MINNEAPOLIS--(BUSINESS WIRE)--
Xcel Energy Inc. (NYSE: XEL):
-- GAAP (generally accepted accounting principles) earnings were $646
million, or $1.46 per diluted share in 2008, compared with $577 million,
or $1.35 per diluted share, in 2007.
-- Ongoing diluted earnings per share were $1.45 in 2008, compared with
$1.43 per share in 2007.
-- 2008 ongoing earnings of $1.45 were within Xcel Energy's stated guidance
range of $1.45 to $1.50 per share.
-- Xcel Energy reaffirms its 2009 earnings guidance of $1.45 to $1.55 per
diluted share.
Xcel Energy Inc. (NYSE: XEL) today reported 2008 GAAP earnings of $646
million, or $1.46 per share, compared with $577 million, or $1.35 per
share, in 2007. Ongoing earnings, adjusted for certain non-recurring
items, were $1.45 per share in 2008, compared with $1.43 per share in
2007.
Ongoing earnings for 2008 were slightly higher than last year primarily
due to higher electric and natural gas margins, reflecting various
increases in base rates and rider recovery and AFUDC-equity earnings.
The impact of electric and natural gas margins was partially offset by
the negative impact of weather when comparing the periods. Partially
offsetting these positive factors were higher depreciation, interest
expense and dilution.
GAAP earnings for 2008 earnings were higher than last year, primarily
due to a 2007 charge associated with the resolution of a corporate-owned
life insurance (COLI) dispute with the Internal Revenue Service (IRS).
"Overall, 2008 was a challenging year due to the global financial crisis
and economic downturn. However, we successfully managed through the
credit and liquidity crisis by issuing over $2 billion of debt and
equity prior to the market collapse. As a result, we believe we are well
positioned to implement our strategy of investing in our utility
business. In addition, while our ongoing earnings were lower than we
originally anticipated, we were pleased to deliver results within our
2008 guidance range," said Richard C. Kelly, chairman, president and
chief executive officer. "At this time, we are reaffirming our 2009
earnings guidance of $1.45 to $1.55 per diluted share."
Earnings Adjusted for Certain Non-recurring Items (Ongoing
Earnings - Note 7)
During 2007, Xcel Energy resolved a dispute with the IRS regarding its
COLI program. Excluding the impact of the COLI program, Xcel Energy's
ongoing 2008 earnings were $641 million, or $1.45 per share, compared
with 2007 ongoing earnings of $612 million or $1.43 per share. The
following table provides a reconciliation of GAAP earnings per share to
ongoing earnings per share for 2008 and 2007:
Three months ended Twelve months ended
Dec. 31, Dec. 31,
Diluted earnings (loss) per share 2008 2007 2008 2007
Ongoing earnings per share $ 0.35 $ 0.30 $ 1.45 $ 1.43
PSR Investments Inc. (PSRI)/COLI IRS 0.01 0.01 0.01 (0.08 )
settlement
GAAP earnings per share $ 0.36 $ 0.31 $ 1.46 $ 1.35
At 10 a.m. CST today, Xcel Energy will host a conference call to review
financial results. To participate in the call, please dial in five to 10
minutes prior to the start and follow the operator's instructions.
US Dial-In: (800) 218-0713
International Dial-In: (303) 228-2960
The conference call also will be simultaneously broadcast and archived
on Xcel Energy's Web site at www.xcelenergy.com.
To access the presentation, click on Investor Information. If you are
unable to participate in the live event, the call will be available for
replay from 1 p.m. CST on January 29 through 11:59 p.m. CST on January
31.
Replay Numbers
US Dial-In: (800) 405-2236
International Dial-In: (303) 590-3000
Access Code: 11123303#
Except for the historical statements contained in this release, the
matters discussed herein, including our 2009 full year EPS guidance and
assumptions, are forward-looking statements that are subject to certain
risks, uncertainties and assumptions. Such forward-looking statements
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 do not undertake any obligation to update them to reflect changes
that occur after that date. Factors that could cause actual results to
differ materially include, but are not limited to: general economic
conditions, including the availability of credit and its impact on
capital expenditures and the ability of Xcel Energy and its subsidiaries
to obtain financing on favorable terms; business conditions in the
energy industry; 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 and its subsidiaries; unusual
weather; effects of geopolitical events, including war and acts of
terrorism; 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; 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; actions of
accounting regulatory bodies; and the other risk factors listed from
time to time by Xcel Energy in reports filed with the Securities and
Exchange Commission (SEC), including Risk Factors in Item 1A and
Exhibit 99.01 of Xcel Energy's Annual Report on Form 10-K for the year
ended Dec. 31, 2007.
This information is not given in connection with any sale, offer for
sale or offer to buy any security.
