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UNITED STATES

Registrant’s telephone number, including area code:

Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of Act:

      Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.     Yes þ          No o          

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o          

      As of March 15, 2002, the aggregate market value of the voting common stock held by non-affiliates of the Registrant was $9,448,331,754 and there were 370,066,813 shares of common stock outstanding, $2.50 par value.

DOCUMENTS INCORPORATED BY REFERENCE

      The Registrant’s Definitive Proxy Statement for its Annual Meeting of Shareholders, to be held April 18, 2002, is incorporated by reference into Part III of this Form 10-K.

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INDEX

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Item l.     Business

COMPANY OVERVIEW

      On Aug. 18, 2000, New Century Energies, Inc. (NCE) and Northern States Power Co. (NSP) merged and formed Xcel Energy Inc. (Xcel Energy). Xcel Energy, a Minnesota corporation, is a registered holding company under the Public Utility Holding Company Act of 1935 (PUHCA). As part of the merger, NSP transferred its existing utility operations that were being conducted directly by NSP at the parent company level to a newly formed subsidiary of Xcel Energy named Northern States Power Co. Each share of NCE common stock was exchanged for 1.55 shares of Xcel Energy common stock. NSP shares became Xcel Energy shares on a one-for-one basis. As a stock-for-stock exchange for shareholders of both companies, the merger was accounted for as a pooling-of-interests and accordingly, amounts reported for periods prior to the merger have been restated for comparability with post-merger results.

      Xcel Energy directly owns six utility subsidiaries that serve electric and natural gas customers in 12 states. These six utility subsidiaries are Northern States Power Co., a Minnesota corporation (NSP-Minnesota); Northern States Power Co., a Wisconsin corporation (NSP-Wisconsin); Public Service Co. of Colorado, a Colorado corporation (PSCo); Southwestern Public Service Co., a Wyoming corporation (SPS); Black Mountain Gas Co., an Arizona corporation (BMG); and Cheyenne Light, Fuel and Power Co., a Wyoming corporation (Cheyenne). Their service territories include portions of Arizona, Colorado, Kansas, Michigan, Minnesota, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin and Wyoming. Xcel Energy’s regulated businesses also include Viking Gas Transmission Co. (Viking) and WestGas InterState, Inc. (WGI), both interstate natural gas pipeline companies.

      Xcel Energy also owns or has an interest in a number of nonregulated businesses, the largest of which is NRG Energy, Inc. (NRG), a publicly traded independent power producer. At Dec. 31, 2001, Xcel Energy indirectly owned approximately 74 percent of NRG. Xcel Energy’s ownership of NRG was 100 percent until the second quarter of 2000, when NRG completed its initial public offering, and then 82 percent until a secondary offering was completed in March 2001. See Note 19 to the Financial Statements under Item 8 for discussion of potential changes in NRG ownership.

      In addition to NRG, Xcel Energy’s nonregulated subsidiaries include Utility Engineering (engineering, construction and design), Seren Innovations, Inc. (broadband telecommunications services), e prime inc. (natural gas marketing and trading), Planergy International, Inc. (enterprise energy management solutions), Eloigne Co. (investments in rental housing projects that qualify for low-income housing tax credits) and Xcel Energy International (an international independent power producer).

      Xcel Energy was incorporated under the laws of Minnesota in 1909. Its executive offices are located at 800 Nicollet Mall, Minneapolis, Minn. 55402.

      For information on the nonregulated subsidiaries of Xcel Energy, see Nonregulated Subsidiaries under Item 1. For information regarding Xcel Energy’s segments and foreign revenues, see Note 18 to the Financial Statements under Item 8.

     NSP-Minnesota

      NSP-Minnesota was incorporated in 2000 under the laws of Minnesota. NSP-Minnesota is an operating utility engaged in the generation, transmission and distribution of electricity and the transportation, storage and distribution of natural gas. NSP-Minnesota provides generation, transmission and distribution of electricity in Minnesota, North Dakota and South Dakota. NSP-Minnesota also purchases, distributes and sells natural gas to retail customers and transports customer-owned gas in Minnesota, North Dakota and South Dakota. NSP-Minnesota provides retail electric utility service to approximately 1.3 million customers and gas utility service to approximately 0.4 million customers.

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      NSP-Minnesota owns the following direct subsidiaries: United Power and Land Co., which holds real estate; NSP Nuclear Corp., which holds NSP-Minnesota’s interest in the Nuclear Management Co.; and NSP Financing I, a special purpose business trust.

     NSP-Wisconsin

      NSP-Wisconsin was incorporated in 1901 under the laws of Wisconsin. NSP-Wisconsin is an operating utility engaged in the generation, transmission and distribution of electricity to approximately 229,000 retail customers in northwestern Wisconsin and in the western portion of the Upper Peninsula of Michigan. NSP-Wisconsin is also engaged in the distribution and sale of natural gas in the same service territory to approximately 90,000 customers in Wisconsin and Michigan.

      NSP-Wisconsin owns the following direct subsidiaries: Chippewa and Flambeau Improvement Co., which operates hydro reserves; Clearwater Investments Inc., which owns interests in affordable housing; and NSP Lands, Inc., which holds real estate.

     PSCo

      PSCo was incorporated in 1924 under the laws of Colorado. PSCo is an operating utility engaged principally in the generation, purchase, transmission, distribution and sale of electricity and the purchase, transportation, distribution and sale of natural gas. PSCo serves approximately 1.3 million electric customers and approximately 1.1 million natural gas customers in Colorado.

      PSCo owns the following direct subsidiaries: 1480 Welton, Inc., which owns certain real estate interests of PSCo; PSR Investments, Inc., which owns and manages permanent life insurance policies on certain employees; Green and Clear Lakes Company, which owns water rights; PS Colorado Credit Corp., a finance company that financed certain of PSCo’s current assets, but was dissolved in 2002; and PSCo Capital Trust I, a special purpose financing trust. PSCo also holds a controlling interest in several other relatively small ditch and water companies whose capital requirements are not significant.

     SPS

      SPS was incorporated in 1921 under the laws of New Mexico. SPS is an operating utility engaged primarily in the generation, transmission, distribution and sale of electricity. SPS serves approximately 387,000 electric customers in portions of Texas, New Mexico, Oklahoma and Kansas. The wholesale customers served by SPS comprise approximately 34 percent of the total kilowatt-hour sales.

      SPS owns a direct subsidiary, SPS Capital I, which is a special purpose financing trust.

     Other Regulated Subsidiaries

      Cheyenne was incorporated in 1900 under the laws of Wyoming. Cheyenne is an operating utility engaged in the purchase, transmission, distribution and sale of electricity and natural gas primarily serving approximately 37,000 electric customers and 30,000 natural gas customers in and around Cheyenne, Wyo.

      BMG was incorporated in 1999 under the laws of Minnesota. BMG is a natural gas and propane distribution company, located in Cave Creek, Ariz., with approximately 8,600 customers.

      Viking Gas, acquired in 1993, owns and operates an interstate natural gas pipeline serving portions of Minnesota, Wisconsin and North Dakota. Viking operates exclusively as a transporter of natural gas for third-party shippers under authority granted by the Federal Energy Regulatory Commission (FERC).

      WGI was incorporated in 1990 under the laws of Colorado. WGI is a natural gas transmission company engaged in transporting natural gas from Chalk Bluffs, Colo., to Cheyenne, Wyo.

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UTILITY REGULATION

Ratemaking Principles

      The Xcel Energy system is subject to the jurisdiction of the Securities and Exchange Commission (SEC) under PUHCA. The rules and regulations under PUHCA generally limit the operations of a registered holding company to a single integrated public utility system, plus additional energy-related businesses. PUHCA rules require that transactions between affiliated companies in a registered holding company system be performed at cost, with limited exceptions. See additional discussion of PUHCA requirements under Factors Affecting Results of Operations and Liquidity and Capital Resources in Management’s Discussion and Analysis under Item 7.

      The Federal Energy Regulatory Commission (FERC) has jurisdiction over rates for electric transmission service and wholesale electric energy sold in interstate commerce, hydro facility licensing, the wholesale gas transportation rates of Viking, the siting and construction of facilities by Viking and certain other activities of Xcel Energy’s utility subsidiaries. Federal, state and local agencies also have jurisdiction over many of Xcel Energy’s other activities.

      Xcel Energy is unable to predict the impact on its operating results from the future regulatory activities of any of these agencies. Xcel Energy strives to comply with all rules and regulations issued by the various agencies.

     NSP-Minnesota

      Retail rates, services and other aspects of NSP-Minnesota’s operations are subject to the jurisdiction of the Minnesota Public Utilities Commission (MPUC), the North Dakota Public Service Commission (NDPSC) and the South Dakota Public Utilities Commission (SDPUC) within their respective states. The MPUC also possesses regulatory authority over aspects of NSP-Minnesota’s financial activities, including security issuances, certain property transfers, mergers with other utilities and transactions between NSP-Minnesota and its affiliates. In addition, the MPUC reviews and approves NSP-Minnesota’s electric resource plans and gas supply plans for meeting customers’ future energy needs. The MPUC also certifies the need for generating plants greater than 50 megawatts and transmission lines greater than 100 kilovolts. NSP-Minnesota has received authorization from the FERC to act as a power marketer.

      The Minnesota Environmental Quality Board (MEQB) is empowered to select and designate sites for new power plants with a capacity of 50 megawatts or more and wind energy conversion plants with a capacity of five megawatts or more. It also designates routes for electric transmission lines with a capacity of 100 kilovolts or more. No power plant or transmission line may be constructed in Minnesota except on a site or route designated by the MEQB.

     NSP-Wisconsin

      NSP-Wisconsin is subject to regulation of similar scope by the Public Service Commission of Wisconsin (PSCW) and the Michigan Public Service Commission (MPSC). In addition, each of the state commissions certifies the need for new generating plants and electric and retail gas transmission lines of designated capacities to be located within the respective states before the facilities may be sited and built.

      The PSCW has a biennial filing requirement. By June of each odd-numbered year, NSP-Wisconsin must submit a rate filing for the two-year period beginning the following January. The filing procedure and review generally allow the PSCW sufficient time to issue an order effective with the start of the test year.

