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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended Sept. 30, 2025


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

For the transition period from to

Commission File Number: 001-03789


Southwestern Public Service Company
(Exact Name of Registrant as Specified in its Charter)

New Mexico

75-0575400

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

790 South Buchanan Street,

Amarillo,

Texas

79101

(Address of Principal Executive Offices)

(Zip Code)


(303)			571-7511
(Registrant’s Telephone Number, Including Area Code)


N/A
(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/A

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

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

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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


Class						Outstanding at Oct. 30, 2025
Common Stock, $1.00 par value						100 shares

Southwestern Public Service Company meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) to such Form 10-Q.

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION
Item 1 —	Financial Statements (unaudited)	4
	Statements of Income	4
	Statements of Cash Flows	5
	Balance Sheets	6
	Statements of Common Stockholder’s Equity	7
	Notes to Financial Statements	8
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 4 —	Controls and Procedures	17

PART II	OTHER INFORMATION
Item 1 —	Legal Proceedings	17
Item 1A —	Risk Factors	17
Item 5 —	Other Information	17
Item 6 —	Exhibits	18

SIGNATURES		19

This Form 10-Q is filed by SPS, a New Mexico corporation. SPS is a wholly owned subsidiary of Xcel Energy Inc. Additional information on Xcel Energy is available in various filings with the SEC. This report should be read in its entirety.

Table of Contents

Definitions of Abbreviations


Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former)
NSP-Minnesota			Northern States Power Company, a Minnesota corporation
NSP-Wisconsin			Northern States Power Company, a Wisconsin corporation
PSCo			Public Service Company of Colorado
SPS			Southwestern Public Service Company
Utility subsidiaries			NSP-Minnesota, NSP-Wisconsin, PSCo and SPS
Xcel Energy			Xcel Energy Inc. and its subsidiaries

Federal and State Regulatory Agencies

EPA			United States Environmental Protection Agency
FASB			Financial Accounting Standards Board
FERC			Federal Energy Regulatory Commission
IRS			Internal Revenue Service
NMPRC			New Mexico Public Regulation Commission
PUCT			Public Utility Commission of Texas
SEC			Securities and Exchange Commission

Other




ARO			Asset retirement obligation
ASU			Accounting standards update
CEO			Chief executive officer
CERCLA			Comprehensive Environmental Response, Compensation, and Liability Act
C&I			Commercial and Industrial
CFO			Chief financial officer


CCR			Coal combustion residuals
DSM			Demand side management
ETR			Effective tax rate
FTR			Financial transmission right

GAAP			United States generally accepted accounting principles
GHG			Greenhouse gas
IPP			Independent power producing entity
IRP			Integrated Resource Plan



MGP			Manufactured Gas Plant

NOx			Nitrogen Oxides
O&M			Operating and maintenance
OATT			Open access transmission tariff

OBBB			One Big Beautiful Bill Act
PFAS			Per- and Polyfluoroalkyl Substances
PPA			Power purchase agreement
PTC			Production tax credit
RFP			Request for proposal
ROE			Return on equity
RTO			Regional Transmission Organization

SPP			Southwest Power Pool, Inc.
VIE			Variable interest entity

Measurements
MW			Megawatts


Forward-Looking Statements

Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases or refunds to customers, expectations and intentions regarding regulatory proceedings, expected pension contributions, and expected impact on our results of operations, financial condition and cash flows of legal proceeding outcomes, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in SPS’ Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2024 and subsequent filings with the SEC, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee workforce and third-party contractor factors; violations of our Codes of Conduct; our ability to recover costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including recessionary conditions, inflation rates, monetary fluctuations, supply chain constraints and their impact on capital expenditures and/or the ability of SPS to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; tax laws; uncertainty regarding epidemics; effects of geopolitical events, including war and acts of terrorism; cybersecurity threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather events; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; costs of potential regulatory penalties and wildfire damages in excess of liability insurance coverage; regulatory changes and/or limitations related to the use of natural gas as an energy source; challenging labor market conditions and our ability to attract and retain a qualified workforce; and our ability to execute on our strategies or achieve expectations related to environmental, social and governance matters including as a result of evolving legal, regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

SOUTHWESTERN PUBLIC SERVICE COMPANY

STATEMENTS OF INCOME (UNAUDITED)

(amounts in millions)


	Three Months Ended Sept. 30				Nine Months Ended Sept. 30
	2025		2024		2025		2024
Operating revenues	$	655	$	594	$	1,684	$	1,480

Operating expenses
Electric fuel and purchased power	208		163		582		426
Operating and maintenance expenses	86		82		257		237
Demand side management expenses	6		4		17		15
Depreciation and amortization	118		109		345		344
Taxes (other than income taxes)	25		26		75		76
Total operating expenses	443		384		1,276		1,098

Operating income	212		210		408		382

Other income, net	4		5		8		10
Allowance for funds used during construction — equity	9		6		20		12

Interest charges and financing costs
Interest charges and other financing costs	50		42		144		120
Allowance for funds used during construction — debt	(5)		(2)		(11)		(6)
Total interest charges and financing costs	45		40		133		114

Income before income taxes	180		181		303		290
Income tax expense (benefit)	20		5		(17)		(32)
Net income	$	160	$	176	$	320	$	322

See Notes to Financial Statements

Table of Contents

SOUTHWESTERN PUBLIC SERVICE COMPANY

STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)


	Nine Months Ended Sept. 30
	2025		2024
Operating activities
Net income	$	320	$	322
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	348		346
Deferred income taxes	24		119
Allowance for equity funds used during construction	(20)		(12)
Provision for bad debts	6		6
Changes in operating assets and liabilities:
Accounts receivable	(66)		49
Accrued unbilled revenues	(45)		(16)
Inventories	(51)		(44)
Prepayments and other	98		(9)
Accounts payable	40		13
Net regulatory assets and liabilities	(16)		20
Other current liabilities	(125)		8
Pension and other employee benefit obligations	(2)		(1)
Other, net	4		(17)
Net cash provided by operating activities	515		784

Investing activities
Utility capital/construction expenditures	(1,106)		(665)
Investments in utility money pool arrangement	(322)		—
Repayments from utility money pool arrangement	322		—
Net cash used in investing activities	(1,106)		(665)

Financing activities
Repayments of short-term borrowings, net	(145)		(75)
Proceeds from issuance of long-term debt, net	493		588
Borrowings under utility money pool arrangement	518		443
Repayments under utility money pool arrangement	(525)		(470)
Capital contributions from parent	563		272
Repayment of long-term debt	—		(350)
Dividends paid to parent	(271)		(320)

