Xcel Energy Inc. · NASDAQ:XEL
Xcel Energy — EEI International Conference 2005
53 slides from Xcel Energy's conference presentation, Feb 15, 2005
Slide 1: EEI International Conference
EEI International Conference j February 2005
Slide 2: Safe Harbor
_ XeelEnergy Safe Harbor This material includes forward-looking statements that are subject to certain alc tear tainties Snlbies initiate Sich arvdar dulce line ataletnate include projected earnings, cash flows, capital expenditures and other SE EE ee wae “estimate,” “expect,” “projected,” ” “outloo
Slide 3: @
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Slide 4: Status of US Electricity Regulation
Xcel Energy” Status of US Electricity Regulation (oy Seas sana by Xcel Energy ll Regulated) MB Large customer access I Adopted restructuring {ll Restructuring suspended 1 Delayed start dates (ll Repealed restructuring
Slide 5: Xcel Energy operating companies and strong regional economy
Northern States @, Xcel Energy” Power Company- 4 Northern States : Minnesota Power Company: Public Service Wisconsin Company of Colorado Strong Regional Economy Unemployment rate — Public Service November 2004 us 5.2% Xcel service area 4.1% Job growth — 2005 Forecast 4th largest US electric Xcel/ser
Slide 6: Low-Risk Strategy
_ XeelEnergy Low-Risk Strategy Invest in utility assets to meet sales growth AND Earn our allowed return on equity Total return objective: 7 to 9% per year Dividend yield 5% Earnings growth 2 to 4% 100% of income from regulated operations
Slide 7: Drivers to Value Creation
Drivers to Value Creation
Slide 8: Energy Supply Mix — 2004
’ : Xcel Energy Energy Supply Mix — 2004 Owned and Purchased Fuel Mix Purchased Energy Gas Other 21% 41% Coal * Owned 54% Generation 68% Nuclear 12% Renewable 1% * Low-sulfur, low-mercury western coal
Slide 9: Supply Requirement and Capability
@ Xcel Energy~ Xcel Energy Supply Requirement and Capability Thousands of MW 27 Resource need without 264 renewal of expiring purchase contracts 257 A Supply requirement 244 23 5 22 Current capability based on existing) generation 21 and) contracted purchases 20 2004 2005 2006 2007 2008 2009 2010 20
Slide 10: Resource Plan Investments
Minnesota MERP 2009 $1 Billion * Comanche 3 ** 2008 ~~ $1 Billion 4s0MW 2005 $125 Mill ource Plan Estimated 2015 nee 4,125 MW baseload Nuclear plant relicensing 1,600 MW 3 Units: 2010; 2013; * Cost including refurbishment of existing 1228 MW and 300 MW of additional capacity * Public Service of Colo
Slide 11: Supply Requirement and Capability
@ Xcel Energy~ Xcel Energy Supply Requirement and Capability Thousands of MW 27 Resource need without 264 renewal of expiring purchase contracts 257 Supply requirement 2a With approved 23 additions 22 Current capability based on existing generation 21 and contracted purchases 20 2004 2005 2006 2007
Slide 12: Reducing Regulatory Risk of Major Investments
Xcel Energy Reducing Regulatory Risk of Major Investments Traditional Regulatory Innovative Regulatory Treatment Treatment Supports Xcel Energy Strategy _ Company makes significant _ Company receives assurance capital investment over Prior to proceeding ree eial ~-Prudency of capital ge) Files for c
Slide 13: Environmental Initiatives
@ Xcel Energy- Environmental Initiatives Owned Generation (GWhj Pounds per MWh 86,000 6.0 82,000 78,000 74,000 70,000 66,000 62,000 1997 1998 1999 2000 2001 2002 2003 —— Nitrogen Oxide emissions Owned generation (GWh. — Sulfur Dioxide emissions Ll g ( )
Slide 14: Commitment to Wind Power
Xcel Energy- Commitment to Wind Power 2500 By GS Actual 2000 | ©) Projected, 1500 1000 + g29 884 = > _469 478 |) sl | | 438 | o> : ——- ; 1997 1998 1999 2000 2001 2002 2003 2004 2005 ~* “Timing dependent on renewal of Production Tax Credit
