Second Quarter 2017 Earnings Release Presentation July 27, 2017 - - PowerPoint PPT Presentation

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Second Quarter 2017 Earnings Release Presentation July 27, 2017 - - PowerPoint PPT Presentation

Second Quarter 2017 Earnings Release Presentation July 27, 2017 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,


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Second Quarter 2017 Earnings Release Presentation

July 27, 2017

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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 our 2017 earnings per share guidance and assumptions, are intended to be identified in this document by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should” and similar expressions. Actual results may vary materially. Forward- looking statements speak only as of the date they are made and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in Xcel Energy’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016 and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of Xcel Energy Inc. and its subsidiaries (collectively, Xcel Energy) to obtain financing

  • n favorable terms; business conditions in the energy industry; including the risk of a slow down in the U.S.

economy or delay in growth, recovery, trade, fiscal, taxation and environmental policies in areas where Xcel Energy has a financial interest; customer business conditions; actions of credit rating agencies; competitive factors including the extent and timing of the entry of additional competition in the markets served by Xcel Energy; unusual weather; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rates or have an impact on asset operation or ownership or impose environmental compliance conditions; structures that affect the speed and degree to which competition enters the electric and natural gas markets; costs and other effects of legal and administrative proceedings, settlements, investigations and claims; financial or regulatory accounting policies imposed by regulatory bodies; outcomes of regulatory proceedings; availability or cost of capital; and employee work force factors.

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2017 Highlights

  • Made significant progress on “Steel for Fuel” strategy
  • Regulatory Approvals:

– Wind proposal for 1,550 MW in the Upper Midwest – Minnesota multi-year electric rate case – Colorado decoupling mechanism – Colorado advanced grid proposal

  • Proposed to save customers ~$650 million over 10 years - PPA termination/modification
  • Continued focus on bending the cost curve, resulting in declining YTD O&M
  • Recognition:

– Named #1 utility wind provider by AWEA – EEI Emergency Recovery Award – Recognized among Fortune Magazine’s “Most Admired” utilities – Recognized among Corporate Responsibility Magazine’s “Best Corporate Citizens” – Recognized as a “Best for Vets” employer by Military Times

  • Increased dividend ~6%
  • Reaffirming 2017 EPS guidance of $2.25 - $2.35
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Capital recovery costs offset by reduced fuel & O&M costs and tax credits

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Steel for Fuel

Significant progress in advancing strategy in the second quarter

  • High wind capacity

factors

  • Production tax credit
  • Improved supply chain
  • Supportive regulatory

environment

  • Economic, low-emission

energy

  • Fleet transition

mechanism

  • Earnings growth with

significant customer savings

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Steel for Fuel

Project Capacity State Estimated Completion Regulatory Status Rush Creek 600 MW CO 2018 Approved Freeborn 200 MW MN 2020 Approved Blazing Star 1 200 MW MN 2019 Approved Blazing Star 2 200 MW MN 2020 Approved Lake Benton 100 MW MN 2019 Approved Foxtail 150 MW ND 2019 Approved Crowned Ridge 300 MW SD 2019 Approved Hale 478 MW TX 2019 Pending Sagamore 522 MW NM 2020 Pending Total New Ownership 2,750 MW Potential Cap Ex ~$4.2 billion Existing Ownership 852 MW NSP In service Grand Total 3,602 MW By 2020

Cost effective renewables: Emission reductions with significant customer savings

NSPM 2,002 MW PSCo 600 MW SPS 1,000 MW Owned Wind Capacity by Company by 2020

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EPS Results by Operating Company

Q2 YTD Operating Company 2017 2016 2017 2016 PSCo $ 0.20 $ 0.17 $ 0.42 $ 0.40 NSPM 0.17 0.15 0.36 0.34 SPS 0.07 0.06 0.12 0.11 NSPW 0.03 0.02 0.07 0.06 Equity earnings 0.01 0.01 0.02 0.03 Regulated utility 0.48 0.42 0.99 0.93 Holding company and other (0.03) (0.04) (0.07) (0.07) Total GAAP & ongoing diluted EPS $ 0.45 $ 0.39 $ 0.92 $ 0.86

Amounts may not sum due to rounding

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Quarterly GAAP & Ongoing EPS Change

$0.39 $0.45 $0.06 $0.02 $0.02 $0.01 $0.01 $0.05 $0.01

2016 Q2 EPS 2017 Q2 EPS

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YTD GAAP & Ongoing EPS Change

$0.86 $0.92 $0.12 $0.04 $0.02 $0.01 $0.11 $0.02

2016 YTD EPS 2017 YTD EPS * Combined margins include ~($0.01) of negative weather impacts (post decoupling)

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2016 Rate Base $24.0 billion GAAP & Ongoing ROE Twelve Months Ended 6/30/2017

9.29% 9.31% 8.88% 8.25% 8.98% 10.55%

NSPM NSPW PSCo SPS Total Op Co Xcel Energy

ROE Results – GAAP & Ongoing Earnings

Wholesale 6% SPS 11% PSCo 37% NSPW 5% NSPM 41%

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5.1% 4.2%

  • 0.2%

N/A 1.7% NSPM NSPW PSCo SPS Xcel Energy

2017 YTD W/A Nat. Gas Sales Growth 2017 YTD W/A Electric Sales Growth

0.9% 0.4% 1.2% 0.0% 0.9% NSPM NSPW PSCo SPS Xcel Energy

2017 Q2 YoY Electric Customer Growth

3.3% 2.8% 2.2% 3.2% 2.7% 4.4% NSPM NSPW PSCo SPS Xcel Energy Nat'l Avg.

