By Tom Kleckner
Xcel Energy last week reported third-quarter earnings of $426 million, a 15% increase over 2014’s $369 million. Its earnings per share of 84 cents was 4 cents more than analyst projections.
Xcel, which operates in eight states, credited the results to several recent rate increases, its “ongoing, successful” regulatory initiatives and “continued cost management efforts.” The Minneapolis-based company said it resolved major regulatory proceedings in Colorado, Minnesota and San Diego and saw favorable legislation passed in Minnesota and Texas.
Xcel CEO Ben Fowke said the company is well positioned to meet the Environmental Protection Agency’s Clean Power Plan, pointing to its recently filed Minnesota resource plan that reduces carbon emissions by 60% from 2005 levels by 2030.
Northern States Power, Xcel’s operating company in Minnesota, Wisconsin and the Dakotas, plans to be 63% carbon-free by that time by adding 1,800 MW of wind and 1,400 MW of utility-scale solar, building a 230-MW natural gas plant in North Dakota and replacing its two Sherco coal generators with a 780-MW combined-cycle plant on their Minnesota site. The plan also assumes the operation of the Monticello and Prairie Island nuclear plants through their license expirations in the early 2030s.
“This proposal will advance our shift to renewable energy, add cleaner natural gas-powered generation to our system and allow us to protect reliability, jobs and community investments,” Fowke said during a conference call Oct. 29.
Given the good news, Xcel tightened its 2015 earnings guidance range from $2 to $2.15/share to $2.05 to $2.15/share. It also stated its 2016 earnings guidance of $2.12-$2.27/share.
“We’re very confident of reaching our targets,” Fowke said.
Xcel shares, however, closed down 47 cents to $35.56 after the earnings call.
Fowke told analysts Xcel will seek rate increases in Minnesota for the next three years, taking advantage of a new state law that allows multiyear requests — and saving legal expenses in the process.
Fowke also said Xcel has transferred about $100 million worth of Kansas and Oklahoma transmission facilities (230 miles of 345-kV transmission and associated equipment) from its Southwestern Public Service affiliate to its independent transmission companies. Xcel last year created Xcel Energy Southwest Transmission and Xcel Energy Transmission Development to compete for FERC Order 1000 projects in SPP and MISO.
“We felt it was an opportune [time] to move those assets into one of our transcos,” Fowke said. “There’s some value to having actual assets inside a transco. It gives you more gravitas when we get to the Order 1000 bidding process.”
