XEL - Earnings call transcript Q2 2019

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Operator

Good day, and welcome to the Xcel Energy Second Quarter 2019 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions].

At this time, I'd like to turn the conference over to Paul Johnson, Vice President of Investor Relations. Please go ahead.

Paul Johnson

morning. Good Xcel Quarter to Call. Release XXXX Energy's welcome Earnings Second Conference And

Chief me Chairman, Frenzel, and and Fowke, are Executive Officer. and President Joining Ben Officer; President today Chief Executive Vice Financial Bob

other In questions. call developments. quarter Slides and your we results members addition, update morning, website. available we of management on on to This XXXX team our review today's regulatory you that are the our will and accompany answer available second business have recent

and measures comments release. from during filings the included discuss information. our the conference SEC. are As call ongoing could forward-looking metrics a earnings of and will natural with On and reminder, in in contain Information the that margin today's Significant certain cause gas comparable on reconciliations may call, some our described measures, release earnings margin. are results are GAAP today's those that factors to differ we non-GAAP electric including earnings, anticipated

the Ben. call With that, over I'll to turn

Benjamin Fowke

good Well, year. earnings to last thank share you, Paul, $X.XX per share morning. Today, $X.XX per of reported compared quarter second we and

objectives on through are differences the earnings XXXX that above a in second we very we range. will well of but our are in as we financial walk midpoint and have earnings timing confident at we year-to-date Our the or positioned to on past. the will Bob year the guidance the of are favorable you deliver track, half in our few minutes, deliver

quick resource which July, filed Midwest we with plan, So In let XXXX. our through me highlights from some quarter. the start runs Upper

of includes retirement King Sherco we in XXXX, coal will Midwest. completely various supported the coal settlement is plants, starting points: Upper end XXXX. the by have XXXX, which early partial plan, of with preferred key environmental followed in the groups, and labor following a exited By the X with in Our by

a includes XXXX. from nuclear an The at calls site. life The gas the and combined cycle and megawatts wind of replacement. the additional combined Monticello of to plan X,XXX for also Mankato XXXX the megawatts acquisition natural to plant facility It cycle adds X,XXX an plant solar of of construction of natural plant gas of extension Sherco the

also frame. add the peaking we firm capacity will post megawatts XXXX X,XXX of Finally, time

Our an preferred result would carbon by XXXX. and be in carbon-free a by NSP plan path reduction on XXXX XX% XXX% puts to

We create to are a sustainable the our excited opportunity future customers. energy cleaner for by

progress on The Hale went on We our strong time strategy. completed XXX-megawatt farm our In also under project Wind was budget. and continue Texas. in service to June, make steel-for-fuel into

substantial Our savings customers will see over its life.

our of stages will management projects highlight projects and employees. skills our permitting other XXXX they be the construction All wind between expect and construction, and in XXXX. completed various of and planning, we project These are excellent of

and bills point for bill our bill The on X passed: important are These of legislative right of that states, refusal in some now to a first sessions projects; that AMI for In Texas, in a Texas. laws there constructive a were provides bills transmission recovery more completed new provides environment right that recovery generation; were of the provides regulatory new a that right investment. bill and passed.

and that achieve carbon-free plans classified by passed XXX% electricity carbon XXXX legislation Colorado, our reduction In to by XX% XXXX. an

of EV Colorado, securitization own to an that allows a Also XX% as targets In passed of voluntary option addition, bill for and in all provides bill ownership the generation. infrastructure. utility us

portfolio a New XX% passed. This the XXXX renewable rule carbon-free Energy XXXX. by Act targets Finally, in Transition electricity and by standard XXX% was Mexico,

meet We XXXX are well positioned milestone. to the

objectives with alignment bills states. with I in energy reflect clean are discussed to proud carbon-reduction our our policymakers are transition, strong We the and the consistent be our leading and

more Best Times Energy goal to has Xcel XXXX a In Xth Military Finally, ranking. set is straight to of we Xcel that year have men workforce. to of veterans, be employs This year. proud hires to nearly women honor. X,XXX that and received the veterans, Employers I'm new honor than our our XXXX, we've named the and goal It's company an this has XX% for XX% workforce. announce have Vest currently been the Energy reached to these in every

their every and strong Our veterans and day. leadership, our customers value bring for passion dedication teamwork for to experience job; deliver service their

vet, more regulatory Navy now Bob? quarterly over detail Bob the So who's it I'll you plans. on Frenzel, results turn to to and a provide