     PSCo

      PSCo is subject to the jurisdiction of the Colorado Public Utility Commission (CPUC) with respect to its facilities, rates, accounts, services and issuance of securities. PSCo is subject to the jurisdiction of the FERC with respect to its wholesale electric operations and accounting practices and policies. PSCo has received authorization from the FERC to act as a power marketer. Also, PSCo holds a FERC certificate that

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     SPS

      The Public Utility Commission of Texas (PUCT) has jurisdiction over SPS’ Texas operations as an electric utility and over its retail rates and services. The municipalities in which SPS operates in Texas have original jurisdiction over SPS’ rate in those communities. The New Mexico Public Regulatory Commission (NMPRC) has jurisdiction over the issuance of securities and accounting. The NMPRC, the Oklahoma Corporation Commission and the Kansas Corporation Commission have jurisdiction with respect to retail rates and services in their respective states. The FERC has jurisdiction over SPS’ rates for wholesale sales for resale and the transmission of electricity in interstate commerce. SPS has received authorization from the FERC to act as a power marketer.

     Cheyenne

      Cheyenne is subject to the jurisdiction of the Wyoming Public Service Commission (WPSC) with respect to its facilities, rates, accounts, services and issuance of securities.

     Other

      Viking and WGI are subject to the FERC jurisdiction and each holds a FERC certificate, which allows them to transport natural gas in interstate commerce pursuant to the provisions of the Natural Gas Act. BMG is subject to the Arizona Corporation Commission (ACC).

Fuel, Purchased Gas and Resource Adjustment Clauses

     NSP-Minnesota

      NSP-Minnesota’s retail electric rate schedules provide for adjustments to billings and revenues for changes in the cost of fuel and purchased energy. NSP-Minnesota is permitted to recover financial instrument costs through a fuel clause adjustment, a mechanism that allows NSP-Minnesota to bill customers for the actual cost of fuel used to generate electricity at its plants and energy purchased from other suppliers. Changes in capacity charges are not recovered through the fuel clause. NSP-Minnesota’s electric wholesale customers do not have a fuel clause provision in their contracts. Instead, the contracts have an escalation factor.

      Gas rate schedules for NSP-Minnesota include a purchased gas adjustment (PGA) clause that provides for rate adjustments for changes in the current unit cost of purchased gas compared with the last costs included in rates. The PGA factors in Minnesota are calculated for the current month based on the estimated purchased gas costs for that month. The MPUC has the authority to disallow certain costs if it finds the utility was not prudent in its procurement activities.

      NSP-Minnesota is required by Minnesota law to spend a minimum of 2 percent of Minnesota electric revenue and 0.5 percent of Minnesota gas revenue on conservation improvement programs (CIP). These costs are recovered through an annual recovery mechanism for electric and gas conservation and energy management program expenditures. NSP-Minnesota is required to request a new cost recovery level annually.

     NSP-Wisconsin

      NSP-Wisconsin does not have an automatic electric fuel adjustment clause for Wisconsin retail customers. Instead, it has a procedure that compares actual monthly and anticipated annual fuel costs with those costs that were included in the latest retail electric rates. If the comparison results in a difference outside a prescribed range, the PSCW may hold hearings limited to fuel costs and revise rates (upward or downward). Any revised rates would be effective until the next rate case. The adjustment approved is calculated on an annual basis, but applied prospectively. Most of NSP-Wisconsin’s wholesale electric rate schedules provide for adjustments to billings and revenues for changes in the cost of fuel and purchased energy.

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      NSP-Wisconsin has a gas cost recovery mechanism to recover the actual cost of natural gas.

      NSP-Wisconsin’s gas and retail electric rate schedules for Michigan customers include gas cost recovery factors and power supply cost recovery factors, which are based on 12-month projections. After each 12-month period, a reconciliation is submitted whereby over-collections are refunded and any under-collections are collected from the customers over the subsequent 12-month period.

     PSCo

      PSCo has five adjustment clauses: the incentive cost adjustment (ICA), the gas cost adjustment (GCA), the steam cost adjustment (SCA), the demand side management cost adjustment (DSMCA) and the qualifying facilities capacity cost adjustment (QFCCA). These adjustment clauses allow certain costs to be passed through to retail customers. PSCo is required to file applications with the CPUC for approval of adjustment mechanisms in advance of the proposed effective dates.

      The ICA allows for an equal sharing between customers and shareholders of certain fuel and energy cost increases. PSCo, through its GCA, is allowed to recover its actual costs of purchased gas. The GCA rate is revised annually to coincide with changes in purchased gas costs. Purchased gas costs and revenues received to recover gas costs are compared on a monthly basis and differences are deferred. PSCo, through its SCA, is allowed to recover the difference between its actual cost of fuel and the amount of these costs recovered under its base rates. The SCA rate is revised annually to coincide with changes in fuel costs. The QFCCA provides for recovery of purchased capacity costs from certain QF projects not otherwise reflected in base electric rates.

      The DSMCA clause currently permits PSCo to recover DSM costs over five years while non-labor incremental expenses and carrying costs associated with deferred DSM costs are recovered on an annual basis. PSCo also has implemented a low-income energy assistance program. The costs of this energy conservation and weatherization program for low-income customers are recovered through the DSMCA.

     SPS

      Fuel and purchased power costs are recoverable in Texas through a fixed fuel factor, which is part of SPS’ rates. If it appears that SPS will materially over-recover or under-recover these costs, the factor may be revised upon application by SPS or action by the PUCT. The rule requires refunding and surcharging under/over-recovery amounts, including interest, when they exceed 4 percent of the utility’s annual fuel and purchased power costs, as allowed by the PUCT, if this condition is expected to continue. PUCT regulations require periodic examination of SPS fuel and purchased power costs, the efficiency of the use of such fuel and purchased power, fuel acquisition and management policies and purchase power commitments. Under the PUCT’s regulations, SPS is required to file an application for the PUCT to retrospectively review at least every three years the operations of SPS’ electric generation and fuel management activities.

      The NMPRC regulations provide for a fuel and purchased power cost adjustment clause for SPS’ New Mexico retail jurisdiction. SPS files monthly and annual reports of its fuel and purchased power costs with the NMPRC, which include the current over/under fuel collection calculation, plus interest. On December 17, 2001, SPS filed an application with the NMPRC for authorization to replace its fixed annual fuel factor with a monthly fuel factor. In January 2002, the NMPRC authorized SPS to implement a monthly adjustment factor on an interim basis beginning with the February 2002 billing cycle.

     Cheyenne

      All electric demand and purchased power costs are recoverable through an energy adjustment clause. Differences in costs incurred from costs recovered in rates are deferred and recovered through prospective adjustments to rates. However, rate changes for cost recovery require WPSC approval before going into effect. Historically, customers have been provided carrying costs on overcollected costs, but Cheyenne has not been allowed to collect carrying charges for under recovered costs.

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Pending Regulatory Matters

     NSP-Minnesota

      Electric Transmission Construction — In December 2001, NSP-Minnesota filed for certificates of need authorizing construction of various high voltage transmission facilities to provide generator outlet for up to 825 megawatts of wind generation. The projected cost is approximately $130 million. The proposal is now in hearings before an administrative law judge. The MPUC must issue a decision before the end of 2002.

      North Dakota Rate Case — In October 2000, NSP-Minnesota filed a request with the NDPSC to increase natural gas rates by approximately 3.3 percent, or $1.4 million, annually. In June 2001, the NDPSC approved an increase of approximately $860,000 annually, effective July 13, 2001.

     NSP-Wisconsin

      NSP-Wisconsin Electric Power Supply Rate Request — In May 2001, NSP-Wisconsin filed an application with the PSCW requesting an increase in Wisconsin retail electric rates due to significant increases in power supply costs. This increase was necessary to recover increases in fuel and purchased power costs from wholesale suppliers who charge market-based prices. On June 28, 2001, the PSCW approved an interim fuel cost surcharge of $0.00374 per kilowatt-hour. On Oct. 18, 2001, the PSCW issued a final order in the docket that replaced the interim surcharge with a $0.00382 per kilowatt-hour increase in base electric rates. The combination of the interim fuel surcharge and the base rate increase increased NSP-Wisconsin’s electric revenue by approximately $5.6 million over the last six months of 2001.

      NSP-Wisconsin General Rate Case — On June 1, 2001, NSP-Wisconsin filed its required biennial rate application with the PSCW requesting no change in Wisconsin retail electric and gas base rates. NSP-Wisconsin requested the PSCW approve its application without hearing, pending completion of the Staff’s audit. The PSCW issued a final order on Dec. 7, 2001 approving NSP-Wisconsin’s application without hearing. As a result, base rates in effect as of the end of 2001 will stay in effect through the 2002-2003 biennium.

     PSCo

      2002 General Rate Case — In May 2002, PSCo is expected to file a general retail electric, gas and thermal energy base rate case with the CPUC. This filing is required as part of the Xcel Energy merger Stipulation and Agreement approved by the CPUC. The case will include setting the electric energy recovery mechanism, elimination of the QFCCA, new depreciation rates and recovery of additional plant investment. The resulting change in rates is expected to be effective Jan. 1, 2003.

      2000 Gas Rate Case — In July 2000, PSCo filed a retail rate case with the CPUC requesting an annual increase in its gas revenues of approximately $40 million. The request for a rate increase reflects revenues for additional plant investment, a 12.5 percent return on equity, new depreciation rates and recovery of the dismantlement costs associated with the Leyden Gas Storage facility. In February 2001, the CPUC granted an increase in gas revenues of $14.2 million and authorized an 11.25 percent return on equity. The CPUC did not grant the new depreciation rates proposed by PSCo, but rather granted new depreciation rates proposed by the CPUC staff. The CPUC denied recovery of the dismantlement costs associated with the Leyden Gas Storage facility in this case since such costs had not yet been incurred and recommended PSCo request recovery in a later rate filing.