XCEL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Dec. 31, Twelve Months Ended Dec. 31,
(Amounts in
Thousands, Except 2008 2007 2008 2007
Per Share Data)
Operating
revenues
Electric $ 1,978,829 $ 1,912,961 $ 8,682,993 $ 7,847,992
Natural gas 706,287 669,281 2,442,988 2,111,732
Other 22,457 20,977 77,175 74,446
Total operating 2,707,573 2,603,219 11,203,156 10,034,170
revenues
Operating
expenses
Electric fuel and 1,076,542 1,023,680 4,947,979 4,136,994
purchased power
Cost of natural
gas sold and 533,968 498,021 1,832,699 1,547,622
transported
Cost of sales -- 6,987 10,191 21,082 24,370
other
Other operating
and maintenance 437,571 487,146 1,777,933 1,788,885
expenses
Conservation and
demand-side 25,435 25,754 117,713 101,772
management
program expenses
Depreciation and 205,867 202,200 828,379 805,731
amortization
Taxes (other than 68,360 67,286 286,580 277,723
income taxes)
Total operating 2,354,730 2,314,278 9,812,365 8,683,097
expenses
Operating income 352,843 288,941 1,390,791 1,351,073
Interest and 14,871 7,778 43,977 10,948
other income, net
Allowance for
funds used during 18,041 11,913 63,519 37,207
construction -
equity
Interest charges
and financing
costs
Interest charges
-- includes other
financing costs
of $5,096, 147,248 129,610 552,919 520,037
$4,891, $20,390
and $21,410,
respectively
Interest and
penalties related -- -- -- 43,401
to COLI
settlement
Allowance for
funds used during (10,290 ) (10,464 ) (39,038 ) (34,593 )
construction -
debt
Total interest
charges and 136,958 119,146 513,881 528,845
financing costs
Income from
continuing 248,797 189,486 984,406 870,383
operations before
income taxes
Income taxes 85,240 54,517 338,686 294,484
Income from
continuing 163,557 134,969 645,720 575,899
operations
Income (loss)
from discontinued 518 (927 ) (166 ) 1,449
operations, net
of tax
Net income 164,075 134,042 645,554 577,348
Dividend
requirements on 1,060 1,060 4,241 4,241
preferred stock
Earnings
available to $ 163,015 $ 132,982 $ 641,313 $ 573,107
common
shareholders
Weighted average
common shares
outstanding
Basic 451,748 423,806 437,054 416,139
Diluted 455,174 434,009 441,813 433,131
Earnings per
share -- basic
Income from
continuing $ 0.36 $ 0.31 $ 1.47 $ 1.38
operations
Income from
discontinued -- -- -- --
operations
Earnings per $ 0.36 $ 0.31 $ 1.47 $ 1.38
share -- basic
Earnings per
share -- diluted
Income from
continuing $ 0.36 $ 0.31 $ 1.46 $ 1.35
operations
Income from
discontinued -- -- -- --
operations
Earnings per $ 0.36 $ 0.31 $ 1.46 $ 1.35
share -- diluted
Cash dividends
declared per $ 0.24 $ 0.23 $ 0.94 $ 0.91
common share
XCEL ENERGY INC. AND SUBSIDIARIES
Notes to Investor Relations Release (Unaudited)
Due to the seasonality of Xcel Energy's operating results, quarterly financial
results are not an appropriate base from which to project annual results.
Note 1. Earnings per Share Summary
The following table summarizes the diluted earnings per share contributions of
Xcel Energy's businesses:
Three months ended Twelve months ended
Dec. 31, Dec. 31,
Diluted earnings (loss) per share 2008 2007 2008 2007
Regulated utility -- continuing $ 0.38 $ 0.33 $ 1.59 $ 1.55
operations (Note 2)
Holding company and other costs (0.03 ) (0.03 ) (0.14 ) (0.12 )
Ongoing earnings per share 0.35 0.30 1.45 1.43
PSRI/COLI IRS settlement (Note 7) 0.01 0.01 0.01 (0.08 )
Total diluted earnings per share $ 0.36 $ 0.31 $ 1.46 $ 1.35
The following table summarizes significant components contributing to
the changes in the three- and twelve- month periods ended Dec. 31, 2008
diluted earnings per share, compared with the same periods in 2007,
which are discussed in more detail later in this release.
