Q1 2025 Xcel Energy Inc Earnings Call
Melissa: Hello and welcome to Xcel Energy first quarter 2025 earnings conference call. My name is Melissa and I will be your coordinator for today's event.
Speaker Change: Please note this conference is being recorded and for the duration of the call, your lines will be on listen only However, you will have the opportunity to ask questions at the end of the presentation This can be done by pressing star followed by one on your keypad to register your question at any time You will have the opportunity to ask questions at any time
Speaker Change: Questions will only be taken from institutional investors. Reporters can contact media relations with inquiries and individual investors and others can reach out to investor relations.
Speaker Change: If you require assistance at any point, please press star zero to be connected to an operator. I'll now turn the call over to Rep. Aguilal, Vice President and Investor Relations. Please go ahead.
Speaker Change: Good morning and welcome to Xcel Energy's 2025 First Quarter Earnings Call.
Speaker Change: Joining me today are Bob Frenzel, Chairman, President, and Chief Executive Officer, and Brian Van Abel, Executive Vice President and Chief Financial Officer.
Speaker Change: In addition, we have other members of the management team in the room to answer your questions if needed.
Speaker Change: This morning we will review our 2025 first quarter results in highlights.
Speaker Change: provide updated 2025 assumptions and share recent business and regulatory updates.
Slides that a company today's call are available on our website.
Some comments during today's call may contain forward looking information.
Speaker Change: Significant factors that could cause results to differ from those anticipated are described in our earnings release and SEC filings.
I will now turn the call over to Bob
Thanks for passion. Good morning, everybody.
Speaker Change: Xcel Energy, we know that economic growth and prosperity of our communities and country depend on our ability to deliver energy to our customers' win and where they need it.
Speaker Change: while keeping their bills as low as possible. And this commitment to our communities and customers.
Speaker Change: to demonstrate it in our results this morning. In the first quarter of 2025, Xcel Energy delivered earnings of 84 cents per share.
Speaker Change: Invested $2.3 billion in resilience and reliable energy infrastructure for our customers.
Speaker Change: and accelerated our wildfire risk reduction efforts to enable safer and more resilient communities.
Speaker Change: Brian will provide more details in a minute, but based on our results for the first quarter we remain confident in our ability to deliver on our earnings guidance for the 21st year in a row, one of the best track records in the industry.
Speaker Change: As you can imagine, over the past several months, we've been engaging at the federal level with legislators and administration officials as executive orders, trade and tariff actions and pending legislation will likely have impacts on future energy infrastructure. Not surprising to anyone on this call.
Speaker Change: We're in an unprecedented period of electric demand growth and believe that we need a broad scope of energy resources to meet those needs.
Speaker Change: We see increased electric demand from the oil and gas sector. We see demand from residential customer growth, EV adoption, and beneficial electrification across our service territories.
Speaker Change: We see demand from data centers in Texas, Colorado, Wisconsin and Minnesota.
Speaker Change: In the medium term, we expect to see continued trends towards electrification as well as re-entering as potential outcome of federal actions.
Speaker Change: The infrastructure to serve this demand growth needs to be thoughtfully planned as well.
Speaker Change: We and many in our industry have been advocating a DC for policies.
Speaker Change: that allow for cost-effective and rapid adoption of new energy resources.
Speaker Change: That includes preservation of technical tax credits, wind, solar storage, and nuclear.
Their Associated Transferability Provision, Various Loan and Grant Programs
Speaker Change: That includes advocating for sighting, permitting and other federal actions that would allow for more rapid construction of the assets needed to serve this growing demand.
Speaker Change: and that includes advocating for federal actions that can mitigate the potential for wildfires and their associated financial impacts.
Speaker Change: Additionally, we're paying close attention to ongoing tariffs and other recent federal actions.
Speaker Change: As you are all aware, this remains a highly fluid situation.
Potentially positively changing as recently as yesterday. Today.
Speaker Change: On the tearfront, we believe that our base capital plan remains intact and that the impacts are both modest and manageable.
Speaker Change: While we're still evaluating, we estimate that roughly 40 to 45% of our capital expenditures are material based with the balance being labor permitting in other items.
and of this percentage, a majority, is domestically sourced. [inaudible]
Speaker Change: There are some notable exceptions though, in particular our industry has exposure to Chinese tariffs related to battery storage
Speaker Change: In our base capital plan, we only have one significant battery project which we continue to work to mitigate any risks.
Speaker Change: But in our longer term plans, we see a need for more battery and other related energy storage assets.
Speaker Change: Based on these recent tariff actions, we expect a relatively rapid evolution of the battery supply chain similar to what we've experienced in solar panels over the last three to four years.
Speaker Change: We estimate that our total tariff exposure on our $45 billion base capital plan for 2025 to 2029 is approximately 2% to 3%.
Speaker Change: And that's before we work through any incremental vendor mitigation actions.
Speaker Change: We remain confident in our ability to navigate this evolving environment and keep delivering for our customers and investors.
Speaker Change: We see incredible energy and demand needs across the country. In total, Xcel Energy anticipates that we will need to deliver between 15 and 29,000 megawatts of new generation by year and 2031 to serve our customers and communities.
Speaker Change: During the first quarter, we continue to make progress with our various commissions on these needs.
Speaker Change: which also helps give line-of-sight to our 10 billion plus incremental investment pipeline.
Speaker Change: In February , the Minnesota PUC approved our Integrated Resource Plan Settlement for nearly 5,000 megawatts of generation.
