- First quarter GAAP and ongoing diluted earnings per share were
$0.88 in 2024 compared with $0.76 in 2023.
- Xcel Energy reaffirms 2024 EPS guidance of $3.50 to $3.60 per
share.
Xcel Energy Inc. (NASDAQ: XEL) today reported 2024 first quarter
GAAP and ongoing earnings of $488 million, or $0.88 per share,
compared with $418 million, or $0.76 per share in the same period
in 2023.
First quarter ongoing earnings results reflect increased
recovery of infrastructure investments and lower O&M expenses,
partially offset by increased interest charges and
depreciation.
“Our thoughts remain with the communities impacted by wildfires
in the Texas Panhandle, an area we have served for more than 100
years,” said Bob Frenzel, chairman, president and CEO of Xcel
Energy. “Like all energy companies, we are navigating changes in
weather and climate-induced impacts on our operations. Wildfire
mitigation and system resiliency will continue to be priorities
going forward. We have already advanced a number of wildfire risk
reduction initiatives — including preventive power shutoffs during
high-risk conditions, non-reclose and fast-trip safety settings,
and accelerated pole inspections and replacements — and will
continue to enhance our wildfire mitigation efforts.”
At 9:00 a.m. CDT today, Xcel Energy will host a conference call
to review financial results. To participate in the call, please
dial in 5 to 10 minutes prior to the start and follow the
operator’s instructions.
US Dial-In:
1 (866) 580-3963
International Dial-In:
(400) 120-0558
Conference ID:
2618878
The conference call also will be simultaneously broadcast and
archived on Xcel Energy’s website at www.xcelenergy.com. To access
the presentation, click on Investors under Company. If you are
unable to participate in the live event, the call will be available
for replay from April 25th through April 29th.
Replay Numbers
US Dial-In:
1 (866) 583-1035
Access Code:
2618878#
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 2024 EPS
guidance, long-term EPS and dividend growth rate objectives, 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
to customers, expectations and intentions regarding regulatory
proceedings, and expected impact on our results of operations,
financial condition and cash flows of resettlement calculations and
credit losses relating to certain energy transactions, 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 Xcel Energy’s Annual Report on Form 10-K for
the fiscal year ended Dec. 31, 2023 and subsequent filings with the
Securities and Exchange Commission, could cause actual results to
differ materially from management expectations as suggested by such
forward-looking information: operational safety, including our
nuclear generation facilities and other utility operations;
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 and our subsidiaries’ ability to recover costs
from customers; 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 Xcel Energy Inc. and its subsidiaries 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; our subsidiaries’ ability to make
dividend payments; tax laws; uncertainty regarding epidemics, the
duration and magnitude of business restrictions including shutdowns
(domestically and globally), the potential impact on the workforce,
including shortages of employees or third-party contractors due to
quarantine policies, vaccination requirements or government
restrictions, impacts on the transportation of goods and the
generalized impact on the economy; 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.
This information is not given in connection
with any sale, offer for sale or offer to buy any security.
XCEL ENERGY INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)
(amounts in millions, except per
share data)
Three Months Ended March
31
2024
2023
Operating revenues
Electric
$
2,685
$
2,763
Natural gas
941
1,288
Other
23
29
Total operating revenues
3,649
4,080
Operating expenses
Electric fuel and purchased power
948
1,117
Cost of natural gas sold and
transported
483
844
Cost of sales — other
8
12
Operating and maintenance expenses
605
650
Conservation and demand side management
expenses
97
76
Depreciation and amortization
658
624
Taxes (other than income taxes)
171
184
Total operating expenses
2,970
3,507
Operating income
679
573
Other income, net
14
5
Earnings from equity method
investments
8
11
Allowance for funds used during
construction — equity
37
19
Interest charges and financing
costs
Interest charges — includes other
financing costs
291
253
Allowance for funds used during
construction — debt
(14
)
(10
)
Total interest charges and financing
costs
277
243
Income before income taxes
461
365
Income tax benefit
(27
)
(53
)
Net income
$
488
$
418
Weighted average common shares
outstanding:
Basic
556
551
Diluted
556
551
Earnings per average common
share:
Basic
$
0.88
$
0.76
Diluted
0.88
0.76
XCEL ENERGY INC. AND SUBSIDIARIES Notes
to Investor Relations Earnings Release (Unaudited)
Due to the seasonality of Xcel Energy’s operating results,
quarterly financial results are not an appropriate base from which
to project annual results.
Non-GAAP Financial Measures
The following discussion includes financial information prepared
in accordance with generally accepted accounting principles (GAAP),
as well as certain non-GAAP financial measures such as ongoing
return on equity (ROE), ongoing earnings and ongoing diluted EPS.
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.
Xcel Energy’s 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.
Ongoing ROE
Ongoing ROE is calculated by dividing the net income or loss of
Xcel Energy or each subsidiary, adjusted for certain nonrecurring
items, by each entity’s average stockholder’s equity. We use these
non-GAAP financial measures to evaluate and provide details of
earnings results.
