Q3 2023 Xcel Energy Inc Earnings Call
Speaker 1: transcript
Speaker 1: Hello and welcome to the Excel Energy third quarter 2023 earnings conference call. My name is George.
Hello, and welcome to the <unk> Energy third quarter 2023 earnings Conference call.
My name is George there'll be a coordinator for today's event.
Speaker 1: transcript
Speaker 2: Please note this conference is being recorded and for the duration of call your lines will be on the...
Please note. This conference is being recorded after the duration of the call your eyes will be on listen only.
Speaker 1: transcript
Speaker 3: A question-answer session will follow the prepared remarks, and questions will only be taken from institution Leicesters and amateurs.
A question answer session will follow the prepared remarks, our questions will only be taken from institutional investors and analysts.
Speaker 1: transcript
Speaker 4: Reporters can contact media relations with inquiries and individual investors and others can reach out to investor relations.
Reporters can contact media relations with inquiries and individual investors and others can reach out to Investor relations.
Speaker 1: transcript
Speaker 5: To register for a question, please press star 1 on your example keypad.
To register for a question. Please press star one on your type of key pad.
Speaker 1: transcript
Speaker 6: If you require assistance at any point, please press star zero and you will be connected to the operator.
Thank you for your questions at any point. Please press star Zero I, you will be connected to an operator.
Speaker 1: transcript
Speaker 7: I'd like to hand it over to your host today, Mr. Paul Johnson, Vice President, Treasurer and Vice Relations speaking today's conference.
I'd like to hand, the call over to your host today, Mr. Paul Johnson, Vice President Treasurer, and Investor Relations to begin today's conference.
Please go ahead Sir.
Speaker 2: transcript
Speaker 8: Thank you. Good morning and welcome to Xcel Energy's third quarter earnings call. Joining me today are Bob Frenzel, Chairman, President, Chief Executive Officer, and Brian Van Abel, Executive Vice President and Chief Financial Officer.
Thank you good morning, and welcome to XL Energy's third quarter earnings call. Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer, and Brian Van Abel Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer your questions if needed.
Speaker 2: transcript
Speaker 9: In addition, we have other members of the management team in the room to answer your questions if needed. This morning, we will review our third-party results and highlights, share recent business and regulatory developments, update our capital and financing plans, and provide 2024 guidance. Please visit a company today's caller.
Morning, We will review, our third quarter results and highlights share recent business and regulatory developments.
Our capital and financing plans and provide 2024 guidance slides that accompanies today's call are available on our website.
Speaker 2: transcript
Speaker 10: As a reminder, some of the comments during today's call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and our SDC filings. Today we'll discuss certain measures that are non-GAAP measures.
As a reminder, some of the comments during today's call may contain forward looking information significant factors that could cause results to differ from those anticipated are described in our earnings release and our SEC filings today will discuss certain measures that are non-GAAP measures.
Speaker 2: transcript
Speaker 11: Information on comparable GAAP measures and reconciliations are included and are earnings.
Information on comparable GAAP measures and reconciliations are included in our earnings release.
Speaker 2: transcript
Speaker 12: Earlier this week, a jury in Denver district court found Xcel Energy liable in its dispute with Core Cooperative regarding prior years lost power damages at our Comanche power plant.
Earlier this week the jury in Denver District Court found excel energy liable and its dispute with core cooperative.
Regarding prior years lost power damages at our Comanche power plant, we intend to appeal the decision for.
Speaker 2: transcript
Speaker 13: For the third quarter of 2023, we recorded gap earnings of $1.19 per share, which includes a one-time non-reoccurring pre-tax charge of $34 million related to the ongoing legal dispute. As a result, we have taken a non-reoccurring charge of five cents per share, which we don't consider part of ongoing earnings. All further discussion in our earnings call will focus on ongoing earnings. For more information on this matter, please see the disclosure on earnings release. I'll now turn the call over to Bob. Thanks, Paul. Good morning.
For the third quarter of 2023, we recorded GAAP earnings of $1 19 per share, which includes a one time nonrecurring pre tax charge of $34 million related to the ongoing legal dispute.
As a result, we have taken a nonrecurring charge of five cents per share, which we don't consider part of ongoing earnings all further discussion on our earnings call will focus on earnings and ongoing earnings.
More information on this matter please that disclosure in the earnings release, I'll now turn the call over to Bob.
Thanks, Paul and good morning, everybody.
Speaker 3: transcript
Speaker 14: We had solid results recording ongoing earnings of $1.23 per share for 2023 compared to $1.18 per share in 2022. As a result, we're narrowing our 23 ongoing earnings guidance to $3.32 to $3.37 per share.
Start with the quarter.
We had solid results recording ongoing earnings of $1 23 per share for 2023 compared to $1 18 per share in 2022.
As a result, we're narrowing our 'twenty three our ongoing earnings guidance to $3.32 to $3.37 per share.
Speaker 3: transcript
Speaker 15: We're also initiating 2024 ongoing earnings guidance of $3.50 to $3.60 per share, which is consistent with our 5 to 7% long-term EPS.
We're also initiating 2020 for ongoing earnings guidance of $3.50 to $3 60 per share, which is consistent with our 5% to 7% long term EPS growth rate.
Speaker 3: transcript
Speaker 16: This is with past practices we've reviewed our customer and operational needs and have updated our infrastructure plan for 2024 to 2028. This revised forecast reflects $34 billion of needed capital investment an increase of 4.5 billion from our previous.
Does it with past practices, we have reviewed our customer and operational needs and have updated our infrastructure plan for 2024 to 2028. Its revised forecast reflects $34 billion of needed capital investment an increase of $4 5 billion from our previous plan.
Speaker 3: transcript
Speaker 17: This base infrastructure investment plan includes substantial resiliency investments in both transmission and distribution
This space infrastructure investment plan includes substantial resiliency investments in both transmission and distribution.
Speaker 3: transcript
Speaker 18: including additional upgrades required to support the Colorado energy.
Including additional upgrades required to support the Colorado Energy plan.
Speaker 3: transcript
Speaker 19: However, it does not include clean energy generation investments that could result from the resource plans in Colorado, Texas, and New Mexico, or in the upper Midwest.
However, it does not include clean energy generation investments that could result from the resource plans in Colorado.
Texas into Mexico or in the upper Midwest.
Speaker 3: transcript
Speaker 20: If approved by our commissions, these cost-effective clean energy generation investments could result in additional capital needs totaling $10 billion from 2024 to 2028, and dramatically reduce carbon emissions in various states.
If approved by our commissions these cost effective clean energy generation investments could result in additional capital needs totaling $10 billion from 2024 to 2028 and dramatically reduce carbon emissions in various states.
Speaker 3: transcript
Speaker 21: Excel Energy's resource plans also demonstrate the benefit that the inflation reduction acts.
<unk> Energy's resource plans also demonstrate the benefits of the inflation reduction Act.
Speaker 3: transcript
Speaker 22: geographic advantages that enable high capacity renewable generation and our operational expertise in commercial acumen can break historic just
Our states geographic advantages that enable high capacity renewable generation and our operational expertise and commercial acumen can bring to our customers.
Speaker 3: transcript
Speaker 23: September , we filed our recommended plan in Colorado. This plan seeks to double the amount of renewable energy in the state, making it the largest clean energy transition ever in Colorado history and demonstrates our strong alignment with the state's environmental goals.
In September we filed a recommended plan in Colorado. This plan seeks to double the amount of renewable energy in the state, making it the largest clean energy transition effort in Colorado history, and demonstrates our strong alignment with the state's environmental goals.
Speaker 3: transcript
Speaker 24: Our proposal contemplates the shutdown or conversion of our remaining coal units, replaces them with approximately 6,500 megawatts of renewable energy and battery storage, and 600 megawatts of dispatchable gas resources to ensure system reliability in tons of low wind or solar conditions.
Our proposal contemplates the shutdown or conversion of our remaining coal units replaces them with approximately 6500 megawatts of renewable energy and battery storage and 600 megawatts of dispatch of a gas resources to ensure system reliability and tons of low wind or solar conditions.
Speaker 3: transcript
Speaker 25: These amounts include 4800 megawatts as proposed to be owned and operated by Xcel Energy for the benefit of our customers.
These amounts include 4800 megawatts is proposed to be owned and operated by ex LNG for the benefit of our customers.
Speaker 3: transcript
Speaker 26: Including the approximately $3 billion in required transmission investment to ensure deliverability and reliability, this Colorado Energy Plan represents nearly an $11 billion total investment by Excel Energy.
Including the approximately $3 billion and required transmission investment to ensure deliverability and reliability. This Colorado energy plan represents nearly an $11 billion total investment by XL energy.
Speaker 3: transcript
Speaker 27: In addition, this portfolio also includes $10 billion in IRA savings to customers. It creates local jobs, promotes economic development, and provides over $2 billion in tax benefits to local communities in the coming decades.
In addition, this portfolio also includes $10 billion and I are a savings to customers. It creates local jobs promote economic development and provides over $2 billion in tax benefits to local communities in the coming decades.
Speaker 3: transcript
Speaker 28: At the same time, it will reduce carbon emissions by over 80% from 2005 levels in Colorado while having an expected annual rate impact of only 2.3%.
At the same time, it will reduce carbon emissions by over 80% from 2005 levels in Colorado, well have an expected annual rate impact of only two 3%.
Speaker 3: transcript
Speaker 29: This competitive portfolio provides our Colorado customers and industry leading opportunity for a cleaner economy at a fraction of the cost, most other states would.
This competitive portfolio provides our Colorado customers, an industry, leading opportunity for a cleaner economy at a fraction of the cost of most other states would incur.
Speaker 3: transcript
Speaker 30: Moving to Minnesota in September the commission approved 350 megawatts of new renewable generation including an additional 250 megawatts at our sure go facility. This brings a total amount company built solar at sure go to over 700 megawatts making one of the largest solar facilities in the country.
Moving to Minnesota in September The Commission approved 350 megawatts of new renewable generation, including an additional 250 megawatts at our Serco facility. This brings the total amount of company built solar at short go to over 700 megawatts. They keep one of the largest solar facilities in the country.
Speaker 3: transcript
Speaker 31: In October , we also issued an RFP seeking 1200 megawatts of wind that will utilize our transmission interconnect at our retiring circle coal facility, and will be issuing additional RFPs to fulfill the remainder of the approved Upper Midwest Resource Plan in 2024.
In October we also issued an RFP seeking 200 megawatts of wind that will utilize our transmission interconnect at our retiring serco coal facility and we'll be issuing additional rfps to fulfill the remainder of the approved upper Midwest resource plan in 2024.
Speaker 3: transcript
Speaker 32: Finally in October we filed a resource plan in Mexico.
Finally in October we filed a resource plan in new Mexico.
Speaker 3: transcript
Based on our filing, SPS could require additional five to 10,000 megawatts of new generation by the end of the decade to accommodate increasing demand, plant retirements, and ensure resiliency and reliability of the grids.
Based on our filing S. P. S could required additional five to 10000 megawatts of new generation by the end of the decade.
To accommodate increasing demand plant retirements, and ensure resiliency and reliability of the grid.
Speaker 3: transcript
We've already proposed 418 megawatts of company owned solar and battery projects that are pending commission approval. We anticipate filing another RFT in 2024 for the additional generation resources.
We've already proposed 418 megawatts of company owned solar and battery projects that are pending commission approval, we anticipate filing another RFP in 2024 for the additional generation resources.
Speaker 3: transcript
Shifting to our clean energy innovation projects, the Department of Energy recently announced nearly $1.5 billion in awards to support multiple Xcel Energy affiliated projects.
Shifting to our clean energy innovation projects. The department of Energy recently announced nearly one $5 billion in awards to support multiple XL energy affiliated projects.
Speaker 3: transcript
Starting with the Hartland Hydrogen Hub, this estimated $5 billion initiative, which includes multiple projects from Excel and our dean others, received an award of up to $925 million by the DOE.
Starting with the Heartland hydrogen hub. This estimated 5 billion dollar initiative, which includes multiple projects from XL energy and others received an award of up to $925 million by the D O N E.
Speaker 3: transcript
This game-changing funding will serve as a catalyst for clean hydrogen ecosystem in the upper bed west and the foundation of our clean fuel efforts at Excel Energy.
This game changing funding will serve as a catalyst for a clean hydrogen ecosystem in the upper Midwest and the foundation of our clean fuels efforts at XL energy.
Speaker 3: transcript
Unfortunately, the Western Interstate Hydrogen Hub in Colorado, in New Mexico, Wyoming, Utah, would not successful in this round of DOE funding. And that said, we remain committed to working with policymakers and federal offices with the hopes that our projects can progress to advance our shared clean energy goals.
Unfortunately, the western Interstate hydrogen hub in Colorado, New Mexico, Wyoming, and Utah was not successful in this round of funding and that said, we remain committed to working with policymakers and federal offices with the hopes that our projects can progress to advance our shared clean energy goals.
Speaker 3: transcript
The D we also awarded ex-alongers, you have to $70 million to support two, 10 megawatt, 100 hour battery pilots with four managers.
The daily also awarded XL energy up to $70 million to support to 10 megawatt 100 hour battery pilots with Forum energy.
Speaker 3: transcript
Combine with the grants from Breakthrough Energy's catalyst fund, we secure up to $90 million to support these long duration energy storage pilots.
Combined with the grants from breakthrough Energy's catalyst, one we secured up to $90 million to support these long duration energy storage pilots.
Speaker 3: transcript
critical asset class to ensure cost effective reliability in a high renewable grid.
Critical asset class to ensure cost effective reliability and a high renewable grid.
Speaker 3: transcript
With respect to DOE's grid resilience and innovation partnerships program, Excel Energy was selected as part of two different awards. First, the DOE awarded Excel Energy $100 million to support projects to mitigate the threat of wildfires and ensure resiliency of the grid through extreme weather.
With respect to you always grid resilience and innovation partnerships program ex LNG was selected as part of two different awards first the deal we awarded XO energy $100 million to support projects to mitigate the threat of wildfires and ensure resiliency of the grid through extreme weather.
Speaker 3: transcript
projects include vegetation management, selective undergrounding, advanced infrastructure technologies, drones, and several additional resilience.
<unk> include vegetation management selective underground and advanced infrastructure technologies drones, and several additional resiliency projects.
Speaker 3: transcript
So as it was also a party to grips $464 million grant to expand transmission as part of the MISO and SPP Seams program to find high voltage transmission to improve interregional transfer capability reliability and resolve grid.
<unk> was also a party to grips $464 million grant to expand transmission as part of the MISO and SPP seams program to find high voltage transmission to improve interregional transfer capability reliability and resolve grid constraints.
Speaker 3: transcript
We appreciate it with the DOE support as well as many of our partners in these projects, including our states and regional transmission organizations.
We're appreciative of the support as well as many of our partners in these projects, including our states and our regional transmission organizations.
Speaker 3: transcript
Funding support helps us accelerate critical carbon-free technology.
Funding support helps us accelerate critical carbon free technologies.
Speaker 3: transcript
I can't safety and resiliency while keeping costs low or cost.
Enhanced safety and resiliency, while keeping costs low for customers.
Speaker 3: transcript
According to our natural gas utility in August , we filed our clean sheet program in Colorado. This first of a kind plan provides a framework to reduce greenhouse gas emissions consistent with state goals in our net zero emissions charts.
Turning to our natural gas utility in August we thought our clean sheet program in Colorado. This first of a kind plant provides a framework to reduce greenhouse gas emissions consistent with state goals and our net zero emissions target.
Speaker 3: transcript
The planned fast track solutions such as electrification, demand side management, clean fuels, and certified natural gas.
The planned fast track solutions, such as electrification demand side management clean fuels and certified natural gas.
Speaker 3: transcript
The proposed Clean Heat Plus portfolio reduces greenhouse gas emissions by 28% by 2030, ensures customer reliability and choice, while optimizing customer bill impact.
The proposed clean heat plus portfolio reduces greenhouse gas emissions by 28% by 2030 insurers customer reliability and choice, while optimizing customer bill impact.
Speaker 3: transcript
We plan to file our natural gas innovation plan, a corresponding framework for our Minnesota gas utility in the fourth.
We plan to file our natural gas innovation plan, a corresponding framework for our Minnesota gas utility in the fourth quarter.
Speaker 3: transcript
September , Metta announced construction of a $700 million data center in Minnesota, which eventually could be one of the largest customers in the state.
In September meta announced construction of a $700 million datacenter in Minnesota, which eventually could be one of our largest customers in the state.
Speaker 3: transcript
We continue to evaluate a number of additional data center and commercial opportunities that will further support low growth and economic development in our community.
We continue to evaluate a number of additional data center and commercial opportunities will further support low growth and economic development in our communities.
Speaker 3: transcript
Finally, there are not many new material developments with the Marshall Wobfire litigation. We currently have 14 complaints with 675 plaintiffs, which have been consolidated into a single case.
