

Pending and Recently Concluded Regulatory Proceedings — NDPSC and South Dakota Public Utilities Commission (SDPUC)

South Dakota Electric Rate Case — In June 2009, NSP-Minnesota filed a request with the SDPUC to increase South Dakota electric rates by $18.6 million annually, or 12.7 percent. This proposed increase includes approximately $2.9 million in revenues currently recovered through automatic recovery mechanisms. Thus, the requested increase, net of current automatic recovery mechanisms, is approximately $15.7 million or 10.7 percent. The request is based on a 2008 historic test year adjusted for known and measurable changes in rate base and operating and maintenance expenses, an electric rate base of $282 million, a requested return on equity (ROE) of 11.25 percent, and an equity ratio of 51.63 percent.

Rates may be implemented as early as January 2010, based on statutory requirements in South Dakota. The procedural schedule is as follows:

· Staff and intervenor testimony on Nov. 20, 2009;

· NSP-Minnesota rebuttal testimony on Dec. 4, 2009; and

· Technical and public hearings on Dec. 9 — 11, 2009.

Pending and Recently Concluded Regulatory Proceedings — Federal Energy Regulatory Commission (FERC)

Revenue Sufficiency Guarantee (RSG) Charges — The MISO tariff charges certain market participants a real-time RSG charge, which is designed to ensure that any generator scheduled or dispatched by MISO will receive no less than its offer price for start-up, no-load and incremental energy. A proposal in 2005 by MISO to refine the RSG charge initiated protracted proceedings. In the subsequent compliance proceeding, the FERC has issued numerous orders, attempting to refine and clarify the RSG charge. With the issuance of these orders, the FERC has directed certain refunds to market participants, but has subsequently refined or waived various refund requirements. The FERC granted rehearing in part of certain earlier orders directing refunds to correct a rate mismatch in the RSG charge. Specifically, a June 2009 order waived refunds for the period from April 2005 to November 2007, and directed MISO to correct the rate mismatch (through refunds) from November 2007 to November 2008.

In August 2007, numerous parties filed complaints against MISO, arguing that the allocation of the RSG charge (only to certain market participants actually withdrawing energy) was unjust, unreasonable, and unduly discriminatory. After protracted proceedings, the FERC found in November 2008 that the RSG charge was unjust and unreasonable, and directed refunds. In May 2009, FERC granted rehearing in part regarding the applicability of refunds for the RSG charges. Specifically, the FERC determined that the refund-effective date is November 2008, the date of the FERC order determining that the allocation to market participants of the RSG charges was unjust and unreasonable.

The FERC directed MISO to implement an interim RSG cost allocation to be effective starting in August 2007. The FERC further directed MISO to submit a complete and final proposal, to be implemented on a prospective basis after the commencement of the MISO’s ancillary services markets in January 2009 . In February 2009, MISO submitted a filing to implement the new RSG rate design; however, the FERC has not yet rendered a final decision to implement the new rate design. Moreover, disputes have arisen regarding whether or not some resources should be assessed to the RSG under the interim rate. In August 2009, the FERC issued an order in which it invalidated numerous exemptions to the RSG that had previously been utilized by MISO through its business practice manuals. Several parties have sought rehearing and a final FERC decision is still pending.

Xcel Energy is a party to each of the relevant RSG-related proceedings. Each of the relevant RSG-related orders has been the subject of requests for rehearing at the FERC and petitions for review filed at the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit). The separate RSG proceedings have proceeded in parallel at the FERC, and the most recent orders (May, June and August 2009), are subject to pending requests for rehearing. The D.C. Circuit proceedings are being held in abeyance pending final action in the FERC proceedings.

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NSP-Wisconsin

Pending and Recently Concluded Regulatory Proceedings — Public Service Commission of Wisconsin (PSCW)

Base Rate

2008 Electric Rate Case — Nuclear Decommissioning Expenses — In January 2008, the PSCW issued the final order in NSP-Wisconsin’s 2008 test year rate case. The PSCW’s final order included recovery of $8.7 million of annual nuclear decommissioning expenses, subject to refund, in anticipation of potential decreases in NSP-Minnesota’s decommissioning expenses. NSP-Wisconsin and NSP-Minnesota share all NSP System generation and transmission costs, including nuclear decommissioning costs, by means of a FERC-approved tariff commonly referred to as the Interchange Agreement.

In June 2009, the MPUC issued the final order in its review of NSP-Minnesota’s 2009 nuclear plant decommissioning accrual, and as a result of that order, the Wisconsin retail jurisdiction’s share of annual nuclear decommissioning expenses decreased to approximately $1.4 million, effective January 2009. In accordance with the PSCW’s final order, NSP-Wisconsin has established a refund liability of $5.5 million through September 2009.

The MPUC order also directed NSP-Minnesota to proceed with a filing to propose a method to return to customers their contributions made to the external escrow decommissioning fund for the Monticello nuclear plant. Once that plan is approved, NSP-Wisconsin will determine what steps are necessary to initiate a refund for its customers’ proportionate share of these funds. NSP-Wisconsin’s share of these funds is approximately $5.8 million as of Sept. 30, 2009.

2010 Electric and Natural Gas Rate Case — In June 2009, NSP-Wisconsin filed an electric and gas rate case in Wisconsin seeking an increase in retail electric rates of $30.4 million, or 5.7 percent, and proposed no change in natural gas rates. The request is based on an ROE of 10.75 percent, an equity ratio of 53.12 percent, an electric rate base of $644 million, a gas rate base of $81 million and a 2010 forecasted test year. The request is comprised of a traditional base rate increase of $45.1 million offset by projected fuel decreases of $14.7 million.

On Oct. 21, 2009, PSCW staff and intervenors filed testimony. The PSCW staff recommended an increase of $14.5 million for 2010 based on a 10.75 percent ROE and a 51.63 percent equity ratio. The PSCW staff has proposed to apply the 2009 fuel over recovery discussed in 2009 Electric Fuel Cost Recovery below against the increase such that there would be no change in rates for 2010. A summary of the proposed adjustments is listed below:

Millions of Dollars	Request			PSCW Adjusted Request
Base non-fuel	$	45.1		$	36.8
Fuel	(14.7		)	(15.8		)
Prairie Island decommissioning	—			(6.5		)
Rate increase	$	30.4		$	14.5

The base non-fuel adjustments include: (1) an adjustment to the equity ratio from 53.12 percent to 51.63 percent on a regulatory basis; (2) a reduction to the rate base to account for appropriated retained earnings associated with certain hydro licenses; (3) reduced interchange agreement fixed charge billings and (4) a disallowance of certain employee compensation expenses. In addition, the PSCW staff adjustments to the proposed increase include a $6.5 million reduction for Prairie Island nuclear plant decommissioning expense as a result of the 10-year life extension approved by the MPUC.

The Wisconsin Industrial Energy Group (WIEG) filed direct testimony objecting to NSP-Wisconsin’s class cost of service study and proposed rate design and recommended changes that would benefit its members.

A decision is expected by the end of 2009 with new rates in effect in January 2010. The procedural schedule is as follows:

· NSP-Wisconsin rebuttal testimony on Nov. 6, 2009;

· Surrebuttal testimony on Nov. 10, 2009; and

· Technical and public hearing on Nov. 11, 2009.

Other

2009 Electric Fuel Cost Recovery — NSP-Wisconsin’s fuel and purchased power costs for February 2009 were lower than authorized and outside the variance ranges for monitored fuel costs established by the PSCW. In April 2009, the PSCW opened a proceeding to

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determine if a rate reduction, or fuel credit factor, should be ordered. The PSCW set NSP-Wisconsin’s electric rates subject to refund with interest at 10.75 percent, pending a full review of 2009 fuel costs.

NSP-Wisconsin’s actual fuel costs through September 2009 were approximately $19.1 million less than authorized, primarily due to lower load and lower market prices for fuel and purchased power. As noted above, the PSCW staff recommended that a portion of this amount be used to offset the 2010 rate increase. The PSCW has not yet completed its review of NSP-Wisconsin’s 2009 fuel costs. However, based on actual fuel costs to date, NSP-Wisconsin has established a liability of $13.3 million for such amounts subject to refund collected through Sept. 30, 2009.

PSCo

Pending and Recently Concluded Regulatory Proceedings — Colorado Public Utilities Commission (CPUC)

Base Rate

PSCo 2009 Electric Rate Case — In November 2008, PSCo filed a request with the CPUC to increase Colorado electric rates by $174.7 million annually, or approximately 7.4 percent. The rate filing was based on a 2009 forecast test year, an electric rate base of $4.2 billion, a requested ROE of 11.0 percent and an equity ratio of 58.08 percent. PSCo’s request included a return of approximately $40 million for construction work in progress (CWIP) associated with incremental expenditures on the Comanche Unit 3 since Jan. 1, 2007. PSCo does not record allowance for funds used during construction (AFDC) income for the months this return is actually received from customers.

In February 2009, parties filed answer testimony in the case. In March 2009, PSCo filed rebuttal testimony and revised its rate increase request to $159.3 million to reflect updated data. On April 22, 2009, a settlement agreement with the major parties was filed with the CPUC. The settlement provides for an overall $112.2 million increase in base rates, but does not provide for the specific resolution of many of the disputed issues such as ROE and capital structure. However, the settlement provides that incremental CWIP not included in existing rates for the Comanche Unit 3 be removed from rate base and that PSCo would be allowed to continue to record AFDC income on this balance until the Comanche Unit 3 is placed into service.

On May 27, 2009, the CPUC approved the settlement agreement and new rates went into effect on July 1, 2009. On Sept. 21, 2009, a citizen intervenor, Leslie Glustrom, filed suit against the CPUC in district court for appeal of the CPUC decision.

PSCo 2010 Electric Rate Case — On May 1, 2009, PSCo filed with the CPUC a request to increase Colorado electric rates by $180.2 million, or 6.8 percent, effective in 2010. The rate filing is based on a 2010 calendar year budget and includes a requested ROE of 11.25 percent, an electric net rate base of approximately $4.4 billion allocated to the Colorado electric retail jurisdiction and an equity ratio of 58.05 percent.

PSCo’s rate request also proposes to shift all or a portion of the costs currently being recovered through the Air Quality Improvement Rider and the DSM Cost Adjustment into base rates. While this shift would add $108.1 million to base rates in addition to the $180.2 million annual revenue increase sought by PSCo, it would correspondingly remove $108.1 million from these riders, and result in no net increase or decrease on customer bills.

Intervenors have filed testimony with the following current recommendations:

· The CPUC staff has recommended an increase of approximately $70.5 million based on an adjusted 2008 historic test year and a 9.84 percent ROE. The CPUC staff recommended adjustments to the 2008 historic test year were costs associated with a full year of 2010 expenses for the Comanche Unit 3 project and Fort St. Vrain Units 5 and 6. The other staff adjustments were related to ROE, elimination of costs associated with PSCo’s annual incentive compensation plan and deferral of recovery of dismantling costs associated with retiring plants until those costs are known. CPUC staff also recommended elimination of sharing for asset based energy sales (referred to as generation book sales).

· The Colorado Office of Consumer Counsel (OCC) has recommended an increase of approximately $33.2 million based on an adjusted 2008 historic test year and a 9.75 percent ROE. The OCC recommended adjustments to the 2008 historic test year were costs associated with a full year of 2010 expenses for the Comanche Unit 3 project (including related pollution control and transmission upgrades) and Fort St. Vrain Units 5 and 6. The other OCC adjustments are related to ROE, a lower equity ratio of 53 percent, a cash working capital cost reduction and additional revenue associated with unbilled revenue, elimination of incentive pay, lower pension and benefit costs, and no recovery of future Innovative Clean Technology (ICT) expense. The OCC recommended an increase of $87.8 million if a forecast test year is accepted. The OCC recommended that generation book

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margins be shared 95 percent to customers and 5 percent to shareholders and the inverse sharing for non-asset based or proprietary margins.

· Colorado Energy Consumers (CEC) recommended the use of an adjusted 2008 historic test year adjusted for major plant investments for the Comanche Unit 3 project and Fort St. Vrain Units 5 and 6; and an ROE of 10.0 percent, resulting in an increase of $95.4 million, which should be reduced to reflect any appropriate adjustments recommended by other intervenors.

· CF&I Steel (CF&I) and Climax Molybdenum Company (Climax) recommended the use of an adjusted 2008 historic test year adjusted for major plant investments for the Comanche Unit 3 project and Fort St. Vrain Units 5 and 6; and an adjustment for 2008 bonus depreciation, resulting in an increase of $98.4 million, which should be reduced to reflect any appropriate adjustments recommended by other intervenors.

In October 2009, PSCo filed rebuttal testimony and revised their request rate increase to $177.4 million and affirmed its requested ROE of 11.25 percent. The procedural schedule is as follows.

· Hearings on the merits on Oct. 26 — Nov. 6, 2009; and

· Statements of Position on Nov. 16, 2009.

PSCo expects a decision before year end with new rates effective in January 2010.

Transmission Cost Adjustment (TCA) Rider — In December 2007, the CPUC approved PSCo’s application to implement a TCA rider. PSCo filed its annual update to the TCA rider in November 2008, and new rates went into effect on Jan. 1, 2009, to recover approximately $18.0 million on an annual basis until the rates in the 2009 rate case take effect. Coincident with the implementation of new electric rates on July 1, 2009, approximately $16.0 million from the TCA rider were included in base rates with a corresponding reduction in the TCA rider.

Pending and Recently Concluded Regulatory Proceedings — FERC

Pacific Northwest FERC Refund Proceeding — In July 2001, the FERC ordered a preliminary hearing to determine whether there may have been unjust and unreasonable charges for spot market bilateral sales in the Pacific Northwest for the period Dec. 25, 2000 through June 20, 2001. PSCo supplied energy to the Pacific Northwest markets during this period and has been a participant in the hearings. In September 2001, the presiding administrative law judge (ALJ) concluded that prices in the Pacific Northwest during the referenced period were the result of a number of factors, including the shortage of supply, excess demand, drought and increased natural gas prices. Under these circumstances, the ALJ concluded that the prices in the Pacific Northwest markets were not unreasonable or unjust and no refunds should be ordered. Subsequent to the ruling, the FERC has allowed the parties to request additional evidence. Parties have claimed that the total amount of transactions with PSCo subject to refund is $34 million. In June 2003, the FERC issued an order terminating the proceeding without ordering further proceedings. Certain purchasers filed appeals of the FERC’s orders in this proceeding with the U. S. Court of Appeals for the Ninth Circuit.

In an order issued in August 2007, the Court of Appeals remanded the proceeding back to the FERC. The Court of Appeals also indicated that the FERC should consider other rulings addressing overcharges in the California organized markets. The Court of Appeals denied a petition for rehearing in April 2009, and the mandate was issued. The FERC has yet to act on this order on remand; currently, certain motions concerning procedures on remand are pending before the FERC.

SPS

Pending and Recently Concluded Regulatory Proceedings — Public Utility Commission of Texas (PUCT)

Base Rate

Texas Retail Base Rate Case — In June 2008, SPS filed a rate case with the PUCT seeking an annual rate increase of approximately $61.3 million, or approximately 5.9 percent. Base revenues are proposed to increase by $94.4 million, while fuel and purchased power revenue would decline by $33.1 million, primarily due to fuel savings from the Lea Power Partners (LPP) purchase power agreement.

The rate filing was based on a 2007 test year adjusted for known and measurable changes, a requested ROE of 11.25 percent, an electric rate base of $989.4 million and an equity ratio of 51.0 percent. Interim rates of $18 million for costs associated with the LPP power purchase agreement went into effect in September 2008.

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In January 2009, a settlement agreement was reached with various intervenors, which provided for a base rate increase of $57.4 million, a reduced depreciation expense of $5.6 million, allowed SPS to implement the transmission rider in 2009 and precludes SPS from filing to seek any other change in base rates until Feb. 15, 2010. In January 2009, an ALJ approved interim rates effective February 2009. On June 2, 2009, the PUCT issued its order approving the settlement.

John Deere Wind Complaint — In June 2007, several John Deere Wind Energy subsidiaries (JD Wind) filed a complaint against SPS disputing SPS’ payments for energy produced from the JD Wind projects. SPS responded that the payments to JD Wind are appropriate and in accordance with SPS’ filed tariffs with the PUCT. In March 2009, the ALJ recommended that SPS payment methodology to JD Wind is proper and that JD Wind’s complaint be denied.

In May 2009 the PUCT issued a final order denying JD Wind’s request for relief against SPS. In June 2009, JD Wind filed a petition for review of the final order in Texas District Court. In July 2009, the PUCT filed an answer to JD Wind’s petition in Texas District Court in which the PUCT denied each and every, all and singular, the allegations contained in the JD Wind petition.

In September 2009, JD Wind submitted a petition to the FERC, which in effect, disputed and sought to overturn the decision of the PUCT. SPS has responded to the JD Wind petition, asserting among other things that the dispute should be resolved in Texas courts.

Texas Jurisdictional Fuel Allocation Methodology — In May 2009, SPS filed an application to revise the calculation of Texas retail jurisdictional fuel and purchased power expense, effective in January 2008. SPS has determined that its current method results in a material amount of unrecovered fuel and purchased power expense. The application seeks approval for a revised methodology, which matches the fuel and purchased power expenses in a month with the fuel factor revenue received from each kilowatt hour used that month. In July 2009, the PUCT referred this case to the State Office of Administrative Hearings (SOAH) for a contested case hearing.

In August 2009, the PUCT issued a draft of the preliminary order. The draft adopts SPS’ position that the PUCT should consider the fuel allocation methodology in this case; lists various issues for the case, most of which are the issues identified in SPS’ filing and lists certain issues that are not to be addressed in this case, specifically, SPS’ fuel factor, the formula used to set SPS’ fuel factor, and the reasonableness of SPS’ fuel and purchased power costs. In August 2009, the PUCT approved the preliminary order as drafted. A procedural schedule was established in September 2009, however, that schedule has been delayed to allow for settlement discussions.

In late October 2009, SPS filed a unanimous settlement that would allow for the change in the calculation of deferred fuel consistent with the approach proposed by SPS. Approval by the PUCT is pending. If approved, the estimated impact is expected to result in an approximate $5.9 million increase to fuel and purchased power expenses for the Texas retail jurisdiction for the Jan. 1, 2008 to Dec. 31, 2009 period. SPS has agreed to reduce the new allocated portion by $3 million subsequent to adopting the new methodology going forward.

Texas Transmission Cost Recovery Factor (TCRF) — In June 2009, SPS filed a request to implement a TCRF with proposed revenues of $7.4 million annually. The TCRF filing is based on changes in transmission investment for the period of Jan. 1, 2008 through April 30, 2009 and increases in FERC approved transmission costs for 2008. In 2007, the PUCT implemented rules allowing utilities to request a TCRF in between rate cases for recovery of new transmission investment costs. This is SPS’ first filing under that rule. In July 2009, the PUCT referred this case to the SOAH for a contested case proceeding. SPS anticipates the PUCT will issue an order with rates effective by the end of 2009.

On Oct. 22, 2009, intervenors filed testimony and made the following recommendations. The Texas Industrial Energy Consumers recommended a revenue requirement of $3.5 million and the Alliance of Xcel Municipalities recommended a revenue requirement of $3.1 million.

The current procedural schedule is as follows:

· PUCT staff testimony on Oct. 29, 2009;

· SPS rebuttal testimony on Nov. 5, 2009

· Settlement and rehearing conferences on Nov. 10 — Nov. 12, 2009; and

· Hearing on the merits on Nov. 17 — Nov. 19, 2009.

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Pending and Recently Concluded Regulatory Proceedings — New Mexico Public Regulation Commission (NMPRC)

Base Rate

2008 New Mexico Retail Electric Rate Case — In December 2008, SPS filed with the NMPRC a request to increase electric rates in New Mexico by approximately $24.6 million, or 6.2 percent. The request was based on a historic test year (split year based on the year ending June 30, 2008), an electric rate base of $321 million, and an equity ratio of 50.0 percent and a requested ROE of 12.0 percent. SPS also requested interim rates of $7.6 million per year to recover capacity costs of the Lea Power facility, which became operational in September 2008.

In March 2009, the NMPRC approved a partial stipulated settlement between the parties that allows SPS to recover approximately $5.7 million of interim rates, effective May 1, 2009, through an LPP cost rider until the final rates from the remainder of the case are effective.

In May 2009, the parties filed an uncontested stipulation that resolves all issues in the case. Under the stipulation, SPS receives a base rate increase of $14.2 million, effective July 1, 2009. SPS has agreed that Dec. 1, 2010 is the earliest date it will file its next base rate case, subject to a force majeure provision triggered by additional environmental compliance costs.

In July 2009, the NMPRC issued an order approving the stipulation agreement. SPS implemented the new rates on July 15, 2009.

Pending and Recently Concluded Regulatory Proceedings — FERC

Wholesale Rate Complaints — In November 2004, Golden Spread Electric, Lyntegar Electric, Farmer’s Electric, Lea County Electric, Central Valley Electric and Roosevelt County Electric, all wholesale cooperative customers of SPS, filed a rate complaint with the FERC alleging that SPS’ rates for wholesale service were excessive and that SPS had incorrectly calculated monthly fuel cost adjustment charges to such customers (the Complaint). Among other things, the complainants asserted that SPS had inappropriately allocated average fuel and purchased power costs to other wholesale customers, effectively raising the fuel cost charges to the complainants. Cap Rock Energy Corporation (Cap Rock), another full-requirements customer of SPS, Public Service Company of New Mexico (PNM) and Occidental Permian Ltd. and Occidental Power Marketing, L.P. (Occidental), SPS’ largest retail customer, intervened in the proceeding.

In May 2006, a FERC ALJ found that SPS should recalculate its fuel and purchased economic energy cost adjustment clause (FCAC) billings for the period beginning Jan. 1, 1999, to reduce the fuel and purchased power costs recovered from the complaining customers by deducting the incremental fuel costs attributed to SPS’ sales of capacity and energy to other wholesale customers served under market-based rates during this period based on the view that such sales should be treated as opportunity sales made out of temporarily excess capacity. In addition, the ALJ made recommendations on a number of base rate issues including a 9.64 percent ROE.

Golden Spread Complaint Settlement — In December 2007, SPS reached a settlement with Golden Spread (which now includes Lyntegar Electric) and Occidental regarding base rate and fuel issues raised in the complaint described above as well as a subsequent rate proceeding. In December 2007, this comprehensive offer of settlement (the Settlement) was filed with the FERC. In April 2008, the FERC approved the Settlement, which resolved all issues that were the subject of the Complaint; implemented a formula rate and extended the term of its partial requirements sale to Golden Spread beginning 2012 at 500 MW and ramping down to 200 MW at the end of the new term in 2019. The Settlement made the extended purchase contingent on certain state approvals. Golden Spread agreed to hold SPS harmless from any future adverse regulatory treatment regarding the proposed sale and SPS agreed to contingent payments ranging from $3 million to a maximum of $12 million, payable in 2012, in the event that there is an adverse cost assignment decision or a failure to obtain state approvals. The approvals are currently pending before the NMPRC and the PUCT.

Order on Wholesale Rate Complaints — In April 2008, the FERC issued its Order on the Complaint applied to the remaining non-settling parties. The Order addresses base rate issues for the period from Jan. 1, 2005 through June 30, 2006, for SPS’ full requirements customers who pay traditional cost-based rates and requires certain refunds.

· Base Rates : The FERC determined the ROE should be 9.33 percent and the treatment of market based rate contracts should be to credit revenues to the cost of service rather than allocating costs to the agreements. The revenue requirement established by the FERC results are estimated to be approximately $25 million, or approximately $6.9 million below the level charged to these customers during this 18-month period. Rates for full requirements customers, the New Mexico Cooperatives and Cap Rock, as well as an interruptible contract with PNM for the period beginning July 1, 2006, are the subject of settlements that have either been approved or are pending before the FERC.

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· Fuel Clause : The FERC determined that the method for calculating fuel and purchased energy charges to the complaining customer is to deduct from such costs incremental fuel and purchased energy costs, which it is attributing to SPS’ market based intersystem sales on the basis that these are “opportunity” sales. The FERC ordered that refunds of fuel cost charges based on this method of determining the FCAC should begin as of Jan. 1, 2005. While the order is subject to interpretation with respect to the calculation of the refund obligation, SPS does not expect its refund obligation to its full requirements customers from Jan. 1, 2005 through March 31, 2008, to exceed $11 million. PNM has filed a separate complaint that any refund obligation to PNM will be determined in that docket.

Several parties, including SPS, filed requests for rehearing on the order. These requests are pending before the FERC. In July 2008, SPS submitted its compliance report to the FERC and calculated the base rate refund for the 18-month period to be $6.1 million and the fuel refund to be $4.4 million. Several wholesale customers have protested the calculations. Once the final refund amounts are approved by the FERC, interest will be added to the refund due to the full requirements customers. As of Sept. 30, 2009, SPS has accrued an amount sufficient to cover the estimated refund obligation.

On June 5, 2009, SPS, the New Mexico Cooperatives and Cap Rock filed a letter with FERC indicating that the parties had reached an agreement in principle regarding this matter and asked that the FERC not issue an order upon reconsideration to allow the parties an opportunity to formalize the Settlement and file it with the NMPRC. The parties have filed subsequent letters with the FERC requesting that it not take up their reconsideration requests as the parties continue to work to finalize the terms of the agreement.

SPS 2008 Wholesale Rate Case — In March 2008, SPS filed a wholesale rate case seeking an annual revenue increase of $14.9 million or an overall 5.14 percent increase , based on 12.20 percent requested ROE.

In May 2008, the FERC conditionally accepted and suspended the rates and established hearing and settlement procedures. The FERC granted a one-day suspension of rates instead of 180 days. Lea Power achieved commercial operations in September 2008 and the proposed base rates of $9.9 million, based on a 10.25 percent ROE and a 12 coincident peak demand allocator, became effective, subject to refund.

In April 2009, the parties reached a settlement in which SPS will receive an annual revenue increase of approximately $9.6 million or an overall percentage increase of 3.3 percent. The FERC issued an order approving the uncontested settlement in September 2009.

SPS 2008 Transmission Formula Rate Case — In December 2007, Xcel Energy submitted an application to implement a transmission formula rate for the SPS zone of the Xcel Energy Open Access Transmission Tariff (OATT). The changed rates will affect all wholesale transmission service customers using the SPS transmission network under either the Southwest Power Pool, Inc. (SPP) Regional OATT or the Xcel Energy OATT.

As filed, SPS’ transmission rates would be updated annually each July 1 based on SPS’ prior year actual costs and loads plus the revenue requirements associated with projected current year transmission plant additions. The proposed ROE was 12.7 percent, including a 50 basis point adder for SPS’ participation in the SPP Regional Transmission Organization (RTO). The proposed rates would provide first year incremental annual transmission revenue for SPS of approximately $5.5 million.

In February 2008, the FERC accepted the proposed rates, suspending the effective date to July 6, 2008, and setting the rate filing for hearings and settlement procedures. The FERC granted a 50 basis point adder to the ROE that it will determine in this proceeding as a result of SPS’ participation in the SPP RTO. The filed rates were placed into effect on July 6, 2008, subject to refund.

In July 2009, SPS and the parties reached a settlement in principle regarding all issues except the ratemaking and rate design treatment of certain radial transmission lines under the SPP Regional OATT. In September 2009, Xcel Energy, on behalf of SPS and the other parties to the proceeding, filed an uncontested offer of settlement and settlement agreement with the FERC which resolves all issues in the proceeding with the exception of the radial line issue.

The settlement provides for a formula rate using a fully forecasted test year effective Jan. 1, 2009, with a stated ROE of 11.27 percent (including the 50 basis point adder for SPP RTO participation), with rates for the locked in 2008 period established by settlement. The settlement will result in approximately $0.8 million in additional revenues for 2008 and 2009 in aggregate and will allow SPS to update its transmission rates annually for predicted costs and loads, subject to an annual true-up. In October 2009, the ALJ approved placing the settlement rates into effect on Oct. 1, 2009, subject to approval of the settlement, and certified the settlement for FERC approval as uncontested. The settlement is pending FERC approval. Additionally in October 2009, SPS announced the 2010 costs and charges pursuant to the formula rate and are expected to provide $2.7 million in additional revenue, subject to true-up.

On Sept. 25, 2009, the FERC set the issue of cost allocation for radial lines for hearings. The ALJ is scheduled to issue an initial decision in August 2010. The outcome of the litigation is not expected to have a material impact on SPS.

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7. Commitments and Contingent Liabilities

Except to the extent noted below, the circumstances set forth in Notes 16, 17 and 18 to the consolidated financial statements included in Xcel Energy’s Annual Report on Form 10-K for the year ended Dec. 31, 2008, and Note 6 to the consolidated financial statements in this Quarterly Report on Form 10-Q appropriately represent, in all material respects, the current status of commitments and contingent liabilities, including those regarding public liability for claims resulting from any nuclear incident, and are incorporated herein by reference. The following include contingencies and unresolved contingencies that are material to Xcel Energy’s financial position.

Environmental Contingencies

Xcel Energy and its subsidiaries have been, or are currently, involved with the cleanup of contamination from certain hazardous substances at several sites. In many situations, the subsidiary involved believes it will recover some portion of these costs through insurance claims. Additionally, where applicable, the subsidiary involved is pursuing, or intends to pursue, recovery from other potentially responsible parties (PRPs) and through the rate regulatory process. New and changing federal and state environmental mandates can also create added financial liabilities for Xcel Energy and its subsidiaries, which are normally recovered through the rate regulatory process. To the extent any costs are not recovered through the options listed above, Xcel Energy would be required to recognize an expense.

Site Remediation — Xcel Energy must pay all or a portion of the cost to remediate sites where past activities of its subsidiaries or other parties have caused environmental contamination. Environmental contingencies could arise from various situations, including sites of former manufactured gas plants (MGPs) operated by Xcel Energy subsidiaries, predecessors, or other entities; and third-party sites, such as landfills, to which Xcel Energy is alleged to be a PRP that sent hazardous materials and wastes. At Sept. 30, 2009, the liability for the cost of remediating these sites was estimated to be $103.1 million, of which $7.2 million was considered to be a current liability.

Manufactured Gas Plant Sites

Ashland Manufactured Gas Plant Site — NSP-Wisconsin has been named a PRP for creosote and coal tar contamination at a site in Ashland, Wis. The Ashland/Northern States Power Lakefront Superfund Site (Ashland site) includes property owned by NSP-Wisconsin, which was previously an MGP facility and two other properties: an adjacent city lakeshore park area, on which an unaffiliated third party previously operated a sawmill, and an area of Lake Superior’s Chequamegon Bay adjoining the park.

In September 2002, the Ashland site was placed on the National Priorities List. A final determination of the scope and cost of the remediation of the Ashland site is not currently expected until late 2009 or 2010. In October 2004, the state of Wisconsin filed a lawsuit in Wisconsin state court for reimbursement of past oversight costs incurred at the Ashland site between 1994 and March 2003 in the approximate amount of $1.4 million. The state also alleges a claim for forfeitures and interest. This litigation was resolved in the first quarter of 2009, and all costs paid to the state are expected to be recoverable in rates.

In November 2005, the Environmental Protection Agency (EPA) Superfund Innovative Technology Evaluation Program (SITE) accepted the Ashland site into its program. As part of the SITE program, NSP-Wisconsin proposed and the EPA accepted a site demonstration of an in situ, chemical oxidation technique to treat upland ground water and contaminated soil. The fieldwork for the demonstration study was completed in February 2007. In June 2007, the EPA modified its remedial investigation report to establish final remedial action objectives (RAOs) and preliminary remediation goals (PRGs) for the Ashland site. In October 2007, the EPA approved the series of reports included in the remedial investigation report. The RAOs and PRGs could potentially impact the development and evaluation of remedial options for ultimate site cleanup.

In 2008, NSP-Wisconsin spent $0.8 million in the development of the work plan, the operation of the existing interim response action and other matters related to the site. In December 2008, the EPA approved the final feasibility study submitted by NSP-Wisconsin. The final feasibility study sets forth a range of remedial options under consideration by the EPA for the site but does not select a remedy. In 2009, the EPA issued its proposed remedial action plan (PRAP). It is expected that the EPA will select a remedial action plan sometime in late 2009. The estimated remediation costs for the cleanup proposed by the EPA in the PRAP range between $94.4 million and $112.8 million.

In July 2009, NSP-Wisconsin advised the EPA and the Wisconsin Department of Natural Resources (WDNR) that it would not implement the hybrid “dry dredging” alternative proposed in the PRAP. NSP-Wisconsin stated that the EPA’s hybrid alternative is 1) unsafe, 2) would cost at least $37 million more than conventional, wet dredging, and 3) would provide no environmental benefits over conventional dredging.

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In addition to potential liability for remediation, NSP-Wisconsin may also have liability for natural resource damages at the Ashland site. NSP-Wisconsin has recorded an estimate of its potential liability based upon its best estimate of potential exposure.

NSP-Wisconsin’s liability for the actual cost of remediating the Ashland site and the time frame over which the amounts may be paid out are not determinable, until the EPA and the WDNR select a remediation strategy for the entire site and determine NSP-Wisconsin’s level of responsibility. NSP-Wisconsin continues to work with the WDNR to access state and federal funds to apply to the ultimate remediation cost of the entire site. NSP-Wisconsin has recorded a liability of $97.5 million based upon the minimum of the range of remediation costs established by the PRAP, together with estimated outside legal, consultant and remedial design costs. NSP-Wisconsin has deferred, as a regulatory asset, the costs accrued for the Ashland site based on an expectation that the PSCW will continue to allow NSP-Wisconsin to recover payments for environmental remediation from its customers. The PSCW has consistently authorized recovery in NSP-Wisconsin rates of all remediation costs incurred at the Ashland site and has authorized recovery of similar remediation costs for other Wisconsin utilities. External MGP remediation costs are subject to deferral in the Wisconsin retail jurisdiction and are reviewed for prudence as part of the Wisconsin biennial retail rate case process.

In addition, in 2003, the Wisconsin Supreme Court rendered a ruling that reopens the possibility that NSP-Wisconsin may be able to recover a portion of the remediation costs from its insurance carriers. Any insurance proceeds received by NSP-Wisconsin will be credited to ratepayers.

Third Party and Other Environmental Site Remediation

Asbestos Removal — Some of Xcel Energy’s facilities contain asbestos. Most asbestos will remain undisturbed until the facilities that contain it are demolished or renovated. Xcel Energy has recorded an estimate for final removal of the asbestos as an asset retirement obligation (ARO).

See additional discussion of AROs in Note 17 to the Xcel Energy Annual Report on Form 10-K for the year ended Dec. 31, 2008. It may be necessary to remove some asbestos to perform maintenance or make improvements to other equipment. The cost of removing asbestos as part of other work is immaterial and is recorded as incurred as operating expenses for maintenance projects, capital expenditures for construction projects or removal costs for demolition projects.

Other Environmental Requirements

EPA’s Proposed Greenhouse Gas Endangerment Finding — On April 17, 2009, the EPA issued a proposed finding that GHGs threaten public health and welfare. This finding was in response to the U.S. Supreme Court’s decision in Massachusetts v. EPA , 549 U.S. 497 (2007), which held that GHGs are pollutants covered by the Clean Air Act (CAA) and required the EPA to determine whether emissions of GHGs from motor vehicles endanger public health or welfare. The EPA’s proposed endangerment finding applies to the CAA’s mobile source program, and does not automatically trigger regulation under other provisions of the CAA that are applicable to stationary sources, such as power plants. As such, the proposed endangerment finding, in and of itself, does not impact Xcel Energy or its operating subsidiaries.

Clean Air Interstate Rule (CAIR) — In March 2005, the EPA issued the CAIR to further regulate sulfur dioxide (SO 2 ) and nitrogen oxide (NOx) emissions. The objective of CAIR was to cap emissions of SO 2 and NOx in the eastern United States, including Minnesota, Texas and Wisconsin, which are within Xcel Energy’s service territory. In July 2008, the U. S. Court of Appeals for the District of Columbia vacated CAIR and remanded the rule to EPA. On Dec. 23, 2008, the court reinstated CAIR while the EPA develops new regulations in accordance with the court’s July opinion. The EPA has indicated that a CAIR replacement rule will be proposed in early 2010 with finalization planned for early 2011.

As currently written, CAIR has a two-phase compliance schedule, beginning in 2009 for NOx and 2010 for SO 2 , with a final compliance deadline in 2015 for both emissions. Under CAIR, each affected state will be allocated an emissions budget for SO 2 and NOx that will result in significant emission reductions. It will be based on stringent emission controls and forms the basis for a cap-and-trade program. State emission budgets or caps decline over time. States can choose to implement an emissions reduction program based on the EPA’s proposed model program, or they can propose another method, which the EPA would need to approve.

Under CAIR’s cap-and-trade structure, SPS can comply through capital investments in emission controls or purchase of emission allowances from other utilities making reductions on their systems. The remaining capital investments for NOx controls in the SPS region are estimated at $4.5 million. For 2009, the estimated NOx allowance compliance costs are $0.8 million to $1.0 million. Annual purchases of SO 2 allowances are estimated in the range of $1.7 million to $7.7 million each year, beginning in 2013, for phase I.

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On May 12, 2009, the EPA issued a proposed rule to stay the effectiveness of CAIR in Minnesota. NSP-Minnesota expects the EPA to complete this regulatory action before 2009 NOx allowances must be surrendered in February 2010. As such, cost estimates are not included at this time for NSP-Minnesota. For 2009, the estimated NOx allowance costs for NSP-Wisconsin are $0.3 million.

Allowance cost estimates for SPS and NSP-Wisconsin are based on fuel quality and current market data. Xcel Energy believes the cost of any required capital investment or allowance purchases will be recoverable from customers in rates.

Clean Air Mercury Rule (CAMR) — In March 2005, the EPA issued the CAMR, which regulated mercury emissions from power plants. In February 2008, the U.S. Court of Appeals for the District of Columbia vacated CAMR, which impacts federal CAMR requirements, but not necessarily state-only mercury legislation and rules. The EPA is in the process of developing a Maximum Achievable Control Technology (MACT) rule to replace CAMR. The EPA is expected to propose the new MACT rule for electric generating units in 2010. Costs to comply with the Minnesota Mercury Emissions Reduction Act of 2006 are discussed in the following sections.

In Colorado, the Air Quality Control Commission (AQCC) passed a mercury rule, which requires mercury emission controls capable of achieving 80 percent capture to be installed at the Pawnee Generating Station by 2012 and other specified units by 2014. The expected cost estimate for the Pawnee Generating Station is $2.3 million for capital costs with an annual estimate of $1.4 million for absorbent expense. PSCo is evaluating the emission controls required to meet the state rule for the remaining units and is currently unable to provide a total capital cost estimate.

Minnesota Mercury Legislation — In May 2006, the Minnesota legislature enacted the Mercury Emissions Reduction Act of 2006 (Act) providing a process for plans, implementation and cost recovery for utility efforts to curb mercury emissions at certain power plants. For NSP-Minnesota, the Act covers units at the A. S. King and Sherco generating facilities. Xcel Energy installed and is operating and maintaining continuous mercury emission monitoring systems at these generating facilities.