Earnings Adjusted for Certain Items
(Ongoing Earnings and Ongoing Diluted EPS)
GAAP diluted EPS reflects the potential dilution that could
occur if securities or other agreements to issue common stock
(i.e., common stock equivalents) were settled. The weighted average
number of potentially dilutive shares outstanding used to calculate
Xcel Energy Inc.’s diluted EPS is calculated using the treasury
stock method. Ongoing earnings reflect adjustments to GAAP earnings
(net income) for certain items. Ongoing diluted EPS for Xcel Energy
is calculated by dividing net income or loss, adjusted for certain
items, by the weighted average fully diluted Xcel Energy Inc.
common shares outstanding for the period. Ongoing diluted EPS for
each subsidiary is calculated by dividing the net income or loss
for such subsidiary, adjusted for certain items, by the weighted
average fully diluted Xcel Energy Inc. common shares outstanding
for the period.
We use these non-GAAP financial measures to evaluate and provide
details of Xcel Energy’s core earnings and underlying performance.
For instance, to present ongoing earnings and ongoing diluted
earnings per share, we may adjust the related GAAP amounts for
certain items that are non-recurring in nature. We believe these
measurements are useful to investors to evaluate the actual and
projected financial performance and contribution of our
subsidiaries. These non-GAAP financial measures should not be
considered as an alternative to measures calculated and reported in
accordance with GAAP. For the three months ended March 31, 2024 and
2023, there were no such adjustments to GAAP earnings and therefore
GAAP earnings equal ongoing earnings for these periods.
Note 1. Earnings Per Share
Summary
Xcel Energy’s first quarter GAAP and ongoing diluted earnings
were $0.88 per share, compared with $0.76 per share in the same
period in 2023. The increase in earnings per share was primarily
driven by increased recovery of infrastructure investments, higher
allowance for funds used during construction (AFUDC) and lower
O&M expenses, partially offset by increased interest charges
and depreciation. Fluctuations in electric and natural gas revenues
associated with changes in fuel and purchased power and/or natural
gas sold and transported generally do not significantly impact
earnings (changes in costs are offset by the related variation in
revenues).
Summarized diluted EPS for Xcel Energy:
Three Months Ended March
31
Diluted Earnings (Loss) Per
Share
2024
2023
PSCo
$
0.39
$
0.39
NSP-Minnesota
0.38
0.25
SPS
0.10
0.10
NSP-Wisconsin
0.08
0.08
Earnings from equity method investments —
WYCO
0.01
0.01
Regulated utility
0.96
0.83
Xcel Energy Inc. and Other
(0.08
)
(0.07
)
GAAP and ongoing diluted EPS
$
0.88
$
0.76
PSCo — GAAP and ongoing earnings were flat for the first
quarter primarily reflecting increased recovery of electric
infrastructure investments, which was offset by unfavorable weather
and increased depreciation and interest charges.
NSP-Minnesota — GAAP and ongoing earnings increased $0.13
per share for the first quarter of 2024. The change was driven by
increased recovery of electric and natural gas infrastructure
investments and lower O&M expenses, partially offset by higher
interest expenses and depreciation.
SPS — GAAP and ongoing earnings were flat for the first
quarter of 2024 primarily due to regulatory rate outcomes and lower
O&M expenses, offset by increased depreciation and amortization
expenses.
NSP-Wisconsin — GAAP and ongoing earnings were flat for
the first quarter of 2024 as lower O&M expenses were offset by
increased depreciation.
Xcel Energy Inc. and Other — Primarily includes financing
costs and interest income at the holding company and earnings from
Energy Impact Partners (EIP) funds equity method investments. The
decline in earnings is largely due to increased interest rates.
Components significantly contributing to changes in 2024 EPS
compared to 2023:
Diluted Earnings (Loss) Per
Share
Three Months Ended March
31
GAAP and ongoing diluted EPS —
2023
$
0.76
Components of change - 2024 vs. 2023
Lower cost of natural gas sold and
transported (a)
0.49
Lower electric fuel and purchased power
(a)
0.23
Lower O&M expenses
0.06
Higher AFUDC
0.04
Lower natural gas revenues
(0.47
)
Lower electric revenues
(0.11
)
Higher depreciation and amortization
(0.05
)
Higher interest charges
(0.05
)
Other, net
(0.02
)
GAAP and ongoing diluted EPS —
2024
$
0.88
(a)
Cost of natural gas sold and
transported and electric fuel and purchased power are generally
recovered through regulatory recovery mechanisms and offset in
revenue.
Note 2. Regulated Utility
Results
Estimated Impact of Temperature Changes on Regulated
Earnings — Unusually hot summers or cold winters increase
electric and natural gas sales, while mild weather reduces electric
and natural gas sales. The estimated impact of weather on earnings
is based on the number of customers, temperature variances, the
amount of natural gas or electricity historically used per degree
of temperature and excludes any incremental related operating
expenses that could result due to storm activity or vegetation
management requirements. As a result, weather deviations from
normal levels can affect Xcel Energy’s financial performance.
However, electric sales true-up and gas decoupling mechanism in
Minnesota predominately mitigate the positive and adverse impacts
of weather in that jurisdiction.