Robert Frenzel

per and good impact share higher per of and on earnings earnings Ben, with quarter XXXX per $X.XX electric quarterly capital the significant share The of The driver per We include outcomes by gas to natural increased recover results was margins, writers XXXX. Thanks, regulatory everyone. share, our $X.XX which and morning, which reflect including weather. for comparison. quarter the share various partially $X.XX by investments, offset unfavorable in $X.XX compared or $X.XX weather earnings second recorded most adverse

effective per rate lower earnings by share. our addition, tax $X.XX In increased

these per to expenses However, by capital an $X.XX of are the which earnings Offsetting electric which were the taxes, positive drivers earnings our increased largely And per depreciation, by neutral. other investment tax O&M ETR tax is share. program, flow and majority credits, reduced both share. $X.XX through which interest margin, to earnings decreased in reflecting higher of customers back production and due lower increase reform impacts,

sales. to Turning

electric customer year-to-date strong result increased customer a use customer. Our sales Year-to-date sales natural as weather-adjusted and weather-adjusted X.X%, customer. growth, growth reflecting per by higher per offset partially of X% gas lower increased strong use by continued

of declines sales, large of lower For and which expectations usage residential sector. sales some XXXX, customer in favorable in use some the per customer and the year-to-date known discrete we favorable anticipate slightly electric consolidated reflects

sales to XXXX we've strong reflect natural to X% For performance. increased guidance gas, to our growth X% year-to-date

Turning to O&M.

storm modernize strategy increased expenses and that to business customer Our natural spend costs, the experience. quarterly reflecting to by systems pipeline support increased million, gas IT $X our maintenance our enhance

XXXX. largely to year above to expense due due also but in expenses last storm O&M Our costs timing are year-to-date higher-than-expected

in half to well due XXXX. in half our cost lower the second of remediation improvements. as increased impact operation the incurring expect of as XXXX plant efficiency in nuclear And for weather costs reminder, hot as of a We business the environmental and we spending O&M outage second

reiterate X% we than that guidance XXXX expenses approximately levels. full XXXX's year lower be O&M our will Accordingly,

a provide update. quick TCJA ROE and X.XX% me filed increase AFUDC $X.X equity of utilization settlement Colorado let In XX%, an steam The for of reflects case. million, May agreement Next, an its of ratio purposes benefits. regulatory settlement of in XXXX, unopposed a of rate PSCo rate an

which Colorado commission of of XXXX New tax rates decision. pending in steps: XXXX. administrative has the law is X at settlement, occur October would judge and The recommended in approval

with group depreciation PSCo investment increase XXXX. In capital XX.XX% for rate reflects our XXXX, changes of and filed electric in which million rate is based historic Colorado, expenditures, January an also or in May an capital XXXX case advanced both an The initiative ROE test forward of requested ratio year seeking on and $XXX equity by in capital for of were reach a PSCo's an of effective request of previously approved rates, of XX.XX%. the X.X% commission.

a through current We in Wisconsin, rates The will is rate commission decrease. pending XXXX decision. maintain natural which gas result also a in modest reached and settlement settlement a electric

Wind reach an of New rate equity Mexico, and July the of capital forward, investment in second effect as strong million We test ROE XXXX. well ratio largely invested half in XX.X%. support going In in seeking into anticipate The of capital the request for to as based SPS reflects growth an $XX XX.XX% filed XXXX, case an Hale increase an a historic year on electric project of region. rates capital the with other

an file and a our rate New as the are project Hale capital we Mexico case previously investment the to Wind of addition, to in projects. planning well in August commissions Hale Texas Texas electric SPS the for other In recovery Need as mechanisms Both and granted Certificate in Wind recover farm.

