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Building the CoreExecuting the Strategy
Midwest Investor MeetingsAugust 9 – 10, 2006 Xcel Energy Inc.
414 Nicollet MallMinneapolis, Minnesota 55401www.xcelenergy.com
®
This material includes forwardThis material includes forward--looking statements that are subject to looking statements that are subject to certain risks, uncertainties and assumptions. Such forwardcertain risks, uncertainties and assumptions. Such forward--looking looking statements include projected earnings, cash flows, statements include projected earnings, cash flows, capital expenditures capital expenditures and other statements and are identified in this document by the and other statements and are identified in this document by the words words ““anticipate,anticipate,”” ““estimate,estimate,”” ““expect,expect,”” ““projected,projected,”” ““objective,objective,”” ““outlook,outlook,””““possible,possible,”” ““potentialpotential”” and similar expressions. Actual results may vary and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ mmaterially. Factors that could cause actual results to differ materially aterially include, but are not limited to: general economic conditions, ininclude, but are not limited to: general economic conditions, including the cluding the availability of credit, actions of rating agencies and their impavailability of credit, actions of rating agencies and their impact on capital act on capital expenditures; business conditions in the energy industry; competexpenditures; business conditions in the energy industry; competitive itive factors; unusual weather; effects of geopolitical events, includfactors; unusual weather; effects of geopolitical events, including war and ing war and acts of terrorism; changes in federal or state legislation; reguacts of terrorism; changes in federal or state legislation; regulation; costs lation; costs and other effects of legal administrative proceedings, settlemenand other effects of legal administrative proceedings, settlements, ts, investigations and claims including litigation related to companinvestigations and claims including litigation related to companyy--owned owned life insurance (COLI); actions of accounting regulatory bodies; life insurance (COLI); actions of accounting regulatory bodies; the higher the higher degree of risk associated with Xcel Energydegree of risk associated with Xcel Energy’’ss nonregulatednonregulated businesses businesses compared with Xcel Energycompared with Xcel Energy’’s regulated business; and other risk factors s regulated business; and other risk factors listed from time to time by Xcel Energy in reports filed with thlisted from time to time by Xcel Energy in reports filed with the SEC, e SEC, including Exhibit 99.01 to Xcel Energyincluding Exhibit 99.01 to Xcel Energy’’s report on Form 10s report on Form 10--K for year 2005.K for year 2005.
Safe HarborSafe Harbor
5th Largest Combination Electric and Gas Utility (based on customers)
5th Largest Combination Electric and Gas Utility (based on customers)
Gas Customers 1.8 millionElectric Customers 3.3 millionGas Customers 1.8 millionElectric Customers 3.3 million
Northern States Northern States Power CompanyPower Company--
MinnesotaMinnesota44% Net Income 44% Net Income
Public Service Public Service Company of Company of
ColoradoColorado39% Net Income39% Net Income
Southwestern Southwestern Public ServicePublic Service
12% Net Income12% Net Income
Northern Northern States Power States Power
CompanyCompany--WisconsinWisconsin
5% Net Income5% Net Income
2005 Earnings Available: $509 Million2005 Earnings Available: $509 Million
Regulatory and Legislative PolicyRegulatory and Legislative Policy
Invest in fully regulated utility assets AND
Increase our earned return on equity
Invest in fully regulated utility assets AND
Increase our earned return on equity
Strategy: Building the CoreStrategy: Building the Core
Financial ResultsFinancial Results
Regulatory RecoveryRegulatory Recovery
Investing in the CoreInvesting in the Core
