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A Strategic Plan for Growth – Xcel Energy

Xcel Energy · Feb 24, 2015 · 48 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. A Strategic Plan for Growth – Xcel Energy – slide 1
    A Strategic Plan for Growth Fixed Income Investor Meetings Boston - New York City February 23-24, 2015
  2. A Strategic Plan for Growth – Xcel Energy – slide 2
    Fully Regulated, Diverse Utility NSP-Minnesota (NSPM) NSP-Wisconsin (NSPW) 35-45% of earnings 5-10% of earnings Public Service Co. of Colorado (PSCo) Southwestern 45-55% of earnings Public Service (SPS) 5-15% of earnings Operate in…
  3. A Strategic Plan for Growth – Xcel Energy – slide 3
    Xcel Energy Investment Merits Focused strategic plan Offering an attractive total return EPS growth objective of 4% 6% * Dividend growth objective of 5% 7% Dividend payout ratio target of 60% 70% Strong credit metrics Unsecured…
  4. A Strategic Plan for Growth – Xcel Energy – slide 4
    Xcel Energy Strategic Plan Objectives Measurable Results Improve Utility Close ROE gap 50 bps by 2018 Performance Derive 75% of revenue from MYPs Drive Operational Manage workforce transition Excellence Limit annual O&M growth to…
  5. A Strategic Plan for Growth – Xcel Energy – slide 5
    Improve Utility Performance Existing ROE gap is approximately 100 bps Regulatory Lag Contribution by Jurisdiction NSPM 75% Close ROE Objective Gap by 50 bps by 2018 SPS 20% PSCo & NSPW 5% 6
  6. A Strategic Plan for Growth – Xcel Energy – slide 6
    Streamlining Minnesota Regulation Based upon four key objectives Lowering carbon emissions by 40% by 2030 Pioneering distribution grid modernization Providing new services and product offerings Pursuing more predictable and nimble…
  7. A Strategic Plan for Growth – Xcel Energy – slide 7
    Legislative Initiatives in Texas Collaborating with other non-ERCOT utilities Pursuing legislative changes to reduce regulatory lag Ability to implement temporary rates 35 days from filing Allow the addition of post test year capital…
  8. A Strategic Plan for Growth – Xcel Energy – slide 8
    Closing the ROE Gap Key Opportunity for EPS Growth 2014 Estimated 20.7 billion 20.7 billion 20.7 billion Rate Base Equity Ratio 54% 54% 54% ROE Improvement 25 bps 50 bps 75 bps Net Income 28 million 56 million 84 million…
  9. A Strategic Plan for Growth – Xcel Energy – slide 9
    Impact of Improved Earned ROE Consolidated 5-year EPS Earned ROE CAGR 11.0% 6% - 7% 10.5% 5% - 6% 10.0% 4% - 5% Based on Xcel Energys consolidated GAAP ROE 10
  10. A Strategic Plan for Growth – Xcel Energy – slide 10
    Improve Utility Performance Derive 75% of Revenue from Multi-Year Plans Percent of Jurisdiction Status Rate Plan Rate Base Minnesota Electric Pending Multi-Year Plan (2014-15) 35% Colorado Electric Pending Multi-Year Plan (2015-17)…
  11. A Strategic Plan for Growth – Xcel Energy – slide 11
    Driving Operational Excellence Bending the Cost Curve Sustainable cost control Standardization of processes Optimize purchasing power Objective Technology Annual O&M Growth Stabilization of nuclear costs Drives 0% - 2% Workforce…
  12. A Strategic Plan for Growth – Xcel Energy – slide 12
    Base Capital Investment Plan Five-Year Total of 14.5 Billion Dollars in millions 3,375 2,780 2,825 2,650 2,850 2015 2016 2017 2018 2019 Transmission Generation Distribution Other 13
