Xcel Energy First Quarter 2013 Earnings Report

Xcel Energy First Quarter 2013 Earnings Report

  • 2013 first quarter earnings per share were $0.48 compared with $0.38 per share in 2012.
  • Xcel Energy reaffirms 2013 earnings guidance of $1.85 to $1.95 per share.

MINNEAPOLIS--(BUSINESS WIRE)-- Xcel Energy Inc. (NYS: XEL) today reported 2013 first quarter earnings of $237 million, or $0.48 per share compared with 2012 earnings of $184 million, or $0.38 per share.

First quarter 2013 earnings were favorably impacted by increased electric and natural gas margins and lower interest expense. Winter weather in the first quarter of 2013 was not only colder than normal, but significantly different from the abnormally warm first quarter of 2012. This contrast in weather primarily drove the positive impact when comparing the two periods. The increase in electric and natural gas margins also reflects the implementation of rate increases in Colorado, South Dakota and Wisconsin, along with interim rate increases, subject to refund, in Minnesota and North Dakota. These positive drivers were partially offset by higher operating and maintenance expenses, depreciation and property taxes.

"We had a good first quarter delivering solid earnings, while maintaining quality service and reliability," said Ben Fowke, Chairman, President and Chief Executive Officer. "We are reaffirming our 2013 earnings guidance of $1.85 to $1.95 per share, which is dependent on several key assumptions, including constructive outcomes in all rate case and regulatory proceedings."

"We recently reached settlements in South Dakota and Texas. However, several parties filed adverse recommendations in our electric rate case in Minnesota and our natural gas rate case in Colorado. We believe our requested rate increases in both states are necessary to continue to provide excellent customer service and reliability, recover our costs of investments in our utility business, maintain strong credit ratings and access the capital markets. We will continue to work with the various parties and commissions to reach constructive outcomes," stated Fowke.

At 9:00 a.m. CDT today, Xcel Energy will host a conference call to review financial results. To participate in the call, please dial in 5 to 10 minutes prior to the start and follow the operator's instructions.

US Dial-In:(800) 762-8779
International Dial-In:(480) 629-9818
Conference ID:4611871

The conference call also will be simultaneously broadcast and archived on Xcel Energy's website at www.xcelenergy.com. To access the presentation, click on Investor Relations. If you are unable to participate in the live event, the call will be available for replay from 2:00 p.m. CDT on May 2 through 11:59 p.m. CDT on May 3.

Replay Numbers
US Dial-In:(800) 406-7325
International Dial-In:(303) 590-3030
Access Code:4611871#

Except for the historical statements contained in this release, the matters discussed herein, are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including our 2013 earnings per share guidance and assumptions, are intended to be identified in this document by the words "anticipate," "believe," "estimate," "expect," "intend," "may," "objective," "outlook," "plan," "project," "possible," "potential," "should" and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of Xcel Energy Inc. and its subsidiaries (collectively, Xcel Energy) to obtain financing on favorable terms; business conditions in the energy industry, including the risk of a slow down in the U.S. economy or delay in growth recovery; trade, fiscal, taxation and environmental policies in areas where Xcel Energy has a financial interest; customer business conditions; actions of credit rating agencies; competitive factors, including the extent and timing of the entry of additional competition in the markets served by Xcel Energy Inc. and its subsidiaries; unusual weather; effects of geopolitical events, including war and acts of terrorism; state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rates or have an impact on asset operation or ownership or impose environmental compliance conditions; structures that affect the speed and degree to which competition enters the electric and natural gas markets; costs and other effects of legal and administrative proceedings, settlements, investigations and claims; actions by regulatory bodies impacting our nuclear operations, including those affecting costs, operations or the approval of requests pending before the Nuclear Regulatory Commission; financial or regulatory accounting policies imposed by regulatory bodies; availability or cost of capital; employee work force factors; and the other risk factors listed from time to time by Xcel Energy in reports filed with the Securities and Exchange Commission (SEC), including Risk Factors in Item 1A and Exhibit 99.01 of Xcel Energy Inc.'s Annual Report on Form 10-K for the year ended Dec. 31, 2012.

