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Fair Value of Financial Assets and Liabilities | 12 Months Ended
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Dec. 31, 2018
Fair Value Disclosures [Abstract] |
Fair Value of Financial Assets and Liabilities | Fair Value of Financial Assets and Liabilities Fair Value Measurements Accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires disclosures about assets and liabilities measured at fair value. A hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance.
• | Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices.
• | Level 2 — Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reporting date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs.
• | Level 3 — Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those valued with models requiring significant management judgment or estimation.
Specific valuation methods include: Cash equivalents — The fair values of cash equivalents are generally based on cost plus accrued interest; money market funds are measured using quoted NAV. Investments in equity securities and other funds — Equity securities are valued using quoted prices in active markets. The fair values for commingled funds are measured using NAVs. The investments in commingled funds may be redeemed for NAV with proper notice. Private equity commingled fund investments require approval of the fund for any unscheduled redemption, and such redemptions may be approved or denied by the fund at its sole discretion. Unscheduled distributions from real estate commingled funds investments may be redeemed with proper notice, however, withdrawals may be delayed or discounted as a result of fund illiquidity. Investments in debt securities — Fair values for debt securities are determined by a third party pricing service using recent trades and observable spreads from benchmark interest rates for similar securities. Interest rate derivatives — Fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts. Commodity derivatives — Methods used to measure the fair value of commodity derivative forwards and options utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations, and are generally assigned a Level 2 classification. When contractual settlements relate to inactive delivery locations or extend to periods beyond those readily observable on active exchanges or quoted by brokers, the significance of the use of less observable forecasts of forward prices and volatilities on a valuation is evaluated and may result in Level 3 classification. Electric commodity derivatives held by NSP-Minnesota and SPS include transmission congestion instruments, generally referred to as FTRs. FTRs purchased from a RTO are financial instruments that entitle or obligate the holder to monthly revenues or charges based on transmission congestion across a given transmission path. The value of an FTR is derived from, and designed to offset, the cost of transmission congestion. In addition to overall transmission load, congestion is also influenced by the operating schedules of power plants and the consumption of electricity pertinent to a given transmission path. Unplanned plant outages, scheduled plant maintenance, changes in the relative costs of fuels used in generation, weather and overall changes in demand for electricity can each impact the operating schedules of the power plants on the transmission grid and the value of an FTR. If forecasted costs of electric transmission congestion increase or decrease for a given FTR path, the value of that particular FTR instrument will likewise increase or decrease. Given the limited observability of important inputs to the value of FTRs between auction processes, including expected plant operating schedules and retail and wholesale demand, fair value measurements for FTRs have been assigned a Level 3. Non-trading monthly FTR settlements are included in fuel and purchased energy cost recovery mechanisms as applicable in each jurisdiction, and therefore changes in the fair value of the yet to be settled portions of most FTRs are deferred as a regulatory asset or liability. Given this regulatory treatment and the limited magnitude of FTRs relative to the electric utility operations of NSP-Minnesota and SPS, the numerous unobservable quantitative inputs pertinent to the value of FTRs are insignificant to the consolidated financial statements of Xcel Energy. Non-Derivative Fair Value Measurements The NRC requires NSP-Minnesota to maintain a portfolio of investments to fund the costs of decommissioning its nuclear generating plants. Assets of the nuclear decommissioning fund are legally restricted for the purpose of decommissioning these facilities. The fund contains cash equivalents, debt securities, equity securities and other investments. NSP-Minnesota uses the MPUC approved asset allocation for the escrow and investment targets by asset class for both the escrow and qualified trust. NSP-Minnesota recognizes the costs of funding the decommissioning over the lives of the nuclear plants, assuming rate recovery of all costs. Realized and unrealized gains on fund investments over the life of the fund are deferred as an offset of NSP-Minnesota’s regulatory asset for nuclear decommissioning costs. Consequently, any realized and unrealized gains and losses on securities in the nuclear decommissioning fund are deferred as a component of the regulatory asset. Unrealized gains for the nuclear decommissioning fund were $450 million and $560 million as of Dec. 31, 2018 and 2017, respectively, and unrealized losses were $45 million and $7 million as of Dec. 31, 2018 and 2017, respectively. Non-derivative instruments with recurring fair value measurements in the nuclear decommissioning fund:
|  | Dec. 31, 2018
|  |  |  | Fair Value
(Millions of Dollars) |  | Cost |  | Level 1 |  | Level 2 |  | Level 3 |  | NAV |  | Total
Nuclear decommissioning fund (a) |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 24 |  |  | $ | 24 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 24 |
Commingled funds |  | 758 |  |  | 79 |  |  | — |  |  | — |  |  | 819 |  |  | 898 |
Debt securities |  | 466 |  |  | — |  |  | 436 |  |  | — |  |  | — |  |  | 436 |
Equity securities |  | 401 |  |  | 697 |  |  | — |  |  | — |  |  | — |  |  | 697 |
Total |  | $ | 1,649 |  |  | $ | 800 |  |  | $ | 436 |  |  | $ | — |  |  | $ | 819 |  |  | $ | 2,055 |
(a) | Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $141 million of equity investments in unconsolidated subsidiaries and $121 million of rabbi trust assets and miscellaneous investments.
