XEL » Topics » Income taxes

This excerpt taken from the XEL 8-K filed Oct 29, 2009.
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.

 

This excerpt taken from the XEL 8-K filed Jul 30, 2009.
Income Taxes — Income tax expense for continuing operations increased by $3.0 million for the second quarter of 2009, compared with 2008.  The increase in income tax expense was primarily due to an increase in pretax income.  The effective tax rate for continuing operations was 33.7 percent for the second quarter of 2009, compared with 34.3 percent for the same period in 2008. The lower effective tax rate for the second quarter of 2009 was primarily due to a decrease in the forecasted annual effective tax rate for 2009 as compared to 2008.

 

Income tax expense for continuing operations increased by $13.8 million for the first six months of 2009, compared with the first six months of 2008.  The increase in income tax expense was primarily due to an increase in pretax income. The effective tax rate for continuing operations was 33.6 percent for the first six months of 2009, compared with 33.7 percent for the same period in 2008.

 

These excerpts taken from the XEL 10-Q filed Apr 30, 2009.

5.              Income Taxes

 

Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (FIN 48) — 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.

 

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. In the third quarter of 2008, the IRS commenced an examination of tax years 2006 and 2007.  As of March 31, 2009, the IRS had not proposed any material adjustments to tax years 2006 and 2007.

 

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 March 31, 2009, Xcel Energy’s earliest open tax years in which an audit can be initiated by state taxing authorities in its major operating jurisdictions are as follows: Colorado-2004, Minnesota-2004, Texas-2004 and Wisconsin-2004.  There currently are no state income tax audits in progress.

 

The amount of unrecognized tax benefits reported in continuing operations was $37.7 million on March 31, 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 March 31, 2009 and Dec. 31, 2008.  These unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryovers reported in continuing operations of $8.1 million on March 31, 2009 and $13.1 million on Dec. 31, 2008 and NOL and tax credit carryovers reported in discontinued operations of  $25.7 million on March 31, 2009 and $26.5 million on Dec. 31, 2008.

 

The unrecognized tax benefit balance reported in continuing operations included $9.8 million and $9.2 million of tax positions on March 31, 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 $27.9 million and $26.3 million of tax positions on March 31, 2009 and Dec. 31, 2008, respectively, for which the ultimate deductibility is highly certain but

 

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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 $2.2 million from Dec. 31, 2008 to March 31, 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.  At this time, due to the uncertain nature of the audit process, it is not reasonably possible to estimate an overall range of possible change.

 

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 first quarter of 2009 was $0.3 million.  The amount reported within interest charges related to unrecognized tax benefits in continuing operations in the first quarter of 2008 reduced interest expense by $1.2 million.  The liability for interest related to unrecognized tax benefits reported in continuing operations was $2.2 million on March 31, 2009 and $1.9 million on Dec. 31, 2008.  The amount reported within interest charges related to unrecognized tax benefits in discontinued operations in both the first quarter of 2009 and the first quarter of 2008 reduced interest expense by $0.2 million.  The receivable for interest related to unrecognized tax benefits reported in discontinued operations was $1.7 million on March 31, 2009 and $1.5 million on Dec. 31, 2008.

 

No amounts were accrued for penalties as of March 31, 2009 and Dec. 31, 2008.

 

Income Taxes — Income taxes for continuing operations increased by $10.5 million for the first quarter of 2009, compared with 2008. The increase in income tax expense was primarily due to an increase in pretax income. The effective tax rate for continuing operations was 33.5 percent for the first quarter of 2009, compared with 33.2 percent for 2008.

 

This excerpt taken from the XEL 8-K filed Apr 30, 2009.
Income Taxes — Income taxes for continuing operations increased by $10.5 million for the first quarter of 2009, compared with 2008.  The increase in income tax expense was primarily due to an increase in pretax income. The effective tax rate for continuing operations was 33.5 percent for the first quarter of 2009, compared with 33.2 percent for 2008.

 

This excerpt taken from the XEL 8-K filed Jan 29, 2009.
Income Taxes — Income taxes for continuing operations increased by $30.7 million for the fourth quarter of 2008, compared with 2007.  The effective tax rate for continuing operations was 34.3 percent for the fourth quarter of 2008, compared with 28.8 percent for the same period in 2007.  The increase in income tax expense and the higher effective tax rate for fourth quarter 2008 as compared with 2007 was primarily due to an increase in pretax income.