      Pacific Northwest Power Market — A complaint has been filed at the FERC requesting that the agency set for investigation, pursuant to Section 206 of the Federal Power Act, the justness and reasonableness of the rates of wholesale sellers in the spot markets in the Pacific Northwest, including PSCo. The FERC decided to hold a preliminary evidentiary hearing to facilitate development of a factual record on whether there may have been unjust and unreasonable charges for spot market bilateral sales in the Pacific Northwest for the period beginning Dec. 25, 2000 through June 20, 2001. Such hearing was held before an administrative law judge of the FERC in August 2001. The administrative law judge recommended that the FERC conclude that the rates charged were not unjust and unreasonable, and accordingly, that there should be no refunds. PSCo

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      2002 Wholesale Sales Data Investigation — In February 2002, after the bankruptcy filing by Enron Corp., the FERC initiated a fact-finding investigation into whether any entity, including Enron, manipulated short-term prices in electric or natural gas markets in the West or otherwise exercised undue influence over wholesale prices in the West since January 2000. PSCo and NRG made market-based sales during this period and are included in the FERC investigation.

     SPS

      Fuel Recovery — At least every three years, SPS is required to file an application for the PUCT to retrospectively review the operations of a utility’s electric generation and fuel management activities. In June 2000, SPS filed an application for the PUCT to retrospectively review the operations of the utility’s electric generation and fuel management activities. In this application, SPS filed its reconciliation for electric generation and fuel management activities totaling approximately $419 million, for the period from January 1998 through December 1999. SPS was granted full recovery of these costs by the PUCT in March 2001.

      SPS Texas Retail Fuel Factor and Fuel Surcharge Application — SPS has filed an application with the PUCT to increase its fixed fuel factor and to surcharge past fuel cost under-recoveries of approximately $47 million for the months October 2000 through January 2001. Hearings were held in May 2001. In October 2001, the PUCT issued a final decision granting SPS’ request to account for wholesale firm sales through the base ratemaking process and to continue its practice of revenue crediting margins from off-system sales, or wholesale non-firm sales. Furthermore, SPS’ request to revise its voltage level fuel factors was granted.

      In May 2001, SPS filed an application with the PUCT seeking authority to surcharge approximately $27 million in additional fuel under-recoveries and related interest accrued during February and March 2001. In July 2001, SPS filed a motion to abate the proceeding until September 2001 since the market price of natural gas unexpectedly and significantly decreased. In September 2001, SPS determined that its cumulative fuel under-collections were below the PUCT materiality threshold. As a result of this determination, SPS withdrew its application and moved to dismiss this proceeding. The PUCT dismissed this proceeding in September 2001.

      In November 2001, SPS filed a motion with the PUCT requesting the termination of all currently approved surcharges in December 2001. SPS made this request to prevent any over-collection of historical under-recoveries due to the rapid and unforeseen decreases in the price of natural gas. This request was granted by the PUCT.

      In December 2001, SPS submitted an application seeking authority to immediately revise its fixed fuel factors on an interim basis to prevent any over-collection of historical under-recoveries due to the rapid and unforeseen decreases in the price of natural gas. SPS also requested that it be allowed to file a supplemental application to revise its fixed fuel factors. On Dec. 19, 2001, the Administrative Law Judge issued an order approving the interim fixed fuel factors and SPS’ request to file a supplemental application. SPS’ supplemental application was filed in February 2001 and on March 25, 2002, a unanimous stipulation was filed to reduce SPS’ fixed fuel factor to reflect projected lower fuel costs for running the SPS’ power plants.

      SPS Texas Transition to Competition Cost Recovery Application — In December 2001, SPS filed an application with the PUCT to recover $20.3 million in costs from the Texas retail customers associated with the transition to competition. The filing was amended in March 2002 to reduce the recoverable costs by $7.3 million, which was associated with over-earnings recognized for the 1999 annual report. The PUCT approved SPS using the 1999 annual report over-earnings to offset the claims for reimbursement of transition to competition costs. This has reduced the requested net collection in Texas to $13 million. SPS is requesting recovery to begin July 2002. Final approval is pending.

      SPS New Mexico Fuel Factor — In October 2000, SPS filed an unopposed motion with the NMPRC, seeking to change the date for the implementation of its next fixed annual fuel factor. SPS was approximately $12.8 million under-collected in fuel and purchased power costs through August 2000 and projected that these

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      On Dec. 17, 2001, SPS filed an application with the NMPRC seeking approval of continued use of its fuel and purchased power cost adjustment using a monthly adjustment factor, authorization to implement the proposed monthly factor on an interim basis and approval of the reconciliation of its fuel and purchase power adjustment clause collections for the period October 1999 through September 2001. In January 2002, the NMPRC authorized SPS to implement a monthly adjustment factor on an interim basis beginning with the February 2002 billing cycle. SPS’ continuation and reconciliation portion of the file is pending before the NMPRC.

     Cheyenne

      Cheyenne Purchased Power Costs — In March 2001, Cheyenne requested an increase in retail electric rates to provide for recovery of increasing power costs. As a result of the significant increase in electric energy costs since late February 2001, Cheyenne under recovered its costs under its electric cost adjustment (ECA) mechanism. On May 25, 2001, the WPSC approved a Stipulation Agreement between Cheyenne and intervenors in connection with a proposed increase in rates charged to Cheyenne’s retail customers to recover increased power costs.

      The Stipulation provides for an ECA rate structure with a fixed energy supply rate for Cheyenne’s customers through 2003; the continuation of the ECA with certain modifications, including the amortization through December 2005 of unrecovered costs incurred during 2001 up to the agreed upon fixed supply rates; and an agreement that Cheyenne’s energy supply needs will be provided, in whole or in part, by PSCo in accordance with wholesale tariff rates to be approved by the FERC. The estimated retail rate increases under the Stipulation would provide recovery of an additional $18 million (in comparison to prior rate levels) through the remainder of 2001 and a total of $28 million for each of the years 2002 and 2003. In 2004 and 2005, Cheyenne will return to requesting recovery of its actual costs incurred plus the outstanding balance of any deferral from earlier years. New cost levels consistent with the Stipulation Agreement has been reflected in Cheyenne’s expenses, and in deferred costs based on current ECA recovery levels, with an effective date of June 1, 2001, and retroactive adjustments back to the date of the increase in costs on Feb. 25, 2001.

     Viking

      On Dec. 28, 2001, Viking filed a general rate increase proposal with the FERC. Viking requested an increase in its annual revenues of approximately $12 million (46 percent), effective July 1, 2002, to reflect increased costs related to its 1999 expansion project, increased depreciation expenses, and other factors. On Jan. 30, 2002, FERC issued an order accepting the proposed rate increase for filing, setting the case for hearing, and allowing the increased rates to go into effect subject to refund.

      For more information on regulatory matters, see Management’s Discussion and Analysis under Item 7.

ELECTRIC UTILITY OPERATIONS

Competition and Industry Restructuring

      Retail competition and the unbundling of regulated energy service could have a significant financial impact on Xcel Energy and its subsidiaries, due to an impairment of assets, a loss of retail customers, lower profit margins and increased costs of capital. The total impacts of restructuring may have a significant financial impact on the financial position, results of operations and cash flows of Xcel Energy. Xcel Energy and its

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      Retail Business Competition — The retail electric business faces increasing competition as industrial and large commercial customers have some ability to own or operate facilities to generate their own electric energy. In addition, customers may have the option of substituting other fuels, such as natural gas for heating, cooling and manufacturing purposes, or the option of relocating their facilities to a lower cost environment. While each of Xcel Energy’s utility subsidiaries face these challenges, these subsidiaries believe their rates are competitive with currently available alternatives. Xcel Energy’s utility subsidiaries are taking actions to lower operating costs and are working with their customers to analyze energy efficiency, load management and cogeneration in order to better position Xcel Energy’s utility subsidiaries to more effectively operate in a competitive environment.

      Wholesale Business Competition — The wholesale electric business faces increasing competition in the supply of bulk power, due to federal and state initiatives to provide open access to utility transmission systems. Under current FERC rules, utilities are required to provide wholesale open-access transmission services and to unbundle wholesale merchant and transmission operations. Xcel Energy’s utility subsidiaries are operating under a joint tariff in compliance with these rules. To date, these provisions have not had a material impact on the operations of Xcel Energy’s utility subsidiaries.

      Utility Industry Changes and Restructuring — The structure of the electric and natural gas utility industry continues to change. Merger and acquisition activity over the past few years has been significant as utilities combine to capture economies of scale or establish a strategic niche in preparing for the future. Some regulated utilities are divesting generation assets. All utilities are required to provide nondiscriminatory access to the use of their transmission systems.

      Some states have begun to allow retail customers to choose their electricity supplier, and many other states are considering retail access proposals. However, the experience of the state of California in instituting competition, as well as the bankruptcy filing of Enron, have caused delays in industry restructuring.

      Major issues that must be addressed include mitigating market power, divestiture of generation capacity, transmission constraints, legal separation, refinancing of securities, modification of mortgage indentures, implementation of procedures to govern affiliate transactions, investments in information technology and the pricing of unbundled services, all of which have significant financial implications. Xcel Energy cannot predict the outcome of restructuring proceedings in the electric utility jurisdictions it serves at this time. The resolution of these matters may have a significant impact on the financial position, results of operations and cash flows of Xcel Energy. For more information on the delay of restructuring for SPS in Texas and New Mexico, see Note 12 to the Financial Statements under Item 8.

      FERC Restructuring — During 2001 and early 2002, the FERC issued several industry-wide orders impacting (or potentially impacting) the Xcel Energy operating companies and NRG. In addition, the Xcel Energy utility subsidiaries submitted proposals to the FERC that could impact future operations, costs and revenues.

      Section 206 Investigation Against All Wholesale Electric Sellers — In November 2001, the FERC issued an order under Section 206 of the Federal Power Act initiating a “generic” investigation proceeding against all jurisdictional electric suppliers making sales in interstate commerce at market based rates. NSP-Minnesota, PSCo, SPS and certain NRG affiliates had previously received FERC authorization to make wholesale sales at market based rates, and have been engaged in such sales subject to rates on file at the FERC. The order proposed that all wholesale electric sales at market based rates conducted starting 60 days after publication of the FERC order in the Federal Register would be subject to refund conditioned on factors determined by the FERC.