|  | Dec. 31, 2017
|  |  |  | Fair Value
(Millions of Dollars) |  | Cost |  | Level 1 |  | Level 2 |  | Level 3 |  | NAV |  | Total
Nuclear decommissioning fund (a) |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 29 |  |  | $ | 29 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 29 |
Commingled funds |  | 701 |  |  | 223 |  |  | — |  |  | — |  |  | 659 |  |  | 882 |
Debt securities |  | 438 |  |  | — |  |  | 441 |  |  | — |  |  | — |  |  | 441 |
Equity securities |  | 423 |  |  | 791 |  |  | — |  |  | — |  |  | — |  |  | 791 |
Total |  | $ | 1,591 |  |  | $ | 1,043 |  |  | $ | 441 |  |  | $ | — |  |  | $ | 659 |  |  | $ | 2,143 |
(a) | Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet, which also includes $140 million of equity investments in unconsolidated subsidiaries and $114 million of rabbi trust assets and miscellaneous investments.
For the years ended Dec. 31, 2018 and 2017, there were no Level 3 nuclear decommissioning fund investments or transfer of amounts between levels. Contractual maturity dates of debt securities in the nuclear decommissioning fund as of Dec. 31, 2018:
|  | Final Contractual Maturity
(Millions of Dollars) |  | Due in 1 Year or Less |  | Due in 1 to 5 Years |  | Due in 5 to 10 Years |  | Due after 10 Years |  | Total
Debt securities |  | $ | 10 |  |  | $ | 107 |  |  | $ | 211 |  |  | $ | 108 |  |  | $ | 436 |
Rabbi Trusts Xcel Energy has established rabbi trusts to provide partial funding for future distributions of its SERP and deferred compensation plan. Cost and fair value of assets held in rabbi trusts:
|  | Dec. 31, 2018
|  |  |  | Fair Value
(Millions of Dollars) |  | Cost |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Rabbi Trusts (a) |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 16 |  |  | $ | 16 |  |  | $ | — |  |  | $ | — |  |  | $ | 16 |
Mutual funds |  | 52 |  |  | 51 |  |  | — |  |  | — |  |  | 51 |
Total |  | $ | 68 |  |  | $ | 67 |  |  | $ | — |  |  | $ | — |  |  | $ | 67 |
|  | Dec. 31, 2017
|  |  |  | Fair Value
(Millions of Dollars) |  | Cost |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Rabbi Trusts (a) |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 12 |  |  | $ | 12 |  |  | $ | — |  |  | $ | — |  |  | $ | 12 |
Mutual funds |  | 47 |  |  | 50 |  |  | — |  |  | — |  |  | 50 |
Total |  | $ | 59 |  |  | $ | 62 |  |  | $ | — |  |  | $ | — |  |  | $ | 62 |
(a) | Reported in nuclear decommissioning fund and other investments on the consolidated balance sheet.