Attractive Total Return withAttractive Total Return withLowLow--Risk StrategyRisk Strategy
EPS growth rate objective 5 – 7% per year*2005 – 2009
Annual dividend growth objective 2 – 4% per year
Dividend yield 4.5%
EPS growth rate objective 5 – 7% per year*2005 – 2009
Annual dividend growth objective 2 – 4% per year
Dividend yield 4.5%
* Excluding any impact from Corporate Owned Life Insurance* Excluding any impact from Corporate Owned Life Insurance
Getting the Rules RightGetting the Rules Right
Minnesota transmission legislation for renewables 2001
MERP legislation 2001
Comanche 3 regulatory framework 2004
Transmission investment recovery legislation— Minnesota 2005— Texas 2005— South Dakota 2006
Rider recovery of environmental investments including Minnesota 90% mercury reduction target
Minnesota transmission legislation for renewables Minnesota transmission legislation for renewables 20012001
MERP legislation 2001MERP legislation 2001
Comanche 3 regulatory framework 2004Comanche 3 regulatory framework 2004
Transmission investment recovery legislationTransmission investment recovery legislation—— Minnesota 2005Minnesota 2005—— Texas 2005Texas 2005—— South Dakota 2006South Dakota 2006
Rider recovery of environmental investments Rider recovery of environmental investments including Minnesota 90% mercury reduction targetincluding Minnesota 90% mercury reduction target
AchievedAchieved
Getting the Rules RightGetting the Rules Right
Rider recovery of Colorado capacity costs – proposedFlow through recovery of SPS Texas capacitycosts – rule making proceedingReduce exposure to trading and marketing margin volatility – Minnesota electric case
Rider recovery of Colorado capacity costs – proposedFlow through recovery of SPS Texas capacitycosts – rule making proceedingReduce exposure to trading and marketing margin volatility – Minnesota electric case
In ProcessIn ProcessIn ProcessIn Process
Future InitiativesFuture Initiatives
Forward test year in all jurisdictionsForward test year in all jurisdictions
Building the Core Building the Core —— TransmissionTransmissionCapX 2020: Collaborative EffortCapX 2020: Collaborative Effort
Three project groups to:Three project groups to:Maintain/improve reliabilitySupport new generationReduce constraints
Maintain/improve reliabilitySupport new generationReduce constraints
Group IIGroup IIGroup IIIGroup III
Defined with Further Study, Defined with Further Study, Dependent on Future Need:Dependent on Future Need: South DakotaSouth Dakota
IowaIowa
MinnesotaMinnesota
WisconsinWisconsin
North DakotaNorth Dakota
Group IGroup I
CapX 2020 CapX 2020 —— 3 Project Groups3 Project Groups
Group I — In-service 2011 – 2012 Total CostS.E. Twin Cities-Rochester-LaCrosse WI / 345kV $1.3 BillionBemidji-Grand Rapids / 230 kVFargo-St. Cloud/Monticello area / 345 kV Xcel ShareBrookings, S.D. - SE Twin Cities / 345 kV $700 Million
Group II — In-service 2014 – 2020New 345 kV transmission loop around the Twin Cities
Group III — In-service 2012 – 2020As needed and generation projects developed
Preliminary Estimated Total > $3 Billion
Group I — In-service 2011 – 2012 Total CostS.E. Twin Cities-Rochester-LaCrosse WI / 345kV $1.3 BillionBemidji-Grand Rapids / 230 kVFargo-St. Cloud/Monticello area / 345 kV Xcel ShareBrookings, S.D. - SE Twin Cities / 345 kV $700 Million
Group II — In-service 2014 – 2020New 345 kV transmission loop around the Twin Cities
Group III — In-service 2012 – 2020As needed and generation projects developed
Preliminary Estimated Total > $3 Billion
Xcel Energy Investment PipelineXcel Energy Investment Pipeline
Core CapExCore CapEx
MERPMERP
Comanche 3Comanche 3
Group 1Group 1
Group 2Group 2
Group 3Group 3
20062006 20072007 20082008 20092009 20102010 20112011 20122012 20202020
Approx. $1 Billion per YearApprox. $1 Billion per Year
$1 Billion Total$1 Billion Total
$1 Billion Total$1 Billion Total
$700 Million Total$700 Million TotalCapX 2020:CapX 2020:
Evaluation of InvestmentsEvaluation of Investments
Significant investment opportunities beyond forecast
