Fitch Upgrs Xcel & Subsidiaries; Rating Outlook is Stable.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 8, 2003

Fitch Ratings has upgraded the ratings of Xcel Energy Inc. (Xcel) and its subsidiaries as follows: senior unsecured rating of Xcel to 'BBB' from 'BBB-'; senior secured ratings of Northern States Power Co. Minnesota (NSP-MN) and Northern States Power Co. Wisconsin (NPS-WI) to 'A' from 'A-' and senior unsecured rating of Southwestern Public Service Co (SPS) to 'A-' from 'BBB+'. Fitch has also affirmed the senior secured rating of Public Service Co. of Colorado (PSCO) at 'BBB+'. The Rating Outlook is Stable. Ratings of all the affected entities are listed on the table below.

The ratings upgrade of Xcel incorporates the reorganization of NRG Energy Inc. (NRG) and its emergence from bankruptcy as a new company on Dec. 5, 2003. As a result of NRG's emergence from bankruptcy, Xcel's ownership in the company was extinguished and its exposure to claims by NRG creditors is limited to the previously set amount of $752 million.

The ratings upgrade also incorporates Fitch's view that Xcel will have sufficient liquidity to make the required $752 million settlement payment by May 2004 at the latest. Sources of liquidity include $650 million of cash on hand as of Oct. 30, 2003, $325 million of expected tax refunds associated with the NRG settlement payment and about $150 million of expected quarterly dividend payments from its utilities for the next three quarters. Included in Xcel's estimated liquidity is a corresponding quarterly dividend payment of about $75 million to common shareholders.

In the unlikely scenario that the tax refund is not granted by the tax authorities or received on time, Fitch assumes that Xcel can fund the payment through a combination of sources, including accessing the capital markets as it has successfully done so throughout 2003. If additional debt is required to bridge such a timing gap, it should not result in a long-term increase in leverage. Xcel is expected to benefit from tax loss carry forwards or avoidance of tax payments of about $125 million per year through 2007.

The new ratings recognize Xcel's strong individual credit profile once it is extricated completely from any liabilities relating to NRG. Xcel's rating is supported by the substantial dividends upstreamed by its four main regulated subsidiaries, NSP-MN, NSP-WI, PSCO and SPS. The utility subsidiaries, which distributed $448 million in dividends to Xcel in the first nine months of 2003, have strong financial profiles, and they will continue to be the main providers of cash flow to Xcel. Xcel has relatively low debt at the parent holding company of $1.025 billion as of third quarter 2003, only around 15% of consolidated group debt. On a consolidated basis, for the first nine months of 2003, Xcel delivered a consolidated EBITDA to interest ratio of 4.2 times (x) and an annualized consolidated debt to EBITDA ratio of 3.5x. These ratios are consistent with Xcel's upgraded ratings. Moreover, in 2003, Xcel and its regulated utility subsidiaries have demonstrated access to capital markets.

The upgrade of Xcel permits the corresponding upgrade of three utility subsidiaries whose ratings are currently constrained by those of its parent. NSP-MN, NSP-WI, and SPS, have substantially better standalone credit profiles than indicated by their current constrained ratings. PSCO's rating is consistent with its underlying financial condition and not constrained.

The rating constraint of the regulated utilities by Xcel's ratings reflects the utilities' moderate degree of insulation from the parent. The Stable Rating Outlook for all of the companies reflects a much more stable business profile for Xcel as a holding company of mostly regulated utility businesses after terminating its involvement with NRG.

Ratings affected by the rating actions are:

Xcel Energy Inc.

-- Senior unsecured debt upgraded to 'BBB' from 'BBB-';

-- Convertible Securities upgraded to 'BBB' from 'BBB-';

-- Preferred Stocks upgraded to 'BBB-' from 'BB+';

Northern States Power Company-MN

-- First mortgage bonds and secured pollution control revenue

bonds upgraded to 'A' from 'A-';

-- Senior unsecured debt and unsecured pollution control revenue

bonds upgraded to 'A-' from 'BBB+';

-- Commercial paper rating upgraded to 'F1' from 'F2'.

Northern States Power Company-WI

-- First mortgage bonds upgraded to 'A' from 'A-';

-- Senior unsecured debt upgraded to 'A-' from 'BBB+'.

Southwestern Public Service Company

-- Senior unsecured debt upgraded to 'A-' from 'BBB+';

-- Commercial paper rating affirmed at 'F2'.

Public Service Company of Colorado

-- First mortgage bonds affirmed at 'BBB+';

-- Senior unsecured notes affirmed at 'BBB';

-- Commercial paper rating affirmed at 'F2'.

Rating Outlook is Stable for all entities.

Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 11 Western and Midwestern states. Xcel Energy provides an energy-related products and services to 3.3 million electricity customers and 1.7 million natural gas customers through its regulated operating companies.