Derivative Fair Value Measurements Xcel Energy enters into derivative instruments, including forward contracts, futures, swaps and options, for trading purposes and to manage risk in connection with changes in interest rates, utility commodity prices and vehicle fuel prices. Interest Rate Derivatives — Xcel Energy enters into various instruments that effectively fix the interest payments on certain floating rate debt obligations or effectively fix the yield or price on a specified benchmark interest rate for an anticipated debt issuance for a specific period. These derivative instruments are generally designated as cash flow hedges for accounting purposes. As of Dec. 31, 2018, accumulated other comprehensive losses related to interest rate derivatives included $3 million of net losses expected to be reclassified into earnings during the next 12 months as the hedged transactions impact earnings. As of Dec 31, 2018, Xcel Energy had unsettled interest rate swaps outstanding with a notional amount of $300 million. These interest rate derivatives were designated as hedges, and as such, changes in fair value are recorded to other comprehensive income. Wholesale and Commodity Trading Risk — Xcel Energy Inc.’s utility subsidiaries conduct various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy, energy-related instruments and natural gas-related instruments, including derivatives. Xcel Energy is allowed to conduct these activities within guidelines and limitations as approved by its risk management committee, comprised of management personnel not directly involved in activities governed by this policy. Commodity Derivatives — Xcel Energy enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric and natural gas operations, as well as for trading purposes. This could include the purchase or sale of energy or energy-related products, natural gas to generate electric energy, natural gas for resale, FTRs, vehicle fuel and weather derivatives. As of Dec. 31, 2018, Xcel Energy had no vehicle fuel contracts designated as cash flow hedges. Xcel Energy may enter into derivative instruments that mitigate commodity price risk on behalf of electric and natural gas customers, but may not be designated as qualifying hedging transactions. Changes in the fair value of non-trading commodity derivative instruments are recorded in other comprehensive income or deferred as a regulatory asset or liability. The classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms. Immaterial amounts to income related to the ineffectiveness of cash flow hedges were recorded for the years ended Dec. 31, 2018 and 2017. As of Dec. 31, 2018, there were no net gains related to commodity derivative cash flow hedges recorded as a component of accumulated other comprehensive losses or related amounts expected to be reclassified into earnings during the next 12 months. Xcel Energy enters into commodity derivative instruments for trading purposes not directly related to commodity price risks associated with serving its electric and natural gas customers. Changes in the fair value of these commodity derivatives are recorded in electric operating revenues, net of amounts credited to customers under margin-sharing mechanisms. Gross notional amounts of commodity forwards, options and FTRs as of Dec. 31:
(Amounts in Millions) (a) (b) |  | 2018 |  | 2017
MWh of electricity |  | 87 |  |  | 68 |
MMBtu of natural gas |  | 92 |  |  | 37 |
(a) | Amounts are not reflective of net positions in the underlying commodities.
(b) | Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise.
Consideration of Credit Risk and Concentrations — Xcel Energy continuously monitors the creditworthiness of counterparties to its interest rate derivatives and commodity derivative contracts prior to settlement, and assesses each counterparty’s ability to perform on the transactions set forth in the contracts. Impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented in the consolidated balance sheets. Xcel Energy’s utility subsidiaries’ most significant concentrations of credit risk with particular entities or industries are contracts with counterparties to their wholesale, trading and non-trading commodity activities. As of Dec. 31, 2018, six of Xcel Energy’s 10 most significant counterparties for these activities, comprising $96 million or 43% of this credit exposure, had investment grade credit ratings from Standard & Poor’s, Moody’s or Fitch Ratings. Three of the 10 most significant counterparties, comprising $20 million or 9% of this credit exposure, were not rated by these external agencies, but based on Xcel Energy’s internal analysis, had credit quality consistent with investment grade. One of these significant counterparties, comprising $12 million or 5% of this credit exposure, had credit quality less than investment grade, based on Xcel Energy’s internal analysis. Eight of these significant counterparties are municipal or cooperative electric entities or other utilities. Qualifying Cash Flow Hedges — Financial impact of qualifying interest rate and vehicle fuel cash flow hedges on Xcel Energy’s accumulated other comprehensive loss, included in the consolidated statements of common stockholders’ equity and in the consolidated statements of comprehensive income:
(Millions of Dollars) |  | 2018 |  | 2017 |  | 2016
Accumulated other comprehensive loss related to cash flow hedges at Jan. 1 |  | $ | (58 | ) |  | $ | (51 | ) |  | $ | (55 | )
After-tax net unrealized losses related to derivatives accounted for as hedges |  | (5 | ) |  | — |  |  | — |
After-tax net realized losses on derivative transactions reclassified into earnings |  | 3 |  |  | 3 |  |  | 4 |
Adoption of ASU. 2018-02 (a) |  | — |  |  | (10 | ) |  | — |
Accumulated other comprehensive loss related to cash flow hedges at Dec. 31 |  | $ | (60 | ) |  | $ | (58 | ) |  | $ | (51 | )
(a) | In 2017, Xcel Energy implemented ASU No. 2018-02 related to TCJA, which resulted in reclassification of certain credit balances within net accumulated other comprehensive loss to retained earnings.