update quick a our give on efforts. to want I PPA buyout Next,

approves a reached and with the General Last various the environmental acquisition. in disagreements We hearings the protection and if recommending economics We customer September. settlement decision Office of despite the we've support commission the of by a acquisition, the Commerce comments mechanisms we compelling quarter, modeling still however, were and comments. the believe recommendations groups that the cycle acquisition. included against Mankato anticipate labor filed ownership their the Department the demonstrated During combined commission alternate on Attorney highlighted of week, partial the

acquisition We the are approve savings the anticipated long-term value based commission the facility our on the would cautiously state the ownership of that will and customer optimistic to the create.

asset our to work on developments beneficial environmental In right margin and are and With working We our identify were customer actively our earnings. a will I'll proactively identify as but budget, in O&M solid labor stakeholders for and unfavorable operating year, slightly sales. favorability and transactions, cost, share year-over-year that, the offset. and second quarter progress. are second to we acquisition other and we these wrap Additionally, first of the will up. benefits and budget opportunities companies were margin to X the the O&M, half slightly to of we favorable these they expect across Weather half had with sales the our

pension and amortization in addition, the to Colorado. timing of In levels of lower depreciation will amortization prepaid expense moderate due

very range. the above confident of in to midpoint result, a we're ability guidance As or earnings our at our deliver

than New will under and to to In rate guidance was and to positioned summary, XXXX. by and settlements Texas long-term and XX% objectives which time passed earnings and reduce Hale X% our of are steam our Constructive emissions preferred proceeding, budget. We us the transition on Minnesota by will X% energy planning Mexico, in growth. continue carbon in on the resource Wind our We more Colorado. in our dividend plan Wisconsin clean and we XXXX we've Colorado, reached filed approved, earnings our legislation completed well in if and allow deliver constructive farm case

remarks. This take now concludes prepared Operator, our questions. we'll

Operator

Instructions]. [Operator

America. Our from of first with Bank question Julien will come Dumoulin-Smith

Alex Morgan

upper In rate for there. And Mexico a congratulations I provide PNM, maintain commission for year-end and hoping interpret was is is struggling around Alex a well, maybe and more plans. being that for end around as more should different able had Julien. then a in Morgan, wondering and one, quick potentially we New could the Mexico, And over comb. will calling on color I the the environment its as results New wondering Colorado was future the fine-tooth Colorado. the little to the specifically know if few regulatory just I first I was on guidance at I example, that with range. cases if color any in looking This securitization apply questions. to of whether And you

Benjamin Fowke

Color in Colorado around securitization?

Alex Morgan

the rate in Just the pending and cases regulatory terms in both. of environment

Benjamin Fowke

I aligned environment. We're the with policymakers constructive we a we start let's much -- Colorado. think in mean very have the Well, I think to continue with state.

it's case, capital as Bob capital rate you look talking we're that oriented. that really at we're has If of what the already filing in about mentioned, most And approved. been

So -- very keeping it helps you're bills continues very and be to bills total constructive, flat. I think it when your

they're fact, less In ago. today than Colorado, X, they in X were years

position So good I in think in we're very Colorado.

to Moving Mexico. New

is in passed Mexico, First creating and the regulatory us. of Texas better all, opportunities just with some as overall lot the environment. support New really really were that both of with for stunning, SPS, pleased And that I in and Texas growth a a of mentioned, bills it's

We are aligned New Mexico. in

for us a not deal. Mexico in is securitization very Now New big

on New the I for the positive and changes So very much for color like can't administration Mexico But I overall. the that. -- the commission you positive SPS new do in are I of more and some think actually give

Robert Frenzel

quarter. Alex, thing was, X.X% commission, earlier ratio set an I a data a which reach of the other for commission. the good XX% settlement of in allowed out think, of Mexico did an ROE with And New point for over constructive and very first equity just One points that the to we

Alex Morgan

that be by the the to rolling we'll something in-house. need One not you That's PPAs off. announced advantage of take XXXXs, that be rolling PTC or just rolling very date there which a tax If benefits? triggered? to any can there's might the Or question helpful. around see quick updates on off the this whether take Is is these wind PPAs into

Robert Frenzel

farms, the buy that that strategies we our discussed. wind buyout be for may us Alex, to contract on say for triggered for one the I benefit while And of I an any trigger don't them any there's from PPA that's assets of potentially of would already repowering think by in opportunity customers. these the deadlines of some only we've of various

Alex Morgan

On decision, question. Mankato, the time quick when commission of line And you last in the are about thinking terms that? of

Benjamin Fowke

middle commission it September in I likely the is Well, think or scheduled will the -- most up probably September. of -- in take

have answer And our so we'll then.