Speaker Change: Included are 720 megawatts of company-owned natural gas generation and battery storage in approximately 2,800 megawatts of wind generation which will reuse the transmission interconnect from our short-code facility.
Speaker Change: RFPs for resources that make up the balance of the IRP will work their way through regulatory processes in 25 and 26.
Speaker Change: Details in which are included in our disclosures and in the attached presentation.
Speaker Change: As a reminder, we're seeking 5 to 10,000 megawatts through a competitive RFP process, including projects being proposed by the company.
Speaker Change: Recurred by the early results to plan to make a recommended filing in Q2. Thank you.
Speaker Change: And in Colorado, we continue to make progress with our Energy Resource Plan filing that we made in October of last year.
Speaker Change: We're recommending the addition of 5,000 to 14,000 megawatts of new generation to meet projected sales growth of 3 to 7% per year.
Speaker Change: The commission decision is expected in the fall of this year.
Speaker Change: Part of these resource planning processes have been asked to comment on the impacts of recent executive orders on coal plants.
Speaker Change: Our Generation Retirement Strategy is the product of long-term planning process with state commissions and other stakeholders.
Speaker Change: With access to some of the country's best wind and solar resources, as well as incremental natural gas generation, we've demonstrated that we can retire these inefficient and aging coal plants while ensuring reliability and keeping customer bills low.
Speaker Change: Continue to evaluate the executive words and work with federal and state agencies as well as our communities and customers on any next steps.
Speaker Change: Alongside our access to some of the country's lowest cost renewable resources, our thoughtful investments and focus on continuous improvement.
Speaker Change: have helped keep our residential electric bill growth below the rate of inflation for the past decade and among the lowest in the country.
Speaker Change: As we continue to grow, the tech, neutral and nuclear PTCs have also proven a critical tool for customer affordability.
Speaker Change: Since 2018, Xcel Energy customers have saved over 5 billion dollars in avoided fuel costs and TTCs from wind generation.
Speaker Change: In this year, our Upper Midwest customers will see an additional benefit of nearly $250 million on their bills from nuclear production tax credits.
Speaker Change: Continue to actively engage with elected officials in the US Health and Senate and key agencies such as DOE to reinforce the critical importance that these incentives play in keeping bills low for our residential and business customers.
Speaker Change: We believe the policymakers are aligned on the belief that lowering energy costs for Americans is a key policy objective.
Speaker Change: We continue to run them these incentives play an important role in helping us meet that objective.
Speaker Change: Xcel Energy also continues to make significant progress to protect our customers and communities and systems from the threats of extreme weather.
Speaker Change: On the regulatory front in Colorado, we reached a constructive settlement on our updated $1.9 billion dollar wildfire mitigation plan.
including a securitization mechanism to manage customer bill impact.
Speaker Change: In Texas, we also reached a constructive settlement on our $500 million system resiliency plan.
Speaker Change: We expect to mission decisions in both proceedings by 3rd quarter 2025 and will continue to prioritize these investments to improve resiliency and reduce risk on our systems.
Speaker Change: And on the policy front, we've seen progress with several pieces of constructive wildfire legislation.
Speaker Change: In Texas, legislation was introduced where material compliance with an approved wildfire mitigation plan provides an affirmative defense to civil liability related to wildfire damage.
Speaker Change: In North Dakota, legislation that provides a utility similar protection was passed by both chambers and awaits the governor's signature.
Speaker Change: We believe these bills could also serve as frameworks in our other states for future legislation.
Looking forward, our focus for 2025 remains unchanged.
Speaker Change: Xcel Energy is working to deliver on our earnings from 21st year in a row.
Speaker Change: to capture the unprecedented opportunities for growth we laid out in our capital plans.
to deliver on our incremental capital opportunity's backlog.
Speaker Change: Advance our clean energy leadership and raise the bar on delivering a compelling experience for our customers in order to make energy work better for them in the communities we serve. With that, let me turn it over to Brian .
Thanks Bob and good morning everyone.
Brian: Starting with our financial results, Xcel Energy had earnings of 84 cents per share for the first quarter of 2025, compared to earnings of 88 cents per share in the first quarter of 2024.
Speaker Change: The most significant earnings drivers for the quarter include the following.
Offsetting These Paws of Drivers [inaudible]
Speaker Change: Tire ONM expenses, decreased earnings by 11 cents per share, higher depreciation and amortization, reflecting our capital investment programs, decreased earnings by 9 cents per share,
Speaker Change: and higher interest expense decreased earnings by $0.6 for sure.
Speaker Change: Now let me comment quick in more detail on ONM expenses for the first quarter which totaled $686 million or $81 million higher than in 2024.
Speaker Change: We expected ONM expenses to be front-loaded this year with the increase due to known items, such as higher nuclear
Speaker Change: Increase insurance premiums, benefit costs, and the impact of a 2024 gain on land sale.
Speaker Change: Some of the increased wildfire related expenses are subject to regulatory decisions later this year.
Speaker Change: These results are in line with our year-to-date ONM expense budget, and we reaffirm our full-year guidance of a 3% increase in ONM expenses relative to 2024.
Speaker Change: Turning into sales, first quarter weather and leapier adjusted electric sales increase 2%. Driven by growth across most operating companies and customer segments.
Speaker Change: For 2025, we continue to expect four-year weather-adjusted electric sales to increase 3%, as a current tariff in economic outlook of all, as we will continue to monitor any potential impacts to our sales outlook.