This information is not given in connection with any sale, offer for sale or offer to buy any security.


(amounts in thousands, except per share data)

  Three Months Ended March 31
2013  2012
Operating revenues
Natural gas669,596621,035
Other 21,057  20,262 
Total operating revenues2,782,8492,578,079
Operating expenses
Electric fuel and purchased power925,043863,980
Cost of natural gas sold and transported439,375417,946
Cost of sales — other8,4117,304
Operating and maintenance expenses529,231510,684
Conservation and demand side management program expenses64,03263,707
Depreciation and amortization248,706228,672
Taxes (other than income taxes) 113,427  105,624 
Total operating expenses 2,328,225  2,197,917 
Operating income454,624380,162
Other income, net3,9223,737
Equity earnings of unconsolidated subsidiaries7,5777,158
Allowance for funds used during construction — equity19,75413,450
Interest charges and financing costs

Interest charges — includes other financing costs of $5,809 and $6,080, respectively

Allowance for funds used during construction — debt (8,758) (6,607)
Total interest charges and financing costs130,855145,223
Income from continuing operations before income taxes355,022259,284
Income taxes 118,434  75,515 
Income from continuing operations236,588183,769
(Loss) income from discontinued operations, net of tax (18) 124 
Net income$236,570 $183,893 
Weighted average common shares outstanding:
Earnings per average common share:
Cash dividends declared per common share$0.27$0.26

Notes to Investor Relations Earnings Release (Unaudited)

Due to the seasonality of Xcel Energy's operating results, quarterly financial results are not an appropriate base from which to project annual results.

The only common equity securities that are publicly traded are common shares of Xcel Energy Inc. The earnings and earnings per share (EPS) of each subsidiary discussed below do not represent a direct legal interest in the assets and liabilities allocated to such subsidiary but rather represent a direct interest in our assets and liabilities as a whole. EPS by subsidiary is a financial measure not recognized under GAAP that is calculated by dividing the net income or loss attributable to the controlling interest of each subsidiary by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period. We use this non-GAAP financial measure to evaluate and provide details of earnings results. We believe that this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of our subsidiaries. This non-GAAP financial measure should not be considered as an alternative to our consolidated fully diluted EPS determined in accordance with GAAP as an indicator of operating performance.

Note 1.Earnings Per Share Summary

The following table summarizes the diluted earnings per share for Xcel Energy:

Three Months Ended March 31
Diluted Earnings (Loss) Per Share2013  2012
Public Service Company of Colorado (PSCo)$0.24$0.19
Southwestern Public Service Company (SPS)0.020.02
Equity earnings of unconsolidated subsidiaries 0.01  0.01 
Regulated utility — continuing operations (a)0.520.41
Xcel Energy Inc. and other costs (0.04) (0.03)
GAAP diluted earnings per share$0.48 $0.38 
(a)See Note 2.

PSCo — PSCo's earnings increased $0.05 per share for the first quarter of 2013. The increase is mainly due to the electric rate increases in May 2012 and January 2013, cooler weather impacting electric and gas margins and lower interest charges. The increase is partially offset by higher depreciation expense and operating and maintenance (O&M) expenses.

NSP-Minnesota — NSP-Minnesota's earnings increased $0.05 per share for the first quarter of 2013. The increase is primarily the result of interim electric rate increases, effective in January 2013 subject to refund, in Minnesota and North Dakota, an electric rate increase in South Dakota, cooler weather and lower interest charges. These increases were partially offset by higher O&M expenses, depreciation expense and property taxes.

NSP-Wisconsin — NSP-Wisconsin's earnings increased $0.01 per share for the first quarter of 2013. The increase is the result of higher electric and gas rates implemented in January 2013 and the effect of cooler weather, which were partially offset by higher O&M expenses and depreciation expense.

SPS — SPS' earnings were flat for the first quarter of 2013. Earnings were positively impacted by higher electric margin due to cooler weather, offset by higher depreciation expense, O&M expenses and interest charges.

