Xcel Energy Inc. · NASDAQ:XEL
Xcel Energy — Bank of America Energy Conference 2006
38 slides from Xcel Energy's conference presentation, Nov 15, 2006
Slide 1: Building the Core Sustainable Growth
Building the Core Sustainable Growth Ben Fowke Vice President and CFO Bank of America Energy Conference November 16, 2006
Slide 2: Safe Harbor
This material includes forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements include projected earnings, cash flows, capital expenditures and other statements and are identified in this document by the words “anticipate,” “estima
Slide 3: Delivering Value — Now and in the Future
Delivering Value — Now and in the Future Building the core — Meeting customers’ needs — Environmental leadership — Getting the rules right Accomplishments — Regulatory — Legislative Future growth Financing the plan
Slide 4: Building the Core: Delivering competitively priced, reliable energy
Building the Core Delivering competitively priced, reliable energy Milwaukee Cents per kWh (Retail) 7.01 Des Moines Amarillo Kansas City Denver Mpls/St. Paul Boston Chicago Phoenix Salt Lake City St. Louis Miami New York Washington DC 6.64 7.79 Source: Summer 2006 EEI Typical Bills 0 3 6 9 12 15 18
Slide 5: Environmental Leadership: Promoting Conservation and Load Management
Building the Core Environmental Leadership Promoting Conservation and Load Management Number of plants avoided 1 Plant = 250 MW 1.6 2.7 3.7 4.7 5.5 6.5 7.4 8.2 1992 1994 1996 1998 2000 2002 2004 2006
Slide 6: Environmental Leadership: Leader in renewables
Building the Core Environmental Leadership Largest U.S. wind provider Double wind supply by year end 2007 Community-based energy Largest U.S. solar photovoltaic announced Wood waste and refuse-derived fuel Leader in renewables
Slide 7: Environmental Leadership: Reducing emissions, increasing efficiency
Building the Core Environmental Leadership Colorado Emission Reduction Program MERP Comanche 1 & 2 Plant uprates Reducing emissions, increasing efficiency
Slide 8: Environmental Leadership: Adopting new technology
Building the Core Environmental Leadership IGCC with sequestration Wind Hydrogen Energy Adopting new technology Xcel Energy in Dow Jones Sustainability Index
Slide 9: Getting the Rules Right
Getting the Rules Right Helping shape public policy – One of the most important things we can do Credibility and leadership to achieve consensus on the appropriate balance: — Customers — Communities — Environmentalists — Regulators — Legislators — Investors
Slide 10: Constructive Regulation: Recent rate case outcomes
Constructive Regulation Recent rate case outcomes Dollars in millions Colorado Gas $34.5 $22.0 11.0% 10.5% Wisconsin Electric 53.1 43.4 11.9 11.0 Wisconsin Gas 7.8 3.9 11.9 11.0 Minnesota Electric 156 131/115 * 11.0 10.54 Colorado Electric 208 151 ** 11.0 10.50 Dollar Increase Return on Equity Reque
Slide 11: Minnesota Gas Rate Case Highlights
Minnesota Gas Rate Case Highlights Requested $18.5 million increase Gas rate base = $440 million 11% return on common equity Equity ratio = 52% Forward test year Expect rates to be in effect January 2007
Slide 12: Regulatory & Legislative Accomplishments
Regulatory & Legislative Accomplishments MERP – Forward recovery Comanche 3 – Forward CWIP through rate case filing Transmission investment – Forward recovery – MN & SD Mercury reduction – Forward recovery – MN Environmental expenditures – Forward recovery – MN Renewable investments – Forward recove
Slide 13: Investment Opportunities 2006 - 2020
A A P A A-MN 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 $700 $900 $60 $300 $700 $100 $700 $30 $4 Committed Estimated Cost Potential Investment A-MN A-MN A-MN A-MN F A A A A A Approved Rider Recovery F Forward Regulatory Recovery Investment Opportunities 2006 - 2020 MERP Comanche 3 CapX 2020 Group
Slide 14: Funding Sustainable Growth
Funding Sustainable Growth 5 – 7% EPS growth * Dividend per share growth 2 – 4% per year Improve credit rating Objectives * Base of $1.30 per share, mid-point of 2006 guidance.
