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Xcel Energy has 'solid' quarter despite lower-than-expected electric sales

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Xcel Energy has 'solid' quarter despite lower-than-expected electric sales

Xcel EnergyInc. experienced a "solid" first quarter, despiteelectric sales falling below expectations, company officials said May 9 duringan earnings conference call.

Declining operations and maintenance expenses "offsetunfavorable weather and lower-than-expected sales," said Xcel EnergyChairman, President and CEO Ben Fowke, who added that sales are projected toimprove during the second half of 2016. "We remain very confidentin our ability to deliver earnings within our guidance range," Fowke said.

The company on May 9 reported its first-quarter ongoing earnings were upabout $10 million year over year to $241.3 million. On a per-share basis, theresult was up 1 cent year over year to 47 cents, in line with the S&PGlobal Market Intelligence normalized EPS consensus estimate.

Xcel Energy generated $2.77 billion in first-quarteroperating revenues, down from $2.96 billion in the opening months of 2015. Theelectric segment generated $2.19 billion in revenues while the natural gassegment generated $565.7 million during the first three months of 2016. Theelectric segment had generated $2.22 billion and the natural gas segment hadgenerated $716.0 million in revenues during the same period of 2015.First-quarter operating income rose to $489.9 million in 2016, from $350.8million in 2015.

As part of Xcel Energy's capital investment plan, it expectsto add 600 MW of wind energy and associated electric transmission in Colorado,representing a rate base investment of more than $1 billion.

In April, the Colorado Public Utilities Commission confirmedthe company's interpretation of a Colorado law that allows utilities to own 25%to 50% of incremental renewables without going through a competitive bidprocess as long as the project is developed at a reasonable cost compared tosimilar renewable sources available in the market, Fowke said. Thelevelized cost of the Colorado project, including transmission, is expected tobe below any other existing wind PPAs in Xcel Energy subsidiary 'sportfolio, he added.

"We therefore believe we will be able to demonstrate tothe commission and the independent evaluator that this project meets andexceeds the reasonable cost standard and represents tremendous value to ourcustomers," Fowke said. Xcel Energy plans to ask the PUC for a decision onthe matter by November, so it can use the full production tax credit benefitfor its customers.

Xcel Energy subsidiary Northern States Power Co. - WI in April for an electric rateincrease of $17.4 million and a natural gas increase of $4.8 million. "Thisis a limited scope case, and ROE in capital structure are not expected to be anissue," Executive Vice President and CFO Bob Frenzel said on the call.According to Frenzel, a decision is expected by December and final rates wouldbecome effective in January 2017.

Additionally, the company has rate cases pending inMinnesota and Texas, and both are in the discovery stage, Frenzel said.

Xcel Energy subsidiary Southwestern Public Service Co. recently a settlement in its NewMexico rate case, calling for the New Mexico Public Regulation Commission toauthorize a $23.5 million electric base rate increase. "Thesettlement represents a compromise, which we think is reasonable," Frenzelsaid, adding that the new rates are anticipated to go into effect in August.