Impact of derivative activity:
|  | Pre-Tax Fair Value Gains (Losses) Recognized During the Period in:
(Millions of Dollars) |  | Accumulated Other Comprehensive Loss |  | Regulatory (Assets) and Liabilities
Year Ended Dec. 31, 2018 |  |  |  |
Derivatives designated as cash flow hedges |  |  |  |
Interest rate |  | $ | (7 | ) |  | $ | — |
Total |  | $ | (7 | ) |  | $ | — |
Other derivative instruments |  |  |  |
Electric commodity |  | $ | — |  |  | $ | 1 |
Natural gas commodity |  | — |  |  | 10 |
Total |  | $ | — |  |  | $ | 11 |
Year Ended Dec. 31, 2017 |  |  |  |
Other derivative instruments |  |  |  |
Electric commodity |  | $ | — |  |  | $ | 10 |
Natural gas commodity |  | — |  |  | (13 | )
Total |  | $ | — |  |  | $ | (3 | )
Year Ended Dec. 31, 2016 |  |  |  |
Other derivative instruments |  |  |  |
Electric commodity |  | $ | — |  |  | $ | 17 |
Natural gas commodity |  | — |  |  | 1 |
Total |  | $ | — |  |  | $ | 18 |
| Pre-Tax (Gains) Losses Reclassified into Income During the Period from: |  | Pre-Tax Gains (Losses) Recognized During the Period in Income |
(Millions of Dollars) | Accumulated Other Comprehensive Loss |  | Regulatory Assets and (Liabilities) |  |
Year Ended Dec. 31, 2018 |  |  |  |  |  |
Derivatives designated as cash flow hedges |  |  |  |  |  |
Interest rate | $ | 4 |  | (a) | $ | — |  |  | $ | — |  |
Total | $ | 4 |  |  | $ | — |  |  | $ | — |  |
Other derivative instruments |  |  |  |  |  |
Commodity trading | $ | — |  |  | $ | — |  |  | $ | 14 |  | (b)
Electric commodity | — |  |  | (1 | ) | (c) | — |  |
Natural gas commodity | — |  |  | (6 | ) | (d) | (4 | ) | (d)
Total | $ | — |  |  | $ | (7 | ) |  | $ | 10 |  |
Year Ended Dec. 31, 2017 |  |  |  |  |  |
Derivatives designated as cash flow hedges |  |  |  |  |  |
Interest rate | $ | 5 |  | (a) | $ | — |  |  | $ | — |  |
Total | $ | 5 |  |  | $ | — |  |  | $ | — |  |
Other derivative instruments |  |  |  |  |  |
Commodity trading | $ | — |  |  | $ | — |  |  | $ | 10 |  | (b)
Electric commodity | — |  |  | (15 | ) | (c) | — |  |
Natural gas commodity | — |  |  | 3 |  | (d) | (6 | ) | (d)
Total | $ | — |  |  | $ | (12 | ) |  | $ | 4 |  |
Year Ended Dec. 31, 2016 |  |  |  |  |  |
Derivatives designated as cash flow hedges |  |  |  |  |  |
Interest rate | $ | 6 |  | (a) | $ | — |  |  | $ | — |  |
Total | $ | 6 |  |  | $ | — |  |  | $ | — |  |
Other derivative instruments |  |  |  |  |  |
Commodity trading | $ | — |  |  | $ | — |  |  | $ | 2 |  | (b)
Electric commodity | — |  |  | (8 | ) | (c) | — |  |
Natural gas commodity | — |  |  | 15 |  | (d) | (8 | ) | (d)
Total | $ | — |  |  | $ | 7 |  |  | $ | (6 | ) |
(a) | Amounts recorded to interest charges.
(b) | Amounts recorded to electric operating revenues. Portions of these gains and losses are subject to sharing with electric customers through margin-sharing mechanisms and deducted from gross revenue, as appropriate.
(c) | Amounts recorded to electric fuel and purchased power. These derivative settlement gains and losses are shared with electric customers through fuel and purchased energy cost-recovery mechanisms, and reclassified out of income as regulatory assets or liabilities, as appropriate.
(d) | Amounts for the year ended Dec. 31, 2018 included $1 million of settlement losses on derivatives entered to mitigate natural gas price risk for electric generation recorded to electric fuel and purchased power, subject to cost-recovery mechanisms and reclassified to a regulatory asset, as appropriate. Such gains and losses for the years ended Dec. 31, 2017 and 2016 were immaterial. Remaining settlement losses for the years ended Dec. 31, 2018, 2017 and 2016 related to natural gas operations and were recorded to cost of natural gas sold and transported. These losses are subject to cost-recovery mechanisms and reclassified out of income to a regulatory asset, as appropriate.