Three months Twelve months
ended Dec. 31, ended Dec. 31,
2007 GAAP earnings per share $ 0.31 $ 1.35
PSRI/COLI IRS settlement (0.01 ) 0.08
2007 ongoing earnings per share 0.30 1.43
Components of change -- 2008 vs. 2007
Lower operating and maintenance expenses 0.07 0.02
Higher electric margins 0.02 0.03
Higher natural gas margins -- 0.06
Higher allowance for funds used during 0.01 0.06
construction - equity
Higher depreciation and amortization -- (0.03 )
Higher conservation and demand-side -- (0.02 )
management program expenses
Higher financing costs (0.03 ) (0.05 )
Dilution from common equity issuance, DRIP (0.02 ) (0.03 )
and benefit plans
Other 0.01 (0.01 )
2008 GAAP earnings per share 0.36 1.46
2008 PSRI/COLI IRS settlement (0.01 ) (0.01 )
2008 ongoing earnings per share $ 0.35 $ 1.45
Note 2. Regulated Utility
Results -- Continuing Operations
Estimated Impact of Temperature Changes on Earnings -- The
following table summarizes the estimated impact of temperature
variations on results, compared with sales under normal weather
conditions.
Three months ended Twelve months ended
Dec. 31, Dec. 31,
2008 vs. 2007 vs. 2008 vs. 2008 vs. 2007 vs. 2008 vs. 2007
Normal Normal 2007 Normal Normal
Retail $ 0.00 $ 0.00 $ 0.00 $ (0.01 ) $ 0.06 $ (0.07 )
electric
Firm
natural 0.00 0.00 0.00 0.01 0.00 0.01
gas
Total $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.06 $ (0.06 )
Sales Growth -- The following table summarizes Xcel
Energy's regulated sales growth for actual and weather-normalized energy
sales for the three- and twelve-month periods ended Dec. 31, 2008,
compared with the same periods in 2007. The year-end sales growth
amounts for 2008 have been adjusted for leap year.
Three months ended Twelve months ended
Dec. 31, Dec. 31,
Actual Normalized Actual Normalized
Electric residential 0.2 % 0.2 % (2.0 )% 0.0 %
Electric commercial and 1.7 1.8 1.5 2.4
industrial
Total retail electric sales 1.3 1.3 0.5 1.7
Firm natural gas sales 3.0 1.4 4.9 1.9
During 2008, we experienced flat electric residential sales, primarily
driven by a decline in the NSP-Minnesota region. We believe the flat
sales growth is a reflection of a recent shift in customer behavior, in
part, attributable to the overall economic conditions as well as
conservation efforts.
Electric -- The following tables detail the
electric revenues and margin:
Three months ended Twelve months ended
Dec. 31, Dec. 31,
(Millions of dollars) 2008 2007 2008 2007
Electric revenues $ 1,979 $ 1,913 $ 8,683 $ 7,848
Electric fuel and purchased power (1,077 ) (1,024 ) (4,948 ) (4,137 )
Electric margin $ 902 $ 889 $ 3,735 $ 3,711
The following table summarizes the components of the changes in electric
margin for the three-and twelve-months ended Dec. 31, 2008:
Three months Twelve months
(Millions of dollars) ended Dec. 31, ended Dec. 31,
2008 vs. 2007 2008 vs. 2007
Retail rate increases (Wisconsin, North $ 17 $ 48
Dakota, Texas interim and New Mexico)
Conservation and non-fuel riders 10 28
Sales growth (excluding weather impact) 6 30
Metropolitan Emissions Reduction Project 6 23
(MERP) rider
Increased margin due to leap year (weather -- 9
normalized impact)
Estimated impact of weather -- (49 )
Purchased capacity costs (19 ) (30 )
Retail customer sales mix 1 (8 )
Trading margin (7 ) (10 )
Revenue subject to refund due to change in (2 ) (18 )
nuclear refueling outage recovery method
Other, including fuel recovery 1 1
Total increase in electric margin $ 13 $ 24
Natural Gas -- The following table details
the changes in natural gas revenues and margin. The cost of natural gas
tends to vary with changing sales requirements and the unit cost of
natural gas purchases. However, due to purchased natural gas cost
recovery mechanisms for sales to retail customers, fluctuations in the
cost of natural gas have little effect on natural gas margin.