Finally.
There are not many new material developments with the Marshal wildfire litigation. We currently have 14 complaints with 675 plaintiffs, which had been consolidated into a single case.
Speaker 3: transcript
The past four years, Excel energy has been operating under a commission approved wildfire mitigation program in Colorado.
For the past four years Extel and actually it's been operating under a commission approved wildfire mitigation program in Colorado.
Speaker 3: transcript
We intend to file an updated wildfire mitigation plan next year, which will include a wide range of options for stakeholder consideration, including new technologies, undergrounding, additional vegetation management, composite poles, selective use of covered conductor and preventative power system shutoff.
We intend to file an updated wildfire mitigation plan next year, which include a wide range of options for stakeholder consideration, including new technologies underground ing additional vegetation management composite poles selective use of covered conductor and preventative power systems shut offs.
Speaker 3: transcript
Let me wrap up with just a few summary comments before I turn it over to Brian .
Let me wrap up with just a few summary comments before I turn it over to Brian.
Speaker 3: transcript
As we look forward across the next five years and beyond, we see a future that is bright for our communities, our customers, and our investors.
As we look forward across the next five years and beyond we see a future that is bright for our communities our customers and our investors.
Speaker 3: transcript
Xcel Energy is committed to providing a clean energy economy in our regions, and it will require meaningful investment to accomplish that.
<unk> energy is committed to providing clean energy economy in our regions and it will require meaningful investments to accomplish.
Speaker 3: transcript
For our customers, we have the potential to deploy 15 to 20,000 megawatts of new clean generation on our systems by 2030.
For our customers, we have the potential to deploy 15 to 20000 megawatts of new clean generation on our systems by 2030.
Speaker 3: transcript
dramatically lowering our emissions profile, affordably powering our customers' homes and businesses, while ensuring 99.99% reliability that they've come to expect from Xcel Energy.
Dramatically lowering our emissions profile affordably powering our customers' homes and businesses, while ensuring 90, 999% reliability that they come to expect from XL energy.
Speaker 3: transcript
And through leveraging the benefits of the IRA and the IJA, we are able to accelerate deployment of renewable resources impairing them with affordable energy storage assets and other firm, despatual, clean fuel resources to provide reliability.
And through leveraging the benefits of the eye array and the I J E. We are able to accelerate deployment of renewable resources and pairing them with affordable energy storage assets and other firm dispatch will clean fuel resources to provide reliability.
Speaker 3: transcript
We continue to invest in and innovate our transmission and distribution systems to ensure reliability and resilience and provide for regional and inter-regional deliverability.
We continue to invest in and innovate our transmission and distribution systems to ensure reliability and resilience and provide for regional and interregional deliverability.
Speaker 3: transcript
We're laying the framework to achieve net zero greenhouse gas emissions on our natural gas.
We're laying the framework to achieve net zero greenhouse gas emissions on our natural gas system.
Speaker 3: transcript
All the while, our residential customer electric and natural gas bills are amongst the lowest in the country, 28 and 14% below the national average.
All the while our residential customer electric and natural gas bills are amongst the lowest in the country, 28% and 14% below the national average.
Speaker 3: transcript
Given that the regions where we serve customers are the most resource-rich in wind and solar, we believe that we can lead this clean energy transition for our customers more cost-effectively than almost any other company. With that, I'll turn it over to Brian .
And given that the regions, where we serve customers are the most resource rich in wind and solar.
We believe that we can lead this clean energy transition for our customers more cost effectively than any other company with that I'll turn it over Brian.
Thanks, Bob and good morning, everyone.
Speaker 4: transcript
We have ongoing earnings of $1.23 per share for the third quarter of 2023, compared to $1.18 per share in 2022. Most significant earnings.
We had ongoing earnings of $1 23 per share for the third quarter of 2023 compared to $1 18 per share in 2022.
Most significant earnings drivers for the quarter included the following.
Speaker 4: transcript
lower O&M expenses, increased earnings by three cents per share, which reflects the impact of cost containment action.
Lower O&M expenses increased earnings by <unk> <unk> per share, which reflects the impact of cost containment actions.
Speaker 4: transcript
lower effective tax rate and conservation and demand-side management expenses, which increase earnings by three cents per share.
Lower effective tax rate in conservation and demand side management expenses, which increased earnings by <unk> <unk> per share.
Speaker 4: transcript
Note that these items are primarily offset in lower margins and are earning neutral.
Note that these items are primarily offsetting lower margins or earnings neutral.
Speaker 4: transcript
In addition, other items combine to increase earnings by four cents per share.
In addition, other items combined to increase earnings by four cents per share.
Speaker 4: transcript
Offsetting these positive drivers. Higher interest charges, which decreased earnings by three cents per share, driven by rising interest rates and increased debt levels to fund capital investment.
Offsetting these positive drivers higher interest charges, which decreased earnings by three cents per share driven by rising interest rates and increased debt levels to fund capital investment.
Speaker 4: transcript
and higher depreciation and amazement expense, which decreased earnings by two cents per share, reflecting our capital investment program.
And higher depreciation and amortization expense, which decreased earnings by two cents per share, reflecting our capital investment program.
Speaker 4: transcript
Turning to sales, year-to-date weather-adjusted electric sales increased by 1.1 percent, largely driven by strong C&I sales.
Turning to sales year to date weather adjusted electric sales increased by one 1% largely driven by strong CNI sales.
Speaker 4: transcript
As a result, we now expect annual electric sales growth of one to two percent in 2023. In 2021, we now expect annual electric sales growth of one to two percent in 2023.
As a result, we now expect annual electric sales growth of 1% to 2% in 2023.
Shifting to expenses.
Speaker 4: transcript
O&M decreased $25 million for the third quarter, reflecting management actions to lower costs. We now expect our annual O&M expenses to decline by 1% to 2%.
O&M decreased $25 million for the third quarter.
The management actions to lower costs, we now expect our annual.
Annual O&M expenses to decline by 1% to 2%.
Speaker 4: transcript
During the third quarter, we also made progress in several regulatory proceedings. And we're getting close to wrapping up a busy regulatory year. 2020-24 will be much lighter from a rate case respect.
During the third quarter. We also made progress on several regulatory proceedings, and we are getting close to wrapping up a busy regulatory year 'twenty 'twenty four will be much lighter from a rate case perspective.
Speaker 4: transcript
In our Colorado Electric Rate Case, the Commission approved our settlement that reflects a $95 million rate increase based on an ROE of 9.3% in an equity ratio of 55.7%. Rates were effective in September .
In our Colorado Electric rate case, the commission approved our settlement that reflects a $95 million rate increase.
Based on an ROE of nine 3% and an equity ratio of 55, 7% rates were effective in September.
Speaker 4: transcript
In October , the New Mexico Commission approved our electric gray case settlement.
In October.
The New Mexico Commission approved our electric rate case settlement.
Speaker 4: transcript
That reflects a rate increase of $33 million based on an ROE of 9.5%, an equity ratio of 54.7%, a forward test year, and acceleration of total depreciation to 2028. Rates were effective in October .
That reflects a rate increase of $33 million based on an ROE of nine 5% an equity ratio of 54, 7% a forward test year and acceleration.
Depreciation of 24, new rates were effective in October.
Speaker 4: transcript
In our pending Texas electric rate case, we reached a settlement in principle on revenue requirements. We're hopeful the parties will reach agreement on class cost allocation and rate design so that we can file the settlement this year.
And our pending Texas electric rate case, we reached a settlement in principle on revenue requirements were.
We're hopeful the parties will reach agreement on class cross allocation and rate design. So that we can file the settlement this year.
Speaker 4: transcript
the expected decision and the implementation of rates in the first quarter of 2024. Now, as a reminder, we have a relate back.
We expect a decision in the implementation of rates in the first quarter of 2024.
And as a reminder, we have a relate back date to July 13th.
Speaker 4: transcript
And in Wisconsin, we continue to work through the regulatory process for electric and natural gas rate cases and expect the commission decision by year end.
And then Wisconsin, we continue to work through the regulatory process for electric and natural gas rate cases, and expect a commission decision by year end.
Speaker 4: transcript
We plan to file a natural gas for AKS from Minnesota in the fourth quarter and the potential Colorado natural gas for AKS in the first quarter of next.
With regards to future rate cases.
We plan to file a natural gas rate case in Minnesota in the fourth quarter, the potential Colorado natural gas rate case in the first quarter of next year.
Speaker 4: transcript
Updating our progress on production tax credit transfer ability, we recently executed two contracts holding $250 million.
Updating our progress on production tax credit Transferability, we recently executed two contracts totaling $250 million.
Speaker 4: transcript
We anticipate further PTC sales in the fourth quarter consistent with our plan totaling $300 to $400 million for the year.
We anticipate further PTC sales in the fourth quarter, consistent with our plan totaling $300 million to $400 million for the year.
Speaker 4: transcript
Transprability lowers the cost of our renewable energy projects for our customers or just near term funding needs
Transferability lowers the cost of our renewable energy projects for our customers.
As near term funding needs.
Moving to our updated capital forecast.
Speaker 4: transcript
You wish you to rob us $34 billion, five-year base capital plan with annual rate base growth of 7.6%.
Issued a robust $34 billion five year base capital plan with annual rate base growth of seven 6%.
Speaker 4: transcript
The base plan reflects Commission-approved renewable projects, including over 700 megawatts of new solar at Sherco.
The base plan reflects commission approved renewable projects, including over 700 megawatts of new solar at circle.
Speaker 4: transcript
The baseline also reflects significant rate and resiliency investments, including our Colorado Power Pathway, transition to support our Colorado Preferred Plan, and MISO Tronch One investments, as well as other system investments to maintain asset health and reliability.
The baseline also reflect significant grit and resiliency investments, including our Colorado power pathway.
Mission to support our Colorado preferred plan MISO tranche, one investments as well as other system investments to maintain asset health and reliability.
Speaker 4: transcript
In addition, we have additional cappellum dust and oxygen as for renewables and firm capacity associated with the Colorado preferred plan. 418 megawatts of proposed self-dotes solar and storage and SPS, and for the RFPs and NSP NSP.
In addition, we have additional capital investment opportunities for our renewables and firm capacity associated with the Colorado preferred plan 418 megawatts from proposed self build solar and storage and Sps.
The Rfps and NSP and Sps.
Speaker 4: transcript
We will update our base capital plan after our various commissions complete their review and finalize their decisions regarding our proposal.
We will update our base capital plan after our various commissions complete their review and finalize our decisions regarding our proposals.
Speaker 4: transcript
These opportunities, if approved, could translate to $10 billion of additional investment through 2028, resulting in annual rate-based growth of 10.7%.
These opportunities if approved could translate to $10 billion of additional investments through 2020 eight resulting in annual rate base growth of 10, 7%.
Speaker 4: transcript
We've updated our base financing plan, which reflects $15 billion of debt and $2.5 billion of equity.
We've updated our base financing plan, which reflects $15 billion of debt and $2 $5 billion of equity.
Speaker 4: transcript
We anticipate that any incremental capital investment would be funded by approximately 40% equity and 60% debt.
We anticipate that any incremental capital investment will be funded by approximately 40% equity and 60% debt.
Speaker 4: transcript
It is important to recognize that we've always maintained a balanced financing strategy, which includes a mix of debt and equity to fund a creative growth, while maintaining a strong balance sheet and credit metric.
It is important to recognize that we've always maintained a balanced financing strategy, which includes a mix of debt and equity to fund accretive growth, while maintaining a strong balance sheet and credit metrics.
Speaker 4: transcript
Maintaining solid credit ratings and favorable access to capital markets are critical to fund our clean energy transition, deliver strong shareholder returns, and keep customer bills low, especially with rising interest rates.
Maintaining solid credit ratings and favorable access to capital markets are critical to fund our clean energy transition deliver.
Deliver strong shareholder returns and keep customer bills low.
Specially with rising interest rates.
Speaker 4: transcript
Shifting to earnings, we've updated our 2023 guidance assumptions to reflect the latest information.
Shifting to our earnings we've.
We've updated our 'twenty to 'twenty three guidance assumptions to reflect the latest information.
Speaker 4: transcript
We're also narrowing our 2023 ongoing earnings guidance range to $3.32 to $3.37 per share.
We're also narrowing our 'twenty to 'twenty three ongoing earnings guidance range to $3 32 to.
The $3 37 per share.
Speaker 4: transcript
We have a long history of delivering on our financial objectives and expect to continue that trend in 2023.
We have a long history of delivering on our financial objectives and expect to continue that trend in 'twenty to 'twenty three.
Speaker 4: transcript
As a result, we anticipate strong earnings in the fourth quarter that will result in achieving our earnings guide.
As a result, we anticipate strong earnings in the fourth quarter that will result in achieving our earnings guidance.
Speaker 4: transcript
The drivers include incremental revenue from Colorado and New Mexico electric rate cases.
Key drivers include incremental revenue from the Colorado, New Mexico electric rate cases.
Speaker 4: transcript
Deferral of certain O&M depreciation interest expenses is part of the Texas electric rate case.
Deferral of certain O&M depreciation and interest expenses as part of the Texas electric rate case.
Speaker 4: transcript
strong O&M cost management, and better than expected sales growth.
Strong O&M cost management and better than expected sales growth.
Speaker 4: transcript
Finally, we are initiating our 2024 ongoing earnings guidance range of $3.50 to $3.60 per share, which is consistent with our long-term EPS growth objective of 5% to 7%. Key assumptions are detailed in our earnings release.
Finally, we are initiating our 2020 for ongoing earnings guidance range of $3 50 to $3 60 per share, which is consistent with our long term EPS growth objective of 5% to 7%.
Key assumptions are detailed in our earnings release.
With that I'll wrap up with a quick summary.
Speaker 4: transcript
We continue to execute our clean energy plans, leveraging the benefits of the IRA to reduce cost for our customers.
We continue to execute on our clean energy plants, leveraging the benefits of the IRA to reduce cost for our customers.
Speaker 4: transcript
We proposed a game changing preferred planning Colorado, which results in one of the most aggressive renewal bill votes in the country.
We froze a game changing preferred plan in Colorado, which results in one of the most aggressive renewable build lots in the country.
Speaker 4: transcript
We secured DOE grants for our Heartland hydrogen hub, wildfire mitigation plants, form entry pilots, and transmission expansion, which will accelerate breakthrough technology and reduce risk at a lower cost for our customers.
We secured doughy grants for our Heartland hydrogen hub wildfire mitigation plans 400 pilots and transmission expansion, which will accelerate breakthrough technology in the roofs risk at a lower cost for our customers.
Speaker 4: transcript
We resolve rate cases in Colorado and New Mexico while reaching a settlement in Prince Juan, Texas.
We resolved rate cases in Colorado, and new Mexico, while reaching a settlement in principle in Texas.
Speaker 4: transcript
We're narrowing our 2023 ongoing earnings guidance and continue to expect to deliver within our guidance range as we have for the past 18 years.
We are narrowing our 2023 ongoing earnings guidance and continue to expect to deliver within our guidance range as we have for the past 18 years.
Speaker 4: transcript
We now have the robust updated capital investment program and initiated 2024 guidance that provides strong, transparent, rate-based growth and customer value.
We announced a robust updated capital investment program and initiated 2024 guidance that provides strong transparent rate base growth and customer value.
Speaker 4: transcript
And finally, we remain confident we can continue to deliver long-term earnings and dividend growth within the upper half of our five to seven percent objective range as we lead the clean energy transition and continue to keep bills low for our costs.
And finally, we remain confident we can continue to deliver long term earnings and dividend growth within the upper half of our 5% to 7% objective range as we lead the clean energy transition and continue to keep bills low for our customers.
Speaker 4: transcript
This concludes our prepared remarks, operated, and I'll take questions.
This concludes our prepared remarks, operator, we will now take questions.
Speaker 1: transcript
Thank you very much sir. Ladies and gentlemen, once again, for analysts to register for question, please press star one and you've got on keypad. Our first question today is coming from Julian Dumoulin, Smith of Bank of America. Please go ahead, your line is open.
Thank you very much sir.
Ladies and gentlemen, once again for Atlas to register for a question. Please press Star One couple key pad. Our first question today is coming from Julien Dumoulin Smith of Bank of America. Please go ahead. Your line is open.
Speaker 5: transcript
hey good morning team uh... nice we got to stay what i would send an up date quote of record you axio eles welcome to
Hey, good morning team nicely done got to say what or what.
What does that or update quarter over quarter here.
Speaker 5: transcript
Thank you. Thank you. Quite well. Really appreciate it.
Hey, Joe Good morning.
Hey, good morning, and thank you.
Speaker 6: transcript
Still warm here and still warm and used in that. I'll leave it at that. So maybe I just do the picked things up here real quickly. On the credit side, I mean, I appreciate the commentary about 60, 40. Can you comment a little bit about the latest modernization policies for the credit rating agencies and thoughts about monetizing in terms of flowing tax credits through FFO? To what extent does that change your impact, your financing, clinical, and all? Just to come back a bit.