Normal weather conditions are defined as either the 10, 20 or
30-year average of actual historical weather conditions. The
historical period of time used in the calculation of normal weather
differs by jurisdiction, based on regulatory practice. To calculate
the impact of weather on demand, a demand factor is applied to the
weather impact on sales. Extreme weather variations, windchill and
cloud cover may not be reflected in weather-normalized
estimates.
Weather — Estimated impact of temperature variations on
EPS compared with normal weather conditions:
Three Months Ended March
31
2024 vs. Normal
2023 vs. Normal
2024 vs. 2023
Retail electric
$
(0.029
)
$
0.002
$
(0.031
)
Decoupling and sales true-up
0.016
(0.006
)
0.022
Electric total
$
(0.013
)
$
(0.004
)
$
(0.009
)
Firm natural gas
(0.027
)
0.029
(0.056
)
Decoupling
$
0.017
$
—
$
0.017
Gas total
$
(0.010
)
$
0.029
$
(0.039
)
Total
$
(0.023
)
$
0.025
$
(0.048
)
Sales — Sales growth (decline) for actual and
weather-normalized sales in 2024 compared to 2023:
Three Months Ended March
31
PSCo
NSP-Minnesota
SPS
NSP-Wisconsin
Xcel Energy
Actual
Electric residential
(2.2
)%
(5.7
)%
(1.7
)%
(7.3
)%
(4.0
)%
Electric C&I
0.4
(3.1
)
7.4
(1.8
)
1.0
Total retail electric sales
(0.5
)
(4.0
)
5.7
(3.5
)
(0.5
)
Firm natural gas sales
(9.1
)
(14.4
)
N/A
(14.6
)
(11.1
)
Three Months Ended March
31
PSCo
NSP-Minnesota
SPS
NSP-Wisconsin
Xcel Energy
Weather-Normalized
Electric residential
0.8
%
(1.0
)%
(2.9
)%
(3.0
)%
(0.8
)%
Electric C&I
1.0
(2.2
)
7.5
(1.5
)
1.6
Total retail electric sales
0.9
(1.8
)
5.5
(2.0
)
0.9
Firm natural gas sales
4.7
1.2
N/A
(3.1
)
3.0
Three Months Ended March 31
(Leap Year Adjusted)
PSCo
NSP-Minnesota
SPS
NSP-Wisconsin
Xcel Energy
Weather-Normalized
Electric residential
(0.3
)%
(2.1
)%
(4.1
)%
(4.1
)%
(1.9
)%
Electric C&I
(0.1
)
(3.3
)
6.3
(2.5
)
0.5
Total retail electric sales
(0.2
)
(2.9
)
4.3
(3.0
)
(0.3
)
Firm natural gas sales
3.4
(0.1
)
N/A
(4.3
)
1.7
Weather-normalized and leap-year adjusted
electric sales growth (decline) — year-to-date
- PSCo — Residential sales decreased due to a 1.5% decrease in
use per customer, partially offset by customer growth of 1.3%. The
C&I sales decline was related to decreased use per customer,
primarily in the information and professional services sectors,
partially offset by increases in the manufacturing and health care
sectors.
- NSP-Minnesota — Residential sales decreased due to a 3.5%
decrease in use per customer, partially offset by a 1.5% increase
in customers. C&I sales declined due to decreased use per
customer, largely in the manufacturing sector.
- SPS — Residential sales declined as a result of a 4.6% decrease
in use per customer, partially offset by 0.5% customer growth.
C&I sales increased due to higher use per customer, primarily
driven by the energy sector.
- NSP-Wisconsin — Residential sales declined due to a 4.9%
decrease in use per customer, partially offset by 0.8% increase in
customers. C&I sales decline was associated with decreased use
per customer, experienced largely in the professional services and
manufacturing sectors.
Weather-normalized and leap-year adjusted
natural gas sales growth (decline) — year-to-date
- Increase in natural gas sales was driven by continued strength
in PSCo residential and C&I use per customer. Additionally,
overall residential and C&I customer growth was 1.1% and 0.6%,
respectively.
Electric Revenues — Electric revenues are impacted by
fluctuations in the price of natural gas, coal and uranium,
regulatory outcomes, market prices and seasonality. In addition,
electric customers receive a credit for PTCs generated, which
reduce electric revenue and income taxes. In the first quarter,
electric revenues decreased $78 million.
(Millions of Dollars)
Three Months Ended March 31,
2024 vs. 2023
Recovery of lower cost of electric fuel
and purchased power
$
(178
)
Wholesale generation revenues
(11
)
Estimated impact of weather (net of sales
true-up)
(8
)
PTCs flowed back to customers (offset by
lower ETR)
(8
)
Regulatory rate outcomes (MN, CO, TX, NM,
WI and ND)
66
Non-fuel riders
34
Conservation and demand side management
(offset in expense)
20
Sales and demand (a)
15
Other (net)
(8
)
Total decrease
$
(78
)
(a)
Sales excludes weather impact,
net of sales true-up mechanism in Minnesota.