In September 2006, NSP-Minnesota filed a request with the MPUC for recovery of up to $6.3 million of certain environmental improvement costs recoverable under the Act. In January 2007, the MPUC approved this request to defer these costs as a regulatory asset with a cap of $6.3 million. In November 2008, NSP-Minnesota filed a request with the MPUC to reflect its requested recovery of these emission reduction compliance costs incurred through 2009 in the NSP-Minnesota electric rate case. In June 2009, NSP-Minnesota received an order from the MPUC closing the docket to correspond with the inclusion of costs in the electric rate case. The recovery of the costs was allowed as part of the rate case.

In November 2008, the MPUC approved and ordered the implementation of the Sherco Unit 3 and A. S. King mercury emission reduction plans. The approved plans are to install a sorbent injection system at both A. S. King and Sherco Unit 3. Implementation would occur by Dec. 31, 2009 at Sherco Unit 3 and by Dec. 31, 2010 at A. S. King. In July 2009, NSP-Minnesota filed a petition with the MPUC requesting to establish a mercury cost recovery rider with 2010 adjustment factors that would recover the 2010 revenue requirement of $3.5 million associated with these two projects from customers.

In the fourth quarter of 2009, NSP-Minnesota expects to file plans for mercury control at Sherco Units 1 and 2 with the MPUC and the Minnesota Pollution Control Agency (MPCA). Assuming these plans are approved, NSP-Minnesota expects to file for recovery of the costs to implement these plans through the mercury cost recovery rider.

Regional Haze Rules — In June 2005, the EPA finalized amendments to the July 1999 regional haze rules. These amendments apply to the provisions of the regional haze rule that require emission controls, known as best available retrofit technology (BART), for industrial facilities emitting air pollutants that reduce visibility by causing or contributing to regional haze. Xcel Energy generating facilities in several states will be subject to BART requirements.

States are required to identify the facilities that will have to reduce SO 2 , NOx and particulate matter emissions under BART and then set BART emissions limits for those facilities. In May 2006, the Colorado AQCC promulgated BART regulations requiring certain major stationary sources to evaluate and install, operate and maintain BART to make reasonable progress toward meeting the national visibility goal. PSCo estimates that the remaining cost for implementation of BART emission control projects is approximately $141 million in capital costs, which are included in the capital budget.

PSCo expects the cost of any required capital investment will be recoverable from customers. Emissions controls are expected to be installed between 2012 and 2015. Colorado’s BART state implementation plan has been submitted to the EPA for approval. In January 2009, the Colorado Air Pollution Control Division (CAPCD) initiated a joint stakeholder process to evaluate what types of additional NOx controls may be necessary to meet reasonable progress goals for Colorado’s Class I areas, the new ozone standard, and Rocky Mountain National Park nitrogen deposition reduction goals. The CAPCD has indicated that it expects to have a final plan for additional point-source NOx controls by the end of 2010.

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NSP-Minnesota submitted its BART alternatives analysis for Sherco Units 1 and 2 in October 2006. The MPCA reviewed the BART analyses for all units in Minnesota and determined that overall, compliance with CAIR is better than BART. On Nov. 13, 2008, NSP-Minnesota submitted a revised BART alternatives analysis letter to the MPCA to account for increased construction and equipment costs. The underlying conclusions and proposed emission control equipment, however, remain unchanged from the original 2006 BART analysis. The MPCA completed their BART determination and proposed SO 2 and NOx limits in the draft state implementation plan (SIP) that are equivalent to the reductions made under CAIR.

In response to a petition from several environmental groups, the U.S. Department of Interior certified on Oct. 21, 2009, that a portion of the visibility impairment in Voyageurs and Isle Royal National Parks is reasonably attributable to emissions from Sherco Units 1 and 2. The MPCA determined, however, that this certification does not alter the proposed SIP. The SIP proposes BART controls for Sherco that are designed to improve visibility in the national parks, but does not require Selective Catalytic Reduction (SCR) on Units 1 and 2. The MPCA concluded that the minor visibility benefits derived from SCR do not outweigh the substantial costs. The MPCA will now work with the MPCA Citizens Board for approval of the SIP, which will then be submitted to the EPA for approval before the end of 2009.

Federal Clean Water Act — The federal Clean Water Act requires the EPA to regulate cooling water intake structures to assure that these structures reflect the best technology available (BTA) for minimizing adverse environmental impacts. In July 2004, the EPA published phase II of the rule, which applies to existing cooling water intakes at steam-electric power plants. Several lawsuits were filed against the EPA in the United States Court of Appeals for the Second Circuit (Court of Appeals) challenging the phase II rulemaking. In January 2007, the Court of Appeals issued its decision and remanded the rule to the EPA for reconsideration. In June 2007, the EPA suspended the deadlines and referred any implementation to each state’s best professional judgment until the EPA is able to fully respond to the remand. In April 2008, the U.S. Supreme Court granted limited review of the Court of Appeals’ opinion to determine whether the EPA has the authority to consider costs and benefits in assessing BTA. On April 1, 2009, the U.S. Supreme Court issued a decision in Entergy Corp. v. Riverkeeper, Inc. , concluding that the EPA can consider a cost benefit analysis when establishing BTA. The decision overturned only one aspect of the Court of Appeals’ earlier opinion, and gives the EPA the discretion to consider costs and benefits when it reconsiders its phase II rules. Until the EPA fully responds to the Court of Appeals’ decision, the rule’s compliance requirements and associated deadlines will remain unknown. As such, it is not possible to provide an accurate estimate of the overall cost of this rulemaking at this time.

The MPCA exercised its authority under best professional judgment to require the Black Dog Generating Station in its recently renewed wastewater discharge permit to create a plan by April 2010 to reduce the plant intake’s impact on aquatic wildlife. NSP-Minnesota is discussing alternatives with the local community and regulatory agencies to address this concern.

PSCo Notice of Violation (NOV) — In July 2002, PSCo received an NOV from the EPA alleging violations of the New Source Review (NSR) requirements of the CAA at the Comanche Station and Pawnee Station in Colorado. The NOV specifically alleges that various maintenance, repair and replacement projects undertaken at the plants in the mid- to late-1990s should have required a permit under the NSR process. PSCo believes it has acted in full compliance with the CAA and NSR process. PSCo believes that the projects identified in the NOV fit within the routine maintenance, repair and replacement exemption contained within the NSR regulations or are otherwise not subject to the NSR requirements. PSCo disagrees with the assertions contained in the NOV and intends to vigorously defend its position.

Legal Contingencies

Lawsuits and claims arise in the normal course of business. Management, after consultation with legal counsel, has recorded an estimate of the probable cost of settlement or other disposition of them. The ultimate outcome of these matters cannot presently be determined. Accordingly, the ultimate resolution of these matters could have a material adverse effect on Xcel Energy’s financial position and results of operations.

Gas Trading Litigation

e prime is a wholly owned subsidiary of Xcel Energy. Among other things, e prime was in the business of natural gas trading and marketing. e prime has not engaged in natural gas trading or marketing activities since 2003. Thirteen lawsuits have been commenced against e prime and Xcel Energy (and NSP-Wisconsin, in one instance), alleging fraud and anticompetitive activities in conspiring to restrain the trade of natural gas and manipulate natural gas prices. Xcel Energy, e prime, and NSP-Wisconsin deny these allegations and will vigorously defend against these lawsuits, including seeking dismissal and summary judgment.

The initial gas-trading lawsuit, a purported class action brought by wholesale natural gas purchasers, was filed in November 2003 in the United States District Court in the Eastern District of California. e prime is one of several defendants named in the complaint. This case is captioned Texas-Ohio Energy vs. CenterPoint Energy et al. The other twelve cases arising out of the same or similar set of facts are captioned Fairhaven Power Company vs. EnCana Corporation et al.; Ableman Art Glass vs. EnCana Corporation et al.; Utility Savings and Refund Services LLP vs. Reliant Energy Services Inc. et al.; Sinclair Oil Corporation vs. e prime and Xcel

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Energy Inc.; Ever-Bloom Inc. vs. Xcel Energy Inc. and e prime et al.; Learjet, Inc. vs. e prime and Xcel Energy Inc et al.; J.P. Morgan Trust Company vs. e prime and Xcel Energy Inc. et al.; Breckenridge Brewery vs. e prime and Xcel Energy Inc. et al.; Missouri Public Service Commission vs. e prime, inc. and Xcel Energy Inc. et al.; Arandell vs. e prime, Xcel Energy, NSP-Wisconsin et al.; NewPage Wisconsin System Inc vs. e prime, Xcel Energy, NSP-Wisconsin et al. and Hartford Regional Medical Center vs. e prime, Xcel Energy et al . Many of these cases involve multiple defendants and have been transferred to Judge Phillip Pro of the United States District Court in Nevada, who is the judge assigned to the Western Area Wholesale Natural Gas Antitrust Litigation.

e prime and some other defendants were dismissed from the Breckenridge Brewery lawsuit in February 2008, but Xcel Energy remains a defendant in that lawsuit and e prime Energy Marketing was added as a defendant in February 2008.

No trial dates have been set for any of these lawsuits. In January 2009, the parties reached a settlement agreement in principle in the Abelman Art Glass, Ever Bloom, Fairhaven Power Company, Texas-Ohio Energy , and Utility Savings and Refund Services cases. The terms of the settlement in principle will not have a material financial effect upon Xcel Energy. Per court order, discovery in most of the remaining cases must be completed by Dec. 5, 2009. Trial for all cases venued in Nevada will likely be set for 2010.

In November 2007, the Missouri Public Service Commission case was remanded to Missouri state court. On Jan. 13, 2009, the Missouri state court granted defendants’ motion to dismiss plaintiff’s complaint for lack of standing. Plaintiffs have filed an appeal.

In late March 2009, Newpage Wisconsin System Inc. commenced a lawsuit in state court in Wood County, Wis. The allegations are substantially similar to Arandell and name several defendants, including Xcel Energy, e prime and NSP-Wisconsin. In September 2009, Plaintiffs moved to consolidate the Newpage and Arandell matters. Defendants have filed motions to dismiss and, as with Arandell , Xcel Energy, e prime and NSP-Wisconsin believe the allegations asserted against them are without merit and they intend to vigorously defend against the asserted claims.

Environmental Litigation

Carbon Dioxide (CO 2 ) Emissions Lawsuit — In July 2004, the attorneys general of eight states and New York City, as well as several environmental groups, filed lawsuits in U.S. District Court in the Southern District of New York against five utilities, including Xcel Energy, to force reductions in CO 2 emissions. The other utilities include American Electric Power Co., Southern Co., Cinergy Corp. and Tennessee Valley Authority. The lawsuits allege that CO 2 emitted by each company is a public nuisance as defined under state and federal common law because it has contributed to global warming. The lawsuits do not demand monetary damages. Instead, the lawsuits ask the court to order each utility to cap and reduce its CO 2 emissions. In October 2004, Xcel Energy and the other defendants filed a motion to dismiss the lawsuit. On Sept. 19, 2005, the court granted the motion to dismiss on constitutional grounds. Plaintiffs filed an appeal to the U.S. Court of Appeals for the Second Circuit. In June 2007, the Court of Appeals issued an order requesting the parties to file a letter brief regarding the impact of the United States Supreme Court’s decision in Massachusetts v. EPA , 127 S. Ct. 1438 (April 2, 2007) on the issues raised by the parties on appeal. Among other things, in its decision in Massachusetts v. EPA , the United States Supreme Court held that CO 2 emissions are a “pollutant” subject to regulation by the EPA under the CAA. In July 2007, in response to the request of the Court of Appeals, the defendant utilities filed a letter brief stating the position that the United States Supreme Court’s decision supports the arguments raised by the utilities on appeal. On Sept. 21, 2009, the Court of Appeals issued an opinion reversing the lower court decision. Xcel Energy intends to file a petition for rehearing or rehearing en banc on or before Nov. 5, 2009.

Comer vs. Xcel Energy Inc. et al. — In April 2006, Xcel Energy received notice of a purported class action lawsuit filed in U.S. District Court in the Southern District of Mississippi. The lawsuit names more than 45 oil, chemical and utility companies, including Xcel Energy, as defendants and alleges that defendants’ CO 2 emissions “were a proximate and direct cause of the increase in the destructive capacity of Hurricane Katrina.” Plaintiffs allege in support of their claim, several legal theories, including negligence and public and private nuisance and seek damages related to the loss resulting from the hurricane. Xcel Energy believes this lawsuit is without merit and intends to vigorously defend itself against these claims. In August 2007, the court dismissed the lawsuit in its entirety against all defendants on constitutional grounds. In September 2007, plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit. Oral arguments were presented to the Court of Appeals on Aug. 6, 2008. Pursuant to the court’s order of Sept. 26, 2008, re-argument was held on Nov. 3, 2008. On Oct. 16, 2009, the U.S. Court of Appeals for the Fifth Circuit reversed the district court decision, in part, concluding that the plaintiffs pleaded sufficient facts to overcome the constitutional challenges that formed the basis for dismissal by the district court. It is anticipated that Xcel Energy will file a petition for rehearing or rehearing en banc.

Native Village of Kivalina vs. Xcel Energy Inc. et al. — In February 2008, the City and Native Village of Kivalina, Alaska, filed a lawsuit in U.S. District Court for the Northern District of California against Xcel Energy and 23 other utilities, oil, gas and coal companies. The suit was brought on behalf of approximately 400 native Alaskans, the Inupiat Eskimo, who claim that defendants’ emission of CO 2 and other GHGs contribute to global warming, which is harming their village. Plaintiffs claim that as a consequence,

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the entire village must be relocated at a cost of between $95 million and $400 million. Plaintiffs assert a nuisance claim under federal and state common law, as well as a claim asserting “concert of action” in which defendants are alleged to have engaged in tortious acts in concert with each other. Xcel Energy was not named in the civil conspiracy claim. Xcel Energy believes the claims asserted in this lawsuit are without merit and joined with other utility defendants in filing a motion to dismiss on June 30, 2008. On Oct. 15, 2009, the U.S. District Court dismissed the lawsuit on constitutional grounds. It is unknown whether plaintiffs intend to appeal this decision.

Comanche Unit 3 Clean Air Act Lawsuit — WildEarth Guardians (WEG) has filed a lawsuit against PSCo alleging that PSCo violated the CAA by constructing Comanche Unit 3 without a final MACT determination from the Colorado Department of Public Health and Environment, Air Pollution Control Division (APCD). PSCo disputes these claims and has filed a motion to dismiss the suit. Comanche Unit 3 was constructed with state-of-the-art emission controls and pursuant to a valid air permit issued by the APCD. On Oct. 28, 2009, WEG filed a motion for a preliminary injunction, seeking to enjoin PSCo from constructing, modifying, or operating Comanche Unit 3 prior to receiving a final MACT determination. PSCo strongly opposes the injunction. Among other issues, PSCo believes that WEG has failed to establish a substantial likelihood of prevailing on the merits of the suit and that therefore there is no valid legal basis upon which an injunction should be issued.

Employment, Tort and Commercial Litigation

Siewert vs. Xcel Energy — In June 2004, plaintiffs, the owners and operators of a Minnesota dairy farm, brought an action in Minnesota state court against NSP-Minnesota alleging negligence in the handling, supplying, distributing and selling of electrical power systems; negligence in the construction and maintenance of distribution systems; and failure to warn or adequately test such systems. Plaintiffs allege decreased milk production, injury, and damage to a dairy herd as a result of stray voltage resulting from NSP-Minnesota’s distribution system. Plaintiffs claim losses of approximately $7 million. NSP-Minnesota denies all allegations. After its motion to dismiss plaintiffs’ claims was denied, NSP-Minnesota filed a motion to certify questions for immediate appellate review. In October 2007, the court granted NSP-Minnesota’s motion for certification, and oral arguments took place on Sept. 11, 2008. Mediation took place on Oct. 14, 2008, but the matter was not resolved. In December 2008, the Court of Appeals issued a decision ordering dismissal of Plaintiffs’ claims for injunctive relief, but otherwise rejecting NSP-Minnesota’s contentions and ordering the matter remanded for trial. The Minnesota Supreme Court subsequently granted NSP-Minnesota’s petition for further review on Feb. 17, 2009. All briefs have been filed, but the Court has not yet set a date for oral argument.

Qwest vs. Xcel Energy Inc. — In June 2004, an employee of PSCo was seriously injured when a pole owned by Qwest malfunctioned. In September 2005, the employee commenced an action against Qwest in Colorado state court in Denver. In April 2006, Qwest filed a third party complaint against PSCo based on terms in a joint pole use agreement between Qwest and PSCo. Pursuant to this agreement, Qwest asserted PSCo had an affirmative duty to properly train and instruct its employees on pole safety, including testing the pole for soundness before climbing. In May 2006, PSCo filed a counterclaim against Qwest asserting Qwest had a duty to PSCo and an obligation under the contract to maintain its poles in a safe and serviceable condition. In May 2007, the matter was tried and the jury found Qwest solely liable for the accident and this determination resulted in an award of damages in the amount of approximately $90 million. On June 16, 2008, Qwest filed its appellate brief. On April 30, 2009, the Colorado Court of Appeals affirmed the jury verdict insofar as it relates to claims asserted by Qwest against PSCo. Qwest subsequently filed a petition for rehearing with the Colorado Court of Appeals. On May 28, 2009, the Colorado Court of Appeals denied Qwest’s request for rehearing. Qwest’s petition for certiorari to the Colorado Supreme Court was filed June 26, 2009. PSCo’s response brief was filed on July 27, 2009. The matter has been fully briefed, and PSCo is awaiting a ruling from the Colorado Supreme Court.

MGP Insurance Coverage Litigation — In October 2003, NSP-Wisconsin initiated discussions with its insurers regarding the availability of insurance coverage for costs associated with the remediation of four former MGP sites located in Ashland, Chippewa Falls, Eau Claire and LaCrosse, Wis. In lieu of participating in discussions, in October 2003, two of NSP-Wisconsin’s insurers, St. Paul Fire & Marine Insurance Co. and St. Paul Mercury Insurance Co., commenced litigation against NSP-Wisconsin in Minnesota state district court. In November 2003, NSP-Wisconsin commenced suit in Wisconsin state court against St. Paul Fire & Marine Insurance Co. and its other insurers. Subsequently, the Minnesota court enjoined NSP-Wisconsin from pursuing the Wisconsin litigation. The Wisconsin action remains in abeyance.

NSP-Wisconsin has reached settlements with 22 insurers, and these insurers have been dismissed from both the Minnesota and Wisconsin actions. NSP-Wisconsin has also reached settlements in principle with Ranger Insurance Company (Ranger), TIG Insurance Company (TIG), Royal Indemnity Company and Globe Indemnity Company.

In July 2007, the Minnesota state court issued a decision on allocation, reaffirming its prior rulings that Minnesota law on allocation should apply and ordering the dismissal, without prejudice, of 11 insurers whose coverage would not be triggered under such an allocation method. In September 2007, NSP-Wisconsin commenced an appeal in the Minnesota Court of Appeals challenging the dismissal of these carriers.

On Aug. 25, 2009, the Minnesota Court of Appeals affirmed the district court decision. NSP-Wisconsin subsequently filed a petition for review of this decision with the Minnesota Supreme Court. It is uncertain when the Minnesota Supreme Court will rule on whether to grant review pursuant to the petition.

The PSCW has established a deferral process whereby clean-up costs associated with the remediation of former MGP sites are deferred and, if approved by the PSCW, recovered from ratepayers. Carrying charges associated with these clean-up costs are not subject to the deferral process and are not recoverable from ratepayers. Any insurance proceeds received by NSP-Wisconsin will be credited to ratepayers. None of the aforementioned lawsuit settlements are expected to have a material effect on Xcel Energy’s consolidated financial statements.

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Nuclear Waste Disposal Litigation — In 1998, NSP-Minnesota filed a complaint in the U.S. Court of Federal Claims against the United States requesting breach of contract damages for the U.S. Department of Energy’s (DOE) failure to begin accepting spent nuclear fuel by Jan. 31, 1998, as required by the contract between the DOE and NSP-Minnesota. At trial, NSP-Minnesota claimed damages in excess of $100 million through Dec. 31, 2004. On Sept. 26, 2007, the court awarded NSP-Minnesota $116.5 million in damages. In December 2007, the court denied the DOE’s motion for reconsideration. In February 2008, the DOE filed an appeal to the U.S. Court of Appeals for the Federal Circuit, and NSP-Minnesota cross-appealed on the cost of capital issue. In April 2008, the DOE asked the Court of Appeals to stay briefing until the appeals in several other nuclear waste cases have been decided, and the Court of Appeals granted the request. In December 2008, NSP-Minnesota made a motion in the Court of Appeals to lift the stay, which was denied by the Court of Appeals in February 2009. Results of the judgment will not be recorded in earnings until the appeal, regulatory treatment and amounts to be shared with ratepayers have been resolved. Given the uncertainties, it is unclear as to how much, if any, of this judgment will ultimately have a net impact on earnings.

In August 2007, NSP-Minnesota filed a second complaint against the DOE in the U.S. Court of Federal Claims (NSP II), again claiming breach of contract damages for the DOE’s continuing failure to abide by the terms of the contract. This lawsuit will claim damages for the period Jan. 1, 2005 through Dec. 31, 2008, which includes costs associated with the storage of spent nuclear fuel at Prairie Island and Monticello, as well as the costs of complying with state regulation relating to the storage of spent nuclear fuel. Per the court’s scheduling order, NSP-Minnesota’s expert report on damages was submitted on April 15, 2009, and asserts damages in excess of $250 million. In late August 2009, the Court agreed to give the DOE an unspecified extension of time to clarify issues regarding NSP-Minnesota’s claim and to file its expert report. Trial is expected to take place in 2010.

Mallon vs. Xcel Energy Inc. — In August 2007, Xcel Energy, PSCo and PSR Investments, Inc. (PSRI) ( hereafter “ Plaintiffs”) commenced a lawsuit in Colorado state court against Theodore Mallon and TransFinancial Corporation seeking damages for, among other things, breach of contract and breach of fiduciary duties associated with the sale of Corporate Owned Life Insurance (COLI) policies. In May 2008, Plaintiffs filed an amended complaint that, among other things, adds Provident Life & Accident Insurance Company (Provident) as a defendant and asserts claims for breach of contract, unjust enrichment and fraudulent concealment against the insurance company. On June 23, 2008, Provident filed a motion to dismiss the complaint. On Oct. 22, 2008, the court granted Provident’s motion in part, but denied the motion with respect to a majority of the core causes of action asserted by Plaintiffs. In September 2009, Plaintiffs reached a settlement with Mallon and TransFinancial Corporation. Pursuant to the terms of the agreement, Mallon agreed to pay Plaintiffs a specified amount and the parties agreed to mutually release each other from all claims. Plaintiffs continue to prosecute their claims against Provident. A trial concerning these claims is expected in early 2010.

Cabin Creek Hydro Generating Station Accident — In October 2007, employees of RPI Coatings Inc. (RPI), a contractor retained by PSCo, were applying an epoxy coating to the inside of a penstock at PSCo’s Cabin Creek Hydro Generating Station near Georgetown, Colo. This work was being performed as part of a corrosion prevention effort. A fire occurred inside the penstock, which is a 4,000-foot long, 12-foot wide pipe used to deliver water from a reservoir to the hydro facility. Four of the nine RPI employees working inside the penstock were positioned below the fire and were able to exit the pipe. The remaining five RPI employees were unable to exit the penstock. Rescue crews located the five employees a few hours later and confirmed their deaths. The accident was investigated by several state and federal agencies, including the federal Occupational Safety and Health Administration (OSHA) and the U.S. Chemical Safety Board and the Colorado Bureau of Investigations.

In March 2008, OSHA proposed penalties totaling $189,900 for twenty-two serious violations and three willful violations arising out of the accident. In April 2008, Xcel Energy notified OSHA of its decision to contest all of the proposed citations. On May 28, 2008, the Secretary of Labor filed its complaint, and Xcel Energy subsequently filed its answer on June 17, 2008. The Court ordered this proceeding stayed until March 3, 2009 and subsequently extended the stay to October 2009. A lawsuit was filed in Colorado state court in Denver on behalf of four of the deceased workers and four of the injured workers (Foster, et. al. v. PSCo, et. al.). PSCo and Xcel Energy were named as defendants in that case, along with RPI Coatings and related companies and the two other contractors who also performed work in connection with the relining project at Cabin Creek. A second lawsuit (Ledbetter et. al vs. PSCo et. al) was also filed in Colorado state court in Denver on behalf of three employees allegedly injured in the accident. A third lawsuit was filed on behalf of one of the deceased RPI workers in the California state court (Aguirre v. RPI, et. al.), naming PSCo, RPI, and the two other contractors as defendants. The court subsequently dismissed the Aguirre lawsuit. Settlements were subsequently reached in all three lawsuits. These confidential settlements are not expected to have a material effect on the financial statements of Xcel Energy or its subsidiaries.

On Aug. 28, 2009, the U. S. Government announced that Xcel Energy and PSCo have been charged with five misdemeanor counts in federal court in Colorado for violation of an OSHA regulation related to the accident at Cabin Creek in October 2007. RPI Coatings, the contractor performing the work at the plant, and two individuals employed by RPI have also been indicted. On Sept. 22, 2009, both Xcel Energy and PSCo entered a not guilty plea, and both will vigorously defend against these charges.

Stone & Webster, Inc. vs. PSCo — On July 14, 2009, Stone & Webster, Inc. (Shaw) filed a complaint against PSCo in State District Court in Denver, Colo. for damages allegedly arising out of its construction work on the Comanche Unit 3 coal fired plant in Pueblo, Colo. Shaw, a contractor retained to perform certain engineering, procurement and construction work on Comanche Unit 3, alleges, among other things, that PSCo was responsible for and mismanaged the construction of Comanche Unit 3. Shaw further claims that this alleged mismanagement caused delays and damages in excess of $55 million. The complaint also alleges that Xcel Energy and related entities, including PSCo, guaranteed Shaw $10 million in future profits under the terms of a 2003 settlement agreement. Shaw alleges that it will not receive the $10 million to which it is entitled. Accordingly, Shaw seeks an amount up to $10 million relating to the 2003 settlement agreement. PSCo denies these allegations and believes the claims are without merit. PSCo filed an answer and counterclaim in August 2009, denying the allegations in the complaint and alleging that Shaw has failed to discharge its contractual obligations and has caused delays, and that PSCo is entitled, among other things, to liquidated damages and excess costs incurred. It is not anticipated that this lawsuit will affect Comanche Unit 3’s scheduled in-service date.

Fru-Con Construction Corporation vs. Utility Engineering Corporation (UE) et al. — In March 2005, Fru-Con Construction Corporation (Fru-Con) commenced a lawsuit in U.S. District Court in the Eastern District of California against UE and the Sacramento Municipal Utility District (SMUD) for damages allegedly suffered during the construction of a natural gas-fired, combined-cycle power plant in Sacramento County. Fru-Con’s complaint alleges that it entered into a contract with SMUD to construct the power plant and further alleges that UE was negligent with regard to the design services it furnished to SMUD. In August 2005, the court granted UE’s motion to dismiss. Because SMUD remains a defendant in this action, the court has not entered a final judgment subject to an appeal with respect to its order to dismiss UE from the lawsuit. Because this lawsuit was commenced prior to the April 2005, closing of the sale of UE to Zachry, Xcel Energy is obligated to indemnify Zachry for damages related to this case up to $17.5 million. Pursuant to the terms of its professional liability policy, UE is insured up to $35 million.

Lamb County Electric Cooperative (LCEC) — In 1995, LCEC petitioned the PUCT for a cease and desist order against SPS alleging SPS was unlawfully providing service to oil field customers in LCEC’s certificated area. In May 2003, the PUCT issued an order denying LCEC’s petition based on its determination that SPS in 1976 was granted a certificate to serve the disputed customers. LCEC appealed the decision to the Texas state court. In August 2004, the court affirmed the decision of the PUCT. In September 2004, LCEC appealed the decision to the Court of Appeals for the Third Supreme Judicial District. In November 2008, the Court of Appeals issued an opinion affirming the decision in favor of SPS. In December 2008, LCEC filed a petition for review with the Supreme Court of Texas. On Feb. 27, 2009, the Supreme Court of Texas denied LCEC’s request for review.

In 1996, LCEC filed a suit for damages against SPS in the District Court in Lamb County, Texas, based on the same facts alleged in the petition for a cease and desist order at the PUCT. This suit has been dormant since it was filed, awaiting a final determination of the legality of SPS providing electric service to the disputed customers. The PUCT order from May 2003, which found SPS was legally serving the disputed customers, collaterally determines the issue of liability contrary to LCEC’s position in the suit. Because the PUCT May 2003 order has now been affirmed, on June 16, 2009, LCEC filed a motion to dismiss this case. On Sept. 16, 2009, the District Court entered a dismissal order, disposing of all claims that have been or could have been asserted in this case.

8. Short-Term Borrowings and Other Financing Instruments

Commercial Paper — At Sept. 30, 2009 and Dec. 31, 2008, Xcel Energy and its utility subsidiaries had commercial paper outstanding of approximately $494.0 million and $330.3 million, respectively. The weighted average interest rates at Sept. 30, 2009 and Dec. 31, 2008 were 0.47 percent and 3.53 percent, respectively. At Sept. 30, 2009 and Dec. 31, 2008, Xcel Energy and its utility subsidiaries had combined board approval to issue up to $2.25 billion of commercial paper.

Credit Facility Bank Borrowings — At Dec. 31, 2008, Xcel Energy and its subsidiaries had credit facility bank borrowings of $125.0 million with a weighted average interest rate of 1.88 percent. At Sept. 30, 2009, Xcel Energy and its subsidiaries had no credit facility bank borrowings.

Money Pool — Xcel Energy and its utility subsidiaries have established a money pool arrangement that allows for short-term loans between the utility subsidiaries and from the holding company to the utility subsidiaries at market-based interest rates. The money pool arrangement does not allow loans from the subsidiaries to the holding company. At Sept. 30, 2009 and Dec. 31, 2008, Xcel Energy and its utility subsidiaries had money pool loans outstanding of $117.0 million and $104.5 million, respectively. The money pool loans are eliminated upon consolidation. The weighted average interest rates at Sept. 30, 2009 and Dec. 31, 2008, were 0.50 percent and 3.48 percent, respectively.

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9. Long-Term Borrowings and Other Financing Instruments

On March 1, 2009, NSP-Wisconsin redeemed its 7.375 percent $65.0 million first mortgage bonds due Dec. 1, 2026. In addition to repayment of all principal amounts, NSP-Wisconsin paid accrued interest and a redemption premium totaling approximately $3.0 million.

On June 4, 2009, PSCo issued $400 million of 5.125 percent first mortgage bonds, series due 2019. PSCo added the proceeds from the sale of the first mortgage bonds to its general funds and applied a portion of the net proceeds to fund the payment at maturity of $200 million of 6.875 percent unsecured senior notes due July 15, 2009.

In 1999, WYCO was formed as a joint venture with Colorado Interstate Gas Company (CIG) to develop and lease natural gas pipeline, storage, and compression facilities. Xcel Energy has a 50 percent ownership interest in WYCO. In June 2009, having achieved certain phases of construction, WYCO’s Totem gas storage facilities (Totem) were placed in service. WYCO will lease Totem to CIG, and CIG will operate the facilities, providing natural gas storage services to PSCo under a service arrangement that commenced on July 1, 2009.

Xcel Energy accounts for PSCo’s service arrangement with CIG as a capital lease in accordance with the authoritative guidance on lease accounting. As a result, Xcel Energy recorded a $67 million capital lease obligation as of Sept. 30, 2009. WYCO is expected to incur approximately $20 million of additional construction costs to complete construction and make Totem operational at full storage capacity.

10. Derivative Instruments

Effective Jan. 1, 2009, Xcel Energy adopted new guidance on disclosures about derivative instruments and hedging activities contained in ASC 815 Derivatives and Hedging , which requires additional disclosures regarding why an entity uses derivative instruments, the volume of an entity’s derivative activities, the fair value amounts recorded to the consolidated balance sheet for derivatives, the gains and losses on derivative instruments included in the consolidated statement of income or deferred, and information regarding certain credit-risk-related contingent features in derivative contracts.

Xcel Energy and its utility subsidiaries enter into derivative instruments, including forward contracts, futures, swaps and options, for trading purposes and to reduce risk in connection with changes in interest rates, utility commodity prices and vehicle fuel prices. See additional information pertaining to the valuation of derivative instruments in Note 12 to the consolidated financial statements.

Interest Rate Derivatives — Xcel Energy and its utility subsidiaries enter 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 a specific period. These derivative instruments are generally designated as cash flow hedges for accounting purposes.

At Sept. 30, 2009, accumulated other comprehensive income related to interest rate derivatives included $0.8 million of net losses expected to be reclassified into earnings during the next 12 months as the related hedged interest rate transactions impact earnings.

At Sept. 30, 2009, Xcel Energy had an unsettled interest rate swap outstanding at SPS with a notional amount of $25 million. The interest rate swap is not designated as a hedging instrument, and as such, changes in the fair value for the interest rate swap are recorded to earnings.

Commodity Derivatives — Xcel Energy’s utility subsidiaries enter into derivative instruments to manage variability of future cash flows from changes in commodity prices in their 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, gas for resale and vehicle fuel.

At Sept. 30, 2009, Xcel Energy had various utility commodity and vehicle fuel related contracts designated as cash flow hedges extending through December 2012. Xcel Energy’s utility subsidiaries also enter 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 the commission approved regulatory recovery mechanisms. Xcel Energy recorded immaterial amounts to income related to the ineffectiveness of cash flow hedges for the nine months ended Sept. 30, 2009 and 2008.

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At Sept. 30, 2009, Xcel Energy had $4.9 million of net losses in accumulated other comprehensive income related to utility commodity and vehicle fuel cash flow hedges of which $4.2 million is expected to be reclassified into earnings during the next 12 months as the hedged transactions occur.

Additionally, Xcel Energy’s utility subsidiaries enter into commodity derivative instruments for trading purposes not directly related to commodity price risks associated with serving their electric and natural gas customers. Changes in the fair value of these commodity derivatives are recorded in income.

Xcel Energy had no derivative instruments designated as fair value hedges during the nine months ended Sept. 30, 2009. Therefore , no gains or losses from fair value hedges or related hedged transactions were recognized for the period.

The following table shows the major components of derivative instruments valuation in the consolidated balance sheets:

	Sept. 30, 2009				Dec. 31, 2008
	Derivative		Derivative		Derivative		Derivative
	Instruments		Instruments		Instruments		Instruments
	Valuation -		Valuation -		Valuation -		Valuation -
(Thousands of Dollars)	Assets		Liabilities		Assets		Liabilities
Long term purchased power agreements	$	335,634	$	331,659	$	374,692	$	353,531
Commodity derivatives	109,625		37,707		52,968		54,307
Interest rate derivatives	—		17,602		—		8,503
Total	$	445,259	$	386,968	$	427,660	$	416,341

In 2003, as a result of implementing new guidance on the normal purchase exception for derivative accounting contained in ASC 815 Derivatives and Hedging , Xcel Energy began recording several long-term purchased power agreements 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.

Financial Impact of Qualifying Cash Flow Hedges — The impact of qualifying interest rate and vehicle fuel cash flow hedges on Xcel Energy’s accumulated other comprehensive income, included in the consolidated statements of common stockholders’ equity and comprehensive income, is detailed in the following table:

	Three Months Ended Sept. 30,
(Thousands of Dollars)	2009			2008
Accumulated other comprehensive loss related to cash flow hedges at July 1	$	(9,782	)	$	(6,134	)
After-tax net unrealized losses related to derivatives accounted for as hedges	(6,589		)	(2,589		)
After-tax net realized losses on derivative transactions reclassified into earnings	1,032			67
Accumulated other comprehensive loss related to cash flow hedges at Sept. 30	$	(15,339	)	$	(8,656	)

	Nine Months Ended Sept. 30,
(Thousands of Dollars)	2009			2008
Accumulated other comprehensive loss related to cash flow hedges at Jan. 1	$	(13,113	)	$	(1,416	)
After-tax net unrealized losses related to derivatives accounted for as hedges	(5,770		)	(7,347		)
After-tax net realized losses on derivative transactions reclassified into earnings	3,544			107
Accumulated other comprehensive loss related to cash flow hedges at Sept. 30	$	(15,339	)	$	(8,656	)

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The following table details the fair value of commodity and interest rate derivatives recorded to derivative instruments valuation in the consolidated balance sheet, by category:

	Sept. 30, 2009
						Derivative
			Counterparty			Instruments
(Thousands of Dollars)	Fair Value		Netting (a)			Valuation

Current derivative assets
Other derivative instruments:
Trading commodity	$	22,719	$	(14,050	)	$	8,669
Electric commodity	43,924		945			44,869
Natural gas commodity	29,747		1,126			30,873
Total current derivative assets	$	96,390	$	(11,979	)	$	84,411

Noncurrent derivative assets
Derivatives designated as cash flow hedges:
Vehicle fuel and other commodity	$	86	$	—		$	86
Other derivative instruments:
Trading commodity	22,457		(6,351		)	16,106
Natural gas commodity	8,872		150			9,022
	31,329		(6,201		)	25,128
Total noncurrent derivative assets	$	31,415	$	(6,201	)	$	25,214

Current derivative liabilities
Derivatives designated as cash flow hedges:
Interest rate	$	2,643	$	—		$	2,643
Vehicle fuel and other commodity	4,428		—			4,428
	7,071		—			7,071
Other derivative instruments:
Interest rate	1,522		—			1,522
Trading commodity	22,572		(18,459		)	4,113
Electric commodity	7,696		946			8,642
Natural gas commodity	8,978		1,124			10,102
	40,768		(16,389		)	24,379
Total current derivative liabilities	$	47,839	$	(16,389	)	$	31,450

Noncurrent derivative liabilities
Derivatives designated as cash flow hedges:
Interest rate	$	8,222	$	—		$	8,222
Vehicle fuel and other commodity	947		—			947
	9,169		—			9,169
Other derivative instruments:
Interest rate	5,215		—			5,215
Trading commodity	15,680		(6,355		)	9,325
Natural gas commodity	—		150			150
	20,895		(6,205		)	14,690
Total noncurrent derivative liabilities	$	30,064	$	(6,205	)	$	23,859

(a) ASC 815 Derivatives and Hedging permits the netting of receivables and payables for derivatives and related collateral amounts when a legally enforceable master netting agreement exists between Xcel Energy and a counterparty. A master netting agreement is an agreement between two parties who have multiple contracts with each other that provides for the net settlement of all contracts in the event of default on or termination of any one contract.