 

Income taxes for continuing operations increased by $44.2 million for 2008, compared with 2007.  The increase in income tax expense was primarily due to an increase in pretax income in 2008. The effective tax rate for continuing operations was 34.4 percent for 2008, compared with 33.8 percent for 2007.

 

This excerpt taken from the XEL 10-Q filed Oct 24, 2008.
Income taxes — Income taxes for continuing operations increased by $1 million for the third quarter of 2008, compared with 2007.  The effective tax rate for continuing operations was 35.3 percent for the third quarter of 2008, compared with 32.2 percent for the same period in 2007.  The higher effective tax rate for third quarter 2008 as compared with 2007 was primarily due to benefits from the COLI policies in the third quarter of 2007.  Without these benefits, the effective tax rate for the third quarter of 2007 would have been 34.8 percent.

 

Income taxes for continuing operations increased by $13 million for the first nine months of 2008, compared with 2007.  The increase in income tax expense was primarily due to an increase in pretax income in 2008. The effective tax rate for continuing operations was 34.5 percent for the first nine months of 2008, compared with 35.2 percent for the same period in 2007.

 

This excerpt taken from the XEL 8-K filed Oct 23, 2008.
Income taxes — Income taxes for continuing operations increased by $1 million for the third quarter of 2008, compared with 2007.  The effective tax rate for continuing operations was 35.3 percent for the third quarter of 2008, compared with 32.2 percent for the same period in 2007.  The higher effective tax rate for third quarter 2008 as compared with 2007 was primarily due to benefits from the COLI policies in the third quarter of 2007.  Without these benefits, the effective tax rate for the third quarter of 2007 would have been 34.8 percent.

 

Income taxes for continuing operations increased by $13 million for the first nine months of 2008, compared with 2007.  The increase in income tax expense was primarily due to an increase in pretax income in 2008. The effective tax rate for continuing operations was 34.5 percent for the first nine months of 2008, compared with 35.2 percent for the same period in 2007.

 

This excerpt taken from the XEL 10-Q filed Aug 1, 2008.
Income taxes — Income taxes for continuing operations decreased by $16 million for the second quarter of 2008, compared with 2007.  The decrease in income tax expense was primarily due to $15.3 million of tax expense related to the COLI settlement in 2007. The effective tax rate for continuing operations was 34.3 percent for the second quarter of 2008, compared with 51.2 percent for the same period in 2007.  The higher effective tax rate for second quarter 2007 was primarily due to the COLI settlement in that quarter.  This was partially offset by an increase in the forecasted annual effective tax rate for 2008, which was largely a result of PSRI terminating the COLI program in 2007. Without these charges and benefits, the effective tax rate for the second quarters of 2008 and 2007 would have been 35.2 percent and 37.8 percent, respectively.

 

Income taxes for continuing operations increased by $13 million for the first six months of 2008, compared with 2007.  The increase in income tax expense was primarily due to an increase in pretax income in 2008 (excluding COLI), partially offset by $15.3 million of tax expense related to the COLI settlement in 2007. The effective tax rate for continuing operations was 33.7 percent for the first six months of 2008, compared with 39.0 percent for the same period in 2007.  The higher effective tax rate for the first six months of 2007 was primarily due to the COLI settlement.  This was partially offset by an increase in the forecasted annual effective tax rate for 2008, which was largely a result of PSRI terminating the COLI program in 2007. Without these charges and benefits, the effective tax rate for the first six months of 2008 and 2007 would have been 33.8 percent and 35.6 percent, respectively.

 

This excerpt taken from the XEL 8-K filed Jul 31, 2008.
Income taxes — Income taxes for continuing operations decreased by $16 million for the second quarter of 2008, compared with 2007.  The decrease in income tax expense was primarily due to $15.3 million of tax expense related to the COLI settlement in 2007. The effective tax rate for continuing operations was 34.3 percent for the second quarter of 2008, compared with 51.2 percent for the same period in 2007.  The higher effective tax rate for second quarter 2007 was primarily due to the COLI settlement in that quarter.  This was partially offset by an increase in the forecasted annual effective tax rate for 2008, which was largely a result of PSRI terminating the COLI program in 2007. Without these charges and benefits, the effective tax rate for the second quarters of 2008 and 2007 would have been 35.2 percent and 37.8 percent, respectively.

