Xcel Energy Inc. — 2024 Q1

Look, at a macro level, I was pretty encouraged by the process we went through with the Texas House and the committee. I think one of the tenets of good risk mitigation is involving all the stakeholders who have a hand in doing that. And I think the committee hearings were a pretty good example of getting all -- mostly all of the interested parties and participants in our [ room ] proactively talking about the issues. And on balance, I think the sessions were productive, still the committee was looking to be prospective and gathering information for future solutions.

I think, yes, Steve. I'll handle this one, and I'll give you [ key helpers], obviously, we'll point to our disclosures. But I'll give you a little bit more color in terms of that $215 million in the lower end of.

And here's very large that some of our pockets it includes. Residential properties and related losses, cattle and feed, agricultural structures and fencing, noneconomic damages and then a number of other items. So obviously, this is subject to changes again additional information since we're still early in the process.

Obviously, it's something you'd expect. Bob and I to evaluate in the normal course, what other options are there. I think we've been -- what you've seen from us is that we were a pretty straightforward conservative financing plan from a company perspective. So I don't -- I think right now, that's our current plan of action. I think I've been on record about not at all interested in minority interest sale in the line. So that's our fair plan of action as we sit here today.

That's a great question. In the conversation and Steve, and it's very topical, both inside the walls of the building as well as around the industry. On your specific questions with regard to the Sherco site, the site get powered with grid energy. And as you know, we're the first company to commit to being a 100% carbon-free electricity.

Steve, I just want to -- just add a little bit of color to that. I think you kind of hinted that, how do we think about it from a current customer perspective [ build ]? I think as we bring on new data centers and is something we did with Meta and the approval of Meta in Minnesota. We make sure it's a win-win for our existing customers. That's really important as we continue to move forward with this significant opportunity.

Yes. Jeremy, I think -- I mean, as Bob has mentioned, we're seeing data center interest across all our service territories. And so service are preferred to have maybe a little different point of attractiveness. And then you hit SPS as on the lowest C&I rates in the country. So interest there. But I would say the other significant growth that we continue to see in SPS, and this is really what you're seeing come through our numbers now when you look at the year-over-year growth from the C&I perspective is the oil and gas expansion in the Permian Basin there and [ averaging ] they're doing from an electrification perspective.

Yes. Right now, there is no cap on noneconomic damages in Texas. There is a cap on [ punitive damages ] this 2x economic damages falls up to [ 750k ] cap for noneconomic.

Yes. Jeremy, it's Bob. Thanks for the question. First, I'm really proud of what the team did in Colorado in executing on behalf of public safety during a volatile weather event. As you can imagine, the -- [ because we have the second ] file on our wildfire mitigation plan, it's going to have a lot of continuation of the existing plan and probably incremental areas that we'd be looking for. But as I think about the big buckets of opportunity there, really early warning capabilities.

Yes. And just I'll get on first, the Minnesota natural gas case because that's probably the one that spurred us along, given that we just received intervenor testimony and the Department of Commerce recommended a $44 million increase of a 9.4% ROE. We have hearings in mid-July, but we'll certainly look [ into this ] opportunity to engage with our stakeholders to see if we've reached settlement, which we did in the last Minnesota gas rate case. So we'll look to engage, like I said, here is our July. So from now until July, we'll look to engage there.

Carly, it's Brian. As I said, we're just looking to put that filing together, it will be late in Q4. So from a timing perspective, you probably into Q3 of the following year for it to get approved. So I think from an overall perspective, I mean, if you look at some of our kind of just distribution spend in SPS and you look at our 5-year capital plan, and what could be [ albacore ]. Obviously, we're currently focus on the Colorado WNP and we'll take a lot of those programs and apply it to SPS, but tailored because SPS is a very different geography than call it Texas is very different geography when we think about what should we be doing to have risk mitigation from wildfire perspective, and so we'll tailor it. But I think we'll give you more color as we get further development of that resiliency plan later this year.