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The following table details the impact of derivative activity during the three and nine months ended Sept. 30, 2009, on other comprehensive income, regulatory assets and liabilities, and income:

	Three Months Ended Sept. 30, 2009
	Fair Value Changes Recognized						Pre-Tax Amounts Reclassified into
	During the Period in:						Income During the Period from:						Pre-Tax Gains (Losses)
	Other			Regulatory			Other			Regulatory			Recognized
	Comprehensive			Assets and			Comprehensive			Assets and			During the Period
(Thousands of Dollars)	Income (Loss)			Liabilities			Income			Liabilities			in Income

Derivatives designated as cash flow hedges
Interest rate	$	(10,846	)	$	—		$	291	(a)	$	—		$	—
Electric commodity	—			—			—			—			—
Natural gas commodity	—			1,457			—			202		(d)	—
Vehicle fuel and other commodity	(304		)	—			1,426		(e)	—			—
	$	(11,150	)	$	1,457		$	1,717		$	202		$	—

Other derivative instruments
Interest rate	$	—		$	—		$	—		$	—		$	(242	) (a)
Trading commodity	—			—			—			—			2,850		(b)
Electric commodity	—			(8,012		)	—			1,284		(c)	—
Natural gas commodity	—			46,700			—			1,325		(d)	—
	$	—		$	38,688		$	—		$	2,609		$	2,608

	Nine Months Ended Sept. 30, 2009
	Fair Value Changes Recognized						Pre-Tax Amounts Reclassified into
	During the Period in:						Income During the Period from:						Pre-Tax Gains (Losses)
	Other			Regulatory			Other			Regulatory			Recognized
	Comprehensive			Assets and			Comprehensive			Assets and			During the Period
(Thousands of Dollars)	Income (Loss)			Liabilities			Income			Liabilities			in Income

Derivatives designated as cash flow hedges
Interest rate	$	(11,425	)	$	—		$	834	(a)	$	—		$	—
Electric commodity	—			(18,599		)	—			(4,755		) (c)	—
Natural gas commodity	—			(15,830		)	—			78,488		(d)	(30,241		) (d)
Vehicle fuel and other commodity	1,610			—			5,019		(e)	—			—
	$	(9,815	)	$	(34,429	)	$	5,853		$	73,733		$	(30,241	)

Other derivative instruments
Interest rate	$	—		$	—		$	—		$	—		$	1,766	(a)
Trading commodity	—			—			—			—			6,918		(b)
Electric commodity	—			35,329			—			899		(c)	—
Natural gas commodity	—			37,535			—			1,340		(d)	—
Other	—			—			—			—			200		(b)
	$	—		$	72,864		$	—		$	2,239		$	8,884

(a) Recorded to interest charges.

(b) Recorded to electric operating revenues.

(c) Recorded to electric fuel and purchased power; these derivative settlement gains and losses 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.

(d) Recorded to cost of natural gas sold and transported; these derivative settlement gains and losses are shared with natural gas customers through purchased natural gas cost-recovery mechanisms, and reclassified out of income as regulatory assets or liabilities, as appropriate.

(e) Recorded to other operating and maintenance expenses.

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At Sept. 30, 2009, commodity derivatives recorded to derivative instruments valuation included derivative contracts with gross notional amounts of approximately 30,395,000 megawatt hours (MwH) of electricity, 86,673,000 MMBtu of natural gas, and 4,375,000 gallons of vehicle fuel. These amounts reflect the gross notional amounts of futures, forwards and financial transmission rights and are not reflective of net positions in the underlying commodities. Notional amounts for options are also included on a gross basis, but are weighted for the probability of exercise.

Credit Related Contingent Features — Contract provisions of the derivative instruments that the utility subsidiaries enter into 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 rating. If the credit rating of SPS were downgraded below investment grade, the counterparty to an interest rate swap agreement with SPS would have the ability to terminate the contract, which at Sept. 30, 2009 would have resulted in the payment of the fair value of the derivative liability to the counterparty of approximately $6.7 million. At Sept. 30, 2009, there was no collateral posted on this specific contract.

Certain of the utility subsidiaries’ 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 given utility subsidiary’s ability to fulfill its contractual obligations is reasonably expected to be impaired. As of Sept. 30, 2009, Xcel Energy’s utility subsidiaries had no collateral posted related to adequate assurance clauses in derivative contracts.

11. Financial Instruments

The estimated fair values of Xcel Energy’s recorded financial instruments are as follows:

	Sept. 30, 2009				Dec. 31, 2008
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Nuclear decommissioning fund	$	1,234,006	$	1,234,006	$	1,075,294	$	1,075,294
Other investments	11,477		11,477		9,864		9,864
Long-term debt, including current portion	8,129,934		9,045,330		8,290,460		8,562,277

The fair value of cash and cash equivalents, notes and accounts receivable and notes and accounts payable are not materially different from their carrying amounts. The fair value of Xcel Energy’s nuclear decommissioning fund is based on published trading data and pricing models, generally using the most observable inputs available for each class of security. The fair values of Xcel Energy’s other investments are estimated based on quoted market prices for those or similar investments. The fair value of Xcel Energy’s long-term debt is estimated based on the quoted market prices for the same or similar issues, or the current rates for debt of the same remaining maturities and credit quality.

The fair value estimates presented are based on information available to management as of Sept. 30, 2009 and Dec. 31, 2008. These fair value estimates have not been comprehensively revalued for purposes of these consolidated financial statements since that date, and current estimates of fair values may differ significantly.

Guarantees — Xcel Energy provides guarantees and bond indemnities supporting certain subsidiaries. The guarantees issued by Xcel Energy guarantee payment or performance by its subsidiaries under specified agreements or transactions. As a result, Xcel Energy’s exposure under the guarantees is based upon the net liability of the relevant subsidiary under the specified agreements or transactions. Most of the guarantees issued by Xcel Energy limit the exposure of Xcel Energy to a maximum amount stated in the guarantees. On Sept. 30, 2009 and Dec. 31, 2008, Xcel Energy had issued guarantees of up to $71.4 million and $67.5 million, respectively, with $17.9 million and $18.2 million of known exposure under these guarantees, respectively. In addition, Xcel Energy provides indemnity protection for bonds issued for itself and its subsidiaries. The total amount of bonds with this indemnity outstanding as of Sept. 30, 2009 and Dec. 31, 2008, was approximately $29.9 million and $27.9 million, respectively. The total exposure of this indemnification cannot be determined at this time. Xcel Energy believes the exposure to be significantly less than the total amount of bonds outstanding.

Letters of Credit — Xcel Energy and its subsidiaries use letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. At Sept. 30, 2009 and Dec. 31, 2008, there were $22.1 million and $24.1 million of letters of credit outstanding, respectively. The contract amounts of these letters of credit approximate their fair value and are subject to fees determined in the marketplace.

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12. Fair Value Measurements

Effective Jan. 1, 2008, Xcel Energy adopted new guidance for recurring fair value measurements contained in ASC 820 Fair Value Measurements and Disclosures which provides a single definition of fair value and requires enhanced disclosures about assets and liabilities measured at fair value. A hierarchal framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value was established by this guidance. The three levels in the hierarchy and examples of each level are as follows:

Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed by the New York Stock Exchange and commodity derivative contracts listed on the New York Mercantile Exchange.

Level 2 — Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities.

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 with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial transmission rights (FTRs).

The following tables present, for each of these hierarchy levels, Xcel Energy’s assets and liabilities that are measured at fair value on a recurring basis:

	Sept. 30, 2009
							Counterparty
(Thousands of Dollars)	Level 1		Level 2		Level 3		Netting			Net Balance
Assets
Nuclear decommissioning fund
Cash equivalents	$	—	$	16,386	$	—	$	—		$	16,386
Debt securities	—		569,303		98,233		—			667,536
Equity securities	550,084		—		—		—			550,084
Commodity derivatives	—		63,768		64,037		(18,180		)	109,625
Total	$	550,084	$	649,457	$	162,270	$	(18,180	)	$	1,343,631

Liabilities
Commodity derivatives	$	—	$	40,585	$	19,716	$	(22,594	)	$	37,707
Interest rate derivatives	—		17,602		—		—			17,602
Total	$	—	$	58,187	$	19,716	$	(22,594	)	$	55,309

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	Dec. 31, 2008
							Counterparty
(Thousands of Dollars)	Level 1		Level 2		Level 3		Netting			Net Balance
Assets
Cash equivalents	$	—	$	50,000	$	—	$	—		$	50,000
Nuclear decommissioning fund										—
Cash equivalents	—		8,449		—		—			8,449
Debt securities	—		491,486		109,423		—			600,909
Equity securities	465,936		—		—		—			465,936
Commodity derivatives	—		29,648		39,565		(16,245		)	52,968
Total	$	465,936	$	579,583	$	148,988	$	(16,245	)	$	1,178,262

Liabilities
Commodity derivatives	$	600	$	78,714	$	16,344	$	(41,351	)	$	54,307
Interest rate derivatives	—		8,503		—		—			8,503
Total	$	600	$	87,217	$	16,344	$	(41,351	)	$	62,810

The following tables present the changes in Level 3 recurring fair value measurements for the three and nine months ended Sept. 30, 2009 and 2008:

	Three Months Ended Sept. 30,
	2009					2008
	Commodity			Nuclear		Commodity			Nuclear
	Derivatives,			Decommissioning		Derivatives,			Decommissioning
(Thousands of Dollars)	Net			Fund		Net			Fund
Balance July 1	$	49,311		$	86,337	$	24,149		$	109,416
Purchases, issuances, and settlements, net	(1,557		)	5,790		(2,960		)	9,110
Transfers into (out of) Level 3	1,202			—		(1,466		)	—
Losses recognized in earnings	1,197			—		2,382			—
Gains (losses) recognized as regulatory assets and liabilities	(5,832		)	6,106		5,758			(4,572		)
Balance Sept. 30	$	44,321		$	98,233	$	27,863		$	113,954

	Nine Months Ended Sept. 30,
	2009						2008
	Commodity			Nuclear			Commodity			Nuclear
	Derivatives,			Decommissioning			Derivatives,			Decommissioning
(Thousands of Dollars)	Net			Fund			Net			Fund
Balance Jan. 1	$	23,221		$	109,423		$	19,466		$	108,656
Purchases, issuances, and settlements, net	(2,779		)	(22,335		)	(10,031		)	12,760
Transfers into (out of) Level 3	1,770			—			(1,414		)	—
Gains recognized in earnings	(878		)	—			(3,884		)	—
Gains (losses) recognized as regulatory assets and liabilities	22,987			11,145			23,726			(7,462		)
Balance Sept. 30	$	44,321		$	98,233		$	27,863		$	113,954

Gains on Level 3 commodity derivatives recognized in earnings for the three months ended Sept. 30, 2009, include $2.3 million of net unrealized gains relating to commodity derivatives held at Sept. 30, 2009. Losses on Level 3 commodity derivatives recognized in earnings for the nine months ended Sept. 30, 2009, included $6.7 million of net unrealized gains relating to commodity derivatives held at Sept. 30, 2009. Gains and losses on Level 3 commodity derivatives recognized in earnings for the three and nine months ended Sept. 30, 2008, include $1.2 million and $4.7 million of net unrealized gains relating to commodity derivatives held at Sept. 30, 2008. Realized and unrealized gains and losses on commodity trading activities are included in electric revenues. Realized and unrealized gains and losses on non-trading derivative instruments are recorded in other comprehensive income or deferred as regulatory assets and liabilities. The classification as a regulatory asset or liability is based on the commission approved regulatory recovery mechanisms. Realized and unrealized gains and losses on nuclear decommissioning fund investments are deferred as a component of a nuclear decommissioning regulatory asset.

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13. Other Income (Expense), Net

Other income (expense), net consisted of the following:

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
(Thousands of Dollars)	2009			2008			2009			2008
Interest income	$	2,709		$	9,854		$	8,775		$	22,244
Other nonoperating income	248			1,146			3,078			4,752
Insurance policy (expenses) income	(3,534		)	(1,264		)	(6,877		)	274
Other nonoperating expenses	(400		)	—			(582		)	—
Other income (expense), net	$	(977	)	$	9,736		$	4,394		$	27,270

14. Segment Information

Xcel Energy has the following reportable segments: regulated electric, regulated natural gas and all other. Commodity trading operations performed by regulated operating companies are not a reportable segment and are included in the regulated electric segment.

	Regulated		Regulated			All		Reconciling			Consolidated
(Thousands of Dollars)	Electric		Natural Gas			Other		Eliminations			Total
Three Months Ended Sept. 30, 2009
Operating revenues from external customers	$	2,128,955	$	169,601		$	16,006	$	—		$	2,314,562
Intersegment revenues	151		584			—		(735		)	—
Total revenues	$	2,129,106	$	170,185		$	16,006	$	(735	)	$	2,314,562
Income (loss) from continuing operations	$	235,751	$	(1,000	)	$	152	$	(13,110	)	$	221,793

Three Months Ended Sept. 30, 2008
Operating revenues from external customers	$	2,576,467	$	258,961		$	16,252	$	—		$	2,851,680
Intersegment revenues	225		1,208			—		(1,433		)	—
Total revenues	$	2,576,692	$	260,169		$	16,252	$	(1,433	)	$	2,851,680
Income (loss) from continuing operations	$	223,464	$	3,960		$	7,817	$	(12,546	)	$	222,695

	Regulated		Regulated		All		Reconciling			Consolidated
(Thousands of Dollars)	Electric		Natural Gas		Other		Eliminations			Total
Nine Months Ended Sept. 30, 2009
Operating revenues from external customers	$	5,749,207	$	1,224,161	$	52,819	$	—		$	7,026,187
Intersegment revenues	569		2,505		—		(3,074		)	—
Total revenues	$	5,749,776	$	1,226,666	$	52,819	$	(3,074	)	$	7,026,187
Income (loss) from continuing operations	$	473,392	$	71,070	$	14,739	$	(44,526	)	$	514,675

Nine Months Ended Sept. 30, 2008
Operating revenues from external customers	$	6,704,164	$	1,736,701	$	54,718	$	—		$	8,495,583
Intersegment revenues	767		5,831		—		(6,598		)	—
Total revenues	$	6,704,931	$	1,742,532	$	54,718	$	(6,598	)	$	8,495,583
Income (loss) from continuing operations	$	423,310	$	83,398	$	23,423	$	(47,969	)	$	482,162

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15. Common Stock and Equivalents

Xcel Energy has common stock equivalents consisting of 401(k) equity awards and stock options. Restricted stock units and performance shares are included as common stock equivalents when all necessary conditions for issuance have been satisfied by the end of the period being reported.

For the three months ended Sept. 30, 2009 and 2008, Xcel Energy had approximately 7.3 million and 8.0 million stock options outstanding, respectively, that were antidilutive and excluded from the earnings per share calculation. For the nine months ended Sept. 30, 2009 and 2008, Xcel Energy had approximately 7.7 million and 8.0 million stock options outstanding, respectively, that were antidilutive and excluded from the earnings per share calculation.

The dilutive impact of common stock equivalents affected earnings per share as follows for the three and nine months ended Sept. 30, 2009 and 2008:

	Three Months Ended Sept. 30, 2009						Three Months Ended Sept. 30, 2008
					Per Share						Per Share
(Amounts in thousands, except per share data)	Income			Shares	Amount		Income			Shares	Amount
Net income	$	220,828					$	222,789
Less: Dividend requirements on preferred stock	(1,060		)				(1,060		)
Basic earnings per share:
Earnings available to common shareholders	219,768			456,769	$	0.48	221,729			434,131	$	0.51
Effect of dilutive securities:
Convertible senior notes	—			—			801			4,663
401(k) equity awards	—			683			—			583
Stock options	—			1			—			20
Diluted earnings per share:
Earnings available to common shareholders and assumed conversions	$	219,768		457,453	$	0.48	$	222,530		439,397	$	0.51

	Nine Months Ended Sept. 30, 2009						Nine Months Ended Sept. 30, 2008
(Amounts in thousands, except per share data)	Income			Shares	Per Share Amount		Income			Shares	Per Share Amount
Net income	$	512,002					$	481,478
Less: Dividend requirements on preferred stock	(3,180		)				(3,180		)
Basic earnings per share:
Earnings available to common shareholders	508,822			456,095	$	1.12	478,298			431,511	$	1.11
Effect of dilutive securities:
Convertible senior notes	—			—			2,382			4,663
401(k) equity awards	—			634			—			516
Stock options	—			—			—			26
Diluted earnings per share:
Earnings available to common shareholders and assumed conversions	$	508,822		456,729	$	1.11	$	480,680		436,716	$	1.10

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16. Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost (Credit)

	Three Months Ended Sept. 30,
	2009			2008			2009			2008
							Postretirement Health
(Thousands of Dollars)	Pension Benefits						Care Benefits
Service cost	$	16,365		$	15,851		$	1,166		$	1,338
Interest cost	42,448			42,630			12,603			12,720
Expected return on plan assets	(64,135		)	(68,584		)	(5,694		)	(7,963		)
Amortization of transition obligation	—			—			3,611			3,644
Amortization of prior service cost (credit)	6,155			5,166			(681		)	(544		)
Amortization of net loss	3,114			3,185			4,832			2,875
Net periodic benefit cost (credit)	3,947			(1,752		)	15,837			12,070
(Cost) credits not recognized and additional cost recognized due to the effects of regulation	(723		)	2,258			972			972
Net benefit cost recognized for financial reporting	$	3,224		$	506		$	16,809		$	13,042

	Nine Months Ended Sept. 30,
	2009			2008			2009			2008
							Postretirement Health
(Thousands of Dollars)	Pension Benefits						Care Benefits
Service cost	$	49,095		$	47,553		$	3,499		$	4,013
Interest cost	127,343			127,890			37,809			38,160
Expected return on plan assets	(192,404		)	(205,753		)	(17,082		)	(23,888		)
Amortization of transition obligation	—			—			10,833			10,932
Amortization of prior service cost (credit)	18,464			15,498			(2,044		)	(1,632		)
Amortization of net loss	9,342			9,555			14,497			8,624
Net periodic benefit cost (credit)	11,840			(5,257		)	47,512			36,209
(Cost) credits not recognized and additional cost recognized due to the effects of regulation	(2,169		)	6,775			2,918			2,918
Net benefit cost recognized for financial reporting	$	9,671		$	1,518		$	50,430		$	39,127

During 2009, voluntary contributions were made by Xcel Energy to the New Century Energies Inc. Retirement Plan for PSCo Bargaining Unit Employees and Former Non Bargaining Unit Employees (PSCo Bargaining Plan) of $1.5 million and to the Xcel Energy Inc. Non Bargaining Pension Plan (South) of $0.5 million. In addition, voluntary contributions were made by PSCo to the PSCo Bargaining Plan of $71.6 million and to the Xcel Energy Inc. Non Bargaining Pension Plan (South) of $18.3 million, and by SPS to the Xcel Energy Inc. Non Bargaining Pension Plan (South) of $8.0 million.

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

The following discussion and analysis by management focuses on those factors that had a material effect on Xcel Energy’s financial condition, results of operations and cash flows during the periods presented, or are expected to have a material impact in the future. It should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes to the consolidated financial statements. Due to the seasonality of Xcel Energy’s electric and natural gas sales, such interim results are not necessarily an appropriate base from which to project annual results.

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Forward-Looking Statements

Except for the historical statements contained in this report, the matters discussed in the following discussion and analysis are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including the availability of credit and its impact on capital expenditures and the ability of Xcel Energy and its subsidiaries to obtain financing on favorable terms; business conditions in the energy industry; actions of credit rating agencies; competitive factors, including the extent and timing of the entry of additional competition in the markets served by Xcel Energy and its subsidiaries; unusual weather; effects of geopolitical events, including war and acts of terrorism; state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rates or have an impact on asset operation or ownership or impose environmental compliance conditions; structures that affect the speed and degree to which competition enters the electric and natural gas markets; costs and other effects of legal and administrative proceedings, settlements, investigations and claims; environmental laws and regulations, actions of accounting regulatory bodies; the items described under Factors Affecting Results of Continuing Operations; and the other risk factors listed from time to time by Xcel Energy in reports filed with the SEC, including “Risk Factors” in Item 1A of Xcel Energy’s Form 10-K for the year ended Dec. 31, 2008, and Item 1A and Exhibit 99.01 to this Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2009.

RESULTS OF OPERATIONS

Earnings per Share Summary

The following table summarizes the diluted earnings per share for Xcel Energy:

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
Diluted earnings (loss) per share	2009			2008			2009			2008
PSCo	$	0.20		$	0.20		$	0.51		$	0.56
NSP-Minnesota	0.20			0.25			0.48			0.51
NSP-Wisconsin	0.03			0.03			0.08			0.07
SPS	0.08			0.05			0.14			0.06
Equity earnings of unconsolidated subsidiaries (WYCO)	0.01			0.01			0.02			0.01
Regulated utility — continuing operations	0.52			0.54			1.23			1.21
Holding company and other costs	(0.04		)	(0.03		)	(0.11		)	(0.11		)
Ongoing (a) diluted earnings per share	0.48			0.51			1.12			1.10
PSRI	—			—			(0.01		)	—
GAAP diluted earnings per share	$	0.48		$	0.51		$	1.11		$	1.10

(a) Ongoing earnings excludes the impact related to the COLI program. During 2007, Xcel Energy resolved a dispute with the IRS regarding its COLI program. The 2009 and 2008 earnings were not materially affected by the termination of the COLI program and the 2009 impact is primarily related to legal costs associated with company claims against the insurance provider and broker of the COLI policies.

PSCo — Earnings at PSCo were flat for the third quarter and decreased by five cents per share for the nine months ending Sept. 30, 2009, largely due to the negative impact of weather and rising costs. The decrease was partially offset by new electric rates that went into effect in July 2009. In May 2009, the CPUC approved an annual electric rate increase of $112 million.

NSP-Minnesota — Earnings at NSP-Minnesota decreased by five cents per share for the third quarter and by three cents per share for the nine months ending Sept. 30, 2009. The decrease is mainly due to the negative impact of weather, an increase in the effective tax rate and timing of nuclear outage expenses. The decrease was partially offset by an electric rate increase that went into effect in January 2009.

NSP-Wisconsin — Earnings at NSP-Wisconsin were flat for the third quarter and increased by one cent per share for the nine months ending Sept. 30, 2009, largely due to improved fuel recovery and new rates which were effective in January 2009.

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SPS — Earnings at SPS increased by three cents per share for the third quarter and by eight cents per share for the nine months ending Sept. 30, 2009. The increase was primarily due to electric rate increases in Texas (effective in February 2009) and New Mexico (effective in July 2009) and the 2008 resolution of certain fuel cost allocation issues, which were partially offset by higher purchased capacity costs.

WYCO — Equity earnings of unconsolidated subsidiaries were flat for the third quarter and increased by one cent per share for the nine months ending Sept. 30, 2009, due to our investment in WYCO, which owns a natural gas pipeline in Colorado that began operations in late 2008, as well as a storage facility that commenced operations in July 2009.

Holding Company and Other Costs

Financing Costs and Preferred Dividends — Holding company and other results include interest expense and the earnings per share impact of preferred dividends, which are incurred at the Xcel Energy and intermediate holding company levels, and are not directly assigned to individual subsidiaries.

The following table summarizes the earnings contributions of Xcel Energy’s business segments on the basis of GAAP:

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
Contribution to Earnings (Millions of Dollars)	2009			2008			2009			2008
GAAP income (loss) by segment
Regulated electric income — continuing operations	$	235.8		$	223.4		$	473.4		$	423.3
Regulated natural gas income — continuing operations	(1.0		)	4.0			71.1			83.4
Other regulated income (a)	4.2			7.3			17.9			23.3
Segment income — continuing operations	239.0			234.7			562.4			530.0

Holding company costs and other results (a)	(17.2		)	(12.0		)	(47.7		)	(47.8		)
Total income — continuing operations	221.8			222.7			514.7			482.2

Discontinued operations	(1.0		)	0.1			(2.7		)	(0.7		)
Total GAAP net income	$	220.8		$	222.8		$	512.0		$	481.5

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
	2009			2008			2009			2008
GAAP earnings (loss) by segment
Regulated electric — continuing operations	$	0.50		$	0.51		$	1.04		$	0.97
Regulated natural gas — continuing operations	—			0.01			0.15			0.19
Other regulated income (a)	0.02			0.02			0.04			0.05
Segment earnings per share — continuing operations	0.52			0.54			1.23			1.21

Holding company costs and other results (a)	(0.04		)	(0.03		)	(0.11		)	(0.11		)
Total earnings per share — continuing operations	0.48			0.51			1.12			1.10

Discontinued operations	—			—			(0.01		)	—
Total earnings per share — continuing operations	$	0.48		$	0.51		$	1.11		$	1.10

(a) Not a reportable segment. Refer to Segment Information in Note 14 to the Consolidated Financial Statements.

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The following table summarizes significant components contributing to the changes in the 2009 diluted earnings per share compared with the same periods in 2008, which are discussed in more detail later.

	Three Months			Nine Months
	Ended Sept. 30,			Ended Sept. 30,
2008 GAAP and ongoing (a) diluted earnings per share	$	0.51		$	1.10

Components of change — 2009 vs. 2008

Higher electric margins	0.12			0.30
Lower depreciation and amortization expenses	0.02			0.02
Higher allowance for funds used during construction — equity	0.01			0.02
Higher operating and maintenance expenses	(0.06		)	(0.10		)
Higher conservation and DSM expenses (generally offset in revenues)	(0.03		)	(0.06		)
Lower other income (expense), net	(0.02		)	(0.03		)
Dilution from DRIP, benefit plan and the 2008 common equity issuance	(0.02		)	(0.05		)
Higher taxes, other than income taxes	(0.01		)	(0.02		)
Lower natural gas margins	(0.01		)	(0.03		)
Higher interest expenses	—			(0.02		)
Other, including higher effective tax rate	(0.03		)	(0.01		)
2009 GAAP diluted earnings per share	0.48			1.12
PSRI	—			(0.01		)
2009 ongoing (a) diluted earnings per share	$	0.48		$	1.11

Utility Results

The following table summarizes the estimated impact on diluted earnings per share of temperature variations compared with sales under normal weather conditions:

	Three Months Ended Sept. 30,									Nine Months Ended Sept. 30,
	2009 vs.			2008 vs.			2009 vs.			2009 vs.			2008 vs.			2009 vs.
	Normal			Normal			2008			Normal			Normal			2008
Retail electric	$	(0.05	)	$	(0.01	)	$	(0.04	)	$	(0.05	)	$	(0.01	)	$	(0.04	)
Firm natural gas	—			—			—			(0.01		)	0.01			(0.02		)
Total	$	(0.05	)	$	(0.01	)	$	(0.04	)	$	(0.06	)	$	—		$	(0.06	)

Electric Revenues and Margin

Electric fuel and purchased power expenses tend to vary with changing retail and wholesale sales requirements and unit cost changes in fuel and purchased power. Due to fuel and purchased energy cost-recovery mechanisms for customers in most states, the fluctuations in these costs do not materially affect electric margin. The following tables detail the electric revenues and margin:

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
(Millions of Dollars)	2009			2008			2009			2008
Electric revenues	$	2,129		$	2,576		$	5,749		$	6,704
Electric fuel and purchased power	(982		)	(1,514		)	(2,704		)	(3,871		)
Electric margin	$	1,147		$	1,062		$	3,045		$	2,833

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The following tables summarize the components of the changes in electric revenues and electric margin:

Electric Revenues

	Three Months			Nine Months
	Ended Sept. 30,			Ended Sept. 30,
(Millions of Dollars)	2009 vs. 2008			2009 vs. 2008
Fuel and purchased power cost recovery	$	(518	)	$	(1,143	)
Estimated impact of weather	(26		)	(24		)
NSP-Minnesota rate case provision for refund (largely offset in depreciation expense)	(25		)	(30		)
Trading	(11		)	(63		)
Sales mix and demand revenues	(5		)	10
Retail rate increases (Colorado, Minnesota, Texas, New Mexico and Wisconsin)	98			190
Conservation and DSM revenues (generally offset by expenses)	20			53
2008 refund of nuclear refueling outage revenues due to change in recovery method	14			15
Non-fuel riders	4			18
MERP rider	3			13
Transmission revenue	3			9
Retail sales decline (excluding weather impact)	—			(17		)
SPS 2008 fuel cost allocation regulatory accruals	—			12
Other, net	(4		)	2
Total decrease in electric revenue	$	(447	)	$	(955	)

Electric Margin

	Three Months			Nine Months
	Ended Sept. 30,			Ended Sept. 30,
(Millions of Dollars)	2009 vs. 2008			2009 vs. 2008
Retail rate increases (Colorado, Minnesota, Texas, New Mexico and Wisconsin)	$	98		$	190
Conservation and DSM revenues (generally offset by expenses)	20			53
2008 refund of nuclear refueling outage revenues due to change in recovery method	14			15
Non-fuel riders	4			18
MERP rider	3			13
NSP-Wisconsin fuel recovery	3			10
Firm wholesale	2			10
Estimated impact of weather	(26		)	(24		)
NSP-Minnesota rate case provision for refund (largely offset in depreciation expense)	(25		)	(30		)
Purchased capacity costs	(11		)	(44		)
Sales mix and demand revenues	(5		)	10
Retail sales (decline excluding weather impact)	—			(17		)
SPS 2008 fuel cost allocation regulatory accruals	—			12
Other, net	8			(4		)
Total increase in electric margin	$	85		$	212

Xcel Energy has experienced a decline in MwH sales, which we believe is driven by overall economic conditions, and to a lesser degree, increased conservation efforts. Our most significant declines have occurred in commercial and industrial sales, which are directly related to the economic downturn. The declines in MwH sales to the commercial and industrial customer class are partially offset by demand fees, which mitigate to a certain degree the impact of the lower MwH sales.

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Natural Gas Revenues and Margin

The cost of natural gas tends to vary with changing sales requirements and the cost of wholesale natural gas purchases. However, due to purchased natural gas cost-recovery mechanisms for sales to retail customers, fluctuations in the cost of natural gas have little effect on natural gas margin. The following tables detail natural gas revenues and margin:

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
(Millions of Dollars)	2009			2008			2009			2008
Natural gas revenues	$	170		$	259		$	1,224		$	1,737
Cost of natural gas sold and transported	(72		)	(156		)	(810		)	(1,299		)
Natural gas margin	$	98		$	103		$	414		$	438

The following tables summarize the components of the changes in natural gas revenues and margin:

Natural Gas Revenues

	Three Months			Nine Months
	Ended Sept. 30,			Ended Sept. 30,
(Millions of Dollars)	2009 vs. 2008			2009 vs. 2008
Purchased natural gas adjustment clause recovery	$	(85	)	$	(493	)
Sales mix	(2		)	(4		)
Transportation margin	(2		)	(1		)
Conservation and DSM revenues (generally offset by expenses)	1			2
Estimated impact of weather	—			(13		)
Other, net	(1		)	(4		)
Total decrease in natural gas revenues	$	(89	)	$	(513	)

Natural Gas Margin

	Three Months			Nine Months
	Ended Sept. 30,			Ended Sept. 30,
(Millions of Dollars)	2009 vs. 2008			2009 vs. 2008
Sales mix	$	(2	)	$	(4	)
Transportation margin	(2		)	(2		)
Estimated impact of weather	(1		)	(13		)
Conservation and DSM revenues (generally offset by expenses)	1			2
Other, net	(1		)	(7		)
Total decrease in natural gas margin	$	(5	)	$	(24	)

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Non-Fuel Operating Expense and Other Items

Other Operating and Maintenance (O&M) Expenses — O&M expenses increased by approximately $43.9 million, or 10.4 percent, for the third quarter and approximately $70.4 million, or 5.3 percent for the first nine months of 2009, compared with 2008. The following table summarizes the changes in other O&M expenses:

	Three Months			Nine Months
	Ended Sept. 30,			Ended Sept. 30,
(Millions of Dollars)	2009 vs. 2008			2009 vs. 2008
Nuclear outage costs, net of deferral	$	27		$	26
Higher employee benefit costs	15			40
Higher nuclear plant operation costs	4			20
Higher plant generation costs	3			5
Lower consulting costs	(7		)	(19		)
Other, net	2			(2		)
Total increase in other operating and maintenance expenses	$	44		$	70

· The increase in nuclear outage costs is due to the timing of outages in conjunction with the commissions’ approval of the change in the nuclear refueling outage recovery method from the direct expense method to the deferral and amortization method in the third quarter of 2008.

· Higher employee benefits costs are primarily attributable to increased pension costs, in part, related to market losses on retirement benefit plan assets, as well as higher employee medical plan costs.

· The increase in nuclear plant operation costs is driven primarily by an increase in security costs and regulatory fees, resulting from new Nuclear Regulatory Commission requirements.

· Lower consulting costs are primarily the result of cost management initiatives implemented in early 2009.

Conservation and DSM Program Expenses — Conservation and DSM program expenses increased approximately $19.7 million for the third quarter of 2009, and by $41.5 million for the first nine months of 2009, compared with the same periods in 2008. The higher expense is attributable to the expansion of programs and regulatory commitments. Conservation and DSM program expenses are generally recovered through riders in our major jurisdictions or through base rates with tracker mechanisms.

Depreciation and Amortization — Depreciation and amortization expenses decreased by approximately $10.9 million, or 5.2 percent, for the third quarter of 2009, and by $13.2 million, or 2.1 percent, for the first nine months of 2009, compared with the same periods in 2008. In September 2009, as a result of the MPUC decision, in the Minnesota electric rate case, NSP-Minnesota began recognizing a 10-year life extension of the Prairie Island nuclear plant for purposes of determining depreciation, effective Jan. 1, 2009. In addition, in June 2009, the MPUC extended the recovery period of decommissioning expense by 10 years for the Prairie Island and the Monticello nuclear plants. These decreases were partially offset by normal system expansion.

Taxes (Other Than Income Taxes) — Taxes (other than income taxes) increased by approximately $8.7 million, or 12.3 percent, for the third quarter of 2009, and by $10.8 million, or 5.0 percent, for the first nine months of 2009, compared with the same periods in 2008. The increase is primarily due to increased property taxes.

Other Income (Expense), Net — Other income (expense), net, decreased $10.7 million during the third quarter of 2009 and $22.9 million for the first nine months of 2009, compared with the same periods in 2008. The net decline is mainly due to changes in our non-qualified benefit plan liabilities related to market activity, lower interest on under recovered deferred fuel balances and a decrease in interest received from WYCO for construction deposits.

Allowance for Funds Used During Construction, Equity and Debt (AFDC) — AFDC increased by approximately $2.3 million, or 8.8 percent, for the third quarter of 2009, and by $11.0 million, or 14.8 percent, for the first nine months of 2009, compared with the same periods in 2008. The increase was due primarily to the construction of Comanche Unit 3, a power facility located in Colorado which is expected to be completed in the fourth quarter of 2009, as well as other construction projects.

Interest Charges — Interest charges decreased by approximately $0.4 million, or 0.3 percent, for the third quarter of 2009 and increased by $14.8 million, or 3.6 percent, for the first nine months of 2009, compared with the same periods in 2008. The lower interest expense in the third quarter was largely due to a maturing bond at NSP-Minnesota that was repaid by issuing lower-cost short-term debt. This short-term debt is expected to be refinanced with long-term debt later in the year. The year-to-date increase was primarily the result of increased debt levels to fund new capital investments.

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Income Taxes — Income tax expense for continuing operations increased by $14.1 million for the third quarter of 2009, compared with 2008. The effective tax rate for continuing operations was 38.4 percent for the third quarter of 2009, compared with 35.3 percent for the same period in 2008. Income tax expense for continuing operations increased by $27.8 million for the first nine months of 2009, compared with the first nine months of 2008. The effective tax rate for continuing operations was 35.8 percent for the first nine months of 2009, compared with 34.4 percent for the same period in 2008.

The higher effective tax rates were primarily due to the recognition of additional state unitary tax expense and the establishment of a valuation allowance against certain state tax credit carryovers that are now expected to expire, which was partially offset by wind energy production tax credits. Excluding these expense items, the effective tax rate for the third quarter and first nine months of 2009 would have been 36.4 percent and 34.8 percent, respectively. We expect the effective tax rate for 2009 continuing operations to be approximately 34 percent to 36 percent.

Equity Earnings of Unconsolidated Subsidiaries — Equity earnings of unconsolidated subsidiaries increased by $4.0 million for the third quarter of 2009, and by $9.6 million, for the first nine months of 2009, compared with the same periods in 2008. The increase is primarily due to higher earnings from the equity investment in WYCO as a result of the High Plains natural gas pipeline, located in Colorado, commencing operations in late 2008, as well as a storage facility that commenced operations in July 2009.

Factors Affecting Results of Continuing Operations

Fuel Supply and Costs

See the discussion of fuel supply and costs in Item 7 — Managements Discussion and Analysis of Financial Condition and Results of Operations in Xcel Energy’s Annual Report on Form 10-K filed for the year ended Dec. 31, 2008.

Public Utility Regulation

NSP-Minnesota

Minnesota Resource Plan — In 2007, NSP-Minnesota filed its resource plan, which covers 2008-2022. The plan would reduce CO 2 emissions by 22 percent from 2005 by 2020, a 6 million ton reduction.

In July 2009, the MPUC approved NSP-Minnesota’s 2007 resource plan, including the following components:

· Energy efficiency savings of 1.15 percent in 2010, 1.2 percent in 2011 and 1.3 percent in 2012;

· Install sufficient renewables to meet the Minnesota RES;

· Obtain required approvals to extend the life of the Prairie Island nuclear plant and to increase the output at both Prairie Island and Monticello;

· Continue ongoing capacity expansion at Sherco Unit 3;

· Continue to investigate repowering Black Dog Units 3 and 4, and provide the MPUC with specific plans and timelines for the repowering;

· Obtain approval for the 375 MW intermediate and 350 MW diversity exchange with Manitoba Hydro beginning in 2015; and

· Continue to ensure sufficient transmission available to deliver generation to load.

Additionally, the MPUC required NSP-Minnesota to consider higher levels of DSM and energy efficiency and provide recommendations in NSP-Minnesota’s next resource plan, which is to be filed no later than Aug. 1, 2010.

Excelsior Energy — In December 2005, Excelsior, an independent energy developer, filed a power purchase agreement with the MPUC seeking a declaration that NSP-Minnesota be compelled to enter into an agreement to purchase the output from two integrated gas combined cycle (IGCC) plants to be located in northern Minnesota as part of the Mesaba Energy Project. Excelsior filed this petition making claims pursuant to Minnesota statutes relating to an Innovative Energy Project and Clean Energy Technology. NSP-Minnesota opposed the petition.

The MPUC referred this matter to a contested case hearing before an ALJ to act on Excelsior’s petition. The contested case proceeding considered a 600 MW unit in Phase 1 and a second 600 MW unit in Phase 2 of the Mesaba Energy Project.

The MPUC issued its order for Phase 1 of the hearing on Aug. 30, 2007. In it, the MPUC found among other things, that Excelsior and NSP-Minnesota should resume negotiations toward an acceptable purchase power agreement, with assistance from the Minnesota Department of Commerce (MDOC) and the guidance provided by the order.

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On Sept. 24, 2008, the MPUC denied Excelsior Energy’s Phase 2 request to approve a power purchase agreement related to its proposed second 600 MW IGCC generating facility. On May 28, 2009, the MPUC affirmed its September 2008 order and denied Excelsior Energy’s motion, which closes the docket . A written order was issued July 7, 2009. On Aug. 6, 2009, Excelsior appealed the MPUC decision to the Minnesota Court of Appeals. Briefings are expected to be completed in November 2009, with oral arguments scheduled subsequently.

Prairie Island Certificate of Need (CON) — On May 16, 2008, NSP-Minnesota filed for a CON for life extension and a separate request for approval of an enhanced power uprate at both Prairie Island Units 1 and 2. The City of Red Wing, Minn. and the Prairie Island Indian Community (PIIC) filed testimony raising concerns about the cost to the community and certain health and safety concerns. The OES filed testimony supporting the uprates. Evidentiary hearings were held in June 2009. The ALJ recommended granting the requested CONs in his report issued Oct. 21, 2009. Pursuant to a 2003 law, if the MPUC grants a CON request for additional dry cask storage, it is stayed for one legislative session. NSP-Minnesota also filed for a license extension with the NRC on April 15, 2008. The PIIC intervened in the proceeding and raised seven points of contention. As of July 15, 2009, NSP-Minnesota and the PIIC have resolved six of these contentions. The final environmental impact statement was published in the state proceeding July 31, 2009. At this time, it is uncertain when ultimate approval of the license extension will occur.