Net cash provided by financing activities	633		88

Net change in cash, cash equivalents and restricted cash	42		207
Cash, cash equivalents and restricted cash at beginning of period	14		3
Cash, cash equivalents and restricted cash at end of period	$	56	$	210

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(100)	$	(91)
Cash received for income taxes, net; includes proceeds from tax credit transfers	63		144

Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	132	$	100
Inventory transfers to property, plant and equipment	73		46

Allowance for equity funds used during construction	20		12

See Notes to Financial Statements

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SOUTHWESTERN PUBLIC SERVICE COMPANY

BALANCE SHEETS (UNAUDITED)

(amounts in millions, except share and per share data)


	Sept. 30, 2025		Dec. 31, 2024
Assets
Current assets
Cash and cash equivalents	$	56	$	14
Accounts receivable, net	212		139
Accounts receivable from affiliates	11		20

Accrued unbilled revenues	174		129
Inventories	78		71
Regulatory assets	16		43
Derivative instruments	140		67

Prepayments and other	396		295
Total current assets	1,083		778

Property, plant and equipment, net	10,121		9,251

Other assets
Regulatory assets	370		359

Operating lease right-of-use assets	345		371

Other	49		42
Total other assets	764		772
Total assets	$	11,968	$	10,801

Liabilities and Equity
Current liabilities

Short-term debt	$	—	$	145
Borrowings under utility money pool arrangement	—		7
Accounts payable	283		233
Accounts payable to affiliates	61		27

Regulatory liabilities	182		142
Taxes accrued	83		51
Accrued interest	63		36
Dividends payable to parent	48		51

Operating lease liabilities	35		34
Other	231		222
Total current liabilities	986		948

Deferred credits and other liabilities
Deferred income taxes	798		765
Regulatory liabilities	785		768
Asset retirement obligations	172		167

Pension and employee benefit obligations	13		17
Operating lease liabilities	310		337
Other	13		10
Total deferred credits and other liabilities	2,091		2,064

Commitments and contingencies
Capitalization
Long-term debt	4,046		3,551
Common stock — 200 shares authorized of $1.00 par value; 100 shares outstanding at Sept. 30, 2025 and Dec. 31, 2024, respectively	—		—
Additional paid in capital	4,202		3,647
Retained earnings	644		592
Accumulated other comprehensive loss	(1)		(1)
Total common stockholder's equity	4,845		4,238
Total liabilities and equity	$	11,968	$	10,801

See Notes to Financial Statements

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SOUTHWESTERN PUBLIC SERVICE COMPANY

STATEMENTS OF COMMON STOCKHOLDER’S EQUITY (UNAUDITED)

(amounts in millions, except share data)


	Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholder's Equity
	Shares	Par Value		Additional Paid In Capital
Three Months Ended Sept. 30, 2025 and 2024
Balance at June 30, 2024	100	$	—	$	3,633	$	628	$	(1)	$	4,260
Net income						176				176

Common dividends declared to parent						(183)				(183)
Contributions of capital by parent				4						4
Balance at Sept. 30, 2024	100	$	—	$	3,637	$	621	$	(1)	$	4,257

Balance at June 30, 2025	100	$	—	$	4,200	$	647	$	(1)	$	4,846
Net income						160				160

Common dividends declared to parent						(163)				(163)
Contributions of capital by parent				2						2
Balance at Sept. 30, 2025	100	$	—	$	4,202	$	644	$	(1)	$	4,845

	Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholder's Equity
	Shares	Par Value		Additional Paid In Capital
Nine Months Ended Sept. 30, 2025 and 2024
Balance at Dec. 31, 2023	100	$	—	$	3,370	$	617	$	(1)	$	3,986
Net income						322				322

Dividends declared to parent						(318)				(318)
Contributions of capital by parent				267						267
Balance at Sept. 30, 2024	100	$	—	$	3,637	$	621	$	(1)	$	4,257

Balance at Dec. 31, 2024	100	$	—	$	3,647	$	592	$	(1)	$	4,238
Net income						320				320

Dividends declared to parent						(268)				(268)
Contributions of capital by parent				555						555

Balance at Sept. 30, 2025	100	$	—	$	4,202	$	644	$	(1)	$	4,845

See Notes to Financial Statements

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SOUTHWESTERN PUBLIC SERVICE COMPANY

Notes to Financial Statements (UNAUDITED)

In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly, in accordance with GAAP, the financial position of SPS as of Sept. 30, 2025 and Dec. 31, 2024; the results of SPS’ operations, including the components of net income and changes in stockholder’s equity for the three and nine months ended Sept. 30, 2025 and 2024; and SPS’ cash flows for the nine months ended Sept. 30, 2025 and 2024.

All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after Sept. 30, 2025 up to the date of issuance of these financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2024 balance sheet information has been derived from the audited 2024 financial statements included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2024.

Notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the financial statements and notes thereto included in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2024, filed with the SEC on Feb. 27, 2025.

Due to the seasonality of SPS’ electric sales, interim results are not necessarily an appropriate base from which to project annual results.


1. Summary of Significant Accounting Policies

The significant accounting policies set forth in Note 1 to the financial statements in the SPS Annual Report on Form 10-K for the year ended Dec. 31, 2024 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.


2. Accounting Pronouncements

Recently Issued

Income Taxes — In December 2023, the FASB issued ASU 2023-09 – Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, with new disclosure requirements including presentation of prescribed line items in the ETR reconciliation and disclosures regarding state and local tax payments. The ASU is effective for annual periods beginning after Dec. 15, 2024, and SPS does not expect implementation of the new disclosure guidance to have a material impact on its financial statements.

Disaggregation of Income Statement Expenses — In November 2024, the FASB issued ASU 2024-03 – Disaggregation of Income Statement Expenses, which requires disclosure of additional detail for certain categories of income statement expenses. The ASU is effective for annual periods beginning after Dec. 15, 2026 and interim reporting periods beginning after Dec. 15, 2027. SPS is currently evaluating the impact of the new disclosure guidance.


3. Selected Balance Sheet Data


(Millions of Dollars)	Sept. 30, 2025		Dec. 31, 2024
Accounts receivable, net
Accounts receivable	$	223	$	151
Less allowance for bad debts	(11)		(12)
Accounts receivable, net	$	212	$	139


(Millions of Dollars)	Sept. 30, 2025		Dec. 31, 2024
Inventories
Materials and supplies	$	68	$	60
Fuel	10		11
Total inventories	$	78	$	71


(Millions of Dollars)	Sept. 30, 2025		Dec. 31, 2024
Property, plant and equipment, net
Electric plant	$	11,973	$	11,443
Plant to be retired (a)	164		182
CWIP	1,014		518
Total property, plant and equipment	13,151		12,143
Less accumulated depreciation	(3,030)		(2,892)
Property, plant and equipment, net	$	10,121	$	9,251

(a)Amounts include Tolk Unit 1 and 2. Amounts are reported net of accumulated depreciation.


