Xcel Energy Inc. · NASDAQ:XEL
Xcel Energy — Q3 2020 Earnings Presentation
34 slides from Xcel Energy's earnings presentation, Oct 29, 2020
Slide 1: Third Quarter 2020 Earnings Report Presentation
THIRD QUARTER 2020 EARNINGS REPORT PRESENTATION OCTOBER 29, 2020
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 the 2020 and 2021 earnings per share (EPS) guidanc
Slide 3: 2020 Q3 Highlights
2020 Q3 Highlights • Effectively mitigating COVID-19 impacts • Narrowed original 2020 earnings guidance to $2.75 to $2.81 per share • Initiated 2021 earnings guidance of $2.90 to $3.00 per share • Announced robust capital forecast • Filed Minnesota Relief and Recovery plan • Mower wind farm PPA buyo
Slide 4: COVID-19 Support for Customers
COVID-19 Support for Customers • Temporarily suspended residential customer service disconnections • Waived reconnection and late fees • Proactively set up payment plans with customers needing help • Proposed $17.5 million of payment credits for customers with past due accounts • Offered business cu
Slide 5: Special Community Support
Special Community Support COVID-19 relief: • Began distributing funds from ~$20 million corporate giving commitment (gain on sale of Mankato) − $1.5 million to address food insecurity and other relief efforts − Up to $750,000 in grants for struggling restaurants − $300,000 for distance learning pods
Slide 6: Robust Capital Forecast 2021 - 2025
Robust Capital Forecast 2021 - 2025 Base Forecast Incremental Forecast Other Electric Other Electric 10% Distribution SPS 10% Distribution NSPM 32% 15% 29% 37% Natural Incremental Natural Gas LDC $22.6 Opportunities Gas LDC $22.5 $24.0 14% Billion Proposed NSPM 13% Billion Billion Electric wind and
Slide 7: Proposed Incremental Projects
Proposed Incremental Projects ~$1.4 Billion in Additional Wind and Solar Wind Repowering (~$750 million) Solar (~$650 million) • Four owned farms (~650 MW) • 460 MW universal scale • MPUC decision requested 2020 YE • MPUC filing 2021 Q1 • Decision requested 2021 Q2/Q3 ($ Millions) 2021 2022 2023 202
Slide 8: Strong Rate Base Growth
Strong Rate Base Growth $ Billions Incremental forecast: 2020 - 2025 CAGR: ~6.9% Base forecast: 2020 - 2025 CAGR: ~6.3% $46.0 $43.7 $41.1 $38.2 $35.4 $44.7 $42.3 $40.0 $37.7 $35.2 $33.0 2020E 2021E 2022E 2023E 2024E 2025E Incremental forecast includes proposed NSPM wind repowering and universal sola
Slide 9: Wind Development – Proven Ability to Execute
Wind Development – Proven Ability to Execute Largest Multi-state Wind Investment in the Nation ~4,500 MW Owned and In Service Capacity Project Capacity Owned wind Border (ND) 150 MW Freeborn (MN) 200 MW Courtenay (ND) 200 MW Blazing Star 2 (MN) 200 MW Grand Meadow (MN) 100 MW Crowned Ridge (SD)* 200
Slide 10: Solar Ownership – Western Mustang Project
Solar Ownership – Western Mustang Project • First universal scale solar rate base investment – Build-own-transfer in NSPW – 74 MW • Investment of ~$100 million • 30% ITC qualification • Anticipate PSCW decision in 2021 Q3 • Commercial operation expected by 2022 YE 9
Slide 11: EPS Results by Operating Company
EPS Results by Operating Company Third Quarter YTD Operating Company 2020 2019 2020 2019 NSPM $ 0.46 $ 0.40 $ 0.89 $ 0.81 PSCo 0.42 0.39 0.87 0.86 SPS 0.24 0.20 0.46 0.42 NSPW 0.08 0.06 0.16 0.12 Equity earnings 0.01 0.01 0.04 0.04 Regulated utility 1.21 1.06 2.42 2.24 Holding company and other (0.0
Slide 12: Quarterly GAAP and Ongoing EPS Change