Three months ended Twelve months ended
Dec. 31, Dec. 31,
(Millions of dollars) 2008 2007 2008 2007
Natural gas revenues $ 706 $ 669 $ 2,443 $ 2,112
Cost of natural gas sold and (534 ) (498 ) (1,833 ) (1,548 )
transported
Natural gas margin $ 172 $ 171 $ 610 $ 564
The following table summarizes the components of the changes in natural
gas margin for the three-and twelve-months ended Dec. 31, 2008:
Three months Twelve months
ended ended
Dec. 31, Dec. 31,
(Millions of dollars) 2008 vs. 2007 2008 vs. 2007
Base rate increase - Colorado and Wisconsin $ 2 $ 24
Estimated impact of weather 2 10
Sales growth (excluding weather impact) 1 5
Conservation revenues (1 ) 3
Increased margin due to leap year (weather -- 1
normalized impact)
Other (3 ) 3
Total increase in natural gas margin $ 1 $ 46
Other Operating and Maintenance Expenses -- Other operating
and maintenance expenses for the fourth quarter of 2008 decreased by $50
million, or 10.2 percent as compared with the same period in 2007. Other
operating and maintenance expenses for 2008 decreased by $11 million, or
0.6 percent, compared with 2007. The following table summarizes the
components of the changes in other operating and maintenance expenses
for the three- and twelve- months ended Dec. 31, 2008:
Three months Twelve months
ended ended
Dec. 31, Dec. 31,
(Millions of dollars) 2008 vs. 2007 2008 vs. 2007
Nuclear outage expenses, net of deferral $ 8 $ (13 )
Higher uncollectible receivable costs 7 7
Lower employee benefit costs (21 ) (39 )
Higher (lower) plant generation costs (15 ) 9
Higher (lower) consulting costs (7 ) 7
Higher (lower) material costs (4 ) 2
Higher (lower) contract labor (4 ) 4
Higher (lower) labor costs (1 ) 22
Other, including nuclear plant operation costs (13 ) (10 )
Total decrease in other operating and $ (50 ) $ (11 )
maintenance expenses
The following provides an explanation of the year-to-date change in
certain items listed in the table above for 2008 as compared to 2007:
-- The decline in nuclear outage expenses is due to the Minnesota Public
Utilities Commission (MPUC), North Dakota Public Service Commission
(NDPSC) and South Dakota Public Utilities Commission (SDPUC) approving
the change in recovery methods for costs associated with refueling
outages at our nuclear plants from the direct expense method to the
deferral and amortization method, effective Jan. 1, 2008. An accrual was
also recorded to lower revenue, reflecting a liability for a customer
refund relating to this decision.
-- Lower employee benefit costs are due to eliminating our annual
performance based incentive plan payout for 2008.
-- The higher plant generation costs were primarily attributable to
scheduled and unplanned maintenance.
-- The increase in labor costs was attributable to annual wage increases,
the insourcing of certain functions and additional employees to support
system growth.
Depreciation and Amortization -- Depreciation and
amortization expense increased by approximately $3.7 million, or 1.8
percent, for the fourth quarter of 2008, and increased by $22.6 million,
or 2.8 percent for 2008, compared with the same periods in 2007. The
increases were primarily due to planned system expansion. These
increases were partially offset by a decrease in depreciation due to the
MPUC approval of two NSP-Minnesota depreciation filings in September
2008 and a NDPSC settlement agreement in December 2008.
Conservation and Demand Side Management (DSM) --
Conservation and DSM expense decreased approximately $0.3 million, or
1.2 percent for the fourth quarter of 2008 and increased $15.9 million,
or 15.7 percent, for 2008, compared to the same periods in 2007. The
higher expense for 2008 is attributable to the expansion of programs and
is designed, in part, to meet regulatory commitments. Conservation and
DSM program expenses are generally recovered through riders in Xcel
Energy's major jurisdictions or through general rate cases.
Interest and Other Income, net -- Interest and other income
increased by $7.1 million, for the fourth quarter of 2008, and $33.0
million, for 2008, compared with the same periods in 2007. The increase
is primarily due to PSRI's termination of the COLI program in 2007,
which eliminated certain expenses.
Allowance for Funds Used During Construction, Equity and Debt
(AFUDC) -- AFUDC increased by approximately $6.0 million, or 26.6
percent, for the fourth quarter of 2008, and increased by $30.8 million,
or 42.8 percent, for 2008 when compared with the same periods in 2007.
The increase was due primarily to the construction of Comanche 3, which
is nearing its final phase and other construction projects.
Interest charges -- Interest charges increased by
approximately $17.6 million, or 13.6 percent, for the fourth quarter of
2008, and increased by $32.9 million, or 6.3 percent, for 2008 when
compared to the same periods in 2007. The increase was primarily the
result of increased debt levels to fund our rate base growth strategy.
Income Taxes -- Income taxes for continuing operations
increased by $30.7 million for the fourth quarter of 2008, compared with
2007. The effective tax rate for continuing operations was 34.3 percent
for the fourth quarter of 2008, compared with 28.8 percent for the same
period in 2007. The increase in income tax expense and the higher
effective tax rate for fourth quarter 2008 as compared with 2007 was
primarily due to an increase in pretax income.
Income taxes for continuing operations increased by $44.2 million for
2008, compared with 2007. The increase in income tax expense was
primarily due to an increase in pretax income in 2008. The effective tax
rate for continuing operations was 34.4 percent for 2008, compared with
33.8 percent for 2007.
Note 3. Xcel Energy Capital
Structure and Financing
Following is the preliminary capital structure of Xcel Energy at Dec.