Natural Gas Revenues — Natural gas revenues vary with
changing sales, the cost of natural gas and regulatory outcomes. In
the first quarter, natural gas revenues decreased $347 million.
(Millions of Dollars)
Three Months Ended March 31,
2024 vs. 2023
Recovery of lower cost of natural gas
$
(359
)
Estimated impact of weather (net of
decoupling)
(29
)
Regulatory rate outcomes (MN, WI, ND and
MI)
22
Retail sales growth (net of decoupling in
Minnesota)
10
Infrastructure and integrity riders
3
Other (net)
6
Total decrease
$
(347
)
Electric Fuel and Purchased Power — Expenses incurred for
electric fuel and purchased power are impacted by fluctuations in
market prices of natural gas, coal and uranium, as well as
seasonality. However, these incurred expenses are generally
recovered through various regulatory recovery mechanisms. As a
result, changes in these expenses are generally offset in operating
revenues and have minimal earnings impact.
Electric fuel and purchased power expenses decreased $169
million for the first quarter of 2024. The decrease is primarily
due to lower commodity prices, timing of fuel recovery and
decreased volumes.
Cost of Natural Gas Sold and Transported — Expenses
incurred for the cost of natural gas sold are impacted by market
prices and seasonality. These costs are generally recovered through
various regulatory recovery mechanisms. As a result, changes in
these expenses are generally offset in operating revenues and have
minimal earnings impact.
Natural gas sold and transported decreased $361 million for the
first quarter of 2024. The decrease is primarily due to lower
commodity prices and volumes.
O&M Expenses — O&M expenses decreased $45 million
for the first quarter. The decrease was primarily due to decreased
labor and benefit costs, gain on land sale and lower bad debt
expenses.
Depreciation and Amortization — Depreciation and
amortization increased $34 million for the first quarter as a
result of system expansion, offset by depreciation life extensions
implemented in the Minnesota Electric Rate Case.
Interest Charges — Interest charges increased $38 million
for the first quarter, largely due to increased long-term debt
levels and higher interest rates.
AFUDC, Equity and Debt — AFUDC increased $22 million for
the first quarter driven by increased investment in renewable
projects in 2024.
Income Taxes — Effective income tax rate:
Three Months Ended March
31
2024
2023
2024 vs. 2023
Federal statutory rate
21.0
%
21.0
%
—
%
State tax (net of federal tax effect)
4.8
4.8
—
(Decreases) increases:
Wind PTCs (a)
(25.9
)
(33.1
)
7.2
Plant regulatory differences (b)
(5.6
)
(5.5
)
(0.1
)
Other tax credits, net NOL & tax
credit allowances
(0.6
)
(1.6
)
1.0
Other (net)
0.4
(0.1
)
0.5
Effective income tax rate
(5.9
)%
(14.5
)%
8.6
%
(a)
Wind PTCs net of estimated
transfer discounts 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 through the average rate assumption method. Income tax
benefits associated with the credit are offset by corresponding
revenue reductions.
Note 3. Capital Structure, Liquidity,
Financing and Credit Ratings
Xcel Energy’s capital structure:
(Millions of Dollars)
March 31, 2024
Percentage of Total
Capitalization
Dec. 31, 2023
Percentage of Total
Capitalization
Current portion of long-term debt
$
552
1
%
$
552
1
%
Short-term debt
463
1
785
2
Long-term debt
26,396
58
24,913
57
Total debt
27,411
60
26,250
60
Common equity
17,841
40
17,616
40
Total capitalization
$
45,252
100
%
$
43,866
100
%
Liquidity — As of April 22, 2024, Xcel Energy Inc. and
its utility subsidiaries had the following committed credit
facilities available to meet liquidity needs:
(Millions of Dollars)
Credit Facility (a)
Drawn (b)
Available
Cash
Liquidity
Xcel Energy Inc.
$
1,500
$
—
$
1,500
$
11
$
1,511
PSCo
700
30
670
656
1,326
NSP-Minnesota
700
15
685
411
1,096
SPS
500
101
399
29
428
NSP-Wisconsin
150
—
150
6
156
Total
$
3,550
$
146
$
3,404
$
1,113
$
4,517
(a)
Expires September 2027.
(b)
Includes outstanding commercial
paper and letters of credit.
Credit Ratings — Access to the capital markets at
reasonable terms is partially dependent on credit ratings. The
following ratings reflect the views of Moody’s, S&P Global
Ratings and Fitch. The highest credit rating for debt is Aaa/AAA
and the lowest investment grade rating is Baa3/BBB-. The highest
rating for commercial paper is P-1/A-1/F-1 and the lowest rating is
P-3/A-3/F-3. A security rating is not a recommendation to buy, sell
or hold securities. Ratings are subject to revision or withdrawal
at any time by the credit rating agency and each rating should be
evaluated independently of any other rating.
Credit ratings and long-term outlook assigned to Xcel Energy
Inc. and its utility subsidiaries as of April 22, 2024:
Moody’s
S&P Global Ratings
Fitch
Company
Credit Type
Rating
Outlook
Rating
Outlook
Rating
Outlook
Xcel Energy Inc.