Quite well really appreciate it.
It's still warm here.
Sure.
Still warm in Houston I'll leave it at that.
Maybe just two.
Pick things up here real quickly on the credit side I mean I. Appreciate the commentary about 60 40 can you comment a little bit about the latest modernization policies for the credit rating agencies and thoughts about monetizing in terms of flowing tax credits through <unk> to what extent does that change or impact your financing plan at all just to come back.
Speaker 4: transcript
Hey, Julian. Good morning. Yeah. So we met with the credit rate agencies in September . And as we're starting right now, we've included tax credit transferability in our finance and plan. And we expect it to that they will include it in the way they look at our credit metrics. And for us, we've in-compacts election methods, so we'll flow through our cash from operations in our financial statement. So all of that is included in our in our base plan, as we think about it.
Is that a bit.
Hey, Julien good morning, Yeah. So we met with the credit rating agencies in September.
And it's really sitting right now that we've included tax credit transfer ability in our financing plan and we expect that they will include it in the way they look at our credit metrics and for all Swedes income tax election methods all flow through our cash from operations in our financial statements. So all of that is included.
In a baseline as we think about it.
Speaker 6: transcript
Excellent. Alright, thank you. And then separately just as you think about the
Excellent alright. Thank you and then separately just as you think about the.
Speaker 6: transcript
the upside plan here i mean it's incredible uh... incredible numbers here i mean i and i know there's a lot of fixation here in calryle can you walk through a little bit of just the timing here in some of the other jurisdictions in terms of uh... comment information especially
The upside plan here I mean, it just incredible.
Incredible numbers here I mean, I know, there's a lot of fixation here in Colorado, but can you walk through a little bit of just the timing here and some of the other jurisdictions in terms of coming to fruition, especially.
Speaker 6: transcript
Through 2020, it's practically around the corner. If you want to talk a little bit about the specific timelines to getting some of that best full 10 reflected in the plan here just as it goes, to aligning against the full update with 4Q or beyond.
Through 2020, it's practically around the corner do you want to talk a little bit about the specific timelines to getting some of that that full 10 reflected in the plan here just as it goes to aligning against a full update with <unk> or beyond.
Speaker 3: transcript
Yeah, I hate Julian, it's Bob. A little bit, we're really excited about the Colorado Energy Plan. It's great to see it sort of nearing conclusion in approval milestone.
George: Hello and welcome to the Xcel Energy 3rd quarter, 2023 earnings capital call. My name is George, I'll be a coordinator for today's event. Please note the capital has been recorded and for the duration of call, your eyes will be on listen only.
Yeah, Hey, Julien it's Bob.
We're really excited about the Colorado energy plan.
It's great to see it sort of nearing.
Conclusion and approval milestones we've been working on this for two years and we've actually been working with the Counterparties on the bids for over six months I recognize that it might be.
Speaker 3: transcript
two years, and we've actually been working with the counterparties on the bids for over six months. You know, I recognize that it might be quick timing for the external world, but we've been working with these people for a while, and we're really excited about what we've done here. You know, we've been working with stakeholders very collaboratively in the PUC over the past two years to bring this plan to life for our Colorado customers.
Operator: A quest at the session will follow the prepared remarks and questions will only be taken from institutional investors and analysts. Reports can conduct media relations with inquiries and individual investors and others can reach out investor relations. To register for a question, please press star one on your double keypad. If you require assistance at any point, please press star zero and you will be connected to an operator.
Quick timing for for the external world, but we've been working with these people for a while and we're really excited about what we've done here.
You know, we've been working with stakeholders very collaboratively and the PUC over the past two years to bring this plant to life for our Colorado customers.
Speaker 3: transcript
Obviously a great wrinkle right in the middle of it with the IRA, right? And so we've basically been able to double the renewable portfolio, have the fossil portfolio and increase our storage component dramatically.
Obviously, a great wrinkle right in the middle of it with the <unk> right and so we basically been able to double the renewable portfolio have the fossil portfolio and increase our storage component dramatically.
Paul Johnson: I'd like to hand a call over to your host today, Mr. Paul Johnson, vice president, pleasure and investor relations to begin this conference. Please go ahead sir. Thank you.
Paul Johnson: Good morning and welcome to Xcel Energy's 3rd quarter earnings call. Joining me today are Bob Frenzel, Chairman, President, Chief Executive Officer, and Brian Van Abel, Executive Vice President, Chief Financial Officer. In addition, we have other members of the management team in the room to answer your questions if needed.
Speaker 3: transcript
So we think the plan leads the policy guidelines. The process from here is relatively quick in the grand scheme of things. So we receive the independent engineer support that validated our proposal last week. Actually Monday of this week, I think. We get comments, external comments to early November . We reply to those comments late November and then we turn it over to the commission for deliberations. We think that happened.
So we think the plan meets the policy guidelines the process from here is relatively quick in the Grand scheme of things. So we received the independent engineers support that validated our proposal last week actually Monday of this week I think we get comments external comments to early November we reply to those comments late.
Paul Johnson: This morning we will review our 3rd quarter results and highlights, share recent business and regulatory developments, update our capital and financing plans and provide 2024 guidance. Flights at a company today's call are available on our website. As a reminder, some of the comments during today's call may contain forward looking information. Significant factors that could cause results are different from those anticipated are described in our earnings release in our STC fileings. Today, we'll discuss certain measures that are non-GAP measures. Information on comparable gap measures and recommendations are included in our earnings release.
November and then we turn it over to the commission for deliberations, we think that happens.
Speaker 4: transcript
in December and early next year and probably early, key one of next year we'd expect a decision from the commission. So pretty quick given the long timeframe of the process in total. And you'll end up in a couple of other pieces and that's deal for Field 2.0 plan is the SPS Solar Plus Storage. We should get the decision in queue two of next year and then we just launched a Minnesota 1200 megawatt wind RFP, bid their due in December . Should get a short list in queue two of next year on that.
In December and early next year and probably early Q1 of next year, we would expect a decision from the commission so pretty quick given the long time frame of the process in total.
Julien a couple of the other pieces in that steel for field Ciudadano plan is the Sps solar plus storage and wish you. Good day decision in Q2 of next year and then we just launched in Minnesota 200 megawatt wind RFP bids are due in December should get a short list in Q2 of next year on that.
Paul Johnson: Earlier this week, the jury in Denver District Court found Xcel Energy Label and its dispute with core cooperative regarding prior years lost power damages at our Comanche power plant. We intend to appeal the decision. For the 3rd quarter of 2023, we recorded gap earnings of $1.19 per share, which includes a one time non-reoccurring free tax charge of $34 million related to the ongoing legal dispute. As a result, we have taken a non-reoccurring charge of $5 per share, which we don't consider part of ongoing earnings. All for the discussion and earnings call will focus on ongoing earnings.
Speaker 4: transcript
And then not in anyone our steel for field 2.0, but really looking forward to working with our stakeholders and SPS. Bob mentioned this in his opening remarks about our new Mexico resource plan. We'll launch an RFP in
And then not in anywhere in our steel for fuel to point, all but really looking forward to working with our stakeholders and Sps Bob mentioned this in his opening remarks about our new Mexico resource plan will launch an RFP in.
Speaker 4: transcript
mid next year and that's 5,000 to 10,000 megawatts of potential generation resources and should get a project selection and call it early to mid 2025 for that. So nowhere in the the 10 billion dollars but a great opportunity to look forward to transition SPS's generation fleet.
Mid next year, and Thats 5000, 10000 megawatts of potential generation resources and should give the project selection and call. It early to mid 2025 for that so nowhere in the world.
The $10 billion with great opportunities as we look forward to transitioning Sps's generation fleet too.
Paul Johnson: For more information this matter, please visit disclosure and earnings release.
Speaker 6: transcript
yeah it's incredible again update with that said though and then given the timing early one q for these to the good chunk of that i mean for q could we see an update to your your uh... uh... earnings cager outlook and or any other met related metrics as you get that clarity affirmed here at least on the proponents of it
Bob Frenzel: I'll now turn the call over to Bob. Thanks for all of the morning everybody. Let's start with the quarter. We'd solid results recording ongoing earnings of $1.23 per share for 2023 compared to $1.18 per share. As a result, we're narrowing our 23 are ongoing earnings guidance to $3.32 to $3.37 per share. We're also initiating 2024 ongoing earnings guidance to $3.50 to $3.60 per share, which is consistent with our 5% to 7% long term EPS growth rate.
Yeah, It's incredible again update with that said, though and then given the timing early <unk> for at least a good chunk of that I mean, <unk> could we see an update to your <unk>.
Earnings CAGR outlook and or any other related metrics as you get that clarity affirmed here at least on the preponderance of it.
Speaker 4: transcript
Yeah, Julie and I mean, it certainly will wait until we get through the Commission approvals. So, but if that timing aligns then yes, it'd be fair to think through that.
Yeah, Julian I mean, certainly we'll wait until we get through the commission approvals.
But if that timing aligns then yes, then yes, it would be fair to think through that.
Alright, guys I will leave it there good luck.
Speaker 1: transcript
Thank you very much sir. We'll now move to Nicholas Campanella calling from Barclays, please go ahead.
Thank you.
Thank you very much sir.
Bob Frenzel: This is with past practices we've reviewed our customer and operational needs and have updated our infrastructure plan for 2024 to 2028. This revised forecast reflects $34 billion of needed capital investment, an increase of 4.5 billion from our previous plan. This base infrastructure investment plan includes substantial resiliency investments in both transmission and distribution. Inc, including additional upgrades required to support the Colorado Energy Plan. However, it does not include clean energy generation investments that could result from the resource plans in Colorado, Texas and the Mexico, or in the upper Midwest.
Apples to Nicholas Campanella, calling from Barclays. Please go ahead.
Speaker 7: transcript
Hey, good morning, happy Friday. Thanks for taking the question. Big. How are you, good morning. Hey. So a couple for me, I guess, on Colorado, as you kind of layer in that to the next financing plan. And obviously, you have the 40% rule. Is equity continuing to be programmatic across the five years, or does that drive a larger need in the near years of the plan?
Hey, good morning, Happy Friday, Thanks for taking the question Nick how are you good morning, Hey.
So a couple a couple from me I guess on Colorado as you kind of layer in that to the next financing plan.
And obviously you have the 40% rule.
Is equity continuing to be programmatic across the five years or does that drive a more a larger need in the near years of the plan.
Speaker 4: transcript
Hey, Nick. Good morning. You know, the way we look at it, the base capital plan regular pretty programmatic as we as we think about it, um, most likely in ATM with the base capital plan. When you look at the, the, not just in Colorado, but the $10 billion of the steel for field two point opportunities, this is really kind of the 25, 26, 27 timeframe or the heavy spend. So, um, I would look at it is that's kind of the timeframe that would align with the spend for that incremental and additional opportunities.
Hey, good morning, the way, we look at it the base capital plan regular pretty programmatic as we as we think about it most likely an ATM with our base capital plan. When you look at the the not just in Colorado, but the $10 billion of the steel for fuel to point opportunities, there's really kind of 'twenty five 'twenty six.
Bob Frenzel: If approved by our commissions, these cost effective clean energy generation investments could result in an additional capital needs, totally $10 billion from 2024 to 2028. And dramatically reduce carbon emissions in various states. Xcel Energy's resource plans also demonstrate the benefit that the Inflation Reduction Act, our state's geographic advantages that enable high capacity renewable generation, and our operational expertise and commercial acumen can bring to our customers. In September, we filed our recommended plan in Colorado.
Seven time frame or the heavy spend so.
I would look at it as that's kind of a timeframe that would align with the spend for that incremental and additional opportunities.
Speaker 7: transcript
Got it. And then one more on the Colorado plan. I just, I know the commission is, is, is exploring some type of risk sharing mechanism for the renewable assets. But can you just help us understand if that type of proposal is something that would tweak the plan in any way? Is it something that you're working with the commission actively on? And how could that kind of transpire through the remaining courses to the year here?
Got it and then one more on the Colorado plan I, just I know the commission as it is.
And exploring some type of risk sharing mechanism for the renewable assets, but can you just help us understand if that type of proposal is something that would tweak the plan in any way is it something that youre working with the commission actively on and how could that kind of transpire through the remaining course of the year here.
Bob Frenzel: This plan seeks to double the amount of renewable energy in the state, making it the largest clean energy transition ever in Colorado history and demonstrates our strong alignment with the state's environmental goals. Our proposal contemplates the shutdown or conversion of our remaining coal units replaces them with approximately 6,500 megawatts of renewable energy and battery storage and 600 megawatts of dispatchable gas resources to ensure system reliability in times of low wind or solar conditions.
Speaker 3: transcript
Yeah, you know, consistent with past practice, Nick, we would expect some forms of customer protection capital costs or energy cost providers. We've submitted some proposals to the commission that they for their purview. It'll go along with their overall decision. And on the portfolio side, you know, of course there's there's always chance to look at it, but you know, we've looked at this.
Yeah.
As with past practice Snick, we would we would expect some forms of customer protections capital cost or energy cost providers, which submitted some proposals to the commission that they.
So their purview it'll go along with their overall decision and on the portfolio side.
Of course, there's always a chance to look at it but we've looked at this.
Speaker 3: transcript
sideways, backways, frontways, think we've put together a great plan that complements the geographic diversity in the state where the wind and solar physically come into the grid to provide high resiliency and reliability from the renewable resources. And so, you know, I'll always chance to move it around a little bit, but we don't think this substantial change is coming from the plan.
Bob Frenzel: These amounts include 4,800 megawatts as proposed to be owned and operated by Xcel Energy for the benefit of our customers. Including the approximately $3 billion in required transmission investment to ensure deliverability and reliability, this Colorado energy plan represents nearly an $11 billion total investment by Xcel Energy. In addition, this portfolio also includes $10 billion in IRA savings to customers. It creates local jobs, promotes economic development, and provides over $2 billion in tax benefits to local communities in the coming decades.
No.
Sideways back ways front ways think we've put together a great plan that complements the geographic diversity in the state where the wind and solar physically come into the into the grid to provide a high resiliency and reliability from the renewable resources and so on.
I'll always chance to move it around a little bit, but we don't think the substantial changes coming from the plan.
Speaker 7: transcript
That's great. And if I could just squeeze one more in, you talked about the data centers in your prepared remarks, your weather normalize load for 24 is 2% to 3%, and that's higher than last year by 100 basis points. So just, what are you seeing that's changing the demand profile, how are you thinking about the longer term forecast and whether that's pressure higher in your 5 to 7? Thank you.
That's great and if I could just squeeze one more in you talked about the data centers in your prepared remarks, you're.
Weather normalized load for for 'twenty, four is 2% to 3% and thats higher than last year by 100 basis points to just what are you seeing a change in the demand profile. How are you thinking about the longer term forecast and whether that's a pressure higher and your 5% to seven thank you.
Bob Frenzel: At the same time, it will reduce carbon emissions by over 80 percent from 2005 levels in Colorado, while having expected annual rate impact of only 2.3 percent. This competitive portfolio provides our Colorado customers an industry leading opportunity for a cleaner economy at a fraction of the cost most other states would incur. Moving to Minnesota in September, the Commission approved 350 megawatts of new renewable generation, including an additional 250 megawatts at our Shurco facility.
Speaker 4: transcript
Thanks, Nick. I'll take that one. The way I think about it is...
Yeah. Thanks, Thanks, Nick I'll take that one.
Speaker 4: transcript
Yes, we're starting to see a number of things in our long-term sales forecast. We updated our sales forecast for 2024, 2% to 3%, but we think over the five years we expect that 2% to 3% to hold. If not, call it conservative given what we're seeing on the potential load from data centers. Data centers represent less than 1% of our sales right now. We see some potential where that could grow to 5% over this next five years.
I think about it is yes, we're starting to see a number of things in our long term sales sales forecast, we updated our sales forecast for 2020 for 2% to 3%, but we think over the five years, we expect that 2% to 3% CAGR to hold if not call. It conservative given what we're seeing on the potential load from data centers.
Bob Frenzel: This brings a total amount of company built solar at Shurco to over 700 megawatts, making it one of the largest solar facilities in the country. In October, we also issued an RFP seeking 1200 megawatts of wind that will utilize our transition interconnect at our retiring Shurco cold facility, and will be issuing additional RFP to fulfill the remainder of the approved Upper Midwest resource plan in 2024. Finally, in October, we filed a resource plan in the Mexico.
Data centers represent less than 1% of our sales right now, we see some potential where that could grow to 5% over this next five years.
Speaker 4: transcript
As I think about just next year, significant electrification happening in the oil and gas region in the Permian Basin and Delaware Basin, we're working very closely with our large customers down there around, it's not just, it's not really about even more drilling, it's about electrification of their pumps compressors as they hit their net zero goals in the Permian Basin and achieve the goals that the state of New Mexico has for them.