      Several parties filed requests for rehearing, arguing the November 2001 order was vague and would require the affected utilities to conditionally report future revenues and earnings. In December 2001, FERC

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      Midwest ISO Begins Operations — In compliance with a condition in the January 2000 FERC order approving the Xcel Energy merger, NSP-Minnesota and NSP-Wisconsin entered into agreements to join the Midwest Independent Transmission System Operator, Inc. (Midwest ISO) in August 2000. In December 2000, the FERC approved the Midwest ISO as the first approved regional transmission organization (RTO) in the U.S., pursuant to FERC Order 2000. On Feb. 1, 2002, the Midwest ISO began interim operations, including regional transmission tariff administration services for the NSP-Minnesota and NSP-Wisconsin electric transmission systems. NSP-Minnesota and NSP-Wisconsin have received all required regulatory approvals to transfer functional control of their high voltage (100 kV and above) transmission systems to the Midwest ISO when the Midwest ISO is fully operational, expected later in 2002. The Midwest ISO will then control the operations of these facilities and the facilities of neighboring electric utilities.

      In October 2001, the FERC issued an order in the separate proceeding to establish the initial Midwest ISO regional transmission tariff rates, ruling that all transmission services (with limited exceptions) in the Midwest ISO region must be subject to the Midwest ISO regional tariff and administrative surcharges to prevent discrimination between wholesale transmission service users. The FERC order unilaterally modified the agreement with the Midwest ISO signed in August 2000. The FERC order is expected to increase wholesale transmission costs to NSP-Minnesota and NSP-Wisconsin by up to $8 million per year prospectively.

      TRANSLink Transmission Company LLC — In September 2001, the Xcel Energy operating companies joined a proposal with several other electric utilities in the U.S. Mid-continent region to form TRANSLink Transmission Company LLC (TRANSLink), an independent transmission company (ITC) which would own and/or operate electric high voltage transmission facilities within a FERC-approved regional transmission organization (RTO). Initially, the applicants propose that the high voltage transmission systems of NSP-Minnesota and NSP-Wisconsin be under the functional control of TRANSLink under an operating agreement between the utilities and TRANSLink, which would then be a member of the Midwest ISO RTO. The electric transmission facilities of SPS and PSCo would also be operated by TRANSLink, but would not initially be part of an RTO because no FERC-approved RTO is operational in the southwestern or western United States at this time.

      TRANSLink would pay the Xcel Energy operating companies a fee for use of their transmission systems, determined on a regulated cost of service basis, and would collect its administrative costs through transmission rate surcharges. The TRANSLink participants argue that RTO participation through the TRANSLink ITC would comply with FERC Order 2000 at a lower cost than RTO participation as vertically integrated utilities. The TRANSLink proposal is now pending FERC approval. Several state approvals would also be required to implement the proposal. Subject to receipt of required regulatory approvals, TRANSLink could be operational by year end 2002.

      Supreme Court Decision on Appeals of FERC Order No. 888 — On March 4, 2001, the U.S. Supreme Court upheld the FERC’s rulings on Order No. 888 dealing with federal jurisdiction over retail transmission service. The court rejected appeals by nine states, lead by New York, which argued that the FERC had gone too far in asserting jurisdiction over unbundled retail transmission, and by Enron, which argued that the FERC should have asserted jurisdiction over all transmission, including bundled retail transmission service. The court ruled the FERC has broad authority over all transmission service in interstate commerce and wholesale sales in interstate commerce.

      Standards of Conduct Rulemaking — In October 2001, the FERC issued proposed rules which would substantially increase the “functional separation” requirements under existing FERC rules (Orders No. 497 and 889) between the regulated electric and natural gas transmission functions of the Xcel Energy operating companies and Viking Gas, and the wholesale electric and natural gas marketing functions of PSCo, NSP-Minnesota, NRG and e prime. The proposed rules, if adopted, would require substantially increased functional separation, causing a loss of integration efficiencies and thus higher costs. In December 2001, Xcel Energy and

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      Standard Market Design Changes Planned — The FERC has initiated a rulemaking proceeding into modifications to the “wholesale market design” adopted when the FERC ordered all jurisdictional electric utilities to begin providing open access electric transmission service in 1996 with Order No. 888. The FERC is expected to adopt new standard market design rules through a notice and comment rulemaking proceeding later in 2002. The new market design rules, if adopted, are expected to materially impact future wholesale electric sales and transmission services (and perhaps revenues) for the Xcel Energy utility subsidiaries, NRG and RTOs.

     NSP-Minnesota

      Minnesota Restructuring — In 2001, the Legislature passed an energy security bill that includes provisions that are intended to streamline the siting process of new generation and transmission facilities. It also includes voluntary benchmarks for achieving renewable energy as a portion of the utility supply portfolio. There is unlikely to be any further action on restructuring in 2002. Although the Minnesota Chamber still supports restructuring, leaders have indicated a “let’s go slow” approach to restructuring given the California experience.

      North Dakota Restructuring — In 1997, the North Dakota Legislature established by statute, an Electric Utility Competition Committee (EUC). The EUC was given six years to perform its research and submit its final report on restructuring, competition, and service territory reforms. To date, the committee has focused on the study of the state’s current tax treatment of the electric utility industry, primarily in the transmission and distribution functions. The report presented to the legislative council in early 2001 did not include recommendations to change the current tax structure. However, the legislature, without recommendation from the EUC, overhauled the application of the coal severance and coal conversion taxes primarily to improve the competitive status of North Dakota lignite for generation. During 2002, the committee continued its review and will present legislation to the legislative assembly in January 2003.

      In December 2000, the NDPSC approved Xcel Energy’s “PLUS” performance-based regulation proposal, effective January 2001 for its electric operations in the state. The plan established operating and service performance standards in the areas of system reliability, customer satisfaction, price and worker safety. The company’s performance determines the range of allowed return on equity for its North Dakota electric operations. The plan will generate refunds or surcharges when earnings fall outside of the allowed return on equity range. Impacts of the plan on 2001 business will be reported to the NDPSC in the second quarter of 2002. The PLUS Plan will remain in effect through 2005.

     NSP-Wisconsin

      Wisconsin Restructuring — The state of Wisconsin continued its incremental approach to industry restructuring by passing legislation in 2001 that reduced the wholesale gross receipts tax on the sale of electricity by 50 percent starting in 2003. This legislation eliminates the double taxation on wholesale sales from non-utility generators, and should encourage the development of merchant plants by making sales from independent power producers more competitive. Additional legislation was passed that enables regulated utilities to enter into leased generation contracts with unregulated generation affiliates. The new legislation provides utilities a new financing mechanism and option to meet their customers’ energy needs. However, while industry-restructuring changes continue in Wisconsin, the movement towards retail customer choice has slowed considerably.

      Michigan Restructuring — In June 2000, Michigan’s “Customer Choice and Electricity Reliability Act,” became law. This law requires NSP-Wisconsin to provide its Michigan customers the opportunity to select an alternative electric energy supplier, beginning on Jan. 1, 2002. NSP-Wisconsin has successfully implemented internal procedures, and has obtained MPSC approval for these procedures to meet the Jan. 1, 2002 deadline. Key elements of internal procedures include the development of retail open access tariffs and unbundled billing, environmental and fuel disclosure information, and a code of conduct compliance plan. Outstanding issues to be addressed by the MPSC include finalizing anti-slamming/ anti-cramming consumer protection

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     PSCo

      Colorado Restructuring — During 1998, a bill was passed in Colorado that established an advisory panel to conduct an evaluation of electric industry restructuring and customer choice. During 1999, this panel concluded that Colorado would not significantly benefit from opening its markets to retail competition. There was no legislative action with respect to restructuring in Colorado during the 2000 or 2001 legislative sessions and none is anticipated during 2002.

     SPS

      New Mexico Restructuring — In March 2001, the state of New Mexico enacted legislation that delayed customer choice until 2007 and amended the Electric Utility Restructuring Act of 1999. SPS has requested recovery of its costs incurred to prepare for customer choice in New Mexico of approximately $5.1 million. A decision on this and other matters is pending before the NMPRC. SPS expects to receive regulatory recovery of these costs through a rate rider in the next New Mexico rate case filed.

      Texas Restructuring — In June 2001, the Governor of Texas signed legislation postponing the deregulation and restructuring of SPS until 2007. This legislation amended the 1999 legislation, Senate Bill No. 7 (SB-7), which provided for retail electric competition beginning January 2002. Under the newly-adopted legislation, prior PUCT orders issued in connection with the restructuring of SPS will be considered null and void. SPS’ restructuring and rate unbundling proceedings in Texas have been terminated. In addition, under the new legislation, SPS is entitled to recover all reasonable and necessary expenditures made or incurred before Sept. 1, 2001, to comply with SB-7. SPS has filed an application with the PUCT, requesting a rate rider to recover these costs incurred preparing for customer choice of approximately $20.3 million.

      For more information on restructuring in Texas and New Mexico, see Note 12 to the Financial Statements under Item 8.

      Kansas Restructuring — During the 2001 legislative session, several restructuring-related bills were introduced for consideration by the state legislature, but to date, there is no restructuring mandate in Kansas.

      Oklahoma Restructuring — The Electric Restructuring Act of 1997 was enacted in Oklahoma during 1997. This legislation directed a series of studies to define the orderly transition to consumer choice of electric energy supplier by July 1, 2002. In 2001, Senate Bill 440 was signed into law to formally delay electric restructuring until restructuring issues could be studied further and new enabling legislation could be enacted. Senate Bill 440 established the Electric Restructuring Advisory Committee and directed the committee to complete an interim report on the state’s transmission infrastructure needs by Dec. 31, 2001. The Advisory Committee submitted this report to the Governor and Legislature on Dec. 31, 2001.

     Other

      Wyoming Restructuring — There were no electric industry restructuring legislation proposals introduced in the Legislature during 2000 or 2001. No action with respect to electric restructuring is anticipated in 2002.

Capacity and Demand

      Assuming normal weather during 2002, system peak demand and the net dependable system capacity for Xcel Energy’s electric utility subsidiaries are projected below. The electric production and transmission system

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The peak demand for the NSP System, PSCo and SPS all typically occur in the summer. The 2001 system peak demand for the NSP System occurred on Aug. 6, 2001. The 2001 system peak demand for PSCo occurred on July 30, 2001. The 2001 system peak demand for SPS occurred on July 26, 2001.