31, 2008:
Balance at Percentage of
(Billions of dollars) Dec. 31. 2008 Total
Capitalization
Current portion of long-term debt $ 0.6 4 %
Short-term debt 0.4 2
Long-term debt 7.7 49
Total debt 8.7 55
Preferred equity 0.1 1
Common equity 7.0 44
Total equity 7.1 45
Total capitalization $ 15.8 100 %
Xcel Energy generally expects to fund its operations and capital
investments through internally generated funds and by periodically
issuing short-term debt, long-term debt, common stock, preferred stock
and hybrid securities.
During the fourth quarter of 2008, Xcel Energy issued the following
securities:
-- In November 2008, we issued $250 million of 8.75 percent Senior Notes,
series due 2018 at Southwestern Public Service Company (SPS)
Current debt financing plans for 2009 include the following:
-- Approximately $400 million of first mortgage bonds at Northern States
Power Co. (NSP-Minnesota).
-- Approximately $400 million of first mortgage bonds at Public Service
Company of Colorado (PSCo).
These financing plans are subject to change, depending on capital
expenditures, internal cash generation, market conditions and other
factors.
Note 4. Liquidity
Xcel Energy expects to meet future financing requirements by
periodically issuing short-term debt, long-term debt, common stock,
preferred securities and hybrid securities to maintain desired
capitalization ratios.
Short-Term Funding Sources --Xcel Energy uses a number of
sources to fulfill short-term funding needs, including operating cash
flow, notes payable, commercial paper and bank lines of credit. The
amount and timing of short-term funding needs depend in large part on
financing needs for construction expenditures, working capital and
dividend payments.
General -- As a result of recent volatile conditions in
global capital markets, general liquidity in short-term credit markets
has been periodically constrained. Xcel Energy has maintained access to
short-term liquidity through the A2/P2 commercial paper market and
utilization of direct borrowing on committed credit agreements. In
addition, Xcel Energy's overall liquidity was strengthened by the
issuance of long-term debt, equity and hybrid securities completed
during 2008. The proceeds from these financings were used to refinance
maturing debt obligations, repay short-term debt and general corporate
purposes.
Pension Fund - Xcel Energy's pension costs and funding
requirements are projected to increase, as a result of the overall
distressed global financial conditions and decline in valuations of both
the equity and debt markets. Xcel Energy's pension assets are invested
in a diversified portfolio of domestic and international equity
securities, fixed income securities, real estate and alternative
investments, including private equity funds and a commodities index.
With the recent decline in asset value in our pension plans, we expect
to have 2009 funding requirements of $70 million to $130 million. At
this time, pension funding contributions for 2010, which will be
dependent on several factors including, realized asset performance,
future discount rate, IRS and legislative initiatives as well as other
actuarial assumptions, are estimated to range between $150 million to
$250 million. For more information, please refer to the following table:
(Billions of dollars) Dec. 31. 2008 Dec. 31. 2007
Fair value of pension assets $ 2,185 $ 3,186
Projected benefit obligationa 2,598 2,662
Funded status $ (413 ) $ 524
a - excludes non-qualified plan of $46 million and $42 million at Dec.
31, 2008 and 2007, respectively.
Pension assumptions 2009 2008
Discount rate 6.75 % 6.25 %
Expected long-term rate of return 8.50 8.75
Commercial Paper -- Xcel Energy, NSP-Minnesota, PSCo and
SPS each have individual commercial paper programs. The authorized
levels for these commercial paper programs are:
-- $800 million for Xcel Energy,
-- $500 million for NSP-Minnesota,
-- $700 million for PSCo, and
-- $250 million for SPS.
Xcel Energy and Utility Subsidiary Credit Facilities -- As
of Jan. 21, 2009, Xcel Energy had the following credit facilities
available to meet its liquidity needs:
(Millions of
Dollars)
Company Facility1 Drawn2 Available Cash3 Liquidity Maturity
NSP-Minnesota $ 482 $ 51 $ 431 $ 2 $ 433 December 2011
PSCo 675 5 670 1 671 December 2011
SPS 248 12 236 229 465 December 2011
Xcel Energy - 772 451 321 1 322 December 2011
Holding Company
NSP-Wisconsin4 -- -- -- 58 58
Total $ 2,177 $ 519 $ 1,658 $ 291 $ 1,949
1 Reflects a reduction in the commitments resulting from the Lehman Brothers
bankruptcy, which reduce the credit facilities by $73 million, collectively.
2 Includes direct borrowings, outstanding commercial paper and letters of
credit.
3 Reflects the payment of common dividends on Jan. 20, 2009.
4 NSP-Wisconsin does not have a separate credit facility; however, it has a
borrowing agreement with NSP-Minnesota.