I think about just next year significant electrification happening in the oil and gas region in the Permian Basin and the Delaware Basin, we're working very closely with our large customers down there around it's not just it's not really about even more drilling as well as electrification of their pumps compressors as they hit their net zero goals in the Permian Basin.
Bob Frenzel: Based on our filing, SPS could require additional 5 to 10,000 megawatts of new generation by the end of the decade to accommodate increasing demand, plant retirements, and ensure resiliency and reliability of the grid. We've already proposed 418 megawatts of company-owned solar and battery projects that are pending commission approval and we anticipate filing another RFT in 2024 for the additional generation resources. Chipping to our clean energy innovation projects, the Department of Energy recently announced nearly one and a half billion dollars in awards to support multiple Xcel Energy Affiliated projects.
The goal is that in the state of new Mexico has for them.
Speaker 3: transcript
And then also we're starting to see an uptick in residential demand. We're starting to see penetration from the EV perspective. So overall, really great trend as we look out, not only next year, but longer term with kind of electrification and data center potential. Hey Nick, just to add on to that, when I think about some of the comments I've...
And then also we're starting to see an uptick in residential demand now we're starting to see penetration from the EV perspective, So overall really great trend as we look out not only next year, but longer term with a kind of electrification and data central potential and Nick just to add onto that as Bob.
When I think about some of the comments I made in the opening remarks.
Speaker 3: transcript
about the ability to deliver clean energy more cost effectively in our regions of the country than other parts. I think over the long term that should absolutely accrue to our state's benefits in terms of economic development. Energy and energy intensive resources are going to come back and on shore the United States.
The ability to deliver clean energy more cost effectively in all regions of the country than other parts I think over the long term that should absolutely.
Bob Frenzel: Starting with the Heartland Hydrogen Hub, this estimated five billion dollar initiative which includes multiple projects from Xcel Energy and others received an award of up to $925 million by the DOE. This game-changing funding will serve the catalyst for a clean hydrogen ecosystem in the Upper Midwest and the foundation of our clean fuels efforts at Xcel Energy. Unfortunately, the Western Interstate Hydrogen Hub in Colorado and New Mexico, Wyoming, Utah would not successful in this round of DOE funding and that said we remain committed to working with policymakers and federal offices with the hopes that our projects can progress to advance our shared clean energy goals.
Crew to our state's benefits in terms of economic development energy and energy intensive resources are going to come back and onshore in the United States.
Speaker 3: transcript
We should be a very attractive destination for them as we can deliver renewable energy and clean energy much more cost effectively. You know, we just, we serve customers where the wind blows and the sun shines, and that translates to high capacity factors and lower energy costs to our customers, which should lead to long-term economic development in our states.
We should be a very attractive destination for them as we can deliver renewable energy and clean energy much more cost effectively.
We serve customers, where the wind blows and the Sun shines and that translates to high capacity factors and lower energy costs to our customers, which should lead to long term economic development in our states.
Alright, thanks, so much see in a few weeks here.
Speaker 1: transcript
We'll now move to Durgesh Chopra calling from Evercore ISI, please go ahead.
Thank you very much sir.
I will now move to <unk> Chopra from Evercore ISI. Please go ahead.
Bob Frenzel: The DOE also awarded Xcel Energy at the $70 million to support two 10 megawatt 100-hour battery pilots with four energy. Combined with the grants from breakthrough energies catalysts fund, we secure up the $90 million to support these long duration energy storage pilots. A critical asset class to ensure cost-effective reliability in a high renewable grid. With respect to DOE's grid resilience and innovation partnerships program, Xcel Energy was selected as part of two different awards.
Speaker 8: transcript
Hey, good morning team. Thanks for taking my questions.
Hey, good morning team thanks for taking my questions.
Speaker 8: transcript
Good morning. You guys have been sort of the leader in transferability. I mean, you were kind of one of the first ones to introduce the concept and start working on it.
Hey, good morning.
Good morning.
They've been sort of the leader in Transferability I mean, you were kind of one of the first ones to introduce the concept and start working on it it seems like you're making great strides here the target for the year. If I recall. This if I have this correctly was increased from 200 million to 300 to 400 million I just wanted to see if I'm thinking about that.
Speaker 9: transcript
It seems like you're making great strides here. The target for the year, if I recall this, if I have this correctly, was increased from $200 million to $300 to $400 million. I just wanted to see if I'm thinking about that correctly. And then what does that do to the prior plan had $1.8 billion in total amount raised from transferability. What does that number look like in the current?
Bob Frenzel: First, the DOE awarded Xcel Energy $100 million to support projects to mitigate the threat of wildfires and ensure resiliency of the grid through extreme weather. Projects include vegetation management, selective undergrounding, advanced infrastructure technologies, drones, and several additional resiliency projects. Xcel Energy was also a party to grips $464 million grant to expand transmission as part of the MISO and SPPCS program to find high voltage transmission to improve interregional transfer capability, reliability, and resolve grid constraints.
Correctly, and then what does that do to the prior plan had $1 8 billion in total amount grades from transferability, what does that number look like in the current plan.
Speaker 4: transcript
Yeah, so you're absolutely thinking about it correctly. You know, we went into this year before the market even fully set up. We're a little bit conservative as they enter on 200 million. We've already executed two contracts for $250 million and working on another. So we feel very good about our $300 to $400 million in total for balance of the year.
Yes, so youre absolutely thinking about it.
Correctly, you know we went away when we went into this year before the market even fully so that we're a little bit conservative as saying around $200 and we've already executed two contracts for $250 million and working on another so we feel very good about our $3 million to $400 million for.
Speaker 4: transcript
And when we think about our baseline, we've layered in the circle solar projects now that they've been approved.
In total for balance of the year.
And when we think about our baseline we've layered in the circle solar projects now that they've been approved so we have a little bit over five think about of about $500 million run rate annual a transfer of PTC credits. So it's about a total of $2 $7 billion over our five year forecast from 2024 to 28.
Speaker 4: transcript
So we have a little bit over $500,000,000, $500,000, run rate annual transfer of PPC credits. So it's about a total of $2.7 billion over our five-year forecast from 24 to...
Bob Frenzel: We appreciate over the DOE support as well as many of our partners in these projects including our states and regional transmission organizations. Funding support helps us accelerate critical carbon-free technologies and enhance safety and resiliency while keeping costs low for customers. Funding to our natural gas utility, in August, we filed a clean sheet program in Colorado. This first-of-a-kind plan provided framework produced greenhouse gas emissions consistent with state goals in our net zero emissions target.
Speaker 9: transcript
Thank you. That's really helpful. And then maybe just I didn't see this in your prepared remarks on slide decks and maybe I missed it, but just any update on the gas price risk management plan that you have to file in Colorado. I believe that's due next month.
Yeah.
Thank you.
That's really helpful. And then maybe just I didn't see this in your prepared remarks on slide decks than maybe I missed it but just any update on the gas price risk management plan that you have to file in Colorado I believe that's due next month.
Speaker 4: transcript
Yeah, so we'll file a final member first, absolutely right. So do next week, working with the stakeholders working on the plan, we think about it in a couple of different
Yes, so we will file a by November 1st absolutely right. So do next week working with the stakeholders and working on the plan, we think about it in a couple of different.
Bob Frenzel: The plan fast-track solutions such as electrification, demand-side management, clean fuels, and certified natural gas. The proposed clean heat plus portfolio reduces greenhouse gas emissions by 28% by 2030, ensures customer reliability and choice while optimizing customer bill impact. We plan to file our natural gas innovation plan, a corresponding framework for our MISO to gas utility in the 4th. Porter.
Speaker 4: transcript
veins. One is this idea of this smoothing mechanism where we can reduce volatility, volatility by using our balance sheet. And so if commodity prices spike to a certain level, we would take that on our balance sheet and spread over 1, 2, 3, 4 years and get a carrying cost on it, or really reduce that volatility that our customers experienced last.
Veins. One is this idea of the smoothing mechanism, where we can reduce volatility volatility by using our balance sheet and so if if commodity prices spiked to a certain level, we would take that on our balance sheet and spread over 1234 years and get a carrying cost on it are really reduce that volatility that our customers are experiencing.
Speaker 4: transcript
So that's important because we need to maintain a good balance sheet, strong credit quality to be able to use our balance sheet to help our customers out. The second part is
Bob Frenzel: In September, Metta announced construction of a $700 million data center in Minnesota, which eventually could be one of our largest customers in the state. We continue to evaluate a number of additional data center and commercial opportunities that will further support low growth and economic development in our communities.
Last year, so that's important because we need to maintain a good balance sheet strong credit quality to be able to use our balance sheet to help our customers out. The second part is really focused on what are the proposals and we can make to reduce volatility and that's whether it's additional physical storage potential for.
Speaker 4: transcript
really focus on, you know, what are the proposals we can make to reduce volatility, and that's whether there's additional physical storage, potential for
Speaker 4: transcript
fixed physical contracts or additional financial hedging. So you see all that of part of our proposal here coming up next week and look forward to working with the commission and the stakeholders and helping reduce the volatility for our customers in Colorado.
Bob Frenzel: Finally, there are not many new material developments with the Marshall Wildfire litigation. We currently have 14 complaints with 675 plaintiffs, which have been consolidated into a single case. The past four years, Xcel Energy has been operating under a commission approved wildfire mitigation program in Colorado. We tend to file an updated wildfire mitigation plan next year, which will include a wide range of options for stakeholder consideration, including new technologies, undergrounding, additional vegetation management, composite poles, selective use of covered conductor and preventative power system shutoffs.
Sure.
Fixed physical contracts or additional financial hedging. So you see all of that are a part of our proposal here coming out next week and look forward to working with the commission and stakeholders and helping reduce volatility for our customers in Colorado.
Speaker 3: transcript
get a degree just to add on to that. One of the best things we've done for our customers is our renewables portfolio. We have lowered our reliability on fossil fuels dramatically over the past five years. And the customers have crude over $4 billion of fuel savings and tax benefits from that since 2017.
Greg just to add onto that one of the best things we've done for our customers is our renewables portfolio, we have lowered our reliability on fossil fuels dramatically over the past five years and the customers of crude over $4 billion of fuel savings and tax benefits benefits from that since 2017.
Speaker 3: transcript
So as we continue to look forward, obviously, the Colorado energy plan, our upper Midwest energy plans, certainly de-risk our customers from a commodity volatility on the electric side. And as we lean into clean fuels, you start to see that on the gas LDC side as well.
So as we continue to look forward, obviously, the Colorado energy plan, our upper Midwest Energy plans, certainly de risked our customers.
Bob Frenzel: Let me wrap up with just a few summary comments before I turn over to Brian. As we look forward across the next five years and beyond, we see a future that is bright for our communities, our customers, and our investors. Xcel Energy is committed to providing a clean energy economy in our regions, and it will require meaningful investments to accomplish. For our customers, we have the potential to deploy 15 to 20,000 megawatts of new clean generation on our systems by 2030.
From a commodity volatility on the electric side and as we lean into clean fuels you start to see that on the gas LDC side as well.
Speaker 2: transcript
And just to clarify, we've meant that we've reduced our reliance on fossil fuels, not the reliability.
And just to clarify we meant that we've reduced our reliance on fossil fuels not the reliability of our fleet.
Speaker 8: transcript
Yep, yep. Thanks team for that call. I really appreciate it.
Yep Yep.
Thanks, Jim for that color really appreciate it.
Speaker 1: transcript
Thank you, sir. We're now to Cardi Davenport of Goldman Sachs. Please go ahead.
Thank you, Sir we'll now move to Carly Davenport of Goldman Sachs. Please go ahead.
Speaker 10: transcript
Good morning. Thanks for taking the questions and all the updates. Maybe just a quick follow-up on your comments just sent on tax credit transfer ability. You know, the color that you've done already, kind of 250 million of contracts. You can just talk a bit about kind of how the market's been evolving relative to your initial expectations and how you kind of think about the competitiveness of that.
Bob Frenzel: Dramatically lowering our emissions profile, affordably powering our customers' homes and businesses, while ensuring 99.99% reliability that they come to expect from Xcel Energy. And through leveraging the benefits of the IRA and the IJA, we are able to accelerate deployment of renewable resources, impairing them with affordable energy storage assets, and other firm, dispatchable, clean fuel resources to provide reliability. We continue to invest in and innovate our transmission and distribution systems to ensure reliability and resilience and provide for regional and interregional deliverability.
Hey, good morning, Thanks for taking the questions and all the updates.
Maybe just a quick follow up on your comments, just then on tax credit transferability.
The color that you've done already kind of $250 million of contracts can you just talk a bit about kind of how the market's been evolving relative to your initial expectations and how you kind of think about the competitiveness of that space.
Speaker 4: transcript
Hey, Carly. Thanks for the question. So it.
Yeah, Hey, Hey, Carly.
Speaker 4: transcript
evolved pretty close to how we expected it to this year by lateral trans X trans by lateral transactions in kind of the pricing we anticipated. There has been significant amount of demand. The demand is much much greater than our supply of PTCs. Now, we're still waiting for a little for the charity to stand up their portal and additional administrative requirements, but we feel comfortable executing contracts. I think also what we found in this is
Thanks for the question so it's.
Evolves pretty close to how we expected it to this year bilateral transaction trends at bilateral transactions and kind of the pricing we anticipated.
Bob Frenzel: We're laying the framework to achieve net zero greenhouse gas emissions on our natural gas system. All the while, our residential customer electric and natural gas builds are amongst the lowest in the country, 28% and 14% below the national average. Given that the regions where we serve customers are the most resource-spritch and wind and solar, we believe that we can lead this clean energy transition for our customers more cost-effectively than almost any other company.
There has been significant amount of demand the demand is much much greater than our supply of ptc's.
No we're still waiting for a little for the treasury to stand up their portal and additional administrative requirements. What we feel comfortable executing contracts I think also what we've found is and this is a strength of losses. We are a major player in this market we have a great tax department.
Speaker 4: transcript
strength of us. We are a major player in this market. We have a great tax department.
Speaker 4: transcript
And with our balance sheet strength and our credit quality, we have no issue with identifying these credits, which makes it really easy to do business with us.
And with our balance sheet strengthen our credit quality, we have no issue with identifying these credits, which makes it really easy to do business with us.
Speaker 4: transcript
And as a certain evolve, we're getting into longer term discussions is not just a 2023 or 2024.
Brian Van Abel: With that, turn over Brian.
Is it starting to evolve or getting into longer term discussions is not just a 'twenty two 'twenty three or 'twenty 'twenty four transaction about hey, let's look at a longer term multiple year signing up a single counterparty. So we're very pleased with how it's developed and the amount of interest from their counterparties, there and for US it's great we have almost 24%.
Brian Van Abel: Thanks, Bob.
Brian Van Abel: Good morning, everyone. We have ongoing earnings of $1.23 per share for the third quarter of 2023, compared to $1.18 per share in 2022. Most significant earnings drivers for the quarter included the following. Lower ONM expenses increased earnings by three cents per share, which reflects the impact of cost-containment actions. Lower effective tax rate and conservation in demand-side management expenses, which increase earnings by three cents per share. Note that these items are primarily offsetting lower margins and earning nutrients.
Speaker 4: transcript
transaction. But hey, let's look at, you know, longer term, multiple years signing up a single counterparty. So we're very pleased with how it's developed and the amount of interest from their counterparties there. And for us, it's great. We have
Speaker 4: transcript
almost 20 Fortune 500 companies in our backyard in Minneapolis, in Minnesota. So it is great to have those relationships at the C-suite level to drive.
500 companies in our backyard in Minneapolis in Minnesota. So it is great to have those relationships at the C suite level to drive some of these.
Speaker 10: transcript
Got it. That's super helpful. Thank you. And then maybe the follow up just on the Hydrogen Hub process now that that's that's been awarded. I guess how should we be thinking about timeline there? And is there any dependence on on that investment cadence going forward on kind of how the the tax credit structure looks for Hydrogen once we get that from the Treasury?
Got it that's super helpful. Thank you and then maybe the follow up just on the hydrogen hub process. How does that's that's been awarded I guess, how should we be thinking about timeline, there and is there any dependence on that investment cadence going forward.
Brian Van Abel: In addition, other items combined to increase earnings by 4 cents per share. Offsetting these positive drivers, higher interest charges, which decreased earnings by 3 cents per share, driven by rising interest rates and increased that levels of fund capital investment, and higher depreciation and amazement expense, which decreased earnings by 2 cents per share, reflecting our capital investment program. 1.1 percent, largely driven by strong CNI sales. As a result, we now expect annual electric sales growth of 1 to 2 percent in 2023.
Kind of how the tax credit structure.
<unk> for hydrogen once we get that from the treasury.
Sure. So currently it's Bob.