Energy Sources

      Xcel Energy’s utility subsidiaries expect to use the following resources to meet their net dependable system capacity requirements: 1) Xcel Energy’s electric generating stations, 2) purchases from other utilities, independent power producers and power marketers, 3) demand-side management options and 4) phased expansion of existing generation at select power plants.

     Purchased Power

      Xcel Energy’s electric utility subsidiaries have contractual arrangements to purchase power from other utilities and nonregulated energy suppliers. Capacity, typically measured in kilowatts or megawatts, is the measure of the rate at which a particular generating source produces electricity. Energy, typically measured in kilowatt-hours or megawatt-hours, is a measure of the amount of electricity produced from a particular generating source over a period of time. Purchase power contracts typically provide for a charge for the capacity from a particular generating source and a charge for the associated energy actually purchased from such generating source.

      The utility subsidiaries of Xcel Energy also make short-term and non-firm purchases to replace generation from company owned units that is unavailable due to maintenance and unplanned outages, to provide each utility’s reserve obligation, to obtain energy at a lower cost than that which could be produced by other resource options, including company owned generation and/or long-term purchase power contracts, and for various other operating requirements.

     NSP System Resource Plan

      In August 2001, the MPUC approved with modifications to NSP-Minnesota’s Resource Plan for 2000 to 2015. The plan described how Xcel Energy intends to meet the energy needs of the NSP System. The plan contained conservation programs to reduce NSP System’s peak demand and conserve overall electricity use, an approximate schedule of power purchase solicitations to meet increasing demand and programs and plans to maintain the reliable operation of existing resources. In summary, the plan, which the MPUC approved:

	•	forecasts 1.6 percent annual growth in the NSP System’s energy and peak demand requirements;
	•	outlines NSP System’s demand side management and conservation programs;
	•	shows new capacity needs of up to 600 megawatts by 2005 and 4,200 megawatts by 2015;
	•	describes how NSP-Minnesota will achieve the mandated renewable energy sources of 425 megawatts of wind and 125 megawatts of biomass by 2002, which have now been met; and
	•	updates the status of spent nuclear fuel at the Prairie Island plant and describes how it can continue to operate through the end of its license given different alternatives for storing spent nuclear fuel.

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      The resource plan proposes to satisfy the NSP System resource needs through the following energy source options:

	•	continued use of existing generation facilities, including the repowering of Black Dog Units 1 and 2;
	•	demand reduction of an additional 1,174 megawatts by 2015 through conservation and load management;
	•	acquisition of competitively priced resources through competitive bidding; and
	•	seek offers to replace Prairie Island through competitive bidding where the offers must have a cancellation option if Xcel Energy resolves Prairie Island’s waste storage issues.

     PSCo Resource Plan

      PSCo estimates it will purchase approximately 28 percent of its total electric system energy input for 2002. Approximately 45 percent of the total system capacity for the summer 2002 system peak demand for PSCo will be provided by purchased power.

      To meet the demand and energy needs of the rapidly growing economy in Colorado, PSCo completed a solicitation process that will add approximately 1,800 megawatts of resources to its system over the 2002-2005 time period.

     Purchased Transmission Services

      Xcel Energy’s electric utility subsidiaries have contractual arrangements with regional transmission service providers to deliver power and energy to the subsidiaries’ native load customers (retail and wholesale load obligations with terms of more than one year). Point-to-point transmission services typically include a charge for the specific amount of transmission capacity being reserved, although some agreements may base charges on the amount of metered energy delivered. Network transmission services include a charge for the metered demand at the delivery point at the time of the provider’s monthly transmission system peak, usually calculated as a 12-month rolling average.

Fuel Supply and Costs

      The following tables present the delivered cost per million British thermal units (MMbtu) of each significant category of fuel consumed for electric generation, the percentage of total fuel requirements represented by each category of fuel and the total weighted average cost of all fuels during such years.

*	Includes refuse-derived fuel and wood

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     NSP-Minnesota and NSP-Wisconsin

      NSP-Minnesota and NSP-Wisconsin normally maintain between 30 and 45 days of coal inventory at each plant site. Estimated coal requirements at NSP-Minnesota’s major coal-fired generating plants are approximately 12 million tons per year. NSP-Minnesota and NSP-Wisconsin have long-term contracts providing for the delivery of up to 100 percent of 2002 coal requirements and up to 85 percent of their 2003 requirements. Coal delivery may be subject to short-term interruptions or reductions due to transportation problems, weather and availability of equipment.

      NSP-Minnesota and NSP-Wisconsin expect that all of the coal they burn in 2002 will have a sulfur content of less than 1 percent. NSP-Minnesota and NSP-Wisconsin have contracts for a maximum of 22 million tons of low-sulfur coal for the next two years. The contracts are with two Montana coal suppliers and three Wyoming suppliers with expiration dates ranging between 2002 and 2005. NSP-Minnesota and NSP-Wisconsin could purchase approximately 7 percent of their coal requirements in the spot market in 2002 and 35 percent of coal requirements in 2003 if spot prices are more favorable than contracted prices.

      NSP-Minnesota and NSP-Wisconsin’s current fuel oil inventory is adequate and they have access to additional spot purchase supplies to meet anticipated 2002 requirements. Additional oil may be obtained through spot purchases.

      To operate NSP-Minnesota’s nuclear generating plants, NSP-Minnesota secures contracts for uranium concentrates, uranium conversion, uranium enrichment and fuel fabrication. The contract strategy involves a portfolio of spot purchases and medium- and long-term contracts for uranium, conversion and enrichment. Current contracts are flexible and cover 85 percent of uranium, conversion and enrichment requirements through the year 2005. These contracts expire at varying times between 2002 and 2006. The overlapping nature of contract commitments will allow NSP-Minnesota to maintain 50 percent to 100 percent coverage beyond 2002. NSP-Minnesota expects sufficient uranium, conversion and enrichment to be available for the total fuel requirements of its nuclear generating plants. Fuel fabrication is 100 percent committed through 2006 and 30 percent committed through 2010.

     PSCo

      PSCo’s primary fuel for its steam electric generating stations is low-sulfur western coal. PSCo’s coal requirements are purchased primarily under long-term contracts with suppliers operating in Colorado and Wyoming. During 2001, PSCo’s coal requirements for existing plants were approximately 10.5 million tons, a substantial portion of which was supplied pursuant to long-term supply contracts. Coal supply inventories at Dec. 31, 2001, were approximately 36 days usage, based on the average burn rate for all of PSCo’s coal-fired plants.

      PSCo operates the Hayden Station, and has partial ownership in the Craig Station, in Colorado. All of Hayden Station’s coal requirements are supplied under a long-term agreement. Approximately 75 percent of PSCo’s Craig Station coal requirements are supplied under two long-term agreements. Any remaining Craig Station requirements for PSCo are supplied through spot coal purchases.

      PSCo has secured more than 75 percent of Cameo Station’s coal requirements for 2002. Any remaining requirements may be purchased from this contract or the spot market. PSCo has contracted for coal supplies to supply approximately 95 percent of the Cherokee and Valmont Stations’ projected requirements in 2002.

      PSCo has long-term coal supply agreements for the Pawnee and Comanche Stations’ projected requirements. Under the long-term agreements, the supplier has dedicated specific coal reserves at the

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      PSCo uses both firm and interruptible natural gas and standby oil in combustion turbines and certain boilers. Natural gas supplies for PSCo’s power plants are procured under short and intermediate-term contracts to provide an adequate supply of fuel.

     SPS

      SPS purchases all of its coal requirements for Harrington and Tolk electric generating stations from TUCO Inc., in the form of crushed, ready-to-burn coal delivered to SPS’ plant bunkers. For the Harrington station the coal supply contract expires in 2016 and the coal-handling agreement expires in 2004. For the Tolk station, the coal supply contract expires in 2017 and the coal-handling agreement expires in 2005. At Dec. 31, 2001, coal inventories at the Harrington and Tolk sites were approximately 41 and 49 days supply, respectively. TUCO has a long-term coal supply agreement to supply approximately 98 percent of Harrington’s projected requirements in 2002. TUCO has long-term contracts for supply of coal in sufficient quantities to meet the primary needs of the Tolk station.

      SPS has a number of short and intermediate contracts with natural gas suppliers operating in gas fields with long life expectancies in or near its service area. SPS also utilizes firm and interruptible transportation to minimize fuel costs during volatile market conditions and to provide reliability of supply. SPS maintains sufficient gas supplies under short and intermediate-term contracts to meet all power plant requirements; however, due to flexible contract terms, approximately 57 percent of SPS’ gas requirements during 2001 were purchased under spot agreements.

Trading Operations

      Xcel Energy and its subsidiaries conduct various trading operations including the purchase and sale of electric capacity and energy. Xcel Energy uses these trading operations to capture arbitrage opportunities created by regional pricing differentials, supply and demand imbalances, and changes in fuel prices. In addition, Xcel Energy participates in short-term energy or capacity sales at the utility subsidiaries. Participation in short-term wholesale energy markets provides market intelligence and information that supports the energy management of each utility subsidiary. Optimizing the utility subsidiaries’ physical assets by engaging in short-term sales and purchase commitments results in lowering the cost of supply for our native customers and the capturing of additional margins from non-traditional customers. Xcel Energy reduces commodity price and credit risks by using physical and financial instruments, to minimize commodity price and credit risk and hedge supplies and purchases.

Nuclear Power Operations and Waste Disposal

      NSP-Minnesota owns two nuclear generating plants: the Monticello plant and the Prairie Island plant. Monticello began operation in 1971 and is licensed to operate until 2010. Prairie Island units 1 and 2 began operation in 1973 and 1974 and are licensed to operate until 2013 and 2014, respectively.

      Nuclear power plant operation produces gaseous, liquid and solid radioactive wastes. The discharge and handling of such wastes are controlled by federal regulation. High-level radioactive waste includes used nuclear fuel. Low-level radioactive waste consists primarily of demineralizer resins, paper, protective clothing, rags, tools and equipment that has become contaminated through use in the plant.