  13. A Strategic Plan for Growth – Xcel Energy – slide 13
    Base Capital Investment Plan Drives Rate Base Growth 2015-2019 Base Capital Expenditures 14.5 Billion Distribution 22% Transmission 4.7% 31% Drives Rate Base Other CAGR 24% 2014 - 2019 Generation 23% 14
  14. A Strategic Plan for Growth – Xcel Energy – slide 14
    Investing for the Future Potential Natural Gas Investment Take advantage of organic growth opportunities Leverage existing natural gas footprint Potential incremental investment opportunities Natural gas pipelines Natural gas…
  15. A Strategic Plan for Growth – Xcel Energy – slide 15
    Xcel Energy An Experienced Natural Gas Provider Sixth largest natural gas consumer in the country Annual natural gas usage 450 Bcf Spend 1.5 - 2.0 billion annually 2013 Natural Gas Consumption NSPM 28% Operating Miles of Gas…
  16. A Strategic Plan for Growth – Xcel Energy – slide 16
    Transmission: A Two-Pronged Strategy Operating Company: A low risk base business Driven by reliability standards & state/regional energy policies Incumbent in areas with a substantial need for investment Will defend using ROFR…
  17. A Strategic Plan for Growth – Xcel Energy – slide 17
    Transmission Base Capital Investment Plan Majority of base plan is driven by reliability targets, state & regional energy policies and asset renewal Plan is not subject to competition - minimal execution risk Transmission CapEx of…
  18. A Strategic Plan for Growth – Xcel Energy – slide 18
    Pending Regulatory Cases Requested Rate Case Requested Increase Expected Decision ROE 221 million Minnesota Electric 10.25% 2015 Q1 Over Two Years South Dakota Electric 16 million 10.25% Mid-2015 Texas Electric 65 million 10.25%…
  19. A Strategic Plan for Growth – Xcel Energy – slide 19
    Colorado 2015 Electric Rate Case Requested a 2015 rate increase of 107 million (3.8%), based on a 2015 test year, an ROE of 10.25%, an equity ratio of 56%, a rate base of 6.39 billion Settlement agreement reached in January 2015:…
  20. A Strategic Plan for Growth – Xcel Energy – slide 20
    Minnesota Multi-Year Electric Rate Case NSP-Minnesota filed a two-year, electric rate case seeking a revised net increase of 221 million over two years The filing is based on a requested ROE of 10.25%, a 52.5% equity ratio, a 2014…
  21. A Strategic Plan for Growth – Xcel Energy – slide 21
    Monticello EPU/LCM Prudence Filing Original estimate was 320 million and final cost was 665 million Monticello uprate & life extension was a sound investment Rebuilt plant provides customer value through 2030 Essential for carbon…
  22. A Strategic Plan for Growth – Xcel Energy – slide 22
    Texas 2015 Electric Rate Case Requested a 2015 electric rate increase of 64.75 million (6.7%) Based on a June 2014 historic test year with known and measurable adjustments ROE of 10.25% and equity ratio of 53.97% Electric rate base…
  23. A Strategic Plan for Growth – Xcel Energy – slide 23
    South Dakota 2015 Electric Rate Case Seeking a 2015 electric rate increase of 15.6 million, or 8.0% Requested ROE of 10.25% and equity ratio of 53.86% Average rate base of 433 million 2013 historic test year with known and…