Unsecured
Baa1
Stable
BBB
Negative
BBB+
Negative
NSP-Minnesota
Secured
Aa3
Stable
A
Negative
A+
Stable
NSP-Wisconsin
Secured
Aa3
Negative
A
Negative
A+
Stable
PSCo
Secured
A1
Stable
A
Negative
A+
Stable
SPS
Secured
A3
Stable
A-
Negative
A-
Stable
Xcel Energy Inc.
Commercial paper
P-2
A-2
F2
NSP-Minnesota
Commercial paper
P-1
A-2
F2
NSP-Wisconsin
Commercial paper
P-1
A-2
F2
PSCo
Commercial paper
P-2
A-2
F2
SPS
Commercial paper
P-2
A-2
F2
2024 Financing Activity — During 2024, Xcel Energy Inc.
and its utility subsidiaries anticipate the following long-term
debt issuances:
Issuer
Security
Amount (in millions)
Status
Tenor
Coupon
Xcel Energy Inc.
Senior Unsecured Notes
$
800
Completed
10 Year
5.50
%
NSP-Minnesota
First Mortgage Bonds
700
Completed
30 Year
5.40
%
PSCo
First Mortgage Bonds
1,200
Completed (a)
10 Year & 30 Year
5.35 % & 5.75
%
SPS
First Mortgage Bonds
600
Second Quarter
30 Year
N/A
NSP-Wisconsin
First Mortgage Bonds
400
Second Quarter
30 Year
N/A
(a)
Bond was issued on April 4,
2024.
Xcel Energy may issue equity through its at-the-market program
or other offerings. Financing plans are subject to change,
depending on capital expenditures, regulatory outcomes, internal
cash generation, market conditions, changes in tax policies and
other factors.
Note 4. Rates, Regulation and
Other
NSP-Minnesota — 2024 Minnesota Natural Gas Rate
Case — In November 2023, NSP-Minnesota filed a request with the
Minnesota Public Utilities Commission (MPUC) for an annual natural
gas rate increase of approximately $59 million, or 9.6%. The
request is based on a ROE of 10.2%, a 52.5% equity ratio and a 2024
forward test year with rate base of approximately $1.27 billion. In
December 2023, the MPUC approved NSP-Minnesota’s request for
interim rates, subject to refund, of approximately $51 million
(implemented on Jan. 1, 2024).
On April 19, 2024, four parties filed direct testimony. The DOC,
OAG, and CUB were the only parties to quantify recommended
financial adjustments. The OAG and CUB provided limited comments,
recommending a reduction of approximately $1 million of O&M
expenses each. The CUB additionally recommended a reduction to
ROE.
Proposed DOC modifications to NSP-Minnesota’s request were as
follows:
(Millions of Dollars)
NSP-Minnesota’s filed base revenue
request
$
59
Recommended adjustments:
Rate of return
(7
)
Operating & maintenance expenses
(4
)
Plant investments
(3
)
Other, net
(2
)
Total adjustments
$
(16
)
Total proposed revenue change
$
43
Positions on NSP-Minnesota’s filed rate request were as
follows:
Recommended Position
DOC
CUB
ROE
9.40
%
9.00-9.40%
Equity ratio
52.50
%
N/A
Procedural schedule:
- Mediation: May 17, 2024 (day subject to availability)
- Rebuttal testimony: May 24, 2024
- Evidentiary hearings: July 10-12, 2024
- ALJ report: October 28, 2024
- MPUC Order Due: March 14, 2025
NSP-Minnesota — Upper Midwest Resource Plan — In
February 2024, NSP filed its Upper Midwest Resource Plan with the
MPUC which included the following key items:
- Reduced carbon emissions by more than 80%, potentially up to
88%, by 2030.
- Extends the operation of Prairie Island and Monticello through
the early 2050s.
- Adds 3,600 MWs of new wind and solar resources by 2030.
- Adds 600 MWs of battery energy storage by 2030.
- Adds more than 2,200 MWs of dispatchable resources by
2030.
These proposed resources are in addition to projects already
approved by the MPUC. NSP-Minnesota anticipates a MPUC decision in
2025.
NSP-Minnesota — North Dakota Natural Gas Rate Case
— In December 2023, NSP-Minnesota filed a request with the North
Dakota Public Service Commission (NDPSC) seeking an increase in
natural gas rates of $8.5 million (9.4%), a 2024 test year, ROE of
10.20%, an equity ratio of 52.5% and rate base of $168 million. In
February 2024, the NDPSC approved interim rates of $8 million,
effective March 1, 2024.
PSCo - Colorado Natural Gas Rate Case — In January 2024,
PSCo filed a request with the Colorado Public Utilities Commission
(CPUC) seeking an increase to retail natural gas rates of $171
million, or an approximately 9.5% increase in the average
residential customer bill. The request is based on a 2023 test
year, a 10.25% ROE, an equity ratio of 55% and a $4.2 billion
retail rate base which includes projected capital additions through
Dec. 31, 2023. PSCo has requested a proposed effective date of Nov.
1, 2024.