Slide 15: Minnesota Metro Emissions Reduction Program (MERP)
linnesota Metre Sic Reduction Program (MERP) Convert two i ity coal plants to natural g refurbish a thir in-city coal plant __| Improves environment Mercury Particulate CO, day, 4 Target ROE: 40. 86% with incentive sliding scale 9.97 to 11.46% _ Equity ratio 48.5%
Slide 16: Colorado — Comanche
_ XeelEnergy Colorado — Comanche 3 _ Net emissions of SO2 and NOx for Comanche Units 1, 2, & 3 will not exceed current emissions _ Construction expenditures up to a formula-based cap are deemed prudent _ | PSCo equity capitalization not to exceed 60% deemed reasonable for 2006 rate case proceeding _
Slide 17: Strategy
Strategy Py ‘t , a 4 | Invest in utility assets to meet sales growth ii
Slide 18: Vice President and Chief Financial Officer
Xcel Energy~ Vice President and Chief Financial Officer
Slide 19: Deliver good value to our customers
Business ee ie ; 1 J! Deliver good value: to our customers.
Slide 20: Retail Electric Rate Comparison
- XeelEneroy- Retail Electric Rate * Comparison 418 Cents per KiWh * EEI typical bills - Summer 2004 16 14 12 10 3 6.07) 6.06 8 14.87 4 4 PR ae g 2 ®\e Koto iS eros SF ee ee Get OTST SO Se we
Slide 21: No competitive threats
_ XeelEnergy __ No competitive threats: _ Constructive regulation _ Executable strategy _ Experienced, focused management _ Identify and manage risks _ Solid balance sheet
Slide 22: Total Return Objective
Total Return Objective — 5% Dividend yield n ! 2 to 4% Earnings per share growth 7 to 9% Total return Objective: Annual dividend increases consistent with long-term earnings growth
Slide 23: Earnings Growth Drivers
Earnings Growth Drivers Annual growth rate of: Rate base Net Income Regulatory| + | Growth Model Ss Earnings per share growth rate
Slide 24: Capital Expenditures in Rate Base
_-XeelEnergy Capital Expenditures in Rate Base Dollars in Millions 2005 2006 2007 2008 2009 Core Investment $1,009 $ 909 $ 925 $ 925 $ 925 Minnesota MERP 439 299 343 q77 34 Comanche 3: 33 186; 289 293 429 NSP’ Combustion Turbines, 47 Nuclear Steam Generators cy Nuclear Vessel Heads 14 40 Total $1,25
Slide 25: Strengthen Balance Sheet with Increased Equity
XeelEnergy~ Strengthen Balance Sheet — with Increased Equity Net Income Sensitivity 100 Basis Point Sept 30, 2004 Target Change in Equity Equity Equity Ratio Company Ratio Ratio Millions NSPM 50% 49 to 51% $3 NSPW 58 54 to 56 1 SPS 48 48 to 50 2 PSCo 49 55 to 56 4 Xcel Energy Consolidated 43 44 to 4
Slide 26: Earn Return Authorized by Regulators
Xcel Energy~ Earn Return Authorized by Regulators Net Income Sensitivity 2003 100 Basis Point Rate Base Change in ROE ** Earned 2003 Regulatory ROE Electric Gas Billions Millions Colorado 9.0% 12.2%* $3.9 $19 Minnesota 9.3 9.0 3.3 16 Texas 7.5 NA 0.8 4 * Effective July 1, 2003 Public Service of Colo
Slide 27: Net Income Growth Potential
Net Income Growth Potential { \ ; aes Annual be | 2005 - 2009 Growth Current Potential Rate $11B $13B 3 to. 3.5% 52% 0 to 1.2% arned Ret on Equity 11.5% 00 4.3% {
Slide 28: 2004 Earnings and 2005 Guidance
Xcel Energy 2004 Earnings * and 2005 Guidance Dollars per Share Regulated utility continuing operations Holding Company finance costs Other nonregulated & Holding Company Total earnings from continuing operations Discontinued operations 2004 ey (0.08) 0.03 $1.27 (0.30) Total Earnings per Share dilut
Slide 29: 2005 - 2007 Regulatory Strategy
_— XeelEnergy- 2005 - 2007 Regulatory Strategy —— —== ee Earnings Growth Colorado Elect {including Co! iche 3) MERP Recovery Minnesota Electric. Wi Electric & Gas North Dakota Gas FERC Transmission Minnesota Gas 2004 2005 2006 2007 2008 2009 Rate Case
Slide 30: increases
increases ng-term, XCEL ENERGY INC.
