XEL - Earnings call transcript Q3 2019

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Operator

Good day and welcome to the Xcel Energy third quarter 2019 earnings conference call. Questions will only be taken from institutional investors. Reporters can contact media relations with inquiries and individual investors and others can reach out to investor relations. Today's conference is being recorded.

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

Paul Johnson

welcome conference and Energy's third XXXX Good to earnings call. quarter morning Xcel

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

addition, answer questions. to have team your members the of In management we available other

on guidance, also developments. This we available update call recent and regulatory earnings you that our financial accompany plans are quarter results, XXXX on website. morning, our third and Slides today's review discuss will update our objectives and business

As that a filings the our our of those comments during contain forward-looking in today's may and reminder, some results with from conference the information. could differ described release call Significant to SEC. are factors anticipated earnings cause

non-GAAP Information ongoing gas in On and natural comparable electric on our measures, including reconciliations today's will earnings that call, we are margins. earnings, measures discuss GAAP and certain included release. are metrics

With that, the turn over Ben. call to I will

Ben Fowke

and thank good morning, Paul everyone. Well, you,

base we per our over earnings years. now earnings. our Let's of Today, with in $X.XX with are range. quarter Three behind year. share updated the year. of start rate base to capital third represents which off This guidance on third investment XXXX our the year X.X%, plan, reflects tradition, quarters deliver half us, of we of quarter $X.XX the to Consistent billion earnings last we per five of $XX share track reported upper have expenditures next of growth compared

we includes our grid of experience, improve as in not gas and and transmission clean maintain plan. transition. combined in at as this reliability additional to base also system Sherco are the renewables in capital likely investment in the a plants. health energy forecast investment advanced the is, reliability also natural opportunities forecast confident included investment facility upside retire additional capital there coal we Our driven This course, to forecast a asset are expenditures customer that ensure cycle our by updated we represents to our initiatives, and The plant continue investment base

guidance initiating consistent XXXX X% EPS also with objective. to $X.XX growth are long per We which $X.XX term of our is share, X% to

excited attractive investors provides customer plan, which very returns low. are about for delivers bills and value, customer We keep our

Next, as its to September, asset coal PPA on acquire me Minnesota let update our brings rate we and cycle plants. retire buyouts the a life, and projects. you to the combined believe plant Mankato our we denied especially Mankato reliability asset. wind tremendous system, as Over proposal the base In Commission the value

we runs assume have as XXXX As a non-regulated with and a result, filed through NSP-Minnesota, PPAs existing which Mankato XXXX. to and acquire the asset

the We acquisition over anticipate will the of generate returns life utility the asset. like

benefits term the However, the are Commission that the be loaded. will generation non-regulated made affiliate we and expect at near approval filings lower expect as wholesale December in or filings FERC Minnesota with in January. we and back-end We returns interest

our PPA can buyout significant We believe benefits. customer that provide strategy

the opportunities beneficial will cost does capital work stakeholders note, our and any will proactively our we a As identify to of acquisition. result, with PPA Please customer to include acquisition continue transaction. incremental benefits the evaluate not and forecast

years. customers are produce PPA would wind front-end for Mower, customers proposed two and these the and as in significant first to back savings Longroad flow our Our acquisitions, PTCs benefits the loaded XX

of the and in Minnesota by the end Mower first the year on decision the half of XXXX. expect We Commission Longroad

continue our We wind important nation-leading in milestones to achieve expansion.

XXXX. by the XXX end project our operation Sagamore megawatts completed development wind slated commercial year New and with phase of Mexico in begin later the construction of to We have this expected

Ridge planned wind back as on the a cost. increased to MISO at project. due interconnection Midwest, developer project In a by had transmission Crowned and megawatts scaled the build-own-transfer Crowned We upper Ridge XXX XXX megawatts

viability While impact renewable address congestion to expand ensure our this it transmission highlight projects. the need forecast, capital the and investment to has future an of immaterial on does

So band back are $X last the utilities again a with we Blues working of Midwest as result, billion over the together we, the XXXX to a projects put like original CapEx and on years. Brothers, Upper in built The are over XX transmission the mission

expect constraints investment in We SPP well. in as similar opportunities Colorado in

investment some and it Energy. need highlights our long in additional not for transmission for for implement While develop to five-year plans, runway time forecast will the take capital the and Xcel

let on regulatory the a update. more call will detail turn over provide me to Bob. Bob? and financial that, and With our outlook He results