      Federal law places responsibility on each state for disposal of its low-level radioactive waste. Low-level radioactive waste from NSP-Minnesota’s Monticello and Prairie Island nuclear plants is currently disposed of at the Barnwell facility, located in South Carolina (all classes of low-level waste), and the Clive facility, located in Utah (class A low-level waste only). Chem Nuclear is the owner and operator of the Barnwell facility, which has been given authorization by South Carolina to accept low-level radioactive waste from out of state. Envirocare, Inc. operates the Clive facility. NSP-Minnesota and Barnwell currently operate under an

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      The federal government has the responsibility to dispose of, or permanently store, domestic spent nuclear fuel and other high-level radioactive wastes. The Nuclear Waste Policy Act requires the U.S. Department of Energy (DOE) to implement a program for nuclear waste management. This includes the siting, licensing, construction and operation of a repository for domestically produced spent nuclear fuel from civilian nuclear power reactors and other high-level radioactive wastes at a permanent storage or disposal facility by 1998. None of NSP-Minnesota’s spent nuclear fuel has yet been accepted by the DOE for disposal. See Item 3 — Legal Proceedings and Note 16 to the Financial Statements under Item 8 for further discussion of this matter.

      NSP-Minnesota has on-site storage for spent nuclear fuel at its Monticello and Prairie Island nuclear plants. NSP-Minnesota has expanded the used nuclear fuel storage facilities at its Monticello plant by replacement of the racks in the storage pool and by shipping 1,058 used fuel assemblies to a General Electric storage facility. The Monticello plant is expected to have sufficient pool storage capacity to the end of its current operating license in 2010.

      The Prairie Island spent fuel pool has undergone two storage rack replacements. The on-site storage pool for spent nuclear fuel at Prairie Island was nearly filled and adequate space was no longer available. In 1994, a Minnesota law was enacted authorizing NSP-Minnesota to install 17 spent fuel casks for storage of spent nuclear fuel at Prairie Island. NSP-Minnesota has determined 17 casks will allow facility operation until 2007. As of Dec. 31, 2001, 14 storage casks were loaded and stored on the Prairie Island nuclear generating plant site. The Minnesota Legislature established several energy resource requirements and other commitments for NSP-Minnesota to obtain the Prairie Island temporary nuclear fuel storage facility approval. NSP-Minnesota has implemented programs to meet the legislative commitments.

      NSP-Minnesota is part of a consortium of private parties working to establish a private facility for interim storage of spent nuclear fuel. In 1997, Private Fuel Storage LLC (PFS) filed a license application with the Nuclear Regulatory Commission (NRC) for a national temporary storage site for spent nuclear fuel. The PFS will undertake the development, licensing, construction and operation of a storage facility on the Skull Valley Indian Reservation in Utah. The NRC license review process consists of formal evidentiary hearings and opportunity for public input. Storage cask certification efforts are continuing, with one cask vendor on track to meet the project goals. The interim used fuel storage facility could be operational and able to accept the first shipment of spent nuclear fuel by 2004. However, due to uncertainty regarding regulatory and governmental approvals, it is possible that this interim storage may be delayed or not available at all.

      In February 2001, NSP-Minnesota signed a contract with Steam Generating Team Ltd. to perform engineering and construction services for the installation of replacement generators at the Prairie Island nuclear power plant. NSP-Minnesota is evaluating the economics of replacing two 28-year-old steam generators on unit 1 at the plant. NSP-Minnesota is taking steps to preserve the replacement option for as early as 2004. The total cost of replacing the steam generators is estimated to be approximately $132 million.

      The NRC has issued a number of regulations, bulletins and orders that require analyses, modification and additional equipment at commercial nuclear power plants. The NRC is engaged in various ongoing studies and rulemaking activities that may impose additional requirements upon commercial nuclear power plants. Management is unable to predict any new requirements or their impact on NSP-Minnesota’s facilities and operations.

     Nuclear Management Company (NMC)

      During 1999, NSP-Minnesota, Wisconsin Electric Power Co., Wisconsin Public Service Corp. and Alliant Energy established the NMC. Consumers Power joined the NMC during 2000, and transferred operating authority for the Palisades nuclear plant to the NMC in 2001. The five affiliated companies own

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      The NRC has approved requests by the NMC’s affiliated utilities to transfer operating authority for their nuclear plants to the NMC, formally establishing the NMC as an operating company. The NMC manages the operations and maintenance at the plants, and is responsible for physical security. NMC responsibilities also include oversight of on-site dry storage facilities for used nuclear fuel at the Prairie Island nuclear plant. Utility plant owners, including Xcel Energy, continue to own the plants, control all energy produced by the plants and retain responsibility for nuclear liability insurance and decommissioning costs. Existing personnel continue to provide day-to-day plant operations, with the additional benefit of sharing ideas and operating experience from all NMC-operated plants for improved safety, reliability and operational performance.

      For further discussion of nuclear issues, see Note 15 and Note 16 to the Financial Statements under Item 8.

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Electric Operating Statistics (Xcel Energy)

GAS UTILITY OPERATIONS

Competition and Industry Restructuring

      In the early 1990’s, the FERC issued Order No. 636, which mandated the unbundling of interstate natural gas pipeline services – sales, transportation, storage and ancillary services. The implementation of Order No. 636 has resulted in additional competitive pressure on all local distribution companies (LDC) to keep gas supply and transmission prices for their large customers competitive. Customers have greater ability to buy gas directly from suppliers and arrange their own pipeline and LDC transportation service. Changes in regulatory policies and market forces have shifted the industry from traditional bundled gas sales service to an unbundled transportation and market based commodity service.

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      The natural gas delivery or transportation business has remained competitive as industrial and large commercial customers have the ability to bypass the local gas utility through the construction of interconnections directly with, and the purchase of gas directly from, interstate pipelines, thereby avoiding the delivery charges added by the local gas utility.

      As LDCs NSP-Minnesota, NSP-Wisconsin and PSCo provide unbundled transportation service to large customers. Transportation service does not have an adverse effect on earnings because the sales and transportation rates have been designed to make them economically indifferent to whether gas has been sold and transported or merely transported. However, some transportation customers may have greater opportunities or incentives to physically bypass the LDC distribution system.

      PSCo has participated fully in state regulatory and legislative efforts to develop a framework for extending unbundling down to the residential and small commercial level. PSCo supported a gas unbundling bill, passed by the Colorado Legislature in 1999 that provides the CPUC the authority and responsibility to approve voluntary unbundling plans submitted by Colorado gas utilities in the future. PSCo has not filed a plan to further unbundle its gas service to all residential and commercial customers and continues to evaluate its business opportunities for doing so.

Capability and Demand

     NSP-Minnesota and NSP-Wisconsin

      Xcel Energy categorizes its gas supply requirements as firm or interruptible (customers with an alternate energy supply). The maximum daily sendout (firm and interruptible) for the combined system of NSP-Minnesota and NSP-Wisconsin was 722,992 MMBtu for 2001, which occurred on Feb. 1, 2001.

      NSP-Minnesota and NSP-Wisconsin purchase gas from independent suppliers. The gas is delivered under gas transportation agreements with interstate pipelines. These agreements provide for firm deliverable pipeline capacity of approximately 640,000 MMBtu/day. In addition, NSP-Minnesota and NSP-Wisconsin have contracted with providers of underground natural gas storage services. Using storage reduces the need for firm pipeline capacity. These storage agreements provide storage for approximately 15 percent of annual and 23 percent of peak daily, firm requirements of NSP-Minnesota and NSP-Wisconsin.

      NSP-Minnesota and NSP-Wisconsin also own and operate two liquified natural gas (LNG) plants with a storage capacity of 2.5 Billion cubic feet (Bcf) equivalent and four propane-air plants with a storage capacity of 1.4 Bcf equivalent to help meet its peak requirements. These peak-shaving facilities have production capacity equivalent to 246,000 MMBtu of natural gas per day, or approximately 32 percent of peak day firm requirements. LNG and propane-air plants provide a cost-effective alternative to annual fixed pipeline transportation charges to meet the peaks caused by firm space heating demand on extremely cold winter days and can be used to minimize daily imbalance fees on interstate pipelines.

      Gas utilities in Minnesota are required to file for a change in gas supply contract levels to meet peak demand, to redistribute demand costs among classes, or exchange one form of demand for another. In October 2001, the MPUC approved NSP’s 2000-2001 entitlement levels, which allow NSP-Minnesota to recover the demand entitlement costs associated with the increase in transportation and storage levels in its monthly PGA. NSP-Minnesota’s filing for approval of its 2001-2002 entitlement levels is pending MPUC action.

     PSCo and Cheyenne

      PSCo and Cheyenne project peak day gas supply requirements for firm sales and backup transportation (transportation customers contracting for firm supply backup) to be approximately 1,690,000 mmBtu. In addition, firm transportation customers hold 389,010 MMBtu of capacity without supply backup. Total firm delivery obligations for PSCo and Cheyenne are 2,079,560 MMBtu per day. The maximum daily deliveries for both companies for 2001 (firm and interruptible services) were 1,627,750 MMBtu on Feb. 8, 2001.

      PSCo and Cheyenne purchase gas from independent suppliers. The gas supplies are delivered to the respective delivery systems through a combination of transportation agreements with interstate pipelines and

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      PSCo has received approval to close one if its three storage facilities, Leyden Storage Field. The field’s 110,000 MMBtu peak day capacity was replaced with additional third-party storage and transportation capacity.

      PSCo is required by CPUC regulations to file a gas purchase plan by June of each year projecting and describing the quantities of gas supplies, upstream services and the costs of those supplies and services for the period beginning July 1 through June 30 of the following year. PSCo is also required to file a gas purchase report by October of each year reporting actual quantities and costs incurred for gas supplies and upstream services for the 12-month period ending the previous June 30.

Gas Supply and Costs

      Xcel Energy’s gas utilities actively seek gas supply, transportation and storage alternatives to yield a diversified portfolio that provides increased flexibility, decreased interruption and financial risk, and economical rates. This diversification involves numerous domestic and Canadian supply sources, with varied contract lengths.

      The following table summarizes the average cost per MMBtu of gas purchased for resale by Xcel Energy’s regulated retail gas distribution business.

      The cost of natural gas supply, transportation service and storage service is recovered through various cost recovery adjustment mechanisms.

     NSP-Minnesota and NSP-Wisconsin

      NSP-Minnesota and NSP-Wisconsin have firm gas transportation contracts with several pipelines, which expire in various years from 2002 through 2014. Approximately 80 percent of NSP-Minnesota and NSP-Wisconsin’s retail gas customers are served from the Northern Natural pipeline system.

