Xcel Energy Inc. · NASDAQ:XEL
Xcel Energy — Q3 2022 Earnings Presentation
36 slides from Xcel Energy's earnings presentation, Oct 27, 2022
Slide 1: Third Quarter 2022 Earnings Report Presentation
THIRD QUARTER 2022 EARNINGS REPORT PRESENTATION OCTOBER 27, 2022
Slide 2: Safe Harbor
Safe Harbor Except for the historical statements contained in this presentation, 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 2022 and 2023 EPS guidance, long
Slide 3: 2022 Q3 Highlights
2022 Q3 Highlights • IRA groundbreaking legislation that reduces cost of renewables for customers, improves cash flow and credit metrics, and improves competitiveness of renewable projects • Minnesota Commission approved the 460-MW Sherco Solar project • MSCI upgraded Xcel Energy’s ESG rating to AAA
Slide 4: Robust Base Capital Forecast 2023 - 2027
Robust Base Capital Forecast 2023 - 2027 Investment by Function Investment by Company Other Electric SPS SPS NSPM 11% Distribution 13% 15% NSPM 37% 32% Natural 40% Gas LDC ~$29.5 $22.5 ~$29.5 12% Billion Billion Billion Electric Electric Generation Transmission PSCo NSPW 13% 29% 38% NSPW 10% Renewab
Slide 5: Potential Incremental Investment 2023 - 2027
Potential Incremental Investment 2023 - 2027 $2.0 - $4.0 Billion in Incremental Opportunities $1.5 - $3.0 Billion Renewables ~3,500 MW proposed additions across Colorado and Minnesota resource plans, assuming 50% ownership $0.5 - $1.0 Billion Transmission Enables renewables associated with the Color
Slide 6: Strong Rate Base Growth
Strong Rate Base Growth Xcel Energy Consolidated Op Co Base CAGRs 2022 - 2027 Base 2022 - 2027 CAGR: ~6.5% $ Billions Incremental 2022 - 2027 CAGR*: ~7.6% NSPM PSCo $56.2 ~6% ~7% $51.7 XEL ~6.5% NSPW SPS $53.3 ~12% ~4% $48.0 $50.3 $41.7 $44.8 $38.9 Op Co CAGRs exclude potential 2022E 2023E 2024E 202
Slide 7: Inflation Reduction Act
Inflation Reduction Act Wind and Solar PTC • Reduces levelized cost of solar projects by 25-40% and wind projects by 50-60%* • Solar PTC reduces cost of utility projects compared to solar ITC Nuclear and Hydrogen PTC • Nuclear PTC provides significant customer credits, depending on MISO marginal pri
Slide 8: Transparent Resource Plans
Transparent Resource Plans 80% Carbon Reduction by 2030, Full Coal Exit by 2034 PSCo NSPM/NSPW SPS Carbon reduction 85% 85% >70% Full coal exit 2030 2030 2034 New renewables ~4,000 MW ~5,800 MW ~1,900 MW Spend horizon 2025 - 2030 2024 - 2034 2025 and beyond 7
Slide 9: EPS Results by Operating Company
EPS Results by Operating Company Third Quarter YTD Operating Company 2022 2021 2022 2021 PSCo $ 0.45 $ 0.40 $ 1.02 $ 0.96 NSPM 0.49 0.46 0.94 0.91 SPS 0.25 0.25 0.52 0.48 NSPW 0.07 0.07 0.19 0.15 Earnings from equity method investments 0.01 0.01 0.03 0.03 Regulated utility 1.28 1.19 2.69 2.54 Holdin
Slide 10: Quarterly GAAP and Ongoing EPS Change
Quarterly GAAP and Ongoing EPS Change $0.33 $0.02 ($0.10) ($0.06) ($0.05) ($0.04) ($0.03) ($0.02) $1.13 $1.18 2021 Q3 2022 Q3 EPS EPS * Electric margin includes ~$0.01 of positive weather impacts (post regulatory mechanisms) ** Includes PTCs and plant regulatory amounts, which are primarily offset i
Slide 11: YTD GAAP and Ongoing EPS Change
YTD GAAP and Ongoing EPS Change $0.12 $0.04 ($0.30) $0.67 ($0.13) ($0.10) ($0.10) ($0.07) ( $0.03) $2.38 $2.48 2021 YTD 2022 YTD EPS EPS * Combined electric and natural gas margins include ~$0.04 of positive weather impacts (post regulatory mechanisms) ** Includes PTCs and plant regulatory amounts,
Slide 12: Sales and Customer Data
Sales and Customer Data 2022 YTD W/A Retail Electric Sales Growth 2022 Q3 YoY Electric Customer Growth 7.4% 2.0% 2.8% 2.2% 1.0% 1.0% 0.8% 0.9% 0.6% -1.6% NSPM NSPW PSCo SPS Xcel Energy NSPM NSPW PSCo SPS Xcel Energy 2022 YTD W/A Natural Gas Sales Growth 2022 Q3 YoY Natural Gas Customer Growth 7.4% 6