Allocation of capital based on:— Customer need— Supportive regulatory treatment— Risk-adjusted return
Incremental investment driven by economic signals
Significant investment opportunities beyond forecast
Allocation of capital based on:— Customer need— Supportive regulatory treatment— Risk-adjusted return
Incremental investment driven by economic signals
Increased customer and shareholder valueIncreased customer and shareholder value
Increasing Our Earned Return on EquityIncreasing Our Earned Return on Equity
Rate Cases with 2006 ImpactsRate Cases with 2006 ImpactsDollars in millionsDollars in millions
Colorado Gas $34.5 $22.0 11.0% 10.5%
Wisconsin Electric 53.1 43.4 11.9 11.0
Wisconsin Gas 7.8 3.9 11.9 11.0
Colorado Gas $34.5 $22.0 11.0% 10.5%
Wisconsin Electric 53.1 43.4 11.9 11.0
Wisconsin Gas 7.8 3.9 11.9 11.0
Dollar IncreaseDollar Increase Return on EquityReturn on EquityRequested GrantedRequested Granted Requested GrantedRequested Granted
Minnesota Electric Rate Case HighlightsMinnesota Electric Rate Case Highlights
Requested $156 million increase
Interim rates effective January 2006,subject to refund
Electric rate base = $3.2 billion
11% return on common equity
Equity ratio = 52%
Forecast test year
Requested $156 million increase
Interim rates effective January 2006,subject to refund
Electric rate base = $3.2 billion
11% return on common equity
Equity ratio = 52%
Forecast test year
Minnesota Electric Rate CaseMinnesota Electric Rate CaseALJ RecommendationALJ Recommendation
$135 million increase 2006 –reduced to $119 million increase 2007
10.65% return on common equity
Commission deliberation August 2006
Written order September 2006
$135 million increase 2006 –reduced to $119 million increase 2007
10.65% return on common equity
Commission deliberation August 2006
Written order September 2006
Colorado Electric Rate Case HighlightsColorado Electric Rate Case Highlights
Requested $210 million increase
Electric rate base = $3.4 billion
11% return on common equity
Equity ratio = 60%
Historical test year with adjustments for known and measurable
Final decision expected late 2006
Rates expected to be in effect early 2007
Requested $210 million increase
Electric rate base = $3.4 billion
11% return on common equity
Equity ratio = 60%
Historical test year with adjustments for known and measurable
Final decision expected late 2006
Rates expected to be in effect early 2007
Colorado Electric Rate ScheduleColorado Electric Rate Schedule
Intervenor testimony — August 18
Rebuttle testimony — September 29
Hearings — October 23 through November 9
Statement of positions — November 20
Deliberations — December 1
Initial decision — December 18
Intervenor testimony — August 18
Rebuttle testimony — September 29
Hearings — October 23 through November 9
Statement of positions — November 20
Deliberations — December 1
Initial decision — December 18
Texas Electric Rate Case HighlightsTexas Electric Rate Case Highlights
Requested $48 million increase
Electric rate base = $943 million
11.6% return on common equity
Equity ratio = 51%
Historical test year with adjustments for known and measurable
Rates expected to be in effect 1st Quarter 2007
Requested $48 million increase
Electric rate base = $943 million
11.6% return on common equity
Equity ratio = 51%
Historical test year with adjustments for known and measurable
Rates expected to be in effect 1st Quarter 2007
Potential Additional Rate CasesPotential Additional Rate Caseswith 2007 Impactwith 2007 Impact
Colorado Gas File 2006
Minnesota Gas File 2006
North Dakota Electric Potential
New Mexico Electric Potential
South Dakota Electric Potential
Colorado Gas File 2006
Minnesota Gas File 2006
North Dakota Electric Potential
New Mexico Electric Potential
South Dakota Electric Potential
Earnings Guidance RangeEarnings Guidance Range
Regulated utility $1.25 – $1.35Holding company
and other (0.10)COLI – tax benefit 0.10
Continuing operations $1.25 – $1.35
Regulated utility $1.25 – $1.35Holding company
and other (0.10)COLI – tax benefit 0.10
Continuing operations $1.25 – $1.35
20062006
Dollars per shareDollars per share