Quarterly GAAP and Ongoing EPS Change $0.07 $0.03 ($0.09 ) ( $0.04) $0.20 ($0.03) ( $0.01) $1.14 $1.01 2019 Q3 2020 Q3 EPS EPS * Includes PTCs and tax reform regulatory amounts, which are primarily offset in electric margin 11
Slide 13: YTD GAAP and Ongoing EPS Change
YTD GAAP and Ongoing EPS Change $0.08 $0.07 ($0.19) $0.17 ($0.07) ($0.05) ($0.03) $0.22 ($0.03) $2.08 $2.25 2019 YTD 2020 YTD EPS EPS * Combined electric and natural gas margins include ~$0.01 of negative weather impacts (post decoupling) ** Includes PTCs and tax reform regulatory amounts, which are
Slide 14: Electric Margin
Electric Margin Third Quarter YTD Diluted Earnings (Loss) Per Share 2020 2020 Electric margin (excluding reductions in sales and demand) $0.21 $0.30 Reductions in sales and demand * (0.01) (0.08) Higher electric margins $0.20 $0.22 * Excludes weather impact, net of decoupling/sales true-up and decre
Slide 15: Sales and Customer Data
Sales and Customer Data 2020 YTD W/A Retail Electric Sales Growth 2020 Q3 YoY Electric Customer Growth (leap year adjusted) 1.0% 1.2% 1.0% 0.9% 0.5% -2.5% -3.0% -3.8% -3.5% -4.6% NSPM NSPW PSCo SPS Xcel Energy NSPM NSPW PSCo SPS Xcel Energy 2020 YTD W/A Natural Gas Sales Growth 2020 Q3 YoY Natural G
Slide 16: SPS Texas Electric Rate Case
SPS Texas Electric Rate Case Docket # 49831 • In March 2020, SPS filed an update to its rate case, requesting: – Base rate increase of $130 million – ROE of 10.1% and equity ratio of 54.62% – Rate base of $2.6 billion – June 30, 2019 HTY • In August 2020, the Commission approved a black box settleme
Slide 17: PSCo Colorado Natural Gas Rate Case
PSCo Colorado Natural Gas Rate Case Docket # 20AL-0049G • In February 2020, PSCo filed a natural gas rate case requesting: – Revised net rate increase of $121 million (net of PSIA rider transfer) – ROE of 9.95% and equity ratio of 55.8% – Rate base of ~$2.2 billion – Sept. 2019 HTY adjusted for know
Slide 18: PSCo Rider Filing
PSCo Rider Filing Wildfire Docket # 20A-0300E, Advanced Grid Docket # 20AL-0301E • In July 2020, PSCo filed for rider recovery of: – Wildfire mitigation – Advanced grid • Capital investment: Advance grid = $850 million; Wildfire mitigation = $325 million • Filing avoids a full electric rate case • C
Slide 19: 2020 EPS Guidance Narrowed: $2.75 – $2.81
2020 EPS Guidance Narrowed: $2.75 – $2.81 Earnings Drivers Key Assumptions (as compared to 2019 levels unless noted) Regulatory proceedings Constructive outcomes in all proceedings Weather Normal weather for the rest of the year W/A retail electric sales Decline of approximately 3% W/A retail natura
Slide 20: 2021 GAAP & Ongoing EPS Guidance: $2.90 – $3.00
2021 GAAP & Ongoing EPS Guidance: $2.90 – $3.00 Earnings Drivers Key Assumptions (as compared to 2020 levels unless noted) Regulatory proceedings Constructive outcomes in all proceedings COVID-19 Modest impacts Weather Normal weather W/A retail electric sales Increase of approximately 1% W/A retail
Slide 21: Base Capital Expenditures by Function
Base Capital Expenditures by Function $ Millions 2021 2022 2023 2024 2025 Total Electric Distribution $1,205 $1,440 $1,550 $1,505 $1,475 $7,175 Electric Transmission $870 $1,285 $1,285 $1,270 $1,290 $6,000 Electric Generation $630 $575 $560 $750 $975 $3,490 Natural Gas $615 $615 $665 $670 $625 $3,19
Slide 22: Base Capital Expenditures by Company