Wind Generation — NSP-Minnesota plans to invest approximately $900 million over three years for a 201 MW project in southwestern Minnesota, called the Nobles Wind Project, and a 150 MW project in southeastern North Dakota, called the Merricourt Wind Project. These projects are expected to be operational by the end of 2010 and 2011, respectively. In June 2009, the MPUC issued an order approving investments in the Nobles and Merricourt Wind Projects. In August 2009, the NDPSC granted advanced determinations of prudence to the Nobles and Merricourt Wind Projects and a certificate of public convenience and necessity (CPCN) to the Merricourt project. In October 2009, the NDPSC voted to obtain additional information to determine whether or not to reopen the Merricourt Wind Project CPCN as a result of the impact on other North Dakota utilities and their retail customers of the MISO cost allocation applicable to transmission investments associated with the Merricourt project. On Oct. 23, 2009, the FERC approved a modified MISO cost allocation method that is expected to reduce the impact on other North Dakota utilities and their customers.

NSP-Minnesota Transmission CONs — In August 2007, NSP-Minnesota and Great River Energy (on behalf of eight other regional transmission providers) filed a CON application, for three 345 kilovolt (KV) transmission lines, as part of the CapX 2020 project. The project to build the three lines includes construction of approximately 600 miles of new facilities at a cost of approximately $1.7 billion. The cost of the project to NSP-Minnesota and NSP-Wisconsin is estimated to be approximately $900 million. These cost estimates will be revised after the regulatory process is completed.

In April 2009, the MPUC granted a CON to construct three 345 KV electric transmission lines in Minnesota. The MPUC also included a condition regarding assuring a portion of the capacity of the Brookings, S.D. to Hampton, Minn. line is used for renewable energy. In September 2009, two intervenors appealed the MPUC’s CON decisions in the Minnesota Court of Appeals.

As part of CapX 2020, NSP-Minnesota and Great River Energy have filed two route permit applications with the MPUC. In December 2008, the route permit application for the Brookings to Hampton Corner Project was filed. In April 2009, the route permit application for the Monticello to St. Cloud portion of the Fargo Twin Cities project was filed. In October 2009, the route permit application for the St. Cloud to Fargo project was filed with the MPUC. Route permit applications for the remaining parts of the three projects are expected to be filed in Minnesota later this year. Permit filings are expected to be made in adjoining states. NSP-Minnesota anticipates the first routing decisions in early 2010.

As part of CapX 2020, Otter Tail Power Company, Minnesota Power and Minnkota Power Cooperative (on behalf of themselves and NSP-Minnesota and Great River Energy) filed a CON application in March 2008 for a 230 KV transmission line between Bemidji and Grand Rapids, Minn. A route application for this project was filed in June 2008. The need application is uncontested; route hearings are expected to be conducted in late 2009, and an MPUC decision is anticipated by the second quarter of 2010. The Bemidji-Grand Rapids line is expected to entail construction of approximately 68 miles of new facilities at a cost of $100 million, with construction to be completed by end of 2011. The estimated cost to NSP-Minnesota is approximately $26 million.

NSP-Wisconsin

Bay Front Biomass Gasification — In February 2009, NSP-Wisconsin filed an application with the PSCW for a certificate of authority (CA) to install biomass gasification technology at the Bay Front Power Plant in Ashland, Wis. Currently, two of the three boilers at Bay Front use biomass as their primary fuel to generate electricity. The proposed project will convert the third boiler to biomass gasification technology allowing the plant to use 100 percent biomass in all three boilers. The project, estimated to cost $58 million, will require additional biomass receiving and handling facilities at the plant, an external gasifier, minor modifications to the plant’s remaining coal-fired boiler and an enhanced air quality control system. The total generation output of the plant is not expected

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to change significantly as a result of the project. However, the project will improve the environmental performance of the plant and contribute towards state RES in the region. Following all state regulatory approvals, engineering and design work is expected to begin in 2010, and the unit could be operational by late 2012. Intervenors have filed testimony both supporting and opposing the project. The request is pending a decision by the PSCW.

NSP-Minnesota also made filings in North Dakota and Minnesota to help ensure future rate recovery of the portion of the project costs that will be billed to NSP-Minnesota through the Interchange Agreement. Decisions on those filings are currently pending regulatory action before the NDPSC and the MPUC respectively.

PSCo

PSCo Resource Plan — In November 2007, PSCo filed the Colorado Resource Plan, which details the type and amount of resources that will be added to the system for an eight year resource acquisition period through 2015. The CPUC issued its order in September 2008, which approved the following:

· Increase in wind portfolio of 850 MW by 2015. PSCo would then have a total of approximately 1,900 MW of wind power resources;

· Approximately 200 MW from a central solar thermal facility with storage, with possible option of acquiring up to 600 MW of solar thermal resources with storage as technology develops;

· Increase customer efficiency and conservation programs with plans to meet the CPUC goals of annual energy sales reductions to approximately 3,669 gigawatt hours, that would yield a demand savings in the range of 886 MW to 994 MW by 2020;

· Retirement of two older coal-burning plants (two units at Arapahoe and two units at Cameo), replacing the capacity with company owned resources, provided the costs are reasonable; and

· Reduce PSCo’s CO 2 emissions by 10 percent below 2005 levels and for PSCo to propose additional reductions to achieve a 20 percent reduction by 2020 in its next plan.

PSCo acquired 174 MW of wind resources and 19 MW of central station photovoltaic (PV) through separate requests for proposal and those contracts were specifically approved by the CPUC. In January 2009, PSCo issued an all-source request for proposals to fill the approved resource plan. Bids were received in April 2009, and PSCo filed its bid evaluation report (120-day all-source report) with the CPUC in August 2009.

In October 2009, the CPUC approved the acquisitions of the resources identified in the 120 day all-source report. With minor modification, the CPUC adopted PSCo’s preferred plan which includes an incremental 900 MW of additional intermittent renewable energy resources (wind and PV solar) and approximately 280 MW of “new technology” renewable energy sources. The CPUC approved the negotiation of purchased power contracts from a pool of PV solar bidders, rather than designate certain bidders. The CPUC approved the selection of about 800 MW of traditional gas-fired resources. The CPUC preferred to follow the normal course of business whereby PSCo would file its next resource plan in the fall of 2011 rather than making an interim filing in 2010. A final order is due out early November 2009.

San Luis Valley-Calumet-Comanche Transmission Project — PSCo and Tri-State Generation and Transmission Association filed a joint application for a certificate of need and public convenience (CPCN) in May 2009. The project consists of four components of both 230 KV and 345 KV line and substation construction. The line is intended to assist in bringing solar power in the San Luis Valley to load. The line is expected to be placed in-service in 2013 if no significant issues in the siting and permitting of the line are encountered. Several landowners are opposing this transmission line, including two large ranches. Opposing testimony is scheduled to be filed on Oct. 28, 2009. Hearings are scheduled for mid-December 2009, with a final order to issue in February 2010.

SPS

SPS Participation in the SPP RTO — In October 2007, as part of the resolution of the 2007 SPS New Mexico retail rate case, the NMPRC ordered an investigation of the benefits of SPS’ participation in the SPP RTO. In June 2009, the NMPRC expanded the scope of the docket to include the issue of placing SPS retail loads in New Mexico under Network Integration Transmission Service (NITS) under the SPP OATT effective Jan. 1, 2010. The conversion to service under the SPP Tariff is mandatory for SPS by Feb. 1, 2010 under the SPP membership agreement. In September 2009, the parties filed a stipulation resolving all issues in the proceeding for a five year interim period, subject to certain reporting by SPS. A hearing on the stipulation is scheduled for Nov. 17, 2009 before the NMPRC hearing examiner.

Summary of Recent Federal Regulatory Developments

The FERC has jurisdiction over rates for electric transmission service in interstate commerce and electricity sold at wholesale, hydro

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facility licensing, natural gas transportation, accounting practices and certain other activities of Xcel Energy’s utility subsidiaries, including enforcement of North American Electric Reliability Corporation (NERC) mandatory electric reliability standards. State and local agencies have jurisdiction over many of Xcel Energy’s utility activities, including regulation of retail rates and environmental matters. See additional discussion in the summary of recent federal regulatory developments and public utility regulation sections of the Xcel Energy Annual Report on Form 10-K for the year ended Dec. 31, 2008. In addition to the matters discussed below, s ee Note 6 to the consolidated financial statements for a discussion of other regulatory matters.

Electric Reliability Standards Compliance

Compliance Audits

The NSP System and PSCo were subject to electric reliability standards compliance audits in the first and second quarters of 2008, respectively. The Midwest Reliability Organization (MRO) found the NSP System in compliance with all NERC standards audited. On Oct. 31, 2008, the Western Electricity Coordinating Council (WECC) auditors issued their final audit report. The report found a possible violation of one standard related to relay maintenance.

In 2008, the NSP System, PSCo and SPS filed self-reports with the MRO, WECC and SPP, respectively, relating to failure to complete certain generation station battery tests, relay maintenance intervals and certain critical infrastructure protection standards. In August and September of 2009, the NSP System, PSCo, and SPS each reached agreement with the relevant regional entity that would resolve all open audit findings and self reports by payment of a non-material penalty. Xcel Energy is in the process of developing definitive settlement agreements with each of the regions. These settlement agreements will be subject to NERC and FERC approval.

NERC Compliance Investigation

On Sept. 18, 2007, portions of the NSP System and transmission systems west and north of the NSP System briefly islanded from the rest of the Eastern Interconnection, as a result of a series of transmission line outages. The initial transmission line outages appear to have occurred on the NSP System. In March 2008, NSP-Minnesota received notice that the MRO was commencing a compliance investigation of the September 2007 event. Because the event affected more than one region, the NERC took over the investigation. The final outcome of the NERC compliance investigation is unknown at this time. Given the ongoing investigation, Xcel Energy is unable to determine if the outcome of this matter will result in any finding of standards violations, and if so whether any associated penalties will have a material adverse impact on operations, cash flows or financial condition.

MISO Generation Interconnection Cost Allocation Tariff — In July 2009, MISO and its transmission owners (including NSP-Minnesota and NSP-Wisconsin) filed to change the cost allocation procedures in the MISO tariff associated with interconnection of new generation. The current rule requires the interconnecting generator to fund 50 percent of the network upgrades associated with the interconnection, with 50 percent funded by the affected transmission owners. The proposed change would require the interconnecting generator to fund 90 or 100 percent of the costs (based on the size of the facility) on an interim basis until MISO and its stakeholders can develop a replacement tariff in 2010. Approximately 40 parties, including Xcel Energy, filed interventions or protests with extensive objections filed by several wind generation developers. Xcel Energy urged the FERC to require MISO and its stakeholders to develop and file a replacement tariff by April 1, 2010, so the tariff could be in effect by July 2010. Xcel Energy indicated uncertainly regarding cost allocation and cost recovery could affect pending transmission projects. On Oct. 23, 2009, FERC approved the modified tariff effective July 9, 2009, conditioned on MISO filing a revised tariff by July 2010. FERC also ruled the interim tariff will be applicable to all generation interconnection agreements executed or filed with FERC during the period July 9, 2009 to July 2010.

FERC Audit of Wholesale FCA — In October 2009, the FERC notified NSP-Minnesota and NSP-Wisconsin that the FERC audit division began an audit of compliance with the FERC’s accounting and reporting regulations related to the calculation of the NSP-Minnesota and NSP-Wisconsin wholesale FCA for the period commencing Jan. 1, 2008. The audit is a periodic financial audit and does not imply any non-compliance has occurred.

Environmental, Legal and Other Matters

See a discussion of environmental, legal and other matters at Note 7 to the consolidated financial statements.

Critical Accounting Policies

Preparation of financial statements and related disclosures in compliance with GAAP requires the application of appropriate technical accounting rules and guidance, as well as the use of estimates. The application of these policies necessarily involves judgments

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regarding future events, including the likelihood of success of particular projects, legal and regulatory challenges and anticipated recovery of costs. These judgments, in and of themselves, could materially impact the financial statements and disclosures based on varying assumptions, which all may be appropriate to use. In addition, the financial and operating environment also may have a significant effect, not only on the operation of the business, but on the results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even if the nature of the accounting policies applied have not changed. Item 7 — Management’s Discussion and Analysis, in Xcel Energy’s Annual Report on Form 10-K for the year ended Dec. 31, 2008, includes a discussion of accounting policies that are most significant to the portrayal of Xcel Energy’s financial condition and results, and that require management’s most difficult, subjective or complex judgments. Each of these has a higher likelihood of resulting in materially different reported amounts under different conditions or using different assumptions.

Pending Accounting Changes

See a discussion of recently issued accounting pronouncements and pending accounting changes in Note 2 to the consolidated financial statements.

Derivatives, Risk Management and Market Risk

In the normal course of business, Xcel Energy and its subsidiaries are exposed to a variety of market risks as disclosed in Management’s Discussion and Analysis in its Annual Report on Form 10-K for the year ended Dec. 31, 2008. Market risk is the potential loss or gain that may occur as a result of changes in the market or fair value of a particular instrument or commodity. All financial and commodity-related instruments, including derivatives, are subject to market risk. Market risks associated with derivatives are discussed in further detail in Note 10 to the consolidated financial statements.

Xcel Energy is exposed to the impact of changes in price for energy and energy related products, which is partially mitigated by Xcel Energy’s use of commodity derivatives. Though no material non-performance risk currently exists with the counterparties to Xcel Energy’s commodity derivative contracts, the continued turmoil in the financial markets may in the future impact that risk to the extent it impacts those counterparties. Continued distress in the financial markets may also impact the fair value of the debt and equity securities in the nuclear decommissioning trust fund and master pension trust, as well as Xcel Energy’s ability to earn a return on short-term investments of excess cash.

Commodity Price Risk — Xcel Energy’s utility subsidiaries are exposed to commodity price risk in their electric and natural gas operations. Commodity price risk is managed by entering into long- and short-term physical purchase and sales contracts for electric capacity, energy and energy-related products and for various fuels used in generation and distribution activities. Commodity price risk is also managed through the use of financial derivative instruments. Xcel Energy’s risk-management policy allows it to manage commodity price risk within each rate-regulated operation to the extent such exposure exists.

At Sept. 30, 2009, a 10 percent increase in prices would have resulted in a net increase in commodity derivative assets of $44.8 million, while a decrease of 10 percent would have resulted in a commodity derivative assets increase of $21.0 million.

Short-Term Wholesale and Commodity Trading Risk — Xcel Energy’s utility subsidiaries conduct various short-term 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, which is made up of management personnel not directly involved in the activities governed by this policy.

The fair value of the commodity trading contracts were as follows:

	Nine Months Ended Sept. 30,
(Thousands of Dollars)	2009			2008
Fair value of commodity trading net contract assets outstanding at Jan. 1	$	4,169		$	6,315
Contracts realized or settled during the period	(14,499		)	(3,911		)
Commodity trading contract additions and changes during period	17,254			2,238
Fair value of commodity trading net contract assets outstanding at Sept. 30	$	6,924		$	4,642

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At Sept. 30, 2009, the fair values by source for the commodity trading net asset balances were as follows:

	Futures / Forwards
		Maturity							Maturity		Total Futures/
	Source of	Less Than			Maturity		Maturity		Greater Than		Forwards
(Thousands of Dollars)	Fair Value	1 Year			1 to 3 Years		4 to 5 Years		5 Years		Fair Value
NSP-Minnesota	1	$	(625	)	$	861	$	—	$	—	$	236
	2	1,511			3,952		256		—		5,719
PSCo	1	(1,607		)	960		—		—		(647		)
	2	968			303		444		—		1,715
		$	247		$	6,076	$	700	$	—	$	7,023

	Options
		Maturity							Maturity
	Source of	Less Than			Maturity		Maturity		Greater Than		Total Options
(Thousands of Dollars)	Fair Value	1 Year			1 to 3 Years		4 to 5 Years		5 Years		Fair Value
NSP-Minnesota	2	$	(99	)	$	—	$	—	$	—	$	(99	)
		$	(99	)	$	—	$	—	$	—	$	(99	)

(1)		Prices actively quoted or based on actively quoted prices.
(2)		Prices based on models and other valuation methods. These represent the fair value of positions calculated using internal models when directly and indirectly quoted external prices or prices derived from external sources are not available. Internal models incorporate the use of options pricing and estimates of the present value of cash flows based upon underlying contractual terms. The models reflect management’s estimates, taking into account observable market prices, estimated market prices in the absence of quoted market prices, the risk-free market discount rate, volatility factors, estimated correlations of commodity prices and contractual volumes. Market price uncertainty and other risks also are factored into the models.

Normal purchases and sales transactions, as defined by ASC 815 Derivatives and Hedging , hedge transactions and certain other long-term power purchase contracts are not included in the fair values by source tables as they are not recorded at fair value as part of commodity trading operations.

At Sept. 30, 2009, a 10 percent increase in market prices over the next 12 months for commodity trading contracts would increase pretax income from continuing operations by approximately $0.5 million, whereas a 10 percent decrease would decrease pretax income from continuing operations by approximately $0.3 million.

Xcel Energy’s short-term wholesale and commodity trading operations measure the outstanding risk exposure to price changes on transactions, contracts and obligations that have been entered into, but not closed, using an industry standard methodology known as Value-at-Risk (VaR). VaR expresses the potential change in fair value on the outstanding transactions, contracts and obligations over a particular period of time under normal market conditions. VaR is calculated on a consolidated basis. The VaRs for the commodity trading operations were:

			Change from
	Period Ended		Period Ended
	Sept. 30, 2009		June 30, 2009			VaR Limit		Average		High		Low
Commodity Trading (a)	$	0.46	$	(0.17	)	$	5.00	$	0.45	$	1.51	$	0.16

(a) Includes transactions for NSP-Minnesota and PSCo.

Interest Rate Risk — Xcel Energy and its subsidiaries are subject to the risk of fluctuating interest rates in the normal course of business. Xcel Energy’s risk management policy allows interest rate risk to be managed through the use of fixed rate debt, floating rate debt and interest rate derivatives such as swaps, caps, collars and put or call options.

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At Sept. 30, 2009, a 100-basis-point change in the benchmark rate on Xcel Energy’s variable rate debt would impact pretax interest expense by approximately $6.1 million annually, or approximately $1.5 million per quarter. See Note 10 to the consolidated financial statements for a discussion of Xcel Energy and its subsidiaries’ interest rate derivatives.

Xcel Energy and its subsidiaries also maintain trust funds, as required by the NRC, to fund costs of nuclear decommissioning. These trust funds are subject to interest rate risk and equity price risk. At Sept. 30, 2009, these funds were invested in a diversified portfolio of taxable and municipal fixed income securities and equity securities. These funds may be used only for activities related to nuclear decommissioning. The accounting for nuclear decommissioning recognizes that costs are recovered through rates; therefore, fluctuations in equity prices or interest rates do not have an impact on earnings.

Credit Risk — Xcel Energy and its subsidiaries are also exposed to credit risk. Credit risk relates to the risk of loss resulting from the nonperformance of a counterparty with respect to its contractual obligations. Xcel Energy and its subsidiaries maintain credit policies intended to minimize overall credit risk and actively monitor these policies to reflect changes and scope of operations.

Xcel Energy and its subsidiaries conduct standard credit reviews for all counterparties. Xcel Energy employs additional credit risk control mechanisms when appropriate, such as letters of credit, parental guarantees, standardized master netting agreements and termination provisions that allow for offsetting of positive and negative exposures. The credit exposure is monitored and, when necessary, the activity with a specific counterparty is limited until credit enhancement is provided. Volatility in financial markets could increase Xcel Energy’s credit risk.

Fair Value Measurements

Xcel Energy adopted new accounting and disclosure guidance on fair value measurements on Jan. 1, 2008 which established a hierarchy for inputs used in measuring fair value, and generally requires that the most observable inputs available be used for fair value measurements. Note 12 to the consolidated financial statements describes the fair value hierarchy, and discloses the amounts of assets and liabilities measured at fair value that have been assigned to Level 3.

Commodity Derivatives — Xcel Energy continuously monitors the creditworthiness of the counterparties to its commodity derivative contracts and assesses each counterparty’s ability to perform on the transactions set forth in the contracts. Given this assessment and the typically short duration of these contracts, the impact of discounting commodity derivative assets for counterparty credit risk was immaterial to the fair value of commodity derivative assets at Sept. 30, 2009. Adjustments to fair value for credit risk of commodity trading instruments are recorded in electric revenues. Credit risk adjustments for other commodity derivative instruments are deferred as other comprehensive income or regulatory assets and liabilities. The classification as a regulatory asset or liability is based on the commission approved regulatory recovery mechanism. Xcel Energy also assesses the impact of its own credit risk when determining the fair value of commodity derivative liabilities. The impact of discounting commodity derivative liabilities for this credit risk was immaterial to the fair value of commodity derivative liabilities at Sept. 30, 2009.

Commodity derivative assets and liabilities assigned to Level 3 consist primarily of FTRs, as well as forwards and options that are either long term in nature or related to commodities and delivery points with limited observability. Level 3 commodity derivative assets and liabilities represent approximately 5 percent and 36 percent of total assets and liabilities, respectively, measured at fair value at Sept. 30, 2009.

Determining the fair value of a FTR requires numerous management forecasts that vary in observability, including various forward commodity prices, retail and wholesale demand, generation and resulting transmission system congestion. Given the limited observability of management’s forecasts for several of these inputs, these instruments have been assigned a Level 3. Level 3 commodity derivatives assets and liabilities include $44.0 million and $7.7 million of estimated fair values, respectively, for FTRs held at Sept. 30, 2009.

Determining the fair value of certain commodity forwards and options can require management to make use of subjective forward price and volatility forecasts for commodities and locations with limited observability, or subjective forecasts which extend to periods beyond those readily observable on active exchanges or quoted by brokers. When less observable forward price and volatility forecasts are significant to determining the value of commodity forwards and options, these instruments are assigned to Level 3. Level 3 commodity derivatives assets and liabilities include $20.1 million and $12.0 million of estimated fair values, respectively, for commodity forwards and options held at Sept. 30, 2009.

Nuclear Decommissioning Fund — Nuclear decommissioning fund assets assigned to Level 3 consist of asset-backed and mortgage-backed securities. To the extent appropriate, observable market inputs are utilized to estimate the fair value of these securities, however, less observable and subjective risk-based adjustments to estimated yield and forecasted prepayments are often significant to these valuations. Therefore, estimated fair values for all asset-backed and mortgage-backed securities totaling $98.2 million in the

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nuclear decommissioning fund at Sept. 30, 2009 (approximately 7 percent of total assets measured at fair value), are assigned to Level 3. Realized and unrealized gains and losses on nuclear decommissioning fund investments are deferred as a component of a nuclear decommissioning regulatory asset.

Liquidity and Capital Resources

Cash Flows

	Nine Months Ended Sept. 30,
(Millions of Dollars)	2009			2008
Cash provided by (used in) operating activities
Continuing operations	$	1,646		$	1,222
Discontinued operations	(17		)	(11		)
Total	$	1,629		$	1,211

Cash provided by operating activities for continuing operations increased by $424 million for the first nine months of 2009, compared with the first nine months of 2008. This increase was due to changes in working capital activity as a result of declining natural gas prices, partially offset by increased funding of the pension liability due to market performance.

	Nine Months Ended Sept. 30,
(Millions of Dollars)	2009			2008
Cash used in investing activities	$	(1,294	)	$	(1,585	)

Cash used in investing activities for continuing operations decreased by $291 million for the first nine months of 2009, compared with the first nine months of 2008. The decrease was due to reduced capital expenditures as well as reduced investment in the WYCO pipeline and storage project.

	Nine Months Ended Sept. 30,
(Millions of Dollars)	2009			2008
Cash (used in) provided by financing activities	$	(492	)	$	706

Cash used in financing activities for continuing operations increased by $1,198 million for the first nine months of 2009, compared with the first nine months of 2008. The increase is primarily due to fewer proceeds from the issuances of long-term debt and common stock in the first nine months of 2009, as well as repayment of long-term debt.

Capital Sources

Xcel Energy expects to meet future financing requirements by periodically issuing short-term debt, long-term debt, common stock, preferred securities and hybrid securities to maintain desired capitalization ratios.

Short-Term Funding Sources — Xcel Energy uses a number of sources to fulfill short-term funding needs, including operating cash flow, notes payable, commercial paper and bank lines of credit. The amount and timing of short-term funding needs depend in large part on financing needs for construction expenditures, working capital and dividend payments.

Totem Gas Storage Facilities — In 1999, WYCO was formed as a joint venture with CIG to develop and lease natural gas pipeline, storage, and compression facilities. Xcel Energy has a 50 percent ownership interest in WYCO. In June 2009, having achieved certain phases of construction, Totem was placed in service. WYCO will lease Totem to CIG, and CIG will operate the facilities, providing natural gas storage services to PSCo under a service arrangement that commenced on July 1, 2009.

Xcel Energy accounts for PSCo’s service arrangement with CIG as a capital lease in accordance with the authoritative guidance on lease accounting. As a result, Xcel Energy has recorded a total of $67 million of Totem storage, leaseholds, and rights assets as property held under capital leases as of Sept. 30, 2009. WYCO is expected to incur approximately $20 million of additional construction costs to complete construction and make Totem operational at full storage capacity.

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Economic Stimulus Plan — On Feb. 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009, referred to as the federal stimulus bill, which includes appropriations into many energy industry-related areas. Xcel Energy has reviewed the stimulus package and DOE application requirements to determine whether federal funding should be used for investments or upgrades to its system. Xcel Energy has had several conversations with state utility commissions and state governments within its service territories regarding the stimulus bill and has identified several areas of interest including renewable energy, energy efficiency, transmission and smart grid technologies. Xcel Energy has submitted applications for funding of certain projects; however, we do not expect this to have a material effect on Xcel Energy’s financial position or results of operations.

Regulation of Derivatives — The U.S. House of Representatives recently passed the ACES and there are several other bills which have been introduced regarding regulation of derivative transactions. One provision within the ACES bill and the other bills introduced require the regulation of all energy derivative and swap transactions. As passed by the House, the ACES bill could preclude or impede some types of over-the-counter energy commodity transactions and/or require clearing through regulated central counterparties, which could result in extensive margin and fee requirements. Xcel Energy will further analyze the provisions of this complex legislation to understand potential financial impacts and risk to Xcel Energy, but based on our preliminary analysis the margin requirements could be significant. In October 2009, the House Financial Institutions Committee held a hearing on additional proposed legislation submitted by Chairman Franks titled, the “Over-the-Counter Derivatives Markets Act of 2009.” The proposed legislation appears to contain less onerous language than the ACES bill; however, Xcel Energy is reviewing the proposal.

Short-Term Investments — Xcel Energy, NSP-Minnesota, NSP-Wisconsin, PSCo and SPS maintain cash operating accounts with Wells Fargo Bank. At Sept. 30, 2009, approximately $16 million of cash was held in these liquid operating accounts.

Commercial Paper — Xcel Energy, NSP-Minnesota, PSCo and SPS each have individual commercial paper programs. The Board authorized levels for these commercial paper programs are:

· $800 million for Xcel Energy;

· $500 million for NSP-Minnesota;

· $700 million for PSCo; and

· $250 million for SPS.

Money Pool — Xcel Energy has established a utility money pool arrangement that allows for short-term loans between the utility subsidiaries and from the holding company to the utility subsidiaries at market-based interest rates.

The utility money pool arrangement does not allow loans from the utility subsidiaries to the holding company. NSP-Minnesota, PSCo and SPS participate in the money pool pursuant to approval from their respective state regulatory commissions.

The borrowings or loans outstanding at Sept. 30, 2009, and the short-term borrowing limits from the money pool are as follows:

	Borrowings			Total Borrowing
(Millions of Dollars)	(Loans)			Limits
Xcel Energy	$	—		$	—
NSP-Minnesota	117			250
PSCo	(27		)	250
SPS	(90		)	100

Credit Facilities — As of Oct. 21, 2009, Xcel Energy had the following credit facilities available to meet its liquidity needs:

(Millions of Dollars)	Facility		Drawn (a)		Available		Cash		Liquidity		Maturity
NSP-Minnesota	$	482.2	$	170.8	$	311.4	$	0.2	$	311.6	December 2011
PSCo	675.1		4.6		670.5		13.1		683.6		December 2011
SPS	247.9		10.0		237.9		3.6		241.5		December 2011
Xcel Energy — Holding Company	771.6		371.1		400.5		1.7		402.2		December 2011
NSP-Wisconsin (b)	—		—		—		21.8		21.8
Total	$	2,176.8	$	556.5	$	1,620.3	$	40.4	$	1,660.7

(a) Includes direct borrowings, outstanding commercial paper and letters of credit.

(b) NSP-Wisconsin does not have a separate credit facility; however, it has a short-term borrowing agreement with NSP-Minnesota.

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Credit Agency Ratings — The access of and cost of short-term and long-term borrowings are affected by regulatory actions, capital market conditions and credit agency ratings. The following ratings reflect the views of Moody’s Investor Services, Inc. (Moody’s), Standard & Poor’s Ratings Services (Standard & Poor’s), and Fitch Ratings (Fitch). A security rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal at any time by the rating agency.

On June 10, 2009, Standard & Poor’s affirmed its credit ratings and revised the outlook on Xcel Energy and its rated subsidiaries to positive from stable. On Aug. 3, 2009, Moody’s upgraded the majority of senior secured debt ratings of investment-grade regulated utilities by one notch. As of Oct. 30, 2009, the following table represents the credit ratings assigned to various Xcel Energy companies:

Company	Credit Type	Moody’s	Standard & Poor’s	Fitch
Xcel Energy	Senior Unsecured Debt	Baa1	BBB	BBB+
Xcel Energy	Commercial Paper	P-2	A-2	F2
NSP-Minnesota	Senior Unsecured Debt	A3	BBB+	A
NSP-Minnesota	Senior Secured Debt	A1	A	A+
NSP-Minnesota	Commercial Paper	P-2	A-2	F1
NSP-Wisconsin	Senior Unsecured Debt	A3	A-	A
NSP-Wisconsin	Senior Secured Debt	A1	A	A+
PSCo	Senior Unsecured Debt	Baa1	BBB+	A-
PSCo	Senior Secured Debt	A2	A	A
PSCo	Commercial Paper	P-2	A-2	F2
SPS	Senior Unsecured Debt	Baa1	BBB+	BBB+
SPS	Commercial Paper	P-2	A-2	F2

Note:

Moody’s highest credit rating for debt is Aaa and lowest investment grade rating is Baa3. Both Standard & Poor’s and Fitch’s highest credit rating for debt are AAA and lowest investment grade rating is BBB-. Moody’s prime ratings for commercial paper range from P-1 to P-3. Standard & Poor’s ratings for commercial paper range from A-1 to A-3. Fitch’s ratings for commercial paper range from F1 to F3.

In the event of a downgrade of its credit ratings to below investment grade, Xcel Energy may be required to provide credit enhancements in the form of cash collateral, letters of credit or other security to satisfy all or a part of its exposures under guarantees outstanding. See discussion of guarantees at Note 11 to the consolidated financial statements. Xcel Energy has no explicit credit rating requirements or hard triggers in its debt agreements.

Registration Statements — Xcel Energy’s articles of incorporation authorize the issuance of 1 billion shares of common stock. As of Sept. 30, 2009 and Dec. 31, 2008, Xcel Energy had approximately 456 and 454 million shares, respectively, of common stock outstanding. In addition, Xcel Energy’s articles of incorporation authorize the issuance of 7 million shares of $100 par value preferred stock. On Sept. 30, 2009 and Dec. 31, 2008, Xcel Energy had approximately 1 million shares of preferred stock outstanding. Xcel Energy and its subsidiaries have the following registration statements on file with the SEC, pursuant to which they may sell, from time to time, securities:

· Xcel Energy has an effective automatic shelf registration statement that does not contain a limit on issuance capacity; however, Xcel Energy’s ability to issue securities is limited by authority granted by the Board of Directors, which authority currently authorizes the issuance of up to an additional $1.5 billion of debt and common equity securities.

· NSP-Minnesota has $1.0 billion of debt securities available under its current effective registration statement.

· PSCo has $400 million of debt securities available under its registration statement that became effective on Feb. 20, 2009.

· NSP-Wisconsin filed a registration statement in June 2008 that has $50 million remaining under its currently effective registration statement.

Long-Term Borrowings — See a discussion of the long-term borrowings in Note 9 to the consolidated financial statements.

Financing Plans

Xcel Energy issues debt securities to refinance retiring maturities, reduce short-term debt, fund construction programs and for other general corporate purposes.

NSP-Minnesota plans to issue $300 million of first mortgage bonds in November. The proceeds will be used to repay short-term debt, which was used to fund the payment of a $250 million unsecured note that matured on Aug. 1, 2009, and for general corporate purposes.

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Financing plans are subject to change, depending on capital expenditures, internal cash generation, market conditions and other factors.

Earnings Guidance

Based on current projections, we expect 2009 earnings to be near the mid-point of our guidance range of $1.45 to $1.55 per share. Key assumptions are detailed below:

· Normal weather patterns are experienced for the remainder of the year.

· Reasonable regulatory outcomes are achieved in various rate cases and other regulatory decisions which may occur during the year.

· Various riders, associated with MERP, Minnesota and Colorado transmission and Minnesota renewable energy, are expected to increase revenue by approximately $50 million to $60 million over 2008 levels.

· Weather adjusted electric retail sales decline by approximately 2 percent.

· Weather adjusted retail firm natural gas sales decline by approximately 1 percent.

· Capacity costs are projected to increase approximately $45 million over 2008 levels. Capacity costs at PSCo are recovered under the purchased capacity cost adjustment.

· Operating and maintenance expenses are projected to increase $140 million over 2008 levels. In 2008, nuclear outage expense decreased due to a change in recovery method related to costs associated with refueling outages and there was no accrual in 2008 for the annual performance based incentive plan. The increase reflects the following:

· Nuclear (including outage amortization) — $55 million

· Pension and medical — $35 million

· Other — $50 million (including $35 million of incentive compensation)

· Depreciation and amortization expense is projected to decline by approximately $10 million compared with 2008 levels. This reflects the recent MPUC decision to extend the depreciation life of the Prairie Island nuclear plant by 10 years.

· Interest expense increases approximately $15 million to $20 million over 2008 levels.

· Allowance for funds used during construction — equity is projected to increase by $10 million to $15 million over 2008 levels.

· An effective tax rate for continuing operations of approximately 34 percent to 36 percent.

· Average common stock and equivalents of approximately 457 million shares.

Item 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See discussion in Derivatives, Risk Management and Market Risks in Item 2 — Management’s Discussion and Analysis.

Item 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Xcel Energy 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 (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. In addition, the disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports under the Exchange Act is accumulated and communicated to management, including the chief executive officer (CEO) and chief financial officer (CFO), allowing timely decisions regarding required disclosure. As of the end of the period covered by this report, based on an evaluation carried out under the supervision and with the participation of Xcel Energy’s management, including the CEO and CFO, of the effectiveness of our disclosure controls and procedures, the CEO and CFO have concluded that Xcel Energy’s disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

No change in Xcel Energy’s internal control over financial reporting has occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Xcel Energy’s internal control over financial reporting.

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Part II — OTHER INFORMATION

Item 1 — LEGAL PROCEEDINGS

In the normal course of business, various lawsuits and claims have arisen against Xcel Energy. After consultation with legal counsel, Xcel Energy has recorded an estimate of the probable cost of settlement or other disposition for such matters.

Additional Information

See Notes 6 and 7 to the consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion of legal proceedings, including Regulatory Matters and Commitments and Contingent Liabilities, which are hereby incorporated by reference. Reference also is made to Item 3 and Notes 16 and 17 of Xcel Energy’s consolidated financial statements in its Annual Report on Form 10-K for the year ended Dec. 31, 2008 for a description of certain legal proceedings presently pending.

Item 1A — RISK FACTORS

Except to the extent updated or described below, Xcel Energy’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, 2008, which is incorporated herein by reference.

We are subject to credit risks.

Credit risk includes the risk that our retail customers will not pay their bills, which may lead to a reduction in liquidity and an eventual increase in bad debt expense. Retail credit risk is comprised of numerous factors including the overall economy and the price of products and services provided.

Credit risk also includes the risk that various counterparties that owe us money or product will breach their obligations. Should the counterparties to these arrangements fail to perform, we may be forced to enter into alternative arrangements. In that event, our financial results could be adversely affected and we could incur losses.

One alternative available to address counterparty credit risk is to transact on liquid commodity exchanges. The credit risk is then socialized through the exchange central clearinghouse function. While exchanges do remove counterparty credit risk, all participants are subject to margin requirements, which creates an additional need for liquidity to post margin as exchange positions change value daily. Additional margin requirements could impact our liquidity.

Xcel Energy may at times have direct credit exposure in its short-term wholesale and commodity trading activity to various financial institutions trading for their own accounts or issuing collateral support on behalf of other counterparties. Xcel Energy may also have some indirect credit exposure due to participation in organized markets such as the PJM Interconnection and MISO in which any credit losses are socialized to all market participants.

Xcel Energy does have additional indirect credit exposures to various financial institutions in the form of letters of credit provided as security by power suppliers under various long-term physical purchased power contracts. If any of the credit ratings of the letter of credit issuers were to drop below the designated investment grade rating stipulated in the underlying long term purchased power contracts, the supplier would need to replace that security with an acceptable substitute. If the security were not replaced, the party would be in technical default under the contract, which would enable Xcel Energy to exercise its contractual rights.

We may be subject to legislative and regulatory responses to climate change, with which compliance could be difficult and costly.

Legislative and regulatory responses related to climate change and new interpretations of existing laws through climate change litigation create financial risk. Increased public awareness and concern may result in more regional and/or federal requirements to reduce or mitigate the effects of GHGs. Numerous states have announced or adopted programs to stabilize and reduce GHG and federal legislation has been introduced in both houses of Congress. Likewise, the EPA has drafted regulations pursuant to which GHGs from certain stationary sources would be regulated under the Clean Air Act by March 2010. Xcel Energy’s electric generating facilities are likely to be subject to regulation under climate change laws introduced at either the state or federal level within the next few years. Xcel Energy is also currently a party to climate change lawsuits and may be subject to additional climate change lawsuits, including lawsuits similar to those described in the Note 7, Commitments and Contingent Liabilities, in our Notes to our Consolidated Financial Statements. While Xcel Energy believes such lawsuits are without merit, an adverse outcome in any of these cases could require substantial capital expenditures that cannot be determined at this time and could possibly require payment of substantial penalties or damages. Defense costs associated with such litigation can also be significant. Such payments or expenditures could affect results of operations, cash flows, and financial condition if such costs are not recovered through regulated rates.