Bob Frenzel

of everyone. our We good higher and capital share per share, $X.XX most regulatory to include for earnings quarter The electric and investment. increased the XXXX. and share riders Thanks compared margins gas recorded quarter drivers per by significant earnings per recover third morning $X.XX which natural Ben outcomes various including in with $X.XX earnings

expenses O&M $X.XX Lower increased share. earnings by per

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

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

sales. to Turning

use continued Our and customer cogeneration. large by to X.X%, electric adjusted certain customer X.X% usage offset in sales customer natural discrete per strong sales expected use year-to-date declines reflecting Year-to-date weather of customer. customer increased weather result declined due by as per a adjusted gas growth and higher growth, lower strong

growth, we performance. gas of growth sales XXXX, X% sales natural reflecting anticipate to X% year-to-date For and flat electric relatively

reflecting our our $XX cost decreased fossil expectations, quarterly expenses by plant Turning consistent lower O&M. our to and million, in nuclear And with operations.

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

the second for environmental by as the hot business XX quarter. from to remediation half in as fossil spending our outages And Accordingly, of X% plant to we will year and full of We weather efficiency as the XXXX O&M XXXX increased lower cost and we levels. due decline expect reminder, well nuclear XXXX O&M improvements. in expenses expect a operations impact fourth

provide me let electric rebuttal Earlier regulatory Colorado revised case rate a request. month, update. and Now filed testimony in our our this we quick

equity We ROE commission are test the based on with the a ratio increase Hearings an million new December through start recommended $XXX of January of in with an rate through capital effective and of capital current and seeking a rates now testimony in base. November and an year an with forward filed year an decision Commission current forward XX.X% X% XXXX. equity average an XX of Interveners XXXX a we XX.X% ROE with reach June and test a ratio June and of staff expect XX.X%. reach

cases capital an Mexico and an of of and reach in is $XX rate and also We test increase XX.X% have year Texas. in forward ROE New million with historic seeking a New SPS equity on a Mexico, electric an based XX.XX%. ratio of

phase in Both support increase an much for as based test strong XX.X% not Texas, historic Hale ratio the growth to While $XXX a region. capital cases seeking Project well to year, report. Wind as investments of requests of the equity discovery of is with SPS other largely and an on XX.XX%. in ROE reflect the million are in The an

certificate in As anticipate We mechanisms and effect for and a Texas a final the reminder, Hale. going of previously need recovery New into XXXX. current both rates Mexico commissions granted

to expect sales. the O&M, Turning in In favorability margin fourth earnings guidance. quarter, we and

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

guidance to guidance we to a the range original our $X.XX narrowing are $X.XX upper earnings share, per to result, XXXX As per of the range $X.XX which represents half of share. $X.XX

noted, term which consistent to EPS we are to X%. growth Ben our long our XXXX range earnings $X.XX As objective of of per initiating with $X.XX share, is guidance X%

Please to our the are assumptions is We XXXX on based a highlight I proceedings. in items. of note EPS that assume all earnings constructive couple outcomes in several wanted release. which regulatory detailed guidance

credits We credited impact rate anticipate expect and leap are approximately earnings. which electric impact year. effective no customers natural wind of production tax growth X%, driven an which of and We largely the sales to includes X%, on tax by of gas have approximately

we O&M Please wind coming reflects jurisdiction savings. Finally, riders most fuel in increase to projects increased cost O&M wind by and online. which recovered expect X%, offset expenses note, is is for new

find support customers. annual base. continued In to details reflects about release, XXXX and customer growth in updated more our base plan X.X% rate using our and in you will our a reliability, an generation $XX results investments growth, of safety forecast of metering which renewable earnings improvements The capital for as enablement capital billion, approximately five-year the automated

the growth the X.X%, Importantly, maintain year. we XXXX if be base would as would rate base rate

dividend and term long of and Our deliver updated objective the our EPS capital to half X% in plan X% range. investment of our supportive is growth the upper goal earnings to growth

reflects debt to and updated cash capital also company We combination of finance majority of operating have which our plan the internal a our holding company expenditures. financing and generation

In fund credit to incremental approximately plan The three we reflects market forecast. as This our XXXX our credit which issue of support previous us and $X the benefit capital million benefits investment the $X.X our equity and access billion to period maintaining will capital to XXXX capital markets. to plan fund ratings. our accretive addition, for next solid of equity billion years incremental incremental with over DRIP of of expect customers capital compared and and equity metrics our while $XXX the favorable to financial opportunities, capital allow investments

With that, will I wrap up.