PSCo has proposed to defer collection of the increased rates
until Feb. 15, 2025 (following the expiration of the rider to
recover Winter Storm Uri costs) to mitigate customer bill impacts,
with revenues for the deferred period collected over a 12-month
period beginning on that date.
Procedural schedule:
- Intervenor testimony: July 11, 2024
- Rebuttal testimony: Aug. 15, 2024
- Settlement deadline: Aug. 27, 2024
- Evidentiary hearing: Sept. 4-12, 2024
- Statement of position: Sept. 26, 2024
PSCo — Colorado Resource Plan — In December 2023,
the CPUC approved a portfolio of 5,835 MW, which includes
approximately 3,100 MW of company owned resources and 2,700 MW of
PPAs. PSCo expects to invest approximately $4.8 billion in
generation resources under the portfolio for the benefit of its
customers and achieving the state’s clean energy goals.
In December 2023, the CPUC approved two PIMs associated with the
generation projects in the portfolio, including a two-way sharing
measure related to capital construction costs and another related
to ongoing levelized energy costs. These PIMs will be further
defined in related proceedings throughout 2024.
In March 2024, PSCo filed its first certificate of need (CPCN)
for the Rocky Mountain and Arroyo 2 solar projects on an expedited
basis in order to begin construction in time for planned in-service
dates in 2025 and 2026. PSCo expects to file additional generation
and transmission CPCNs throughout the remainder of 2024.
PSCo — Transportation Electrification Plan — In
April 2024, the CPUC approved PSCo’s TEP with modification,
including a three-year budget of $264 million and continued cost
recovery through the TEP rider. The CPUC approved PSCo’s proposal
to offer rebates for residential chargers and wiring to be paired
with residential managed charging programs and vehicle rebates for
Income-Qualified customers, as well as its proposal to offer
rebates for commercial public chargers and electric vehicle supply
infrastructure. Additionally, the CPUC approved PSCo’s proposed
budget to support innovation projects including electric school
buses, Vehicle-to-Everything demonstrations, and stakeholder-driven
projects with a focus on disproportionately impacted communities.
The Commission also approved a WACC return on rebates with a 3-year
amortization.
PSCo — Wildfire Mitigation Plan — PSCo will file a
Wildfire Mitigation Plan and request for recovery of costs to
execute the plan in the second quarter of 2024. The plan will
include a number of new and expanded programs from the currently
approved Wildfire Mitigation Plan including distribution
undergrounding, distribution covered conductor, enhanced wildfire
safety settings, increased scope and scale for vegetation
management, updated frequency of inspections of poles and other
equipment in wildfire risk zones, transmission line rebuilds,
proactive line de-energization and situational awareness programs
including weather stations, cameras, and other monitoring
software.
PSCo — CPUC Proactive Line De-Energization
Investigation — In early April 2024, PSCo proactively
de-energized certain lines in Colorado due to winds that were over
90 MPH to reduce potential wildfire risk. Later in April, the CPUC
opened a Miscellaneous Proceeding to seek information on:
- Utility operations during, after, and leading up to the wind
event to identify risks, de-energize lines and re-energize
lines.
- Customer communications (including what was communicated to
whom and when).
- Community engagement to assess the coordination with
neighboring electric providers, telecom companies, 911, medical
providers, and other first responders and community leaders.
The CPUC held sessions to hear public comments and will hold
Commissioner Information Meetings in May 2024 to hear directly from
PSCo, impacted customers, and other first responders and community
leaders on power shutoffs. A potential order, rules, procedures or
report is expected later this year.
SPS — 2023 Texas Electric Rate Case — In 2023, SPS
filed an electric rate case with the Public Utility Commission of
Texas (PUCT) seeking an increase in base rate revenue of $158
million (14%).
The request was based on a ROE of 10.65%, an equity ratio of
54.6%, a retail rate base of $3.6 billion and a change in the Tolk
coal plant depreciation life from 2034 to 2028.
In December 2023, SPS, PUCT Staff and intervenors filed a black
box settlement. Key terms include:
- A base rate increase of $65 million effective back to July 13,
2023.
- A 9.55% ROE, a 54.51% equity ratio and a 7.11% WACC for
purposes of calculating SPS’ allowance for funds used during
construction and in other proceedings filed before the PUCT where a
stated WACC is required.
- The reflection in rates of the retirement of Tolk Generation
Station from 2034 to 2028.
- Establishment of a rate rider of approximately $18 million to
be recovered over a three-year period for various deferred
expenses.
Interim rates based on the settlement went into effect on Feb.
1, 2024. On April 11, 2024, the PUCT unanimously approved the
settlement without modification.
SPS New Mexico Resource Plan — 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. Based on load forecast
scenarios, SPS’ initial IRP modeling projects a total resource need
ranging from approximately 5,300 MW to 10,200 MW by 2030. In
February 2024, the NMPRC accepted the IRP. SPS expects to issue an
RFP for new generation in July 2024. The RFP will be evaluated in
the latter half of 2024 with portfolio selection expected in early
2025.