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Many of the federal and state climate change legislative proposals, such as ACES, use a “cap and trade” policy structure, in which GHG emissions from a broad cross-section of the economy would be subject to an overall cap. Under the proposals, the cap becomes more stringent with the passage of time. The proposals establish mechanisms for GHG sources, such as power plants, to obtain “allowances” or permits to emit GHGs during the course of a year. The sources may use the allowances to cover their own emissions or sell them to other sources that do not hold enough emission allowances for their own operations. Proponents of the cap and trade policy believe it will result in the most cost effective, flexible emission reductions. The impact of legislation and regulations, including a “cap and trade” structure, on Xcel Energy and its customers will depend on a number of factors, including whether GHG sources in multiple sectors of the economy are regulated, the overall GHG emissions cap level, the degree to which GHG offsets are allowed, the allocation of emission allowances to specific sources and the indirect impact of carbon regulation on natural gas and coal prices. Another important factor is Xcel Energy’s ability to recover the costs incurred to comply with any regulatory requirements that are ultimately imposed. We may not recover all costs related to complying with regulatory requirements imposed on Xcel Energy or its operating subsidiaries. If our regulators do not allow us to recover all or a part of the cost of capital investment or the operating and maintenance costs incurred to comply with the mandates, it could have a material adverse effect on our results of operations.

For further discussion see the Management’s Discussion and Analysis section and Note 7 to the consolidated financial statements.

Item 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

	Issuer Purchases of Equity Securities
					Maximum Number
				Total Number of	(or Approximate
				Shares Purchased as	Dollar Value) of Shares
				Part of Publicly	That May Yet Be
	Total Number of	Average Price		Announced Plans or	Purchased Under the
Period	Shares Purchased	Paid per Share		Programs	Plans or Programs
July 1, 2009 — July 31, 2009	—	—		—	—
Aug. 1, 2009 — Aug. 31, 2009 (a)	136,846	$	19.77	—	—
Sept. 1, 2009 — Sept. 30, 2009	—	—		—	—
Total	136,846			—	—

(a)	Xcel Energy or one of its agents periodically purchases common shares in order to satisfy obligations under the Stock Equivalent Plan for Non-Employee Directors.

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Item 6 — EXHIBITS

* Indicates incorporation by reference

3.01*		Restated Articles of Incorporation of Xcel Energy, as amended on May 21, 2008. (Exhibit 3.01 to Form 10-Q for the quarter ended June 30, 2008 (file no. 001-03034)).

3.02*		Restated By-Laws of Xcel Energy (Exhibit 3.01 to Form 8-K dated Aug. 12, 2008 (file no. 001-03034)).

10.01		Credit Agreement dated Dec. 14, 2006 between Xcel Energy and various lenders.

10.02		Credit Agreement dated Dec. 14, 2006 between NSP-Minnesota and various lenders.

10.03		Credit Agreement dated Dec. 14, 2006 between PSCo and various lenders.

10.04		Credit Agreement dated Dec. 14, 2006 between SPS and various lenders.

10.05		Second Amendment to the Xcel Energy 2005 Omnibus Incentive Plan (renaming it the Xcel Energy 2005 Long-Term Incentive Plan).

10.06		Amendment dated Aug. 26, 2009 to the Xcel Energy Senior Executive Severance and Change-in-Control Policy

10.07		Second Amendment to the Xcel Energy Inc. Executive Annual Incentive Award Plan (Effective May 25, 2005).

10.08		Xcel Energy Inc. Executive Annual Incentive Award Plan Form of Restricted Stock Agreement.

31.01		Principal Executive Officer’s and Principal Financial Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

99.01		Statement pursuant to Private Securities Litigation Reform Act of 1995.

1 01.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

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

		XCEL ENERGY INC.
		(Registrant)

Oct. 30, 2009	By:	/s/ TERESA S. MADDEN
		Teresa S. Madden
		Vice President and Controller
		(Principal Accounting Officer)

		/s/ DAVID M. SPARBY
		David M. Sparby
		Vice President and Chief Financial Officer
		(Principal Financial Officer)

Exhibit 10.01

EXECUTION COPY

$800,000,000

CREDIT AGREEMENT

among

XCEL ENERGY INC.,

as Borrower,

The Several Lenders from Time to Time Parties Hereto,

CITICORP USA, INC.,

UBS LOAN FINANCE LLC, and

WELLS FARGO, NATIONAL ASSOCIATION

as Documentation Agents,

BARCLAYS BANK PLC,

as Syndication Agent, and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as Of December 14, 2006

J.P. MORGAN SECURITIES INC. and BARCLAYS CAPITAL,

as Joint Lead Arrangers and Bookrunners

TABLE OF CONTENTS

		Page

SECTION 1.	DEFINITIONS	1

1.1	Defined Terms	1
1.2	Other Definitional Provisions	16

SECTION 2.	AMOUNT AND TERMS OF REVOLVING COMMITMENTS	16

2.1	Revolving Commitments	16
2.2	Procedure for Revolving Loan Borrowing	17
2.3	Fees	17
2.4	Termination or Reduction of Revolving Commitments	18
2.5	Optional Prepayments	18
2.6	Conversion and Continuation Options	18
2.7	Limitations on Eurodollar Tranches	19
2.8	Interest Rates and Payment Dates	19
2.9	Computation of Interest and Fees	19
2.10	Inability to Determine Interest Rate	20
2.11	Pro Rata Treatment and Payments	20
2.12	Requirements of Law	21
2.13	Taxes	22
2.14	Indemnity	24
2.15	Change of Lending Office	24
2.16	Replacement of Lenders	24
2.17	Extension of Revolving Termination Date	25

SECTION 3.	LETTERS OF CREDIT	25

3.1	L/C Commitment	25
3.2	Procedure for Issuance of Letter of Credit	26
3.3	Fees and Other Charges	26
3.4	L/C Participations	26
3.5	Reimbursement Obligation of the Borrower	27
3.6	Obligations Absolute	28
3.7	Letter of Credit Payments	28
3.8	Applications	28

SECTION 4.	REPRESENTATIONS AND WARRANTIES	28

4.1	Financial Condition	28
4.2	No Change	29
4.3	Existence; Compliance with Law	29
4.4	Power; Authorization; Enforceable Obligations	29
4.5	No Legal Bar	29
4.6	Litigation	29

4.7	Ownership of Property; Liens	30
4.8	Taxes	30
4.9	Federal Regulations	30
4.10	ERISA	30
4.11	Investment Company Act; Other Regulations	31
4.12	Use of Proceeds	31
4.13	Accuracy of Information, etc	31
4.14	Solvency	31

SECTION 5.	CONDITIONS PRECEDENT	31

5.1	Conditions to Initial Extension of Credit	31
5.2	Conditions to Each Extension of Credit	32

SECTION 6.	AFFIRMATIVE COVENANTS	32

6.1	Financial Statements	32
6.2	Certificates; Other Information	33
6.3	Payment of Obligations and Taxes	33
6.4	Maintenance of Existence; Compliance	34
6.5	Maintenance of Property; Insurance	34
6.6	Inspection of Property; Books and Records; Discussions	34
6.7	Notices	34
6.8	Ownership of Significant Subsidiaries	35
6.9	Scope of Business	35
6.10	Significant Subsidiaries	35

SECTION 7.	NEGATIVE COVENANTS	35

7.1	Ratio of Funded Debt to Total Capital	35
7.2	Liens	35
7.3	Fundamental Changes	36
7.4	Disposition of Property	36
7.5	Transactions with Affiliates	36
7.6	Swap Agreements	36
7.7	Clauses Restricting Subsidiary Distributions	36

SECTION 8.	EVENTS OF DEFAULT	37

SECTION 9.	THE AGENTS	39

9.1	Appointment	39
9.2	Delegation of Duties	39
9.3	Exculpatory Provisions	39
9.4	Reliance by Administrative Agent	40
9.5	Notice of Default	40
9.6	Non-Reliance on Agents and Other Lenders	40
9.7	Indemnification	41

9.8	Agent in Its Individual Capacity	41
9.9	Successor Administrative Agent	41
9.10	Documentation Agents and Syndication Agents	42

SECTION 10.	MISCELLANEOUS	42

10.1	Amendments and Waivers	42
10.2	Notices	42
10.3	No Waiver; Cumulative Remedies	44
10.4	Survival of Representations and Warranties	44
10.5	Payment of Expenses and Taxes	44
10.6	Successors and Assigns; Participations and Assignments	45
10.7	Adjustments; Set-off	47
10.8	Counterparts	47
10.9	Severability	47
10.10	Integration	48
10.11	GOVERNING LAW	48
10.12	Submission To Jurisdiction; Waivers	48
10.13	Acknowledgements	48
10.14	Confidentiality	49
10.15	WAIVERS OF JURY TRIAL	49
10.16	Delivery of Addenda	49
10.17	USA Patriot Act Notice	49
10.18	Existing Credit Agreement	49

SCHEDULES :

1.1A	Revolving Commitments
1.1B	Existing Letters of Credit
4.1	Financial Condition
4.2	No Change
4.6	Litigation
4.7	Ownership of Property; Liens
7.2	Existing Liens

EXHIBITS :

A	Form of Closing Certificate
B	Form of Assignment and Assumption
C	Form of Exemption Certificate
D	Form of Addendum
E-1	Form of New Lender Supplement
E-2	Form of Increased Revolving Commitment Activation Notice
F-1	Form of Extension Request
F-2	Form of Continuation Notice

CREDIT AGREEMENT (this “ Agreement ”), dated as of December 14, 2006, among XCEL ENERGY INC., a Minnesota corporation (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “ Lenders ”), CITICORP USA, INC., UBS LOAN FINANCE LLC, and WELLS FARGO, NATIONAL ASSOCIATION as documentation agents (in such capacity, the “ Documentation Agents ”), BARCLAYS BANK PLC, as syndication agent (in such capacity, the “ Syndication Agent ”), and JPMORGAN CHASE BANK, N.A., as administrative agent.

The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms . As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

“ 15% Subsidiary ”: each current or subsequently acquired Subsidiary the total assets of which equal or exceed 15% of the consolidated total assets of the Borrower and its Subsidiaries.

“ ABR ”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1 / 2 of 1%. For purposes hereof, “ Prime Rate ” shall mean the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors). Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“ ABR Loans ”: Revolving Loans the rate of interest applicable to which is based upon the ABR.

“ Addendum ”: an instrument, substantially in the form of Exhibit D, by which a Lender becomes a party to this Agreement as of the Closing Date.

“ Administrative Agent ”: JPMorgan Chase Bank, N.A., together with its affiliates, as an arranger of the Revolving Commitments and as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors.

“ Affiliate ”: as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by, or is under common Control with, such Person.

“ Agents ”: the collective reference to the Syndication Agent, the Documentation Agents and the Administrative Agent.

“ Aggregate Exposure ”: with respect to any Lender at any time, an amount equal to the amount of such Lender’s Revolving Commitment then in effect or, if the Revolving Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.

“ Aggregate Exposure Percentage ”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.

“ Agreement ”: as defined in the preamble hereto.

“ Applicable Margin ”: The rate per annum set forth under the relevant column heading below based on the applicable Debt Rating:

Level	Debt Rating	Commitment Fee		ABR Loans		Eurodollar Loans/ Letters of Credit
I	> A/A2/A	0.05	%	0	%	0.20	%
II	A-/A3/A-	0.06	%	0	%	0.25	%
III	BBB+/Baa1/BBB+	0.08	%	0	%	0.35	%
IV	BBB/Baa2/BBB	0.10	%	0	%	0.45	%
V	BBB-/Baa3/BBB-	0.125	%	0	%	0.60	%
VI	< BB+/Ba1/BB+	0.175	%	0	%	0.875	%

provided that for each Excess Utilization Day, the Applicable Margin set forth above on such day shall be increased by 0.05% for Eurodollar Loans and Letters of Credit.

For purposes of this definition, “ Debt Rating ” means, as of any date of determination, the rating as determined by S&P, Moody’s or Fitch (collectively, the “ Debt Ratings ”) of the Borrower’s senior unsecured non-credit enhanced long-term indebtedness for borrowed money; provided that (x) at any time that Debt Ratings are available from each of S&P, Moody’s and Fitch and there is a split among such Debt Ratings, then (i) if any two of such Debt Ratings are in the same level, such level shall apply or (ii) if each of such Debt Ratings is in a different level, the level that is the middle level shall apply and (y) at any time that Debt Ratings are available only from any two of S&P, Moody’s and Fitch and there is a split in such Debt Ratings, then the higher* of such Debt Ratings shall apply, unless there is a split in Debt Ratings of more than one level, in which case the level that is one level higher than the lower Debt Rating shall apply. The Debt Ratings shall be determined from the most recent public announcement of any changes in the Debt Ratings. If the rating system of S&P, Moody’s or Fitch shall change, the Borrower and the Administrative Agent shall negotiate in good faith to amend this definition to reflect such changed rating system and, pending the effectiveness of such amendment (which shall require the approval of the Required Lenders), the Debt Rating shall be determined by reference to the rating most recently in effect prior to such change.

“ Application ”: an application, in such form as the applicable Issuing Lender may specify from time to time, requesting such Issuing Lender to open a Letter of Credit.

“ Assignee ”: as defined in Section 10.6(b).

“ Assignment and Assumption ”: an Assignment and Assumption, substantially in the form of Exhibit B.

* It being understood and agreed, by way of example, that a Debt Rating of A– is one level higher than a Debt Rating of BBB+.

“ Available Revolving Commitment ”: as to any Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding.

“ Benefitted Lender ”: as defined in Section 10.7(a).

“ Board ”: the Board of Governors of the Federal Reserve System of the United States (or any successor).

“ Borrower ”: as defined in the preamble hereto.

“ Borrowing Date ”: any Business Day specified by the Borrower as a date on which the Borrower requests the Lenders to make Revolving Loans hereunder.

“ Business Day ”: a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, provided , that with respect to notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

“ Capital Lease Obligations ”: as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

“ Capital Stock ”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

“ Change in Control ”: (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of Voting Stock representing more than 30% of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of the Borrower; or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated.

“ Closing Date ”: the date on which the conditions precedent set forth in Section 5.1 shall have been satisfie d, which date is December 14, 2006.

“ Code ”: the Internal Revenue Code of 1986, as amended from time to time.

“ COLI Litigation ”: the litigation related to the matters disclosed in Note 3 to the Consolidated Financial Statements under the heading “Tax Matters — Corporate-Owned Life Insurance” in the Xcel Energy Inc. Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006.

“ Commodity Swap Agreement ”: any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, commodities.

“ Commonly Controlled Entity ”: an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code.

“ Confidential Information Memorandum ”: the Confidential Information Memorandum dated November 2006 and furnished to certain Lenders.

“ Continuation Notice ”: as defined in Section 2.17(a).

“ Continuing Lender ”: as defined in Section 2.17(a).

“ Contractual Obligation ”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“ Control ”: the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

“ Debt Rating ”: as defined in the definition of “Applicable Margin.”

“ Default ”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“ Designated Significant Subsidiary ”: any Significant Subsidiary designated as such by the Borrower in accordance with Section 6.10, so long as such designation shall not have been revoked pursuant to Section 6.10.

“ Disposition ”: with respect to any property, any sale, lease, sale and leaseback, conveyance, transfer or other disposition thereof. The terms “ Dispose ” and “ Disposed of ” shall have correlative meanings.

“ Documentation Agents ”: as defined in the preamble hereto.

“ Dollars ” and “ $ ”: dollars in lawful currency of the United States.

“ Environmental Laws ”: any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.

“ ERISA ”: the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ Eurocurrency Reserve Requirements ”: for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve

requirements in effect on such day (including basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

“ Eurodollar Base Rate ”: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the “ Eurodollar Base Rate ” shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.

“ Eurodollar Loans ”: Revolving Loans the rate of interest applicable to which is based upon the Eurodollar Rate.

“ Eurodollar Rate ”: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

	Eurodollar Base Rate
	1.00 - Eurocurrency Reserve Requirements

“ Eurodollar Tranche ”: the collective reference to Eurodollar Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Revolving Loans shall originally have been made on the same day).

“ Event of Default ”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“ Excess Utilization Day ”: each day on which the Total Revolving Extensions of Credit on such day exceed 50% of the Total Revolving Commitments on such day.

“ Existing Credit Agreement ”: the Credit Agreement, dated as of November 4, 2004, among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

“ Existing Letters of Credit ” means the letters of credit set forth on Schedule 1.1B that have been issued prior to the Closing Date.

“ Existing Utility Subsidiary ”: means Northern States Power Company, a Minnesota corporation; Northern States Power Company, a Wisconsin corporation; Southwestern Public Service Company; and Public Service Company of Colorado.

“ Extension Request ”: as defined in Section 2.17(a).

“ Federal Funds Effective Rate ”: for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by JPMorgan Chase Bank, N.A. from three federal funds brokers of recognized standing selected by it.

“ Fee Payment Date ”: (a) the third Business Day following the last day of each March, June, September and December and (b) the last day of the Revolving Commitment Period.

“ FERC ”: the Federal Energy Regulatory Commission and any successor thereto.

“ Fitch ”: Fitch IBCA, Inc. and any successor thereto

“ Funded Debt ”: of any Person at any date, without duplication, (i) all indebtedness of such Person for borrowed money; (ii) the deferred and unpaid balance of the purchase price owing by such Person on account of any assets or services purchased (other than trade payables and other accrued liabilities incurred in the ordinary course of business that are not overdue by more than 180 days unless being contested in good faith) if such purchase price is (A) due more than nine months from the date of incurrence of the obligation in respect thereof or (B) evidenced by a note or a similar written instrument; (iii) all Capital Lease Obligations of such Person; (iv) all obligations of such Person evidenced by notes, bonds, debentures or other similar written instruments; (v) any non-contingent obligation of such Person in respect of letters of credit and bankers’ acceptances issued for the account of such Person (other than such letters of credit, bankers’ acceptances and drafts for the purchase price of assets or services to the extent such purchase price is excluded from clause (ii) above); (vi) guaranty obligations of such Person with respect to indebtedness for borrowed money of another Person (including Affiliates); (vii) all Off-Balance Sheet Liabilities of such Person; and (viii) all obligations of the kind referred to in clauses (i) through (vii) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation; provided , however , that in no event shall any calculation of Funded Debt of the Borrower include deferred taxes; provided , further , that (x) there shall be excluded from “Funded Debt” an aggregate principal amount of Non-Recourse Debt, Mandatorily Convertible Securities, Trust Preferred Securities and Hybrid Equity Securities outstanding as of the last day of the immediately preceding fiscal quarter for which financial statements are available in an amount not to exceed 15% of Total Capital as of such date and (y) any indebtedness arising solely from the application of either Financial Interpretation Nos. 45 and 46 of Financial Accounting Standards Board or Issue No. 01-08 of the Emerging Issues Task Force shall not constitute “Funded Debt” .

“ Funding Office ”: the office of the Administrative Agent specified in Section 10.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

and the Required Lenders, all financial covenants (including those contained in Section 7.1), standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes” refers to changes in accounting principles required or permitted by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

“ Governmental Authority ”: any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

“ Guarantee Obligation ”: as to any Person (the “ guaranteeing person ”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “ primary obligations ”) of any other third Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided , however , that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

“ Hybrid Equity Securities ”: any securities issued by the Borrower, any Subsidiary or a financing vehicle of the Borrower or any Subsidiary that (i) are classified as possessing a minimum of “intermediate equity content” by S&P, Basket C equity credit by Moody’s and 50% equity credit by Fitch at the time of issuance thereof and (ii) require no repayments or prepayments and no mandatory redemptions or repurchases, in each case, prior to the date that is 91 days after the later of (A) the Revolving Termination Date and (B) the date on which the Revolving Commitments are terminated, no Letter of Credit remains outstanding and no Revolving Loan or other amount is owing to any Lender or the Administrative Agent hereunder.

“ Increased Revolving Commitment Activation Notice ”: a notice substantially in the form of Exhibit E-2.

“ Increased Revolving Commitment Closing Date ”: any Business Day designated as such in an Increased Revolving Commitment Activation Notice.

“ Indebtedness ”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade payables or liabilities incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all non-contingent obligations of such Person in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all mandatorily redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, and (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor. Notwithsta nding the foregoing, any indebtedness arising solely from the application of either Financial Interpretation Nos. 45 and 46 of Financial Accounting Standards Board or Issue No. 01-08 of the Emerging Issues Task Force shall not constitute “Indebtedness”.

“ Insolvency ”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

“ Insolvent ”: pertaining to a condition of Insolvency.

“ Interest Payment Date ”: (a) as to any ABR Loan, the last day of each March, June, September and December to occur while such Revolving Loan is outstanding and the Revolving Termination Date of such Revolving Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Revolving Loan, the date of any repayment or prepayment made in respect thereof.

“ Interest Period ”: as to any Eurodollar Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not later than 11:00 A.M., New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

(i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(ii) the Borrower may not select an Interest Period that would extend beyond the Revolving Termination Date; and

(iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.

“ Issuing Lender ”: each of JPMorgan Chase Bank, N.A. and Barclays Bank PLC, or any affiliate of any of the foregoing, each in its capacity as issuer of any Letter of Credit. Any other Lender selected by the Borrower to be an Issuing Lender shall become an Issuing Lender with the consent of the Administrative Agent and such Lender, in such capacity.

“ L/C Commitment ”: $100,000,000.

“ L/C Obligations ”: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.5.

“ L/C Participants ”: with respect to each Issuing Lender, the collective reference to all the Lenders other than such Issuing Lender.

“ Lenders ”: as defined in the preamble hereto.

“ Letters of Credit ”: letters of credit issued pursuant to Section 3.1 (and including in any case the Existing Letters of Credit).

“ Lien ”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

“ Loan Documents ”: this Agreement, the Notes and any amendment, waiver, supplement or other modification to any of the foregoing.

“ Mandatorily Convertible Securities ”: mandatorily convertible equity-linked securities issued by the Borrower or any Subsidiary, so long as the terms of such securities require no repayments or prepayments and no mandatory redemptions or repurchases, in each case prior to the date that is 91 days after the later of (A) the Revolving Termination Date and (B) the date on which the Revolving Commitments are terminated, no Letter of Credit remains outstanding and no Revolving Loan or other amount is owing to any Lender or the Administrative Agent hereunder.

“ Material Adverse Effect ”: any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (a) the business, operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of any of this Agreement or any other Loan Document or the rights and remedies of the Administrative Agent or the Lenders hereunder and thereunder.

exceeding $50,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Significant Subsidiary in respect of any Swap Agreement or any Commodity Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Significant Subsidiary would be required to pay if such Swap Agreement or Commodity Swap Agreement, as applicable, were terminated at such time.

“ Moody’s ”: Moody’s Investors Service, Inc. and any successor thereto.

“ Multiemployer Plan ”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“ New Lender ”: as defined in Section 2.1(c).

“ New Lender Supplement ”: as defined in Section 2.1(c).

“ Non-Excluded Taxes ”: as defined in Section 2.13(a).

“ Non-Extending Lender ”: as defined in Section 2.17(a).

“ Non-Recourse Debt ”: Indebtedness (a) which does not constitute Indebtedness or a Guarantee Obligation of the Borrower or any Significant Subsidiary, (b) as to which neither the Borrower nor any Significant Subsidiary is a lender, (c) in respect of which default would not permit (whether upon notice, lapse of time or both) any holder of any other Indebtedness of the Borrower or any Significant Subsidiary to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity, and (d) as to which the lenders will not have any recourse to the stock or assets of the Borrower or any Significant Subsidiary.

“ Non-U.S. Lender ”: as defined in Section 2.13(d).

“ Notes ”: the collective reference to any promissory note evidencing Revolving Loans.

“ Obligations ”: the unpaid principal of and interest on (including interest accruing after the maturity of the Revolving Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Revolving Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.

“ Off-Balance Sheet Liability ”: of a Person, (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction of such Person which is not a Capital Lease Obligation and (iii) all Synthetic Lease Obligations of such Person. The amount of liability under a Sale and Leaseback Transaction of any Person shall be the amount that would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP if such lease or agreement were accounted for as a Capital Lease Obligation.

“ Other Taxes ”: any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“ Participant ”: as defined in Section 10.6(c).

“ PBGC ”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

“ Permitted Lien ”: (i) any Lien securing a tax, assessment or other governmental charge or levy or the claim of a materialman, mechanic, carrier, warehouseman or landlord for labor, materials, supplies or rentals incurred in the ordinary course of business, but only if payment thereof shall not at the time be required to be made in accordance with Section 6.3; (ii) any Lien on the properties and assets of a Significant Subsidiary of the Borrower securing an obligation owing to the Borrower or another Significant Subsidiary; (iii) any Lien consisting of a deposit or pledge made in the ordinary course of business in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance, social security or retirement benefits or similar legislation; (iv) any Lien arising pursuant to an order of attachment, distraint or similar legal process arising in connection with legal proceedings, but only if no Event of Default exists in respect of such order; (v) any Lien existing on (A) any property or asset of any Person at the time such Person becomes a Subsidiary or (B) any property or asset at the time such property or asset is acquired by the Borrower or a Subsidiary, but only, in the case of either (A) or (B), if and so long as (1) such Lien was not created in contemplation of such Person becoming a Subsidiary or such property or asset being acquired, (2) such Lien is and will remain confined to the property or asset subject to it at the time such Person becomes a Subsidiary or such property or asset is acquired and to improvements thereafter erected on or attached to such property or asset or any property or asset acquired in substitution or replacement thereof, (3) such Lien secures only the obligation secured thereby at the time such Person becomes a Subsidiary or such property or asset is acquired and (4) the obligation secured by such Lien is not in default; (vi) any Lien in existence on the Closing Date to the extent set forth on Schedule 7.2, but only, in the case of each such Lien, to the extent it secures an obligation outstanding on the Closing Date to the extent set forth on such Schedule; (vii) any Lien securing Purchase Money Indebtedness but only if, in the case of each such Lien, (A) such Lien shall at all times be confined solely to the property or asset the purchase price of which was financed through the incurrence of the Purchase Money Indebtedness secured by such Lien and to improvements thereafter erected on or attached to such property or asset or any property or asset acquired in substitution or replacement thereof and (B) such Lien attached to such property or asset within 90 days of the acquisition of such property or asset; (viii) deposits made in the ordinary course of business to secure the performance of bids, trade contracts (other than Indebtedness), operating leases, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (ix) deposits securing liability to insurance carriers under insurance or self-insurance arrangements; (x) easements, reservations, rights-of-way, restrictions, survey exceptions and other similar encumbrances as to real property which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not materially interfere with the conduct of the business of the Borrower or any Significant Subsidiary conducted at the property subject thereto; (xi) leases and subleases of property owned or leased by the Borrower or any Significant Subsidiary not interfering with the ordinary conduct of the business of the Borrower and the Significant Subsidiaries; (xii) Liens securing obligations, neither assumed by the Borrower or any Significant Subsidiary nor on account of which the Borrower or any Significant Subsidiary customarily pays interest, upon real estate or under which any Significant Subsidiary has a right-of-way, easement, franchise or other servitude or of which any Significant Subsidiary is the lessee of the whole thereof or any interest therein for the purpose of locating transmission and distribution lines and related support structures, pipe lines, substations, measuring

stations, tanks, pumping or delivery equipment or similar equipment; (xiii) Liens arising by virtue of any statutory or common law provision relating to banker’s liens, rights of setoff or similar rights as to deposit accounts or other funds maintained with a depository institution; (xiv) any Lien constituting a renewal, extension or replacement of a Lien constituting a Permitted Lien by virtue of clause (v), (vi), (vii) or (xvii) of this definition, but only if (A) at the time such Lien is granted and immediately after giving effect thereto, no Default or Event of Default would exist, (B) such Lien is limited to all or a part of the property or asset that was subject to the Lien so renewed, extended or replaced and to improvements thereafter erected on or attached to such property or asset or any property or asset acquired in substitution or replacement thereof, (C) the principal amount of the obligations secured by such Lien does not exceed the principal amount of the obligations secured by the Lien so renewed, extended or replaced and (D) the obligations secured by such Lien bear interest at a rate per annum not exceeding the rate borne by the obligations secured by the Lien so renewed, extended or replaced except for any increase that is commercially reasonable at the time of such increase; (xv) Liens on any property of any Significant Subsidiary securing Indebtedness of such Significant Subsidiary; (xvi) any Lien on any asset of any Person existing at the time such Person is merged or consolidated with or into the Borrower or any Significant Subsidiary and not created in contemplation thereof; and (xvii) Liens not described in clauses (i) through (xvi), inclusive, securing Indebtedness or other liabilities or obligations of the Borrower and/or its Significant Subsidiaries in an aggregate principal amount outstanding not to exc eed 10% of the consolidated net worth of the Borrower and its Subsidiaries at the time of such incurrence.

“ Person ”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

“ Plan ”: at a particular time, any employee benefit plan that is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“ Purchase Money Indebtedness ”: Indebtedness of the Borrower that is incurred to finance part or all of (but not more than) the purchase price of a tangible asset; provided that (i) neither the Borrower nor any Subsidiary had at any time prior to such purchase any interest in such asset other than a security interest or an interest as lessee under an operating lease and (ii) such Indebtedness is incurred within 90 days after such purchase.

“ Refinancing ”: as defined in Section 5.1(b).

“ Register ”: as defined in Section 10.6(b).

“ Regulation U ”: Regulation U of the Board as in effect from time to time.

“ Reimbursement Obligation ”: the obligation of the Borrower to reimburse the applicable Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.

“ Reorganization ”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“ Reportable Event ”: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under PBGC Reg. § 4043.

“ Required Lenders ”: at any time, the holders of more than 50% of the Total Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding.

“ Requirement of Law ”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“ Responsible Officer ”: the chief executive officer, president, chief financial officer or treasurer of the Borrower.

“ Revolving Commitment ”: as to any Lender, the obligation of such Lender to make Revolving Loans and participate in Letters of Credit in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Revolving Commitment” opposite such Lender’s name on Schedule 1.1A or in the Assignment and Assumption or New Lender Supplement pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original amount of the Total Revolving Commitments is $800,000,000.

“ Revolving Commitment Period ”: as to any Lender, the period from and including the Closing Date to the Revolving Termination Date applicable thereto.

“ Revolving Extensions of Credit ”: as to any Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Loans held by such Lender then outstanding and (b) such Lender’s Revolving Percentage of the L/C Obligations then outstanding.

“ Revolving Loans ”: as defined in Section 2.1(a).

“ Revolving Percentage ”: as to any Lender at any time, the percentage which such Lender’s Revolving Commitment then constitutes of the Total Revolving Commitments or, at any time after the Revolving Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender’s Revolving Loans then outstanding constitutes of the aggregate principal amount of the Revolving Loans then outstanding, provided , that, in the event that the Revolving Loans are paid in full prior to the reduction to zero of the Total Revolving Extensions of Credit, the Revolving Percentages shall be determined in a manner designed to ensure that the outstanding Revolving Extensions of Credit shall be held by the Lenders on a comparable basis.

“ Revolving Termination Date ”: December 14, 2011: provided that with respect to Continuing Lenders only, the Revolving Termination Date may be extended pursuant to Section 2.17.

“ Sale and Leaseback Transaction ”: any arrangement, directly or indirectly, with any Person whereby a seller or transferor shall sell or otherwise transfer any real or personal property and concurrently therewith lease, or repurchase under an extended purchase contract, conditional sales or other title retention agreement, the same or substantially similar property.

“ S&P ”: Standard & Poor’s Ratings Services, a division of the McGraw Hill Companies, Inc. or any successor thereto.

“ SEC ”: the Securities and Exchange Commission and any successor thereto.

“ Significant Subsidiary ”: (a) any Existing Utility Subsidiary, (b) any 15% Subsidiary and (c) any Designated Significant Subsidiary.

“ Single Employer Plan ”: any Plan that is covered by Title IV of ERISA, but that is not a Multiemployer Plan.

“ Solvent ”: when used with respect to any Person, means that, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

“ Subsidiary ”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

“ Swap Agreement ”: any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more interest rates, currencies, equity or debt instruments or securities, including indices relating thereto, or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or any of its Subsidiaries shall be a “Swap Agreement”.

“ Synthetic Lease Obligation ”: the monetary obligation of a Person under (i) a so-called synthetic or off-balance sheet or tax retention lease or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as indebtedness of such Person (without regard to accounting treatment). The amount of Synthetic Lease Obligations of any Person under any such lease or agreement shall be the amount which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP if such lease or agreement were accounted for as a Capital Lease Obligation.

“ Syndication Agent ”: as defined in the preamble hereto.

Hybrid Equity Securities, in each case as determined with respect to the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP; provided that there shall be excluded from the calculation of “Total Capital” any non-cash effects (x) of the COLI Litigation, including any non-cash effects resulting from any decisions in respect thereof or any settlement thereof, (y) resulting from application of Financial Accounting Standards Board Interpretation No. 48 — Accounting for Uncertainty in Income Taxes and Interpretation of FASB Statement No. 109 and (z) resulting from application of Financial Accounting Standards Board Statement No. 158: Employers’ Accounting for Defined Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R).

“ Total Revolving Commitments ”: at any time, the aggregate amount of the Revolving Commitments then in effect.

“ Total Revolving Extensions of Credit ”: at any time, the aggregate amount of the Revolving Extensions of Credit of the Lenders outstanding at such time.

“ Transferee ”: any Assignee or Participant.

“ Trust Preferred Securities ”: any preferred securities issued by a Trust Preferred Securities Subsidiary, where such preferred securities have the following characteristics:

(i) such Trust Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower in exchange for subordinated debt issued by the Borrower or such wholly-owned direct or indirect Subsidiary, respectively ;

(ii) such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for the deferral of interest payments on the subordinated debt; and

(iii) the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower (as the case may be) makes periodic interest payments on the subordinated debt, which interest payments are in turn used by the Trust Preferred Securities Subsidiary to make corresponding payments to the holders of such preferred securities.

“ Trust Preferred Securities Subsidiary ”: any Delaware business trust (or similar entity) (i) all of the common equity interest of which is owned (either directly or indirectly through one or more Wholly Owned Subsidiaries of the Borrower) at all times by the Borrower, (ii) that has been formed for the purpose of issuing Trust Preferred Securities and (iii) substantially all of the assets of which consist at all times solely of subordinated debt issued by the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower (as the case may be) and payments made from time to time on such subordinated debt..

“ Type ”: as to any Revolving Loan, its nature as an ABR Loan or a Eurodollar Loan.

“ United States ”: the United States of America.

“ Voting Stock ”: Capital Stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such contingency.

“ Wholly Owned Subsidiary ”: as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

1.2 Other Definitional Provisions . (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to the Borrower not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (v) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.

(c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS

2.1 Revolving Commitments . (a) Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans (“ Revolving Loans ”) to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Revolving Percentage of the L/C Obligations then outstanding, does not exceed the amount of such Lender’s Revolving Commitment. During the Revolving Commitment Period the Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.6.

Revolving Commitments in question, (iii) the increase effected pursuant to this paragraph shall be in a minimum amount of at least $25,000,000 and (iv) no more than one Increased Revolving Commitment Closing Date may be selected by the Borrower during the term of this Agreement. No Lender shall have any obligation to participate in any increase described in this paragraph unless it agrees to do so in its sole discretion.

(c) Any additional bank, financial institution or other entity which, with the consent of the Borrower and the Administrative Agent (which consent shall not be unreasonably withheld), elects to become a “Lender” under this Agreement in connection with an increase described in Section 2.1(b) shall execute a New Lender Supplement (each, a “ New Lender Supplement ”), substantially in the form of Exhibit E-1, whereupon such bank, financial institution or other entity (a “ New Lender ”) shall become a Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement.

(d) On each Increased Revolving Commitment Closing Date on which there are Revolving Loans outstanding, the New Lender(s) and/or Lender(s) that have increased their Revolving Commitments shall make Revolving Loans, the proceeds of which will be used to prepay the Revolving Loans of other Lenders, so that, after giving effect thereto, the resulting Revolving Loans outstanding are allocated among the Lenders in accordance with Section 2.11(a) based on the respective Revolving Percentages of the Lenders after giving effect to such Increased Revolving Commitment Closing Date.

(e) The Borrower shall repay the outstanding Revolving Loans of each Lender on the Revolving Termination Date applicable to such Lender.

2.2 Procedure for Revolving Loan Borrowing . The Borrower may borrow under the Revolving Commitments during the Revolving Commitment Period on any Business Day, provided that the Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 11:00 A.M., New York City time, (a) three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Loans (or, with respect to any Eurodollar Loans to be made on the Closing Date, such shorter time period as may be agreed by the Administrative Agent) or (b) on the requested Borrowing Date, in the case of ABR Loans), specifying (i) the amount and Type of Revolving Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of Eurodollar Loans, the respective lengths of the initial Interest Period therefor. Each borrowing under the Revolving Commitments shall be in an amount equal to (x) in the case of ABR Loans, $1,000,000 or a whole multiple thereof (or, if the then aggregate Available Revolving Commitments are less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Lender thereof. Each Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent.

2.3 Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee for the period from and including the date hereof to the last day of the Revolving Commitment Period applicable thereto, computed at the Applicable Margin on the average daily amount of the Available Revolving Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on each Fee Payment Date.

(b) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent and to perform any other obligations contained therein.

2.4 Termination or Reduction of Revolving Commitments . The Borrower shall have the right, upon not less than three Business Days’ notice to the Administrative Agent, to terminate the Revolving Commitments or, from time to time, to reduce the amount of the Revolving Commitments; provided that no such termination or reduction of Revolving Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans made on the effective date thereof, the Total Revolving Extensions of Credit would exceed the Total Revolving Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Commitments then in effect. Following an Extension Request pursuant to Section 2.17, the Borrower may terminate the Revolving Commitments of the Non-Extending Lenders; provided that the Borrower shall prepay the Revolving Loans of such Non-Extending Lenders on the effective date of such termination, together with accrued but unpaid interest and fees thereon and all other amounts then payable hereunder to such Non-Extending Lenders.

2.5 Optional Prepayments . The Borrower may at any time and from time to time prepay the Revolving Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent no later than 11:00 A.M., New York City time, three Business Days prior thereto, in the case of Eurodollar Loans, and no later than 11:00 A.M., New York City time, on the prepayment date, in the case of ABR Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurodollar Loans or ABR Loans; provided , that if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.14. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments of Revolving Loans shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.

2.6 Conversion and Continuation Options . (a) The Borrower may elect from time to time to convert Eurodollar Loans to ABR Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 11:00 A.M., New York City time, on the Business Day preceding the proposed conversion date, provided that any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 11:00 A.M., New York City time, on the third Business Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor), provided that no ABR Loan may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the Required Lenders have determined in its or their sole discretion not to permit such conversions. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof.

(b) Any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Revolving Loans, provided that no Eurodollar Loan may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such continuations, and provided , further , that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted

pursuant to the preceding proviso such Revolving Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof.

2.7 Limitations on Eurodollar Tranches . Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions and continuations of Eurodollar Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more than ten Eurodollar Tranches shall be outstanding at any one time.

2.8 Interest Rates and Payment Dates . (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin.

(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.

(c) (i) If all or a portion of the principal amount of any Revolving Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), all outstanding Revolving Loans and Reimbursement Obligations (whether or not overdue) shall bear interest at a rate per annum equal to (x) in the case of the Revolving Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to ABR Loans plus 2%, and (ii) if all or a portion of any interest payable on any Revolving Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans plus 2%, in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment).

(d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

2.9 Computation of Interest and Fees . (a) Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Revolving Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change in interest rate.

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.8(a).

2.10 Inability to Determine Interest Rate . If prior to the first day of any Interest Period, the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders that:

(a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or

(b) the Administrative Agent shall have received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Revolving Loans during such Interest Period,

then (x) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Revolving Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans shall be converted, on the last day of the then-current Interest Period, to ABR Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to convert Revolving Loans to Eurodollar Loans.