4. Borrowings and Other Financing Instruments

Short-Term Borrowings

SPS meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility and the money pool.

Money Pool — Xcel Energy and its utility subsidiaries have established a money pool arrangement that allows for short-term investments in and borrowings between the utility subsidiaries. Xcel Energy may make investments in the utility subsidiaries at market-based interest rates; however, the money pool arrangement does not allow the utility subsidiaries to make investments in Xcel Energy.

Money pool borrowings:


(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2025		Year Ended Dec. 31, 2024
Borrowing limit	$	100	$	100
Amount outstanding at period end	—		7
Average amount outstanding	—		24
Maximum amount outstanding	—		100
Weighted average interest rate, computed on a daily basis	N/A		5.29		%
Weighted average interest rate at period end	N/A		4.58

Commercial Paper — Commercial paper outstanding:


(Amounts in Millions, Except Interest Rates)	Three Months Ended Sept. 30, 2025		Year Ended Dec. 31, 2024
Borrowing limit	$	600	$	500
Amount outstanding at period end	—		145
Average amount outstanding	—		35
Maximum amount outstanding	—		160
Weighted average interest rate, computed on a daily basis	N/A		5.47		%
Weighted average interest rate at period end	N/A		4.66

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Letters of Credit — SPS uses letters of credit, generally with terms of one year, to provide financial guarantees for certain obligations. At both Sept. 30, 2025 and Dec. 31, 2024, there were no letters of credit outstanding under the credit facility. Amounts approximate their fair value and are subject to fees.

Revolving Credit Facility — In order to issue its commercial paper, SPS must have a revolving credit facility equal to or greater than the commercial paper borrowing limit and cannot issue commercial paper exceeding available capacity under this credit facility. The credit facility provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

In May 2025, SPS entered into an amended five-year credit agreement with a syndicate of banks, with substantially the same terms and conditions as the prior credit agreements. The borrowing limit for SPS was increased from $500 million to $600 million, and the maturity was extended from September 2027 to December 2029.

SPS has the right to request an extension of the revolving credit facility termination date for two additional one-year periods. All extension requests are subject to majority bank group approval.

As of Sept. 30, 2025, SPS had the following committed revolving credit facility available (in millions of dollars):


Credit Facility (a)		Drawn (b)		Available
$	600	$	—	$	600

(a)Expires in December 2029.

(b)Includes outstanding letters of credit.

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. SPS had no direct advances on the credit facility outstanding as of Sept. 30, 2025 and Dec. 31, 2024.

Long-Term Borrowings

During the nine months ended Sept. 30, 2025, SPS issued $500 million of 5.30% First Mortgage Bonds due May 15, 2035.


5. Revenues

Revenue is classified by the type of goods/services rendered and market/customer type. SPS’ operating revenues consisted of the following:


	Three Months Ended Sept. 30
(Millions of Dollars)	2025		2024
Major revenue types
Revenue from contracts with customers:
Residential	$	153	$	152
C&I	359		308
Other	16		14
Total retail	528		474
Wholesale	33		29
Transmission	84		80
Other	—		1
Total revenue from contracts with customers	645		584
Alternative revenue and other	10		10
Total revenues	$	655	$	594


	Nine Months Ended Sept. 30
(Millions of Dollars)	2025		2024
Major revenue types
Revenue from contracts with customers:
Residential	$	362	$	321
C&I (a)	936		744
Other	39		36
Total retail	1,337		1,101
Wholesale	81		95
Transmission	238		221
Other	2		2
Total revenue from contracts with customers	1,658		1,419
Alternative revenue and other	26		61
Total revenues	$	1,684	$	1,480

(a)For the nine months ended Sept. 30, 2025 and 2024, revenues from one C&I customer represented approximately 9.3% and 10.1% of total revenues, respectively.


6. Income Taxes

Reconciliation between the statutory rate and ETR:


	Nine Months Ended Sept. 30
	2025		2024
Federal statutory rate	21.0	%	21.0	%
State income tax on pretax income, net of federal tax effect	2.6		2.0
(Decreases) increases:
PTCs (a)	(27.5)		(28.8)
Plant regulatory differences (b)	(4.9)		(4.4)
Amortization of excess nonplant deferred taxes	0.2		0.2
Adjustment to tax reform implementation	3.2		—
Other, net	(0.2)		(1.0)
Effective income tax rate	(5.6)	%	(11.0)	%

(a)Wind PTCs net of estimated transfer discounts. Gross PTCs are generally credited to customers (reduction to revenue) and do not materially impact earnings.

(b)Plant regulatory differences primarily relate to the credit of excess deferred taxes to customers. Income tax benefits associated with the credit are offset by corresponding revenue reductions.


7. Fair Value of Financial Assets and Liabilities

Fair Value Measurements

Accounting guidance for fair value measurements and disclosures provides a hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value.

•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 actively traded instruments with observable actual trading prices.

•Level 2 — Pricing inputs are other than actual trading 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 include those valued with models requiring significant judgment or estimation.

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Specific valuation methods include:

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 contracts relate to inactive delivery locations or extend to periods beyond those readily observable on active exchanges, the significance of the use of less observable inputs on a valuation is evaluated, and may result in Level 3 classification.

Electric commodity derivatives held by SPS include transmission congestion instruments, generally referred to as FTRs. FTRs purchased from an 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 values of these instruments are derived from, and designed to offset, the costs 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 these instruments.

FTRs are recognized at fair value and adjusted each period prior to settlement. Given the limited observability of certain variables underlying the reported auction values of FTRs, these fair value measurements have been assigned a Level 3 classification.

Net congestion costs, including the impact of FTR settlements, are shared through fuel and purchased energy cost recovery mechanisms. As such, the fair value of the unsettled instruments (i.e., derivative asset or liability) is offset/deferred as a regulatory asset or liability.

Derivative Activities and Fair Value Measurements

SPS enters into derivative instruments, including forward contracts, for trading purposes and to manage risk in connection with changes in interest rates and utility commodity prices.

Interest Rate Derivatives — SPS enters into contracts that effectively fix the interest rate on a specified principal amount of a hypothetical future debt issuance. These financial swaps net settle based on changes in a specified benchmark interest rate, acting as a hedge of changes in market interest rates that will impact specified anticipated debt issuances. These derivative instruments are designated as cash flow hedges for accounting purposes, with changes in fair value prior to occurrence of the hedged transactions recorded as other comprehensive income.