The following table summarizes significant components contributing to the changes in 2013 EPS compared with the same period in 2012, which are discussed in more detail later in the release:

Three Months

Diluted Earnings (Loss) Per Share

Ended March 31
2012 GAAP diluted earnings per share$0.38
Components of change — 2013 vs. 2012
Higher electric margins0.12
Higher natural gas margins0.03
Lower interest charges0.01
Higher AFUDC - Equity0.01
Higher depreciation and amortization(0.03)
Higher operating and maintenance expenses(0.02)
Higher effective tax rate(0.01)
Higher taxes (other than income taxes) (0.01)
2013 GAAP diluted earnings per share$0.48 

Note 2.Regulated Utility Results — Continuing Operations

Estimated Impact of Temperature Changes on Regulated Earnings — Unusually hot summers or cold winters increase electric and natural gas sales while, conversely, mild weather reduces electric and natural gas sales. The estimated impact of weather on earnings is based on the number of customers, temperature variances and the amount of natural gas or electricity the average customer historically uses per degree of temperature. Accordingly, deviations in weather from normal levels can affect Xcel Energy's financial performance, from both an energy and demand perspective.

Degree-day or Temperature-Humidity Index (THI) data is used to estimate amounts of energy required to maintain comfortable indoor temperature levels based on each day's average temperature and humidity. Heating degree-days (HDD) is the measure of the variation in the weather based on the extent to which the average daily temperature falls below 65° Fahrenheit, and cooling degree-days (CDD) is the measure of the variation in the weather based on the extent to which the average daily temperature rises above 65° Fahrenheit. Each degree of temperature above 65° Fahrenheit is counted as one cooling degree-day, and each degree of temperature below 65° Fahrenheit is counted as one heating degree-day. In Xcel Energy's more humid service territories, a THI is used in place of CDD, which adds a humidity factor to CDD. HDD, CDD and THI are most likely to impact the usage of Xcel Energy's residential and commercial customers. Industrial customers are less sensitive to weather.

Normal weather conditions are defined as either the 20-year or 30-year average of actual historical weather conditions. The historical period of time used in the calculation of normal weather differs by jurisdiction based on the time period used by the regulator in establishing estimated volumes in the rate setting process. To calculate the impact of weather on demand, a demand factor is applied to the weather impact on sales as defined above to derive the amount of demand associated with the weather impact.

There was no impact on sales in the first quarter of 2013 due to THI or CDD. The percentage increase (decrease) in normal and actual HDD is provided in the following table:

Three Months Ended March 31
2013 vs.  2012 vs.  2013 vs.








Weather — The following table summarizes the estimated impact of temperature variations on EPS compared with sales under normal weather conditions:

Three Months Ended March 31
2013 vs.  2012 vs.  2013 vs.
Retail electric$ 0.004$ (0.025)$ 0.029
Firm natural gas  0.009  (0.021)  0.030
Total$ 0.013$ (0.046)$ 0.059

In 2012, Xcel Energy refined its estimate to incorporate the impact of weather on demand charges. As a result, the estimated weather impact on earnings per share for prior periods has been adjusted for comparison purposes.

Sales Growth (Decline) — The following table summarizes Xcel Energy's sales growth (decline) for actual and weather-normalized sales in 2013:

Three Months Ended March 31
Three Months Ended March 31(Without Leap Day)
Weather  Weather
Electric residential5.1%0.0%6.3%1.1%
Electric commercial and industrial0.1(0.8)1.20.4
Total retail electric sales1.4(0.6)2.60.5
Firm natural gas sales21.7(0.4)23.00.7

Electric — Electric revenues and fuel and purchased power expenses are largely impacted by the fluctuation in the price of natural gas, coal and uranium used in the generation of electricity, but as a result of the design of fuel recovery mechanisms to recover current expenses, these price fluctuations have little impact on electric margin. The following table details the electric revenues and margin:

Three Months Ended March 31
(Millions of Dollars)2013  2012
Electric revenues$2,092$1,937
Electric fuel and purchased power (925) (864)
Electric margin$1,167 $1,073 

The following table summarizes the components of the changes in electric margin:

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