2.11 Pro Rata Treatment and Payments . (a) Except as otherwise expressly provided herein, each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee and any reduction of the Revolving Commitments of the Lenders shall be made pro rata according to the respective Revolving Percentages of the Lenders.

(b) Except as otherwise expressly provided herein, each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Lenders.

(c) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

(d) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor,

such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error. If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans, on demand, from th e Borrower. Nothing herein shall be deemed to limit the rights of the Borrower against such Lender.

(e) Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective shares of a corresponding amount. If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

2.12 Requirements of Law . (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:

(i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except, in each case, for Non-Excluded Taxes covered by Section 2.13 and changes in the rate of tax on the overall net income of such Lender);

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate; or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall pay such Lender, reasonably promptly after its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled, setting forth in reasonable detail the calculations upon which such Lender determined such amounts.

(b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor setting forth in reasonable detail the calculations upon which such Lender determined such amounts, the Borrower shall pay to such Lender reasonably promptly after such submission such additional amount or amounts as will compensate such Lender or such corporation for such reduction.

(c) A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. Notwithstanding anything to the contrary in this Section, the Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more than six months prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; provided that, if within such six-month period circumstances occur that give rise to such claim having a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect. The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Revolving Loans and all other amounts payable hereunder.

2.13 Taxes . (a) All payments made by the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“ Non-Excluded Taxes ”) or Other Taxes are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided , however , that the Borrower shall not be required to increase any such amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s failure to comply with the requirements of paragraph (d) or (e) of this Section or (ii) that are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender’s assignor (if any) was entitled, at the time of assignment, to receive such additional amounts from the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph, so long as such additional amounts payable by the Borrower are not increased thereby.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of the relevant Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof or such other evidence of payment as is reasonably satisfactory to the Administrative Agent. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental Non-Excluded Taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure.

(d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30) of the Code (a “ Non-U.S. Lender ”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit C and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.

(e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender’s judgment such completion, execution or submission would not materially prejudice the legal position of such Lender.

(f) If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.13, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.13 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all associated out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , that the Borrower, upon the request of the Administrative Agent or such Lender, shall repay the amount paid over to the Borrower (plus any

penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person .

(g) The agreements in this Section shall survive the termination of this Agreement and the payment of the Revolving Loans and all other amounts payable hereunder.

2.14 Indemnity . The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurodollar Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day that is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Revolving Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. A certificate as to any amounts payable pursuant to this Section submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Revolving Loans and all other amounts payable hereunder.

2.15 Change of Lending Office . Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.12 or 2.13(a) with respect to such Lender, it will use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Revolving Loans affected by such event with the object of avoiding the consequences of such event; provided , that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided , further , that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 2.12 or 2.13(a).

2.16 Replacement of Lenders . The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 2.12 or 2.13(a), (b) defaults in its obligation to make Revolving Loans hereunder or (c) is a Non-Extending Lender, with a replacement financial institution or other entity; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) in the case of clause (a) above, prior to any such replacement, such Lender shall have taken no action under Section 2.15 so as to eliminate the continued need for payment of amounts owing pursuant to Section 2.12 or 2.13(a), (iv) the replacement financial institution shall purchase, at par, all Revolving Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (v) the Borrower shall be liable to such replaced Lender under Section 2.14 if any Eurodollar Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (vi) the replacement financial institution, if not already a Lender, shall be reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender shall be obligated to make

such replacement in accordance with the provisions of Section 10.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (viii) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.12 or 2.13(a), as the case may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.

2.17 Extension of Revolving Termination Date . (a) The Borrower may, by written notice to the Administrative Agent in the form of Exhibit F-1 (an “ Extension Request ”) given no earlier than the first anniversary of the Closing Date but no later than 60 days prior to the then applicable Revolving Termination Date, request that the then applicable Revolving Termination Date be extended to the date that is one calendar year after the then applicable Revolving Termination Date. Such extension shall be effective with respect to each Lender that, by a written notice in the form of Exhibit F-2 (a “ Continuation Notice ”) to the Administrative Agent given no later than 30 days after the applicable Extension Request is given by the Borrower (or such later date as the Borrower shall specify in such Extension Request) (the “ Extension Request Response Date ”), consents, in its sole discretion, to such extension (each Lender giving a Continuation Notice being referred to herein as a “ Continuing Lender ” and each Lender other than a Continuing Lender being referred to herein as a “ Non-Extending Lender ”), provided that (i) such extension shall be effective only if the aggregate Revolving Commitments of the Continuing Lenders constitute at least a majority of the Total Revolving Commitments on the date of the Extension Request, (ii) any Lender that fails to submit a Continuation Notice on or before the applicable Extension Request Response Date shall be deemed not to have consented to such extension and shall constitute a Non-Extending Lender and (iii) the Borrower may give only two Extension Requests during the term of this Agreement. No Lender shall have any obligation to consent to any extension of the Revolving Termination Date. The Administrative Agent shall notify each Lender of the receipt of an Extension Request promptly after receipt thereof. The Administrative Agent shall notify the Borrower and the Lenders no later than five days after the applicable Extension Request Response Date whether the Administrative Agent has received Continuation Notices from Lenders holding Revolving Commitments aggregating at least a majority of the Total Revolving Commitments on the date of the applicable Extension Request.

(b) The Revolving Commitment of each Non-Extending Lender shall terminate at the close of business on the Revolving Termination Date in effect prior to the delivery of such Extension Request without giving any effect to such proposed extension. In accordance with Section 2.1(e), on such Revolving Termination Date, the Borrower shall pay to the Administrative Agent, for the account of each Non-Extending Lender, an amount equal to such Non-Extending Lender’s Revolving Loans, together with accrued but unpaid interest and fees thereon and all other amounts then payable hereunder to such Non-Extending Lender. If, however, on or before the date which is 10 days prior to the Revolving Termination Date in effect prior to the delivery of an Extension Request pursuant to this Section 2.17, the Borrower obtains a replacement Lender pursuant to Section 2.16 for any such Non-Extending Lender and such replacement Lender agrees to the extension of the Revolving Termination Date pursuant to this Section 2.17, then such replacement Lender shall for all purposes of this Section 2.17 and this Agreement be deemed to be a Continuing Lender, and the Revolving Loans of such Lender shall not be due and payable pursuant to this Section 2.17(b).

SECTION 3. LETTERS OF CREDIT

Issuing Lender shall issue any Letter of Credit if, (i) after giving effect to such issuance, (A) the L/C Obligations would exceed the L/C Commitment or (B) the aggregate amount of the Available Revolving Commitments would be less than zero or (ii) such Issuing Lender shall have received written notice from the Administrative Agent or the Borrower, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Section 5.2 shall not have been satisfied. On the Closing Date, each Existing Letter of Credit shall be deemed to be a Letter of Credit issued hereunder for the account of the Borrower. Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date that is five Business Days prior to the Revolving Termination Date (as it may be extended), provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above).

(b) No Issuing Lender shall at any time be obligated to issue any Letter of Credit if such issuance would conflict with, or cause such Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law.

3.2 Procedure for Issuance of Letter of Credit . The Borrower may from time to time request that an Issuing Lender issue a Letter of Credit by delivering to such Issuing Lender at its address set forth in its Issuing Lender Agreement an Application therefor, completed to the satisfaction of such Issuing Lender, and such other certificates, documents and other papers and information as such Issuing Lender may request. Upon receipt of any Application, such Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall an Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower. Such Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower promptly following the issuance thereof. The applicable Issuing Lender shall promptly furnish to the Administrative Agent, which shall in turn promptly furnish to the Lenders, notice of the issuance of each Letter of Credit (including the amount thereof).

3.3 Fees and Other Charges . (a) The Borrower will pay a fee on all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar Loans, shared ratably among the Lenders and payable quarterly in arrears on each Fee Payment Date after the issuance date. In addition, the Borrower shall pay to the applicable Issuing Lender for its own account a fronting fee for each Letter of Credit requested by the Borrower in such amount and at such times as may be set forth in a separate letter agreement between the Borrower and such Issuing Lender (each, an “ Issuing Lender Agreement ”), which shall contain such Issuing Lender’s address for notices..

(b) In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for such normal and customary costs and expenses as are incurred or charged by such Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit.

risk an undivided interest equal to such L/C Participant’s Revolving Percentage in such Issuing Lender’s obligations and rights under and in respect of each Letter of Credit and the amount of each draft paid by such Issuing Lender thereunder. Each L/C Participant agrees with each Issuing Lender that, if a draft is paid under any Letter of Credit for which such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to such Issuing Lender upon demand at such Issuing Lender’s address for notices specified herein an amount equal to such L/C Participant’s Revolving Percentage of the amount of such draft, or any part thereof, that is not so reimbursed. Each L/C Participant’s obligation to pay such amount shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such L/C Participant may have against such Issuing Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5, (iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the Borrower or any other L/C Participant or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing

(b) If any amount required to be paid by any L/C Participant to an Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by such Issuing Lender under any Letter of Credit is paid to such Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to such Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is not made available to an Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, such Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans. A certificate of an Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error.

(c) Whenever, at any time after an Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.4(a), such Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by such Issuing Lender), or any payment of interest on account thereof, such Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided , however , that in the event that any such payment received by an Issuing Lender shall be required to be returned by such Issuing Lender, such L/C Participant shall return to such Issuing Lender the portion thereof previously distributed by such Issuing Lender to it.

3.5 Reimbursement Obligation of the Borrower . If any draft is paid under any Letter of Credit, the Borrower shall reimburse the applicable Issuing Lender for the amount of (a) the draft so paid and (b) any taxes, fees, charges or other costs or expenses incurred by such Issuing Lender in connection with such payment, not later than 12:00 Noon, New York City time, on (i) the Business Day that the Borrower receives notice of such draft, if such notice is received on such day prior to 10:00 A.M., New York City time, or (ii) if clause (i) above does not apply, the Business Day immediately following the day that the Borrower receives such notice. Each such payment shall be made to the applicable Issuing Lender at its address set forth in its Issuing Lender Agreement in Dollars and in immediately available funds. Interest shall be payable on any such amounts from the date on which the relevant draft is paid until payment in full at the rate set forth in (x) until the Business Day next succeeding the date of the relevant notice, Section 2.8(b) and (y) thereafter, Section 2.8(c).

3.6 Obligations Absolute . The Borrower’s obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with each Issuing Lender that, absent gross negligence or willful misconduct of such Issuing Lender, such Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions resulting from the gross negligence or willful misconduct of such Issuing Lender. The Borrower agrees that any action taken or omitted by an Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower; provided that the Borrower shall not be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower to the extent caused by (i) the gross negligence or willful misconduct of such Issuing Lender in determining whether a request presented under any Letter of Credit issued by it complied with the terms of such Letter of Credit or (ii) such Issuing Lender’s willful failure or gross negligence in failing to pay under any Letter of Credit issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit.

3.7 Letter of Credit Payments . If any draft shall be presented for payment under any Letter of Credit, the applicable Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of the applicable Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.

3.8 Applications . To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply.

SECTION 4. REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Revolving Loans and issue or participate in the Letters of Credit, the Borrower hereby represents and warrants to the Administrative Agent and each Lender that:

year-end adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). Except as set forth on Schedule 4.1, as of the Closing Date, neither the Borrower nor any Significant Subsidiary has any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph.

4.2 No Change . Except as set forth on Schedule 4.2, since December 31, 2005, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.

4.3 Existence; Compliance with Law . The Borrower and each Significant Subsidiary (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to own and operate its material properties, to lease the material properties it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation or other organization and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to be so qualified or in good standing could not, in the aggregate, reasonably be expected to have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.4 Power; Authorization; Enforceable Obligations . The Borrower has the corporate power and authority to make, deliver and perform the Loan Documents to which it is a party and to obtain extensions of credit hereunder. The Borrower has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and to authorize the extensions of credit on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with (a) any extension of credit hereunder when made (except for consents, authorizations, filings, notices or other acts required with respect to such extension of credit that have been obtained or made and are in full force and effect at the time of such extension of credit) or (b) the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents. Each Loan Document has been duly executed and delivered on behalf of the Borrower. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

4.5 No Legal Bar . The execution, delivery and performance of this Agreement and the other Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof will not (a) violate any (i) Requirement of Law or (ii) Contractual Obligation of the Borrower or any Significant Subsidiary (except in the case of this clause (a) to the extent any such violations could not, in the aggregate, reasonably be expected to have a Material Adverse Effect) and (b) result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation.

4.6 Litigation . Except as set forth on Schedule 4.6, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the

Borrower, threatened by or against the Borrower or any Significant Subsidiary or against any of their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that could reasonably be expected to have a Material Adverse Effect.

4.7 Ownership of Property; Liens . Except (i) for assets disposed of in the ordinary course of business since September 30, 2006 and (ii) as set forth on Schedule 4.7, on the Closing Date the Borrower and its Significant Subsidiaries have good title, free of all Liens other than Permitted Liens, to all of the material assets reflected in the Borrower’s consolidated balance sheet as of September 30, 2006 as owned by the Borrower and/or its Significant Subsidiaries.

4.8 Taxes . Each of the Borrower and each Significant Subsidiary has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than (i) those that are not in the aggregate material and (ii) any taxes, fees or other charges the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or such Significant Subsidiary).

4.9 Federal Regulations . No part of the proceeds of any Revolving Loans, and no other extensions of credit hereunder, will be used (a) for “buying” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect for any purpose that violates the provisions of the Regulations of the Board or (b) for any purpose that violates the provisions of the Regulations of the Board. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

4.10 ERISA . Except as could not reasonably be expected to have a Material Adverse Effect, (a) neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA), as applicable, has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan subject to Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code; (b) no termination of a Single Employer Plan has occurred, and no Lien on the assets of the Borrower or any Significant Subsidiary in favor of the PBGC or a Plan has arisen, during such five-year period; (c) the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date for which a valuation report is available prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by a material amount; and (d) neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to result in a material liability under ERISA, and, to the knowledge of the Borrower or any Commonly Controlled Entity, neither the Borrower nor any Commonly Controlled Entity would become subject to any material liability under ERISA if the Borrower or any Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. Neither the Borrower nor any Commonly Controlled Entity has knowledge that any such Multiemployer Plan is in Reorganization or Insolvent.

4.11 Investment Company Act; Other Regulations . The Borrower is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. The Borrower is not subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness.

4.12 Use of Proceeds . The proceeds of the Revolving Loans and the Letters of Credit shall be used to effect the Refinancing, to pay fees and expenses incurred in connection therewith and for general corporate purposes (including commercial paper support).

4.13 Accuracy of Information, etc . The information, taken as a whole, contained in this Agreement, the other Loan Documents, the Confidential Information Memorandum or the other documents, certificates or statements furnished by or on behalf of the Borrower to the Administrative Agent or the Lenders, or any of them, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, did not contain as of the date such information was so furnished (or, in the case of the Confidential Information Memorandum, together with all other information so furnished to the Lenders prior to the Closing Date, as of the date of this Agreement), any untrue statement of a material fact or omit to state a material fact necessary to make the information contained herein or therein not misleading in light of the circumstances under which such information was furnished.

4.14 Solvency . The Borrower is, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith will be, Solvent.

SECTION 5. CONDITIONS PRECEDENT

5.1 Conditions to Initial Extension of Credit . The agreement of each Lender to make the initial extension of credit requested to be made by it is subject to the satisfaction, prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent:

(a) Credit Agreement . The Administrative Agent shall have received this Agreement or, in the case of the Lenders, an Addendum, executed and delivered by the Administrative Agent, the Borrower and each Person listed on Schedule 1.1A.

(b) Termination of Existing Credit Facility . The Administrative Agent shall have received satisfactory evidence that the Existing Credit Agreement shall have been terminated, all commitments thereunder shall have been terminated and all amounts owing thereunder shall have been paid in full (the “ Refinancing ”).

(c) Financial Statements . The Lenders shall have received audited consolidated financial statements of the Borrower for the 2003, 2004 and 2005 fiscal years, and such financial statements shall not, in the reasonable judgment of the Lenders, reflect any material adverse change in the consolidated financial condition of the Borrower, as reflected in the financial statements contained in the Confidential Information Memorandum.

(d) Approvals . All governmental and third party approvals, if any, required as of the Closing Date in connection with the Refinancing and the transactions contemplated hereby shall have been obtained on satisfactory terms and shall be in full force and effect.

(e) Fees . The Lenders and the Administrative Agent shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Closing Date.

(f) Closing Certificate; Certified Articles of Incorporation; Good Standing Certificates . The Administrative Agent shall have received (i) a certificate of the Borrower, dated the Closing Date, substantially in the form of Exhibit A, with appropriate insertions and attachments, including the articles of incorporation of the Borrower certified by the relevant authority of the jurisdiction of organization of the Borrower, and (ii) a long form good standing certificate for the Borrower from its jurisdiction of organization.

(g) Legal Opinions . The Administrative Agent shall have received the following executed legal opinions:

(i) the legal opinion of Jones Day, special New York counsel to the Borrower; and

(ii) the legal opinion of Gary R. Johnson, general counsel of Xcel Energy Inc.

Each such legal opinion shall cover such matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.

5.2 Conditions to Each Extension of Credit . The agreement of each Lender to make any extension of credit requested to be made by it on any date (including its initial extension of credit) is subject to the satisfaction of the following conditions precedent:

(a) Representations and Warranties . Each of the representations and warranties made by the Borrower in or pursuant to the Loan Documents (other than the representations and warranties contained in Sections 4.2 and 4.6, which representations and warranties need only be true and correct on and as of the Closing Date) shall be true and correct in all material respects on and as of such date as if made on and as of such date, except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct in all material respects as of such earlier date.

(b) No Default . No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

(c) Other Documents . In the case of any extension of credit made on an Increased Revolving Commitment Closing Date, the Administrative Agent shall have received such customary documents and information as it may reasonably request.

Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied.

SECTION 6. AFFIRMATIVE COVENANTS

The Borrower hereby agrees that, so long as the Revolving Commitments remain in effect, any Letter of Credit remains outstanding or any Revolving Loan or other amount is owing to any Lender or the Administrative Agent hereunder:

6.1 Financial Statements . The Borrower shall furnish to the Administrative Agent (which shall in turn furnish to the Lenders):

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as of the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by Deloitte & Touche LLP or other independent certified public accountants of nationally recognized standing; and

(b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments).

All such financial statements shall present fairly, in all material respects, the financial position of the Borrower and its Subsidiaries and shall be prepared in reasonable detail and in accordance with GAAP applied (except as approved by such accountants or officer, as the case may be, and disclosed in reasonable detail therein) consistently throughout the periods reflected therein and with prior periods.

6.2 Certificates; Other Information . The Borrower shall furnish to the Administrative Agent (which shall in turn furnish to the Lenders, or, in the case of clause (c), to the relevant Lender):

(a) concurrently with the delivery of any financial statements pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating that, to the best of such Responsible Officer’s knowledge, during such period the Borrower has observed or performed all of its covenants and other agreements, and satisfied every condition contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) a compliance certificate containing all information and calculations necessary for determining compliance by the Borrower with the provisions of Section 7.1 of this Agreement as of the last day of the fiscal quarter or fiscal year of the Borrower, as the case may be;

(b) within five days after the same are sent, copies of all financial statements and reports that the Borrower sends to the holders of any class of its debt securities or public equity securities and, within five days after the same are filed, copies of all reports on Forms 10-K, 10-Q and 8-K that the Borrower files with the SEC; and

(c) promptly, such additional financial and other information as any Lender may from time to time reasonably request through the Administrative Agent.

6.3 Payment of Obligations and Taxes . The Borrower shall and shall cause each of its Significant Subsidiaries to pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations (including, without limitation, obligations with respect to taxes) of whatever nature which, if unpaid, undischarged or otherwise unsatisfied are or might become a Lien or other charge upon any properties of the Borrower or any Significant Subsidiary, except that neither the Borrower nor any Subsidiary shall be required to pay, discharge or otherwise satisfy any such obligation (i) whose amount, applicability or validity is being contested in good faith by appropriate

proceedings and for which the Borrower or such Subsidiary has provided adequate reserves in accordance with GAAP or (ii) where failure to pay, discharge or otherwise satisfy such obligation could not, in the aggregate, reasonably be expected to result in a Material Adverse Effect or (iii) in respect of any judgment in the COLI Litigation, so long as no Default or Event of Default under Section 8(h) in respect thereof has occurred and is continuing.

6.4 Maintenance of Existence; Compliance . The Borrower shall and shall cause each of its Significant Subsidiaries:

(a) to preserve, renew and keep in full force and effect its organizational existence, except as otherwise permitted by Section 7.3 or 7.4;

(b) to take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except (i) as otherwise permitted by Section 7.3 and (ii) to the extent that failure to do so could not, in the aggregate, reasonably be expected to have a Material Adverse Effect; and

(c) to comply with all Contractual Obligations and Requirements of Law, except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

6.5 Maintenance of Property; Insurance . The Borrower shall and shall cause each of its Significant Subsidiaries to (a) keep all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and except where the failure to do so could not, in the aggregate, reasonably be expected to result in a Material Adverse Effect, and (b) maintain with financially sound and reputable insurance companies insurance on its property in at least such amounts (subject to deductibles and self-retention limits) and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business.

6.6 Inspection of Property; Books and Records; Discussions . The Borrower shall and shall cause each of its Significant Subsidiaries to (a) keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) from time to time during normal business hours and on reasonable prior notice, permit representatives of any Lender to visit and inspect any of its properties (subject to such physical security requirements as the Borrower or the applicable Significant Subsidiary may require) and examine and make abstracts from any of its books and records (except to the extent that such access is restricted by law or by a bona fide non-disclosure agreement not entered into for the purpose of evading the requirements of this Section 6.6), at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Borrower and the Significant Subsidiaries with officers and employees of the Borrower and the Significant Subsidiaries and with their independent certified public accountants.

6.7 Notices . Promptly after any officer of the Borrower with responsibility for the matter in question becomes aware thereof, the Borrower shall give notice to the Administrative Agent (which shall in turn furnish such notice to the Lenders) of:

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual Obligation of the Borrower or any Significant Subsidiary or (ii) litigation, investigation or proceeding that may exist at any

time between the Borrower or any Significant Subsidiary, on the one hand, and any Governmental Authority, on the other hand, that in either case, if not cured could reasonably be expected to have a Material Adverse Effect;

(c) (i) the occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan, which in any case could reasonably be expected to have a Material Adverse Effect; and

(d) any development or event that has had or could reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this Section 6.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower or such Significant Subsidiary proposes to take with respect thereto.

6.8 Ownership of Significant Subsidiaries . The Borrower shall at all times, directly or indirectly own, beneficially and of record, (a) except as permitted by Section 6.10, 7.3 or 7.4, 100% of each class of issued and outstanding common stock of each Significant Subsidiary and (b) 100% of each class of issued and outstanding common stock of each 15% Subsidiary.

6.9 Scope of Business . The Borrower shall, and shall cause each Significant Subsidiary to, engage primarily in energy-related businesses.

6.10 Significant Subsidiaries . So long as no Default or Event of Default then exists or arises as a result thereof, the Borrower may from time to time by written notice delivered to the Administrative Agent:

(a) designate any Subsidiary as a Significant Subsidiary; and

(b) with respect to any Designated Significant Subsidiary, revoke its designation as a Significant Subsidiary; provided that the assets of such Designated Significant Subsidiary could have been disposed of pursuant to the provisions of Section 7.4 if such transaction were treated as a Disposition of the assets of such Designated Significant Subsidiary.

SECTION 7. NEGATIVE COVENANTS

7.1 Ratio of Funded Debt to Total Capital . The Borrower shall not permit the ratio of Funded Debt of the Borrower and its Subsidiaries on a consolidated basis to Total Capital as at the last day of any fiscal quarter of the Borrower to exceed 0.65 to 1.00.

7.2 Liens . The Borrower shall not, and shall not permit any of its Significant Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien upon any of its property, whether now owned or hereafter acquired, except for Permitted Liens.

7.3 Fundamental Changes . The Borrower shall not, and shall not permit any of its Significant Subsidiaries to, directly or indirectly, merge or consolidate with any Person, except that, if after giving effect thereto no Default or Event of Default would exist, this Section 7.3 shall not apply to (a) any merger or consolidation of the Borrower with any one or more Persons (including any Subsidiary), so long as the successor entity (if other than the Borrower) (i) is a Person organized and duly existing under the law of any state of the United States and (ii) assumes, in form reasonably satisfactory to the Administrative Agent, all of the obligations of the Borrower under this Agreement, (b) any merger or consolidation of a Significant Subsidiary with another Subsidiary, provided that the continuing Person shall be a Significant Subsidiary, and (c) any merger or consolidation of a Significant Subsidiary (other than a 15% Subsidiary) with another Person if after giving effect thereto the survivor is no longer a Significant Subsidiary and the assets of such Significant Subsidiary could have been Disposed of pursuant to the provisions of Section 7.4 if such transaction were treated as a Disposition of the assets of such Significant Subsidiary. In the event of any merger or consolidation of or by the Borrower in which the Borrower is not the surviving entity, the surviving entity of such merger or consolidation shall deliver to the Administrative Agent for the benefit of the Lenders all information reasonably necessary to comply with the identification requirements of the Act (as defined in Section 10.17).

7.4 Disposition of Property . The Borrower shall not, directly or indirectly, Dispose of, in one transaction or a series of transactions, all or substantially all of its business or property, whether now owned or hereafter acquired. For the avoidance of doubt, it is understood and agreed that this Section 7.4 shall not relieve the Borrower from complying with Section 6.8(b).

7.5 Transactions with Affiliates . The Borrower shall not, and shall not permit any of its Significant Subsidiaries to, directly or indirectly, enter into any transaction with any Affiliate (other than the Borrower or any Significant Subsidiary) unless such transaction is upon fair and reasonable terms no less favorable to the Borrower or such Significant Subsidiary than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate; provided , however , that this Section 7.5 shall not prohibit any transaction subject to the jurisdiction of the FERC or any applicable state regulatory commission.

7.6 Swap Agreements . The Borrower shall not, and shall not permit any of its Significant Subsidiaries to, directly or indirectly, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Borrower or any Significant Subsidiary has actual exposure or in respect of an anticipated transaction and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Significant Subsidiary.

7.7 Clauses Restricting Subsidiary Distributions . The Borrower shall not, and shall not permit any of its Significant Subsidiaries to, directly or indirectly, enter into or suffer to exist or become effective (including by way of amendment, supplement or other modification of an agreement existing on the Closing Date) any consensual encumbrance or restriction on the ability of any Significant Subsidiary of the Borrower to make payments, directly or indirectly, to its shareholders by way of dividends, repayment of loans or intercompany charges, or other returns on investments that is more restrictive than any such encumbrance or restriction applicable to such Significant Subsidiary on the Closing Date; provided that this Section 7.7 shall not apply to (a) limitations or restrictions imposed by law or in regulatory proceedings or (b) financial covenants contained in any agreement or indenture requiring compliance with financial tests or ratios, so long as such financial covenants could not reasonably be expected to impair the Borrower’s ability to repay the Obligations as and when due.

SECTION 8. EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(a) the Borrower shall fail to pay any principal of any Revolving Loan or Reimbursement Obligation when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Revolving Loan or Reimbursement Obligation, or any other amount payable hereunder or under any other Loan Document, within five days after any such interest or other amount becomes due in accordance with the terms hereof; or

(b) any representation or warranty made or deemed made by the Borrower herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or

(c) the Borrower shall default in the observance or performance of any agreement contained in Section 6.4(a) (with respect to the Borrower only), Section 6.7(a) or Section 7 of this Agreement; or

(d) the Borrower shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after notice to the Borrower from the Administrative Agent or the Required Lenders; or

(e) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (e) shall not apply to (i) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, (ii) Indebtedness that becomes due as a result of (A) the Borrower or any Significant Subsidiary effecting an optional redemption, voluntary prepayment, voluntary defeasance or voluntary repurchase of such Indebtedness or (B) a similar event or condition occurring at the election of the Borrower or any Significant Subsidiary or (iii) Swap Agreements and Commodity Swap Agreements that are cancelled or terminated at the option of either party thereto, other than as a result of a default, event of default or early termination event ; or

warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any Significant Subsidiary shall take any corporate action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any Significant Subsidiary shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

(g) (i) any Person shall engage in any non-exempt “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan subject to Section 412 of the Code or Section 302 of ERISA or any Lien in favor of the PBGC or a Plan shall arise on the assets of any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan, any Commonly Controlled Entity shall, or is reasonably likely to, incur any unpaid liability or (vi) any other similar event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or

(h) one or more judgments or decrees shall be entered against the Borrower or any Significant Subsidiary involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage) of $50,000,000 or more, and such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof; provided that a judgment in the COLI Litigation shall not constitute a Default or an Event of Default so long as the Borrower and/or any of its Subsidiaries has appealed such judgment, is in discussions in good faith to enter into a settlement of such matter and/or has entered into a settlement agreement in respect thereof and is in compliance in all material respects with the terms thereof; provided , however , that not all legal appeals in connection therewith have been exhausted and no assets of the Borrower or its Subsidiaries have been levied against, garnished or attached to satisfy such judgment; or

(i) a Change in Control shall occur;

then, and in any such event, (A) if such event is an Event of Default specified in paragraph (f) above with respect to the Borrower or any 15% Subsidiary, automatically the Revolving Commitments shall immediately terminate and the Revolving Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Revolving Loans (with accrued interest thereon) and all other amounts owing under this Agreement and

the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit. During the continuance of an Event of Default, the Administrative Agent may, or upon the request of the Required Lenders shall, apply any Excess Balance (as defined below) to repay the Obligations. If all Obligations (other than L/C Obligations in respect of undrawn Letters of Credit) have been paid in full, the Excess Balance shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). If no Event of Default is then continuing, the Administrative Agent shall return to the Borrower the balance in the cash collateral account. For purposes hereof, “Excess Balance” means the amount by which the balance in the cash collateral account exceeds the undrawn and unexpired amount of the Letters of Credit. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.

SECTION 9. THE AGENTS

9.1 Appointment . Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

9.2 Delegation of Duties . The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care.

9.3 Exculpatory Provisions . Neither any Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of the Borrower to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Borrower. Neither any Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall, except as expressly set forth herein and in the other Loan Documents,

have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as an Agent or any of its Affiliates in any capacity.

9.4 Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless such Note had been assigned in accordance with the provisions of Section 10.6 hereof. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Revolving Loans.

9.5 Notice of Default . The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

9.6 Non-Reliance on Agents and Other Lenders . Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of the Borrower or any affiliate of the Borrower, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and its affiliates and made its own decision to make its Revolving Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and its affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or

otherwise), prospects or creditworthiness of the Borrower or any affiliate of the Borrower that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

9.7 Indemnification . The Lenders agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Revolving Commitments shall have terminated and the Revolving Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Revolving Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Revolving Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Revolving Loans and all other amounts payable hereunder.

9.8 Agent in Its Individual Capacity . Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though such Agent were not an Agent. With respect to its Revolving Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

9.9 Successor Administrative Agent . The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8(a) or Section 8(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Revolving Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

9.10 Documentation Agents and Syndication Agent . Neither any Documentation Agent nor the Syndication Agent shall have any duties or responsibilities hereunder in its capacity as such.

SECTION 10. MISCELLANEOUS

10.1 Amendments and Waivers . Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1. The Required Lenders and the Borrower may, or, with the written consent of the Required Lenders, the Administrative Agent and the Borrower may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided , however , that no such waiver and no such amendment, supplement or modification shall (i) except as set forth in Section 2.17, forgive the principal amount or extend the final scheduled date of maturity of any Revolving Loan or Reimbursement Obligation, reduce the stated rate of any interest or fee payable hereunder (except in connection with the waiver of applicability of any post-default increase in interest rates (which waiver shall be effective with the consent of the Required Lenders)) or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Lender’s Revolving Commitment, in each case without the written consent of each Lender directly affected thereby; (ii) eliminate or reduce the voting rights of any Lender under this Section 10.1 without the written consent of such Lender; (iii) reduce any percentage specified in the definition of Required Lenders or consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, in each case without the written consent of all Lenders; (iv) amend, modify or waive any provision of Section 2.11(a) or Section 2.11(b) without the written consent of each Lender directly affected thereby, (v) amend, modify or waive any provision of Section 9 without the written consent of the Administrative Agent; or (vi) amend, modify or waive any provision of Section 3 without the written consent of each Issuing Lender. Notwithstanding anything contained in this Section 10.1, the Revolving Termination Date with respect to any Lender may not be extended with respect to such Lender without its written consent. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the Administrative Agent and all future holders of the Revolving Loans. In the case of any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver, except to the extent expressly provided therein, shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Notwithstanding the foregoing, the Administrative Agent may waive payment of the fee required by Section 10.6(b)(ii)(B) without obtaining the consent of any other party to this Agreement

10.2 Notices . All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by electronic transmission or telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Borrower and the Administrative Agent, and as set forth in an administrative questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

Borrower:		414 Nicollet Mall
		Minneapolis, MN 55401

		Attention: Treasurer
		Telecopy: 612-215-5311
		Telephone: 612-215-4627

Administrative Agent:		c/o Loan and Agency Services Group
		1111 Fannin, 10 th Floor
		Houston, TX 77002
		Attention: Jamie Garcia
		Telecopy: 713-427-6307
		Telephone: 713-750-2377

with a copy to:		JPMorgan Chase Bank, N.A.
		270 Park Avenue, 4 th Floor
		New York, NY 10017
		Attention: Peter Ling
		Telecopy: 212-270-0213
		Telephone: 212-270-4676

and, if regarding Letters of Credit, with a copy to:		JPMorgan Chase LOC Tampa
		10420 Highland Mn Dr
		Block 2, Floor 4
		Tampa, FL 33610
		Attention: James Alonzo
		Telecopy: 813-432-5161
		Telephone: 813-432-6339

		And if to any other Issuing Lender, at its address for notices set forth in its Issuing Lender Agreement.

; provided that any notice, request or demand to or upon the Administrative Agent or the Lenders shall not be effective until received.

Unless and until the Administrative Agent is notified in writing by the Borrower to the contrary, the Borrower hereby authorizes the Administrative Agent to rely on any notices in respect of the making, extension, conversion or continuation of Revolving Loans and the Types of Revolving Loans and the Interest Periods applicable to Eurodollar Loans given by any Responsible Officer or any designee of a Responsible Officer of which the Administrative Agent is notified in writing. Notices by the Borrower in respect of the making, extension, conversion or continuation of Revolving Loans and the Types of Revolving Loans and the Interest Periods applicable to Eurodollar Loans may be given telephonically, and the Borrower agrees that the Administrative Agent may rely on any such notices made by any person or persons which the Administrative Agent in good faith believes to be acting on behalf of the Borrower. The Borrower agrees to deliver promptly to the Administrative Agent a written confirmation of any telephonic notice, if such confirmation is requested by the Administrative Agent. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Information required to be delivered pursuant to Sections 6.1 and 6.2(b) shall be deemed to have been delivered on the date on which the Borrower provides notice to the Administrative Agent (which notice the Administrative Agent shall promptly provide to the Lenders) that such information has been posted on the SEC website on the Internet at sec.gov/edaux/searches.htm, on the Borrower’s IntraLinks site at intralinks.com or at another website identified in such notice and accessible by the Lenders without charge.

10.3 No Waiver; Cumulative Remedies . No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

10.4 Survival of Representations and Warranties . All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Revolving Loans and other extensions of credit hereunder.

the extent such Indemnified Liabilities resulted from the gross negligence or willful misconduct of such Indemnitee. Without limiting the foregoing, and to the extent permitted by applicable law, the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of recovery that arise as a result of such Indemnitee’s status as a Lender or the Administrative Agent, or an officer, director, employee, affiliate, agent or controlling person thereof, with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee, except to the extent that such claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses have resulted from the gross negligence or willful misconduct of such Indemnitee. All amounts due under this Section 10.5 shall be payable not later than 10 days after written demand therefor. Statements payable by the Borrower pursuant to this Section 10.5 shall be submitted to the Borrower at the address of the Borrower set forth in Section 10.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent. The agreements in this Section 10.5 shall survive repayment of the Revolving Loans and all other amounts payable hereunder.

10.6 Successors and Assigns; Participations and Assignments . (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any affiliate of an Issuing Lender that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.

(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more financial institutions or other entities (each, an “ Assignee ”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Commitments and the Revolving Loans at the time owing to it) with the prior written consent of:

(A) the Borrower (such consent not to be unreasonably withheld or delayed), provided that no consent of the Borrower shall be required for an assignment to a Lender or, if an Event of Default has occurred and is continuing, any other Person; and

(B) the Administrative Agent and each Issuing Lender.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Revolving Commitments or Revolving Loans, the amount of the Revolving Commitments or Revolving Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower, the Administrative Agent and each Issuing Lender otherwise consent, provided that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates, if any;

(B) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Assumption the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.12, 2.13, 2.14 and 10.5 in respect of the period that it was a Lender). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Revolving Commitments of, and principal amount of the Revolving Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Lenders and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c)(i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Revolving Commitments and the Revolving Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, each Issuing Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of such Lender pursuant to the proviso to the second sentence of Section 10.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.14 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.7(b) as though it were a Lender, provided such Participant shall be subject to Section 10.7(a) as though it were a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under Section 2.12 or 2.13 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. In addition, any Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 2.13 unless such Participant complies with Section 2.13(d).

(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations to a Federal Reserve Bank.

(e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

10.7 Adjustments; Set-off . (a) Except to the extent that this Agreement expressly provides for payments to be allocated to a particular Lender, if any Lender (a “ Benefitted Lender ”) shall, at any time after the Revolving Loans and other amounts payable hereunder shall immediately become due and payable pursuant to Section 8, receive any payment of all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided , however , that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency or Affiliate thereof to or for the credit or the account of the Borrower, as the case may be. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such setoff and application.

10.8 Counterparts . This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.10 Integration . This Agreement and the other Loan Documents represent the entire agreement of the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

10.11 GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

10.12 Submission To Jurisdiction; Waivers . Each party hereto hereby irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth or referenced in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

10.13 Acknowledgements . The Borrower hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders.

10.14 Confidentiality . Each of the Administrative Agent and each Lender agrees to keep confidential all information provided to it by or on behalf of the Borrower, the Administrative Agent or any Lender pursuant to or in connection with this Agreement and to use such information solely in connection with evaluating, administering, structuring and/or approving the credit facility contemplated hereby; provided that nothing herein shall prevent the Administrative Agent or any Lender from disclosing any such information (a) to the Administrative Agent, any other Lender or any affiliate thereof, solely for the purpose of evaluating, administering, structuring and/or approving the credit facility contemplated hereby, (b) subject to an agreement to comply with the provisions of this Section, to any actual or prospective Transferee or any direct or indirect counterparty (or any professional advisor to such counterparty) to any Swap Agreement with respect to this Agreement, the Revolving Loans or the Revolving Commitments, (c) to its employees, directors, agents, attorneys, accountants and other professional advisors or those of any of its affiliates, solely for the purpose of evaluating, administering, structuring and/or approving the credit facility contemplated hereby, (d) upon the request or demand of any Governmental Authority, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) that has been publicly disclosed, (h) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender, or

(i) in connection with the exercise of any remedy hereunder or under any other Loan Document .