      NSP-Minnesota and NSP-Wisconsin have certain gas supply and transportation agreements that include obligations for the purchase and/or delivery of specified volumes of gas or to make payments in lieu of delivery. At Dec. 31, 2001, NSP-Minnesota and NSP-Wisconsin were committed to approximately $173.8 million in such obligations under these contracts, which expire in various years from 2002 through 2014. NSP-Minnesota and NSP-Wisconsin have negotiated market out clauses in their new supply agreements, which reduce purchase obligations if NSP-Minnesota and NSP-Wisconsin no longer provide merchant gas service.

      In addition to fixed transportation charge obligations, NSP-Minnesota and NSP-Wisconsin have entered into firm gas supply agreements that provide for the payment of monthly or annual reservation charges irrespective of the volume of gas purchased. The total annual obligation is approximately $12 million. These agreements allow NSP-Minnesota and NSP-Wisconsin to purchase natural gas at a high load factor at rates below the prevailing market price, reducing the total cost per MMBtu.

      NSP-Minnesota and NSP-Wisconsin purchase firm gas supply from approximately 30 domestic and Canadian suppliers under contracts with durations of one year to 10 years. NSP-Minnesota and NSP-Wisconsin purchase no more than 20 percent of their total daily supply from any single supplier. This diversity

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     PSCo and Cheyenne

      PSCo and Cheyenne have certain gas supply and transportation agreements that include obligations for the purchase and/or delivery of specified volumes of gas or to make payments in lieu of delivery. At Dec. 31, 2001, PSCo and Cheyenne were committed to approximately $1.0 billion in such obligations under these contracts, which expire in various years from 2002 through 2025.

      PSCo and Cheyenne have attempted to maintain low-cost, reliable natural gas supplies by optimizing a balance of long-term and short-term gas purchases, firm transportation and gas storage contracts. PSCo and Cheyenne also utilize a mixture of fixed-price purchases and index-related purchases to provide a less volatile, yet market sensitive, price to their customers. During 2001, PSCo and Cheyenne purchased natural gas from approximately 47 suppliers.

     Viking

      During 1999, Viking, WICOR and CMS Energy Corp. announced plans to build an interstate natural gas pipeline to serve the growing needs of the northern Illinois and southeastern Wisconsin markets. The three energy companies each own an equal share of the pipeline. The project, called the Guardian Pipeline, will transport natural gas from interconnections with Alliance, Northern Border, Midwestern Gas Transmission and Natural Gas Pipeline of America at the Chicago hub near Joliet, Ill. to the Ixonia, Wis., area. In March 2001, the FERC issued a certificate of public convenience and necessity authorizing the construction and operation of the Guardian pipeline. The estimated cost of the 142-mile pipeline is $230 million. Construction is expected to begin in the spring of 2002, with completion and operation of the pipeline expected by November 2002.

Gas Operating Statistics (Xcel Energy)

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NONREGULATED SUBSIDIARIES

      Through its non-utility subsidiaries, Xcel Energy invests and operates several nonregulated businesses in a variety of industries. The following is an overview of the significant nonregulated businesses.

NRG Energy, Inc.

      NRG is a global energy company primarily engaged in the acquisition, development, ownership and operation of power generation facilities and the sale of energy, capacity and related products.

      At Dec. 31, 2001, Xcel Energy indirectly owned approximately 74 percent of NRG. Xcel Energy owned 100 percent of NRG until the second quarter of 2000, when NRG completed its initial public offering and 82 percent until a secondary offering was completed in March 2001. For more information, see NRG Initial Public Offering discussed under Liquidity and Capital Resources in Management’s Discussion and Analysis under Item 7. See Note 19 to the Financial Statements under Item 8 for discussion of potential changes in NRG ownership.

      NRG has experienced significant growth in the past, especially the year 2001, expanding from 15,007 megawatts of net ownership interest in power generation facilities (including those under construction) as of Dec. 31, 2000 to 24,357 megawatts of net ownership interests as of Dec. 31, 2001. NRG has a well diversified portfolio in terms of location, fuel and dispatch mode. See a listing of NRG power generation facilities in Item 2.

      NRG is organized into four regionally-based divisions: NRG North America, based in Minneapolis, MN; NRG Europe, based in London, England; NRG Asia-Pacific based in Brisbane, Australia and NRG Latin America, based in Miami, Florida. Most of NRG’s North American projects are grouped under regional holding companies corresponding to their domestic core market. NRG operates its United States generation facilities within each region as a separate operating unit within its power generation business. This regional portfolio structure allows NRG to coordinate the operations of its assets to take advantage of regional opportunities, reduce risks related to outages, whether planned or unplanned, and pursue expansion plans on a regional basis.

      NRG’s international power generation projects are managed as three distinct markets, Asia-Pacific, Europe and Other Americas.

      At Dec. 31, 2001, NRG had interests in power generation facilities with a total generating capacity of 38,388 megawatts. Of this amount, NRG has a net ownership of 24,357 megawatts. NRG also has interests in district heating and cooling systems and steam transmission operations. As of Dec. 31, 2001, these thermal

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      Since its inception, NRG has been acquiring and constructing the power generation facilities listed in Item 2. The following discussion describes NRG’s significant recent business developments including pending asset acquisitions, which are subject to various regulatory approvals. Potential capital requirements for these opportunities are discussed in Management’s Discussion and Analysis under Item 7. Additional information is included in Item 1 of NRG’s 2001 Form 10-K, which is incorporated by reference via Exhibit 99.02.

     Pending NRG Asset Acquisitions

      In June 2001, NRG extended purchase agreements with a subsidiary of Conectiv to acquire 794 megawatts of coal and oil-fired electric generating capacity and other assets in New Jersey and Pennsylvania, including an additional 66 megawatts of the Conemaugh Generating Station and an additional 42 megawatts of the Keystone Generating Station. These purchase agreements expired on Feb. 28, 2002, but to date neither party has terminated the agreements.

      In July 2001, NRG signed agreements to acquire a 50 percent interest in the Commonwealth Atlantic 375 megawatt, gas and oil-fired generating station from Edison Mission Energy. The Commonwealth Atlantic facility is located near Chesapeake, Virginia. In addition, NRG will also acquire a 50 percent interest in the James River 110 megawatt, coal-fired generating facility located in Hopewell, Virginia. NRG closed on the acquisition of these facilities in January 2002.

      In November 2001, NRG signed purchase agreements with subsidiaries of FirstEnergy Corporation to acquire or lease a 2,535-megawatt portfolio of generating assets and two ash disposal sites. The four coal-fueled, generating stations are located along Lake Erie, near Cleveland and Toledo, Ohio. A transitional power purchase agreement with FirstEnergy Corporation, covering approximately 95 percent of the output from the facilities, is in place through 2005. The acquisition is expected to take place in the second quarter of 2002.

     NRG 2001 Business Developments

      In January 2001, NRG purchased from LS Power LLC a 5,339-megawatt portfolio of operating projects and projects in construction and advanced development that are located primarily in the north central and south central United States. Approximately 3,295 megawatts are currently in operation or under construction. Each facility employs natural gas-fired, combined-cycle technology. Through Dec. 31, 2005, NRG also has the opportunity to acquire ownership interests in an additional 3,000 megawatts of generation projects developed and offered for sale by LS Power and its partners.

      In March 2001, NRG purchased from Cogentrix the remaining 430 megawatts or 51.37 percent interest, in a 837 megawatt natural gas-fired combined-cycle plant located in Mississippi. NRG acquired a 48.63 percent interest in the plant in January 2001 from LS Power.

      In June 2001, NRG purchased a 640-megawatt, natural gas-fired power plant in Audrain County, Missouri, from Duke Energy North America LLC.

      In June 2001, NRG closed on the construction financing for the Brazos Valley generating facility, a 633-megawatt, gas-fired power plant in Texas that NRG will build, operate and manage. At the time of the closing, NRG also became the 100 percent owner of the project by purchasing STEAG Power LLC’s 50 percent interest in the project. NRG expects the project to begin commercial operation in June 2003.

      In June 2001, NRG purchased 1,081 megawatts of interests in power generation plants from a subsidiary of Conectiv. NRG acquired a 100 percent interest in the 784 megawatt, coal-fired Indian River Generating Station, located in Delaware, and in the 170 megawatt, oil-fired Vienna Generating Station, located in Maryland. In addition, NRG acquired 64 megawatts of the 1,711 megawatt, coal-fired Conemaugh Generating Station and 63 megawatts of the 1,711 megawatt, coal-fired Keystone Generating Station, both located near Pittsburgh, Penn.

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      In June 2001, NRG increased its interest in Compania Boliviana de Energia Electrica S.A. — Bolivian Power Company Ltd. (COBEE) as part of a large portfolio acquisition of assets. NRG now owns 98.9 percent of COBEE. COBEE, with 220 megawatts of predominantly hydroelectric generation, is the second largest electric generator in Bolivia.

      In June 2001, NRG purchased a 389-megawatt, gas-fired power plant and a 116-megawatt, thermal power plant, both of which are located in Hungary, from PowerGen. In April 2001, NRG also purchased PowerGen’s interest in Saale Energie GmbH and MIBRAG BV. By acquiring PowerGen’s interest in Saale Energie, NRG increased its ownership interest in the 960 megawatt, coal-fired Schkopau power station, located in Germany, from 200 megawatts to 400 megawatts. By acquiring PowerGen’s interest in MIBRAG, consisting primarily of two lignite mines and three power stations in Germany, NRG increased its ownership of MIBRAG from 33.3 percent to 50 percent.

      In July 2001, NRG acquired approximately 60 percent of Hsin Yu Energy Development Co. Ltd, a Taiwan company, for NT $1.6 billion (approximately $46.7 million at the date of acquisition). Hsin Yu currently owns a 170-megawatt, cogeneration facility. Hsin Yu is developing a 245-megawatt expansion of the facility and has the rights to develop a new 490-megawatt greenfield project in Taiwan.

      During 2001, NRG acquired a 30 percent ownership in the Lanco Kondapalli Power Private Limited and 100 percent of Eastern Generation (India) Services Limited Private for $27 million. The 355-megawatt gas and oil-fired Kondapalli generating facility is a combined cycle power plant located in India. Eastern Generation Services is the plant operator.