Note 5. Wildfire
Litigation
2024 Smokehouse Creek Fire Complex — Beginning on
February 26, 2024, multiple wildfires began in the Texas Panhandle,
including the Smokehouse Creek Fire and the 687 Reamer Fire, which
news reports indicate 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. SPS is continuing to conduct
investigations into other potential ignitions associated with the
Smokehouse Creek Fire Complex. According to the Texas A&M
Forest Service’s Incident Viewer and news reports, as of March 19,
2024, the Smokehouse Creek Fire Complex burned approximately
1,055,000 acres.
On March 12, 2024, the Speaker of the Texas House of
Representatives created the Investigative Committee on the
Panhandle Wildfires (the “Investigative Committee”). The
Investigative Committee held public hearings in Pampa, Texas,
between April 2 and April 4, 2024, and stated that it plans to
issue a report by early May 2024.
SPS is aware of approximately 15 complaints, most of which have
also named Xcel Energy Services Inc. as an additional defendant,
relating to the Smokehouse Creek Fire Complex, including one
putative class action on behalf of persons or entities who owned
rangelands or pastures that were damaged by the fire. The
complaints 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. SPS has also received
approximately 46 claims for losses related to the Smokehouse Creek
Fire Complex through its claims process.
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.
Based on the current state of the law and the facts and
circumstances available to Xcel Energy as of the date of this
filing, Xcel Energy believes it is probable that it will incur a
loss in connection with the Smokehouse Creek Fire Complex and
accordingly recorded a pre-tax charge in the amount of $215 million
for the three months ended March 31, 2024 (before available
insurance). The aggregate liability of $215 million for claims in
connection with the Smokehouse Creek Fire Complex (before available
insurance) corresponds to the lower end of the range of Xcel
Energy’s reasonably estimable range of losses, and is subject to
change based on additional information. This $215 million estimate
does not include, among other things, 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) compensation claims for damage to trees, railroad
lines, or oil and gas equipment, or (v) other amounts that are not
reasonably estimable.
Xcel Energy is 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. 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.
SPS records insurance recoveries when it is deemed probable that
recovery will occur, and SPS can reasonably estimate the amount or
range. As of March 31, 2024, SPS has recorded an insurance
receivable for $215 million. While SPS plans to seek recovery of
all insured losses, it is unable to predict the ultimate amount and
timing of such insurance recoveries.
Marshall Wildfire Litigation — In December 2021, a
wildfire ignited in Boulder County, Colorado (the “Marshall Fire”),
which burned over 6,000 acres and destroyed or damaged over 1,000
structures. On June 8, 2023, the Boulder County Sheriff’s Office
released its Marshall Fire Investigative Summary and Review and its
supporting documents (the “Sheriff’s Report”). According to an
October 2022 statement from the Colorado Insurance Commissioner,
the Marshall Fire is estimated to have caused more than $2 billion
in property losses.
According to the Sheriff’s Report, on Dec. 30, 2021, a fire
ignited on a residential property in Boulder, Colorado, located in
PSCo’s service territory, for reasons unrelated to PSCo’s power
lines. According to the Sheriff’s Report, approximately one hour
and 20 minutes after the first ignition, a second fire ignited just
south of the Marshall Mesa Trailhead in unincorporated Boulder
County, Colorado, also located in PSCo’s service territory.
According to the Sheriff’s Report, the second ignition started
approximately 80 to 110 feet away from PSCo’s power lines in the
area.
The Sheriff’s Report states that the most probable cause of the
second ignition was hot particles discharged from PSCo’s power
lines after one of the power lines detached from its insulator in
strong winds, and further states that it cannot be ruled out that
the second ignition was caused by an underground coal fire.
According to the Sheriff’s Report, no design, installation or
maintenance defects or deficiencies were identified on PSCo’s
electrical circuit in the area of the second ignition. PSCo
disputes that its power lines caused the second ignition.
PSCo is aware of 302 complaints, most of which have also named
Xcel Energy Inc. and Xcel Energy Services Inc. as additional
defendants, relating to the Marshall Fire. The complaints are on
behalf of at least 4,047 plaintiffs, and one complaint is filed on
behalf of a putative class of first responders who allegedly were
exposed to the threat of serious bodily injury, or smoke, soot and
ash from the Marshall Fire. The complaints generally allege that
PSCo’s equipment ignited the Marshall Fire and assert various
causes of action under Colorado law, including negligence, premises
liability, trespass, nuisance, wrongful death, willful and wanton
conduct, negligent infliction of emotional distress, loss of
consortium and inverse condemnation. In addition to seeking
compensatory damages, certain of the complaints also seek exemplary
damages.
In September 2023, the Boulder County District Court Judge
consolidated eight lawsuits that were pending at that time into a
single action for pretrial purposes and has subsequently
consolidated additional lawsuits that have been filed. At the case
management conference in February 2024, a trial date was set for
September 2025. Discovery is now underway.