Speaker 3: transcript
We were really excited about our Clean Fuels program, but it is fairly long dated.
We were really excited about our clean fuels program, but it is fairly long dated.
Speaker 3: transcript
We are at a place where we are invited to negotiate with the DOE on this Upper Midwest Hydrogen Hub, the Heartland Hub.
We are at a place where we're invited to negotiate with the Doe on this upper Midwest hydrogen hub the heartland hub.
Speaker 3: transcript
final engineering, those processes are going to take probably two years.
Negotiations final engineering those processes are going to take probably two years I wouldn't say, we'd start capital deployment till probably the end of our five year plan and runs through the end of the decade.
Speaker 3: transcript
I wouldn't say we'd start capital deployment. He'll probably the end of our five year plan and run through the end of the decade. You know, I would think that parts of the hub could be activated by 2029, 2028, 2029. So it's a long-dated investment cycle. It's a $5 billion project about half of that was attributed to projects that we proposed.
Brian Van Abel: Chifting to expenses, ONN decreased $25 million for the third quarter, reflecting management actions the lower cost. We now expect our annual ONM expenses to decline by 1 to 2 percent. During the third quarter, we also made progress in several regulatory proceedings, and we're getting closer wrapping up a busy regulatory year. 2024 will be much lighter from a rate case perspective.
I would think that parts of the hub could be activated by 2029 2028 2029, So it's long dated investment cycle.
It's a $5 billion project about half of that was attributed to the projects that we proposed.
Speaker 3: transcript
So about $2 billion of company capital paired with half a billion dollars of federal money, it's sort of how I think about it. None of that's in our financial plan, and that's about the timeline it's gonna go on.
So about $2 billion of company capital paired with a half a billion dollars of federal money.
Brian Van Abel: In our Colorado electric rate case, the commission approved our settlement that reflects a $95 million rate increase based on an ROE of 9.3 percent in an equity ratio of 55.7 percent, rates were effective in September. In October, the New Mexico Commission approved our electric rate case settlement. That reflects a rate increase of $33 million based on an ROE of 9.5 percent, an equity ratio of 54.7 percent, a forward test year, an acceleration of total depreciation of 20.28, rates were effective in October.
It's sort of how I think about it none of that's in our financial plan and that's about the time line, it's going to go on.
Speaker 3: transcript
will still work on. That does not include any investment also that we would look at. Some of the projects in Colorado were really attractive as part of our hub application there. We still want to work with the federal offices and our state partners to see if we can advance some of those projects as well. Again, none of that's in our base case or in our steel for fuel portfolio.
So.
We will still work on that does not include any investments also that we would look at some of the projects in Colorado were really attractive as part of our hub application. There were still want to work with the federal offices in our state partners to see if we can advance some of those projects as well again, none of that's in our base case or in our steel for fuel port.
Speaker 4: transcript
In Carly, as you can second part of your question, yes, well, kind of the guidance around that, you know, obviously, we're still waiting for the guidance from Treasury on this. We provided our comments, industry provider comments. One of the things important to us is around on the nuclear qualifying for hydrogen PTC. So, I'm hopeful that we get guidance here. Rumor is sometime in November , but could push a little bit.
Polio.
And currently as you kind of second part of your question you asked about kind of the guidance around that you know obviously, we're still waiting for the guidance from treasury on unless we provided our comments industry's broader comments one of the things are important to us is around on the nuclear.
Brian Van Abel: In our pending taxes, electric rate case, we reached the settlement in principal and revenue requirements. We're hopeful the parties will reach agreement on class cross allocation rate design so that we can file the settlement this year. We expect the decision and implementation rates in the first quarter of 2024. As a reminder, we have a relate back date to July 13th. In Wisconsin, we continue to work through the regulatory process for electric and natural gas rate cases and expect a commission decision by your end.
Qualify qualify qualifying for hydrogen PTC so.
Hopeful that we get guidance here.
Rumours sometime in November, but because it could push a little bit.
Thanks for the color.
Speaker 1: transcript
When I move to Jeremy Tonnet, call from JP Morgan, please go ahead.
Thank you I mean is that they have in ports.
We'll now move to Jeremy tonnage, calling from JP Morgan. Please go ahead.
Brian Van Abel: With regards to future rate cases, we plan to file a natural gas rate case for Minnesota in the fourth quarter and the potential Colorado natural gas rate case in the first quarter of next year. Updating our progress on production tax credit transfer ability, we recently executed two contracts totaling $250 million. We anticipate further PTC sales in the fourth quarter consistent with our plan, totaling $300 to $400 million for the year. Transferability lowers the cost of our renewable energy projects for our customers and reduces near term funding needs.
Hi, good morning.
Speaker 11: transcript
Good, good, clearly an incredible update in Colorado here and just wanted to dive in a little bit more if I could. You know, just given the rate based growth, as you outline there, and how should we think about, I guess, the EPS growth, you know, relative to the rate based growth, given the higher interest rate environment here, you know, thinking about potentially greater than 10 percent rate based growth. Do you see the gap, you know, kind of widening at that point, or how should we think about that at a high level?
Hey, Jeremy how are you.
Good clearly an incredible update in Colorado here and just wanted to dive in a little bit more if I could.
Just given the rate base growth that as you outlined there and how should we think about I guess the EPS growth.
Relative to the rate base growth given the higher interest rate environment here, you know thinking about potentially greater than 10% rate base growth do you see the gap.
Kind of a widening at that point or how should we think about that at a high level.
Speaker 4: transcript
Hey, Jeremy, you know, good question. Obviously, we are in a higher interest rate environment, higher financing market, and also have some issue equity to fund accretive growth, which we're very comfortable with. It's important to maintain a strong balance sheet, and we've been very consistent about how we'll fund incremental growth. So as you go through, you do see a little bit of a divergence from rate-based growth and EPS growth, but certainly not hard to do the math, and I'm sure all of you have done that math already.
Brian Van Abel: Moving to our updated capital forecast, we issued a robust $34 billion five year base capital plan with annual rate base growth of 7.6%. The base plan reflects commission approved renewable projects, including over 700 megawatts of new solar at Sherco. The base plan also reflects significant rate and resiliency investments, including our Colorado power pathway. Transmission to support our Colorado preferred plan. We also have a financial control and investments, as well as other system investments to maintain asset health and reliability.
Hey, Jeremy Good question, obviously, we are in a.
Higher interest rate environment higher financing market and also have some.
Issue equity equity to fund accretive growth, which we're very comfortable with its important to maintain a strong balance sheet and we've been very consistent about how we'll fund incremental growth. So as you go through that you do see a little bit of a divergence from rate base growth and EPS growth, but certainly not hard to do the math and I'm sure. All of you have done that math already.
Speaker 11: transcript
got it yep no uh... good math to do there uh... so that means that
Got it Yep no good math to do there so.
Speaker 11: transcript
and uh... you know just want to kind of come in on uh... you know the o-n-m-side for the guidance there and i think you should have been kind of flat to down if i recall correctly but targeting a little bit of an uplift in in twenty four year and just wondering if you could provide a bit more color on the increase here and how this uh... o-n-m-a i guess you know impacts how uh... you know twenty four guidance could fall out you know particularly given minnesota being a bit lighter
Brian Van Abel: In addition, we have additional capital investment opportunities for renewables and firm capacity associated with the Colorado preferred plan, 418 megawatts of proposed self-built solar and storage and SPS, and further RFPs and NSP and SPS. We will update our base capital plan after our various commissions complete the review and finalize our decisions regarding our proposals. These opportunities, if approved, can translate to $10 billion of additional investment through 2028, resulting in annual rate-based growth of 10.7%.
So that makes sense.
And.
Just wanted to kind of come in on.
The O&M side for the guidance, there and I think usually it's been kind of flat to down if I recall correctly, but targeting a little bit of an uplift in 'twenty four here and just wondering if you could provide a bit more color on the increase here and how this O&M.
O&M I guess impacts how.
24 guidance could fall out, particularly given minnesota being a bit lighter than expected.
Speaker 4: transcript
Yeah, and we take everything that happened in this year, from a regulatory perspective, a case perspective, taken into account as we give 2024 guidance. We think about O&M, and we're down for this year, our guidance for this year is down one to two percent.
Yes, we take everything that happened in this year from a regulatory perspective rate case perspective, taking into account as we give 2024 guidance. When we think about O&M, though were down for this year our guidance for this year is down 1% to 2%. So as we think about next year up 1% to 2% we've picked some management actions.
Brian Van Abel: We will update our base financing plan, which reflects $15 billion of debt in $2.5 billion of equity. We anticipate that any incremental capital investment would be funded by approximately 4% equity in 60% debt. It is important to recognize that we've always maintained a balanced financing strategy, which includes a mix of debt and equity to fund a creative growth while maintaining a strong balance sheet and credit metrics. Intaining solid credit ratings and favorable access to capital markets are critical to fund our clean energy transition, deliver strong shareholder returns, and keep customer bills low, especially with rising interest rates.
Speaker 4: transcript
So as we think about next year up one to 2%, we've take some management actions in this year. And so really when I put the two years together, it's about essentially maintaining flat O&M. It's our big focus from a long-term perspective is investing in technology to improve processes and take costs out of the business.
And this year and so really when I put the two years together, it's about essentially maintaining flat O&M, it's our big focus from a long term perspective.
Is investing in technology to improve processes and take cost out of the business, we have innovation and transformation arm focus on eliminating waste and improving processes, we call. It one accelerating the way that we've deployed that started this year and also does it go longer term, we start to see a tailwind from coal plant shutdowns as we start to shut down.
We have an innovation and transformation arm focused on eliminating waste and improving processes. We call it One Xcel Energy Way that we've deployed at the start of this year. And also as we go longer term, we start to see tailwinds from coal plant shutdowns as we start to shut down a unit a year almost. So so next year is just a little bit of a balance between this year and next year, but over flat is how I'd look at it overall.
Brian Van Abel: Fifting to earnings, we've updated our 2023 guidance assumptions to reflect the latest information. We're also narrowing our 2023 ongoing earnings guidance range to $3.32 cents to $3.37 per share. We have a long history of delivering on our financial objectives and expect to continue that trend in 2023. As a result, we anticipate strong earnings in the fourth quarter that will result in achieving our earnings guidance. The drivers include incremental revenue from Colorado and New Mexico electric rate cases. The furl of certain O&M depreciation interest expenses is part of the Texas electric rate case. Strong O&M cost management and better than expected sales growth.
You ended the year almost so so next year is just a little bit of a downstream. This year next year, but over a flat is how I'd look at it overall.
Speaker 11: transcript
got it that that makes sense on the other side of the coin uh... as a release of the sales outlook you talk about the data center opportunity uh... in in two you know supporting this two to three percent growth
Got it that makes sense on the other side of the coin is.
As it relates to the sales outlook you talk about the data center opportunity.
Speaker 11: transcript
Is that kind of like the right base to think about beyond 24? Do you anticipate some further acceleration over the five-year plan just trying to, you know, calibrate if like the environment is just different now given some of the tailwinds as you talked about and clearly, you know, as well, oil and gas, a Delaware basin, really click on all cylinders here, a lot of activity that we see on the pipeline side. So just I guess curious for, you know, those drivers and how that could carry out over.
Supporting this 2% to 3% growth.
Is that kind of like the rate base to think about beyond 'twenty for.
Do you anticipate some further acceleration with five year plan just trying to you know.
Calibrate if like the environment is just different now given some of the tailwind as you talked about and clearly as well oil and gas at Delaware Basin really click on all cylinders here a lot of activity that we see on the pipeline side. So just I guess curious for those drivers and how that could carry out overtime.
Brian Van Abel: Finally, we are initiating our 2024 ongoing earnings guidance range of $3.50 to $3.60 per share, which is consistent with our long-term EPS growth objective of 5-7%. Key assumptions are detailed in our own joys.
Speaker 4: transcript
Yeah, and I think really next year, as you mentioned, in the Permian Basin, significant growth down in SPS as we're supporting electrification and working closely with our large customers there. From a data center perspective, and thinking about the longer term growth, I do think right now our five year sales growth is we're projecting two to 3% over the five years. So kind of think about 2024 and that will continue.
Yes, and I think really next year as you mentioned in the Permian basin significant growth down in Sps as we're supporting electrification and working closely with our large customers there.
Brian Van Abel: With that, I'll wrap up with a quick summary. We continue to execute our clean energy plans leveraging the benefits of the IRA to reduce cost for our customers. We proposed a game-changing preferred plan in Colorado, which results in one of the most aggressive renewable bill notes in the country. We secured DOE grants for our heartland hydrogen hub, wildfire mitigation plans, form energy pilots, and transmission expansion, which will accelerate breakthrough technology to reduce risk at a lower cost for our customers.
From a data center perspective, and thinking about the longer term growth I do think right now our five year sales growth as we're projecting 2% to 3% over the five years. So kind of think about 'twenty 'twenty four and that will continue over the next five years and I think there's even opportunity beyond that as you start to look at what generally the AI means from from others.
Speaker 4: transcript
over the next five years. And I think there's even opportunity beyond that as you start to look at what generative AI means from a load perspective and a data center perspective. So pretty excited. We think about, you know, obviously there's investment opportunity, but we think about low growth, helping us keeping customer bills low and affordable. And that's really important as we look to invest significantly into our system.
Load perspective in a data center perspective, so pretty excited we think about obviously theres investment opportunity. When we think about loan growth, helping us keeping customer bills low and affordable and that's really important as we look to invest significantly into our system.
Brian Van Abel: We resolved rate cases in Colorado and New Mexico while reaching a settlement in principal and Texas. We're narrowing our 2023 ongoing earnings guidance and continue to expect to deliver within our guidance range as we have for the past 18 years. We announced a robust updated capital investment program and initiated 2024 guidance that provides strong, transparent rate-based growth and customer value. Finally, we remain confident we can continue to deliver long-term earnings and dividend growth within the upper half of our 5-7% objective range as we lead the clean energy transition and continue to keep bills low for our customers.
Speaker 11: transcript
got it uh... that's very helpful thanks real quick last one if i could just just kind of running things out here any updates on the ongoing marshall wildfire uh... litigation any update the weather total liabilities elected to preach the five fifty insurance coverage or any color you can provide
Got it that's very helpful. Thanks real quick last one if I could just just kind of rounding things out here any updates on the ongoing Marshall wildfire litigation any updates on whether total liabilities in our country.
The $5 60 insurance coverage or any color you can provide there.
Speaker 3: transcript
Yeah, hey, it's Bob. I don't think we've seen a lot of material updates in Marshall. I think in our disclosures in our queue and in our earnings release are up to date. We've seen 675 plaintiffs.
Yeah, Hey, it's Bob I don't think we've seen a lot of material updates and Marshall I think in our disclosures in our Q and in our earnings release are up to date.
We've seen.
Speaker 3: transcript
You know, to put it perspective, we think there are about 1100 structures that had some amount of physical damage.
675 plaintiffs.
To put in perspective, we think there are about 1100 structures that had some amount of physical damage.
Operator: This concludes our prepared remarks, Operator. We will not take questions. Thank you very much, sir. Ladies and gentlemen, once again, for analysts to register for questions, please press star one and you've got full keypad.
Speaker 3: transcript
and estimated by the state of Colorado about $2 billion worth of damage. None of that's changed or been updated. The cases into 14 complaints and it's been consolidated in a single case right now.
Estimated by the by the state of Colorado at about $2 billion worth of damage. None of that's changed or been updated the cases into 14 complaints and has been consolidated into a single case right now.
Julien Dumoulin: Our first question today is coming from Julien Dumoulin, Smith of Bank of America. Please go ahead, your line is open. Hey, good morning, team. Nicely done. Gotta stay. What a set of updates, quarter recorder here. Hey Julien, good morning. Hey, good morning. Thank you quite well. Really appreciate it. Still warm here and still warm in Houston now. I'll leave it at that.
Speaker 3: transcript
The statute of limitation ends at the end of this year, so we think it'll be pretty quiet until then. Maybe a couple other plaintiffs trickle in through the process, and then we'd expect to get a litigation calendar sometime in early next year. Got it. Very helpful.
The statute of limitation ends at the end of this year. So we think it will be pretty quiet until then maybe a couple of other places trickle in through the process and then we'd expect to get a litigation calendar sometime in early next year.
Got it very helpful. Thank you for the time I'll leave it there.
Bob Frenzel: So maybe just to pick things up here real quickly on the credit side. I mean, I appreciate the comments here about 60, 40. Can you comment a little bit about the latest modernization policies for the credit rating agencies and thoughts about monetizing in terms of flowing tax credits through FFO? To what extent? Again, does that change your impact, your financing clinic at all? Just to come back a bit a bit. Hey, Julien, good morning.
Speaker 1: transcript
We now move to Anthony Caldo of Mizzou Hall. Please go ahead.
Thank you Mr tonnage.