 

Income taxes for continuing operations increased by $13 million for the first six months of 2008, compared with 2007.  The increase in income tax expense was primarily due to an increase in pretax income in 2008 (excluding COLI), partially offset by $15.3 million of tax expense related to the COLI settlement in 2007. The effective tax rate for continuing operations was 33.7 percent for the first six months of 2008, compared with 39.0 percent for the same period in 2007.  The higher effective tax rate for the first six months of 2007 was primarily due to the COLI settlement.  This was partially offset by an increase in the forecasted annual effective tax rate for 2008, which was largely a result of PSRI terminating the COLI program in 2007. Without these charges and benefits, the effective tax rate for the first six months of 2008 and 2007 would have been 33.8 percent and 35.6 percent, respectively.

 

This excerpt taken from the XEL 10-Q filed May 2, 2008.
Income taxes Income taxes for continuing operations increased by $29 million for the first quarter of 2008, compared with the same period in 2007. The increase in income tax expense was primarily due to an increase in pretax income. The effective tax rate for continuing operations was 33.2 percent for the first quarter of 2008, compared with 28.8 percent for the same period in 2007.  The higher effective tax rate for first quarter 2008 was primarily due to an increase in the forecasted annual effective tax rate for 2008, compared with 2007, largely as a result of PSRI terminating the COLI program in 2007.

 

This excerpt taken from the XEL 8-K filed May 1, 2008.
Income taxes — Income taxes for continuing operations increased by $29 million for the first quarter of 2008, compared with 2007.  The increase in income tax expense was primarily due to an increase in pretax income. The effective tax rate for continuing operations was 33.2 percent for the first quarter of 2008, compared with 28.8 percent for the same period in 2007.  The higher effective tax rate for first quarter 2008 was primarily due to an increase in the forecasted annual effective tax rate for 2008, compared with 2007, largely as a result of PSRI terminating the COLI program in 2007.

 

This excerpt taken from the XEL 8-K filed Jan 30, 2008.
Income taxes — Income taxes for continuing operations increased by $30 million for the fourth quarter of 2007, compared with 2006.  The increase in income tax expense was primarily due to an increase in pretax income. The effective tax rate for continuing operations was 28.8 percent for the fourth quarter of 2007, compared with 20.2 percent for the same period in 2006.  The higher effective tax rate for fourth quarter 2007 was primarily due the discontinuation of COLI benefits as of Oct. 31, 2007.  Excluding these benefits from fourth quarter 2006, the effective tax rate for that period would have been 28.7 percent.

 

Income taxes for continuing operations increased by $113 million for 2007, compared with 2006.  The increase in income tax expense was due to an increase in pretax income (excluding COLI) and $16.1 million of tax expense related to the COLI settlement in 2007.  In addition, in 2006 we recognized $29.9 million of tax benefits from the reversal of a regulatory reserve and realized capital loss carry forwards.  The effective tax rate for 2007 was 33.8 percent, compared with 24.2 percent for the same period in 2006.  The higher effective tax rate for 2007 was primarily due to the COLI settlement and the lower effective tax rate for 2006 was primarily due to the recognition of a tax benefit relating to the reversal of a regulatory reserve and realized capital loss carry forwards.  Without these charges and benefits, the effective tax rate for 2007 and 2006 would have been 30.3 percent and 28.2 percent, respectively.

 

This excerpt taken from the XEL 10-Q filed Dec 13, 2007.
Income taxes — Income taxes for continuing operations increased by $45.1 million for the first six months of 2007, compared with 2006.  The increase in income tax expense was primarily due to an increase in pretax income (excluding COLI), $15.3 million of tax expense related to the COLI settlement in 2007 and $17.5 million of tax benefits from realized capital loss carry forwards in 2006. The effective tax rate for continuing operations was 39.0 percent for the first six months of 2007, compared with 23.0 percent for the same period in 2006.  The higher effective tax rate for the first six months of 2007 was primarily due to the COLI settlement and the lower effective tax rate for the first six months of 2006 was primarily due to realized capital loss carry forwards.  Without these charges and benefits, the effective tax rate for the first six of months of 2007 and 2006 would have been 29.3 percent and 28.4 percent, respectively.