Slide 15: Capital Expenditure Forecast
Base & Other Capital Expenditures $ 850 $ 850 $ 830 $ 990 $ 980 MERP 350 270 180 40 10 Comanche 3 200 340 280 60 10 Minnesota Wind Transmission 60 120 10 50 20 CapX 2020 10 20 110 240 Nuclear Fuel 75 80 80 135 100 Balance 85 100 100 115 140 Total $1,620 $1,770 $1,500 $1,500 $1,500 Capital Expenditur
Slide 16: Assumptions — Potential Sources and Uses of Cash
Assumptions — Potential Sources and Uses of Cash The forecast scenario is illustrative of a potential outcome, and does not imply guidance or a most likely outcome EPS growth of 6% per year, mid-point of the 5 – 7% objective range, from 2006 midpoint of $1.30 Dividend rate increase 3% per year, mid-
Slide 17: Potential Sources and Uses of Cash
Cash from Operations $ 1,650 $ 1,700 $ 1,800 $ 1,900 Cash from Investing Capital Expenditures (1,770) (1,500) (1,500) (1,500) Nuclear Decommissioning (45) (45) (45) (45) Cash from Financing DRIP 40 40 40 40 Dividends (370) (390) (420) (440) Financing Needed $ 495 $ 195 $ 125 $ 45 Potential Sources a
Slide 18: Financing Growth
Financing Growth Current financing plan includes: — DRIP — Modest debt ($600 million) — Hybrid preferred ($300 million 2008) Financing plans to remain flexible: — Capital expenditure opportunities — Unanticipated credit events
Slide 19: Improving Credit Metrics
Improving Credit Metrics * Financing needed funded with: Current plan 100% debt * This forecast scenario is illustrative of a potential outcome, and does not imply guidance or a most likely outcome ** Assuming conversion of convertible notes into equity 43.5 45 45.5 46 47.5 Percent equity capitaliza
Slide 20: 2006 Earnings Guidance Range
2006 Earnings Guidance Range * Regulated Utility $1.25 – $1.35 Holding Company and Other (0.10) COLI – Tax Benefit 0.10 Continuing Operations $1.25 – $1.35 ** 2006 Dollars per share * Assumptions in appendix ** Expectation is to end the year in the upper half of the guidance range
Slide 21: 2007 Earnings Guidance Range
2007 Earnings Guidance Range * Regulated Utility $1.39 – $1.49 Holding Company and Other (0.15) COLI – Tax Benefit 0.11 Continuing Operations $1.35 – $1.45 2007 Dollars per share * Assumptions in appendix
Slide 22: Sustainable Growth
Sustainable Growth Collaborative process that balances various interests and delivers value to customers and investors Constructive rate case outcomes Forward recovery on significant incremental investments Pipeline of investments beyond 2010 Attractive Total Return Sustainable 5 – 7% earnings per s
Slide 23: Appendix
2. Xcel Energy’ Appendix
Slide 24: Xcel Energy operating companies
Northern States Power Company- Minnesota 44% Net Income Public Service Company of Colorado 39% Net Income Southwestern Public Service 12% Net Income Northern States Power Company- Wisconsin 5% Net Income 5 th Largest Combination Electric and Gas Utility (based on customers) Traditional Regulation 20
Slide 25: Owned Generating Facilities and Energy Supply Mix
Coal 36 8,138 Natural Gas 61 4,918 Nuclear 3 1,617 Hydro 83 508 Oil 24 492 RDF 6 96 Wind - 25 Total 15,794 2005 Owned Generating Facilities Unit Type Number MW * Xcel Energy supplies in excess of 1100 MWs of wind power * Xcel Energy Supply Sources Nuclear 10% Coal ** 45% Gas & Oil 38% * Includes pur
Slide 26: Capital Expenditure Forecast by Operating Company
NSP – Minnesota $ 910 $ 880 $ 680 $ 810 $ 820 NSP – Wisconsin 60 70 70 50 60 PSCo 550 680 620 510 500 SPS 100 140 130 130 120 Total $1,620 $1,770 $1,500 $1,500 $1,500 Capital Expenditure Forecast by Operating Company 2006 2007 2008 2009 2010 Dollars in millions
Slide 27: 2005 Rate Base and Returns