Now move to Anthony <unk> of Mizuho. Please go ahead.
Speaker 12: transcript
Hey, good morning, good morning Bob. Just hopefully easy one, everything's been answered. Great news on Colorado, but just following up on Jeremy's question. You talked about I think the company's gonna file a wildfire mitigation plan I believe in 2024 in Colorado. Is there potential for even additional cat-backs associated with wildfire mitigation? And it's like magnitude is that some of what we've seen in the, you know, steal for fuel two point out.
Hey, good morning, Good morning, Bob just hopefully easy one everything has been answered.
News on Colorado, but just following up on Jeremy's question, you talked about I think the company is going to file a wildfire mitigation plan I believe in 2024 in Colorado is there a potential for even additional capex associated with wildfire mitigation and then.
Bob Frenzel: Yeah, so we met with the credit rating agencies in September. And as we're starting right now, we've included tax credit transfer ability in our finance and plan. And we expect it to that they will include it in the way they look at our credit metrics. And for us, we've income tax election methods that will flow through our cash from operations in our financial statements. So all that is included. In our in our base plan, as we think about it.
<unk> does that similar to what we've seen in the <unk>.
No.
Speaker 3: transcript
Hey, Anthony. Good morning. Um, look, we've been operating under a W. M. P. in Colorado for the past four years. I think that plan was around $400 million in total. We are looking at
For fuel to point out.
Hey, Anthony good morning.
We've been operating under a W. M P in Colorado for the past four years I think that plan was around $400 million. In total we are looking at more capital investments as we roll forward I think a lot of that is going to be built into the base plan already I don't think it has anything of the magnitude of steel for fuel to point no.
Speaker 3: transcript
more capital investments as we roll forward. I think a lot of that's gonna be built into the base plan already. I don't think it has anything of a magnitude of steel for fuel 2.0. Obviously the big needle in there would be if we did something very dramatic on undergrounding. I don't see a proposal that'll move the needle necessarily in capital expenditures going forward, but something worth looking at. Great, thanks again. Great quarter.
Bob Frenzel: Excellent. Alright, thank you. And then separately, just as you think about the the upside plan here, I mean, it's just incredible incredible numbers here. I mean, I and I know there's a lot of fixation here in Colorado. Can you walk through a little bit of just the timing here and some of the other jurisdictions in terms of coming information, especially through 2020 to practically around the corner. If you want to talk a little bit about the specific timelines to getting some of that best full 10 reflected in the plan here, just as it goes to a lining against the full update with 4Q or beyond.
Obviously, the big needle and there would be if we did something very dramatic on under grounding I don't see a proposal that will move the needle necessarily in capital expenditures going forward, but something worth looking at.
Great. Thanks, again, great quarter.
Speaker 1: transcript
We'll now move to David Arcaro calling from William Stanley. Please go ahead, sir.
You bet. Thanks Anthony.
Thank you Sir.
When Apple to it David Arcaro, calling from Morgan Stanley. Please go ahead Sir.
Hey, good morning, Thanks, so much for taking my question.
Speaker 13: transcript
Um, I was wondering, you know, this is, uh, it's clearly a step change, uh, in the renewables aspirations and, uh, opportunity for Colorado. Could this also apply to Minnesota in terms of potentially seeing an acceleration and it's step change, um, in renewables there as you fully realize the benefits of IRA going forward?
Bob Frenzel: Yeah, hey Julian, it's Bob. Look, we're really excited about the Colorado energy plan. It's great to see it sort of nearing conclusion in approval milestones. You know, we've been working on this for two years. We've actually been working with the counter parties on the bids for over six months. You know, I recognize that it might be quick timing for for the external world, but we've been working with these people for a while and we're really excited about what we've done here.
And I was wondering this is a it's clearly a step change in the renewables aspirations and opportunity for Colorado could you also apply to Minnesota.
In terms of potentially seeing an acceleration and a step change in renewables there as you fully realize the benefits of IRA going forward.
Speaker 3: transcript
Yeah, maybe a David. It's Bob. Good morning. And thanks for the question.
Yeah, maybe hey, David It's Bob and good morning, and thanks for the question.
Speaker 3: transcript
When I think about my prepared remarks, I made the comment around
When I when I think about my prepared remarks, I made the comment around <unk>.
Bob Frenzel: You know, we've been working with stakeholders very collaboratively in the PC over the past two years to bring this plan to life for our Colorado customers. Obviously a great wrinkle right in the middle of it with the IRA, right? And so we've basically been able to double the renewable portfolio. Have the fossil portfolio and increase our storage component dramatically. So we think the plan meets the policy guidelines. The process from here is relatively quick in the grand scheme of things.
Speaker 3: transcript
15,000 to 20,000 gigawatts of – 15,000 megawatts of generation by the end of the decade. If you think seven of that's in Colorado, then the balance, eight to 13, is a combination of SPS and NSP.
15 to 20000 Gigawatts of Gen or 15000 megawatts of generation by the end of the decade. If you think seven of that is in Colorado, and then the balance 8% to 13 as a combination of Sps and NSP.
Speaker 3: transcript
There's very little in our capital plan, our steel for fuel plan that's included for those two regions in our capital plan or in our steel for fuel 2.0 that Brian laid out.
There's very little in our capital plan, our steel for fuel plan that's included.
For those two regions in our capital plan or in our steel for fuel to point out that Brian laid out. So we have real generation upside investment opportunities. They are a little longer dated so think 28% to 30, maybe outside of the plan period, some might creep into this five years, but I think it's really more.
Speaker 3: transcript
So we have real generation upside investment opportunities. They're a little longer dated. So I think 28 to 30 maybe outside of the plan period. Some might creep into this five years, but I think it's really more backdated. But that's a substantial amount of generation in each of those two.
Bob Frenzel: So we received the independent engineer support that validated our proposal last week. Actually Monday of this week, I think we get comments, external comments to early November. We replied to those comments late November and then we turn it over to the commission for deliberations. We think that happens in December and early next year and probably early key one of next year, we'd expect a decision from the commission. So pretty quick, given the long time frame of the process and total.
David but that's a substantial amount of generation and each of those two.
Speaker 3: transcript
to those jurisdictions we did go through a resource plan in Minnesota of the 1200 megawatts that that we reference in terms of a RFP for next year is part of that program but this probably 4,000 to 5,000 megawatts of that is the upper Midwest largely approved as part of our last resource plan that we need to go execute upon.
And to those jurisdictions, we did go through a resource plan in Minnesota of 200 megawatts that we referenced in terms of our RFP.
For next year is part of that program.
Bob Frenzel: And in a couple of other pieces in that steal for field 2.0 plan is the SPS solar plus storage. We should get the decision in Q2 of next year and then we just launched a Minnesota 1200 megawatt wind RFP bid their due in December should get a short list in Q2 of next year on that. And then not in anyone are still for field 2.0 but really looking forward to working with our stakeholders and SPS Bob mentioned this in the opening marks about our new Mexico resource plan.
But there's probably 4000 to 5000 megawatts of that is in the upper Midwest.
Largely approved as part of our last resource plan that we need to go execute upon.
Speaker 4: transcript
We have, as we mentioned, we have the 1200 megawatts of wind RFP in flight. We actually have a Wisconsin RFP, so we're RFP in flight that we're working on. And now we think we'll follow another resource plan, but also a significant opportunity for Minnesota longer data is around our wind repowering. In the assets that we put in service in the 18-21 timeframe.
Yes.
We have as we mentioned we have the 200 megawatts of wind RFP in flight, we actually have a Wisconsin RFP solar RFP in flight that we're working on now and we think all will file another resource plan, but also significant opportunities in Minnesota longer data is around our wind repowering and the assets that we put in service in the 18 to 21 time frame.
Speaker 4: transcript
You know, we're requiring a couple older ones that we brought forward to the commission. And it's a great way to increase output and save our customers money. And so we'll, we'll look at those as we get closer to the time period is another opportunity in terms of being able to drive savings for our customers, invest in steel on the ground.
Bob Frenzel: We'll launch an RFP in mid next year and that's 5000 to 10,000 megawatts of potential generation resources and should get a project selection in call it early to mid 2025 for that. So nowhere in the 10 billion dollars, but a great opportunity to look forward to transition SPS's generation. Yeah, it's incredible, again, update. With that said, though, and given the timing early one queue for at least a good chunk of that, I mean, four queue, could we see an update to your earnings cager outlook and or any other related metrics, as you get that clarity affirms here, at least on the proponents of it? Yeah, Julien, I mean, certainly we'll wait until we get through the commission approvals. So, but if that timing aligns then yes, it'd be fair to think through that.
Our repowering a couple of all the ones that we brought forward to the commission and it's a great way to increase output and save our customers money and so we'll look at those as we get closer to the time period is another opportunity.
In terms of being able to drive savings for our customers invest in steel in the ground.
Speaker 13: transcript
God, it all makes sense. It's helped me frame it up. And I was curious what's the latest that you're seeing in renewable's economics in terms of LCOE and your service territories. There've been market concerns about rising PPA prices and inflationary pressures in the renewable supply chain. But just curious what your experience has been in terms of latest data points, how attractive have renewable projects look.
Got it that all makes sense, it's helpful to frame it up and.
I was curious what's the latest that you're seeing in renewables economics in terms with all CRE in your service territories have been market concerns about rising PPA prices inflationary pressures in the renewable supply chain, but just curious what your experience has been in terms of latest data points, how attractive have renewables projects.
Speaker 3: transcript
Yeah, David. Hey, look, so the great benefit of the last couple years is obviously the Inflation Reduction Act. We've definitively seen higher capital costs in wind and in solar. But the IRA and the tax benefits of 100% PTCs have been able to offset that at least in our jurisdictions on an LCOE basis. So probably I give you some data points, I'd say we've seen probably 30 to from our last
Yeah.
Yeah, David Hey, look so the great benefit of the last couple of years is obviously the inflation reduction act, we've definitively seen higher capital costs in wind and in solar, but the IRA and the tax benefits of 100% Ptc's have been able to offset that at least in our jurisdictions on in.
Julien Dumoulin: All right, guys, I will leave it there. Good luck. Thank you. Thank you very much, sir.
Nicholas Campanella: We'll now move to Nicholas Campanella, calling for Barclays. Please go ahead. Hey, good morning, happy Friday. Thanks for taking the question. How are you? Good morning. So a couple, couple for me, I guess on Colorado, as you kind of layer in that to the next financing plan. And obviously you have the 40% rule is equity continuing to be programmatic across the five years or does that drive a more a larger need in the near years of the plan?
L Coa basis, so probably I'll give you some data points I'd say, we've seen probably 30% from our last approved wind project, which would have been our Dakota Ridge project.
Speaker 3: transcript
approved wind project, which would have been our Dakota Ridge project.
Speaker 3: transcript
We built that for around $1,200, $1,250 at KW. We've probably seen capital cost increases on wind, or 30 to 40% on top of that. But the IRA has offset all of the capital cost improvements, as well as NCF improvements from the better technology and the bigger turbines.
We built that for around 1200, $12 50, a kw, we've probably seen capital cost increases on when they're 30% to 40% on top of that but the IRA has offset all of the capital cost improvements as well as the MTF improvements from the better technology in the bigger turbines those two combinations have put our <unk>.
Nicholas Campanella: Hey, Nick, good morning. You know, the way we look at it, the base capital plan regular pretty programmatic as we as we think about it, most likely in ATM with the base capital plan, when you look at the, not just in Colorado, but the $10 billion of the steel for fuel to point opportunities, this really kind of the 2526 27 timeframe or the heavy spend. So, I would look at it is that's kind of the timeframe that would align with the spend for that incremental.
Speaker 3: transcript
Those two combinations have put our LCOEs on those projects in line with what we put wind and service board 2018 and 2019. So we're really favorable.
On those projects in line with what we put wind into service for 2018 in 2019, So we're really favorable.
Speaker 3: transcript
participants, our customers are great beneficiaries of the Inflation Reduction Act to keep the levelized cost of energy very, very affordable for our customers.
Participants are customers are great beneficiaries of the inflation reduction act to keep the level is cost of energy.
Speaker 3: transcript
And when I think about – I made the comment earlier around sort of economic development opportunities. We're putting wind in – let's say we're putting wind in around $20, $22 a megawatt hour. You compare that to offshore wind on the east coast at north of 100, and we think over time lower cost energy will accrue in economic benefits to our regions of the country.
Very very affordable for our customers and when I think about I made the comment earlier around sort of economic development opportunities, we're putting wind in let's say, we're putting wind in around $2022 a megawatt hour.
Nicholas Campanella: Additional opportunities. Got it. And then one more on the Colorado plan. I just, I know the commission is, is, is exploring some type of risk sharing mechanism for the renewable assets, but can you just help us understand if that type of proposal is something that would tweak the plan in any way? Is it something that you're working with the commission actively on and how could that kind of transpire through the remaining course of the year here?
You compare that to offshore wind on the east coast at North of 100.
And we think over time lower cost energy will accrue and economic benefits to our regions of the country.
Nicholas Campanella: Yeah, you know, consistent with past practice, Nick, we would we would expect some forms of customer protection capital costs or energy cost providers, we've submitted some proposals to the commission that they for their purview, it'll go along with their overall decision. And on the portfolio side, you know, of course, there's there's always chance to look at it, but you know, we've looked at this. You know, sideways, back ways, front ways, think we've put together a great plan that they complement the geographic diversity in the state where the wind and solar physically come into the into the grid to provide high resiliency and reliability from the renewable resources.
Yeah excellent okay, that's great to hear thanks, so much for the update.
Speaker 1: transcript
We'll now move to Travis Miller of Morningstar. Please go ahead.
Thank you Sir.
Well now move to Travis Miller of Morningstar. Please go ahead.
Speaker 4: transcript
Just a couple of quick follow-ups to some of the earlier questions and your comments. That 1 to 2 percent moving the sales number to 2 to 3 percent, what's the approximate earnings impact there, incremental, all else being equal?
Good morning, Thank you.
Just a couple of quick follow up Travis good morning.
Hi.
Just a couple of quick follow ups to suddenly earlier questions and your comments.
That 1% to 2% moving the sales number just 2% to 3%, what's the approximate earnings impact of our incremental all else equal.
Speaker 4: transcript
Yeah, easiest rule of thumb is I'll call it a 1% change in sales is about a $25 million change in the revenue from from our energy sales. So that's a good rule of thumb for you, Travis. Okay. After tax, the earnings, right?
Yeah.
You sort of easiest rule of thumb is call it 1% change in sales it was about a $25 million change in the revenue from from our energy sales. So that's a good good rule of thumb, probably Travis okay.
Nicholas Campanella: And so, you know, always chance to to move it around a little bit, but we don't think this substantial change is coming from the plan. That's great. And if I could just squeeze one more in, you know, you talked about the data centers in your prepared remarks, your, your weather normalized load for 24 is 2 to 3% and that's higher than last year by 100 basis points to just what are you seeing that's changing the demand profile, how are you thinking about the longer term forecast and whether that's pressure higher in your 5 to 7.
Speaker 4: transcript
Sorry, that's revenue, and that takes into account our true open decoupling mechanisms.
After tax that's earnings right.
Oh that was revenue I'm, sorry, that's right.
That takes into account, our true up and decoupling mechanisms.
Speaker 14: transcript
And then on the heartland and some of the other projects you've mentioned in terms of new technology, other hydrogen projects.
Okay, so pretax okay.
Got it.
On the Heartland and some of the other projects you've mentioned in terms of new technology of their hydrogen projects.
Speaker 14: transcript
Is your thought process to put that through those things through the regulatory, traditional regulatory process, or do you foresee potentially coming up with another financing structure, another corporate structure, something that would house some of those projects that are, say, unusual in a positive way?
Is your thought process to put that through some of those things through the regulatory traditional regulatory process or do you foresee potentially coming up with another financing structure or another corporate structure something that would house some of those projects that are say.
Nicholas Campanella: Thank you. Thanks, Nick. I'll take that one. The way I think about it is. Yes, we're starting to see a number of things in our long term sales sales forecast. You know, we updated our sales forecast for 2024 to 3% but we think over the five years we expect that 2 to 3% record a whole. If not call it conservative, given what we're seeing on the potential load from data centers data centers represent less than 1% of our sales right now.
Speaker 3: transcript
Travis, it's Bob. Good morning. Our proposed plan would.
Unusual in a positive way obviously.
Hey, Travis it's Bob good morning.
Speaker 3: transcript
certainly put the assets into regulatory rate base.
Our proposed plan would.
Certainly put the assets into regulatory rate base.
Speaker 3: transcript
here in the upper Midwest. If you think about our proposals at the DOE, we've got green hydrogen off of wind and solar. We've got pink hydrogen off of nuclear plants. And the end uses are we're gonna help partners create green fertilizer. So green ammonia to green urea to fertilizer, as well as some amount of blending into our gas plants and into our LDCs with some of the help.