 

This excerpt taken from the XEL 10-Q filed Dec 13, 2007.
Income taxes — Income taxes for continuing operations increased by $83.1 million for the first nine months of 2007, compared with 2006. The increase in income tax expense was primarily due to an increase in pretax income (excluding COLI) and $16.1 million of tax expense related to the COLI settlement in 2007 and $27.3 million of tax benefits from the reversal of a regulatory reserve and realized capital loss carry forwards in 2006. The effective tax rate for continuing operations was 35.2 percent for the first nine months of 2007, compared with 25.0 percent for the same period in 2006. The higher effective tax rate for the first nine months of 2007 was primarily due to the COLI settlement and the lower effective

 

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tax rate for the first nine months of 2006 was primarily due to the recognition of a tax benefit relating to the reversal of a regulatory reserve and realized capital loss carry forwards.  Without these charges and benefits, the effective tax rate for the first nine of months of 2007 and 2006 would have been 30.8 percent and 29.3 percent, respectively.

 

This excerpt taken from the XEL 8-K filed Dec 13, 2007.
Income Taxes — Xcel Energy and its domestic subsidiaries file consolidated federal income tax returns. Xcel Energy and its domestic subsidiaries file combined and separate state income tax returns.

 

Federal income taxes paid by Xcel Energy, as parent of the Xcel Energy consolidated group, are allocated to the Xcel Energy subsidiaries based on separate company computations of tax. A similar allocation is made for state income taxes paid by Xcel Energy in connection with combined state filings. The holding company also allocates its own net income tax benefits to its direct subsidiaries based on the positive tax liability of each company.

 

Xcel Energy defers income taxes for all temporary differences between pretax financial and taxable income, and between the book and tax bases of assets and liabilities. Xcel Energy uses the tax rates that are scheduled to be in effect when the temporary differences are expected to turn around, or reverse.

 

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Due to the effects of past regulatory practices, when deferred taxes were not required to be recorded, the reversal of some temporary differences are accounted for as current income tax expense. Investment tax credits are deferred and their benefits amortized over the estimated lives of the related property. Utility rate regulation also has created certain regulatory assets and liabilities related to income taxes, which are summarized in Note 9 to the Consolidated Financial Statements.

 

This excerpt taken from the XEL 10-Q filed Oct 26, 2007.
Income taxes — Income taxes for continuing operations increased by $65 million for the first nine months of 2007, compared with 2006. The increase in income tax expense was due to an increase in pretax income in 2007 and $27 million of tax benefits from the reversal of a regulatory reserve and realized capital loss carryforwards in 2006. The effective tax rate for continuing operations was 34.5 percent for the first nine months of 2007, compared with 29.5 percent for the same period in 2006. The lower effective tax rate for the first nine months of 2006 was primarily due to the recognition of a tax benefit relating to the reversal of a regulatory reserve and realized capital loss carryforwards in 2006. Excluding these benefits, the effective tax rate for the first nine months of 2006 would have been 33.7 percent.

 

This excerpt taken from the XEL 8-K filed Aug 8, 2007.
Income Taxes — Xcel Energy and its domestic subsidiaries file consolidated federal income tax returns. Xcel Energy and its domestic subsidiaries file combined and separate state income tax returns.

Federal income taxes paid by Xcel Energy, as parent of the Xcel Energy consolidated group, are allocated to the Xcel Energy subsidiaries based on separate company computations of tax. A similar allocation is made for state income taxes paid by Xcel Energy in connection with combined state filings. The holding company also allocates its own net income tax benefits to its direct subsidiaries based on the positive tax liability of each company.

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Xcel Energy defers income taxes for all temporary differences between pretax financial and taxable income, and between the book and tax bases of assets and liabilities. Xcel Energy uses the tax rates that are scheduled to be in effect when the temporary differences are expected to turn around, or reverse.

Due to the effects of past regulatory practices, when deferred taxes were not required to be recorded, the reversal of some temporary differences are accounted for as current income tax expense. Investment tax credits are deferred and their benefits amortized over the estimated lives of the related property. Utility rate regulation also has created certain regulatory assets and liabilities related to income taxes, which are summarized in Note 8 to the Consolidated Financial Statements.

This excerpt taken from the XEL 10-Q filed Jul 27, 2007.
Income taxes — Income taxes for continuing operations increased by $27 million for the first six months of 2007, compared with 2006.  The effective tax rate for continuing operations was 33.4 percent for the first six months of 2007, compared with 27.7 percent for the same period in 2006.  The lower effective tax rate for the first six months of 2006 was primarily due to the recognition of a tax benefit relating to capital loss carry forwards in 2006.  Excluding these benefits, the effective tax rate for the first six months 2006 would have been 32.9 percent.