Financial Performance ObjectivesFinancial Performance Objectives
EPS growth rate 2005 EPS growth rate 2005 –– 20092009—— Target 5 Target 5 –– 7% per year7% per year**
Annual dividend increases of 2 Annual dividend increases of 2 –– 4% per year4% per year
Deliver an attractive total return with low riskDeliver an attractive total return with low risk
Credit ratingCredit rating—— Senior unsecured debt BBB+ to A rangeSenior unsecured debt BBB+ to A range
* Excluding any impact from COLI* Excluding any impact from COLI
AppendixAppendix
Senior Debt RatingsSenior Debt Ratings
Holding Co. BBB+ Baa1 BBB-NSPM A+ A2 A- A A3 BBB-NSPW A+ A2 A- A A3 BBB PSCo A- A3 A- BBB+ Baa1 BBB-SPS A- Baa1 BBB
Holding Co. BBB+ Baa1 BBB-NSPM A+ A2 A- A A3 BBB-NSPW A+ A2 A- A A3 BBB PSCo A- A3 A- BBB+ Baa1 BBB-SPS A- Baa1 BBB
Fitch Moody’s S&P Fitch Moody’s S&PFitch Moody’s S&P Fitch Moody’s S&PSecuredSecured UnsecuredUnsecured
Des Moines
Des Moines
Des Moines
2005 Average RetailElectric Rate Comparison2005 Average Retail2005 Average RetailElectric Rate ComparisonElectric Rate Comparison
0
4
8
12
16
20
0
4
8
12
16
20Cents per KWhCents per KWhCents per KWh
Amarillo
Amarillo
Amarillo
Kansas City
Kansas City
Kansas CityDenver
Denver
Denver
Mpls/St. Paul
Mpls/St. Paul
Mpls/St. Paul
BostonBostonBoston
Chicago
Chicago
Chicago
Milwaukee
Milwaukee
Milwaukee
Phoenix
Phoenix
Phoenix
Salt Lake City
Salt Lake City
Salt Lake City
6.806.806.80
St. Louis
St. Louis
St. Louis
MiamiMiamiMiami
New York
New York
New York
Washington DC
Washington DC
Washington DC
5.975.975.977.347.347.34
CoalCoal 3636 8,1388,138Natural GasNatural Gas 6161 4,9184,918NuclearNuclear 33 1,6171,617HydroHydro 8383 508508OilOil 2424 492492RDFRDF 66 9696WindWind -- 2525TotalTotal 15,79415,794
2005 OwnedGenerating Facilities
2005 OwnedGenerating Facilities
Unit TypeUnit Type NumberNumber MWMW
* Xcel Energy supplies in * Xcel Energy supplies in excess of 1100 MWs of excess of 1100 MWs of wind powerwind power
**
Xcel Energy Supply SourcesXcel Energy Supply Sources
Nuclear10%
Nuclear10%
Coal **45%
Coal **45%
Gas & Oil38%
Gas & Oil38%
* Includes purchases** Low-sulfur western coal* Includes purchases** Low-sulfur western coal
Renewables7%
Renewables7%
2005Energy Supply Mix*
2005Energy Supply Mix*
Nuclear Relicensing StatusNuclear Relicensing Status
Minnesota PUC, legislative and NRC approvals expected 2006 – 2007Life Cycle modifications to be installed 2008 – 2012, projected capital cost of $150 – 200 million
Minnesota PUC, legislative and NRC approvals expected 2006 – 2007Life Cycle modifications to be installed 2008 – 2012, projected capital cost of $150 – 200 million
Begin license application to the NRC and Minnesota Legislature in 2008Life Cycle modifications under evaluationApprovals expected 2010 – 2011
Begin license application to the NRC and Minnesota Legislature in 2008Life Cycle modifications under evaluationApprovals expected 2010 – 2011
MonticelloMonticello
Prairie IslandPrairie Island
Owned Generation (GWh)Owned Generation (GWh)Owned Generation (GWh)Pounds per MWhPounds per MWhPounds per MWh
1997 1999 2001 2003 2005 2007 20090
1
2
3
4
5
6
00
60,00060,000
80,00080,000
100,000100,000
Nitrogen Oxide emissionsNitrogen Oxide emissionsNitrogen Oxide emissionsSulfur Dioxide emissionsSulfur Dioxide emissionsSulfur Dioxide emissions
Owned generation (GWh)Owned generation (GWh)Owned generation (GWh)
Xcel Energy Xcel Energy –– An Environmental LeaderAn Environmental Leader
Capital Expenditures 2006 Capital Expenditures 2006 —— 20092009
Electric Distribution24%
Electric Distribution24%
Generation40%
Generation40%
Gas9%Gas9%
Common9%
Common9%
Nuclear Fuel4%
Nuclear Fuel4%
Electric Transmission14%
Electric Transmission14%
Convert two in-city coal plants to natural gas & refurbish a third in-city coal plant
Improves environment
Cash return on investmentbegan January 2006
Target ROE 10.86% withincentive sliding scale9.97 to 11.46%
Equity ratio 48.5%
Convert two in-city coal plants to natural gas & refurbish a third in-city coal plant
Improves environment
Cash return on investmentbegan January 2006
Target ROE 10.86% withincentive sliding scale9.97 to 11.46%
Equity ratio 48.5%
Minnesota Metro EmissionsMinnesota Metro EmissionsReduction Program (MERP) $1 BillionReduction Program (MERP) $1 Billion
SOSO22 NOxNOx MercuryMercury ParticulateParticulate COCO22
93%93% 91%91% 78%78% 55%55% 21%21%
18 Months 18 Months –– application to application to constructionconstruction
Major contracts signed for Major contracts signed for turbine generator, boiler andturbine generator, boiler andair quality control system air quality control system ––within budget within budget
Began construction inBegan construction inOctober 2005. Major October 2005. Major contractors start May 2006contractors start May 2006
Construction completed fall Construction completed fall 2009 2009
New unitNew unit $1.1 B$1.1 BTransmissionTransmission $150 M$150 MRetrofit 1 & 2Retrofit 1 & 2 $127 M$127 M
Comanche 3 Comanche 3 —— 750 MW Coal Station750 MW Coal Station
Artist RenderingArtist Rendering
Minnesota Cost Recovery MechanismsMinnesota Cost Recovery Mechanisms
Projected electric fuel and purchased energy costs billed for the current month with subsequent true-up; MISO costs recovered through FCA on interim basis, with final recovery mechanismbeing developed by stakeholders
Projected purchased gas cost billed for the current month with subsequent true-up
Conservation Improvement Program rider which providesrecovery of program costs plus incentives
Emission Reduction Program, Renewable Development Fund,and State Energy Policy rider in place,
Renewable Transmission rider in place; General Transmissionrider authorized by law
Mercury Reduction and Environmental Improvement rider authorized by law
Projected electric fuel and purchased energy costs billed for the current month with subsequent true-up; MISO costs recovered through FCA on interim basis, with final recovery mechanismbeing developed by stakeholders
Projected purchased gas cost billed for the current month with subsequent true-up
Conservation Improvement Program rider which providesrecovery of program costs plus incentives
Emission Reduction Program, Renewable Development Fund,and State Energy Policy rider in place,
Renewable Transmission rider in place; General Transmissionrider authorized by law
Mercury Reduction and Environmental Improvement rider authorized by law
Minnesota Electric Case Minnesota Electric Case ——Partial Settlement of Trading MarginPartial Settlement of Trading Margin
No credit to base rates for wholesale electric margins
Margins to be flowed through fuel clause include:— 100% wholesale electric margins from excess
generation capacity— 80% of wholesale margins from ancillary
services sales— 25% of margins not arising from use of
NSP-Minnesota generating assets
No credit to base rates for wholesale electric No credit to base rates for wholesale electric marginsmargins
Margins to be flowed through fuel clause include:Margins to be flowed through fuel clause include:—— 100% wholesale electric margins from excess 100% wholesale electric margins from excess
generation capacitygeneration capacity—— 80% of wholesale margins from ancillary 80% of wholesale margins from ancillary
services salesservices sales—— 25% of margins not arising from use of25% of margins not arising from use of
NSPNSP--Minnesota generating assetsMinnesota generating assets
Colorado Cost Recovery MechanismsColorado Cost Recovery Mechanisms
Energy Cost Adjustment recovers electric fuel and purchased Energy Cost Adjustment recovers electric fuel and purchased energy costs for retail load with a maximum gain or loss of energy costs for retail load with a maximum gain or loss of $11.25 million$11.25 millionMonthly Gas Cost Adjustment recovers the cost of the natural Monthly Gas Cost Adjustment recovers the cost of the natural gas commodity, interstate pipeline and storage costs on a dollargas commodity, interstate pipeline and storage costs on a dollar--forfor--dollar basisdollar basisPurchased Capacity Adjustment recovers the demand Purchased Capacity