Xcel Energy had no derivative instruments designated as fair value hedges during the years ended Dec. 31, 2018, 2017 and 2016. Credit Related Contingent Features — Contract provisions for derivative instruments that the utility subsidiaries enter, including those accounted for as normal purchase-normal sale contracts and therefore not reflected on the consolidated balance sheets, may require the posting of collateral or settlement of the contracts for various reasons, including if the applicable utility subsidiary’s credit ratings are downgraded below its investment grade credit rating by any of the major credit rating agencies, or for cross default contractual provisions if there was a failure under other financing arrangements related to payment terms or other covenants. As of Dec. 31, 2018 and 2017, there were no derivative instruments in a liability position with such underlying contract provisions. Certain derivative instruments are also subject to contract provisions that contain adequate assurance clauses. These provisions allow counterparties to seek performance assurance, including cash collateral, in the event that a given utility subsidiary’s ability to fulfill its contractual obligations is reasonably expected to be impaired. Xcel Energy had no collateral posted related to adequate assurance clauses in derivative contracts as of Dec. 31, 2018 and 2017. Recurring Fair Value Measurements — Xcel Energy’s derivative assets and liabilities measured at fair value on a recurring basis:
|  | Dec. 31, 2018 |  | Dec. 31, 2017
|  | Fair Value |  | Fair Value Total |  | Netting (a) |  |  |  | Fair Value |  | Fair Value Total |  | Netting (a) |  |
(Millions of Dollars) |  | Level 1 |  | Level 2 |  | Level 3 |  |  |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  |  |  | Total
Current derivative assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity trading |  | $ | 4 |  |  | $ | 92 |  |  | $ | 2 |  |  | $ | 98 |  |  | $ | (44 | ) |  | $ | 54 |  |  | $ | 2 |  |  | $ | 22 |  |  | $ | — |  |  | $ | 24 |  |  | $ | (15 | ) |  | $ | 9 |
Electric commodity |  | — |  |  | — |  |  | 25 |  |  | 25 |  |  | — |  |  | 25 |  |  | — |  |  | — |  |  | 32 |  |  | 32 |  |  | (2 | ) |  | 30 |
Natural gas commodity |  | — |  |  | 4 |  |  | — |  |  | 4 |  |  | — |  |  | 4 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total current derivative assets |  | $ | 4 |  |  | $ | 96 |  |  | $ | 27 |  |  | $ | 127 |  |  | $ | (44 | ) |  | 83 |  |  | $ | 2 |  |  | $ | 22 |  |  | $ | 32 |  |  | $ | 56 |  |  | $ | (17 | ) |  | 39 |
PPAs (b) |  |  |  |  |  |  |  |  |  |  |  | 4 |  |  |  |  |  |  |  |  |  |  |  |  | 5 |
Current derivative instruments |  |  |  |  |  |  |  |  |  |  |  | $ | 87 |  |  |  |  |  |  |  |  |  |  |  |  | $ | 44 |
Noncurrent derivative assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other derivative instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity trading |  | $ | — |  |  | $ | 27 |  |  | $ | 5 |  |  | $ | 32 |  |  | $ | (14 | ) |  | $ | 18 |  |  | $ | — |  |  | $ | 31 |  |  | $ | 5 |  |  | $ | 36 |  |  | $ | (7 | ) |  | $ | 29 |
Total noncurrent derivative assets |  | $ | — |  |  | $ | 27 |  |  | $ | 5 |  |  | $ | 32 |  |  | $ | (14 | ) |  | 18 |  |  | $ | — |  |  | $ | 31 |  |  | $ | 5 |  |  | $ | 36 |  |  | $ | (7 | ) |  | 29 |
PPAs (b) |  |  |  |  |  |  |  |  |  |  |  | 16 |  |  |  |  |  |  |  |  |  |  |  |  | 19 |
Noncurrent derivative instruments |  |  |  |  |  |  |  |  |  |  |  | $ | 34 |  |  |  |  |  |  |  |  |  |  |  |  | $ | 48 |
|  | Dec. 31, 2018 |  | Dec. 31, 2017
|  | Fair Value |  | Fair Value Total |  | Netting (a) |  |  |  | Fair Value |  | Fair Value Total |  | Netting (a) |  |
(Millions of Dollars) |  | Level 1 |  | Level 2 |  | Level 3 |  |  |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  |  |  | Total