Chifting Great Case Activity
Speaker Change: In Wisconsin, we filed our 2026 to 2027 Electric and Natural Gas Rage Cases.
Speaker Change: Requesting a total revenue increase of $151 million and $24 million respectively over two years.
Speaker Change: We're evaluating following electric and natural gas ray cases in Colorado and in electric ray cases in New Mexico later this year.
Speaker Change: Moving to data centers, we are making solid progress in our high probability pipeline and remain on track to meet our goal of contracting our toll base plan by this fall.
Speaker Change: Xcel Energy continues to receive requests for new data centers in its service territories. We're managing a robust pipeline and remain committed to our data center contract principles, ensuring new contracts maximize benefits to all customers and protect Xcel Energy from stranded asset risk.
Speaker Change: We also continue to make strong progress in the smokehouse creek wildfire claims process.
Speaker Change: We've resolved 151 of the 225 submitted claims which we continue to view as constructive.
Speaker Change: We have committed $113 million in settlement agreements of which $79 million have been paid through
Speaker Change: Based on current information and settlement activity, we have updated the low end of our estimated liability to $290 million, which remains well below our insurance of $500 million, as we describe in our needs disclosure.
Speaker Change: As part of the increase, we have reached settlements related to some previously excluded categories, such as compensation for railroad claims and settled claims related to tree damage.
Speaker Change: We've also updated our discolors as a marshal. In particular, as it relates to two new causation theories introduced by plaintiffs, plaintiffs and expert reports that were submitted in the first quarter of 2025.
Speaker Change: We remain an expert discovery until mid-July and are preparing for a trial in late September .
Speaker Change: Moving to guidance, we remain confident and reaffirm our ability to deliver earnings within our $3.75 to $3.85 guidance range for the year.
Speaker Change: Updates to key assumptions are included in our slides and earnings release.
With that, I will wrap up with a quick summary.
Speaker Change: Xcel Energy Post at first quarter, 2025 earnings of 84 cents for share. We continue to lead the clean energy transition while ensuring safe, clean and reliable service and keeping customer bills as low as possible.
Speaker Change: We are focused on reducing operating risk and assistance from extreme weather. We reach settlements with our Texas and Colorado resiliency and welfare mitigation plans to see progress and constructive legislation in Texas and North Dakota.
Speaker Change: We have a strong line of sight with our ten plus billion dollar investment pipeline with approval for at least five thousand megawatts of generation resources in Minnesota and awards for three to four billion dollars of transmission in MISO and SPP.
Speaker Change: We continue to maintain a strong balancing credit metrics using a balance of debt and equity to fund a creative growth.
Speaker Change: This concludes our prepared remarks. Operator, we will now take questions.
Speaker Change: Thank you. As a reminder, if you would like to ask a question, please press star followed by one on your keypad to register your question. To withdraw your question for any reason, you may press star two.
Speaker Change: Our first question is from Nicholas Campanella from Barclays. Please go ahead.
Nicholas Campanella: Hey, thanks so much for taking the questions. Hey, morning. I wanted to ask, you know, I appreciate all your comments on the prepare remarks. You know, you are kind of a big transferability beneficiary. We're going through budget reconfiliations right now. You know, if there's any kind [inaudible]
Speaker Change: Outcome where the tax credits get sunset as sooner within your five-year plan.
Nicholas Campanella: You know, how do you kind of think about the offsets to cash flow considering, you know, there might be a positive attribution to rate base as well. Do you still see like some type of true cash impact and maybe you can kind of walk through how the plan could absorb that?
Nicholas Campanella: Hey, Nick, it's Bob, and I'll start and then I'll give Brian some time to get to some of the details, but you know, there's been a lot of conversation around transferability in general, at least in the investor community, not actually a lot in DC, and I've spent a lot of time there, you know
Speaker Change: Transformability was architected as part of the IRA. We think it's explicitly, explicitly linked to the credit program themselves.
Speaker Change: We know there's a lot of support as evidenced by letters that Congress and the Senate have written to their respective finance and ways and means committees around support for continuation of the credits in some fashion and form, and by that measure we think the transferability.
continues along with those credits.
Speaker Change: So, you know, as I see it here today, I think very positively about the credits that come from our...
Speaker Change: Our legacy projects, projects that are in service, projects that we've saved harbored.
and then depending on where the credits go in general.
Yeah, Nick, and maybe I'll all want a...
Speaker Change: Talk about it in two different avenues and feel free to ask for the questions if I don't hit on exactly what you're thinking about. No, I think about it one is there's been a lot of discussion around the bill introduced by Representative Fedorichek.
Speaker Change: in terms of, but when you actually look at what that bill does it doesn't impact transferability on any projects and service and it doesn't impact transferability on projects that would have been safe harbor last year under the old regime of tax credits.
Speaker Change: So when we think about it in terms of what we saved Harvard last year for projects [inaudible]
Speaker Change: We're in a really good spot, basically through 2028 when you look at the four-year safe harbor with projects last year and so we would expect those to have
credits and transferability associated with them. [inaudible]
Speaker Change: So really the door check bill would be a 2029 impact but how it steps down it's it's a 20% credit in 2029 no certainly we're not advocating for that bill because a significant long-term customer impacts but from a transferability perspective I'm in our casual perspective we are very comfortable with with that in terms of of [inaudible]
How it deals with...
Speaker Change: Prior wind farms in what would have been safe harbored last year in the older regime.
