Xcel Energy Inc. · NASDAQ:XEL
Xcel Energy — NRG Energy — Merger or Acquisition (May 2002)
22 slides from Xcel Energy's merger presentation, May 6, 2002
Slide 1: Xcel Energy
Slide 2: Exchange offer and forward-looking statements notice
In connection with the proposed NRG exchange offer, Xcel Energy has filed an exchange offer prospectus and related materials with the SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THESE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free
Slide 3: Xcel Energy and NRG Energy: Dual Growth Platform
Xcel Energy NRG Energy Utility Operations Dual Growth Platform
Slide 4: Xcel Energy Utility Electric and Gas Service Areas
Xcel Energy — Utility Electric Service Area 3.2 Million Customers 15,394 MW Generation 16,303 Miles of Transmission Generating Plants Denver Colorado Amarillo Texas Gas Service Area 1.7 Million Customers 4th Largest Combination Gas & Electric Company Minneapolis/St. Paul Minnesota
Slide 5: Strong Diverse Economy
Strong Diverse Economy Property Mgmt. 2.7 Petroleum Products 2.3 Government 2.3 Non-Elec Machinery 1.8 Food & Beverage Processing 1.7 NSP 0.6 PSCo 1.8 SPS 1.9 National 0.3 Food & Bev Proces- sing 2.7 5 Largest Sectors Based on Revenue Petro Prod Non- Elec Mach- inery Prop Mgmt 2.3 2.3 1.7 Gov't 1.8
Slide 6: Diverse Electric Utility Supply Mix
Diverse Electric Utility Supply Mix 2001 Energy 2002 Capacity Coal 72 > 5 Years 18 1-5 Years 5 < 1 Year 5 Contracted Purchases 28% Owned Generation 72% < 1 Yr 5% 1- 5 Yrs 5% > 5 Yrs 18% Coal 50 Renewables 2 Nuclear 11 Other 10 Purchases 23 Manitoba Hyrdo 4 Nuclear 11% Purchases 27% Gas & Oil 10% Coa
Slide 7: XEM Marketing and Trading Around Utility Assets Augments Profitability
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 XEM 21 36 44 32 135 68 33 28 8 Marketing and Trading Around Utility Assets Augments Profitability Gross Margin in $Millions Note: After sharing of margins per Colorado Incentive Cost Adjustment 2000 2001 2002
Slide 8: Colorado Regulatory Filings
Colorado Regulatory Filings Rate case to be filed May 31, 2002 Regulated electric return on equity capped at 10.5% in 2002 Rates in effect on about February 2003 and no return on equity sharing in 2003 New Incentive Cost Adjustment in effect in 2002
Slide 9: XEM Colorado Incentive Cost Adjustment
2000 2001 2002 XEM 41 83 0 Colorado Incentive Cost Adjustment Dollars in Millions $41 $83 Approximately $0
Slide 10: Performance-Based Regulation
Performance-Based Regulation Operational Excellence Low Cost Customer Satisfaction Higher ROE Higher EPS Growth
Slide 11: 3rd Largest IPP Worldwide
3rd Largest IPP Worldwide Euromoney Portfolio Rating of 92 NRG Energy (19,582 MW In-Operation at 12/31/01) Australia/Asia 2,297 MW Latin America 433 MW Europe 1,755 MW North America 15,097 MW Net Income in Millions North America $ 307 Europe 64 Australia/Asia 12 Latin America 1 Corporate & Other -11
Slide 12: NRG Portfolio Diversity 2001
NRG Portfolio Diversity — 2001 Risk Reduction through Diversification Other 3 Gas 54 Oil 15 Coal 28 us northeast 32 US Other 1 Europe 8 Latin America 4 Asia Pacific 9 US West 7 US South Central 19 US North Central 15 US Mid-Atlantic 5 Long-Term 50 Spot Sales 25 Short-Term 25 Long-Term Contracts 50%
Slide 13: NRG Significant Growth
NRG — Significant Growth NRG MWs* 2001 1999 2000 * MWs In-Operation MW 1997 2637 1998 3300 1999 10738 2000 14260 2001 19582 10,738 14,260 19,582 2001 1999 2000 Dollars in Millions 1997 0.15 1998 0.28 1999 57 2000 183 2001 265 $57 $183 $265 NRG Net Income
Slide 14: NRG Exchange Offer Transaction Terms
NRG Exchange Offer Transaction Terms Tax-free stock-for-stock exchange NRG shareholders receive 0.50 share of Xcel Energy common stock for each share of NRG stock Awaiting SEC approval under PUHCA Targeted close May 2002
Slide 15: Xcel Energy Direction for NRG
Xcel Energy Direction for NRG Largely domestic-based non-regulated power producer regionally-based high-load centers Selective growth expansion Continue focus on optionality of fuel source, dispatch mix and power sales Strengthen balance sheet Capture benefits of combined operations and integration
Slide 16: NRG Plan Highlights
NRG Plan Highlights Infuse $600 million of equity into NRG Monetize 2,800 MW of projects - net cash of $1.1 billion Cancel projects $0.7 billion, approximately 3,900 MW Defer projects $0.9 billion and sell excess turbines Reduction of 2002 cash requirements by $3 billion Reduce business development
Slide 17: Credit Rating Objectives
NRG Energy 2002 2005 Debt/Capitalization Estimated Estimated Credit Rating Objectives Xcel Energy: High-Quality Credit Without Non-Recourse Debt 50% 45% With Non-Recourse Debt 63% 60% Xcel Energy 2002 2005 Debt/Capitalization Estimated Estimated NRG Energy: Investment Grade Without Non-Recourse Debt
Slide 18: Xcel Energy Financial Guidance
Xcel Energy Financial Guidance 2002 earnings guidance of $2.30 - $2.40 Average annual earnings growth of 7% - 9% Current $1.50 per share dividend sustainable
Slide 19: 2002 Earnings per Share Guidance
2002 Earnings per Share Guidance Utility $1.65 to $1.70 NRG $0.80 to $0.90 Enterprises $-0.04 to $0.00 Unallocated Interest $-0.14 to $-0.10 Range $2.30 to $2.40 Note: After impact of equity issuances
Slide 20: Sustainable High Dividend Yield
Company Name P/E DUK 2.82 ETR 2.84 CEG 3.02 EXC 3.24 PNW 3.51 FPL 3.69 PPL 3.7 D 3.88 SRE 4 AYE 4.01 TXU 4.26 PGN 4.35 DTE 4.38 FE 4.5 PEG 4.62 SO 4.79 KSE 4.91 CIN 4.93 AEP 5.03 ED 5.1 NI 5.15 REI 5.86 XEL 5.91 AEE 5.94 CMS 7 Sustainable High Dividend Yield S&P Electric Utilities as of April 24, 20
Slide 21: Why Xcel Energy?
Why Xcel Energy? Total return — Dividend yield approximately 6.0% — Sustainable $1.50 per share dividend — Earnings growth 7-9% average per year Sharpened business focus Dual growth platform Liquid stock Incented management
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