Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xcel Energy Inc (XEL, Financial) delivered earnings per share of $0.54 for the second quarter of 2024, up from $0.52 in 2023.
- The company invested $1.7 billion in resilient and reliable energy infrastructure during the quarter.
- Xcel Energy Inc (XEL) reaffirmed its 2024 earnings guidance range of $3.50 to $3.60 per share.
- The company has issued multiple RFPs for significant renewable energy projects, including 1,600 megawatts in the Upper Midwest and 3,100 megawatts in SPS.
- Xcel Energy Inc (XEL) has a strong track record of delivering earnings guidance for 19 consecutive years and aims to make it 20 this year.
Negative Points
- Higher depreciation and amortization expenses decreased earnings by $0.18 per share.
- Higher interest charges reduced earnings by $0.07 per share.
- Higher O&M expenses decreased earnings by $0.04 per share.
- Year-to-date weather and leap year adjusted electric sales decreased by 0.4%.
- The company is still working through the claims process for the Smokehouse Creek wildfire, with 21 lawsuits filed and an accrued liability of $215 million.
Q & A Highlights
Q: How do you think system risk stands now with the wildfire mitigation plan? Are there certain parts in focus? And was any of your equipment involved in the recent Colorado fires?
A: Robert Frenzel, CEO: We are proud of our operational progress in reducing real-time wildfire risk. Colorado is ahead with its second wildfire mitigation plan, but we are also focused on Texas and New Mexico. Our daily wildfire safety operations and proactive public safety power shutoff capabilities are enterprise-wide. Brian Van Abel, CFO: Our assets were more than a mile away from the recent Colorado fires' ignition points.
Q: Can you provide more details on the data center opportunities and their impact on your footprint?
A: Robert Frenzel, CEO: We are seeing significant opportunities in Minnesota and Colorado, with a broader backlog across all our states. We have what data centers need: low-cost clean energy, access to fiber, water, and land. Brian Van Abel, CFO: Our updated sales forecast will likely reflect a 4% to 5% growth range, incorporating high-probability loads. We are working closely with our economic development team and commissions to accommodate this growth.
Q: What feedback have you received on the wildfire mitigation plan in Colorado, and what are your plans for other states?
A: Brian Van Abel, CFO: Early feedback from first responders and the community has been positive, especially regarding our Pano AI cameras. We are developing system resiliency plans for Texas and New Mexico, to be filed later this year, and incorporating wildfire mitigation into our multiyear rate case in Minnesota.
Q: How do you process and prioritize data center load requests in your sales forecast?
A: Brian Van Abel, CFO: We categorize loads into contracted, near-term pipeline (80% probability), and other opportunities. Only high-probability loads are included in our base forecast. We will update our five-year capital and sales forecast in Q3 to reflect these opportunities.
Q: How do you see the need for more gas-fired generation with the new load growth?
A: Robert Frenzel, CEO: We are in a resource-rich area for wind and solar but will need incremental combustion turbines for reliability. Our recent resource plans include CTs, and we may need more backup generation as load grows. Currently, we have no plans for combined cycle gas turbines but will evaluate based on future needs.
Q: How are you progressing with the Smokehouse Fire settlements, and what is the timing and process?
A: Brian Van Abel, CFO: We have settled 43 out of 141 claims, covering various losses. Our accrued liability of $215 million is supported by these settlements and a Texas A&M AgriLife Extension report estimating $123 million in agricultural losses.
Q: What is the likelihood of settling the Colorado Gas rate case, and what are your equity financing plans?
A: Brian Van Abel, CFO: We are open to settlement and have a deadline of August 27. We have settled past cases in Colorado and are prepared for litigation if needed. Our primary equity vehicle is the ATM, but we may consider other options. Our CFO to debt ratio is 17%, giving us flexibility.
Q: What is the timing for the Minnesota electric rate case, and any lessons from the gas case settlement?
A: Brian Van Abel, CFO: We plan to file a multiyear electric rate case on November 1. We aim for constructive settlements, as seen in the gas case, and will explore settlement opportunities after filing.
Q: How sensitive is the data center load growth to regulatory proceedings?
A: Robert Frenzel, CEO: We need regulatory processes to add generation capacity to meet the 6,700 MW of potential data center load. We have proven our ability to efficiently address expanding customer needs through resource planning and regulatory processes.
Q: How do you approach rate design for data centers, and what role do VPPs play in servicing this load?
A: Brian Van Abel, CFO: We design contracts to ensure data centers cover incremental costs, benefiting all customers. VPPs can be another demand-side management tool, and we are exploring their role in our distribution planning, especially in Colorado.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