As of Sept. 30, 2025, accumulated other comprehensive loss related to interest rate derivatives included immaterial net losses expected to be reclassified into earnings during the next 12 months as the hedged transactions impact earnings. As of Sept. 30, 2025, SPS had no unsettled interest swaps outstanding.

Wholesale and Commodity Trading — SPS conducts various wholesale and commodity trading activities, including the purchase and sale of electric capacity, energy and energy-related instruments, including derivatives. SPS 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 the activities governed by this policy.

Results of derivative instrument transactions entered into for trading purposes are presented in the statements of income as electric revenues, net of any sharing with customers. These activities are not intended to mitigate commodity price risk associated with regulated electric operations. Sharing of these margins is determined through state regulatory proceedings as well as the operation of the FERC-approved joint operating agreement.

Commodity Derivatives — SPS enters into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric utility operations. This could include the purchase or sale of energy or energy-related products and FTRs.

The most significant derivative positions outstanding at Sept. 30, 2025 for this purpose relate to FTR instruments administered by SPP. These instruments are intended to offset the impacts of transmission system congestion.

When SPS enters into derivative instruments that mitigate commodity price risk on behalf of electric customers, the instruments are not typically designated as qualifying hedging transactions. The classification of unrealized losses or gains on these instruments as a regulatory asset or liability, if applicable, is based on approved regulatory recovery mechanisms.

As of Sept. 30, 2025, SPS had no commodity contracts designated as cash flow hedges.

Gross notional amounts of FTRs:

Amounts in Millions (a)

Sept. 30, 2025

Dec. 31, 2024

MWh of electricity

(a)Not reflective of net positions in the underlying commodities.

Consideration of Credit Risk and Concentrations — SPS 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 on the balance sheets.

SPS often has significant concentrations of credit risk with particular entities or industries in its wholesale, trading and non-trading commodity activities.

As of Sept. 30, 2025, one of the four most significant counterparties for these activities, comprising $4 million, or 14%, of this credit exposure, had investment grade credit ratings from S&P Global Ratings, Moody’s Investor Services or Fitch Ratings.

Three of the four most significant counterparties, comprising $21 million, or 77%, of this credit exposure, were not rated by external ratings agencies, but based on SPS’ internal analysis, had credit quality consistent with investment grade.

None of these counterparties had credit quality less than investment grade, based on internal analysis.

Four of these counterparties are municipal or cooperative electric entities, RTOs or other utilities.

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Recurring Derivative Fair Value Measurements

Impact of derivative activity:


Pre-Tax Fair Value Gains Recognized During the Period in:
(Millions of Dollars)	Regulatory Assets and Liabilities
Three Months Ended Sept. 30, 2025
Other derivative instruments:
Electric commodity	$	2
Total	$	2

Nine Months Ended Sept. 30, 2025
Other derivative instruments:
Electric commodity	$	21
Total	$	21

Three Months Ended Sept. 30, 2024
Other derivative instruments:
Electric commodity	$	15
Total	$	15

Nine Months Ended Sept. 30, 2024
Other derivative instruments:
Electric commodity	$	55
Total	$	55


Pre-Tax Losses (Gains) Reclassified into Income During the Period from:
(Millions of Dollars)	Regulatory Assets and Liabilities
Three Months Ended Sept. 30, 2025



Other derivative instruments:

Electric commodity	$	2	(a)
Total	$	2

Nine Months Ended Sept. 30, 2025



Other derivative instruments:

Electric commodity	$	(27)	(a)
Total	$	(27)

Three Months Ended Sept. 30, 2024



Other derivative instruments:

Electric commodity	$	(18)	(a)
Total	$	(18)

Nine Months Ended Sept. 30, 2024



Other derivative instruments:

Electric commodity	$	(26)	(a)
Total	$	(26)

(a)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. FTR settlements are shared with customers and do not have a material impact on net income. Presented amounts reflect changes in fair value between auction and settlement dates, but exclude the original auction fair value.

SPS had no derivative instruments designated as fair value hedges during the nine months ended Sept. 30, 2025 and 2024.

Derivative assets and liabilities measured at fair value on a recurring basis were as follows:


	Sept. 30, 2025												Dec. 31, 2024
	Fair Value						Fair Value Total		Netting (a)		Total		Fair Value						Fair Value Total		Netting (a)		Total
(Millions of Dollars)	Level 1		Level 2		Level 3								Level 1		Level 2		Level 3
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	140	$	140	$	—	$	140	$	—	$	—	$	67	$	67	$	—	$	67
Total current derivative assets	$	—	$	—	$	140	$	140	$	—	$	140	$	—	$	—	$	67	$	67	$	—	$	67

(a)SPS nets derivative instruments and related collateral on its balance sheet when supported by a legally enforceable master netting agreement. At Sept. 30, 2025 and Dec. 31, 2024, derivative assets and liabilities include no obligations to return cash collateral or rights to reclaim cash collateral. Counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

Changes in Level 3 commodity derivatives:


	Three Months Ended Sept. 30
(Millions of Dollars)	2025		2024
Balance at July 1	$	184	$	146
Purchases (a)	—		2
Settlements (a)	(39)		(64)
Net transactions recorded during the period:
Net (losses) gains recognized as regulatory assets and liabilities (a)	(5)		28
Balance at Sept. 30	$	140	$	112


	Nine Months Ended Sept. 30
(Millions of Dollars)	2025		2024
Balance at Jan. 1	$	67	$	39
Purchases (a)	199		107
Settlements (a)	(161)		(183)
Net transactions recorded during the period:
Net gains recognized as regulatory assets and liabilities (a)	35		149
Balance at Sept. 30	$	140	$	112

(a)Relates primarily to FTR instruments administered by SPP.

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Fair Value of Long-Term Debt

As of Sept. 30, 2025, other financial instruments for which the carrying amount did not equal fair value:


	Sept. 30, 2025				Dec. 31, 2024
(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	4,046	$	3,561	$	3,551	$	2,968

Fair value of SPS’ 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 Sept. 30, 2025 and Dec. 31, 2024, and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.


8. Benefit Plans and Other Postretirement Benefits

Components of Net Periodic Benefit Cost


	Three Months Ended Sept. 30
	2025		2024		2025		2024
(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits
Service cost	$	1	$	1	$	—	$	—
Interest cost (a)	5		6		1		—
Expected return on plan assets (a)	(8)		(9)		(1)		—

Amortization of net loss (gain) (a)	1		1		(1)		—

Net periodic benefit credit	(1)		(1)		(1)		—
Effects of regulation	—		—		—		—
Net benefit credit recognized for financial reporting	$	(1)	$	(1)	$	(1)	$	—


	Nine Months Ended Sept. 30
	2025		2024		2025		2024
(Millions of Dollars)	Pension Benefits				Postretirement Health Care Benefits
Service cost	$	5	$	5	$	—	$	—
Interest cost (a)	17		17		1		1
Expected return on plan assets (a)	(24)		(25)		(2)		(1)

Amortization of net loss (gain) (a)	2		2		(1)		—

Net periodic benefit credit	—		(1)		(2)		—
Effects of regulation	1		(1)		—		—
Net benefit cost (credit) recognized for financial reporting	$	1	$	(2)	$	(2)	$	—

(a)The components of net periodic cost other than the service cost component are included in the line item “Other income, net” in the statements of income or capitalized on the balance sheets as a regulatory asset.

In January 2025, contributions totaling $125 million were made across Xcel Energy’s pension plans, $3 million of which was attributable to SPS. Xcel Energy does not expect additional pension contributions during 2025.


9. Commitments and Contingencies

Legal

SPS is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories.

In such cases, there is considerable uncertainty regarding the timing or ultimate resolution, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on SPS’ financial statements. Legal fees are generally expensed as incurred.

2024 Smokehouse Creek Fire Complex — On February 26, 2024, multiple wildfires began in the Texas Panhandle, including the Smokehouse Creek Fire and the 687 Reamer Fire, which burned into the perimeter of the Smokehouse Creek Fire (together, referred to herein as the “Smokehouse Creek Fire Complex”). The Texas A&M Forest Service issued incident reports that determined that the Smokehouse Creek Fire and the 687 Reamer Fire were caused by power lines owned by SPS after wooden poles near each fire origin failed. According to the Texas A&M Forest Service’s Incident Viewer and news reports, the Smokehouse Creek Fire Complex burned approximately 1,055,000 acres. In August 2025, the Texas Attorney General’s office announced that it was opening a civil investigation into utilities, including Xcel Energy and SPS, connected to the Smokehouse Creek and Windy Deuce fires. The company is cooperating with that investigation.

SPS is aware of approximately 34 complaints, most of which have also named Xcel Energy Services Inc. as an additional defendant, relating to the Smokehouse Creek Fire Complex. The complaints, which assert claims on behalf of one or more plaintiffs, generally allege that SPS’ equipment ignited the Smokehouse Creek Fire Complex and seek compensation for losses resulting from the fire, asserting various causes of action under Texas law. In addition to seeking compensatory damages, certain of the complaints also seek exemplary damages. Of the 34 complaints, 12 have been resolved and dismissed to date, with nine others settled or settled in principle, and pending dismissal.

SPS has received 254 claims through its claims process and has reached final settlements on 212 of those claims as of the date of this filing. In addition to filed complaints and claims made through SPS’ claims process, SPS has also received information from attorneys for approximately 83 claims which have not been submitted through the claims process and have also not been filed as lawsuits, and has reached settlement of 71 of those claims through mediation.

SPS has settled claims related to both of the fatalities believed to be associated with the Smokehouse Creek Fire Complex. Settlements have also been reached with the subrogated insurer plaintiffs as well as the three largest claims that have been asserted from the fire, as measured by fire-impacted acreage. Settlements reached as of the date of this filing total $361 million of expected loss payments, of which $219 million and $35 million were paid through Sept. 30, 2025 and Dec. 31, 2024, respectively.

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Based on the current state of the law and the facts and circumstances available as of the date of this filing, Xcel Energy has recorded $410 million of total estimated losses for the matter (before available insurance). This represents a $120 million increase from the estimated losses as of June 30, 2025, largely driven by actual settlement activity for large claims and previously inestimable categories, such as damage to trees. A remaining estimated liability of $191 million and $180 million is presented in other current liabilities as of Sept. 30, 2025 and Dec. 31, 2024, respectively.

The cumulative estimated probable losses of $410 million for complaints and claims in connection with the Smokehouse Creek Fire Complex (before available insurance) represents the total of actual settlements reached to date plus the low end of the range for remaining reasonably estimable losses, and is subject to change as additional information becomes available. This $410 million estimate does not include amounts for (i) potential penalties or fines that may be imposed by governmental entities on Xcel Energy, (ii) exemplary or punitive damages, (iii) compensation claims by federal, state, county and local government entities or agencies, (iv) unsettled compensation claims for damage to trees and oil and gas equipment, or (v) other amounts that are not reasonably estimable.

Xcel Energy remains unable to reasonably estimate any additional loss or the upper end of the range because there are a number of unknown facts and legal considerations that may impact the amount of any potential liability, including whether additional complaints and demands may be made. In the event that SPS or Xcel Energy Services Inc. was found liable related to the litigation related to the Smokehouse Creek Fire Complex and was required to pay damages, such amounts could exceed our insurance coverage of approximately $500 million for the annual policy period and could have a material adverse effect on our financial condition, results of operations or cash flows.

The process for estimating losses associated with potential claims related to the Smokehouse Creek Fire Complex requires management to exercise significant judgment based on a number of assumptions and subjective factors, including the factors identified above and estimates based on currently available information and prior experience with wildfires. As more information becomes available, management estimates and assumptions regarding the potential financial impact of the Smokehouse Creek Fire Complex may change.

Texas law does not apply strict liability in determining an electric utility company’s liability for fire-related damages. For negligence claims under Texas law, a public utility has a duty to exercise ordinary and reasonable care.

Potential liabilities related to the Smokehouse Creek Fire Complex depend on various factors, including the cause of the equipment failure and the extent and magnitude of potential damages, including damages to residential and commercial structures, personal property, vegetation, livestock and livestock feed (including replacement feed), personal injuries and any other damages, penalties, fines or restitution that may be imposed by courts or other governmental entities if SPS is found to have been negligent.

SPS records insurance recoveries when it is deemed probable that recovery will occur, and SPS can reasonably estimate the amount or range. Insurance receivables of $341 million and $210 million, net of recoveries received, are presented in prepayments and other current assets as of Sept. 30, 2025 and Dec. 31, 2024, respectively. While SPS plans to seek recovery of all insured losses, it is unable to predict the ultimate amount and timing of such insurance recoveries.

Rate Matters and Other

SPS is involved in various regulatory proceedings arising in the ordinary course of business. Until resolution, typically in the form of a rate order, uncertainties may exist regarding the ultimate rate treatment for certain activities and transactions. Amounts have been recognized for probable and reasonably estimable losses that may result. Unless otherwise disclosed, any reasonably possible range of loss in excess of any recognized amount is not expected to have a material effect on the financial statements.