Slide 31: Regulatory Accomplishments
_ XeelEnergy ____ Regulatory Accomplishments _ Minnesota MERP approved _ Comanche 3 approved _ Monthly gas cost adjustment approved in Colorado Feconr A B approved in Colorado _ Increased equity approved to bolster PSCo credit rating
Slide 32: — XeelEnergy
— XeelEnergy
Slide 33: Shifting the Paradigm
_ XeelEnergy Shifting the Paradigm Regulators Regulators comers Environmentalists Environmentalists
Slide 34: Slide 34
Slide 35: Income from Continuing Operations by Subsidiary
Xcel Energy Inc. Income from C ons (Doll tinuing s in Millions) $510 Holding Company $(42) Northern Northern ‘ Subsidiaries States States EuPlie Southwestern Ml ietecreni coy . corey . Company of Service * Eloigne Minnesota Wisconsin eee Sompany ees $193 $57 $228 $82 $(8)
Slide 36: Northern States Power — Minnesota
Xcel Energy~ Northern States Power — Minnesota 2003 Electric 2003 Gas Avg. Retail % of Xcel Energy Avg. Retail % of Xcel Energy Customers Retail Customers Customers Retail Customers 1,319,197 40.9% 435,977 25.6% ROE Allowed (Electric) 11.47% Norbaror une iinnesaes Regulatory ROE Earned (Electric), 9
Slide 37: Northern States Power — Wisconsin
_ XeelEnergy Northern States Power — Wisconsin 2003 Electric 2003 Gas Retail %ofXcelEnergy Avg. Retail % of Xcel Eneray 233,538. 7.2%, 93,631 5.5%, ROE Allowed (Electric & Gas) 11.9% halsjans Regulatory ROE Earned) (Electric & Gas) 13.8% Equity in Capital Structure 55.8% Senior Unsecured Credit Rati
Slide 38: Public Service Company of Colorado
_ XeelEnergy Public Service Company of Colorado 2003 Electric 2003 Gas Avg.Retall %ofXcelEnergy Avg. Retail % of Xcel Energy Customers RetallCustomers Customers Retail Gustamers 1,279,047 39.7% 1,174,036. 68.9% ROE Allowed (Electric) 10.75% Colorado Regulatory ROE Earned (Electric) 9.0% Equity in Ca
Slide 39: Southwestern Public Service
@ Xcel Energy~ Southwestern Public Service 2003 Electric Avg. Retail Customers % of Xcel Energy Retail Customers 390,345 ROE Allowed (Electric — Texas) Regulatory ROE Earned (Electric — Texas) % Equity in Capital Structure: Senior Unsecured Credit Rating Electric/Gas Net Income Mix Net Income (Milli
Slide 40: Corporate Governance
_ XeelEnergy Corporate Governance Board of Directors _ 10 independent directors plus 2 management _ Rotating lead directors each quarter _ Required to own Xcel Energy stock or equivalents equal to 7 times retainer _ Repealed classified board in 2004 following shareholder proposal Xcel Energy _ Code
Slide 41: 2004 Management Compensation Linked to Shareholder Interests
-XeelEnergy- 2004 Management Compensation Linked to Shareholder Interests * Compensation at Risk Compen- Primary Incentive sation Measure CEO Officers Short-term Cash Earnings 40% 27 to 40% Long-term Performance Total Return* Shares vs. Industry 35% 25 to 32% Long-term Restricted Total Stock Units R
Slide 42: Environmental Initiatives
_ XeelEnergy Environmental Initiatives Reduce and manage energy consumption _ Reduce our environmental impact __ Increase use of renewable energies __ Advocate public policies that achieve environmental improvement, regulatory certainty andi cost effective chery _ Protect wildlife