 

This excerpt taken from the XEL 8-K filed Jul 25, 2007.
Income taxes – Income taxes for continuing operations increased by $35 million for the second quarter of 2007, compared with 2006.  The effective tax rate for continuing operations was 33.4 percent for the second quarter of 2007, compared with 21.7 percent for the same period in 2006.  The lower effective tax rate for second quarter 2006 was primarily due to the recognition of a tax benefit relating to capital loss carry forwards in 2006. Excluding these benefits, the effective tax rate for second quarter 2006 would have been 35.0 percent.

Income taxes for continuing operations increased by $27 million for the first six months of 2007, compared with 2006.  The effective tax rate for continuing operations was 33.4 percent for the first six months of 2007, compared with 27.7 percent for the same period in 2006.  The lower effective tax rate for the first six months of 2006 was primarily due to the recognition of a tax benefit relating to capital loss carry forwards in 2006.  Excluding these benefits, the effective tax rate for the first six months 2006 would have been 32.9 percent.

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Note 3.  Results from Discontinued Operations

A summary of the earnings per share - diluted components of discontinued operations is as follows:

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

June 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

PSRI earnings

 

$

0.02

 

$

 

$

0.03

 

$

0.02

 

COLI tax settlement, net of tax

 

(0.13

)

 

(0.13

)

 

Total discontinued operations

 

$

(0.11

)

$

 

$

(0.10

)

$

0.02

 

 

This excerpt taken from the XEL 10-Q filed Apr 27, 2007.
Income taxes – Income taxes for continuing operations decreased by $5 million for the first quarter of 2007 compared with the same period in 2006. The decrease was primarily due to a decrease in pretax income. The effective tax rate for continuing operations was 28.8 percent for the first quarter of 2007, compared with 26.3 percent for the same period in 2006. The lower effective tax rate in the first quarter of 2006 was primarily due to $4 million of tax benefits for the successful resolution of various audit issues. Excluding these tax benefits, the effective rate for 2006 would have been 28.2 percent.

 

This excerpt taken from the XEL 8-K filed Apr 25, 2007.
Income taxes – Income taxes for continuing operations decreased by $5 million for the first quarter of 2007 compared with the same period in 2006. The decrease was primarily due to a decrease in pretax income. The effective tax rate for continuing operations was 28.8 percent for the first quarter of 2007, compared with 26.3 percent for the same period in 2006. The lower effective tax rate in the first quarter of 2006 was primarily due to $4 million of tax benefits for the successful resolution of various audit issues. Excluding the tax benefits, the effective rate for 2006 would have been 28.2 percent.

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This excerpt taken from the XEL 10-K filed Feb 23, 2007.
Income Taxes — Xcel Energy and its domestic subsidiaries file consolidated federal income tax returns. Xcel Energy and its domestic subsidiaries file combined and separate state income tax returns.

Federal income taxes paid by Xcel Energy, as parent of the Xcel Energy consolidated group, are allocated to the Xcel Energy subsidiaries based on separate company computations of tax. A similar allocation is made for state income taxes paid by Xcel Energy in connection with combined state filings. The holding company also allocates its own net income tax benefits to its direct subsidiaries based on the positive tax liability of each company.

Xcel Energy defers income taxes for all temporary differences between pretax financial and taxable income, and between the book and tax bases of assets and liabilities. Xcel Energy uses the tax rates that are scheduled to be in effect when the temporary differences are expected to turn around, or reverse.

Due to the effects of past regulatory practices, when deferred taxes were not required to be recorded, the reversal of some temporary differences are accounted for as current income tax expense. Investment tax credits are deferred and their benefits amortized over the estimated lives of the related property. Utility rate regulation also has created certain regulatory assets and liabilities related to income taxes, which are summarized in Note 7 to the Consolidated Financial Statements.

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This excerpt taken from the XEL 8-K filed Jan 31, 2007.
Income Taxes — Income taxes for continuing operations decreased by $19 million for the fourth quarter of 2006, compared with 2005. The effective tax rate was 20.2 percent for the fourth quarter of 2006, compared with 30.4 percent for the same period in 2005. The decrease in income taxes and the effective tax rate was primarily due to a reduction in pretax income.