Here in the upper Midwest.
Nicholas Campanella: We see some potential where that could grow to 5% over this next 5 years. As I think about just next year, significant electrification happening in the oil and gas region in the Permian Basin and Delaware Basin, we're working very closely with our large customers down there around. It's not just, it's not really about even more drilling and so electrification of their pumps compressors as they hit their net zero goals in the Permian Basin and achieve the goals that the state of New Mexico has for them.
Think about our proposals at the Doe, we've got green hydrogen off of wind and solar we've got pink hydrogen off of nuclear plants. In the end uses are we're going to help partners create green fertilizers, So green ammonia to green urea to fertilizer as well as some.
Some amount of blending into our gas plants and into our LDC is with some of the output. So the expectation is as they would go through a regular state process around that capital investments and those ultimate uses for the fuel.
Speaker 3: transcript
So the expectation is, is they would go through a regular state process around that capital investment and those ultimate uses for the fuel.
Nicholas Campanella: And then also we're starting to see an uptake in residential demand. You know, we're starting to see penetration from the EV perspective. So overall, really great trend as we look out not only next year, but longer term with kind of electrification and data center potential. Just to add on to that problem. When I think about some of the comments I made in the opening remarks about the ability to deliver clean energy more cost effectively in our regions of the country than other parts, I think over the long term, that should absolutely accrue to our state's benefits in terms of economic development energy and energy intensive resources are going to come back and on shore the United States.
Speaker 14: transcript
OK, perfect. And then real quick, Minnesota, any update on the timing of your appeal process?
Okay, Perfect and then real quick Minnesota any update on the timing.
Your appeal process.
Speaker 4: transcript
So, in the right case, yeah, so sorry, thanks. The we would do a reconsideration process in mid September . I think our appeal plan would be early November . Okay, and then about how long does that take? What do you think? Sometime in the next year.
Selling a rate case, yes, so thats alright, thanks, Steve.
We went through.
Reconsideration process in mid September our I think our appeal plan would be early November.
Okay, and then about how long does that take.
What do you think.
Sometime into next year.
Okay, Okay very good I appreciate it.
Speaker 1: transcript
When I go to Ross Fowler, call it for me UBS. Please go ahead, your line is open sir. Morning, Bob.
Thank you. Thank you vishal sorry for that thank you Mr. Taylor.
Nicholas Campanella: We should be a very attractive destination for them. As we can deliver renewable energy and clean energy, much more cost effectively, we serve customers where the wind blows and the sun shines and that translates to high capacity factors and lower energy costs to our customers, which should lead to long term economic development in our states. All right, thanks so much.
Well now go to Ross <unk>, calling from UBS. Please go ahead. Your line is open Sir.
Speaker 3: transcript
So Brian , maybe one for you. Did you guys are sort of on the leading edge of a lot of this transfer ability?
Good morning, Good morning, Brian how are you.
Good morning Ross.
So Brian maybe one for you.
Since you guys are sort of on the leading edge of a lot of transferability.
Speaker 3: transcript
and they're too free to take a song for line if you can't do it in seven minutes. But I'm just thinking through like, how do you think about the accounting? Do you record the non-month curiosity to give you a value and then book a sort of gain a loss against that when you get the cash or there's no FASB guideline here, right, if I've got it right. So how are you walking through the accounting of these first ones that you're doing and can we get clarification from FASB or the IRS at some point about how the accounting and mission if
And.
Feel free to take this offline.
If you can't do it in seven minutes, but.
I'm just thinking through like how do you think about the accounting do you record a non monetary asset value and then book.
Nicholas Campanella: See you in a few weeks here. Thank you very much, sir.
Durgesh Chopra: We'll now move to Durgesh Chopra, according to every core ISI. Please go ahead. Hey, good morning, team. Thanks for taking my questions. Hey, good morning. I just wanted to see if I'm thinking about that correctly. And then what does that do to the prior plan had 1.8 billion in total amount raised from transfer ability. What does that number look like in the current plan? Yeah, so you're absolutely thinking about it correctly.
Sort of gain or loss against that when you get to cash or there's no Crosby guideline here right. If I've got it right. So how.
How are you walking through the accounting of these first ones that youre doing and can we get clarification from FASB, where the IRS at some point about how the accounting shouldn't work.
Speaker 4: transcript
Certainly, we work closely with our audit firm on this, and the audit firm is working with the big fores I'm working together. The way we look at it, it's an income tax model election for us.
Certainly we were there so we work closely with our audit.
Firm on this in the audit firm is working with the Big four is all working together the way we look at it as an income tax model election for us and we'll do so what that means is we're going to run it through the gains and losses through income tax expense on our income statement.
Speaker 4: transcript
And so what that means is we're going to run it through the gains and losses through income tax expense on our income statement. And so any discounts on the sales will run through that. And then from a regulatory approval of regulatory mechanisms for that discount, we'll be able to have deferral treatment of the discount with our regulatory approval. So really because this is a benefit for our customers, we'll have that regulatory deferral mechanism is helpful. And then it will run through our cash from operations. So they income tax expense line item and then cash from operations.
And so any discounts on the sales will run through that and then from a regulatory approval of regulatory mechanisms for that discount.
Where we will be able to have deferral treatment of the discount with our regulatory approval so rich.
Durgesh Chopra: You know, we wouldn't we wouldn't we went into this year before the market even fully set up. We're a little bit conservative of staying around 200 million. We've already executed two contracts for 250 million dollars and working on another. So we feel very good about our three to 400 million dollars for in total for balance of the year. And when we think about our baseline, we've layered in the circle solar projects now that they've been approved.
Because this is a benefit for our benefit of our customers.
I have that regulatory deferral mechanism is helpful. And then it will run through our cash from operations. So I think income tax expense line item and then cash from operations.
Speaker 15: transcript
Got it. Okay. Thank you very much.
Got it got it okay. Thank you very much.
Speaker 1: transcript
We'll now take questions from Paul Patterson, coming from Glen Roth, that we're going to shift to the first one. Hey!
Yes.
Thank you Sir.
Durgesh Chopra: So we have a little bit over five think about it about 500 million dollars, one rate annual transfer of PTC credits. So it's about a total of $2.7 billion over our five year forecast from 24 to 28.
We'll now take questions from Paul Patterson, calling from Glen Roth Associates. Please go ahead.
Speaker 16: transcript
So all my questions have been answered except for congratulations. But just some comments. I saw that you would, can you hear me?
Hey, good morning.
Good morning, Paul.
So.
All of my questions have been answered except for.
Congratulations.
Just on Comanche.
Bob Frenzel: Thank you. That's really helpful. And then maybe just I didn't see this in your prepared remarks on slide decks and maybe I missed a bit just any update on the gas price risk management plan that you have to file in Colorado. I believe that's due next month. Yeah, so we'll file it by November 1st, absolutely right. So do next week working with the stakeholders working on the plan. We think about it in a couple of different veins.
So I'll be quick.
Speaker 16: transcript
Yeah, sorry. The Comanche litigation, just was wondering with the jury ward and everything, where we stand with that? Is that pretty much over? And just if you could elaborate a little bit more.
Can you hear me.
Yes.
Yeah I'm sorry.
The Comanche litigation I'm, just was wondering with the jury award and everything.
Where we stand with that is that pretty much over and just if you could elaborate a little bit more on that.
Speaker 4: transcript
Yeah, I mean, it's, we will appeal. We feel that we have a strong legal challenge against, there's two items that they awarded related to lost power. I mean, the jury found no liability in all the other allegations, including no award for diminishing plant value. So, you know, as Paul mentioned in the opening comments, we view it as a one-time charge and we have a strong legal basis for challenging that $26 million of award.
Yes.
We will appeal, we feel that we have a strong legal challenge against Theres two items that they awarded it was related to lost power I mean was it the jury found no liability and all the other allegations, including no award for diminishing or plant value. So.
Bob Frenzel: One is this idea of this smoothing mechanism where we can release volatility, volatility by using our balance sheet. And so if commodity prices spike to a certain level, we would take that on our balance sheet and spread over 1, 2, 3, 4 years and get a carrying cost on it, really reduce that volatility that a customer experience last year. So that's important because we need to maintain a good balance sheet strong credit quality to be able to use use our balance sheet help our customers out.
As Paul mentioned in the opening comments, we viewed it as a one time charge and we have a strong legal basis for challenging that.
Speaker 17: transcript
Okay, so that was what that charge that jury would was what was reflected in the third quarter of result. Is that right? That's correct. Yeah. Yeah. Okay. Okay. Great. Thanks so much. Yep. Thank you, Ms. Patterson.
$26 million of award.
Okay. So that was what that charge. That's reward was what was reflected in the third quarter results is that right. That's correct. Yeah, yeah. Okay. Okay, great. Thanks, so much.
Bob Frenzel: The second part is really focus on what are the proposals we can make to reduce volatility and that's whether it's additional physical storage potential for Fixed Physical Contracts for additional financial hedging. So you see all out of part of our proposal here coming up next week and look forward to working with the commission and the stakeholders in helping reduce the volatility for our customers in Colorado. Get a digress just to add on to that one of the best things we've done for our customers is our renewables portfolio.
Yep.
Thank you Ms Patterson.
Speaker 5: transcript
Morning, thanks for taking my questions. Quick ones. What's your current thought on PPA buy-ins in light of some of the tax transferability dynamics and some
We'll go to Ryan Levine, calling from Citi. Please go ahead.
Good morning, Thanks for taking my questions.
Just two quick ones Whats your current thought on PTA Zions in light of some of the tax transferability dynamics.
Speaker 4: transcript
Hey Ryan, it's something we have nothing in our capital plans for PPA Bines or PPA BILOTs as we think about it. It's something that can come through the RAP processes as we think about it and we work closer to our developers to see if there's an opportunity. The way I think about the opportunity may come in, if you can buy out a wind farm and repower it. That's where we're going to success with our PPA BILOTs, but we think it as an incremental, very opportunistic
And so you are having.
Hey, Ryan it's something we have nothing in our capital plans for our PPA buying or PPA buyouts as we think about it it's something that can come through.
Bob Frenzel: We have lowered our reliability on fossil fuels dramatically over the past five years, and the customers have crude over $4 billion of fuel savings and tax benefits from that since 2017. So as we continue to look forward, obviously the Colorado Energy Plan, our Upper Midwest Energy Plan, certainly de-risk our customers from a commodity volatility on the electric side. And as we lean into clean fuels, you start to see that on the gas LDC side as well. And just to clarify, we've meant that we've reduced our reliance on fossil fuels, not the reliability of our fossil fuels. Yep, yep. Thanks, Steve, for that color. Really appreciate it.
<unk> processes.
As we think about it and we work closely with our developers to see if theres an opportunity the way I think about the opportunity may come in if you can buy at a wind farm in Repower, that's where we've been successful with our PPA buyouts, but we think of it as incremental op very opportunistic.
Bob Frenzel: Thank you, sir.
Speaker 4: transcript
call an opportunistic hard to predict opportunities and that's why we don't put anything in our capital plan. What we do, what we're close to, as our developers, is to see if there's opportunities from time to time.
Call it opportunistic hard to predict opportunities and that's why we don't put anything in our capital plans, but we do work closely with our developers and see if those opportunities from time to time.
Speaker 18: transcript
Okay, and then regarding the $100 million DOE grants for wildfire mitigation that's been rewarded more recently. You know, as you go into a wildfire mitigation plan and look at more spending. Is there opportunities to receive digital grants or are you pursuing any federal capital to automate that?
Okay, and then regarding the it looks like $100 million daily grants for wildfire mitigation.
Been rewarded more recently.
Carly Davenport: We're now to Carly Davenport of Goldman Sachs. Please go ahead. Hey, good morning. Thanks for taking the questions and all the updates. Maybe just a quick follow-up on your comments just sent on tax credit transfer ability. You know, the color that you've done already, kind of 250 million of contracts. Can you just talk a bit about kind of how the market's been evolving relative to your initial expectations and how you kind of think about the competitiveness of that space?
As you go into allow fire mitigation plan and look at more spending is there opportunities to receive additional grants are you assuming any federal capital.
Speaker 3: transcript
Yeah, Ryan, it's Bob. I don't know if there's more dollars in the DOE bucket in the grid resiliency program. You know, obviously, we're going to take these dollars and continue to do additional work. Those were discrete projects that were approved with the DOE and are earmarked across our various states, some of which is for wildfire. Some of it is in technology development. So we're excited about partnering with the DOE.
On the airplane.
Yeah, Hey, Brian It's Bob I don't know if there's more dollars in the <unk> bucket in the grid resiliency program.
Obviously, we're gonna take these dollars and continued to do additional work those worst discrete projects that were approved with the Doe and are earmarked across our various states some of which is for wildfires. Some of it is in technology development.
Carly Davenport: Yeah, hey, Carly. Thanks for the question. So it's evolved pretty close to how we expected it to this year bilateral transactions, transit bilateral transactions in kind of the pricing we anticipated. There has been significant amount of demand. The demand is much, much greater than our supply of PTCs. Now, we're still waiting for a little for the charity to stand up their portal and additional administrative requirements, but we feel comfortable executing contracts.
So we're excited about partnering with the Doe.
Speaker 3: transcript
60-40 split in terms of their funding versus our capital and our pieces embedded within our forecast. So it's not going to be a big upside in terms of capital investment opportunities, but as we look to the long term on wildfire mitigation plan, you know, we're going to work with all of our stakeholders in our various states, but the wildfire mitigation plan in Colorado should get filed late this year.
It's about.
60, 40 split in terms of their funding versus our capital and our pieces embedded within our forecast. So it's not going to be a big upside in terms of capital investment opportunities, but as we look to the long term on wildfire mitigation plan, we're going to work with all of our stakeholders and our various states, but the wildfire mitigation.
Carly Davenport: I think also what we found and this is a strength of us as we were a major player in this market. We have a great tax department and we with our balance sheet strength and our credit quality, we have no issue with identifying these credits, which makes it really easy to do business with us. And as a certain evolve, we're getting in the longer term discussions is not just a 2023 or 2024 transaction, but hey, let's look at longer term multiple years signing up a single counter party sell.
<unk> plan in Colorado should get filed.
Speaker 3: transcript
and look to be very proactive in how we handle system hardening new technology to bring the bear to to minimize the risk of ignition for our customers in the state obviously protecting their assets and their health as our priority.
Late this year early next.
And look to be very proactive in how we handle system hardening, new technology to bring to bear to minimize the risk of ignition for our customers in the state obviously protecting their assets and their health is our priority.
Speaker 4: transcript
Yeah, I was just taking a step back. We're proud of the four grants that we've received really folks. How can we help lower the cost of our customers, whether it's for new technology around specifically on the form form.
Carly Davenport: We're very pleased with how it's developed in the amount of interest from our counter parties there. And for us, it's great. We have almost 20 folks and 500 companies in our backyard in Minneapolis, in Minnesota. So it is great to have those relationships at the CSU level to drive some of these.
Was hoping just taking a step back you know we're proud of the four granted we've received really focusing on how can we help lower the cost of our customers, whether it's for new technology around specifically around the form form form long duration battery and not only do we get to $70 million in view refunding for that but we also got $20 million from our breakthrough energy ventures. So now.
Carly Davenport: Got it. That's super helpful. Thank you.
Speaker 4: transcript
long-duration battery. And not only do we get $70 million in DOE funding for that, but we also got $20 million from Breakthrough Energy Ventures. So $90 million for those two pilots. So really a great story. And looking forward to working with our commissions on all the DOE funding that we've received so far. And certainly we'll look for other opportunities out there.
Bob Frenzel: And then maybe the follow up just on the hydrogen hub process now that that's that's been awarded. I guess how should we be thinking about timeline there? And is there any dependence on on that investment cadence going forward on kind of how the tax credit structure looks for hydrogen once we get that from the Treasury? Sure. So Carly's Bob, we're really excited about our clean fuel program, but it is fairly long dated.
<unk> million dollars for those two pilots so really a great story.
And looking forward to working with our commissions on all the Doa funding that we received so far and certainly we will look for other opportunities out there.
I appreciate it thank you.
Speaker 1: transcript
As we have no further audio questions, I turn for Closier Marks to the callback over to CFO Brian Van Able.
Thank you. Thank you Mr Levine.
As we have no further audio questions I tuned for closing remarks, I'll turn the call back over to CFO, Brian Van Abel.
Speaker 4: transcript
Thank you all for participating in our earnings call this morning. Please contact our Invest relations team with any follow up questions.
Thank you all for participating in our earnings call. This morning, please contact our Investor relations team with any follow up questions.
Bob Frenzel: We are at a place where we are invited to negotiate with the DOE on this upper Midwest Hydrogen Hub, the Heartland Hub. Negotiations, final engineering, those processes are going to take probably two years. I wouldn't say we'd start capital deployment till probably the end of our five year plan and run through the end of the decade. I would think that parts of the hub could be activated by 2029, 2028, 2029. So it's a long-gated investment cycle.