Slide 13: Uri Storm Cost Recovery
Uri Storm Cost Recovery NSPM • Minnesota approved full Uri cost recovery with exception of a $19 million disallowance Recovery period (started in September 2021): C&I 27 months and residential 63 months • North Dakota approved full Uri cost recovery over 15 months (starting in July 2021) • South Dak
Slide 14: NSPM Minnesota Natural Gas Rate Case
NSPM Minnesota Natural Gas Rate Case Proceeding No. 21-678 • In November 2021, NSPM filed a natural gas rate case: – Requesting rate increase of ~$36 million – ROE of 10.5% and equity ratio of 52.50% – Rate base of ~$934 million – 2022 forward test year • In 2021, the MPUC approved interim rates of
Slide 15: NSPM Minnesota Electric Rate Case
NSPM Minnesota Electric Rate Case Proceeding No. 21-630 • In October 2021, NSPM filed a three-year electric rate case: – Requesting rate increase of $677 million over three years – ROE of 10.2% and equity ratio of 52.5% – 2022 - 2024 forward test years $ Millions, Except Percentages 2022 2023 2024 T
Slide 16: PSCo Colorado Natural Gas Rate Case
PSCo Colorado Natural Gas Rate Case Proceeding No. 22AL-0046G • In January 2022, PSCo filed a natural gas rate case: – Requesting a revised net base rate increase of ~$94 million in 2022, with incremental step increases of $40 million in 2023 and $41 million in 2024 – Total revised change to base ra
Slide 17: Base Capital Expenditures by Function
Base Capital Expenditures by Function $ Millions 2023 2024 2025 2026 2027 Total Electric Distribution $1,610 $1,790 $1,680 $2,000 $2,450 $9,530 Electric Transmission $1,280 $1,650 $1,890 $1,690 $1,900 $8,410 Electric Generation $710 $910 $900 $560 $650 $3,730 Natural Gas $740 $730 $760 $650 $680 $3,
Slide 18: Base Capital Expenditures by Company
Base Capital Expenditures by Company $ Millions 2023 2024 2025 2026 2027 Total NSPM $2,000 $2,400 $2,530 $2,200 $2,580 $11,710 NSPW $540 $570 $500 $450 $540 $2,600 PSCo $2,140 $2,440 $2,550 $1,980 $2,190 $11,300 SPS $710 $780 $720 $770 $900 $3,880 Other* $10 $10 ($30) $10 $10 $10 Total $5,400 $6,200
Slide 19: Financing Plan 2023 - 2027
Financing Plan 2023 - 2027* $ Millions $325 $425 $8,210 $3,800 $3,800 $29,500 $20,540 CFO** Maturing Refinanced Incremental Equity Equity Base Plan LT Debt LT Debt Debt (Other) (DRIP) * Financing plans are subject to change ** Cash from operations is net of dividends and pension funding 18
Slide 20: Strong Credit Metrics
Strong Credit Metrics Plan 2023 2024 2025 2026 2027 FFO/Debt ~18% ~19% ~18% ~18% ~18% Debt/EBITDA 4.9x 4.9x 4.9x 4.9x 4.9x Equity Ratio 40% 40% 40% 40% 40% Hold Co Debt/Total Debt 24.1% 24.3% 24.9% 24.7% 24.9% Credit Ratings Moody’s S&P Fitch Xcel Energy Unsecured Baa1 BBB+ BBB+ NSPM Secured Aa3 A A
Slide 21: 2022 GAAP & Ongoing EPS Guidance Narrowed: $3.14 - $3.19
2022 GAAP & Ongoing EPS Guidance Narrowed: $3.14 - $3.19 Earnings Drivers Key Assumptions (as compared to 2021 levels unless noted) Regulatory proceedings Constructive outcomes in all proceedings Weather Normal weather patterns for the remainder of the year W/A retail electric sales Increase of ~2%
Slide 22: 2023 GAAP and Ongoing EPS Guidance: $3.30 - $3.40
2023 GAAP and Ongoing EPS Guidance: $3.30 - $3.40 Earnings Drivers Key Assumptions (as compared to 2022 projected levels unless noted) Regulatory proceedings Constructive outcomes in all proceedings Weather Normal weather patterns for of the year W/A retail electric sales Increase of ~1% W/A retail
Slide 23: Appendix
APPENDIX 22
Slide 24: Colorado Resource Plan