Yes, good question. I think from our perspective, really have, as you kind of noted, we haven't changed our guidance for the year-end even though we had a significant quarter-over-quarter change. So I look at it more from where we are from a budget perspective which you don't see. And we're slightly has our budget for the first quarter. But from where we sit, I think it's early in the year, that our goal is just to land within that 1% to 2% O&M guidance range as [ we sit here.]

Anthony. Yes, that's a good question as we think about it. So I assume you're asking specifically about wildfire insurance or excess liability.

I think yes, all our other programs, I would say, are relatively stable or don't have significant challenges. As I think about wildfire insurance and just let's say for the wildfire insurance versus the overall access liability is they are 2 different things. I think this is a very key industry issue, both at the state and federal level. And if you've been following with EEI, this is one of their top priorities this year from a federal perspective.

Anthony, thanks for the question. As Brian said, this is a big and emerging national issue. And we've seen pressure both on the retail side of insurance, homeowners struggling to get homeowner insurance that protects from wildfire risk, and you're seeing it in the commercial side on the wholesale side as well.

Yes. Just to add a little bit to that. I think as Bob talked about importance of that insurance backstop and filling a WNP, but I think there's also an aspect there is if you're following [ the plans of the WMP to the presumption of routes ] which I think is important, too, and also looking at a limit job liability or limit on damages.

Sophie, yes. I mean, so first of all, I'll talk about the claims process and still early, but we obviously encourage people to submit claims. It was [ 46 ] so far. But how it works is anyone can submit a claim, and when they submit that claim, they don't waive their right to pursue a lawsuit. But if there is a claim settlement, then that absolves or release any other potential lawsuits that they could file.

Sophie, it's Bob. Look, we've got a number of gas proceedings in Colorado over the last year. I think you're referring to our clean heat plan. And we think that was an industry leading or very unique filing and proactive on the company and the commissions' part to move forward that. Big picture, I think they're sitting, they're looking at the gas system as an effective delivery of energy but making sure that if we've got capacity need from a growing customer base out there that we're looking at something other than pipeline alternatives.

Yes. Sophie, so actually, you bring up increasing compression station, it's certainly an opportunity. I think generally it's thought of -- what are the electrification opportunities. Say, there's going to be a new neighborhood builds. What is the alternative, it's -- okay, you saw that [indiscernible] gas and expansion of a pipeline or what are the alternatives from electrification perspective. So that's probably the best way to think about it.

Ryan, it's Bob. Certainly, we think of PSPS as a kind of a tool of last resort. But public safety is our priority in making sure that our communities are protected in volatile wind events and wildfire risk case is really important to us as well. So are there opportunities for us to gain more public support, of course, there are. And the ways that we can improve our own performance as we, [ again ] more muscle here, because this is something that I don't love to do. But when we have to do it, I think there's areas of improvement that we as a company have identified and are working with our Colorado Commission to do so. And that includes early notification, excellence in outage maps, something I talked about earlier on segmentation.

Ryan, I think a little bit as the color I provided before is obviously, overall, we believe our growth plans from an investment perspective, a long-term EPS growth perspective impact and same in our chance of maintaining a strong balance sheet. What I talked about not necessarily in avoidance, but how do we look at the timing of equity and the timing of capital, particularly on the timing of the equity, given that we have a strong balance sheet, is we can look at being flexible there. But I would expect that when we're investing $39 billion of capital at a 9% rate base growth. That does come with the financings. And generally, our prior financing year in and year out, that's aligned with the capital spend.

Yes. Ryan, it's Bob. Look, I think as we see reindustrialization, we see data center build-out. Certainly, there can be cost pressures that come from basic materials and construction materials like concrete, steel, and things like that. I think we take our best estimates when we put our capital forecast out, but something we watch pretty closely.

Paul. Yes, you're referencing the resource plan that we just filed here in Q1 related to the extension of Monticello. So Monticello we already extended to 2040, and we've recognized that depreciation in terms of lower customer bills. So we're looking to extend [ Monticello] from 2040 to 2050. And then Prairie Island both units [ 20 ] years, so we'll go from the early 2030s to the early 2050s.

No, this would likely just be captured either how to defer here or likely if we're in a multiyear plan to have a [ true ] mechanism part.

Yes. Thank you all for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions.