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xcel energy  RBC_August_2008
 

xcel energy RBC_August_2008

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    xcel energy  RBC_August_2008 xcel energy RBC_August_2008 Presentation Transcript

    • Reducing Carbon Delivering Results RBC Investor Meetings August 13, 2008
    • Safe Harbor This material includes forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements include projected earnings, cash flows, capital expenditures and other statements and are identified in this document by the words “anticipate,” “estimate,” “expect,” “projected,” “objective,” “outlook,” “possible,” “potential” and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including the availability of credit, actions of rating agencies and their impact on capital expenditures; business conditions in the energy industry; competitive factors; unusual weather; effects of geopolitical events, including war and acts of terrorism; changes in federal or state legislation; regulation; actions of accounting regulatory bodies; and other risk factors listed from time to time by Xcel Energy in reports filed with the SEC, including Exhibit 99.01 to Xcel Energy’s report on Form 10-K for year 2007.
    • Xcel Energy Corporate Strategy Grow our core business and meet the environmental challenge Achieve annual EPS growth of 5 – 7% Increase dividend by 2 – 4% annually Reduce emissions by 2020
    • Company Profile Traditional Regulation NSP-Wisconsin Operate in 8 States NSP-Minnesota 6% of earnings * 40% of earnings * Combination Utility Electric 85% of net income Gas 15% of net income PSCo 49% of earnings * Customers 3.3 million electric 1.8 million gas SPS 2007 Financial Statistics 5% of earnings * NI Ongoing: $612 million NI GAAP: $577 million * Percentages based on 2007 Ongoing Earnings Assets: $23 billion Equity ratio: 43% 2007 EPS Ongoing: $1.43, GAAP: $1.35 2008 Dividend $0.95 per share annualized
    • Attractive Investment Opportunity Environmental leader with both a willingness and the ability to address environmental challenges Constructive regulation with enhanced recovery of major capital projects Rate base growth opportunities Track record of successful execution Strong corporate governance
    • Impact of Potential Climate Change Legislation Climate Change legislation would require: Significant emission reductions Significant capital investments Long-term technological transformation A diverse portfolio of resources
    • Xcel Energy States at Forefront Demand-Side Renewable Management Portfolio (annual MWh Carbon State Standards savings) Reduction 30% by 2025 MN 30% by 2020 1.5% (over 2005) CO 20% by 2020 .6% N/A 10% by 2020 NM 20% by 2020 .3% (over 2000) WI 10% by 2015 N/A N/A TX 5% by 2015 .2% N/A
    • Benefits of a Stability/Reduction Plan Reduce risk Federal and state carbon regulation Community and litigation risks Mitigate long-term costs to customers Demonstrate continued environmental leadership Potential for investment opportunities
    • Geographic Competitive Advantage Biomass Resource Wind Resource Source: National Renewable Energy Laboratory Solar Resource Wind Density High Low Xcel Energy States Served
    • Clean Energy Actions Increase renewable energy Uprate and extend lives of nuclear plants Expand demand side management, energy efficiency and conservation efforts Increase investment in transmission Upgrade environmental systems and improve efficiencies of generation plants Replace/repower inefficient generation Evaluate carbon capture and storage
    • Minnesota Resource Plan Reduces carbon emission by 22% by 2020 Adds 2,600 megawatts (MW) of wind by 2020 Seeks to expand output from Prairie Island and Monticello nuclear plants by 230 MW Requests environmental upgrades and capacity expansion of 80 MW at Sherco Seeks approval of Manitoba Hydro 375 MW PPA Would add 2,300 MW of natural gas generation Expands DSM efforts Plan requires Commission approval