Base Capital Expenditures by Company $ Millions 2021 2022 2023 2024 2025 Total NSPM $1,630 $1,605 $1,635 $1,645 $1,890 $8,405 NSPW $360 $430 $395 $515 $470 $2,170 PSCo $1,700 $1,835 $1,750 $1,695 $1,655 $8,635 SPS $505 $710 $770 $735 $675 $3,395 Other* ($20) ($15) $10 $10 $10 ($5) Total $4,175 $4,56
Slide 23: Base Financing Plan 2021 – 2025
Base Financing Plan 2021 – 2025* $ Millions $250 $410 $7,260 $4,120 $4,120 $22,600 $14,680 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 22
Slide 24: Strong Credit Metrics
Strong Credit Metrics Plan 2021 2022 2023 2024 2025 FFO/Debt ~17% ~17% ~17% ~17% ~17% Debt/EBITDA 4.9x 4.8x 4.8x 4.8x 4.8x Equity Ratio 42% 42% 41% 41% 41% Hold Co Debt/Total Debt 22% 23% 23% 23% 23% Credit Ratings Moody’s S&P Fitch Xcel Energy Unsecured Baa1 BBB+ BBB+ NSPM Secured Aa3 A A+ NSPW Sec
Slide 25: Appendix
APPENDIX 24
Slide 26: COVID-19 Impacts
COVID-19 Impacts • Deferral orders pursued for COVID-related bad debt expense: − Normal bad debt levels ~$40 million/yr; reached $65 million in 2008-09 recession − Orders approved in Minnesota, Wisconsin, Colorado, Texas, New Mexico, South Dakota and Michigan − Filed request in North Dakota; pending
Slide 27: Liquidity Profile
Liquidity Profile $ Millions Over $4 Billion in Liquidity Available Total Entity & Credit Facility * Amount Drawn ** Cash Liquidity Liquidity Hold Co $1,250 $0 $1,250 $269 $1,519 NSPM $500 $10 $490 $202 $692 NSPW $150 $10 $140 $0 $140 PSCo $700 $8 $692 $2 $694 SPS $500 $16 $484 $1 $485 Sub-Total $3,
Slide 28: ROE Results – GAAP and Ongoing Earnings
ROE Results – GAAP and Ongoing Earnings GAAP and Ongoing ROE 2019 Rate Base Twelve Months Ended 9/30/2020 SPS 10.33% 10.97% 16% 9.53% 9.26% 8.94% NSPM 8.10% $30 37% PSCo Billion 41% NSPM NSPW PSCo SPS Total Xcel NSPW OpCo Energy 6% 27
Slide 29: 2021 Long-term Debt Financing Base Plan
2021 Long-term Debt Financing Base Plan $ Millions Issuer Security Amount Hold Co Senior Unsecured Bonds N/A NSPM First Mortgage Bonds ~$400 NSPW First Mortgage Bonds ~$100 PSCo First Mortgage Bonds ~$400 SPS First Mortgage Bonds ~$150 Financing plans are subject to change, depending on capital expe
Slide 30: Xcel Energy W/A Sales Growth
Xcel Energy W/A Sales Growth Residential C&I Total Retail Electric Natural Gas Electric Natural Gas 2.8% 1.5% 2.4% 2.7% 0.8% 0.4% 1.3% -0.5% -0.3% -1.0% -3.5% -5.8% YTD YTD YTD YTD 2018 2019 2020* 2018 2019 2020* 2018 2019 2020* 2018 2019 2020* * Leap year adjusted Extreme weather variations, wind c
Slide 31: 2020 YTD W/A Electric Sales Growth
2020 YTD W/A Electric Sales Growth NSPM NSPW PSCo SPS Residential C&I Total Retail 3.0% 2.3% 3.2% 1.6% -2.5% -3.0% -4.6% -3.8% -3.9% -5.1% -6.2% -7.8% Leap year adjusted Extreme weather variations, wind chill and cloud cover may not be reflected in growth (decline) estimates 30
Slide 32: Retail Electric Sales and Revenue By Class
Retail Electric Sales and Revenue By Class Residential Small C&I Large C&I Percent of revenue 37% 41% 21% Percent of sales (KWh) 28% (~70% decoupled) 40% (~40% decoupled) 32% (~25% decoupled) 1% sales impact ~$5 million ~$20 million Considerations Highest-margin class Demand charges ~56% of base rev
Slide 33: Retail Electric C&I Demand Charges
Retail Electric C&I Demand Charges % of % of Demand % of Demand Revenue Based on Company C&I Base Revenue Based on Greater of the Current Month Peak or Prior Levels Revenue Current Month Peak NSPM 44% 25% 75% - Greater of current month peak or 50% of peak in past year NSPW 32% 85% 15% - Highest mont
Slide 34: © 2020 Xcel Energy Inc.
(2) Xcel Energy’ © 2020 Xcel Energy Inc.