Adjustment recovers the demand component of purchased power contracts (through 2006)component of purchased power contracts (through 2006)Fuel Cost Adjustment recovers 100% of electric fuel and Fuel Cost Adjustment recovers 100% of electric fuel and purchased energy costs for wholesale customerspurchased energy costs for wholesale customersDemandDemand--side Management Cost Adjustment rider (gas and side Management Cost Adjustment rider (gas and electric) Air Quality Improvement rider (to recover cost of electric) Air Quality Improvement rider (to recover cost of emissions controls on several Denver metro generation facilitiesemissions controls on several Denver metro generation facilities))
Under earning: 8.5% ROE vs 10.75% Under earning: 8.5% ROE vs 10.75% $ 64$ 64Increase ROE to 11% and higherIncrease ROE to 11% and higher
equity ratio equity ratio 1717Comanche 3Comanche 3 2424DepreciationDepreciation 3333Wholesale contract expirationWholesale contract expiration 1414Employee related costsEmployee related costs 66OtherOther 2020
$178$178PCCA impact & amendment 37 riderPCCA impact & amendment 37 rider 3232Total requestedTotal requested $210$210
Dollars in millionsDollars in millions
Colorado Electric Rate Case DetailsColorado Electric Rate Case Details
2005 Jurisdictional Returns2005 Jurisdictional Returns
Colorado Electric $3,120 8.5%Colorado Gas 1,084 7.00Minnesota Electric 3,230 10.61 9.98%Minnesota Gas 422 6.30 7.42North Dakota Electric 176 12.46 12.65North Dakota Gas 42 5.71 6.81Wisconsin Electric 613Wisconsin Gas 83
Colorado Electric $3,120 8.5%Colorado Gas 1,084 7.00Minnesota Electric 3,230 10.61 9.98%Minnesota Gas 422 6.30 7.42North Dakota Electric 176 12.46 12.65North Dakota Gas 42 5.71 6.81Wisconsin Electric 613Wisconsin Gas 83
Rate Weather-Base* Actual NormalizedRateRate WeatherWeather--
Base*Base* ActualActual NormalizedNormalized
** Dollars in millionsDollars in millions**** Reflects regulatory reporting requirementsReflects regulatory reporting requirements****** Electric and GasElectric and Gas
Return on Equity**Return on Equity**Return on Equity**
6.26***6.26***
Rate Base $10.9 B $13 B 4.5%Regulatory EquityCapitalization 52% 52 – 54% 0 to 1%Earned Return onUtility Rate Base Equity 9.5% 10.5 to 11% 2.5 to 3.5%
Rate BaseRate Base $10.9 B$10.9 B $13 B$13 B 4.5%4.5%Regulatory EquityRegulatory EquityCapitalizationCapitalization 52%52% 52 52 –– 54%54% 0 to 1%0 to 1%Earned Return onEarned Return onUtility Rate Base EquityUtility Rate Base Equity 9.5%9.5% 10.5 to 11%10.5 to 11% 2.5 to 3.5%2.5 to 3.5%
Earnings Growth DriversEarnings Growth Drivers
Annual2009 Growth
2005* Potential Rate
AnnualAnnual20092009 GrowthGrowth
2005*2005* PotentialPotential RateRate
** Estimated regulatory resultsEstimated regulatory results
Corporate Owned Life InsuranceCorporate Owned Life InsuranceLitigation (COLI)Litigation (COLI)
Positive pre-deduction cash flowsMortality gainsThe buildup of cash values
Positive prePositive pre--deduction cash flowsdeduction cash flowsMortality gainsMortality gainsThe buildup of cash valuesThe buildup of cash values
The courtThe court’’s opinion in the Dow case outlined three indicators s opinion in the Dow case outlined three indicators of potential economic benefits to be examined in a COLI case. of potential economic benefits to be examined in a COLI case.
In Xcel EnergyIn Xcel Energy’’s COLI case, the plans:s COLI case, the plans:Were projected to have sizeable preWere projected to have sizeable pre--deduction cash flows, deduction cash flows, based upon the relevant assumptions when purchasedbased upon the relevant assumptions when purchasedPresented the opportunity for mortality gains that were not Presented the opportunity for mortality gains that were not eliminated either retroactively or prospectivelyeliminated either retroactively or prospectivelyHad large cash value increases that were not encumbered Had large cash value increases that were not encumbered by loans during the first seven years of the policiesby loans during the first seven years of the policies