    • Colorado Resource Plan Reduces carbon emission by 10% by 2017 and puts PSCo on path to achieve 20% reduction by 2020 Adds 800 MW of wind by 2015 Replaces four coal units with natural gas generation Acquire 25 MW of solar with plans to add up to 200 MW of solar as technology develops Expands DSM efforts Plan requires Commission approval
    • Reducing Carbon Dioxide Emissions* Millions of tons 80 75 70 65 60 2003 2004 2005 2006 2007 * Owned–generation carbon dioxide emissions
    • Projected Renewable Resources Energy 2007 2020 Nuclear Nuclear 11% 13% Renewables Gas & Oil Renewables 24% 31% 9% Gas & Oil 17% Coal Coal 49% 46% Capacity Wind Hydro Solar Biomass RDF Landfill Geothermal MW 2007 2,700 365 17 182 100 15 0 2020 7,400 400 600 250 60 20 20
    • Constructive Regulation Transmission riders – CO, MN, ND, SD Renewable riders – CO, MN MERP rider – MN Conservation/DSM riders – CO, MN Environmental riders – MN, ND, SD Capacity rider – CO Comanche 3 forward CWIP via general rate case – CO IGCC rider – CO Air quality improvement rider – CO
    • Projected Rider Revenue Dollars in millions 240 CO AQIR MN Renewable Energy Standard $195 200 CO Trans Cost Adjustment MN Trans Cost Recovery $166 MN MERP 160 120 $107 $73 80 40 0 2006 2007 2008 2009
    • Regulatory Results Rate relief granted 2006-2007: $400 million 2006 Minnesota electric rate case: $131 million 2006 Colorado electric rate case: $151 million 2006 Wisconsin gas and electric rate cases: $47 million 2007 Colorado gas rate case: $32 million Other: $39 million
    • Recovery on Capital Investment* Dollars in millions 2,800 $2,350 2,400 $2,150 $2,000 $1,900 2,000 1,600 1,200 800 400 0 2008 2009 2010 2011 Traditional Recovery Enhanced Recovery Depreciation * Capital forecast based on middle of range
    • Delivering on Rate Base Growth* Dollars in billions CAGR = 7.5% $16.9 $15.7 $14.9 $14.0 $12.8 $11.7 2006 2007 2008 2009 2010 2011 * Growth based on middle of capital forecast range
    • Proven Track Record Delivering on 5 – 7% EPS Growth Guidance Range $1.45 – $1.55 $1.43 $1.30 $1.15 ~5%** 10% 13% 2005 2006 2007 2008 Ongoing* Ongoing* Ongoing* Guidance * Ongoing EPS excludes the impacts of COLI and disc ops. A reconciliation to GAAP earnings is included in the appendix. ** Estimated growth rate based on middle of guidance range
    • Proven Track Record: Delivering 2 – 4% Dividend Growth* Annualized dividend per share 2004 – 2008 CAGR = 3.4% $0.95 $0.92 $0.89 $0.86 $0.83 $0.75 2003 2004 2005 2006 2007 2008 * Xcel Energy increased the dividend by 3¢ on May 21, 2008
    • Strong Corporate Governance Independent Lead Director Annual election of all directors 12 independent directors on 13 person board Management compensation aligned with shareholders – stock ownership guidelines: CEO ownership 5x annual base salary CFO/Other Officers ownership 3x base salary
    • Value Proposition Low risk, fully regulated and integrated utility Constructive regulation with enhanced recovery of major capital projects Pipeline of investment opportunities Environmental leader, well–positioned for changing rules Attractive Total Return Sustainable annual EPS growth of 5% – 7% with upside potential Strong dividend yield of 4.7% (as of 7/31/08) Sustainable annual dividend growth of 2% – 4%
    • Appendix
    • Reconciliation – Ongoing EPS to GAAP Dollars per share 2007 2005 2006 Ongoing Earnings $1.15 $1.30 $1.43 PSRI/COLI 0.05 0.05 (0.08) Continuing Operations $1.20 $1.35 $1.35 Disc Ops 0.03 0.01 – GAAP Earnings $1.23 $1.36 $1.35 As a result of the termination of the COLI program, Xcel Energy’s management Energy’s believes that ongoing earnings provide a more meaningful comparison of earnings comparison results between different periods in which the COLI program was in place and is more representative of Xcel Energy’s fundamental core earnings power. Energy’s Xcel Energy’s management uses ongoing earnings internally for financial planning Energy’s planning and analysis, for reporting of results to the Board of Directors, in determining Directors, whether performance targets are met for performance-based compensation, performance-based and when communicating its earnings outlook to analysts and investors. investors.