Speaker Change: Now your question I get is a little bit more, what happened if Transp really went away for all projects even in service or future projects?
Um...
Speaker Change: We do not believe, as Bob said, that will happen. Congress generally does not disturb the public.
Speaker Change: Decisions that have made by businesses, they recognize the need for business certainly, but if that did happen, pick a point, you hit it on the right rate base goes up because you're less tax efficient. We have an impact or a castle, so you look at no issuing some equity to manage some of those credit impacts. Thanks.
Speaker Change: But longer term, it's just becomes a timing issue where you're pushing those cash flows out in the future.
But there's also alternative. [inaudible]
Paul Johnson, Unknown Executive
Paul Johnson: So pick a wind farm 30 years, flowing back over 30 years, that improves your cash flow in the near term, reduces the tax and efficiency, and also provides a pretty stable call it customer profile from bill impacts.
Paul Johnson: So there's absolutely things that we think of internally that maybe not be understood externally and we think about how do we manage if that scenario like I said we don't expect will happen, but how we manage if it did happen.
That's really helpful color. I appreciate that
Paul Johnson: Thank you. Just one quick question, just the broader kind of tariff outlook and how it's affecting economic development in your service territory. You know, you're seeing eye sales that you guys put up on a weather adjusted basis still seem strong. I know that at the end of March, maybe you can kind of comment on how activity has changed in the service territory at all in real time. [inaudible]
Paul Johnson: Clearly, you're kind of reaffirming your load outlook here. So it seems like you're comfortable, but yeah, maybe just a few more details there. Thanks.
Hey Nick, let me start with you.
Look definitely the sentiment meter has changed over the last. [inaudible]
You know, 45 days.
I don't think we've seen a lot of-
Change in actual activity yet.
even a consumer or the CNI side. [inaudible]
Paul Johnson: But what you see in here in this earnings season from a lot of people who have already announced whether it's banks or...
Paul Johnson: and there is a lot of conversation and maybe sparked over the last couple two or three days around.
You know, [inaudible]
Paul Johnson: How quickly could this environment change as well? We saw it hit very quickly, we've seen...
Paul Johnson: Some peelback already you've seen the market respond to that already.
Paul Johnson: And so, you know, we use the word in our prepared remarks of dynamic or fluid.
Paul Johnson: and I continue to believe that, you know, we don't see a lot of impacts right now in the customer, but we're, you know, we're cautiously optimistic that we work through this, through the balance of the year and obviously we've reiterated our guidance and sales forecast accordingly.
Speaker Change: Yeah Nick, I can just provide a little bit extra color on that too. Obviously one of the areas when you think about where the price of oil has gone and we serve the Delaware basin, the most prolific basin. But we've been in contact with our large oil and gas customers in terms of expectations there and they haven't changed a little bit of feedback we got though as they're watching carrots and how that could impact their business. [inaudible]
but so far we haven't seen that. [inaudible]
Speaker Change: Um, impact on us are our sales to that mining and transportation sector. We're up 9% quarter over year over year. I'm seriously down to that. So still seeing it there.
Speaker Change: One area we saw a little bit of weakness in March was just in Colorado on the small CNI sales but again one month doesn't make a trend so just something we're watching but overall right now we sit here feeling comfortable with reaffirming our 3% sales girl for the year.
Thank you.
Speaker Change: Thank you. Our next question is from Julien Dumoulin Smith from Jeffries. Please go ahead.
Speaker Change: Hey, good morning team. Thank you guys very much. Appreciate it. Look, if I can follow up on the next question, it's really been a focus from a lot of folks on this transferability stuff just to go back to the
Speaker Change: Can we say alternative that you were talking to you a second ago about the 30 year flowback?
Speaker Change: I mean, would that suffice in most of your case that I get everything is discreet and specific but...
Speaker Change: Do you see that sort of meaningfully offsetting the equity risk scenario here that could emerge?
from going back to...
Should we say the prior regime?
Speaker Change: I just want to make sure I understand the total impact of what you're contemplating there, as well as just to clarify your specific thoughts. I know there's several different credits here and the eligibility for various credits to qualify for Transpability. It could be bifurcated, it seems like you can speak that a little bit too. Thank you.
Speaker Change: Yeah, Julien. Let me first let me again reiterate that we don't expect transferability to go away, particularly for projects that are in service and for the stuff that have already been safe harbored, particularly under the old regime as we think about it when the credits change from old regime to tech neutral this year. But yeah, the alternative mechanisms significantly reduces their equity impacts. We also have to remember
Speaker Change: That are the how we think about financing it. We also have remember this drives rapies
Speaker Change: goes up to when you have tax inefficiency, so but as we think about this alternative flowback mechanism, obviously we'd work with our regulators on approval of it, but it is what we think about a very good solution in terms of how to manage some of the credit impacts.
Speaker Change: and another, I'd say, we have a strong balance sheet. We maintain a strong balance sheet for a reason if you have to manage through any of these impacts. It's a...
Speaker Change: Timing issue when you think about this in terms of when you can monetize it. So overall I wanted to provide some color on on scenario that probably most of our investors don't understand that there are alternatives out there in terms of how you can fold back these and there are benefits to come up customers and to the company and how we do it so. Thank you very much.
And then your question was around bifurcating different treatment of credits.