SPP OATT Upgrade Costs — Costs of transmission upgrades may be recovered from other SPP customers whose transmission service depends on capacity enabled by the upgrade under the SPP OATT. SPP had not been charging its customers for these upgrades, even though the SPP OATT had allowed SPP to do so since 2008. In 2016, the FERC granted SPP’s request to recover these previously unbilled charges and SPP subsequently billed SPS approximately $13 million.

In 2018, SPS’ appeal to the D.C. Circuit over the FERC rulings granting SPP the right to recover previously unbilled charges was remanded to the FERC. In 2019, the FERC reversed its 2016 decision and ordered SPP to refund charges retroactively collected from its transmission customers, including SPS, related to periods before September 2015. In 2020, SPP and Oklahoma Gas & Electric separately filed petitions for review of the FERC’s orders at the D.C. Circuit. In 2021, the D.C. Circuit issued a decision denying these appeals and upholding the FERC’s orders.

In September 2024, the Eighth Circuit issued an additional decision reaffirming the FERC’s decision to order refunds. In September 2025, the FERC issued an order on SPP's refund plan. The FERC directed SPP to provide additional information in a compliance filing, due 45 days after the order. SPS has recorded an estimate for a refund in this matter. Any refunds received by SPS are expected to be given back to SPS customers through future rates.

Environmental

New and changing federal and state environmental mandates can create financial liabilities for SPS, which are normally recovered through the regulated rate process.

Site Remediation

Various federal and state environmental laws impose liability where hazardous substances or other regulated materials have been released to the environment. SPS may sometimes pay all or a portion of the cost to remediate sites where past activities of their predecessors or other parties have caused environmental contamination.

Environmental contingencies could arise from various situations, including sites of former MGPs; and third-party sites, such as landfills, for which SPS is alleged to have sent wastes to that site.

MGP, Landfill and Disposal Sites

SPS is investigating, remediating or performing post-closure actions at three historical MGP, landfill or other disposal sites across its service territories, excluding sites that are being addressed under current coal ash regulations (see below).

SPS has recognized its best estimate of remaining liabilities for resolution of these issues, however, the final outcome and timing are unknown. In addition, there may be regulatory recovery, insurance recovery and/or recovery from other potentially responsible parties, offsetting a portion of costs incurred.

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Water and Waste

Coal Ash Regulation — SPS is subject to the CCR Rule, which imposes requirements for handling, storage, treatment and disposal of coal ash and other solid waste.

In May 2024, final amendments to the CCR Rule were published, widening its scope to include legacy CCR surface impoundments at inactive facilities and previously exempt areas where CCR was placed directly on land at CCR-regulated facilities, including areas of beneficial use.

As a requirement of the CCR Rule, utilities must complete facility evaluations and groundwater sampling around their subject landfills, surface impoundments and certain other areas where coal ash was placed on land.

If certain impacts to groundwater are detected, utilities are required to perform additional groundwater investigations and/or perform corrective actions, beginning with an Assessment of Corrective Measures.

SPS expects to incur $4 million for investigations through 2028 to perform required reporting and assess whether corrective actions are necessary. AROs have been recorded for each of these activities, and amounts are expected to be recoverable through regulatory mechanisms.

SPS continues to perform site investigation activities related to the CCR Rule, which may result in updates to estimated costs as well as identification of additional required corrective actions.

In July 2025, the EPA issued a proposed rule amending the CCR Legacy rule. The proposal seeks to extend deadlines for various regulatory actions and clarify previous information regarding implementation of the rule. SPS will monitor the proposed rule and evaluate the impacts of any final rule.

Air

Clean Air Act NOx Allowance Allocations — In June 2023, the EPA published final regulations for ozone under the “Good Neighbor” provisions of the Clean Air Act that established NOx allowance budgets for fossil fuel-fired electric generating facilities in subject states. The final rule applies to generation facilities in Texas, as well as other states outside of our service territory. In February 2024, the EPA proposed to include New Mexico in the rule. In March 2025, the 5th Circuit Court of Appeals denied petitions challenging EPA’s disapproval of Texas’s state implementation plan, affirming inclusion of Texas facilities in the EPA’s plan.

However, the plan is subject to both judicial and administrative stays and the EPA has announced that it intends to reconsider the rule.

Compliance with the published plan would require subject facilities to secure additional allowances, install NOx controls and/or develop a strategy of operations that utilizes the existing allowance allocations. While the financial impacts of the final rule are uncertain and dependent on market forces and anticipated generation, if the rule is implemented, SPS anticipates the annual costs could be significant but would be recoverable through regulatory mechanisms.

Leases

SPS evaluates contracts that may contain leases, including PPAs and arrangements for the use of office space and other facilities, vehicles and equipment. A contract contains a lease if it conveys the exclusive right to control the use of a specific asset.

PPA operating lease payments are included in electric fuel and purchased power, and expense for other operating leases is included in O&M expense and electric fuel and purchased power.

Components of lease expense:


	Three Months Ended Sept. 30
(Millions of Dollars)	2025		2024
Operating leases
PPA capacity payments	$	10	$	12
Other operating leases (a)	1		1
Total operating lease expense	$	11	$	13

(a)Includes immaterial short-term lease expense.


	Nine Months Ended Sept. 30
(Millions of Dollars)	2025		2024
Operating leases
PPA capacity payments	$	28	$	38
Other operating leases (a)	3		3
Total operating lease expense	$	31	$	41

(a)Includes immaterial short-term lease expense.

Commitments under operating leases as of Sept. 30, 2025:


(Millions of Dollars)	PPA Operating Leases		Other Operating Leases		Total Operating Leases
Total minimum obligation	$	370	$	44	$	414
Interest component of obligation	(59)		(10)		(69)
Present value of minimum obligation	$	311	$	34	345
Less current portion					(35)
Noncurrent operating lease liabilities					$	310

Variable Interest Entities

Under certain PPAs, SPS purchases power from IPPs for which SPS is required to reimburse fuel costs, or to participate in tolling arrangements under which SPS procures the natural gas required to produce the energy that it purchases. SPS has determined that certain IPPs are VIEs. SPS is not subject to risk of loss from the operations of these entities, and no significant financial support is required other than contractual payments for energy and capacity.

In addition, certain solar PPAs provide an option to purchase emission allowances or sharing provisions related to production credits generated by the solar facility under contract. These specific PPAs create a variable interest in the IPP.