  24. A Strategic Plan for Growth – Xcel Energy – slide 24
    Strong Credit Ratings and Liquidity 44% equity ratio as of December 31, 2014 2.75 billion credit line with a maturity of October 2019 Moodys * S&P Fitch Xcel Unsecured A3 BBB+ BBB+ NSPM Secured Aa3 A A+ NSPW Secured Aa3 A A+ PSCo…
  25. A Strategic Plan for Growth – Xcel Energy – slide 25
    Strong Balance Sheet As of December 31, 2014 Millions Percent Equity 10,214 44.4 Current Portion LT Debt 258 1.1 Short-Term Debt 1,020 4.4 Long-Term Debt 11,500 50.0 Total Capitalization 22,992 100.0 26
  26. A Strategic Plan for Growth – Xcel Energy – slide 26
    Manageable Debt Maturities Dollars in millions 1,600 Hold Co NSPM NSPW PSCo SPS 1,200 800 400 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 27
  27. A Strategic Plan for Growth – Xcel Energy – slide 27
    Modest Financing Needs Financing Plan 2015-2019 Funding capital expenditures millions 14,480 11,500 2,605 2,995 0 375 Cap CFO * New Equity ** DRIP & Refinanced Ex Debt Benefits Debt * Cash from operations is net of dividend…
  28. A Strategic Plan for Growth – Xcel Energy – slide 28
    Financing Plan for 2015 Amount Issuer Security Timing (millions) Hold Co Senior Unsecured 500 Second Quarter NSP-M First Mortgage Bonds 600 Third Quarter PSCo First Mortgage Bonds 250 Second Quarter NSP-W First Mortgage Bonds…
  29. A Strategic Plan for Growth – Xcel Energy – slide 29
    Proven Track Record of Delivering Value Consistent Dividend Growth Dividend growth CAGR 2013-2015 = 6.9% Dividend growth CAGR 2005-2015 = 4.1% 1.28 1.20 1.12 1.08 1.01 1.04 0.98 0.92 0.95 0.86 0.89 2005 Annual Dividend Increase…
  30. A Strategic Plan for Growth – Xcel Energy – slide 30
    Proven Track Record of Delivering Value Consistent Ongoing EPS Growth Ongoing EPS CAGR 2005-2014 = 6.5% 2.00- 2.15 2.03 1.15 2005 2015 Ongoing Earnings Guidance Range 2014 2015E Ongoing EPS Annual Growth Objective = 4-6% *…
  31. A Strategic Plan for Growth – Xcel Energy – slide 31
    Proven Track Record Delivering on Financial Objectives EPS Guidance 2005 Achieved 2006 Achieved 2007 Exceeded 2008 Achieved 2009 Achieved 2010 Achieved 2011 Achieved 2012 Achieved 2013 Achieved 2014 Achieved 32
  32. A Strategic Plan for Growth – Xcel Energy – slide 32
    Appendix 33
  33. A Strategic Plan for Growth – Xcel Energy – slide 33
    Reconciliation Ongoing EPS to GAAP EPS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Ongoing EPS 1.15 1.30 1.43 1.45 1.50 1.62 1.72 1.82 1.95 2.03 PSRI-COLI 0.05 0.05 (0.08) 0.01 (0.01) (0.01) - - - - Prescription Drug Tax…
  34. A Strategic Plan for Growth – Xcel Energy – slide 34
    Projected Rate Base Growth Dollars in billions CAGR 2014 2019 = 4.7% 25.2 26.1 24.5 23.5 22.5 CAGR 2005 2013 = 7.5% 20.7 19.2 17.6 16.9 15.2 14.4 13.3 12.5 11.7 10.8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015…
  35. A Strategic Plan for Growth – Xcel Energy – slide 35
    Better Than Expected 2014 Sales Growth 2014 Weather-Adjusted Retail Electric Sales 3.3% 2.3% 1.3% 1.2% 0.6% Xcel NSPM PSCo NSPW SPS Energy 36
  36. A Strategic Plan for Growth – Xcel Energy – slide 36
    Capital Expenditures by Function Dollars in millions 2015 2016 2017 2018 2019 Total Electric Generation 1,190 630 620 415 450 3,305 Electric Transmission 875 780 905 975 1,000 4,535 Electric Distribution 605 630 640 650 680 3,205…