Speaker Change: Certainly, the Fedora Check Bill was just focused on Wyndon Solar. It didn't impact the storage credits or the nuclear credits, but also we think that is just a marker out there as Bob's comments.
provided, there was a lot of support. [inaudible]
Speaker Change: across Republican states. If you think about the House of the House ladder that had 21 Republicans signed on to it, the Senate ladder that had four senators signed on to it for Republican senators. So I think there's an understanding of the importance of the economy of these credits. Let's move on to the next slide.
Speaker Change: and what they do. There's a couple of good studies out there about the economic impacts and the 14 million plus jobs that the IRA will create over the next 10 years. So that's how I think about it in terms of overall and transferability being a key part of it.
Speaker Change: Excellent guys. Hey, thank you for the details. Just following up here nicely done, but can you write some further elaboration on what's in this Colorado?
Wildfire Mitigation Plan, Settlement Agreement. Let's go.
Speaker Change: It seems like there's some good stuff and they would just want to speak to that a little bit more if you're going to elaborate on what exactly is in that total plan.
Speaker Change: Yeah, thanks, Julien. I can handle that. Yeah, overall a very constructive settlement with...
Julian: A unanimous settlement with all the parties in that wildfire mitigation plan. Again, if you remember that's a three-year plan 1.9 billion dollars split between 1.6 billion dollars of capital and 300 million dollars of O&M.
and how we think about it is. [inaudible]
Julian: It's a win-win from all sides is we get constructive cost recovery here in the near term.
Julian: We also get an extension of our insurance deferral that we had a one-year extension that expired in October , so we have an extension of that access liability insurance deferral.
Julian: But we also agreed to securitize approximately $1.1 or seek to securitize $1.2 billion dollars of spend by 20, and by 2029.
Julian: and that's really a helpful way to manage overall customer affordability. So when we look at this total package, we think it's a really good outcome to reach a
Julian: Again a good outcome and we look forward to having the hearing in front of the commission here I think within a month.
Thanks and thank you guys. See you soon!
Speaker Change: Thank you. Our next question is from Carly Davenport with Goldman Sachs. Please go ahead.
Carly Davenport: Hey, good morning. Thanks for taking the questions. Maybe just to start on your comments on the tariff exposure, that two to three percent on the capital plan, could you just talk a little bit about the process or the timeline over what you'd expect to have those discussions with vendors, and any sense of where you think that exposure could potentially go post having those discussions.
Speaker Change: Yeah, any carl act and good morning, I can take that one. Some of these discussions have already happened when you think about certain project specific.
Speaker Change: It's the conversations have started working through specific ones but also working with various suppliers in terms of how much do they absorb what happens there but we also are already looking at how do you. [inaudible]
Speaker Change: Deversified from a supply base, so I'll give you a recent example. We recently signed an agreement for substation power transformers. This was the last week that we signed it.
Speaker Change: This is where scale and scope comes in. So we signed a agreement with nine different suppliers, five U.S. domestic manufacturers.
Speaker Change: for global manufacturers to give us that kind of ability to source where we think it is most effective for our customers, so I would say...
Speaker Change: These discussions have been going on and not only just recently but there's an expectation that tariffs were coming [inaudible]
Speaker Change: When the election happened back in November , we expected tariffs, we included tariff impacts into the bids we made in our RFP and down in SPS in January . So I wouldn't view it as conversations that just started, but it's now as we understand where they are. Then it's how do you navigate?
Speaker Change: Got it. Appreciate that. That's helpful. And then maybe just a quick follow up on the liability related to smokehouse creek going up to 290. I think you had highlighted in the prepared remarks, you know, inclusion of some previously excluded verticals, but just curious if there's anything else, you know, that you see at this point that could pose a risk to that number continuing to move higher or you guys still feel good, you know, about wherever that number goes relative to the insurance coverage. Thank you very much for your time. Thank you very much. Thank you very much.
Yeah, and I'll give you a little bit more color
Speaker Change: Now, the way I think about it is we're making really good progress on the overall claims. If you look at the details, we've settled 151 of the claims that come through our process. So we've settled more than we took in in Q1, so we're making progress in terms of closing that from our internal claims process.
Speaker Change: We also have 25 lawsuits filed against us. What I didn't say in the opening remarks is we've settled or dismissed five of those already. So we've turned to settling the represented claims.
Speaker Change: As you said, your question is, I said my opening remarks.
Speaker Change: We've now had settled with the railroad entities, which was not in our low end accrual before we settled with the utility entity that was not in our low end accrual. And we have made some settlements for tree damages. And so we've included the settlement payments in our $290 million accrual. There's also one other called large claim that we've gone through the discovery process and included in our accrual. So from that perspective.
Speaker Change: Active, again, it is following account, accounting guidance. It's a low-end accrual, and you can see what we just included in our disclosures. But overall, you know, I was pointing to people that we have approximately 500 million dollars of insurance coverage, and we are well under. Thank you for joining us today.
Speaker Change: that policy limit as we sit here today and we'll continue to make progress over the balance of the year on these claims.
Speaker Change: Great. Great to see the progress there. Thanks so much for all the color.
Speaker Change: Thank you. Our next question is from Durgesh Chopra with Evercore ISI. Please go ahead.
Durgesh Chopra: Hey team, good morning. Thank you for taking my questions. I actually just have one all of the questions I've been asked. Just any updated thoughts on the Marshal fire any conversations with stakeholders as we're approaching trial here this this fall. Anything new there. Thank you.
Speaker Change: Yeah, I think just as I noted in my prepared remarks.