Income taxes for continuing operations increased by $8 million for 2006, compared with 2005. The effective tax rate for continuing operations was 24.2 percent for 2006, compared with 25.8 percent for 2005. The increase in income tax expense was primarily due to an increase in pretax income, partially offset by $30 million of tax benefits from the reversal of a regulatory reserve and realized capital loss carryforwards. Without these tax benefits, the effective tax rate for 2006 would have been 28.2 percent. In 2005, tax benefits of $10 million were recorded from increased research credits and a net operating loss carry back.

This excerpt taken from the XEL 10-Q filed Oct 27, 2006.
Income taxes — Income taxes for continuing operations increased by $26.7 million for the first nine months of 2006, compared with 2005. The increase in income taxes was primarily due to an increase in pretax income. The effective tax rate for continuing operations was 25.0 percent for the first nine months of 2006 and 24.6 percent for the first nine months of 2005. The increase in the effective tax rate was primarily due to an increase in the forecasted annual effective tax rate for 2006 as compared to 2005.

 

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This excerpt taken from the XEL 8-K filed Oct 26, 2006.
Income Taxes – Income taxes for continuing operations increased by $22.4 million for the third quarter of 2006, compared with 2005.  The increase in income tax expense was primarily due to an increase in pretax income.  Income tax expense was partially offset by the reversal of a $9.8 million regulatory reserve in the third quarter of 2006 and by recognition of research and experimentation credits and net operating loss carry back claims of $10.4 million in the third quarter of 2005.  The effective tax rate for continuing operations was 27.0 percent for the third quarter of 2006, compared with 23.5 percent for the same period in 2005.  The increase in the effective tax rate was primarily due to an increase in the forecasted annual effective tax rate for 2006 as compared to 2005.  Without the additional

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tax benefits, the effective tax rate would have been 30.2 percent in the third quarter of 2006 and 27.5 percent in the third quarter of 2005.

Income taxes for continuing operations increased by $26.7 million for the first nine months of 2006, compared with 2005.  The increase in income taxes was primarily due to an increase in pretax income.  The effective tax rate for continuing operations was 25.0 percent for the first nine months of 2006, compared with 24.6 percent for the same period in 2005.  The increase in the effective tax rate was primarily due to an increase in the forecasted annual effective tax rate in 2006, compared with 2005.  Without the additional tax benefits, the effective tax rate would have been 29.3 percent for the first nine months of 2006 and 26.5 percent for the first nine months of 2005.

This excerpt taken from the XEL 10-Q filed Aug 3, 2006.
Income taxes — Income taxes for continuing operations increased by $4.3 million for the first six months of 2006, compared with 2005.  The increase in income taxes was primarily due to an increase in pre-tax earnings partially offset by a tax benefit of $17.5 million for the first six months of 2006 for capital loss carry forwards, as previously discussed.  The effective tax rate for continuing operations was 23.0 percent for the first six months of 2006, compared with 25.6 percent for the same period in 2005.  The reduction in the effective tax rate was primarily due to the tax benefit for capital loss carry forwards.

This excerpt taken from the XEL 8-K filed Aug 1, 2006.
Income Taxes – Income taxes for continuing operations decreased by $4.1 million for the second quarter of 2006, compared with 2005.  The effective tax rate for continuing operations was 17.3 percent for the second quarter of 2006, compared with 24.1 percent for the same period in 2005.  The reduction in income taxes and in the effective tax rate was primarily due to the recognition of a tax benefit of $16.6 million during the second quarter of 2006 relating to capital loss carry forwards that are now considered realizable.  Previously, such tax benefits did not meet the recognition threshold under tax accounting requirements, due to the absence of likely capital gains which provided the opportunity to make use of the capital loss carry forwards.

Income taxes for continuing operations increased by $4.3 million for the first six months of 2006, compared with 2005.  The increase in income taxes was primarily due to an increase in pre-tax earnings, partially offset by a tax benefit of $17.5 million for the first six months of 2006 for capital loss carry forwards, as previously discussed.  The effective tax rate for continuing operations was 23.0 percent for the first six months of 2006, compared with 25.6 percent for the same period in 2005.  The reduction in the effective tax rate was primarily due to the tax benefit for capital loss carry forwards.

This excerpt taken from the XEL 10-Q filed May 1, 2006.
Income taxes – Income taxes for continuing operations increased by $8 million for the first quarter of 2006 compared with the same period in 2005. The increase is primarily due to an increase in pretax income. The effective tax rate for continuing operations was 26.3 percent for the first quarter of 2006, compared with 26.5 percent for the same period in 2005.