Current derivative liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate |  | $ | — |  |  | $ | 7 |  |  | $ | — |  |  | $ | 7 |  |  | $ | — |  |  | $ | 7 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Other derivative instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity trading |  | 4 |  |  | 88 |  |  | 2 |  |  | 94 |  |  | (60 | ) |  | 34 |  |  | 2 |  |  | 18 |  |  | — |  |  | 20 |  |  | (15 | ) |  | 5 |
Electric commodity |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2 |  |  | 2 |  |  | (2 | ) |  | — |
Natural gas commodity |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | 1 |  |  | — |  |  | 1 |
Total current derivative liabilities |  | $ | 4 |  |  | $ | 95 |  |  | $ | 2 |  |  | $ | 101 |  |  | $ | (60 | ) |  | 41 |  |  | $ | 2 |  |  | $ | 19 |  |  | $ | 2 |  |  | $ | 23 |  |  | $ | (17 | ) |  | 6 |
PPAs (b) |  |  |  |  |  |  |  |  |  |  |  | 20 |  |  |  |  |  |  |  |  |  |  |  |  | 23 |
Current derivative instruments |  |  |  |  |  |  |  |  |  |  |  | $ | 61 |  |  |  |  |  |  |  |  |  |  |  |  | $ | 29 |
Noncurrent derivative liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other derivative instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity trading |  | $ | — |  |  | $ | 18 |  |  | $ | 1 |  |  | $ | 19 |  |  | $ | 17 |  |  | $ | 36 |  |  | $ | — |  |  | $ | 24 |  |  | $ | — |  |  | $ | 24 |  |  | $ | (10 | ) |  | $ | 14 |
Total noncurrent derivative liabilities |  | $ | — |  |  | $ | 18 |  |  | $ | 1 |  |  | $ | 19 |  |  | $ | 17 |  |  | 36 |  |  | $ | — |  |  | $ | 24 |  |  | $ | — |  |  | $ | 24 |  |  | $ | (10 | ) |  | 14 |
PPAs (b) |  |  |  |  |  |  |  |  |  |  |  | 93 |  |  |  |  |  |  |  |  |  |  |  |  | 112 |
Noncurrent derivative instruments |  |  |  |  |  |  |  |  |  |  |  | $ | 129 |  |  |  |  |  |  |  |  |  |  |  |  | $ | 126 |
(a) | Xcel Energy nets derivative instruments and related collateral in its consolidated balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements as of Dec. 31, 2018 and 2017. At Dec. 31, 2018 and 2017, derivative assets and liabilities include $32 million and $0 million of obligations to return cash collateral, respectively. At Dec. 31, 2018 and 2017, derivative assets and liabilities include rights to reclaim cash collateral of $15 million and $3 million, respectively. Counterparty netting excludes settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.
(b) | During 2006, Xcel Energy qualified these contracts under the normal purchase exception. Based on this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.
Changes in Level 3 commodity derivatives:
|  | Year Ended Dec. 31
(Millions of Dollars) |  | 2018 |  | 2017 |  | 2016
Balance at Jan. 1 |  | $ | 35 |  |  | $ | 17 |  |  | $ | 18 |
Purchases |  | 59 |  |  | 82 |  |  | 35 |
Settlements |  | (59 | ) |  | (97 | ) |  | (89 | )
Net transactions recorded during the period: |  |  |  |  |  |
(Losses) gains recognized in earnings (a) |  | (1 | ) |  | 5 |  |  | — |
Net (losses) gains recognized as regulatory assets and liabilities |  | (5 | ) |  | 28 |  |  | 53 |
Balance at Dec. 31 |  | $ | 29 |  |  | $ | 35 |  |  | $ | 17 |
(a) | Amounts relate to commodity derivatives held at the end of the period.
Xcel Energy recognizes transfers between levels as of the beginning of each period. There were no transfers of amounts between levels for derivative instruments for 2016 - 2018. Fair Value of Long-Term Debt As of Dec. 31, other financial instruments for which the carrying amount did not equal fair value:
|  | 2018 |  | 2017
(Millions of Dollars) |  | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Long-term debt, including current portion |  | $ | 16,209 |  |  | $ | 16,755 |  |  | $ | 14,977 |  |  | $ | 16,531 |
Fair value of Xcel Energy’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of Dec. 31, 2018 and 2017, and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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