June Unemployment

Economic, Sales, and Customer Data

(adjusted for leap day)

0.2% 1.9% 0.9% 1.2% 0.8% NSPM NSPW PSCo SPS Xcel Energy

(adjusted for leap day)

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Colorado Multi-Year Natural Gas Rate Case

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Docket # 17AL-0363G

  • PSCo filed a Colorado natural gas multi-year rate case in June 2017

– Requested a natural gas rate increase of $139 million over 3 years – Requested an ROE of 10.0% and equity ratio of 55.25% – Based on forward test years – Includes transfer of $94 million of PSIA rider to base rates, which will not impact

  • verall customer bills

– Rate base in 2019 reflects the roll-in of capital associated with the PSIA rider

  • Commission decision expected and rates effective by February 2018

($ Millions) 2018 2019 2020 Total New Revenue Request $63.2 $32.9 $42.9 $139.0 PSIA revenue conversion to base rates 93.9 93.9 Total $63.2 $126.8 $42.9 $232.9 Projected YE Rate Base ($ Billions) $1.5 $2.3 $2.4

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Wisconsin Rate Case

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Docket # 4220-UR-123

  • NSPW filed a Wisconsin electric & natural gas rate case in May 2017

– Requested electric rate increase of $24.7 million (3.6%) – Requested nat. gas rate increase of $12.0 million (10.1%) – Requested an ROE of 10.0% and equity ratio of 52.53% – Rate base of ~$1.2 billion (electric) and $138 million (nat. gas) – Based on a 2018 forward test year

  • Commission decision anticipated in the fourth quarter of 2017
  • New rates expected to be effective January 2018
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GAAP & Ongoing EPS Guidance Range: $2.25 – $2.35

Earnings Drivers Key Assumptions Regulatory proceedings Constructive outcomes in all proceedings Weather Normal weather for the rest of the year W/A electric sales Increase 0% - 0.5% W/A natural gas sales Increase 0% - 0.5% Capital rider revenue ** Increase $50 million - $60 million O&M expenses Flat Depreciation expense * Increase ~$180 million - $190 million Property taxes Increase ~$0 million - $10 million Interest exp. (net of AFUDC-debt) Increase $15 million - $25 million AFUDC-equity Increase ~$5 million - $15 million Effective tax rate ** ~31% - 33% Average common stock & equiv. ~509 million shares

2017 GAAP & Ongoing Earnings Guidance

Ongoing earnings could differ from those prepared in accordance with GAAP for unplanned and/or unknown adjustments. Xcel Energy is unable to forecast if any of these items will occur or provide a quantitative reconciliation of the guidance for

  • ngoing diluted EPS to corresponding GAAP diluted EPS.

* The change in the depreciation expense assumption is largely due to changes in the amortization of the renewable development fund, which is offset in revenue and will not have an impact on earnings. ** The change in assumptions is largely due to the level of PTC, which flows back to customers.

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Appendix

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  • 0.3%
  • 0.1%
  • 0.2%
  • 1.7%

0.3%

  • 0.5%
  • 0.3%
  • 1.0%

0.3% 1.0% 0.8% 1.7%

Residential C&I Total Electric Natural Gas

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Adjusted for leap year

2015 2016 YTD 2017

Xcel Energy W/A Sales Growth

Electric Natural Gas

2015 2016 YTD 2017 2015 2016 YTD 2017 2015 2016 YTD 2017

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0.7% 1.5% 0.0%

  • 0.9%

0.0% 2.1% 1.2% 1.9% 0.2% 1.9% 0.9% 1.2%

NSPM NSPW PSCo SPS

Residential C&I Total

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2017 YTD W/A Electric Sales Growth

Adjusted for leap year

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Issuer Security Amount (millions) Timing Tenor Coupon PSCo First Mortgage Bonds $400 Completed 30 Yr 3.80% Hold Co Senior Unsecured $300 Q4 N/A N/A NSPM First Mortgage Bonds $600 Q3 N/A N/A NSPW First Mortgage Bonds $100 Q4 N/A N/A SPS First Mortgage Bonds $450 Q3 N/A N/A

Financing plans are subject to change, depending on capital expenditures, internal cash generation, rating agency views, market conditions, and other factors

2017 Financing Plan

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Upcoming 2017 Third Quarter Events

Events Dates Barclays Kohler Conference August 16-17 CFA “Intellisight” Conference August 22 Mid-Atlantic Non-deal Roadshow September 13-14 Wolfe Research Conference September 27