      In August 2001, NRG acquired an approximately 2,255 megawatt portfolio of five projects in operation, construction and advanced development that are located in Illinois and upstate New York from Indeck Energy Services, Inc. Approximately 402 megawatts are currently in operation.

      In August 2001, NRG acquired Duke Energy’s 77 percent interest in the 520 megawatt, natural gas-fired McClain Energy Generating Facility, located in Oklahoma. The Oklahoma Municipal Power Authority owns the remaining 23 percent interest. The McClain facility became operational in June 2001.

      In September 2001, NRG acquired a 50 percent interest in TermoRio SA, a 1,040-megawatt gas-fired co-generation facility currently under construction from Petroleos Brasileiros SA located in Brazil. Commercial operation is expected to begin in March 2004.

      In September 2001, NRG acquired for $66 million, a 50 percent interest in Saguaro Power Company, L.P. The partnership owns a 105-megawatt natural gas fired cogeneration facility in Nevada. The facility is also capable of generating 50 to 160 thousand pounds per hour of export steam.

      In December 2001, NRG acquired a 540-megawatt, natural gas-fired generation facility being developed in Connecticut. The plant has a planned commercial operation date of August 2003.

e prime, inc.

      e prime was incorporated in 1995 under the laws of Colorado. e prime provides energy related products and services, which include natural gas marketing and trading and energy consulting. In 1996, e prime received authorization from the FERC to act as a power marketer. Additionally, e prime owns Young Gas Storage Company, which owns a 47.5 percent general partnership interest in an underground gas storage facility in northeastern Colorado.

      e prime’s gas trading operations acquire assets and commodities and subsequently trade around those assets or commodity positions. e prime captures trading opportunities through price volatility driven by factors such as asset utilization, locational price differentials, weather, available supplies, credit, and customer actions. Trading margins are captured through the utilization of transmission, transportation, and storage assets, capitalization on regional price differences, and other factors.

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Other Subsidiaries

      Although not individually reportable segments, Xcel Energy also has a number of nonregulated subsidiaries in various lines of business. The most significant are discussed below.

     Xcel Energy International

      Xcel Energy International (Xcel International) was formed in 1997 to manage the international operations of Xcel Energy, outside of NRG. At Dec. 31, 2001, Xcel International’s primary investments included Yorkshire Power and Xcel Energy Argentina.

      In April 1997, Xcel International purchased a 50 percent interest in Yorkshire Power, a U.K. regional electricity company, for approximately $362 million. Yorkshire Electricity’s main business is the supply and distribution and supply of electricity and the supply of gas to approximately 2 million customers. During April 2001, Xcel International sold the majority of its investment in Yorkshire Power to Innogy Holdings plc. Xcel Energy retains an interest of approximately 5 percent in Yorkshire Power to comply with pooling-of-interests accounting requirements associated with the merger of NSP and NCE in 2000. Xcel Energy received approximately $366 million for the sale, which approximated the book value of Xcel Energy’s investment.

      Xcel Argentina’s primary investment consists of the ownership and operation of independent power production facilities in Argentina. At Dec. 31, 2001, Xcel Argentina had approximately $102 million invested in these facilities. See further discussion in Note 15 to the Financial Statements under Item 8.

     Utility Engineering (UE)

      UE was incorporated in 1985 under the laws of Texas. UE is engaged in engineering, design, construction management and other miscellaneous services. UE currently has five wholly-owned subsidiaries — Universal Utility Services LLC, Precision Resource Co., Quixx, Proto-Power and Applied Power Associates Inc. Universal Utility Services Co. provides cooling tower maintenance and repair, certain other industrial plant improvement services, and engineered maintenance of high-voltage plant electric equipment. Precision Resource Co. provides contract professional and technical resources for customers in the energy industrial sectors. Quixx was incorporated in 1985 under the laws of Texas. Quixx’s primary business is investing in and developing cogeneration and energy-related projects. Quixx also holds water rights and certain other non-utility assets. Quixx financed the sale of heat pumps until December 1999.

     Planergy International Inc.

      Planergy was acquired in 1998. Planergy provides energy management, consulting, on-site generation, load curtailment, demand-side management, energy conservation and optimization, distributed generation and power quality services, as well as information management solutions to industrial, commercial and utility customers.

      Energy Masters International, Inc. (EMI) began operations in 1993. EMI primarily offers retrofitting and upgrading facilities for greater energy efficiency on a national basis. In 1995, EMI acquired Energy Masters Corporation, a company that specializes in energy efficiency improvement services for commercial, industrial and institutional customers. In 1997, EMI acquired 100 percent of Energy Solutions International Inc., an energy management firm.

      During 2000, Planergy and EMI, both wholly owned subsidiaries of Xcel Energy, were combined to form Planergy International.

     Seren Innovations, Inc.

      Seren was formed in 1996 to pursue communications and data services businesses. Currently, Seren is constructing a combination cable television, telephone and high-speed internet access system in two locations: St. Cloud, Minn. and Contra Costa County in the East Bay area of northern California. Seren had capitalized

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     Eloigne Company

      Eloigne was established in 1993 and its principal business is the acquisition of rental housing projects that qualify for low-income housing tax credits under current federal tax law. As of Dec. 31, 2001, approximately $84 million had been invested in Eloigne projects, including approximately $24 million in wholly owned properties and approximately $60 million in equity interests in jointly owned projects.

      Completed Eloigne projects as of Dec. 31, 2001, are expected to generate tax credits of $65 million over the time period of 2002 through 2011.

Environmental Matters

      Certain of Xcel Energy’s subsidiary facilities are regulated by federal and state environmental agencies. These agencies have jurisdiction over air emissions, water quality, wastewater discharges, solid wastes and hazardous substances. Various company activities require registrations, permits, licenses, inspections and approvals from these agencies. Xcel Energy has received all necessary authorizations for the construction and continued operation of its generation, transmission and distribution systems. Company facilities have been designed and constructed to operate in compliance with applicable environmental standards.

      Xcel Energy and its subsidiaries strive to comply with all environmental regulations applicable to its operations. However, it is not possible at this time to determine when or to what extent additional facilities or modifications of existing or planned facilities will be required as a result of changes to environmental regulations, interpretations or enforcement policies or, generally, what effect future laws or regulations may have upon Xcel Energy’s operations. For more information on Environmental Contingencies, see Note 15 to the Financial Statements under Item 8 and Environmental Matters in Management’s Discussion and Analysis under Item 7.

Capital Spending and Financing

      For a discussion of expected capital expenditures and funding sources, see Management’s Discussion and Analysis under Item 7.

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EMPLOYEES

      The number of Xcel Energy employees at Dec. 31, 2001, is presented in the table below. Of the employees listed below, 7,177, or 43 percent, are covered under collective bargaining agreements.

Executive Officers

      Wayne H. Brunetti, 59, Chairman of the Board, August 2001 to present, President and Chief Executive Officer, August 2000 to present. Previously, Vice Chairman, President, Chief Operating Officer and Director of NCE since 1997 and President and Director of PSCo since 1994.

      Paul J. Bonavia, 50, President — Energy Markets, Xcel Energy, August 2000 to present. Previously, Senior Vice President and General Counsel of NCE since 1997.

      Cathy J. Hart, 52, Vice President and Corporate Secretary, Xcel Energy, August 2000 to present. Previously, Secretary of NCE since 1998 and Manager of Corporate Communications of PSCo from 1993 to 1996.

      Gary R. Johnson, 55, Vice President and General Counsel, Xcel Energy, August 2000 to present. Previously, Vice President and General Counsel of NSP since 1991.

      Richard C. Kelly, 55, President — Enterprises, Xcel Energy, August 2000 to present. Previously, Executive Vice President and Chief Financial Officer for NCE from 1997 to August 2000 and Senior Vice President of PSCo from 1990 to 1997.

      Cynthia L. Lesher, 53, Chief Administrative Officer, Xcel Energy, August 2000 to present. Chief Human Resources Officer, Xcel Energy, July 2001 to present. Previously, President of NSP-Gas since July 1997 and previously Vice President-Human Resources of NSP.

      Edward J. McIntyre, 51, Vice President and Chief Financial Officer, Xcel Energy, August 2000 to present. Previously, Vice President and Chief Financial Officer of NSP since 1993.

      Paul E. Pender, 47, Vice President and Treasurer, Xcel Energy, August 2000 to present. Previously, Vice President of Finance and Treasurer of NSP since May 1997 and previously Assistant Treasurer and Director of Corporate Finance of NSP.

      Tom Petillo, 57, President — Delivery, Xcel Energy, March 2001 to present. Previously, President, — Delivery, Xcel Energy from August 2000 to March 2001, Executive Vice President of New Century Services from 1998 to August 2000 and President and Director of New Century International from 1997 to 1998.

      David E. Ripka, 53, Vice President and Controller, Xcel Energy, August 2000 to present. Previously, Vice President and Controller of NRG from June 1999 to August 2000, Controller of NRG from March 1997 to June 1999 and Assistant Controller for NSP from June 1992 to March 1997.

      Patricia K. Vincent, 43, President — Retail, Xcel Energy, March 2001 to present. Previously, Vice President of Marketing and Sales of Xcel Energy from August 2000 to March 2001, Vice President of Marketing & Sales of NCE from January 1999 to August 2000 and Manager, Director and Vice President of Marketing and Sales at Arizona Public Service Company from 1992 to January 1999.

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      David M. Wilks, 55, President — Energy Supply, Xcel Energy, August 2000 to present. Previously, Executive Vice President and Director of PSCo and New Century Services from 1997 to August 2000 and President, Chief Operating Officer and Director of SPS from 1995 to August 2000.

Item 2.     Properties

      For discussion and information concerning nonregulated properties, see Nonregulated Subsidiaries under Item 1, incorporated by reference.

      Virtually all of the utility plant of NSP-Minnesota, NSP-Wisconsin and PSCo is subject to the lien of their first mortgage bond indentures.

      Electric utility generating stations:

NSP — Minnesota

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NSP — Wisconsin

RDF is refuse derived fuel, made from municipal solid waste

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PSCo