Operator

Morningstar. with Miller Travis from hear will we next, And

Travis Miller

some you you capital Texas, now? state potentially comments putting especially environment that Would to work made on about transmission anticipate regulatory developments there in more there, the the positive side.

Benjamin Fowke

mean, growth. capital put SPS. more of mechanisms very I significantly, work at right putting was No. we of up be there's and keep And gen needs for refusal the of to Well, pretty of first course, into the it's wider there for have to both a lot supportive that writer growing that new the meter with that are and of investment, capital

Robert Frenzel

is long-term financial working And capital and guidance Travis, process our this Bob, we're we quarter. back in expect process, through and be planning the to planning third with

Travis Miller

Okay.

I off So quickly right? possibly XXXX-type that could wind farms, pretty at up in range? if correctly, least rolls recall after the it So in come Texas, the

Robert Frenzel

by run driven farms rate increased the and say in would that large increased there. but is growth I customer wind load SPS discrete are and positive a capital our certainly Yes. investment,

Travis Miller

Yes. last XX plus of over smaller think, if you have coal, renewables then the And offsetting retirements. right level, very look the guys the at it. Got coal deals. high I years, been back we forefront Gas in

As for renewables, guys, you, flat or you once environment is are of the competition an we the next coal very Is years, where on assuming or offset? XX kind the gas the or demand little look of that it's essentially out but solar in side? growth the versus that comes wind, texture in that forward

Benjamin Fowke

be thank is there'd of mentioned, mean after all, completely more have that that. get milestone I Well, will on coal of Midwest. first coal XXXX. to you, big out -- so think for in Still I Travis, XX% transitioning. I milestone, our we by the system, that which some a let's be

sense XXXX. going with each think They're all and compete support on really they'll other and the point. we to make that other. I that don't think continue gas by how I renewables electricity of the will extension to XXX% on path niche at each they -- carbon-free

course, the can on play play batteries also with Of the grid, we'll role be storage. can looking batteries our at role

I And and more customers. about excited new it'll mean our we're demand programs. what can system even our be the interactions very think with interactions to and create -- important response-type that have course, of that might to EVs

Travis Miller

XXX%-type still a carbon-free would do How vision? for do how see Okay. you And see a environment? you that role that gas in --

Benjamin Fowke

certainly away. that are on the And possibility, it's burning Yes. those renewable you Very good I decades want question. of mean gas, which unless is I number wouldn't by XXXX, a them that incredibly plants think But you is a action. grid. important take early

I how on to action, how for it so of think get technologies need coal, avenue off of to is gas affordability. get XX% that how the But a there. take get said us last our maintain system. carbon things different bit There's lot could be. going away now, of we And gas that move to I've to reliability, we're early those as and maintain before, we from need work mark, we We we to is to and

Operator

will Paul Glenrock from Patterson question next Associates. our with And come

Paul Patterson

basically deal guys discussion have been backing who signing been contractors So about have wind because has basically contracts, you there been the some with to on that not in has the out of out low. start been Colorado, their just price the there. economics terms wondering was what to little we'll bit elaborate seeing in you of too sort a could and on you're if what recontract seeing in that of I having some and

Benjamin Fowke

are you about Paul, talking are talking about you wind? Or solar?