 

This excerpt taken from the XEL 8-K filed Apr 27, 2006.
Income taxes – Income taxes for continuing operations increased by $8 million for the first quarter of 2006 compared with the same period in 2005. The increase is primarily due to an increase in pretax income. The effective tax rate for continuing operations was 26.3 percent for the first quarter of 2006, compared with 26.5 percent for the same period in 2005.

 

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This excerpt taken from the XEL 10-K filed Feb 27, 2006.
Income Taxes — Xcel Energy and its domestic subsidiaries file consolidated federal income tax returns. Xcel Energy and its domestic subsidiaries file combined and separate state income tax returns.  NRG and one or more of its domestic subsidiaries

 

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were included in some state returns, but not all, of these combined returns in 2003. NRG has not been consolidated or combined in any of Xcel Energy’s income tax returns since 2003.

 

Federal income taxes paid by Xcel Energy, as parent of the Xcel Energy consolidated group, are allocated to the Xcel Energy subsidiaries based on separate company computations of tax. A similar allocation is made for state income taxes paid by Xcel Energy in connection with combined state filings. In accordance with the PUHCA requirements, the holding company also allocates its own net income tax benefits to its direct subsidiaries based on the positive tax liability of each company.

 

Xcel Energy defers income taxes for all temporary differences between pretax financial and taxable income, and between the book and tax bases of assets and liabilities. Xcel Energy uses the tax rates that are scheduled to be in effect when the temporary differences are expected to turn around, or reverse.

 

Due to the effects of past regulatory practices, when deferred taxes were not required to be recorded, the reversal of some temporary differences are accounted for as current income tax expense. Investment tax credits are deferred and their benefits amortized over the estimated lives of the related property. Utility rate regulation also has created certain regulatory assets and liabilities related to income taxes, which are summarized in Note 16 to the Consolidated Financial Statements.

 

This excerpt taken from the XEL 8-K filed Feb 1, 2006.
Income Taxes – Income taxes associated with continuing operations increased by $44 million for the fourth quarter of 2005, compared with the same period in 2004.  The effective tax rate for continuing operations was 30.4 percent for the fourth quarter of 2005, compared with -0.5 percent for the same period in 2004.  The increases in income taxes and the effective tax rate were primarily attributable to tax benefits of $33.8 million that were recorded in the fourth quarter of 2004, including $22.3 million related to the successful resolution of various tax audit issues.

 

Income taxes associated with continuing operations increased by $12 million for 2005, compared with 2004.  The effective tax rate for continuing operations was 25.8 percent for 2005, compared with 23.7 percent for 2004.  Income taxes recorded in 2005 reflect tax benefits from increased research credits and a net operating loss carryback.  As stated above, income taxes recorded in 2004 include tax benefits from the resolution of tax audit issues.

 

This excerpt taken from the XEL 10-Q filed Oct 28, 2005.
Income taxes — Income taxes for continuing operations decreased by $32 million for the first nine months of 2005 compared with the same period in 2004.  The effective tax rate for continuing operations was 24.6 percent for the first nine months of 2005, compared with 28.9 percent for the same period in 2004.  Income taxes recorded in 2005 reflect tax benefits from increased research credits and a net operating loss carryback.

 

This excerpt taken from the XEL 8-K filed Oct 26, 2005.
Income Taxes – Income taxes for continuing operations decreased by $13 million for the third quarter of 2005, compared with the same period in 2004.  The effective tax rate for continuing operations was 23.5 percent for the third quarter of 2005, compared with 30.9 percent for the same period in 2004.  Income taxes for the third quarter

 

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of 2005 reflect tax benefits from increased research credits and a net operating loss carryback.  Income tax expense recorded in the third quarter of 2005 also reflects reductions to adjust to the forecasted annual effective tax rate.

 

Income taxes for continuing operations decreased by $32 million for the first nine months of 2005, compared with the same period in 2004.  The effective tax rate for continuing operations was 24.6 percent for the first nine months of 2005, compared with 28.9 percent for the same period in 2004.  Income taxes recorded in 2005 reflect tax benefits from increased research credits and a net operating loss carryback.

 

This excerpt taken from the XEL 10-Q filed Jul 29, 2005.
Income taxes – Income taxes for continuing operations decreased by $18 million for the first six months of 2005 compared with the same period in 2004.  The effective tax rate for continuing operations was 25.6 percent for the first six months of 2005, compared with 27.3 percent for the same period in 2004.  The decrease in the effective tax rate was due to additional tax credits and lower pretax income levels for the first six months of 2005 as compared with the same period in 2004, partially offset by the additional income tax expense recorded, as discussed above.

