Xcel Energy (XEL)

1. Accounting Policies

FASB Interpretation No. 47 (FIN No. 47) – In April 2005, the Financial Accounting Standards Board (FASB) issued FIN No. 47 to clarify the scope and timing of liability recognition for conditional asset retirement obligations pursuant to Statement of Financial Accounting Standard (SFAS) No. 143 - “Accounting for Asset Retirement Obligations”.  The interpretation requires that a liability be recorded for the fair value of an asset retirement obligation, if the fair value is estimable, even when the obligation is dependent on a future event.  FIN No. 47 further clarified that uncertainty surrounding the timing and method of settlement of the obligation should be factored into the measurement of the conditional asset retirement obligation rather than affect whether a liability should be recognized.  Implementation is required to be effective no later than the end of fiscal years ending after Dec. 15, 2005.  Additionally, FIN No. 47 will permit but not require restatement of interim financial information during any period of adoption.  Both recognition of a cumulative change in accounting and disclosure of the liability on a pro forma basis are required for transition purposes.  Xcel Energy is evaluating the impact of FIN No. 47, however, it is not expected to have a material impact on results of operations or financial position due to the expected recovery in customer rates.

Reclassifications – Certain items in the statements of operations and balance sheets have been reclassified from prior period presentation to conform to the 2005 presentation. These reclassifications had no effect on net income or earnings per share. The reclassifications were primarily related to the presentation of Utility Engineering operations as discontinued following the announcement of its sale in March 2005, as discussed below.

2. Discontinued Operations

A summary of the subsidiaries presented as discontinued operations is discussed below. Results of operations as well as assets and liabilities for the divested businesses and the businesses held for sale are reported on a net basis as a component of discontinued operations for all periods presented. Amounts previously reported for 2004 have been restated to conform to the 2005 discontinued operations presentation.