Durgesh Chopra: that in the plaintiff's expert reports, we received two new causation theories. One,
Durgesh Chopra: Related to a partially unattached piece of telecom equipment, making contact with our line in the other one that being an unidentified flying object making contact with our line. So four theories in total when you look at the share of support, the bowl of the share of support which had the
Durgesh Chopra: Ignition, being our first line and then the underground coal seam. So that's where we are I think a little bit of discussions just from a process perspective.
Durgesh Chopra: We have mediation process in this case that's standard for trials such as this deadline for mediation is May 29th so we'll work through that process but as we sit here today and as we said before we're relatively preparing ourselves for trial which starts September 26th.
Speaker Change: Awesome. Thanks, Brian . Yeah. Hey, Dugressh, just what they got to add on there that I think, you know, it's important is is the that we believe that our indemnity agreements on our poll attachments are strong as we think about the. Yeah.
Speaker Change: Caution series that have been proposed. I think that's just an important one to think through.
Got it. Thank you.
Speaker Change: Thank you. Our next question is from Jeremy Tonet with JP Morgan. Please go ahead.
Hi, good morning!
Good. Good. Thanks.
Speaker Change: I just want to, I, I guess, start off. Could you elaborate on the potential regulatory treatment of wildfire related O&M expense and are you expecting to recover some of these costs and what type of, what kind of assumptions underpin your guidance at this point?
Hey, Jeremy, you know, I think, you know,
and underpinning our guidance assumption is always constructive regulatory treatment.
Speaker Change: I'll kind of hit on a couple of one. We talked about the Colorado wildfire mitigation plan. Now that's a unanimous settlement, still awaiting commission, a commission hearing and approval, but that includes concurrent recovery for our O&M expenses related to our wildfire investments. And so that what, as I said, is a very good constructive outcome in awaiting the decision by the commission there.
We have filed regulatory deferral. [inaudible]
Speaker Change: For regulatory, for older around our insurance premiums, we've made a filing in Wisconsin, Texas, and New Mexico, and so we expect decisions, their Q2, Q3 time frame on those three filings.
Speaker Change: And then in Minnesota, that would just be part of our race case. We've included our wildfire ONM expenses and investments in the race case, which has a forecast year for 2025, and that decision will play out that proceedings a little bit longer dated. But overall, we do assume constructive regulatory outcomes. Overall, just as part of general guidance assumptions year in a year out.
Speaker Change: Yeah, I think, you know, as we've spoken about this, you know, the last few calls.
Speaker Change: We talk about, you've heard us talk about the opportunities in Minnesota and the interests we've seen there.
Speaker Change: We've seen it expand beyond Minnesota as you alluded to. One, we already have a data center in construction in Colorado and that was one of our signed contracts.
Speaker Change: and the three contracts we're working on right now is what I talked about in my opening remarks that we expect to have signed by this fall. One is in Colorado. We also worked on what we call a large load cluster study in Colorado when you look at looking at this.
Speaker Change: Co-location area near the Denver airport in Aurora, which is not only some data center customers, but also a large industrial customer and a large distribution center. So gaining interest in Colorado, but we also have a lot of interest in Wisconsin, too. So as we think about it, we have signed agreements in three different states today. And then we also have the three agreements that we're working on, one in Wisconsin, one in Minnesota, one in Colorado. So it's helpful.
Speaker Change: to see that interest across our states, and also seeing growing interest in the decoders.
Speaker Change: There was a land sale last year in South Dakota to a data center, so I would continue to get received inbound inquiries and have a strong pipeline, so our goals.
Speaker Change: for our customers and maintaining affordability. I had, you know, in the Southwest as well, we filed
Speaker Change: Southwest Power Pool for thousands of megawatts of data center inquiries down there, you know, a little bit further back in our probability pipeline for data centers, but we're still seeing lots of interest down there. You know, think about it. Our SPSC and ITARIF is one of the lowest in the country and has attracted some attention as well. Thank you very much.
Speaker Change: Got it. That's helpful there. And just want to go back to Colorado if I could one last one. How do you think about pacing high Colorado investment against, you know, high sales growth as you've outlined there? Do you see any periods of relatively elevated bill inflation as investments come in ahead of load just wondering, you know, stakeholder feedback on bill inflation in Colorado? Colorado.
Speaker Change: Yeah, I mean, we have a significant investment plan in Colorado, and I think, you know, we are very focused on affordability. Maybe I started from a little bit higher level is...
Speaker Change: If we look at our customer bills in Colorado on the electric perspective, they're the second lowest in the nation from an affordability perspective as sheriff wallet and then we looked at the combined electric and gas its lowest in the nation.
Speaker Change: from an affordability perspective. So we're in a really good place in Colorado from an affordability perspective, significant investments, certainly working with commission, that's an avenue of additional...
Speaker Change: Requests we made in our current resource plan in terms of writing the longer term affordability looks so working closely with our commission and stakeholders on that
Speaker Change: And that was also part of the wildfire mitigation plan that we just settled here in terms of looking at securitization, some of these unique investments we're making to protect our customers and communities, so certainly top of mind.
Speaker Change: Like you said, there could be a little bit elevated customer ability in the near term as we work to get that load online later called in the five years, but certainly something will work with our commission and stakeholders on managing that affordability.
Speaker Change: The other lens of this is we talked in the prepared remarks about $5 billion across all of Xcel Energy on savings from wind energy and tax credits.
Speaker Change: Colorado sits in one of the windiest and sunniest parts of the country. We have the ability to make an energy transition there, very cost-effectively. Our forecast for Colorado was to be...