SPS evaluated each of these VIEs for possible consolidation, including review of qualitative factors such as the length and terms of the contract, control over O&M, control over dispatch of electricity, historical and estimated future fuel and electricity prices, and financing activities. SPS concluded that these entities are not required to be consolidated in its financial statements because it does not have the power to direct the activities that most significantly impact the entities’ economic performance.

SPS had 1,197 MW of capacity under long-term PPAs at both Sept. 30, 2025 and Dec. 31, 2024 with entities that have been determined to be VIEs. These agreements have expiration dates through 2048.

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10. Segment Information

Segment information:


	Three Months Ended Sept. 30
	2025		2024
(Millions of Dollars)	Regulated electric utility		Regulated electric utility
Operating revenues	$	655	$	594
Electric fuel and purchased power	208		163
O&M expenses	86		82
Depreciation and amortization	118		109
Other segment expenses, net	18		19
Interest charges and financing costs	45		40
Income tax expense	20		5
Net income	$	160	$	176


	Nine Months Ended Sept. 30
	2025		2024
(Millions of Dollars)	Regulated electric utility		Regulated electric utility
Operating revenues	$	1,684	$	1,480
Electric fuel and purchased power	582		426
O&M expenses	257		237
Depreciation and amortization	345		344
Other segment expenses, net	64		69
Interest charges and financing costs	133		114
Income tax benefit	(17)		(32)
Net income	$	320	$	322

Other segment expenses, net, includes conservation and DSM expenses, taxes (other than income taxes), other income, net and AFUDC - equity.


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

Discussion of financial condition and liquidity for SPS is omitted per conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management’s narrative analysis of the results of operations set forth in General Instruction H(2)(a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).

Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with GAAP, as well as certain non-GAAP financial measures such as ongoing earnings. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that adjusts measures calculated and presented in accordance with GAAP.

SPS’ management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation, and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.

Earnings Adjusted for Certain Items (Ongoing Earnings)

Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items. We use this non-GAAP financial measure to evaluate and provide details of SPS’ core earnings and underlying performance.

We believe this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of SPS. For the three and nine months ended Sept. 30, 2025 and 2024, there were no such adjustments to GAAP earnings and therefore GAAP earnings equal ongoing earnings.


Results of Operations

SPS’ net income was $320 million for the nine months ended Sept. 30, 2025 compared with $322 million for the prior year. The year-to-date decrease was driven by unfavorable weather, increased interest charges and O&M expenses, partially offset by higher recovery of electric infrastructure investments and sales growth.

Electric Revenue

Electric revenues are impacted by fluctuations in the price of natural gas and coal, regulatory outcomes, market prices and seasonality. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and income taxes.


(Millions of Dollars)	Nine Months Ended Sept. 30, 2025 vs. 2024
Recovery of higher cost of electric fuel and purchased power	$	166
Sales and demand	49
Non-fuel riders	25
Regulatory rate outcomes	7
Revenue recognition for the Texas rate case surcharge	(38)
Estimated impact of weather	(29)
Other, net	24
Total increase	$	204

Electric Fuel and Purchased Power — Expenses incurred for electric fuel and purchased power are impacted by fluctuations in market prices of natural gas and coal, as well as seasonality. These incurred expenses are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are largely offset in operating revenues and have minimal earnings impact.

Electric fuel and purchased power expenses increased $156 million year-to-date. The increase is due to increased commodity prices, timing of fuel recovery mechanisms and increased volumes.

Non-Fuel Operating Expense and Other Items

O&M Expenses — O&M expenses increased $20 million year-to-date. The increase was primarily related to increased insurance costs, benefits and operational activities, which was partially offset by the recognition of previously deferred costs associated with the Texas Electric Rate Case in 2024.

Interest Charges — Interest charges increased $24 million year-to-date, largely due to higher debt levels and interest rates.


Public Utility Regulation and Other

The FERC and state and local regulatory commissions regulate SPS. SPS is subject to rate regulation by state utility regulatory agencies, which have jurisdiction with respect to the rates of electric distribution companies in New Mexico and Texas.

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Rates are designed to recover plant investment, operating costs and an allowed return on investment. SPS requests changes in utility rates through commission filings. Changes in operating costs can affect SPS’ financial results, depending on the timing of rate cases and implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and demand side management efforts, and the cost of capital.

In addition, the regulatory commissions authorize the ROE, capital structure and depreciation rates in rate proceedings. Decisions by these regulators can significantly impact SPS’ results of operations and credit quality.

Except to the extent noted below, the circumstances set forth in Public Utility Regulation included in Item 7 of SPS’ Annual Report on Form 10-K for the year ended Dec. 31, 2024, appropriately represent, in all material respects, the current status of public utility regulation and are incorporated herein by reference.

Pending and Recently Concluded Regulatory Proceedings

SPS Resource Plan (IRP) — In October 2023, SPS filed its IRP with the NMPRC, which supports projected load growth and increasing reliability requirements, and secures replacement energy and capacity for retiring resources. SPS’ projected resource needs range from approximately 5,300 MW to 10,200 MW of nameplate capacity by 2030. In February 2024, the NMPRC accepted the IRP.

In July 2024, SPS issued a RFP, seeking approximately 3,200 MW of accredited capacity by 2030. The total capacity to be added to the system is expected to align with the range identified in the SPS IRP, depending on the types of resources proposed in the RFP and their accredited capacity factors.

In July 2025, the portfolio selection report was publicly filed with the NMPRC with 3,121 MW of accredited capacity resources, including the following:


Generation Resource Nameplate Capacity (in MW)	Company Owned	PPAs	Total
Wind Resources	1,273	—	1,273
Solar	695	—	695
Storage	472	640	1,112
Natural Gas	2,088	—	2,088
Total	4,528	640	5,168

SPS filed or expects to file Certificate of Convenience and Necessity filings for the specific assets with the PUCT and NMPRC in 2025, with approvals expected in 2026.

In October 2025, SPS issued a second RFP to solicit 870 MW of accredited capacity (approximately 1,500 MW to 3,000 MW nameplate capacity) through 2032. Additional resources will be evaluated to meet the New Mexico Renewable Portfolio Standard compliance need. Bids are due in January 2026, and the portfolio is expected to be filed in the second half of 2026.

Excess Liability Insurance Deferral – In March 2025, SPS filed a request with the PUCT and in April 2025, SPS filed a request with the NMPRC for deferred accounting treatment for incremental excess liability insurance expense incurred as a result of the October 2024 policy renewal, estimated at approximately $30 million across the two jurisdictions. In October 2025, the NMPRC approved the request, resulting in a deferral of approximately $15 million of incremental excess liability insurance costs in 2025. A PUCT decision is expected in the first quarter of 2026.