  37. A Strategic Plan for Growth – Xcel Energy – slide 37
    Capital Expenditures by Company Dollars in millions 2015 2016 2017 2018 2019 Total NSPM 1,625 990 975 845 950 5,385 PSCO 950 820 815 885 1,010 4,480 SPS 570 710 735 595 565 3,175 NSPW 230 260 300 325 325 1,440 Total 3,375 2,780…
  38. A Strategic Plan for Growth – Xcel Energy – slide 38
    SPP Scoring Methodology Criteria Xcel Energy Brings Engineering Design 200 pts Accomplished development team Project Management 200 pts Skillful project execution Operating Ability 250 pts Seasoned operator Cost Analysis 225 pts…
  39. A Strategic Plan for Growth – Xcel Energy – slide 39
    Proven Low Cost Leader 345 kV Lines Dollars in millions per mile Average Cost per Mile, Adjusted * 2.5 Overall Average = 2.1 million/mile 2.0 1.5 1.0 0.5 of 13 25 55 12 35 projects 0.0 Xcel Energy SPP ERCOT WECC MISO Average…
  40. A Strategic Plan for Growth – Xcel Energy – slide 40
    Regulatory vs. Authorized ROE - 2013 Rate Base Authorized W/A Earned OPCO Jurisdiction Regulatory Plan ( millions) ROE ROE MN Electric 6,719 9.83% 8.22% 2014-2015 MYP Filed MN Gas 436 10.09 9.76 NSPM ND Electric 389 9.75 9.54…
  41. A Strategic Plan for Growth – Xcel Energy – slide 41
    Minnesota Regulatory Calendar 2014 2015 2015 2015 2015 Q4 Q1 Q2 Q3 Q4 MN 2014 2015 Rate Case Monticello Case MN Legislative Session MN Regulatory Filing Resource Plan Filing Alternative Plan: 2016 2018 Rate Case…
  42. A Strategic Plan for Growth – Xcel Energy – slide 42
    Minnesota Multi-Year Electric Rate Case 2014 (millions of dollars) DOC NSP-M ALJ Surrebuttal Rebuttal NSP-Minnesotas original request 192.7 192.7 192.7 Monticello EPU (31.3) (33.9) (12.2) Sales forecast* (15.8) (43.2) (15.8) ROE (DOC…
  43. A Strategic Plan for Growth – Xcel Energy – slide 43
    Minnesota Multi-Year Electric Rate Case 2015 (millions of dollars) DOC NSP-M ALJ Surrebuttal Rebuttal NSP-Minnesotas original request 98.5 98.5 98.5 Monticello EPU * 29.1 18.9 11.7 Excess depreciation reserve adjustment ** - (22.7) -…
  44. A Strategic Plan for Growth – Xcel Energy – slide 44
    Colorado 2015 Electric Rate Case PSCo Settlement (Millions of Dollars) Staff OCC Rebuttal Agreement PSCos filed rate request 136.0 136.0 136.0 136.0 Transfer from transmission cost adjustment rider to base rates 19.9 19.9 19.9 19.9…
  45. A Strategic Plan for Growth – Xcel Energy – slide 45
    Minnesota Resource Plan Filing In January 2015, NSP filed its resource plan, which recommends: Adding 600 MW of wind by 2020 and 1,200 MW by 2027 Adding 187 MW of large scale solar by 2016 and 1,700 MW by 2030 500 MW of…
  46. A Strategic Plan for Growth – Xcel Energy – slide 46
    Proactive Environmental Leadership Fuel Mix Based on Energy 2005 2013 2020 5% 1% 4% 1% 2% 3% 3% 56% 15% 12% 46% 22% 43% 11% 23% 12% 23% 18% Coal Natural Gas Nuclear Wind Hydro Other 47
  47. A Strategic Plan for Growth – Xcel Energy – slide 47
    Proactive Environmental Leadership Emission Reductions Nitrogen Oxide Emissions (lbs/MWh) CO2 Emissions 150,000 Million tons 100,000 95 50,000 90 0 2005 2006 2007 2008 2009 2010 2011 2012 85 Sulfur Dioxide Emissions (lbs/MWh)…
  48. A Strategic Plan for Growth – Xcel Energy – slide 48
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