Meeting the Challenge: A Business Perspective

CHAIRMAN, PRESIDENT AND CEO

BEN FOWKE

AGENDA

Industry Trends

Where We Want to Go

How We Get There

Building on Our

Momentum

ACCOMPLISHMENTS

No. 1 wind provider in America

Building Solar Capacity

A Leader in Emission Reductions

A Leader in Conservation

A Leader in Transmission 30%

Carbon Reduction

Strong Reliability

Storm Response

TRENDS IN THE ENERGY INDUSTRY

Changing Economics

Growing Customer Expectations

Changing Policy Landscape

CHANGING ECONOMICS Natural Gas

Drilling and Fracking

$1/ MCF Difference = $1.2 Billion Over 10 years

Price and Production

Henry Hub Price

$/MMBtu

Marketed Monthly

Production MMcf

Millions

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

$-

$2

$4

$6

$8

$10

$12

$14

2008 2009 2010 2011 2012 2013 2014 2015

Price Production

CHANGING ECONOMICS Renewable Costs

$-

$2

$4

$6

$8

$10

$0

$20

$40

$60

$80

2005 2009 2013

$/MMBtu $/MWh

• Competes with natural gas

• Great energy hedge

Wind

Energy Tax Credit

CHANGING ECONOMICS Renewable Costs

• Technology improvements lower costs

• Utility-scale approaching combined cycle

• Utility costs must be considered

• Higher penetration requires greater system support

Solar Energy

Utility Scale

Energy

Rooftop

Tax

Credit

$400

$300

$200

$100

2006 2013 2013 $0

2009

Incentive

CHANGING ECONOMICS On the Horizon

Several icons will come up here, including:

Micro Grids

Battery storage

Two-way communication

Smart Appliances

Electric vehicles

Heat and Power

Micro Grids

Battery Storage

Fuel Cells

Utility in a Box

10 Year US Treasury Yield

Jan 2004 4.13

Dec 2014 2.17

1.00

2.00

3.00

4.00

5.00

6.00

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Percent

CHANGING ECONOMICS Investor Appetite

Transco Yieldco

REIT MLP

CHANGING ECONOMICS Electric Sales and Infrastructure

• Capital investment more than doubled

• Infrastructure needs will continue

• Combined, these issues drive higher rate pressure

1.7%

-0.7%

0.6%

2000-2007

Average

2008-2013

Average

2014

Actual

GROWING CUSTOMER EXPECTATIONS

COMPETITIVE PRICES

CHANGING POLICY LANDSCAPE Growing Competition

Competition

Grid is the Economic Enabler

Assault on California Power Station Raises Alarm

CHANGING POLICY LANDSCAPE Security

CHANGING POLICY LANDSCAPE Security

CHANGING POLICY LANDSCAPE Security

Power Plants

77

miles of transmission lines

19,000 transmission towers

200,000

transformers

2,200 substations

1,200

Transmission Control Centers

4

CHANGING POLICY LANDSCAPE Security: Our Response

Defense in Depth

Invest in Resiliency

Drill, Assess, Repeat

Strong Response Plan

Risk-based Planning

30%

CHANGING POLICY LANDSCAPE Carbon Intensity Reduction Requirements

41%

11%

16%

35%

2005

2020 30%

Carbon Reduction

2012

2005

CHANGING POLICY LANDSCAPE Xcel Energy Carbon Reduction

XCEL ENERGY

To be the preferred and trusted provider of our customers’ energy needs

Vision

We provide our customers the safe, clean, reliable energy services they want and value at a competitive price

Mission

Carbon reduction

Grid modernization

Innovative products and services

New regulatory framework

ACHIEVING THE VISION

35% by 2030

40% reduction by 2030

RESOURCES FOR THE FUTURE

63% Carbon Free Fuel Diversity to Manage Risk

Coal 29%

Nuclear 28%

Renewables 35%

Natural Gas 8%

A NEW FRAMEWORK

Create new tools Take a macro view

Employ performance-based oversight

Employ longer-term compacts Align resource, policy and rate decisions

Expedite customer options Move away from one-size-fits-all

Ensure fair playing field

Explore alternative structures Create value

Meet each state's priorities

22

A flexible, collaborative, forward-looking process

THE PATH FORWORD

Pursue no regrets investment

Adopt technology at the speed of value

Use mitigation to smooth the way

Take a comprehensive view

OUR FUTURE

Our Role

Achieve each state’s policy objectives

Enable the

transformation

Balance multiple

interests

Competitive price

Our Customers

Satisfied Meet

community needs

More choice

Regulatory Framework

Fair Efficient Incentives Collaborative Policy Based

Our System Renewables Coal Nuclear

More distributed resources

Robust, reliable, resilient grid

Cost-effective carbon

reductions

Let’s Keep Working Together

COLLABORATION: THE MINNESOTA WAY

We’ve Accomplished Great Things

Together We have a Strong Team

Customers

Policymakers

Utilities

E21 Initiative