10.15 WAIVERS OF JURY TRIAL . THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

10.16 Delivery of Addenda . Each initial Lender shall become a party to this Agreement by delivering to the Administrative Agent an Addendum duly executed by such Lender.

10.17 USA Patriot Act Notice . Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Act ”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act.

10.18 Existing Credit Agreement . The Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the “Lenders” (as defined in the Existing Credit Agreement) party to the Existing Credit Agreement comprising the “Required Lenders” as defined therein, hereby agree that (i) the commitments and all other obligations of the Lenders under the Existing Credit Agreement shall terminate in their entirety immediately and automatically upon the effectiveness of this Agreement, without further action by any party to the Existing Credit Agreement, (ii) all accrued fees under the Existing Credit Agreement shall be due and payable at such time and (iii) subject to the funding loss indemnities in the Existing Credit Agreement, the Borrower may prepay any and all loans outstanding thereunder on the date of effectiveness of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

	XCEL ENERGY INC.

	By:	/s/ George E. Tyson, II
		Name: George E. Tyson II
		Title: Vice President and Treasurer

	JPMORGAN CHASE BANK, N.A. as Administrative Agent and as a Lender

	By:	/s/ Michael J. DeForge
		Name: Michael J. DeForge
		Title : Vice President

	BARCLAYS BANK PLC, as Syndication Agent and as a Lender

	By:	/s/ Sydney Dennis
		Name: Sydney Dennis
		Title: Director

	CITICORP USA, INC. , as Documentation Agent and as a Lender

	By:	/s/ Richard J. Evans
		Name: Richard J. Evans
		Title: Vice President

	UBS LOAN FINANCE LLC , as Documentation Agent and as a Lender

	By:	/s/ Irja R. Otsa
		Name: Irja R. Otsa
		Title: Associate Director Banking Products Services, US


	By:	/s/ Barbara Ezell-McMichael
		Name: Barbara Ezell-McMichael
		Title: Associate Director Banking Products Services, US

	WELLS FARGO, NATIONAL ASSOCIATION , as Documentation Agent and as a Lender

	By:	/s/ Patrick McCue
		Name: Patrick McCue
		Title: Vice President

Schedule 1.1A

Revolving Commitments

Lenders	Revolving Commitment
JPMorgan Chase Bank, N.A.	$	54,222,222.22
Barclays Bank PLC	$	54,222,222.22
Bank of America	$	42,666,666.67
The Bank of New York	$	42,666,666.67
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch	$	42,666,666.67
BMO Capital Markets Financing, Inc.	$	42,666,666.67
BNP Paribas	$	42,666,666.67
Citicorp USA, Inc.	$	42,666,666.67
KeyBank National Association	$	42,666,666.67
Morgan Stanley Bank	$	42,666,666.67
The Royal Bank of Scotland PLC	$	42,666,666.67
The Bank of Nova Scotia	$	42,666,666.67
UBS Loan Finance LLC	$	42,666,666.67
Wells Fargo, National Association	$	42,666,666.67
Credit Suisse, Cayman Islands Branch	$	28,444,444.44
William Street Commitment Corporation	$	28,444,444.44
Lehman Brothers Bank, FBS	$	28,444,444.44
Merrill Lynch Bank USA	$	28,444,444.44
Mizuho Corporate Bank, Ltd.	$	28,444,444.44
US Bank National Association	$	28,444,444.44
Amarillo National Bank	$	8,888,888.88
Total	$	800,000,000.00

SCHEDULE 1.1B

EXISTING LETTERS OF CREDIT

Xcel Energy Inc., a Minnesota corporation

1. Letter of Credit No. NZS539962

Face Amount: $17,800,000.00

· Issued by: Wells Fargo Bank, National Association

· Beneficiary: Bank of N.T. Butterfield and Sons Ltd.

· Expiration: November 24, 2007, with automatic renewal

2. Letter of Credit No. NZS532082

· Face Amount: $744,604.52

· Issued by: Wells Fargo Bank, National Association

· Beneficiary: Bank of America, N.A. as Administrative Agent

· Expiration: March 25, 2007, with automatic renewal

Xcel Energy Schedules

SCHEDULE 4.1

FINANCIAL CONDITION

In addition to the matters disclosed in the Financial Statements and Supplementary Data in Item 8 of the Borrower’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and the Notes thereto, as well as the matters disclosed in the Financial Statements in Item 1 of the Borrower’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, and the Notes thereto, the Borrower and its Significant Subsidiaries have the following material Guarantee Obligations, contingent liabilities, liabilities for taxes, long-term leases, forward or long-term commitments, including interest rate or foreign currency swaps and exchange transactions, and obligations in respect of derivatives:

As a result of an RFP / competitive solicitation issued in the first half of 2006, Southwestern Public Service Company (“SPS”) negotiated and on October 20, 2006 executed a long-term (25 year) power purchase agreement with an independent power producer for the power from a new approximately 500 MW combined-cycle power project expected to be constructed near Hobbs, NM and in operation for the summer of 2008. SPS will provide the Natural Gas required to fuel this plant. Lea Power Partners, the owner of the facility has filed for all of its major permits including the air emissions permit and the NMPRC site permit. SPS’s payment obligations for capacity service under the contract begin upon commercial operation in 2008 and would approximate $48 million per year.

In November 2006, Northern States Power Company (Minnesota) (“NSP”) filed an application with the Minnesota Public Utilities Commission in which it proposed to purchase 375 MW of power from Manitoba Hydro beginning in 2015. Any power purchase agreement would be subject to regulatory approval and negotiation and execution of definitive documentation.

SCHEDULE 4.2

EVENTS AND DEVELOPMENTS SINCE DECEMBER 31, 2005

1. See disclosure regarding the Borrower and its Subsidiaries in the Borrower’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the SEC (the “2005 Form 10-K”).

2. See disclosure regarding the Borrower and its Subsidiaries in the Borrower’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006 filed with the SEC (the “2006 Form 10-Qs”).

3. The following disclosure contains updated information with respect to certain of the matters discussed in the 2005 Form 10-K and the 2006 Form 10-Qs:

SCHEDULE 4.6

LITIGATION

1. See disclosure regarding the Borrower and its Subsidiaries (i) under the headings “ELECTRIC UTILITY OPERATIONS — Summary of Recent Federal Regulatory Developments”, “NSP-Minnesota — Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — FERC”, “NSP-Minnesota — Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — MPUC”, “NSP-Wisconsin — Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — FERC”, “NSP-Wisconsin — Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — PSCW”, “PSCo — Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — FERC”, “PSCo — Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — CPUC”, “SPS — Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — FERC”, “SPS — Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — PUCT”, “SPS — Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — NMPRC”, in Item 1 of the Borrower’s 2005 Form 10-K, (ii) under the headings “Environmental Contingencies,” “Legal Contingencies” and “Other Contingencies” in Note 14 to the Consolidated Financial Statements of the Borrower and its subsidiaries as of and for the year ended December 31, 2005, in Item 8 of the Borrower’s 2005 Form 10-K and (iii) under the heading “Legal Proceedings” in Item 3 of the Borrower’s 2005 Form 10-K.

2. See disclosure regarding the Borrower and its Subsidiaries in Note 3 (Rates and Regulation) and Note 4 (Commitments and Contingent Liabilities) in its Form 10-Q for the quarter ended March 31, 2006 and in Note 3 (Tax Matters — Corporate Owned Life Insurance), Note 4 (Rates and Regulations) and Note 5 (Commitments and Contingent Liabilities) in its Forms 10-Q for the quarters ended June 30, 2006 and September 30, 2006.

3. See disclosure regarding Borrower and its Subsidiaries in Item 1 of Part II (Legal Proceedings) in Borrower’s 2006 Form 10-Qs.

SCHEDULE 4.7

OWNERSHIP OF PROPERTIES

Other than those assets disposed of in the ordinary course of business, Borrower and/or its Significant Subsidiaries have disposed of the following material assets since September 30, 2006:

NONE

SCHEDULE 7.2

EXISTING LIENS

Xcel Energy, Inc.

Public Service Company of Colorado (PSCo)

1. Liens created under the Indenture, dated as of October 1, 1993, between the Borrower and U.S. Bank Trust National Association (formerly First Trust of New York, National Association), a national banking association, as successor trustee, to Morgan Guarantee Trust Company of New York, as supplemented and amended from time to time, which is a Lien on all assets related to the Borrower’s electric utility business, now owned or hereafter acquired, securing indebtedness, as described in the Borrower’s Consolidated Statements of Consolidation contained in the Borrower’s 2006 Form 10-Q dated September 30 th , 2006.

2. Capital Lease between Young Gas Storage Company and the Borrower dated as of June 1995 for the lease of a gas storage facility. The lease will expire in May 2025.

3. Capital Lease between WYCO and the Borrower dated as of December 1999 for the lease of a natural gas pipeline. The lease will expire in November 2029.

Northern States Power Company (NSP - MN)

1. Liens created under the Indenture dated as of February 1, 1937, as supplemented and restated by the Supplemental and Restated Trust Indenture dated May 1, 1988, between the Borrower and BNY Midwest Trust Company, as successor trustee to Harris Trust and Savings Bank, as supplemented and amended from time to time, which is a Lien on all property, real, personal and mixed now owned or hereafter acquired or to be acquired, securing indebtedness as described in the Borrower’s Consolidated Statements of Capitalization contained in the Borrower’s 2006 Form 10-Q dated September 30 th , 2006.

Northern States Power Company (NSP - WI)

1. Liens created under the Supplemental and Restated Trust Indenture, dated as of March 1, 1991, between NSP-WI and U.S. Bank National Association, as successor trustee, as supplemented and amended from time to time, which is a Lien on all property, real, personal and mixed now owned or hereafter acquired or to be acquired.

Southwestern Public Service Company (SPS)

NONE

Exhibit 10.02

EXECUTION COPY

$500,000,000

CREDIT AGREEMENT

among

NORTHERN STATES POWER COMPANY,

as Borrower,

The Several Lenders from Time to Time Parties Hereto,

THE BANK OF NEW YORK,

THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH, and

WELLS FARGO, NATIONAL ASSOCIATION

as Documentation Agents,

BARCLAYS BANK PLC,

as Syndication Agent, and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as Of December 14, 2006

J.P. MORGAN SECURITIES INC. and BARCLAYS CAPITAL,

as Joint Lead Arrangers and Bookrunners

TABLE OF CONTENTS

		Page
SECTION 1.	DEFINITIONS	1

1.1	Defined Terms	1
1.2	Other Definitional Provisions	15

SECTION 2.	AMOUNT AND TERMS OF REVOLVING COMMITMENTS	16

2.1	Revolving Commitments	16
2.2	Procedure for Revolving Loan Borrowing	17
2.3	Fees	17
2.4	Termination or Reduction of Revolving Commitments	18
2.5	Optional Prepayments	18
2.6	Conversion and Continuation Options	18
2.7	Limitations on Eurodollar Tranches	19
2.8	Interest Rates and Payment Dates	19
2.9	Computation of Interest and Fees	19
2.10	Inability to Determine Interest Rate	20
2.11	Pro Rata Treatment and Payments	20
2.12	Requirements of Law	21
2.13	Taxes	22
2.14	Indemnity	24
2.15	Change of Lending Office	24
2.16	Replacement of Lenders	25
2.17	Extension of Revolving Termination Date	25

SECTION 3.	LETTERS OF CREDIT	26

3.1	L/C Commitment	26
3.2	Procedure for Issuance of Letter of Credit	26
3.3	Fees and Other Charges	27
3.4	L/C Participations	27
3.5	Reimbursement Obligation of the Borrower	28
3.6	Obligations Absolute	28
3.7	Letter of Credit Payments	29
3.8	Applications	29

SECTION 4.	REPRESENTATIONS AND WARRANTIES	29

4.1	Financial Condition	29
4.2	No Change	29
4.3	Existence; Compliance with Law	30
4.4	Power; Authorization; Enforceable Obligations	30
4.5	No Legal Bar	30
4.6	Litigation	30

4.7	Ownership of Property; Liens	31
4.8	Taxes	31
4.9	Federal Regulations	31
4.10	ERISA	31
4.11	Investment Company Act; Other Regulations	32
4.12	Use of Proceeds	32
4.13	Accuracy of Information, etc	32
4.14	Solvency	32

SECTION 5.	CONDITIONS PRECEDENT	32

5.1	Conditions to Initial Extension of Credit	32
5.2	Conditions to Each Extension of Credit	33

SECTION 6.	AFFIRMATIVE COVENANTS	34

6.1	Financial Statements	34
6.2	Certificates; Other Information	34
6.3	Payment of Obligations and Taxes	35
6.4	Maintenance of Existence; Compliance	35
6.5	Maintenance of Property; Insurance	35
6.6	Inspection of Property; Books and Records; Discussions	36
6.7	Notices	36
6.8	Ownership of Significant Subsidiaries	36
6.9	Scope of Business	36
6.10	Significant Subsidiaries	37

SECTION 7.	NEGATIVE COVENANTS	37

7.1	Ratio of Funded Debt to Total Capital	37
7.2	Liens	37
7.3	Fundamental Changes	37
7.4	Disposition of Property	38
7.5	Transactions with Affiliates	38
7.6	Swap Agreements	38
7.7	Clauses Restricting Subsidiary Distributions	38

SECTION 8.	EVENTS OF DEFAULT	38

SECTION 9.	THE AGENTS	41

9.1	Appointment	41
9.2	Delegation of Duties	41
9.3	Exculpatory Provisions	41
9.4	Reliance by Administrative Agent	41
9.5	Notice of Default	42
9.6	Non-Reliance on Agents and Other Lenders	42
9.7	Indemnification	43

9.8	Agent in Its Individual Capacity	43
9.9	Successor Administrative Agent	43
9.10	Documentation Agents and Syndication Agents	44

SECTION 10.	MISCELLANEOUS	44

10.1	Amendments and Waivers	44
10.2	Notices	44
10.3	No Waiver; Cumulative Remedies	46
10.4	Survival of Representations and Warranties	46
10.5	Payment of Expenses and Taxes	46
10.6	Successors and Assigns; Participations and Assignments	47
10.7	Adjustments; Set-off	49
10.8	Counterparts	50
10.9	Severability	50
10.10	Integration	50
10.11	GOVERNING LAW	50
10.12	Submission To Jurisdiction; Waivers	50
10.13	Acknowledgements	51
10.14	Confidentiality	51
10.15	WAIVERS OF JURY TRIAL	52
10.16	Delivery of Addenda	52
10.17	USA Patriot Act Notice	52
10.18	Existing Credit Agreement	52

SCHEDULES :

1.1A	Revolving Commitments
1.1B	Existing Letters of Credit
4.1	Financial Condition
4.2	No Change
4.6	Litigation
4.7	Ownership of Property; Liens
7.2	Existing Liens

EXHIBITS :

A	Form of Closing Certificate
B	Form of Assignment and Assumption
C	Form of Exemption Certificate
D	Form of Addendum
E-1	Form of New Lender Supplement
E-2	Form of Increased Revolving Commitment Activation Notice
F-1	Form of Extension Request
F-2	Form of Continuation Notice

CREDIT AGREEMENT (this “ Agreement ”), dated as of December 14, 2006, among NORTHERN STATES POWER COMPANY, a Minnesota corporation (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “ Lenders ”), THE BANK OF NEW YORK, THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH, and WELLS FARGO, NATIONAL ASSOCIATION, as documentation agents (in such capacity, the “ Documentation Agents ”), BARCLAYS BANK PLC, as syndication agent (in such capacity, the “ Syndication Agent ”), and JPMORGAN CHASE BANK, N.A., as administrative agent.

The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms . As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

“ ABR ”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1%. For purposes hereof, “ Prime Rate ” shall mean the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors). Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“ ABR Loans ”: Revolving Loans the rate of interest applicable to which is based upon the ABR.

“ Addendum ”: an instrument, substantially in the form of Exhibit D, by which a Lender becomes a party to this Agreement as of the Closing Date.

“ Affiliate ”: as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by, or is under common Control with, such Person.

“ Agents ”: the collective reference to the Syndication Agent, the Documentation Agents and the Administrative Agent.

“ Agreement ”: as defined in the preamble hereto.

“ Applicable Margin ”: The rate per annum set forth under the relevant column heading below based on the applicable Debt Rating:

Level	Debt Rating	Commitment Fee		ABR Loans		Eurodollar Loans/ Letters of Credit
I	> A/A2/A	0.05	%	0	%	0.20	%
II	A-/A3/A-	0.06	%	0	%	0.25	%
III	BBB+/Baa1/BBB+	0.08	%	0	%	0.35	%
IV	BBB/Baa2/BBB	0.10	%	0	%	0.45	%
V	BBB-/Baa3/BBB-	0.125	%	0	%	0.60	%
VI	< BB+/Ba1/BB+	0.175	%	0	%	0.875	%

provided that for each Excess Utilization Day, the Applicable Margin set forth above on such day shall be increased by 0.05% for Eurodollar Loans and Letters of Credit.

“ Application ”: an application, in such form as the applicable Issuing Lender may specify from time to time, requesting such Issuing Lender to open a Letter of Credit.

“ Assignee ”: as defined in Section 10.6(b).

“ Assignment and Assumption ”: an Assignment and Assumption, substantially in the form of Exhibit B.

* It being understood and agreed, by way of example, that a Debt Rating of A– is one level higher than a Debt Rating of BBB+.

“ Benefitted Lender ”: as defined in Section 10.7(a).

“ Board ”: the Board of Governors of the Federal Reserve System of the United States (or any successor).

“ Borrower ”: as defined in the preamble hereto.

“ Borrowing Date ”: any Business Day specified by the Borrower as a date on which the Borrower requests the Lenders to make Revolving Loans hereunder.

“ Change in Control ”: Xcel Energy Inc. ceasing to directly own, beneficially and of record, 100% of each class of issued and outstanding common stock of the Borrower free and clear of all Liens.

“ Closing Date ”: the date on which the conditions precedent set forth in Section 5.1 shall have been satisfie d, which date is December 14, 2006.

“ Code ”: the Internal Revenue Code of 1986, as amended from time to time.

“ Commodity Swap Agreement ”: any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, commodities.

“ Confidential Information Memorandum ”: the Confidential Information Memorandum dated November 2006 and furnished to certain Lenders.

“ Continuation Notice ”: as defined in Section 2.17(a).

“ Continuing Lender ”: as defined in Section 2.17(a).

“ Debt Rating ”: as defined in the definition of “Applicable Margin.”

“ Default ”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“ Documentation Agents ”: as defined in the preamble hereto.

“ Dollars ” and “ $ ”: dollars in lawful currency of the United States.

“ ERISA ”: the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ Eurocurrency Reserve Requirements ”: for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

Telerate screen (or otherwise on such screen), the “ Eurodollar Base Rate ” shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.

“ Eurodollar Loans ”: Revolving Loans the rate of interest applicable to which is based upon the Eurodollar Rate.

Eurodollar Base Rate

1.00 - Eurocurrency Reserve Requirements

“ Event of Default ”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“ Excess Utilization Day ”: each day on which the Total Revolving Extensions of Credit on such day exceed 50% of the Total Revolving Commitments on such day.

“ Existing Credit Agreement ”: the Credit Agreement, dated as of April 21, 2005, among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

“ Existing Letters of Credit ” means the letters of credit set forth on Schedule 1.1B that have been issued prior to the Closing Date.

“ Extension Request ”: as defined in Section 2.17(a).

“ Federal Power Act ”: the Federal Power Act, as amended from time to time.

“ Fee Payment Date ”: (a) the third Business Day following the last day of each March, June, September and December and (b) the last day of the Revolving Commitment Period.

“ FERC ”: the Federal Energy Regulatory Commission and any successor thereto.

“ First Mortgage Indenture ” or “ Indenture ”: the First Mortgage Bond Indenture dated as of February 1, 1937 between the Borrower (by assignment from Xcel Energy Inc) and the trustee thereunder, as previously amended and supplemented and as it may be amended and/or supplemented from time to time.

“ Fitch ”: Fitch IBCA, Inc. and any successor thereto

“ GAAP ”: generally accepted accounting principles in the United States as in effect from time to time; provided that in the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then (i) the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made and (ii) until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants (including those contained in Section 7.1), standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes” refers to changes in accounting principles required or permitted by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

“ Increased Revolving Commitment Activation Notice ”: a notice substantially in the form of Exhibit E-2.

“ Increased Revolving Commitment Closing Date ”: any Business Day designated as such in an Increased Revolving Commitment Activation Notice.

sale of such property), (e) all Capital Lease Obligations of such Person, (f) all non-contingent obligations of such Person in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all mandatorily redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, and (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor. Notwithsta nding the foregoing, any indebtedness arising solely from the application of either Financial Interpretation Nos. 45 and 46 of Financial Accounting Standards Board or Issue No. 01-08 of the Emerging Issues Task Force shall not constitute “Indebtedness”.

“ Insolvency ”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

“ Insolvent ”: pertaining to a condition of Insolvency.

(ii) the Borrower may not select an Interest Period that would extend beyond the Revolving Termination Date; and

“ L/C Commitment ”: $100,000,000.

“ L/C Participants ”: with respect to each Issuing Lender, the collective reference to all the Lenders other than such Issuing Lender.

“ Lenders ”: as defined in the preamble hereto.

“ Letters of Credit ”: letters of credit issued pursuant to Section 3.1 (and including in any case the Existing Letters of Credit).

“ Loan Documents ”: this Agreement, the Notes and any amendment, waiver, supplement or other modification to any of the foregoing.

“ Material Indebtedness ”: Indebtedness (other than the Revolving Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements or Commodity Swap Agreements, of any one or more of the Borrower and its Significant Subsidiaries in an aggregate principal amount exceeding $50,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Significant Subsidiary in respect of any Swap Agreement or any Commodity Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Significant Subsidiary would be required to pay if such Swap Agreement or Commodity Swap Agreement, as applicable, were terminated at such time.

“ Moody’s ”: Moody’s Investors Service, Inc. and any successor thereto.

“ Multiemployer Plan ”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“ New Lender ”: as defined in Section 2.1(c).

“ New Lender Supplement ”: as defined in Section 2.1(c).

“ Non-Excluded Taxes ”: as defined in Section 2.13(a).

“ Non-Extending Lender ”: as defined in Section 2.17(a).

“ Non-U.S. Lender ”: as defined in Section 2.13(d).

“ Notes ”: the collective reference to any promissory note evidencing Revolving Loans.

“ Participant ”: as defined in Section 10.6(c).

“ PBGC ”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

thereafter erected on or attached to such property or asset or any property or asset acquired in substitution or replacement thereof, (C) the principal amount of the obligations secured by such Lien does not exceed the principal amount of the obligations secured by the Lien so renewed, extended or replaced and (D) the obligations secured by such Lien bear interest at a rate per annum not exceeding the rate borne by the obligations secured by the Lien so renewed, extended or replaced except for any increase that is commercially reasonable at the time of such increase; (xv) Liens on any property of any Significant Subsidiary securing Indebtedness of such Significant Subsidiary; (xvi) Liens created and/or permitted under the First Mortgage Indenture, as such First Mortgage Indenture exists on the date hereof, without regard to any waiver, amendment, modification or restatement thereof; (xvii) any Lien on any asset of any Person existing at the time such Person is merged or consolidated with or into the Borrower or any Significant Subsidiary and not created in contemplation thereof; and (xviii) Liens not described in clauses (i) through (xvii), inclusive, securing Indebtedness or other liabilities or obligations of the Borrower and/or its Significant Subsidiaries in an aggregate principal amount outstanding not to exc eed 10% of the consolidated net worth of the Borrower and its Subsidiaries at the time of such incurrence.

“ Refinancing ”: as defined in Section 5.1(b).

“ Register ”: as defined in Section 10.6(b).

“ Regulation U ”: Regulation U of the Board as in effect from time to time.

“ Reimbursement Obligation ”: the obligation of the Borrower to reimburse the applicable Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.

“ Reorganization ”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“ Reportable Event ”: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under PBGC Reg. § 4043.

“ Requirement of Law ”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or

determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“ Responsible Officer ”: the chief executive officer, president, chief financial officer or treasurer of the Borrower.

“ Revolving Commitment Period ”: as to any Lender, the period from and including the Closing Date to the Revolving Termination Date applicable thereto.

“ Revolving Loans ”: as defined in Section 2.1(a).

“ Revolving Termination Date ”: December 14, 2011: provided that with respect to Continuing Lenders only, the Revolving Termination Date may be extended pursuant to Section 2.17.

“ S&P ”: Standard & Poor’s Ratings Services, a division of the McGraw Hill Companies, Inc. or any successor thereto.

“ SEC ”: the Securities and Exchange Commission and any successor thereto.

“ Significant Subsidiary ”: (a) any current or subsequently acquired Subsidiary the total assets of which equal or exceed 15% of the consolidated total assets of the Borrower and its Subsidiaries and (b) any Designated Significant Subsidiary.

“ Single Employer Plan ”: any Plan that is covered by Title IV of ERISA, but that is not a Multiemployer Plan.

“ Syndication Agent ”: as defined in the preamble hereto.

“ Total Capital ”: the sum of (A) stockholder’s equity, which is the sum of common stock, premium on common stock, retained earnings and preferred stock plus (B) Funded Debt plus (C) to the extent not included in Funded Debt, Mandatorily Convertible Securities, Trust Preferred Securities and Hybrid Equity Securities, in each case as determined with respect to the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP; provided that there shall be excluded from the calculation of “Total Capital” any non-cash effects (x) resulting from application of Financial Accounting Standards Board Interpretation No. 48 — Accounting for Uncertainty in Income Taxes and Interpretation of FASB Statement No. 109 and (y) resulting from application of Financial Accounting Standards Board Statement

No. 158: Employers’ Accounting for Defined Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R).

“ Total Revolving Commitments ”: at any time, the aggregate amount of the Revolving Commitments then in effect.

“ Total Revolving Extensions of Credit ”: at any time, the aggregate amount of the Revolving Extensions of Credit of the Lenders outstanding at such time.

“ Transferee ”: any Assignee or Participant.

“ Trust Preferred Securities ”: any preferred securities issued by a Trust Preferred Securities Subsidiary, where such preferred securities have the following characteristics:

(ii) such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for the deferral of interest payments on the subordinated debt; and

“ Type ”: as to any Revolving Loan, its nature as an ABR Loan or a Eurodollar Loan.

“ United States ”: the United States of America.

(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to the Borrower not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall

have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (v) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.

(c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS

2.1 Revolving Commitments . (a) Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans (“ Revolving Loans ”) to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Revolving Percentage of the L/C Obligations then outstanding, does not exceed the amount of such Lender’s Revolving Commitment. During the Revolving Commitment Period the Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.6.

(b) At any time prior to the fourth anniversary of the Closing Date, the Borrower and any one or more Lenders (including New Lenders) may agree that such Lender(s) shall make, obtain or increase the amount of their Revolving Commitments by executing and delivering to the Administrative Agent an Increased Revolving Commitment Activation Notice specifying the amount of such increase and the applicable Increased Revolving Commitment Closing Date (which may be no later than the fourth anniversary of the Closing Date). Notwithstanding the foregoing, (i) the aggregate amount of incremental Revolving Commitments obtained pursuant to this Section 2.1(b) shall not exceed $100,000,000, (ii) incremental Revolving Commitments may not be made, obtained or increased after the occurrence and during the continuation of a Default or Event of Default, including after giving effect to the incremental Revolving Commitments in question, (iii) the increase effected pursuant to this paragraph shall be in a minimum amount of at least $25,000,000 and (iv) no more than one Increased Revolving Commitment Closing Date may be selected by the Borrower during the term of this Agreement. No Lender shall have any obligation to participate in any increase described in this paragraph unless it agrees to do so in its sole discretion.

Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement.

(e) The Borrower shall repay the outstanding Revolving Loans of each Lender on the Revolving Termination Date applicable to such Lender.

(b) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent and to perform any other obligations contained therein.

permanently the Revolving Commitments then in effect. Following an Extension Request pursuant to Section 2.17, the Borrower may terminate the Revolving Commitments of the Non-Extending Lenders; provided that the Borrower shall prepay the Revolving Loans of such Non-Extending Lenders on the effective date of such termination, together with accrued but unpaid interest and fees thereon and all other amounts then payable hereunder to such Non-Extending Lenders.

(b) Any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Revolving Loans, provided that no Eurodollar Loan may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such continuations, and provided , further , that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Revolving Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof.

(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.

(c) (i) If all or a portion of the principal amount of any Revolving Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), all outstanding Revolving Loans and Reimbursement Obligations (whether or not overdue) shall bear interest at a rate per annum equal to (x) in the case of the Revolving Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to ABR Loans plus 2%, and (ii) if all or a portion of any interest payable on any Revolving Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans plus 2%, in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment).

(d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.8(a).

(b) the Administrative Agent shall have received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately

and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Revolving Loans during such Interest Period,

(b) Except as otherwise expressly provided herein, each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Lenders.

(c) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

(d) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error. If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans, on demand, from th e Borrower. Nothing herein shall be deemed to limit the rights of the Borrower against such Lender.

(e) Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective shares of a corresponding amount. If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

(i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except, in each case, for Non-Excluded Taxes covered by Section 2.13 and changes in the rate of tax on the overall net income of such Lender);

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate; or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall pay such Lender, reasonably promptly after its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled, setting forth in reasonable detail the calculations upon which such Lender determined such amounts.

(b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent)

of a written request therefor setting forth in reasonable detail the calculations upon which such Lender determined such amounts, the Borrower shall pay to such Lender reasonably promptly after such submission such additional amount or amounts as will compensate such Lender or such corporation for such reduction.

(c) A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. Notwithstanding anything to the contrary in this Section, the Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more than six months prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; provided that, if within such six-month period circumstances occur that give rise to such claim having a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect. The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Revolving Loans and all other amounts payable hereunder.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of the relevant Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof or such other evidence of payment as is reasonably satisfactory to the Administrative Agent. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other documentary evidence, the Borrower shall indemnify the

Administrative Agent and the Lenders for any incremental Non-Excluded Taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure.

(d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30) of the Code (a “ Non-U.S. Lender ”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit C and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.

(e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender’s judgment such completion, execution or submission would not materially prejudice the legal position of such Lender.

(f) If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.13, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.13 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all associated out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , that the Borrower, upon the request of the Administrative Agent or such Lender, shall repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

(g) The agreements in this Section shall survive the termination of this Agreement and the payment of the Revolving Loans and all other amounts payable hereunder.

2.17 Extension of Revolving Termination Date . (a) The Borrower may, by written notice to the Administrative Agent in the form of Exhibit F-1 (an “ Extension Request ”) given no earlier

than the first anniversary of the Closing Date but no later than 60 days prior to the then applicable Revolving Termination Date, request that the then applicable Revolving Termination Date be extended to the date that is one calendar year after the then applicable Revolving Termination Date. Such extension shall be effective with respect to each Lender that, by a written notice in the form of Exhibit F-2 (a “ Continuation Notice ”) to the Administrative Agent given no later than 30 days after the applicable Extension Request is given by the Borrower (or such later date as the Borrower shall specify in such Extension Request) (the “ Extension Request Response Date ”), consents, in its sole discretion, to such extension (each Lender giving a Continuation Notice being referred to herein as a “ Continuing Lender ” and each Lender other than a Continuing Lender being referred to herein as a “ Non-Extending Lender ”), provided that (i) such extension shall be effective only if the aggregate Revolving Commitments of the Continuing Lenders constitute at least a majority of the Total Revolving Commitments on the date of the Extension Request, (ii) any Lender that fails to submit a Continuation Notice on or before the applicable Extension Request Response Date shall be deemed not to have consented to such extension and shall constitute a Non-Extending Lender and (iii) the Borrower may give only two Extension Requests during the term of this Agreement. No Lender shall have any obligation to consent to any extension of the Revolving Termination Date. The Administrative Agent shall notify each Lender of the receipt of an Extension Request promptly after receipt thereof. The Administrative Agent shall notify the Borrower and the Lenders no later than five days after the applicable Extension Request Response Date whether the Administrative Agent has received Continuation Notices from Lenders holding Revolving Commitments aggregating at least a majority of the Total Revolving Commitments on the date of the applicable Extension Request.

SECTION 3. LETTERS OF CREDIT

3.1 L/C Commitment . (a) Subject to the terms and conditions hereof, each Issuing Lender, in reliance on the agreements of the other Lenders set forth in Section 3.4(a), agrees to issue Letters of Credit for the account of the Borrower on any Business Day during the Revolving Commitment Period in such form as may be approved from time to time by such Issuing Lender; provided that no Issuing Lender shall issue any Letter of Credit if, (i) after giving effect to such issuance, (A) the L/C Obligations would exceed the L/C Commitment or (B) the aggregate amount of the Available Revolving Commitments would be less than zero or (ii) such Issuing Lender shall have received written notice from the Administrative Agent or the Borrower, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Section 5.2 shall not have been satisfied. On the Closing Date, each Existing Letter of Credit shall be deemed to be a Letter of Credit issued hereunder for the account of the Borrower. Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date that is five Business Days prior to the Revolving

Termination Date (as it may be extended), provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above).

(b) No Issuing Lender shall at any time be obligated to issue any Letter of Credit if such issuance would conflict with, or cause such Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law.

(b) In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for such normal and customary costs and expenses as are incurred or charged by such Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit.

or other right that such L/C Participant may have against such Issuing Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5, (iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the Borrower or any other L/C Participant or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing

(b) If any amount required to be paid by any L/C Participant to an Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by such Issuing Lender under any Letter of Credit is paid to such Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to such Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is not made available to an Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, such Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans. A certificate of an Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error.

(c) Whenever, at any time after an Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.4(a), such Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by such Issuing Lender), or any payment of interest on account thereof, such Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided , however , that in the event that any such payment received by an Issuing Lender shall be required to be returned by such Issuing Lender, such L/C Participant shall return to such Issuing Lender the portion thereof previously distributed by such Issuing Lender to it.

between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions resulting from the gross negligence or willful misconduct of such Issuing Lender. The Borrower agrees that any action taken or omitted by an Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower; provided that the Borrower shall not be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower to the extent caused by (i) the gross negligence or willful misconduct of such Issuing Lender in determining whether a request presented under any Letter of Credit issued by it complied with the terms of such Letter of Credit or (ii) such Issuing Lender’s willful failure or gross negligence in failing to pay under any Letter of Credit issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit.

SECTION 4. REPRESENTATIONS AND WARRANTIES

4.1 Financial Condition . The audited consolidated balance sheet of the Borrower as at December 31, 2005, and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by and accompanied by an unqualified report from Deloitte & Touche LLP, present fairly the consolidated financial condition of the Borrower as of such date, and the consolidated results of its operations and its consolidated cash flows for the fiscal year then ended. The unaudited consolidated balance sheet of the Borrower as at September 30, 2006, and the related unaudited consolidated statements of income and cash flows for the nine-month period ended on such date, present fairly the consolidated financial condition of the Borrower as of such date, and the consolidated results of its operations and its consolidated cash flows for the nine-month period then ended (subject to normal year-end adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). Except as set forth on Schedule 4.1, as of the Closing Date, neither the Borrower nor any Significant Subsidiary has any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph.

4.2 No Change . Except as set forth on Schedule 4.2, since December 31, 2005, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.

4.6 Litigation . Except as set forth on Schedule 4.6, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any Significant Subsidiary or against any of their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that could reasonably be expected to have a Material Adverse Effect.

all of the material assets reflected in the Borrower’s consolidated balance sheet as of September 30, 2006 as owned by the Borrower and/or its Significant Subsidiaries.

4.14 Solvency . The Borrower is, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith will be, Solvent.

SECTION 5. CONDITIONS PRECEDENT

(g) Legal Opinions . The Administrative Agent shall have received the following executed legal opinions:

(i) the legal opinion of Jones Day, special New York counsel to the Borrower; and

(ii) the legal opinion of Gary R. Johnson, general counsel of Xcel Energy Inc.

Each such legal opinion shall cover such matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.

(b) No Default . No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

SECTION 6. AFFIRMATIVE COVENANTS

6.1 Financial Statements . The Borrower shall furnish to the Administrative Agent (which shall in turn furnish to the Lenders):

6.2 Certificates; Other Information . The Borrower shall furnish to the Administrative Agent (which shall in turn furnish to the Lenders, or, in the case of clause (c), to the relevant Lender):

(c) promptly, such additional financial and other information as any Lender may from time to time reasonably request through the Administrative Agent.

6.4 Maintenance of Existence; Compliance . The Borrower shall and shall cause each of its Significant Subsidiaries:

(a) to preserve, renew and keep in full force and effect its organizational existence, except as otherwise permitted by Section 7.3 or 7.4;

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual Obligation of the Borrower or any Significant Subsidiary or (ii) litigation, investigation or proceeding that may exist at any time between the Borrower or any Significant Subsidiary, on the one hand, and any Governmental Authority, on the other hand, that in either case, if not cured could reasonably be expected to have a Material Adverse Effect;

withdrawal from, or the termination, Reorganization or Insolvency of, any Plan, which in any case could reasonably be expected to have a Material Adverse Effect; and

(d) any development or event that has had or could reasonably be expected to have a Material Adverse Effect.

6.8 Ownership of Significant Subsidiaries . Except as permitted by Section 6.10, 7.3 or 7.4, the Borrower shall at all times, directly or indirectly own, beneficially and of record, 100% of each class of issued and outstanding common stock of each Significant Subsidiary.

6.9 Scope of Business . The Borrower shall, and shall cause each Significant Subsidiary to, engage primarily in energy-related businesses.

6.10 Significant Subsidiaries . So long as no Default or Event of Default then exists or arises as a result thereof, the Borrower may from time to time by written notice delivered to the Administrative Agent:

(a) designate any Subsidiary as a Significant Subsidiary; and

(b) with respect to any Designated Significant Subsidiary, revoke its designation as a Significant Subsidiary; provided that the assets of such Designated Significant Subsidiary could have been disposed of pursuant to the provisions of Section 7.4 if such transaction were treated as a Disposition of the assets of such Designated Significant Subsidiary.

SECTION 7. NEGATIVE COVENANTS

assets of such Significant Subsidiary could have been Disposed of pursuant to the provisions of Section 7.4 if such transaction were treated as a Disposition of the assets of such Significant Subsidiary. I n the event of any merger or consolidation of or by the Borrower in which the Borrower is not the surviving entity, the surviving entity of such merger or consolidation shall deliver to the Administrative Agent for the benefit of the Lenders all information reasonably necessary to comply with the identification requirements of the Act (as defined in Section 10.17).

SECTION 8. EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(b) any representation or warranty made or deemed made by the Borrower herein or in any other Loan Document or that is contained in any certificate, document or financial or other

statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or

(c) the Borrower shall default in the observance or performance of any agreement contained in Section 6.4(a) (with respect to the Borrower only), Section 6.7(a) or Section 7 of this Agreement; or

(f) (i) the Borrower or any Significant Subsidiary shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any Significant Subsidiary shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any Significant Subsidiary any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed or undischarged for a period of 60 days; or (iii) there shall be commenced against the Borrower or any Significant Subsidiary any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any Significant Subsidiary shall take any corporate action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any Significant Subsidiary shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

favor of the PBGC or a Plan shall arise on the assets of any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan, any Commonly Controlled Entity shall, or is reasonably likely to, incur any unpaid liability or (vi) any other similar event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or

(i) a Change in Control shall occur;

then, and in any such event, (A) if such event is an Event of Default specified in paragraph (f) above with respect to the Borrower, automatically the Revolving Commitments shall immediately terminate and the Revolving Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Revolving Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit. During the continuance of an Event of Default, the Administrative Agent may, or upon the request of the Required Lenders shall, apply any Excess Balance (as defined below) to repay the Obligations. If all Obligations (other than L/C Obligations in respect of undrawn Letters of Credit) have been paid in full, the Excess Balance shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). If no Event of Default is then continuing, the Administrative Agent shall return to the Borrower the balance in the cash collateral account. For purposes hereof, “Excess Balance” means the amount by which the balance in the cash collateral account exceeds the undrawn and unexpired amount of the Letters of Credit. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.