 

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This excerpt taken from the XEL 8-K filed Jul 27, 2005.
Income Taxes – Income taxes for continuing operations increased by $9 million for the second quarter of 2005 compared with the same period in 2004.  The effective tax rate for continuing operations was 24.0 percent for the second quarter of 2005, compared with 15.7 percent for the same period in 2004.  Additional income tax expense was recorded in the second quarter of 2005 to eliminate the difference in tax expense computed based on the actual year-to-date effective tax rate at the subsidiary level as compared to the forecasted annual consolidated effective tax rate.  Second quarter 2005 and second quarter 2004 had lower actual effective tax rates as compared to forecast due to a variation in the year-to-date levels and mix of income earned in various jurisdictions with different tax rates.

 

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Income taxes for continuing operations decreased by $18 million for the first six months of 2005 compared with the same period in 2004.  The effective tax rate for continuing operations was 25.6 percent for the first six months of 2005, compared with 27.3 percent for the same period in 2004.  The decrease in the effective tax rate was due to additional tax credits and lower pretax income levels for the first six months of 2005 as compared with the same period in 2004, partially offset by the additional income tax expense recorded, as discussed above.

 

This excerpt taken from the XEL 10-Q filed May 2, 2005.
Income taxes – Income taxes for continuing operations decreased by $27 million for the first quarter of 2005 compared with the same period in 2004.  The effective tax rate for continuing operations was 26.6 percent for the first quarter of 2005, compared with 32.7 percent for the same period in 2004.  The decreases were due to the decrease in pretax income and plant-related permanent taxable income adjustments and an increase in research and development tax credits.

 

This excerpt taken from the XEL 8-K filed Apr 27, 2005.
Income taxes – Income taxes for continuing operations decreased by $27 million for the first quarter of 2005 compared with the same period in 2004.  The effective tax rate for continuing operations was 26.6 percent for the first quarter of 2005, compared with 32.7 percent for the same period in 2004.  The decreases were due to a decrease in pretax income and plant-related permanent taxable income adjustments and an increase in research and development tax credits.

 

Note 3. Discontinued Operations

 

Results from discontinued operations were a loss of 1 cent per share for the first quarter of 2005.  In March 2005, Xcel Energy agreed to sell its non-regulated subsidiary, Utility Engineering Corp. (UE) to Zachry Group, Inc.  In April 2005, Zachry acquired all of the outstanding shares of UE.  Quixx Corp., a subsidiary of UE that partners in cogeneration projects, was not included in the transaction.  Xcel Energy recorded an immaterial loss in the first quarter of 2005 on the transaction.

 

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This excerpt taken from the XEL 10-K filed Mar 4, 2005.
Income Taxes — Xcel Energy and its domestic subsidiaries file consolidated federal income tax returns. NRG and its domestic subsidiaries were included in Xcel Energy’s consolidated federal income tax returns prior to NRG’s March 2001 public equity offering. Xcel Energy and its domestic subsidiaries file combined and separate state income tax returns. NRG and one or more of its domestic subsidiaries were included in some, but not all, of these combined returns in 2002 and 2003. NRG will not be consolidated or combined in any of Xcel Energy’s income tax returns after 2003.

 

Federal income taxes paid by Xcel Energy, as parent of the Xcel Energy consolidated group, are allocated to the Xcel Energy subsidiaries based on separate company computations of tax. A similar allocation is made for state income taxes paid by Xcel Energy in connection with combined state filings. In accordance with PUHCA requirements, the holding company also allocates its own net income tax benefits to its direct subsidiaries based on the positive tax liability of each company.

 

Xcel Energy defers income taxes for all temporary differences between pretax financial and taxable income, and between the book and tax bases of assets and liabilities. Xcel Energy uses the tax rates that are scheduled to be in effect when the temporary differences are expected to turn around, or reverse.

 

Due to the effects of past regulatory practices, when deferred taxes were not required to be recorded, the reversal of some temporary differences are accounted for as current income tax expense. Investment tax credits are deferred and their benefits amortized over the estimated lives of the related property. Utility rate regulation also has created certain regulatory assets and liabilities related to income taxes, which are summarized in Note 18 to the Consolidated Financial Statements.

 

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