Colorado courts do not apply strict liability in determining an
electric utility company’s liability for fire-related damages. For
inverse condemnation claims, Colorado courts assess whether a
defendant acted with intent to take a plaintiff’s property or
intentionally took an action which has the natural consequence of
taking the property. For negligence claims, Colorado courts look to
whether electric power companies have operated their system with a
heightened duty of care consistent with the practical conduct of
its business, and liability does not extend to occurrences that
cannot be reasonably anticipated.
Colorado law does not impose joint and several liability in tort
actions. Instead, under Colorado law, a defendant is liable for the
degree or percentage of the negligence or fault attributable to
that defendant, except where the defendant conspired with another
defendant. A jury’s verdict in a Colorado civil case must be
unanimous. Under Colorado law, in a civil action other than a
medical malpractice action, the total award for noneconomic loss is
capped at $0.6 million per defendant for claims that accrued at the
time of the Marshall Fire unless the court finds justification to
exceed that amount by clear and convincing evidence, in which case
the maximum doubles.
Colorado law caps punitive or exemplary damages to an amount
equal to the amount of the actual damages awarded to the injured
party, except the court may increase any award of punitive damages
to a sum up to three times the amount of actual damages if the
conduct that is the subject of the claim has continued during the
pendency of the case or the defendant has acted in a willful and
wanton manner during the action which further aggravated
plaintiff’s damages.
In the event Xcel Energy Inc. or PSCo was found liable related
to this litigation and were required to pay damages, such amounts
could exceed our insurance coverage of approximately $500 million
and have a material adverse effect on our financial condition,
results of operations or cash flows. However, due to uncertainty as
to the cause of the fire and the extent and magnitude of potential
damages, Xcel Energy Inc. and PSCo are unable to estimate the
amount or range of possible losses in connection with the Marshall
Fire.
Note 6. Earnings Guidance and Long-Term
EPS and Dividend Growth Rate Objectives
Xcel Energy 2024 Earnings Guidance — Xcel Energy’s 2024
ongoing earnings guidance is a range of $3.50 to $3.60 per
share.(a)
Key assumptions as compared with 2023 actual levels unless
noted:
- Constructive outcomes in all pending rate case and regulatory
proceedings.
- Normal weather patterns for the remainder of the year.
- Weather-normalized retail electric sales are projected to
increase 1% to 2%.
- Weather-normalized retail firm natural gas sales are projected
to be flat.
- Capital rider revenue is projected to increase $60 million to
$70 million (net of PTCs).
- O&M expenses are projected to increase 1% to 2%.
- Depreciation expense is projected to increase approximately
$290 million to $300 million. The change largely reflects changes
in depreciation rates approved in the Texas rate case, which are
largely offset in revenue and earnings neutral.
- Property taxes are projected to increase $20 million to $30
million.
- Interest expense (net of AFUDC - debt) is projected to increase
$165 million to $175 million, net of interest income.
- AFUDC - equity is projected to increase $65 million to $75
million.
- ETR is projected to be ~(4%) to (6%). The negative ETR is
largely offset by PTCs flowing back to customers in the capital
riders and fuel mechanisms and is largely earnings neutral. The
projected ETR does not reflect the potential impact of nuclear
PTCs, which are also expected to flow back to customers.
(a)
Ongoing earnings is calculated
using net income and adjusting for certain nonrecurring or
infrequent items that are, in management’s view, not reflective of
ongoing operations. Ongoing earnings could differ from those
prepared in accordance with GAAP for unplanned and/or unknown
adjustments. As Xcel Energy is unable to quantify the financial
impacts of any additional adjustments that may occur for the year,
we are unable to provide a quantitative reconciliation of the
guidance for ongoing EPS to corresponding GAAP EPS.
Long-Term EPS and Dividend Growth Rate Objectives — Xcel
Energy expects to deliver an attractive total return to our
shareholders through a combination of earnings growth and dividend
yield, based on the following long-term objectives:
- Deliver long-term annual EPS growth of 5% to 7% based off of a
2023 actual ongoing earnings base of $3.35 per share.
- Deliver annual dividend increases of 5% to 7%.
- Target a dividend payout ratio of 50% to 60%.
- Maintain senior secured debt credit ratings in the A
range.
XCEL ENERGY INC. AND
SUBSIDIARIES
EARNINGS RELEASE SUMMARY
(UNAUDITED)
(amounts in millions, except per
share data)
Three Months Ended March
31
2024
2023
Operating revenues:
Electric and natural gas
$
3,626
$
4,051
Other
23
29
Total operating revenues
3,649
4,080
Net income
$
488
$
418
Weighted average diluted common shares
outstanding
556
551
Components of EPS —
Diluted
Regulated utility
$
0.96
$
0.83
Xcel Energy Inc. and other costs
(0.08
)
(0.07
)
GAAP and ongoing diluted EPS
(a)
$
0.88
$
0.76
Book value per share
$
32.09
$
30.54
Cash dividends declared per common
share
0.5475
0.52
(a)
Amounts may not add due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240425403450/en/
Paul Johnson, Vice President - Treasurer & Investor
Relations (612) 215-4535 Roopesh Aggarwal, Senior Director -
Investor Relations (303) 571-2855 Xcel Energy website address:
www.xcelenergy.com (612) 215-5300
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