2005 Rate Base and Returns Colorado Electric $3,120 8.5% Colorado Gas 1,084 7.00 Minnesota Electric 3,230 10.61 9.98% Minnesota Gas 422 6.30 7.42 North Dakota Electric 175 12.46 12.65 North Dakota Gas 42 5.71 6.81 South Dakota Electric 191 SPS Electric 1,422 Wisconsin Electric 613 Wisconsin Gas 83 R
Slide 28: Senior Debt Ratings
Senior Debt Ratings Holding Co. BBB+ Baa1 BBB- NSPM A+ A2 A- A A3 BBB- NSPW A+ A2 A- A A3 BBB PSCo A- A3 A- BBB+ Baa1 BBB- SPS A- Baa1 BBB Fitch Moody’s S&P Fitch Moody’s S&P Secured Unsecured
Slide 29: Texas Electric Rate Case Highlights
Texas Electric Rate Case Highlights Requested $63 million increase, capped at $48 million Electric rate base = $943 million 11.6% return on common equity Equity ratio = 51% Historical test year with adjustments for known and measurable Expect rates to be in effect second quarter 2007
Slide 30: Potential Additional Rate Cases with 2007 Impact
Potential Additional Rate Cases with 2007 Impact Colorado Gas Filing Planned for 2006 North Dakota Electric Potential New Mexico Electric Potential South Dakota Electric Potential
Slide 31: Minnesota Cost Recovery Mechanisms
Minnesota Cost Recovery Mechanisms Projected electric fuel and purchased energy costs billed for the current month with subsequent true-up; MISO energy and ancillary services being recovered through FCA. Projected purchased gas cost billed for the current month with subsequent true-up Conservation I
Slide 32: Colorado Cost Recovery Mechanisms
Colorado Cost Recovery Mechanisms Quarterly Energy Cost Adjustment to recover electric fuel and purchased energy costs – Pending CPUC approval of settlement Monthly Gas Cost Adjustment recovers natural gas commodity, interstate pipeline and storage costs Annual Purchased Capacity Adjustment to recov
Slide 33: Corporate-Owned Life Insurance Litigation (COLI)
Corporate-Owned Life Insurance Litigation (COLI) Positive pre-deduction cash flows Mortality gains The buildup of cash values The court’s opinion in the Dow case outlined three indicators of potential economic benefits to be examined in a COLI case. In Xcel Energy’s COLI case, the plans: Were projec
Slide 34: 2006 Key Earnings Guidance Assumptions
2006 Key Earnings Guidance Assumptions Approval of Minnesota electric rate case decision No material incremental accruals in SPS regulatory proceedings Normal weather patterns for remainder of year Weather adjusted sales growth: — Retail electric 1.8 – 2.1% — Retail gas decline 1 – 2% Short-term who
Slide 35: 2006 Key Earnings Guidance Assumptions (continued)
2006 Key Earnings Guidance Assumptions (continued) Depreciation increases $45 – $55 million, excluding decommissioning Decommissioning accruals increase approximately $20 million Interest expense increases $10 – $15 million AFUDC equity increases $5 – $10 million Continue to recognize COLI tax deduc
Slide 36: 2007 Key Earnings Guidance Assumptions
2007 Key Earnings Guidance Assumptions Approval of Minnesota electric rate case decision Approval of Colorado electric rate case settlement Reasonable rate recovery is approved — Texas electric rate request — Potential Minnesota gas rate request — Potential Colorado gas rate request No material incr
Slide 37: 2007 Key Earnings Guidance Assumptions (continued)
2007 Key Earnings Guidance Assumptions (continued) Short-term wholesale and commodity trading margins of $15 – $25 million Capacity costs at NSPM and SPS increase $35 million Operating and maintenance expenses increase 2 – 3% Depreciation increases $45 – $55 million Interest expense increases $35 to
Slide 38: Xcel Energy
2 Xcel Energy’