    • Earnings Guidance Range Dollars per share 2007A 2008 Regulated Utility $1.55 $1.61 – $1.71 Holding Company (0.12) (0.16) Ongoing Earnings $1.43 $1.45 – $1.55 PSRI/COLI $(0.08) – Continuing Operations 1.35 1.45 – 1.55 Disc Ops – – GAAP Earnings $1.35 $1.45 – $1.55
    • 12 /3 1/ 20 -20% -15% -10% -5% 0% 5% 07 1/ 31 / 20 08 2/ 29 / 20 08 3/ 31 / 20 08 Stock Price Change Peer Avg 4/ 30 / 20 08 XEL 5/ 31 / 20 08 6/ 30 / 20 08 7/ 13 /2 00 8
    • 2008 Regulatory Status Requested Status New Mexico Electric December 2007 Pending $17.3 million Summer 2008 11.0% ROE North Dakota Electric December 2007 Pending $20.5 million August 2008 11.5% ROE Interim rates PSCo Wholesale February 2008 Settlement Base rates $8.8 million $6.5 million CWIP $3.7 million Blackbox 11.5% ROE SPS Wholesale March 2008 Pending $14.9 million 12.2% ROE Texas Electric June 2008 Pending $61.3 million overall 11.25% ROE
    • Capital Expenditure Forecast Denotes enhanced recovery mechanism Dollars in millions 2008 2009 2010 2011 Base & Other $1,245 $1,285 $1,310 $1,300 MERP 170 25 10 0 Comanche 3 330 60 10 0 MN Wind Tran/CapX 2020 40 65 115 270 Sherco Upgrade 5 20 75 230 MN Wind Generation 135 0 0 0 Nuclear Capacity/Life Ext 75 120 180 200 Fort St. Vrain CT 100 25 0 0 Total Committed $2,100 $1,600 $1,700 $2,000 Potential Projects 0-100 200-400 200-400 200-500 Range $2,100- $1,800- $1,900- $2,200- $2,200 $2,000 $2,100 $2,500
    • Capital Expenditures by Operating Company* Dollars in millions 2008 2009 2010 2011 NSPM $935 $955 $1,060 $1,380 PSCo 945 650 680 750 SPS 170 205 180 140 NSPW 100 90 80 80 Total $2,150 $1,900 $2,000 $2,350 * Capital forecast based on middle of range
    • Capital Expenditures by Function* Dollars in millions 2008 2009 2010 2011 Elec Generation $935 $480 $525 $745 Elec Transmission 300 325 390 500 Elec Distribution 355 345 355 360 Gas 140 155 160 155 Nuclear Fuel 145 150 140 105 Common/Other 225 145 130 135 Potential Projects 50 300 300 350 Total $2,150 $1,900 $2,000 $2,350 * Capital forecast based on middle of range
    • Credit Ratings Secured Unsecured Fitch Moody’s S&P Fitch Moody’s S&P Holding Co. – – – BBB+ Baa1 BBB NSPM A+ A2 A A A3 BBB NSPW A+ A2 A A A3 BBB+ PSCo A A3 A A– Baa1 BBB A– SPS – – – BBB+ Baa1 BBB+
    • Debt Maturities Dollars in millions $1,200 SPS $1,000 PSCo NSPW $800 NSPM $600 Xcel Energy $400 $200 $0 2008 2009 2010 2011 2012 2013 2014 2015
    • Strong Access to Credit Markets Issued $400 million of retail hybrid securities with a 7.6% coupon in January 2008 Issued $500 million of first mortgage bonds at NSP–Minnesota with 5.25% coupon in March 2008 Potential FMB debt issuances: 2nd half 2008 PSCo: $500 to $600 million NSP–Wisconsin: Up to $250 million