Slide 43: Reduce and Manage Energy Consumption
_ XeelEnergy Reduce and Manage Energy Consumption _ Spent more than $66 million on: electric and gas demand-side management programs across its service territories in 2004 _ Expenditures alone resulted in 340 GWh and 663,000 MCF in first-year energy savings _ Various conservation and DSM programs ha
Slide 44: Reduce Environmental Impact
_ XeelEnergy Reduce Environmental Impact Carbon Management Plan Mercury Management Initiatives Goals ~ 7% reduction in CO, intensity (pounds per MWh) from 2003 to 2012 _ 12 million ton reduction in co, emissions by 2009, based on — 2003 emissions Actions _ Industry-leading voluntary emission reducti
Slide 45: Renewable Energy Sources
Renewable Energy Sources 2,864 MW 4 Owned and purchased ” Nameplate rating > 12% of 2004 System Capacity
Slide 46: Reduce Environmental Impact
_ XeelEnergy Reduce Environmental Impact vironm Advi Protect Wildlife. Advocate for voluntary emission By 1989, the Company began. reduction legislation that installing nest boxes on its supports recovery of investments power plant chimneys to rebuild that reduce emissions below peregrine falcon pop
Slide 47: Regulatory Initiatives
Regulatory Initiatives 2004 Wisconsin MN Gas Comanche3 MN Interim Gas Adjustment Filed Increase Requested Approved Increase Approved August September December December HT - ' 5 ' " CO Capacity Cost FERC Transmission ND Gas Increase NSP Wisconsin Adjustment Increase Requested Requested Rate Increase
Slide 48: Key Assumptions for 2005 Earnings Guidance
_ XeelEnergy Key Assumptions for 2005 Earnings Guidance _ Seren is held for sale and accounted for as discontinued operations _ Normal weather patterns are experienced for 2005 _ Weather-adjusted retail electric utility sales growth of approximately 2.0 to 2.4% _ Weather-adjusted retail natural gas
Slide 49: Key Assumptions for 2005 Earnings Guidance (continued)
_ XeelEnergy Key Assumptions for 2005 Earnings Guidance (continued) _ 2005 depreciation expense is projected to increase approximately 7 to 8% compared with 2004 _ 2005 interest expense is projected to increase approximately $10 million to $16 million compared with 2004 levels ey NE Ree ea eT MER TL
Slide 50: Minnesota MERP Potential Earnings
Minnesota MERP Potential Earnings Dollars in Millions 2004 «2005 2006 2007 2008 2009 Expenditures: ; Minnesota MERP $43 $139 $295 $343. «$177 § 34 Cumulative $43 $182 $477 $820 $997 $1,034 Equity Ratio 48.5% 48.5% 48.5% 48.5% 48.5% 48.5% ROE 10.86% 10.86% 10.86% 10.86% 10.86% 10.86% Equity Return *
Slide 51: Senior Debt Rating
Senior Debt Rating ' Moody's } 4, Sap ‘Secured — Unsecured ‘Secured Unsecured Out!
Slide 52: Coal Supply Contracted
Xcel Energy Coal Supply Contracted Coal Tfansportation) Annual consumption: 32 Million tons of low-sulfur, low-mercury western coal
Slide 53: Searchable text section of graphics shown above
Searchable text section of graphics shown above