Credit Agency Ratings -- Short-term and long-term
borrowings, as a source of funding, are affected by regulatory actions,
capital markets conditions and credit agency ratings. The following
ratings reflect the views of Moody's Investor Services, Inc. (Moody's),
Standard & Poor's Ratings Services (S&P's), and Fitch Ratings (Fitch). A
security rating is not a recommendation to buy, sell or hold securities
and is subject to revision or withdrawal at any time by the rating
agency. As of Jan. 20, 2009, the following table represents the credit
ratings assigned to various Xcel Energy companies:
Company Credit Type Moody's S & P's Fitch
Xcel Energy Senior Unsecured Debt Baa1 BBB BBB+
Xcel Energy Commercial Paper P-2 A-2 F2
NSP-Minnesota Senior Unsecured Debt A3 BBB+ A
NSP-Minnesota Senior Secured Debt A2 A A+
NSP-Minnesota Commercial Paper P-2 A-2 F1
NSP-Wisconsin Senior Unsecured Debt A3 A- A
NSP-Wisconsin Senior Secured Debt A2 A A+
PSCo Senior Unsecured Debt Baa1 BBB+ A-
PSCo Senior Secured Debt A3 A A
PSCo Commercial Paper P-2 A-2 F2
SPS Senior Unsecured Debt Baa1 BBB+ BBB+
SPS Commercial Paper P-2 A-2 F2
On Nov. 5, 2008, S&P increased the senior unsecured credit ratings of
NSP-Minnesota, NSP-Wisconsin and PSCo by one notch.
Note 5. Rates and Regulation
Pending Rate Cases
NSP- Minnesota - Minnesota Electric Rate Case -- On Nov. 2,
2008, NSP-Minnesota filed a request with the MPUC to increase electric
rates in Minnesota by $156 million, or 6.05 percent. The request is
based on a 2009 forecast test year, electric rate base of
$4.1 billion, a requested return on equity (ROE) of 11.0 percent and an
equity ratio of 52.5 percent.
In December 2008, the MPUC approved interim rates of $132 million, or
5.12 percent, effective Jan. 2, 2009. The primary difference between
interim rate levels approved and our request of $156 million is due to a
previously authorized ROE of 10.54 percent compared to our requested ROE
of 11.0 percent.
A decision is expected in October 2009. The following schedule has been
established:
-- Direct testimony on April 7, 2009;
-- Rebuttal on May 5, 2009;
-- Surrebuttal May 26, 2009; and
-- Evidentiary hearings June 2-9, 2009.
PSCo - Colorado Electric Rate Case -- On Nov. 14, 2008,
PSCo, filed with Colorado Public Utilities Commission (CPUC) a request
to increase Colorado electric rates by approximately $174.7 million, or
7.4 percent. The rate filing is based on a 2009 forecast test year, an
electric rate base of approximately $4.15 billion, a requested ROE of
11.0 percent and an equity ratio of 58.08 percent.
A final decision is expected in the summer of 2009. The following
schedule has been established:
-- Answer Testimony for all intervenors on Feb.13, 2009;
-- Rebuttal and Cross-Answer Testimony on March 20, 2009;
-- Surrebuttal testimony for all intervenors on April 10, 2009;
-- Hearings are scheduled for April 20-May 1, 2009,
-- Statement of Position on May 12, 2009.
SPS - Texas Electric Retail Rate Case -- On June 12, 2008,
SPS filed a rate case with Public Utility Commission of Texas (PUCT),
seeking an annual rate increase of approximately $61.3 million, or
approximately 5.9 percent. Base revenues are proposed to increase by
$94.4 million, while fuel and purchased power revenue will decline by
$33.1 million, primarily due to fuel savings from the Lea Power Partners
LLC (LPP) purchase power agreement.
The rate filing is based on a 2007 test-year adjusted for known and
measurable changes, a requested ROE of 11.25 percent, an electric rate
base of $989.4 million and an equity ratio of 51.0 percent. The interim
rates of $18 million for costs associated with the LPP power purchase
agreement went into effect in September 2008. The parties have been in
active negotiations since November and SPS is hopeful that they will be
able to reach a settlement agreement in the near future.
SPS - New Mexico Retail Electric Rate Case -- On Dec. 18,
2008, SPS filed with the New Mexico commission a request to increase
electric rates in New Mexico by approximately $24.6 million, or 5.1
percent. The request is based on a historic test year (split year based
on year-ending June 30, 2008), an electric rate base of $321 million, an
equity ratio of 50 percent and a requested ROE of 12 percent. SPS also
requested interim rates to allow it to begin recovering the cost of the
Lea Power facility of approximately $7.6 million. The New Mexico Public
Regulation Commission (NMPRC) has set the interim rate request for
hearing for March 19, 2009.