Other

Supply Chain

SPS’ ability to meet customer energy requirements and growing customer demand, respond to storm-related disruptions, and execute our capital expenditure program are dependent on maintaining an efficient supply chain.

Large global demand for energy-related infrastructure has stretched equipment supply chains, extended delivery dates and increased prices for items like combustion turbines, transformers and other large electrical equipment. The labor market for skilled engineering and construction resources to build renewables and gas generation has also been strained, impacting cost and availability.

In addition, manufacturing processes have experienced disruptions related to the scarcity of certain raw materials and interruptions in production and shipping. The impact of inflationary pressures, geopolitical events and federal policies have exacerbated the situation. SPS continues to monitor the situation as it remains fluid and seeks to mitigate the impacts by securing alternative suppliers and key vendor partners, increasing procurement lead times, modifying design standards, and adjusting the timing of work.

Tariffs, Trade Complaints and Federal Actions

Several trade cases related to anti-dumping and countervailing duty investigations are ongoing and we continue to monitor the potential impacts of these cases.

In 2025, several executive orders have been issued imposing new global and country-specific tariffs on many imports, which may impact our procurement and development activities. Additionally, executive orders and actions from government agencies may impact the permitting of wind and solar facilities and the retirement of coal facilities.

SPS continues to assess the impacts of these tariffs, executive orders, trade complaints and federal policies on its business, including company owned projects and PPAs. SPS may seek regulatory relief, if required, in its jurisdictions.

Continued and/or further policy actions or other restrictions, disruptions in imports from key suppliers, or any new trade complaint could impact viability, timelines and costs of various projects and PPAs.

Tax Law Changes

On July 4, 2025, the President signed into law Public Law No. 119-21 (the “OBBB”). The OBBB modifies certain clean energy tax provisions included in the Inflation Reduction Act. The provisions include:

•Eliminating production and investment tax credits for wind and solar facilities placed in service after 2027, for facilities that begin construction after July 4, 2026.

•The addition of foreign entity of concern rules that apply to projects commencing construction after 2025.

In August 2025, the U.S. Treasury issued further guidance related to the beginning of construction for clean energy projects.

SPS does not expect these provisions to have an impact on our 2026-2030 base capital plan, as steps have been taken to begin construction under the IRS’ safe harbor guidance.

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Environmental Regulation

Throughout 2025, the EPA has announced various regulatory actions addressing a wide range of environmental regulations. SPS will continue to monitor these proposed rules as they move toward final action. Additionally, any other amendments and changes to rules will be evaluated as proposed by the EPA.

Clean Air Act

Power Plant Greenhouse Gas Regulations — In April 2024, the EPA published final rules addressing control of CO2 emissions from the power sector. The rules regulate new natural gas generating units and emission guidelines for existing coal and certain natural gas generation. The rules create subcategories of coal units based on planned retirement date and subcategories of natural gas combustion turbines and combined cycle units based on utilization. The CO2 control requirements vary by subcategory.

Based on current estimates and assumptions, SPS has determined that due to scheduled plant retirements, there is minimal financial or operational impact associated with these requirements and believes that the cost of these initiatives or replacement generation would be recoverable through rates based on prior state commission practices.

In June 2025, the EPA proposed to repeal these and all other GHG emissions standards for the power sector. In the alternative, the EPA proposed to repeal a narrower subset of the 2024 regulations.

In July 2025, the EPA additionally proposed to repeal the 2009 Endangerment Finding and associated regulations addressing GHG emissions under the Clean Air Act. SPS will monitor the proposed rules and evaluate the impacts of any final rule.

In September 2025, the EPA proposed to amend the Clean Air Act GHG Reporting Program to scale back reporting and recordkeeping requirements. Under the amended program, SPS would no longer be required to report GHG emissions to the federal program. SPS will monitor the proposed rule and evaluate the impacts of any final rule upon state reporting programs as applicable.

Emerging Contaminants of Concern

PFAS are man-made chemicals that are widely used in consumer products and can persist and bio-accumulate in the environment. SPS does not manufacture PFAS, but because PFAS are so ubiquitous in products and the environment, it may impact our operations.

In June 2024, the EPA finalized a rule that designated certain PFAS as hazardous substances under CERCLA. In July 2024, the EPA finalized another rule that set enforceable drinking water standards for certain PFAS.

Potential costs for these rules and any additional proposed regulations related to PFAS are uncertain and will be determined on a site specific basis where applicable. If costs are incurred, SPS believes the costs will be recoverable through rates based on prior state commission practices.


ITEM 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

SPS maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.

In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the CEO and CFO, allowing timely decisions regarding required disclosure.

As of Sept. 30, 2025, based on an evaluation carried out under the supervision and with the participation of SPS’ management, including the CEO and CFO, of the effectiveness of its disclosure controls and procedures, the CEO and CFO have concluded that SPS’ disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

No changes in SPS’ internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, SPS’ internal control over financial reporting.

PART II — OTHER INFORMATION


ITEM 1 — LEGAL PROCEEDINGS

Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to, when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss.

For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on SPS’ financial statements. Legal fees are generally expensed as incurred.

See Note 9 to the financial statements and Part I Item 2 for further information.


ITEM 1A — RISK FACTORS

SPS’ risk factors are documented in Item 1A of Part I of its Annual Report on Form 10-K for the year ended Dec. 31, 2024, which is incorporated herein by reference. There have been no material changes from the risk factors previously disclosed in the Form 10-K.


ITEM 5 — OTHER INFORMATION

None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended Sept. 30, 2025.

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ITEM 6 — EXHIBITS

* Indicates incorporation by reference


Exhibit Number	Description	Report or Registration Statement	Exhibit Reference
3.01*	Amended and Restated Articles of Incorporation, dated Sept. 30, 1997	SPS Form 10-Q for the quarter ended Sept. 30, 2017	3.01
3.02*	Amended and Restated Bylaws of SPS, dated Jan. 25, 2019	SPS Form 10-K for the year ended Dec. 31, 2018	3.02
31.01	Principal Executive Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.02	Principal Financial Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.01	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Schema
101.CAL	Inline XBRL Calculation
101.DEF	Inline XBRL Definition
101.LAB	Inline XBRL Label
101.PRE	Inline XBRL Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

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


		Southwestern Public Service Company

October 30, 2025	By:	/s/ MELISSA L. OSTROM
		Melissa L. Ostrom
		Senior Vice President, Controller
		(Principal Accounting Officer)


	By:	/s/ BRIAN J. VAN ABEL
		Brian J. Van Abel
		Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)

SOUTHWESTERN PUBLIC SERVICE CO 10-Q