Colorado Resource Plan 85% Carbon Reduction & Coal Exit by 2030 Full coal exit by 2030 Significant renewable additions • Hayden 1 & 2 (233 MW) retire 2028/2027 • ~2,400 MW wind • Pawnee (505 MW) conversion to natural • ~1,600 MW universal scale solar gas no later than January 2026 • ~1,200 MW distri
Slide 25: Minnesota Resource Plan
Minnesota Resource Plan 85% Carbon Reduction & Coal Exit by 2030 Full coal exit by 2030 Significant renewable additions • King (511 MW) retire 2028 • 2,500 MW universal scale solar • Sherco 3 (517 MW) retire 2030 • 2,150 MW wind • Additional 1,100 MW beyond 2032 Firm peaking capacity (reliability dr
Slide 26: Transmission Expansion - Colorado Pathway
Transmission Expansion - Colorado Pathway $1.7 Billion Transmission Backbone - Approved • Enables ~5,500 MW of renewable generation • ~560 miles of 345 kV lines; three new, four expanded substations • Settlement reached November 2021, including the $1.7 billion estimate and rider recovery • Commissi
Slide 27: Transmission Expansion - MISO Tranche 1
Transmission Expansion - MISO Tranche 1 MISO Tranche 1 (in service by 2030) • 18 projects totaling $10.3 billion 3 2 Xcel Energy Preliminary Estimates 5 4 • ~$1.2 billion based on the following:* 6 2 Alexandria - Cassie’s Crossing 3 Iron Range - Benton - Cassie’s Crossing 4 Wilmarth - North Rocheste
Slide 28: NSPM North Dakota Natural Gas Rate Case
NSPM North Dakota Natural Gas Rate Case Proceeding No. PU-21-381 • In September 2021, NSPM filed a natural gas rate case seeking a $7 million rate increase – Revised rate increase to ~$6 million in April 2022 – ROE of 10.5% and equity ratio of 52.54% – Revised rate base of ~$115 million – 2022 forwa
Slide 29: NSPM South Dakota Electric Rate Case
NSPM South Dakota Electric Rate Case Proceeding No. EL22-017 • In June 2022, NSPM filed an electric rate case requesting: • Rate increase of ~$44 million • ROE of 10.75% and equity ratio of 53% • Rate base of ~$947 million • 2021 historic test year • Rates expected to be effective in 2023 Q1 28
Slide 30: ROE Results – GAAP and Ongoing Earnings
ROE Results – GAAP and Ongoing Earnings GAAP and Ongoing ROE 2021 Rate Base Twelve Months Ended 9/30/2022 SPS 10.82% 10.60% 18% 9.16% 8.50% NSPM 8.31% 8.07% ~$36 39% PSCo Billion 38% NSPM NSPW PSCo SPS Total Xcel NSPW OpCo Energy 5% 29
Slide 31: 2023 Debt Financing Plan
2023 Debt Financing Plan $ Millions Issuer Security Amount Hold Co Senior Unsecured Bonds $450 NSPM First Mortgage Bonds $650 NSPW First Mortgage Bonds $150 PSCo First Mortgage Bonds $650 SPS First Mortgage Bonds $100 Financing plans are subject to change, depending on capital expenditures, regulato
Slide 32: 2022 YTD W/A Electric Sales Growth
2022 YTD W/A Electric Sales Growth NSPM NSPW PSCo SPS Residential C&I Total Retail 9.0% 7.4% 3.8% 2.7% 2.0% 2.8% 0.6% 0.6% 0.7% -0.5% -1.6% -3.7% Extreme weather variations, windchill and cloud cover may not be reflected in growth (decline) estimates 31
Slide 33: Xcel Energy W/A Sales Growth
Xcel Energy W/A Sales Growth Residential C&I Total Retail Electric Natural Gas Electric Natural Gas 3.1% 2.1% 3.5% 1.7% 2.2% 0.8% 0.7% 0.4% 0.9% -1.0% -3.1% -5.4% 2022 2022 2022 2022 2020* 2021* YTD 2020* 2021* YTD 2020* 2021* YTD 2020* 2021* YTD * Leap year adjusted Extreme weather variations, wind
Slide 34: Pension Profile
Pension Profile Funded Status and Assumptions Target Asset Allocation Discount Rate 3.08% Long-duration fixed income Domestic and securities Return international 38% ~100% equity securities 6.49% 33% Short-to- Trackers intermediate MN, WI, CO, TX fixed income Alternative securities investments 11% C
Slide 35: 2022 Q4 Events
2022 Q4 Events Events Dates EEI Financial Conference November 13-15 Mizuho Conference November 28 Wells Fargo Conference December 8 34
Slide 36: © 2022 Xcel Energy Inc.
(2) Xcel Energy’ © 2022 Xcel Energy Inc.