On January 12, 2009, the Staff and the Attorney General (AG) requested
that the NMPRC suspend SPS' advice notice and deny our request for
interim relief. The staff stated that the standard for interim relief
requires clear and convincing evidence of a financial emergency, which
SPS has failed to provide. The AG stated that our testimony does not
rise to the level required for the NMPRC to grant interim relief.
SPS 2008 Wholesale Rate Case -- On March 31,
2008, SPS filed a wholesale electric rate case. SPS is seeking an annual
revenue increase of $14.9 million or an overall 5.14 percent increase,
based on 12.20 percent requested ROE. Four New Mexico Cooperatives filed
a motion for dismissal and protest in April 2008.
On May 30, 2008, the Federal Energy Regulatory Commission (FERC)
conditionally accepted and suspended the rates and established hearing
and settlement procedures. The FERC granted a one-day suspension of
rates instead of 180 days. The LPP plant achieved commercial operations
in September 2008 and the proposed base rates, based on a 10.25 percent
ROE and a 12-coincident peak demand allocator, became effective, subject
to refund. A pre-hearing conference has been set for Jan. 29, 2009. A
decision is pending.
Completed Rate Cases
NSP-Minnesota - North Dakota Electric Rate Case -- On
Dec. 7, 2007, NSP-Minnesota filed with the NDPSC, a request to increase
electric rates by $20.5 million, which would be an $18.2 million impact
to NSP-Minnesota due to the transfer of certain costs and revenues
between base rates and the fuel cost recovery mechanism. The request is
based on a common equity ratio of 51.77 percent, a ROE of 11.5 percent
and a rate base of approximately $242 million. Interim rates of $17.2
million were effective on Feb. 5, 2008.
The NDPSC approved a settlement agreement on Dec. 31, 2008, which calls
for a base rate increase of $12.8 million, based on an authorized ROE of
10.75 percent. Key terms of the settlement are listed below:
-- Adjustments in depreciation expenses related to service life changes for
generation plants and removal rates for transmission and distribution
plant, resulting in a $2.5 million decrease in the revenue deficiency.
-- Sharing of wholesale margins, refunding to customers 85 percent of
asset-based wholesale margins and 50 percent of non-asset-based margins
through the fuel clause. Test year wholesale margins to be shared with
customers are estimated to be $1.9 million.
-- An electric rate moratorium, under which NSP-Minnesota agreed to not
implement an increase in electric rates until Jan. 1, 2011.
-- Sharing of any earnings in excess of the authorized 10.75 percent ROE,
providing customers 50 percent of any earnings above 10.75 percent and
75 percent of any earnings above 11.25 percent.
-- The MPUC terminated the 2005 proceeding regarding recovery of MISO Day 2
market charges and approved fuel clause adjustment (FCA) recovery of all
Day 2 charges through the FCA retroactively and prospectively.
Based on the final order, there is an estimated refund of interim rates
of $6.3 million, expected to be completed by June 1, 2009. This refund
was accrued for in 2008 and will have no impact on 2009 results. Final
rates will be implemented for service on and after March 1, 2009.
NSP-Wisconsin - Electric Limited Reopener 2009 Rate Case --
On Aug. 1, 2008, NSP-Wisconsin filed with the Public Service Commission
of Wisconsin (PSCW) a request to increase retail electric rates by $47.1
million. In the application, NSP-Wisconsin requested the PSCW to reopen
the 2008 base rate case for the limited purpose of adjusting 2009
electric rates to reflect forecasted increases in production and
transmission costs, as authorized by the PSCW. No changes were requested
to the capital structure or ROE authorized by the PSCW in the 2008 base
rate case.
On Dec. 30, 2008, the PSCW issued an order approving the stipulation
agreement, entered into between NSP-Wisconsin and various intervenors,
authorizing a $5.6 million rate increase. The original request of $47.1
million was reduced by $31.6 million due to the dramatic decline in
market prices for fuel and purchased power, $5.5 million for a change in
nuclear outage accounting and $4.4 million due to other adjustments.
Further, in accordance with the stipulation agreement, an estimated 2008
interim fuel surcharge refund liability of $9.8 million, previously
recorded in 2008, will be offset by the $5.6 million 2009 rate increase,
and the remaining liability will be refunded to customers in the first
quarter of 2009, after the PSCW completes its final review of 2008
actual fuel costs.
Note 6. Xcel Energy Earnings
Guidance
Xcel Energy's 2009 earnings guidance is $1.45 to $1.55 per share. Key
assumptions are detailed below:
-- Normal weather patterns are experienced for the year.