Speaker Change: You know, more than 80% carbon reduced by the end of this decade, capping into those great resources. We think that that footprint
Speaker Change: It allows us to be very attractive in economic developments as well. When you think about low cost energy in the attraction to bring economic development, whether it's data centers, whether it's the oil and gas load in the DJ basin, or whether it's new, ensuring and reshoring, we think Colorado is a great home for economic development and as we all know,
Speaker Change: You know, more sales is beneficial to the broad customer base. So our continued focus on, you know, bringing businesses to Colorado, minimizing the bill impacts from a energy transition and from a growth perspective is a real focus for the company.
Got it. That's very helpful. Thank you
Speaker Change: Thank you. Our next question is from David Arcaro, who's Morgan Stanley . Please go ahead.
Hey, thanks so much. Good morning.
Point David.
Wanted to
Speaker Change: Clarify is the, I think you called out two to three persons.
and Total Care of Impact on your investment plans. Does that consider all of the renewables investment as well? And like specifically the ADCVD ruling that we had just recently.
and the potential...
increased cost.
in the Solar Supply Chain.
Speaker Change: Hey David, good morning. Yeah, we're that two to three percent is really just focus on our base $45 billion capital plan. And we think about that in over a five year time period, very modest and manageable. In terms of ADCVD, we do not...
Speaker Change: Expect any impacts from that recent AD-CVD maruiling that came out from the Commerce Department on Monday. So we're comfortable that, you know, that was...
Speaker Change: Well, communicated with that investigation and we took steps with our suppliers to ensure that we would not get impacted by it. So, as we've been from so I think longer term on the wind side in terms of...
Speaker Change: Our agreements with our OEMs, we feel good about in terms of managing the tariff impacts on the windside and the solar side.
Got it. Perfect.
Speaker Change: and then just curious on the data center side of things, I think your longer term kind of data center target.
Speaker Change: or the pipeline level didn't change, versus the prior quarter. It sounds like there's been activity don't maybe in the earlier stage.
Speaker Change: Pipeline, is that the right way to think about it where we've seen I guess additional gigawatts coming in the earlier stages but I guess what's the cadence of how you would update that?
that more firm, Pipeline 4K.
Speaker Change: David, I don't think we've seen much of a timing in terms of pulling things earlier. We've made really good progress, I would say, with the three that we're working on to sign. And like
Colorado, Minnesota, and Wisconsin.
Speaker Change: But I don't think the timing of it has changed necessarily when I look at it. No, we're signing contracts for those three customers today. They're going to be a little bit back gated in our five year forecast. So yeah, overall we haven't changed our kind of pipeline. Don't expect us to update that 8,900 and tell Q3 will the suit with our normal kind of five year sales cycle. But the timing I would call it is intact within the next five years in what we expect to bring on. Thank you very much. Thank you very much.
Yeah, got it. Okay, great. I appreciate it. Thanks so much.
Anthony Crowdell: Thank you. Our next question is from Anthony Crowdell with Mizzouho. Please go ahead.
Anthony Crowdell: Hey, good morning, team. It's just really nice calling investor relations and not hearing into Sandman in the background. You're probably listening, Anthony. I know, I know, I know, I know, so I had to make fun of him.
Anthony Crowdell: One clarification, one question. I think it was to Durgesh's question earlier.
Anthony Crowdell: on a new cause related to the Marshal fire. I just apologize if I heard correctly. Is a plane of claiming the cause of the fire was a UFO hit your wire and the wire fell and caused the fire? Yeah.
The cause, so what I said was there are two.
Theories Introduced
by the plaintiffs experts in their reports that they submitted.
Speaker Change: that was their language that unidentified flying object or something hit our lines and actually in our lines again our lines did not fall to the ground. We had one line that came off the insulator but we had no down power lines but that was the theory that they put forth and the other theory was that
Speaker Change: piece of partially unattached telecom equipment hit our line. So those are the two theories, but you are correct in terms of how I phrased it in the first part.
Speaker Change: Got it. Okay. And just if I could circle back, I think Bobbi talked on an early on coal plant retirements. You know, I highlighted just years of planning. I think you, I think you maybe have scheduled maybe one or two plant retirements this year, maybe Comanche, just thoughts if you go. Thank you for your time.
Speaker Change: I assume they're still on schedule, just any clarity could provide to that.
Speaker Change: Yeah, so the way I think about it is we probably have a coal plant the year through the balance of the decade. This year is the second unit at Comanche.
Speaker Change: I think the unit, Anthony, is probably 60 years old, 50 to 60 years old and so our expectation is at the end of the year that that unit shuts down along with its sister unit which shut down two years ago.
Speaker Change: and that's the plan and we're working towards that. And when you think about the renewable build out in the Colorado Power Pathway that is underway in the state right now, that's the reliability replacement for that unit that is retiring at the end of this year.
Speaker Change: So, you know, we work with our states for years including sometimes almost decades on transition plans.
Speaker Change: We've been incredibly successful in maintaining reliability, is Brian Comet that on a particular Colorado you know one of the lowest electric bills in the country while we've done a significant transition away from coal in that state and we expect that to continue.
Great. Thanks so much. Appreciate you taking my question.
Speaker Change: Thank you. Our next question is from Ryan Levine with City. Please go ahead.
Ryan Levine: Good morning. What impact do you see from the potential new Texas legislation related to wildfires in terms of its impact to your mitigation plans in the future in Texas.