Paul Patterson

wind. was I thought contracts... I it it was renewal thought

Benjamin Fowke

economics something. our some what which I of deal Well, I'm very bids steel But is out out was change contracts, had The solar replacement and ownership. going mill. we the That out due David to to asked we if gone familiar received with, the we've vendor have pulled to news support well, with of -- and I'm good have Eves with help the particular and EVRAZ missing one bids. attractive

right to So things as in there Okay. I I keep unique anything? both on as Colorado, and the plan miss remain deal think for expanding. track David, our Colorado on CEP EVRAZ did well

Paul Patterson

Okay.

guess, wind afterwards. here is we I that, just what follow I correct? inaccurate, about that reading So the talk it with you is contractors I saw article I'm up backing guys that afterwards. that, is -- okay, some that -- about can out the can

Benjamin Fowke

happen So But made we had, If on the we stepped missing and of follow into some the can at past, in let's up taken customers. it. for our have that over couldn't and it look something, it. we I'm happen, the developer benefit contracts they remember, we've -- wind in make it were came project and

why bring to mix we've some table. I take as solicitation, moving utility bit that have want can't you're because the can PPAs But -- step to or do demonstrated and you bids you a just think business it end, but this to keep to I a to cut But continue yourself. points anything mustard that ownership have a reason and to the strong when as in the of you and the next usual. probably you things big see don't going and in over we

Paul Patterson

Okay. okay. change, And don't you any see

So dropping way for significant that and or economics a the anything. might you terms be for there out, the any that? of but seen some or Is it change to in CEP renewable good yes, the because, summarize outlook people development sounds most anything in like haven't part,

Benjamin Fowke

That's absolutely right, Paul.

Paul Patterson

this stuff, a you picking talking seeing just do, of up you the Okay. in beat this or on peaker, discussion, Great. believe is you're sort ground? a the was What of kind that cheap that outlook in guys of quite thing. -- what of just that how RFPs. are we're a lot seeing wondering you there? I'm have storage And I renewables with in than megawatts, on And this know economics the developers coming you mentioned, that big and then guys about sort combined you battery different the discussion general, cheaper under also XXX I CEP. on practically see wondering, your What you since developing are of different seeing

Benjamin Fowke

the for with are bids, question, mentioned Paul, recognized. ITC solar because I asset, parity it's that XX% because great allows -- project. you the very want the with attractive And it to battery That's on and associated be some asset, and you So we seeing put peakers. XXX-megawatt and did solar the with associated

a think fall And fall benefits. storage tax peakers penetration think to saturation. renewables I an the new be to I I much continue for know, overcome price mean X-hour but event. only to continue to like need yes, of we of just the degree than certain time and X-hour, as and on the even because, roll-off will batteries will a price can over on plan you more

the you of you weight more to but very more planning very would you equal off the that are of think basis, give of you traditional to them batteries. of I And load, with value the you in some that. get planning we're batteries shave initial aware a peaker. So technical batteries, peak you too on you, of and lose But start as CT tranches the have penetration viable not

Of as But be grid into will alternatives. our those the course, including peaking and that very all looking plans we batteries baked move replace will the cannot have That's forward. of needs other all at supporting batteries. with roles we're you on clear. grid, reliability, And

Robert Frenzel

with we for we saw at of We will that declines share becoming I Plan. ago don't continue to the do of published with the Obviously, want of price for can solar we if about I'd see storage we you think markets averages, on some highlight for did the and what I numbers storage time. that and that more over fingertips. the and Paul, both midpoints is you to Colorado XX asset how assets, that But is in move those months one on solar-plus and the both solicitation comments solar-only Ben's classes. have you. a we my solicitation, the broad on stuff those details competitive average. But published add a Energy to solicitation thing results

Operator

call the or in Frenzel closing And no like remarks. over with turn any additional queue, I'd to further to back Bob questions the for

Robert Frenzel

Thanks to road earnings call in people for quarter this in second forward participating We our look on the quarter. seeing the morning. third

highlight investor shows a We for and have materials. road queue our we conferences that in quite

group. to Relations, Lastly, we going I'd corporate working Director She with our new joins Investor be Emily and introduce will from and before Ahachich. us Paul depart, forward. our of like She internal Darin strategy

you. to So free questions out please if have feel Thank in anybody reach the you to Relations any Investor or calls.

Benjamin Fowke

you. Thank

Operator

And once Thank call our participation. for for you again, does your conclude today. that

You disconnect. may now

Xcel Energy (XEL) 1 Aug 192019 Q2 Earnings call transcript