-- Reasonable regulatory outcomes in the Minnesota electric rate case, the
Colorado electric rate case, the Texas electric rate case, the New
Mexico electric rate case, the SPS FERC wholesale electric rate cases
and other rate cases that may be filed during the year.
-- Various riders, associated with MERP, Minnesota and Colorado
transmission and Minnesota renewable energy, are expected to increase
revenue by approximately $50 million to $60 million over 2008 levels.
-- Weather adjusted electric retail sales growth of 0.0 percent to 0.5
percent.
-- Weather adjusted retail firm natural gas sales decline by approximately
(1.0) percent to 0.0 percent.
-- Capacity costs are projected to increase approximately $45 million over
2008 levels. Capacity costs at PSCo are recovered under the purchased
capacity cost adjustment.
-- Operating and maintenance expenses are projected to increase:
o Nuclear (including outage amortization) $55 million
o Pension and medical $25 million
o Other (including incentive compensation) $75 million - $125 million
-- Depreciation and amortization expense is projected to increase
approximately $80 million to $90 million over 2008.
-- Interest expense increases approximately $20 million to $30 million over
2008 levels.
-- Allowance for funds used during construction-equity decreases
approximately $5 million to $10 million over 2008.
-- An effective tax rate for continuing operations of approximately 33
percent to 35 percent.
-- Average common stock and equivalents of approximately 457 million
shares.
Note 7. Non-GAAP Reconciliation
The following table provides a reconciliation of GAAP earnings to
ongoing earnings:
Three months ended Twelve months ended
Dec. 31, Dec. 31,
(Thousand of dollars) 2008 2007 2008 2007
Ongoing earnings $ 158,586 $ 131,504 $ 641,122 $ 612,013
PSRI/COLI IRS settlement 4,971 3,465 4,598 (36,114 )
Total continuing operations 163,557 134,969 645,720 575,899
Income (loss) from 518 (927 ) (166 ) 1,449
discontinued operations
GAAP earnings $ 164,075 $ 134,042 $ 645,554 $ 577,348
As a result of the termination of the COLI program, Xcel Energy's
management believes that ongoing earnings provide a more meaningful
comparison of earnings results between different periods in which the
COLI program was in place and is more representative of Xcel Energy's
fundamental core earnings power. Xcel Energy's management uses ongoing
earnings internally for financial planning and analysis, for reporting
of results to the board of directors, in determining whether performance
targets are met for performance-based compensation, and when
communicating its earnings outlook to analysts and investors.
XCEL ENERGY INC. AND SUBSIDIARIES
UNAUDITED EARNINGS RELEASE SUMMARY
All amounts in thousands, except earnings per share
Three months ended Dec. 31, 2008 2007
Operating revenues:
Electric and natural gas and trading revenues $ 2,685,116 $ 2,582,242
Other 22,457 20,977
Total operating revenues 2,707,573 2,603,219
Income from continuing operations 163,557 134,969
Income (loss) from discontinued operations 518 (927 )
Net income 164,075 134,042
Earnings available to common shareholders 163,015 132,982
Weighted average diluted common shares 455,174 434,009
outstanding
Segments and Components of Earnings per Share --
Diluted
Regulated utility segments -- continuing $ 0.38 $ 0.33
operations
Holding company and other costs (0.03 ) (0.03 )
Earnings per share - ongoing operations 0.35 0.30
PSRI/COLI IRS settlement 0.01 0.01
Total earnings per share $ 0.36 $ 0.31
Twelve months ended Dec. 31, 2008 2007
Operating revenues:
Electric and natural gas and trading revenues $ 11,125,981 $ 9,959,724
Other 77,175 74,446
Total operating revenues 11,203,156 10,034,170
Income from continuing operations 645,720 575,899
Income (loss) from discontinued operations (166 ) 1,449
Net income 645,554 577,348
Earnings available to common shareholders 641,313 573,107
Weighted average diluted common shares 441,813 433,131
outstanding
Segments and Components of Earnings per Share --
Diluted
Regulated utility segments -- continuing $ 1.59 $ 1.55
operations
Holding company and other costs (0.14 ) (0.12 )
Earnings per share - ongoing operations 1.45 1.43
PSRI/COLI IRS settlement 0.01 (0.08 )
Total earnings per share $ 1.46 $ 1.35
Book value per share $ 15.35 $ 14.70
Source: Xcel Energy Inc.
Contact: Xcel Energy Inc.
Paul Johnson, 612-215-4535
Managing Director, Investor Relations and Assistant Treasurer
or
Jack Nielsen, 612-215-4559
Director, Investor Relations
or
Cindy Hoffman, 612-215-4536
Senior Investor Relations Analyst
or
For news media inquiries only:
Xcel Energy media relations, 612-215-5300
Xcel Energy Internet address:
www.xcelenergy.com