Ryan Levine: Brian , can you be a little bit more specific which piece of legislation that you're talking about because there are several pieces of legislation that are out there? [inaudible]
Ryan Levine: So there's a few bills being proposed by a congressman from your service territory around.
Ryan Levine: and private M.P. lands in terms of whose jurisdiction would be under, and then a few others around mitigation plans. I didn't know if that had any implications for CAPEX or risk reduction for the company.
Speaker Change: Yeah, let me start and then I'm bragging it up on, but you know, first of all, you know, we feel really good about where our system resiliency plan conversations went with stakeholders in Texas. [inaudible]
Speaker Change: and a unanimous settlement on that program is going to allow us to make heartening investments into the state that we think are important.
Speaker Change: The legislation that's gone going, there's probably two that I talk about, one is...
Speaker Change: around poll inspection programs and having more of a state law around that. I think we're generally supportive of poll inspection and poll inspection programs and reporting compliance with those programs.
and the second is more around, you know, wildfire.
Brian Abel, Paul Johnson, Unknown Executive
Speaker Change: SRP, which again is under a unanimous settlement and looking for commission approval later this year.
Speaker Change: Yeah, and Ryan, there's two more pieces I can touch on. The other is some legislation is really directed to oil and gas lines.
Speaker Change: and then there's other legislation that we certainly support is more around kind of Texas improving their state firefighting capabilities.
Speaker Change: That's around funding for firefighting aircraft, funding for rural volunteer firefighting departments, new emergency management facilities, things like that, which we certainly support. But overall, if I think about our system resiliency plan and the investments we're making, whether it's in
Texas.
Speaker Change: New Mexico, Colorado, Minnesota. It's all about protecting your customers and communities. And that's how we think about the plans that we put forth. It is really protecting them and this legislation we don't see having an impact on how we think about the risk and how we protect our customers in terms of the investments we're making.
Speaker Change: Thanks. And then in terms of tax credit transferability, have you discussed or preview the credit implications for different transferability iterations with the rating agencies? Please.
Speaker Change: Brian , we are annual meetings with the agencies of R and September . Again, we think anything happening to transferability.
Speaker Change: or having tax credits without transferability is a very low likelihood. So if certain if something happened we certainly would have a conversation with them, but again overall our conversations back in September were good conversations but didn't focus on this which you think is a low probability outcome.
Unidentified Operator: Thank you. Our next question is from Travis Miller with Morningstar. Please go ahead.
Thank you. Good morning, everyone.
Speaker Change: And Brian there teed up a little bit on taxes, that was my question. But on a little different perspective here, obviously a lot of headlines, a lot of talk about the power generation side. And given your different regulatory framework, I'm say outside of or cut.
Speaker Change: What's your take in terms of as there's more uncertainty around the rest of the state? Does that either impact you? Does it give you an advantage or attracting demands? Any kind of implications there as there's more and more uncertainty?
Speaker Change: on the power generation side, demand forecasting, outside of your area. In Texas, that makes sense.
Speaker Change: Yeah, hey Travis, you know the way I think about it and Bob kind of alluded to this with the ACUE studies we have a significant amount of demand already and that's a little bit a kind of point towards the RFP we have in flight rate right now we've [inaudible]
Speaker Change: that RFP we have in flight is between 5,000 and 10,000 megawatts of new generation in that upper end, that 10,000 megawatts is really to serve the our oil and gas customers with the demand we're seeing there and again, I mean that's so
from our perspective, we have it.
Speaker Change: significant amount of damage, demand without even considering what's happening in the other parts of Texas. So our focus is on ensuring we can serve our current customers and potential data centers that we're seeing from it.
Speaker Change: So I would say we already had robust demand there even before any impacts from call of the other parts of Texas and of any entities want to locate it in SPP territory.
Speaker Change: And just take, Travis, I don't know if your question was aimed at the risk side. I mean, the interconnectivity between IRCOT and the Southwest Power Pool is relatively diminimous and it's through DC ties, so there's no contagion risk, I would say, operationally between those two systems.
Speaker Change: and other those other bills out there that would impact you directly at all, again kind of the power generation focus stuff. [inaudible]
Speaker Change: Yeah, I did talk about wildfire legislation in Texas. We also had similar legislation in North Dakota as well, which we are buoyed by.
Speaker Change: I think the only thing I'd comment on really that's brought on the generation side is really the continued trend and support for nuclear or broadly across the country and in our states we've gotten
Nuclear Siding, Legislation in both Wisconsin and North Dakota.
Speaker Change: and then in Colorado, they changed the law to recognize that nuclear counts as a clean energy resource under their calculations for carbon-free generation.
Speaker Change: Not surprising there's been a national trend towards nuclear as a preferred form of generation. We think it's...
Speaker Change: Okay, great. Well, Sunji Perala, Proko, the Texas policy in terms of nuclear, do you have a stance?
Peter Weg,
Speaker Change: Well, the Texas has been broadly supportive of nuclear. I mean, I think they want a big piece of the nuclear supply chain and whether it's from R&D or manufacturing of large components to wholesale manufacturing of SMRs to the implementation onto the grid. So as a state, Texas has been pro nuclear for a host of reasons, and of course we would support that as well.
Okay, great. Thanks so much for the time.
Unidentified Operator: Thank you. As we have no further questions, I'd like to turn the call back over to CFO Brian Van Abel for any closing remarks.
Unidentified Operator: Thank you all for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions.
Speaker Change: Thank you very much. That does conclude today's conference. You may now disconnect
Dr. Paret.