Speaker 1: transcript
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Bob Frenzel: It's a $5 billion project about half of that was attributed to projects that we proposed. So about $2 billion of company capital paired with half a billion dollars of federal money is sort of how I think about it. None of that's in our financial plan and that's about the timeline it's going to go on. We'll still work on that does not include any investment also that we would look at. Some of the projects in Colorado are really attractive as part of our hub application there.
Bob Frenzel: We still want to work with the federal offices and our state partners to see if we can advance some of those projects as well. Again, none of that's in our base case or in our steel for fuel portfolio. In Carly as you can second part of your question. Yes. Well, kind of the guidance around that. Obviously, we're still waiting for the guidance from Trevor on this. We provided our comments, industries, writer comments.
Bob Frenzel: One thing important does is around the nuclear qualify qualifying for hydrogen PTC. So I'm hopeful that we get guidance here. Rumors sometime in November, but could could push a little bit. Thanks for the color. Thank you.
Jeremy Tonet: Is that the reports when I move to Jeremy Tonnet, calling from JP Morgan, please go ahead. Hi, good morning. Hey, Jeremy, how are you? Good, good, clearly an incredible update in Colorado here and just wanted to dive in a little bit more if I could, you know, just given the rate base growth as you outline there. And how should we think about, I guess, the EPS growth, you know, relative to the rate base growth given the higher industry environment here, you know, thinking about potentially greater than 10% rate base growth.
Jeremy Tonet: So do you see the gap, you know, kind of widening at that point or how should we think about that at a high level? Hey, Jeremy, you know, good question. Obviously, we are in a higher interest rate environment, higher financing market and also have some issue equity to fund the creative growth, which was very comfortable with it's important to maintain a strong balance. And we've been very consistent about how we'll fund incremental growth.
Jeremy Tonet: So as you go through that, you do see a little bit of divergence from rate base growth and EPS growth, but certainly not hard to do the math and then sure all of you have done that math already. Got it. Yep. No, good math to do there. So that makes sense. And, you know, just want to kind of come in on, you know, the O&M side for the guidance there. And I think you should have been kind of flat to down if I recall correctly, but targeting a little bit of an uplift in 24 here and just wondering if you could provide a bit more color on the increase here and how this O&M, I guess, you know, impacts how, you know, 24 guidance could fall out, you know, particularly given Minnesota being a bit lighter than.., and expected.
Jeremy Tonet: Yeah, and we take everything that happened in this year, from a regulatory perspective, a case perspective, taken into account as we give 2024 guidance. And we think about O&M, and we're down for this year, our guidance for this year is down one to two percent. So as we think about next year, up one to two percent, we've taken management actions in this year, and so really when I put the two years together, it's about essentially maintaining flat O&M.
Jeremy Tonet: It's our big focus from a long-term perspective, is investing in technology to improve processes and take costs out of the business. We have innovation and transformation arm focused on limiting waste and improving processes, we call it one-excel energy way, and we've deployed that started this year. And also, as we go longer-term, we start to see tailwinds from coal plants shut down, so we start to shut down a unit a year almost.
Jeremy Tonet: So next year is just a little bit of balancing this year next year, but over the slide is how it would look at it overall. Got it. That makes sense. On the other side of the coin, as it relates to the sales outlook, you talk about the data center opportunity in supporting this two to three percent growth. Is that kind of like the right base to think about beyond 24? Do you anticipate some further acceleration over the five-year plan, just trying to calibrate if the environment is just different now, given some of the tailwinds?
Jeremy Tonet: As you talked about, and clearly, as well, oil and gas, a Delaware basin really click on all cylinders here, a lot of activity that we see on the pipeline side, so just I guess curious for those drivers and how that could carry out over time. Yeah, and I think really next year, as you mentioned, in the Permian Basin, significant growth down in SPS as we're supporting electrication and working closely with our large customers there.
Jeremy Tonet: From a data center perspective in thinking about the longer-term growth, I do think right now our five-year sales growth is projecting two to three percent over the five-year, so kind of think about 20-24 and that will continue over the next five years, and I think there's even opportunity beyond that as you start to look at what generally the AI means from a low perspective and the data center perspective. So pretty excited.
Jeremy Tonet: We think about, obviously, there's an investment opportunity, but we think about low growth, helping us keeping customer bills low and affordable, and that's really important as we look to invest significantly into our system. Got it. That's very helpful. Thanks. Real quick last one if I could. Just kind of rounding things out here. Any updates on the ongoing Marshall, wildfire, litigation, any updates, and whether total liabilities are likely to breach the 560 insurance coverage or any color you could provide there?
Jeremy Tonet: Yeah, hey, it's Bob. I don't think we've seen a lot of material updates in Marshall. I think in our disclosures and our queue and in our earnings release are up to date. We've seen 675 plaintiffs to put in perspective. We think there are about 1100 structures that had some amount of physical damage and estimated by the state of Colorado about $2 billion worth of damage. None of that's changed or been updated.
Jeremy Tonet: The cases into 14 complaints and it's been consolidated in a single case right now. The statute of limitation ends at the end of this year. So we think it'll be pretty quiet until then maybe a couple other plaintiffs trickle in through the process. And then we'd expect to get a litigation calendar sometime in early next year. I got it, very helpful. Thank you for the time. I'll leave it there.
Jeremy Tonet: Thank you, Mr. Tonet.
Anthony Cowdell: When I move to Anthony Cowdell of Mizzouho, please go ahead.
Anthony Cowdell: Good morning, Bob. Just hopefully easy one, everything's been answered. Great news on Colorado, but just follow up on Jeremy's question. You talked about I think a company is going to file a wildfire mitigation plan I believe in 2024 in Colorado. Is there potential for even additional cat-backs associated with wildfire mitigation? And it's like magnitude of that. Some of what we've seen in the, you know, steel for fuel 2.0.
David Arcaro: Hey Anthony, good morning. Look, we've been operating under a WNP in Colorado for the past four years. I think that plan was around $400 million in total. We are looking at more capital investments as we roll forward. I think a lot of that's going to be built into the base plan already. I don't think it has anything of the magnitude of steel for fuel 2.0. Obviously the big needle in there would be if we did something very dramatic on undergrounding. I don't see a proposal that'll move the needle necessarily in capital expenditures going forward, but something worth looking at. Great. Thanks again. Great quarter. You got thanks Anthony. Thank you, sir.
Bob Frenzel: When I move to David, our caro call is from William Stanley. Peaceful head, sir. Well, hey, good morning. Thanks so much for taking my question. I was wondering, you know, this is it's clearly a step change in the renewable aspirations and opportunity for Colorado. Could this also apply to Minnesota in terms of potentially seeing an acceleration and its step change in renewable there as you fully realize the benefits of IRA going forward?
Bob Frenzel: Yeah, maybe David, it's Bob and good morning and thanks for the question. When I think about my prepared remarks, I made the comment around 15 to 20,000 gigawatts of general, 15,000 megawatts of generation by the end of the decade. If you think seven of that's in Colorado, then the balance eight to 13 is the combination of SPS and NSP. There's very little in our capital plan, our seal for fuel plan that's included for those two regions in our capital plan or in our seal for fuel two plan that Brian laid out.
Bob Frenzel: So we have real generation upside investment opportunities. They're a little longer dated, so I think 28 to 30 maybe outside of the plan period. Some might creep into this five years, but I think it's really more backdated. But that's a substantial amount of generation in each of those two those jurisdictions. We did go through a resource plan in Minnesota, the 1200 megawatts that we referenced in terms of RFP for next year is part of that program.
Bob Frenzel: But this probably 4,000 to 5,000 megawatts of that is the upper Midwest largely approved as part of our last resource plan that we need to go execute upon. Yeah, and we have, as we mentioned, we have the 1200 megawatts of wind RFP in flight. We actually have Wisconsin RFP, solar RFP in flight that we're working on. Now we think we'll follow another resource plan, but also the significant opportunities in Minnesota longer date is around our wind repowering.
Bob Frenzel: In the assets that we put in service in the 18 to 21 time frame, we're repowering a couple of all the ones that we brought forward to the commission, and it's a great way to increase output and save our customers money. And so we'll look at those as we get closer to the time period as another opportunity in terms of being able to drive savings for our customers and invest in steel on the ground.
Bob Frenzel: Got it. That all makes sense. It's helpful to frame it up. And I was curious what's the latest that you're seeing in Renewable's economics in terms of LCOE and your service territories? You know, there's been market concerns about rising PPA prices and inflationary pressures in the Renewable supply chain, but just curious what your experience has been in terms of, you know, latest data points. How attractive have Renewable's projects looked? Yeah, David.
Bob Frenzel: Hey, look, so the great benefit of the last couple of years is obviously the inflation reduction act. We've definitively seen higher capital costs in wind and in solar, but the IRA and the tax benefits of 100% PTCs have been able to offset that, at least in our jurisdictions, on an LCOE basis. So probably, I give you some data points. I'd say we've seen probably 30. From our last approved wind project, which would have been our Dakota Ridge project, we built that for around 1250 KW.
Bob Frenzel: We've probably seen capital cost increases on wind, or 30 to 40% on top of that. But the IRA has offset all of the capital cost improvements, as well as NCF improvements from the better technology and the bigger turbines. Those two combinations have put our LCOEs on those projects in line with what we put wind into service board 2018 and 2019. So we're really favorable participants. Our customers are great beneficiaries of the inflation reduction act to keep the levelized cost of energy very, very affordable for our customers.
Bob Frenzel: And when I think about, I made the comment earlier around sort of economic development opportunities. We're putting wind in, let's say we're putting wind in around 20, $22 a megawatt hour. You compare that to offshore wind on the east coast at north of 100. And we think over time, lower cost energy will accrue in economic benefits to our regions of the country. Yeah, excellent. Okay, that's great to hear. Thanks so much for the update.
Bob Frenzel: Thank you, sir.
Travis Miller: Well, then move to Travis Miller of Morningstar. Please go ahead.
Travis Miller: Good morning. Thank you. Just a couple of quick follow up. Good morning. Hi. Just a couple of quick follow-ups to some of the earlier questions and your comments that 1 to 2 percent moving this fails no more to 2 to 3 percent. What's the approximate earnings impact are incremental? All those people? Yeah, I'm just easiest, easiest rule of thumb is called a 1 percent change in sales is about a $25 million change in the revenue from our energy sales.
Travis Miller: So that's a good rule of thumb for your Travis. Okay, after tax attorneys, right? That's revenue. Sorry, that's revenue. And that takes into account our true up into coupling mechanisms. Okay, so pre-tax. Okay. Got it. The and then on the heartland and some of the other projects you've mentioned in terms of new technology, other hydrogen projects, is your thought process to put that through those things through the regulatory, traditional regulatory process or you foresee potentially coming up with another financing structure, another corporate structure that would house some of those projects that are, say, unusual in a positive way. Obviously.
Bob Frenzel: Travis is Bob Good morning. Our proposed plan would certainly put the assets into regulatory rate base here in the upper midwest. If you think about our proposals at the DOE, we've got green hydrogen off of wind and solar, we've got pink hydrogen off a nuclear plants. In the end uses are we're going to help partners create green fertilizer. So green ammonia to green urea to fertilizer. As well as some amount of blending into our gas plants and into our LDCs with some of the output. So the expectation is is they would go through a regular state process around that capital investments and those ultimate uses for the fuel.
Bob Frenzel: Okay, perfect.
Ryan Levine: And then real quick, Minnesota, any update on the timing of your appeal process and. Sorry, the rate case. Yeah, so sorry, thanks. We would do a reconsideration process in mid September. I think our appeal plan would be early November. Okay, and then about how long does that take? What do you think? Some time into next year. Okay, okay, very good. Appreciate it. Thank you. Thank you for that.
Ryan Levine: Thank you, Mr Miller.
Ross Fowler: We'll now go to Ross Fowler, colleague from UBS. Please go ahead, your line is open, sir. Morning, Bob. Morning, Brian. How are you? Morning, Ross. So Brian, maybe one for you. Since you guys are sort of on the leading edge of a lot of those transfer ability. And they're too free to take us offline.
Brian Van Abel: If you can't do it in seven minutes, but I'm just thinking through like, how do you think about the accounting? Do you record the non-month curiosity of sure value and then book a sort of gain a loss against that when you get the cash or there's no FASB guideline here, right? If I've got it right. So how are you walking through the accounting of these first ones that you're doing?
Brian Van Abel: And can we get clarification from FASB where the IRS is at some point about how the accounting should work? Certainly, you know, we were this and we work closely with our audit firm on this and the audit firm is working with the, you know, the big fours are working together. The way we look at it, it's an income tax model election for us. And so what that means is we're going to run it through the gains and losses through income tax expense on their income statement.
Brian Van Abel: And so any discounts on the sales will run through that. And then from a regulatory approval of regulatory mechanisms for that discount, where we'll be able to have deferral treatment of the discount with our regulatory approval. So really, because this is a benefit for our customers and able to have that regulatory deferral mechanism is helpful. And then it will run through our cash from operations. So I think income tax expense line item and then cash from operations. Got it. Okay.
Paul Patterson: Thank you very much. Thank you, sir.
Paul Patterson: We'll now take questions from Paul Patterson, calling from Glen Roth, but we'll get to people ahead.
Paul Patterson: Hey, good morning. Morning, Paul. So all my questions have been answered, except for congratulations, but just on Comanche, I thought it was a, can you hear me? The Comanche litigation, just was wondering with the jury ward and everything where we stand with that is that pretty much over and just if you could elaborate a little bit more on that. Yeah, I mean, it's, we will appeal, we feel that we have a strong legal challenge against the, there's two items that a ward was related to lost power.
Bob Frenzel: I mean, the jury upon no liability and all the other allegations, including no award for diminishing of a plant value. So now, as Paul mentioned in the opening comments, as a one time charge, and we have a strong legal basis for challenging that $26.9 of award.
Bob Frenzel: Okay, so that was what that charge that jury ward was what was reflected in the third quarter result, is that right? That's correct. Yeah, yeah. Okay. Okay, great. Thanks so much. Yep. Thank you, Ms. Patterson.
Ryan Levine: When I go to Ryan Levine, calling from city, please go ahead. Good morning. Thanks for taking my questions. Quick ones, what's your current thought on PTA buy-ins in light of some of the texture and stability dynamics and some of the developments that you're having? Hey, Ryan, it's something we have nothing in our capital plans for PPA buy-ins or PPA buy-ups as we think about it. It's something that can come through the RFP processes as we think about it and we work closer to their developers to see if there's an opportunity.
Ryan Levine: The way I think about the opportunity may come in if you can buy out a wind farm and repower it. That's where we've been successful with our PPA buy-ups, but we think it as an incremental, very opportunistic call an opportunistic hard to predict opportunities. And that's where we don't put anything in our capital plans. Will we do or close your other developers to see if there's opportunities from time to time?
Bob Frenzel: Okay, and then regarding the $100 million DOE grants for wildfire mitigation that's been rewarded more recently. As you go into a wildfire mitigation plan and look at more spending, is there opportunities to receive digital grants or pursuing any federal capital to automate your plan? Yeah, Ryan, it's Bob. I don't know if there's more dollars in the DOE bucket in the grid resiliency program. You know, obviously we're going to take these dollars and continue to do additional work.
Bob Frenzel: Those were discrete projects that were approved with the DOE and are earmarked across our various states, some of which is for wildfire, some of it is in technology development. So we're excited about partnering with the DOE about a 60, 40 split in terms of their funding versus our capital and our pieces embedded within our forecast. So it's not going to be a big upside in terms of capital investment opportunities, but as we look to the long term on wildfire mitigation plan, you know, we're going to work with all of our stakeholders in our various states, but the wildfire mitigation plan in Colorado should get filed, late this year, early next, and look to be very proactive in how we handle system hardening new technology to bring the bear to to minimize the risk of ignition for our customers in the state, obviously protecting their assets and their help as our priority.
Bob Frenzel: Yeah, I was nothing just, you know, taking a step back, you know, we're proud of the four grants that we've received really focusing on how can we help lower the cost of our customers, other as for new technology around and specifically around the form form. Form long duration battery and not only do we get $70 million in due refunding for that, but we also got $20 million from break through energy ventures, so $90 million for those two pilots. So really a great story and looking forward to working with our commissions on all the due refunding that we received. So far, and certainly we'll look for other opportunities out there. Appreciate it. Thank you.
Brian Van Abel: Thank you, Mr. Libin. As we have no further audio questions, I turn for closure marks to the call back over to CFO Brian Van Abel. Thank you all for participating in our earnings call this morning. Please contact our investor relations team with any follow up questions. Thank you, what's your ladies and gentlemen, thanks for today's conference.
Operator: We will show very good day and you may not disconnect.