SECTION 9. THE AGENTS

9.1 Appointment . Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents,

and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Revolving Loans.

have resulted from such Agent’s gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Revolving Loans and all other amounts payable hereunder.

9.10 Documentation Agents and Syndication Agent . Neither any Documentation Agent nor the Syndication Agent shall have any duties or responsibilities hereunder in its capacity as such.

SECTION 10. MISCELLANEOUS

thereof, or increase the amount or extend the expiration date of any Lender’s Revolving Commitment, in each case without the written consent of each Lender directly affected thereby; (ii) eliminate or reduce the voting rights of any Lender under this Section 10.1 without the written consent of such Lender; (iii) reduce any percentage specified in the definition of Required Lenders or consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, in each case without the written consent of all Lenders; (iv) amend, modify or waive any provision of Section 2.11(a) or Section 2.11(b) without the written consent of each Lender directly affected thereby, (v) amend, modify or waive any provision of Section 9 without the written consent of the Administrative Agent; or (vi) amend, modify or waive any provision of Section 3 without the written consent of each Issuing Lender. Notwithstanding anything contained in this Section 10.1, the Revolving Termination Date with respect to any Lender may not be extended with respect to such Lender without its written consent. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the Administrative Agent and all future holders of the Revolving Loans. In the case of any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver, except to the extent expressly provided therein, shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Notwithstanding the foregoing, the Administrative Agent may waive payment of the fee required by Section 10.6(b)(ii)(B) without obtaining the consent of any other party to this Agreement

Borrower:	414 Nicollet Mall
	Minneapolis, MN 55401
	Attention: Treasurer
	Telecopy: 612-215-5311
	Telephone: 612-215-4627

Administrative Agent:	c/o Loan and Agency Services Group
	1111 Fannin, 10 th Floor
	Houston, TX 77002
	Attention: Jamie Garcia
	Telecopy: 713-427-6307
	Telephone: 713-750-2377

with a copy to:	JPMorgan Chase Bank, N.A.
	270 Park Avenue, 4 th Floor
	New York, NY 10017
	Attention: Peter Ling
	Telecopy: 212-270-0213
	Telephone: 212-270-4676

and, if regarding Letters of Credit, with a copy to:	JPMorgan Chase LOC Tampa

	10420 Highland Mn Dr
	Block 2, Floor 4
	Tampa, FL 33610
	Attention: James Alonzo
	Telecopy: 813-432-5161
	Telephone: 813-432-6339 And if to any other Issuing Lender, at its address for notices set forth in its Issuing Lender Agreement.

; provided that any notice, request or demand to or upon the Administrative Agent or the Lenders shall not be effective until received.

10.5 Payment of Expenses and Taxes . The Borrower agrees (a) to pay or reimburse the Administrative Agent for all its out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to the Administrative Agent and filing and recording fees and expenses, with statements with respect to the foregoing to be submitted to the Borrower prior to the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to time thereafter on a quarterly basis or such other periodic basis as the Administrative Agent shall deem appropriate, (b) to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including the reasonable fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Lender and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and the Administrative Agent and their respective officers, directors, employees, affiliates, agents and controlling persons (each, an “ Indemnitee ”) harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including any of the foregoing relating to the use of proceeds of the Revolving Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Borrower or any of its Subsidiaries or any of their properties and the reasonable fees and expenses of legal counsel in connection with claims, actions or proceedings by any Indemnitee against the Borrower under any Loan Document (all the foregoing in this clause (d), collectively, the “ Indemnified Liabilities ”), provided , that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities resulted from the gross negligence or willful misconduct of such Indemnitee. Without limiting the foregoing, and to the extent permitted by applicable law, the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of recovery that arise as a result of such Indemnitee’s status as a Lender or the Administrative Agent, or an officer, director, employee, affiliate, agent or controlling person thereof, with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee, except to the extent that such claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses have resulted from the gross negligence or willful misconduct of such Indemnitee. All amounts due under this Section 10.5 shall be payable not later than 10 days after written demand therefor. Statements payable by the Borrower pursuant to this Section 10.5 shall be submitted to the Borrower at the address of the Borrower set forth in Section 10.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent. The agreements in this Section 10.5 shall survive repayment of the Revolving Loans and all other amounts payable hereunder.

Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.

(B) the Administrative Agent and each Issuing Lender.

(ii) Assignments shall be subject to the following additional conditions:

(B) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire.

terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Lenders and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.

(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations to a Federal Reserve Bank.

(e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

any such payment to or collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided , however , that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency or Affiliate thereof to or for the credit or the account of the Borrower, as the case may be. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such setoff and application.

10.9 Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.12 Submission To Jurisdiction; Waivers . Each party hereto hereby irrevocably and unconditionally:

courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;

(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

10.13 Acknowledgements . The Borrower hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders.

National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender, or (i) in connection with the exercise of any remedy hereunder or under any other Loan Document .

10.16 Delivery of Addenda . Each initial Lender shall become a party to this Agreement by delivering to the Administrative Agent an Addendum duly executed by such Lender.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

	NORTHERN STATES POWER COMPANY

	By:	/s/ George E. Tyson, II
		Name: George E. Tyson II
		Title: Vice President and Treasurer

	JPMORGAN CHASE BANK, N.A. as Administrative Agent and as a Lender

	By:	/s/ Michael J. DeForge
		Name: Michael J. DeForge
		Title: Vice President

	BARCLAYS BANK PLC, as Syndication Agent and as a Lender

	By:	/s/ Sydney Dennis
		Name: Sydney Dennis
		Title: Director

	THE BANK OF NEW YORK, as Documentation Agent and as a Lender

	By:	/s/ Raymond J. Palmer
		Name: Raymond J. Palmer
		Title: Vice President

	THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH, as Documentation Agent and as a Lender

	By:	/s/ Matthew A. Ross
		Name: Matthew A. Ross
		Title: Vice President & Manager

	WELLS FARGO, NATIONAL ASSOCIATION, as Documentation Agent and as a Lender

	By:	/s/ Patrick McCue
		Name: Patrick McCue
		Title: Vice President

Schedule 1.1A

Revolving Commitments

Lenders	Revolving Commitment
JPMorgan Chase Bank, N.A.	$	33,888,888.89
Barclays Bank PLC	$	33,888,888.89
Bank of America, N.A.	$	26,666,666.67
The Bank of New York	$	26,666,666.67
The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch	$	26,666,666.67
BMO Capital Markets Financing, Inc.	$	26,666,666.67
BNP Paribas	$	26,666,666.67
Citicorp USA, Inc.	$	26,666,666.67
KeyBank National Association	$	26,666,666.67
Morgan Stanley Bank	$	26,666,666.67
The Royal Bank of Scotland PLC	$	26,666,666.67
The Bank of Nova Scotia	$	26,666,666.67
UBS Loan Finance LLC	$	26,666,666.67
Wells Fargo, National Association	$	26,666,666.67
Credit Suisse, Cayman Islands Branch	$	17,777,777.77
William Street Commitment Corporation	$	17,777,777.77
Lehman Brothers Bank, FSB	$	17,777,777.77
Merrill Lynch Bank USA	$	17,777,777.77
Mizuho Corporate Bank, Ltd.	$	17,777,777.77
U.S. Bank National Association	$	17,777,777.77
Amarillo National Bank	$	5,555,555.56
Total	$	500,000,000.00

SCHEDULE 1.1B

EXISTING LETTERS OF CREDIT

Northern States Power Company, a Minnesota corporation

1. Letter of Credit No. NZS 336112

· Face Amount: $375,000.00

· Issued by: Wells Fargo

· Beneficiary: Hennepin County

· Expiration: April 13, 2007, with automatic renewal

2. Letter of Credit No. NZS336111

· Face Amount: $3,000,000.00

· Issued by: Wells Fargo

· Beneficiary: Nuclear Regulatory Commission

· Expiration: July 1, 2007, with automatic renewal

3. Letter of Credit No. NZS462606

· Face Amount: $5,319,335.00

· Issued by: Wells Fargo

· Beneficiary: Minnesota Pollution Control Agency

· Expiration: November 30, 2007, with automatic renewal

4. Letter of Credit No. NZS398198

· Face Amount: $10,000.00

· Issued by: Wells Fargo

· Beneficiary: City of Maple Grove

· Expiration: May 15, 2007, with automatic renewal

5. Letter of Credit No. NZS336372

· Face Amount: $5,000.00

· Issued by: Wells Fargo

· Beneficiary: City of Sioux Falls

· Expiration: October 22, 2007, with automatic renewal

6. Letter of Credit No. NZS383500

· Face Amount: $5,000.00

· Issued by: Wells Fargo

· Beneficiary: Sherburne County Public Works

· Expiration: December 31, 2007, with automatic renewal

7. Letter of Credit No. NZS353810

· Face Amount: $25,000.00

· Issued by: Wells Fargo

· Beneficiary: Employers Insurance of Wausau

· Expiration: February 1, 2007, with automatic renewal

8. Letter of Credit No. NZS574050

· Face Amount: $24,307,800.00

· Issued by: Wells Fargo

· Beneficiary: American Fuel Resources LLC

· Expiration: February 14, 2007, with no automatic renewal

9. Letter of Credit No. NZS510340

· Face Amount: $1,110,000.00

· Issued by: Wells Fargo

· Beneficiary: New York Independent System Operator

· Expiration: January 30, 2008, with automatic renewal

10. Letter of Credit No. NZS583784

· Face Amount: $5,000.00

· Issued by: Wells Fargo

· Beneficiary: Brown’s Creek Watershed District

· Expiration: November 3, 2007, with no automatic renewal

11. Letter of Credit No. NZS586392

· Face Amount: $7,000.00

· Issued by: Wells Fargo

· Beneficiary: Rice Creek Watershed District

· Expiration: December 7, 2007, with no automatic renewal

NSP-M Schedules

SCHEDULE 4.1

FINANCIAL CONDITION

SCHEDULE 4.2

EVENTS AND DEVELOPMENTS SINCE DECEMBER 31, 2005

1. See disclosure regarding the Borrower and its Subsidiaries in the Borrower’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the SEC (the “2005 Form 10-K”).

3. The following disclosure contains updated information with respect to certain of the matters discussed in the 2005 Form 10-K and the 2006 Form 10-Qs:

SCHEDULE 4.6

LITIGATION

1. See disclosure regarding the Borrower and its Subsidiaries (i) under the headings “ELECTRIC UTILITY OPERATIONS — Summary of Recent Federal Regulatory Developments”, “— Ratemaking Principles — Pending and Recently Concluded Regulatory Proceedings — FERC”, and “— Pending and Recently Completed Regulatory Proceedings — MPUC” in Item 1 of the Borrower’s 2005 Form 10-K, (ii) under the headings “Environmental Contingencies” and “Legal Contingencies” in Note 11 to the Consolidated Financial Statements of the Borrower and its subsidiaries as of and for the year ended December 31, 2005, in Item 8 of the Borrower’s 2005 Form 10-K and (iii) under the heading “Legal Proceedings” in Item 3 of the Borrower’s 2005 Form 10-K.

2. See disclosure regarding the Borrower and its Subsidiaries in Note 2 (Regulation) and Note 3 (Commitments and Contingent Liabilities) in each of the 2006 Form 10-Qs.

3. See disclosure regarding the Borrower and its Subsidiaries in Item 1 of Part II (Legal Proceedings) in Borrower’s Form 10-Q for the quarter ended September 30, 2006.

SCHEDULE 4.7

OWNERSHIP OF PROPERTIES

Other than those assets disposed of in the ordinary course of business, Borrower and/or its Significant Subsidiaries have disposed of the following material assets since September 30, 2006:

NONE

SCHEDULE 7.2

EXISTING LIENS

Northern States Power Company, a Minnesota corporation

Exhibit 10.03

EXECUTION COPY

$700,000,000

CREDIT AGREEMENT

among

PUBLIC SERVICE COMPANY OF COLORADO,

as Borrower,

The Several Lenders from Time to Time Parties Hereto,

BMO CAPITAL MARKETS,

THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH, and

KEYBANK NATIONAL ASSOCIATION

as Documentation Agents,

BARCLAYS BANK PLC,

as Syndication Agent, and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as Of December 14, 2006

J.P. MORGAN SECURITIES INC. and BARCLAYS CAPITAL,

as Joint Lead Arrangers and Bookrunners

TABLE OF CONTENTS

		Page

SECTION 1.	DEFINITIONS	1

1.1	Defined Terms	1
1.2	Other Definitional Provisions	16

SECTION 2.	AMOUNT AND TERMS OF REVOLVING COMMITMENTS	16

2.1	Revolving Commitments	16
2.2	Procedure for Revolving Loan Borrowing	17
2.3	Fees	17
2.4	Termination or Reduction of Revolving Commitments	18
2.5	Optional Prepayments	18
2.6	Conversion and Continuation Options	18
2.7	Limitations on Eurodollar Tranches	19
2.8	Interest Rates and Payment Dates	19
2.9	Computation of Interest and Fees	19
2.10	Inability to Determine Interest Rate	19
2.11	Pro Rata Treatment and Payments	20
2.12	Requirements of Law	21
2.13	Taxes	22
2.14	Indemnity	24
2.15	Change of Lending Office	24
2.16	Replacement of Lenders	24
2.17	Extension of Revolving Termination Date	25

SECTION 3.	LETTERS OF CREDIT	25

3.1	L/C Commitment	25
3.2	Procedure for Issuance of Letter of Credit	26
3.3	Fees and Other Charges	26
3.4	L/C Participations	26
3.5	Reimbursement Obligation of the Borrower	27
3.6	Obligations Absolute	27
3.7	Letter of Credit Payments	28
3.8	Applications	28

SECTION 4.	REPRESENTATIONS AND WARRANTIES	28

4.1	Financial Condition	28
4.2	No Change	29
4.3	Existence; Compliance with Law	29
4.4	Power; Authorization; Enforceable Obligations	29
4.5	No Legal Bar	29
4.6	Litigation	29

4.7	Ownership of Property; Liens	30
4.8	Taxes	30
4.9	Federal Regulations	30
4.10	ERISA	30
4.11	Investment Company Act; Other Regulations	30
4.12	Use of Proceeds	31
4.13	Accuracy of Information, etc	31
4.14	Solvency	31

SECTION 5.	CONDITIONS PRECEDENT	31

5.1	Conditions to Initial Extension of Credit	31
5.2	Conditions to Each Extension of Credit	32

SECTION 6.	AFFIRMATIVE COVENANTS	32

6.1	Financial Statements	32
6.2	Certificates; Other Information	33
6.3	Payment of Obligations and Taxes	33
6.4	Maintenance of Existence; Compliance	34
6.5	Maintenance of Property; Insurance	34
6.6	Inspection of Property; Books and Records; Discussions	34
6.7	Notices	34
6.8	Ownership of Significant Subsidiaries	35
6.9	Scope of Business	35
6.10	Significant Subsidiaries	35

SECTION 7.	NEGATIVE COVENANTS	35

7.1	Ratio of Funded Debt to Total Capital	35
7.2	Liens	35
7.3	Fundamental Changes	36
7.4	Disposition of Property	36
7.5	Transactions with Affiliates	36
7.6	Swap Agreements	36
7.7	Clauses Restricting Subsidiary Distributions	36

SECTION 8.	EVENTS OF DEFAULT	37

SECTION 9.	THE AGENTS	39

9.1	Appointment	39
9.2	Delegation of Duties	39
9.3	Exculpatory Provisions	39
9.4	Reliance by Administrative Agent	40
9.5	Notice of Default	40
9.6	Non-Reliance on Agents and Other Lenders	40
9.7	Indemnification	41

9.8	Agent in Its Individual Capacity	41
9.9	Successor Administrative Agent	41
9.10	Documentation Agents and Syndication Agents	42

SECTION 10.	MISCELLANEOUS	42

10.1	Amendments and Waivers	42
10.2	Notices	42
10.3	No Waiver; Cumulative Remedies	44
10.4	Survival of Representations and Warranties	44
10.5	Payment of Expenses and Taxes	44
10.6	Successors and Assigns; Participations and Assignments	45
10.7	Adjustments; Set-off	47
10.8	Counterparts	47
10.9	Severability	47
10.10	Integration	48
10.11	GOVERNING LAW	48
10.12	Submission To Jurisdiction; Waivers	48
10.13	Acknowledgements	48
10.14	Confidentiality	49
10.15	WAIVERS OF JURY TRIAL	49
10.16	Delivery of Addenda	49
10.17	USA Patriot Act Notice	49
10.18	Existing Credit Agreement	49

SCHEDULES :

1.1A		Revolving Commitments
1.1B		Existing Letters of Credit
4.1		Financial Condition
4.2		No Change
4.6		Litigation
4.7		Ownership of Property; Liens
7.2		Existing Liens

EXHIBITS :

A		Form of Closing Certificate
B		Form of Assignment and Assumption
C		Form of Exemption Certificate
D		Form of Addendum
E-1		Form of New Lender Supplement
E-2		Form of Increased Revolving Commitment Activation Notice
F-1		Form of Extension Request
F-2		Form of Continuation Notice

CREDIT AGREEMENT (this “ Agreement ”), dated as of December 14, 2006, among PUBLIC SERVICE COMPANY OF COLORADO, a Colorado corporation (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “ Lenders BMO CAPITAL MARKETS, THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH, and KEYBANK NATIONAL ASSOCIATION as documentation agents (in such capacity, the “ Documentation Agents ”), BARCLAYS BANK PLC, as syndication agent (in such capacity, the “ Syndication Agent ”), and JPMORGAN CHASE BANK, N.A., as administrative agent.

The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms . As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

“ ABR ”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1%. For purposes hereof, “ Prime Rate ” shall mean the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors). Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“ ABR Loans ”: Revolving Loans the rate of interest applicable to which is based upon the ABR.

“ Addendum ”: an instrument, substantially in the form of Exhibit D, by which a Lender becomes a party to this Agreement as of the Closing Date.

“ Affiliate ”: as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by, or is under common Control with, such Person.

“ Agents ”: the collective reference to the Syndication Agent, the Documentation Agents and the Administrative Agent.

“ Agreement ”: as defined in the preamble hereto.

“ Applicable Margin ”: The rate per annum set forth under the relevant column heading below based on the applicable Debt Rating:

Level	Debt Rating	Commitment Fee		ABR Loans		Eurodollar Loans/ Letters of Credit
I	> A/A2/A	0.05	%	0	%	0.20	%
II	A-/A3/A-	0.06	%	0	%	0.25	%
III	BBB+/Baa1/BBB+	0.08	%	0	%	0.35	%
IV	BBB/Baa2/BBB	0.10	%	0	%	0.45	%
V	BBB-/Baa3/BBB-	0.125	%	0	%	0.60	%
VI	< BB+/Ba1/BB+	0.175	%	0	%	0.875	%

provided that for each Excess Utilization Day, the Applicable Margin set forth above on such day shall be increased by 0.05% for Eurodollar Loans and Letters of Credit.

“ Application ”: an application, in such form as the applicable Issuing Lender may specify from time to time, requesting such Issuing Lender to open a Letter of Credit.

“ Assignee ”: as defined in Section 10.6(b).

“ Assignment and Assumption ”: an Assignment and Assumption, substantially in the form of Exhibit B.

* It being understood and agreed, by way of example, that a Debt Rating of A– is one level higher than a Debt Rating of BBB+.

“ Benefitted Lender ”: as defined in Section 10.7(a).

“ Board ”: the Board of Governors of the Federal Reserve System of the United States (or any successor).

“ Borrower ”: as defined in the preamble hereto.

“ Borrowing Date ”: any Business Day specified by the Borrower as a date on which the Borrower requests the Lenders to make Revolving Loans hereunder.

“ Change in Control ”: Xcel Energy Inc. ceasing to directly own, beneficially and of record, 100% of each class of issued and outstanding common stock of the Borrower free and clear of all Liens.

“ Closing Date ”: the date on which the conditions precedent set forth in Section 5.1 shall have been satisfie d, which date is December 14, 2006.

“ Code ”: the Internal Revenue Code of 1986, as amended from time to time.

“ Commodity Swap Agreement ”: any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, commodities.

“ Confidential Information Memorandum ”: the Confidential Information Memorandum dated November 2006 and furnished to certain Lenders.

“ Continuation Notice ”: as defined in Section 2.17(a).

“ Continuing Lender ”: as defined in Section 2.17(a).

“ Debt Rating ”: as defined in the definition of “Applicable Margin.”

“ Default ”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“ Documentation Agents ”: as defined in the preamble hereto.

“ Dollars ” and “ $ ”: dollars in lawful currency of the United States.

“ ERISA ”: the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

“ Eurodollar Loans ”: Revolving Loans the rate of interest applicable to which is based upon the Eurodollar Rate.

Eurodollar Base Rate

1.00 - Eurocurrency Reserve Requirements

“ Event of Default ”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“ Excess Utilization Day ”: each day on which the Total Revolving Extensions of Credit on such day exceed 50% of the Total Revolving Commitments on such day.

“ Existing Credit Agreement ”: the Credit Agreement, dated as of April 21, 2005, among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

“ Existing Letters of Credit ” means the letters of credit set forth on Schedule 1.1B that have been issued prior to the Closing Date by JPMorgan Chase Bank, N.A.

“ Extension Request ”: as defined in Section 2.17(a).

“ Federal Power Act ”: the Federal Power Act, as amended from time to time.

“ Fee Payment Date ”: (a) the third Business Day following the last day of each March, June, September and December and (b) the last day of the Revolving Commitment Period.

“ FERC ”: the Federal Energy Regulatory Commission and any successor thereto.

“ Fitch ”: Fitch IBCA, Inc. and any successor thereto

“ Increased Revolving Commitment Activation Notice ”: a notice substantially in the form of Exhibit E-2.

“ Increased Revolving Commitment Closing Date ”: any Business Day designated as such in an Increased Revolving Commitment Activation Notice.

“ Indenture ”: the Indenture dated as of October 1, 1993 as amended from time to time, from the Borrower to U.S. Bank Trust National Association (formerly, First Trust of New York, National Association), as successor trustee to Morgan Guaranty Trust Company of New York.

“ Insolvency ”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

“ Insolvent ”: pertaining to a condition of Insolvency.

(ii) the Borrower may not select an Interest Period that would extend beyond the Revolving Termination Date; and

“ L/C Commitment ”: $75,000,000.

“ L/C Participants ”: with respect to each Issuing Lender, the collective reference to all the Lenders other than such Issuing Lender.

“ Lenders ”: as defined in the preamble hereto.

“ Letters of Credit ”: letters of credit issued pursuant to Section 3.1 (and including in any case the Existing Letters of Credit).

“ Loan Documents ”: this Agreement, the Notes and any amendment, waiver, supplement or other modification to any of the foregoing.

netting agreements) that the Borrower or such Significant Subsidiary would be required to pay if such Swap Agreement or Commodity Swap Agreement, as applicable, were terminated at such time.

“ Moody’s ”: Moody’s Investors Service, Inc. and any successor thereto.

“ Multiemployer Plan ”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“ New Lender ”: as defined in Section 2.1(c).

“ New Lender Supplement ”: as defined in Section 2.1(c).

“ Non-Excluded Taxes ”: as defined in Section 2.13(a).

“ Non-Extending Lender ”: as defined in Section 2.17(a).

“ Non-U.S. Lender ”: as defined in Section 2.13(d).

“ Notes ”: the collective reference to any promissory note evidencing Revolving Loans.

“ Other Taxes ”: any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the

execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“ Participant ”: as defined in Section 10.6(c).

“ PBGC ”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

accounts or other funds maintained with a depository institution; (xiv) any Lien constituting a renewal, extension or replacement of a Lien constituting a Permitted Lien by virtue of clause (v), (vi), (vii) or (xvii) of this definition, but only if (A) at the time such Lien is granted and immediately after giving effect thereto, no Default or Event of Default would exist, (B) such Lien is limited to all or a part of the property or asset that was subject to the Lien so renewed, extended or replaced and to improvements thereafter erected on or attached to such property or asset or any property or asset acquired in substitution or replacement thereof, (C) the principal amount of the obligations secured by such Lien does not exceed the principal amount of the obligations secured by the Lien so renewed, extended or replaced and (D) the obligations secured by such Lien bear interest at a rate per annum not exceeding the rate borne by the obligations secured by the Lien so renewed, extended or replaced except for any increase that is commercially reasonable at the time of such increase; (xv) Liens on any property of any Significant Subsidiary securing Indebtedness of such Significant Subsidiary; (xvi) Liens created and/or permitted under the Indenture, as such Indenture exists on the date hereof, without regard to any waiver, amendment, modification or restatement thereof; (xvii) any Lien on any asset of any Person existing at the time such Person is merged or consolidated with or into the Borrower or any Significant Subsidiary and not created in contemplation thereof; and (xviii) Liens not described in clauses (i) through (xvii), inclusive, securing Indebtedness or other liabilities or obligations of the Borrower and/or its Significant Subsidiaries in an aggregate principal amount outstanding not to exc eed 10% of the consolidated net worth of the Borrower and its Subsidiaries at the time of such incurrence.

“ Refinancing ”: as defined in Section 5.1(b).

“ Register ”: as defined in Section 10.6(b).

“ Regulation U ”: Regulation U of the Board as in effect from time to time.

“ Reimbursement Obligation ”: the obligation of the Borrower to reimburse the applicable Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.

“ Reorganization ”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“ Reportable Event ”: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under PBGC Reg. § 4043.

“ Responsible Officer ”: the chief executive officer, president, chief financial officer or treasurer of the Borrower.

“ Revolving Commitment Period ”: as to any Lender, the period from and including the Closing Date to the Revolving Termination Date applicable thereto.

“ Revolving Loans ”: as defined in Section 2.1(a).

“ Revolving Termination Date ”: December 14, 2011: provided that with respect to Continuing Lenders only, the Revolving Termination Date may be extended pursuant to Section 2.17.

“ S&P ”: Standard & Poor’s Ratings Services, a division of the McGraw Hill Companies, Inc. or any successor thereto.

“ SEC ”: the Securities and Exchange Commission and any successor thereto.

“ Single Employer Plan ”: any Plan that is covered by Title IV of ERISA, but that is not a Multiemployer Plan.

“ Syndication Agent ”: as defined in the preamble hereto.

“ Total Capital ”: the sum of (A) stockholder’s equity, which is the sum of common stock, premium on common stock, retained earnings and preferred stock plus (B) Funded Debt plus (C) to the

extent not included in Funded Debt, Mandatorily Convertible Securities, Trust Preferred Securities and Hybrid Equity Securities, in each case as determined with respect to the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP; provided that there shall be excluded from the calculation of “Total Capital” any non-cash effects (x) of the COLI Litigation, including any non-cash effects resulting from any decisions in respect thereof or any settlement thereof, (y) resulting from application of Financial Accounting Standards Board Interpretation No. 48 — Accounting for Uncertainty in Income Taxes and Interpretation of FASB Statement No. 109 and (z) resulting from application of Financial Accounting Standards Board Statement No. 158: Employers’ Accounting for Defined Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R).

“ Total Revolving Commitments ”: at any time, the aggregate amount of the Revolving Commitments then in effect.

“ Total Revolving Extensions of Credit ”: at any time, the aggregate amount of the Revolving Extensions of Credit of the Lenders outstanding at such time.

“ Transferee ”: any Assignee or Participant.

“ Trust Preferred Securities ”: any preferred securities issued by a Trust Preferred Securities Subsidiary, where such preferred securities have the following characteristics:

(ii) such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for the deferral of interest payments on the subordinated debt; and

“ Type ”: as to any Revolving Loan, its nature as an ABR Loan or a Eurodollar Loan.

“ United States ”: the United States of America.

(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to the Borrower not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (v) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.

(c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS

2.1 Revolving Commitments . (a) Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans (“ Revolving Loans ”) to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Revolving Percentage of the L/C Obligations then outstanding, does not exceed the amount of such Lender’s Revolving Commitment. During the Revolving Commitment Period the Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.6.

any obligation to participate in any increase described in this paragraph unless it agrees to do so in its sole discretion.

(e) The Borrower shall repay the outstanding Revolving Loans of each Lender on the Revolving Termination Date applicable to such Lender.

(b) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent and to perform any other obligations contained therein.

(b) Any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Revolving Loans, provided that no Eurodollar Loan may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such continuations, and provided , further , that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Revolving Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof.

(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.

(c) (i) If all or a portion of the principal amount of any Revolving Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), all outstanding Revolving Loans and Reimbursement Obligations (whether or not overdue) shall bear interest at a rate per annum equal to (x) in the case of the Revolving Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to ABR Loans plus 2%, and (ii) if all or a portion of any interest payable on any Revolving Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans plus 2%, in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment).

(d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.8(a).

(b) Except as otherwise expressly provided herein, each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Lenders.

(c) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

(d) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to the Administrative Agent. A

certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error. If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans, on demand, from th e Borrower. Nothing herein shall be deemed to limit the rights of the Borrower against such Lender.

(e) Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective shares of a corresponding amount. If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

(i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except, in each case, for Non-Excluded Taxes covered by Section 2.13 and changes in the rate of tax on the overall net income of such Lender);

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate; or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall pay such Lender, reasonably promptly after its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled, setting forth in reasonable detail the calculations upon which such Lender determined such amounts.

(b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive

regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor setting forth in reasonable detail the calculations upon which such Lender determined such amounts, the Borrower shall pay to such Lender reasonably promptly after such submission such additional amount or amounts as will compensate such Lender or such corporation for such reduction.

(c) A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. Notwithstanding anything to the contrary in this Section, the Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more than six months prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; provided that, if within such six-month period circumstances occur that give rise to such claim having a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect. The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Revolving Loans and all other amounts payable hereunder.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of the relevant Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof or such other evidence of payment as is reasonably satisfactory to the Administrative Agent. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental Non-Excluded Taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure.

(d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30) of the Code (a “ Non-U.S. Lender ”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit C and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.

(e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender’s judgment such completion, execution or submission would not materially prejudice the legal position of such Lender.

(f) If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.13, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.13 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all associated out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , that the Borrower, upon the request of the Administrative Agent or such Lender, shall repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require the

Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person .

(g) The agreements in this Section shall survive the termination of this Agreement and the payment of the Revolving Loans and all other amounts payable hereunder.

pursuant to Section 2.12 or 2.13(a), as the case may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.

SECTION 3. LETTERS OF CREDIT

the Administrative Agent or the Borrower, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Section 5.2 shall not have been satisfied. On the Closing Date, each Existing Letter of Credit shall be deemed to be a Letter of Credit issued hereunder for the account of the Borrower. Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date that is five Business Days prior to the Revolving Termination Date (as it may be extended), provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above).

(b) No Issuing Lender shall at any time be obligated to issue any Letter of Credit if such issuance would conflict with, or cause such Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law.

(b) In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for such normal and customary costs and expenses as are incurred or charged by such Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit.

paid under any Letter of Credit for which such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to such Issuing Lender upon demand at such Issuing Lender’s address for notices specified herein an amount equal to such L/C Participant’s Revolving Percentage of the amount of such draft, or any part thereof, that is not so reimbursed. Each L/C Participant’s obligation to pay such amount shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such L/C Participant may have against such Issuing Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5, (iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the Borrower or any other L/C Participant or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing

(b) If any amount required to be paid by any L/C Participant to an Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by such Issuing Lender under any Letter of Credit is paid to such Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to such Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is not made available to an Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, such Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans. A certificate of an Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error.

(c) Whenever, at any time after an Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.4(a), such Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by such Issuing Lender), or any payment of interest on account thereof, such Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided , however , that in the event that any such payment received by an Issuing Lender shall be required to be returned by such Issuing Lender, such L/C Participant shall return to such Issuing Lender the portion thereof previously distributed by such Issuing Lender to it.

3.6 Obligations Absolute . The Borrower’s obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff,

counterclaim or defense to payment that the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with each Issuing Lender that, absent gross negligence or willful misconduct of such Issuing Lender, such Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions resulting from the gross negligence or willful misconduct of such Issuing Lender. The Borrower agrees that any action taken or omitted by an Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower; provided that the Borrower shall not be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower to the extent caused by (i) the gross negligence or willful misconduct of such Issuing Lender in determining whether a request presented under any Letter of Credit issued by it complied with the terms of such Letter of Credit or (ii) such Issuing Lender’s willful failure or gross negligence in failing to pay under any Letter of Credit issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit.

SECTION 4. REPRESENTATIONS AND WARRANTIES

(except as approved by the aforementioned firm of accountants and disclosed therein). Except as set forth on Schedule 4.1, as of the Closing Date, neither the Borrower nor any Significant Subsidiary has any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph.

4.2 No Change . Except as set forth on Schedule 4.2, since December 31, 2005, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.

contemplated hereby or thereby, or (b) that could reasonably be expected to have a Material Adverse Effect.

Requirement of Law (other than Regulation X of the Board, the Public Utilities Commission of the State of Colorado and the FERC under the Federal Power Act) that limits its ability to incur Indebtedness.

4.14 Solvency . The Borrower is, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith will be, Solvent.

SECTION 5. CONDITIONS PRECEDENT

(g) Legal Opinions . The Administrative Agent shall have received the following executed legal opinions:

(i) the legal opinion of Jones Day, special New York counsel to the Borrower; and

(ii) the legal opinion of Paula Connelly, Assistant General Counsel, Xcel Energy Services Inc.

Each such legal opinion shall cover such matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.

(b) No Default . No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

SECTION 6. AFFIRMATIVE COVENANTS

6.1 Financial Statements . The Borrower shall furnish to the Administrative Agent (which shall in turn furnish to the Lenders):

6.2 Certificates; Other Information . The Borrower shall furnish to the Administrative Agent (which shall in turn furnish to the Lenders, or, in the case of clause (c), to the relevant Lender):

(c) promptly, such additional financial and other information as any Lender may from time to time reasonably request through the Administrative Agent.

6.4 Maintenance of Existence; Compliance . The Borrower shall and shall cause each of its Significant Subsidiaries:

(a) to preserve, renew and keep in full force and effect its organizational existence, except as otherwise permitted by Section 7.3 or 7.4;

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual Obligation of the Borrower or any Significant Subsidiary or (ii) litigation, investigation or proceeding that may exist at any

(d) any development or event that has had or could reasonably be expected to have a Material Adverse Effect.

6.9 Scope of Business . The Borrower shall, and shall cause each Significant Subsidiary to, engage primarily in energy-related businesses.

6.10 Significant Subsidiaries . So long as no Default or Event of Default then exists or arises as a result thereof, the Borrower may from time to time by written notice delivered to the Administrative Agent:

(a) designate any Subsidiary as a Significant Subsidiary; and

(b) with respect to any Designated Significant Subsidiary, revoke its designation as a Significant Subsidiary; provided that the assets of such Designated Significant Subsidiary could have been disposed of pursuant to the provisions of Section 7.4 if such transaction were treated as a Disposition of the assets of such Designated Significant Subsidiary.

SECTION 7. NEGATIVE COVENANTS

7.3 Fundamental Changes . The Borrower shall not, and shall not permit any of its Significant Subsidiaries to, directly or indirectly, merge or consolidate with any Person, except that, if after giving effect thereto no Default or Event of Default would exist, this Section 7.3 shall not apply to (a) any merger or consolidation of the Borrower with any one or more Persons (including any Subsidiary), so long as the successor entity (if other than the Borrower) (i) is a Person organized and duly existing under the law of any state of the United States and (ii) assumes, in form reasonably satisfactory to the Administrative Agent, all of the obligations of the Borrower under this Agreement, (b) any merger or consolidation of a Significant Subsidiary with another Subsidiary, provided that the continuing Person shall be a Significant Subsidiary, and (c) any merger or consolidation of a Significant Subsidiary with another Person if after giving effect thereto the survivor is no longer a Significant Subsidiary and the assets of such Significant Subsidiary could have been Disposed of pursuant to the provisions of Section 7.4 if such transaction were treated as a Disposition of the assets of such Significant Subsidiary. In the event of any merger or consolidation of or by the Borrower in which the Borrower is not the surviving entity, the surviving entity of such merger or consolidation shall deliver to the Administrative Agent for the benefit of the Lenders all information reasonably necessary to comply with the identification requirements of the Act (as defined in Section 10.17).

SECTION 8. EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(c) the Borrower shall default in the observance or performance of any agreement contained in Section 6.4(a) (with respect to the Borrower only), Section 6.7(a) or Section 7 of this Agreement; or

(h) one or more judgments or decrees shall be entered against the Borrower or any Significant Subsidiary involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage) of $50,000,000 or more, and such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof; provided that a judgment in the COLI Litigation shall not constitute a Default or an Event of Default so long as the Borrower, any of its Subsidiaries and/or Xcel Energy Inc. has appealed such judgment, is in discussions in good faith to enter into a settlement of such matter and/or has entered into a settlement agreement in respect thereof and is in compliance in all material respects with the terms thereof; provided , however , that not all legal appeals in connection therewith have been exhausted and no assets of the Borrower or its Subsidiaries have been levied against, garnished or attached to satisfy such judgment; or

(i) a Change in Control shall occur;

Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit. During the continuance of an Event of Default, the Administrative Agent may, or upon the request of the Required Lenders shall, apply any Excess Balance (as defined below) to repay the Obligations. If all Obligations (other than L/C Obligations in respect of undrawn Letters of Credit) have been paid in full, the Excess Balance shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). If no Event of Default is then continuing, the Administrative Agent shall return to the Borrower the balance in the cash collateral account. For purposes hereof, “Excess Balance” means the amount by which the balance in the cash collateral account exceeds the undrawn and unexpired amount of the Letters of Credit. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.

SECTION 9. THE AGENTS

9.10 Documentation Agents and Syndication Agent . Neither any Documentation Agent nor the Syndication Agent shall have any duties or responsibilities hereunder in its capacity as such.

SECTION 10. MISCELLANEOUS

Borrower:	414 Nicollet Mall
	Minneapolis, MN 55401

	Attention: Treasurer
	Telecopy: 612-215-5311
	Telephone: 612-215-4627

Administrative Agent:	c/o Loan and Agency Services Group
	1111 Fannin, 10 th Floor
	Houston, TX 77002
	Attention: Jamie Garcia
	Telecopy: 713-427-6307
	Telephone: 713-750-2377

with a copy to:	JPMorgan Chase Bank, N.A.
	270 Park Avenue, 4 th Floor
	New York, NY 10017
	Attention: Peter Ling
	Telecopy: 212-270-0213
	Telephone: 212-270-4676

and, if regarding Letters of
Credit, with a copy to:	JPMorgan Chase LOC Tampa
	10420 Highland Mn Dr
	Block 2, Floor 4
	Tampa, FL 33610
	Attention: James Alonzo
	Telecopy: 813-432-5161
	Telephone: 813-432-6339

	And if to any other Issuing Lender, at its address for notices set forth in its Issuing Lender Agreement.