We in development PPA announced our with buyout Mower our are strategy progress efforts to make project. continuing recently wind on the

forward long strong due the going with provides are term. the the the to acquisition asset We over Mankato value

earnings of to guidance half deliver the well-positioned XXXX are range. We earnings in upper our

program, announced transparent growth investment strong and capital base a robust value. customer have updated provides We rate which

$X.XX, EPS which objective. $X.XX consistent guidance initiated our of have term We long to with XXXX is

very EPS that the objective our of X% can deliver Finally, to growth confident upper range. we X% in we long term half are

operator, our take a prepared questions. This concludes few remarks. we And will

Operator

first will [Operator with Greg take Instructions]. we question Gordon Evercore. from our And

Greg Gordon

guys. Great outlook Thanks.

questions. couple a Just

lower flex about today? range outcomes a results have sort when direction the of You And how range? for got might you in think on potential contemplate that pending. be of are the you financial things think that of we of influence modestly And do with on you guidance you this of where than equity, the do return terms rates low that might about rate ROEs lot interest like still travel when cases

Ben Fowke

Greg, great risk recognize that's do mean have incorporated modest have into think, our a for which question. that we we I we I some range.

of a got lot things we going us. think for I

our all, First with are with commissions very energy support clean their good transition. that. we doing have on to aligned of we are what much the It's with

of above point today. data ROE. some at kind we And cases points I you on it, have if market think of second we you that to then think about look decided certainly some if all, the reasonable of ROEs a recently, don't have finally, they

So we course. we everything always And I for with very know ask we don't the think have are guidance for, we of us. we comfortable set

Greg Gordon

only a my question. Have was That day. great you. Okay. Thank

Ben Fowke

Greg. Thanks

Operator

Turnure Moving with on, from will JPMorgan. we hear Christopher

Ben Fowke

morning Good Chris.

Christopher Turnure

Good morning an maybe guys older Increasing investment Ben Bob. a a of a and bit little newer to of or theme kind for return you theme. is transmission

if here, investments the really the tail wondering you is here? plan Just degree needed projects this being kind three regulatory higher guess, are of or know there upside larger And of off risk that in size those I numbers? to two to renewable due is I but next successful renewables approvals are years, there to that or to your

Ben Fowke

sync which scheduled this last our because two very renewables coal Chris, expect that's have plan. will as when know, as that guess we significant, mid-XXXXs I renewable plants up the don't and portfolio question. parts through. with And IRP in the round you we the next part, be renewables, that's retire come to Well, any will to of to try we

we and we infrastructure of is of in talking One it's consumer bills the approval our the together we isn't investment benefits to there. health. we program is the headroom the to the Fuel have already do referred to the Steel this support on are again. investment for require have to created about, with Chris, more had the we reliability. regulatory is, is that going back getting asset out because not big have really grid are This the said some band I This transmission when I lines renewables And

Christopher Turnure

kind the Okay. to the give Can five-year then to incremental And as billion sense the range? of you of a That's needs maybe are structure that and over the $X hear. technically plan. timing good of within five-year us equity

Bob Frenzel

I remarks prepared three historically of it my in do Chris, the looked Yes. at probably company we next the and would years a mentioned has different over bunch products.

ATM used have We programs.

deals have in past. We used block the

various mix a we at of look I think products.

one than it obviously in offering. think will come more I

I our just look we years. three needs about as will so next with forward over And execute think in cash will and it the we we it measured be line

Christopher Turnure

that for Okay. Thanks guys.

Ben Fowke

Thank you.

Operator

we with And Agha take next Robinson Ali from will a up, SunTrust Humphrey. question

Ali Agha

morning. Thank you. Good

Ben Fowke

morning. Good

Ali Agha

when may I that five-year obviously it have at the you at right CapEx, missed billion forward. $XX you roll Ben, opening but look

So apples-to-apples talked your that the to what's then have years laid past, everything your the And in even and for it in have time, This you about in not you But out, your the like it's both, et with last are five-year. the plan quantified numbers? is main one plan. base complete cetera. looks upside plan upside

projects number. approved certain Or go? to now placeholders these ready of $XX all billion are and are this there So in

Ben Fowke

on. part, stuff for think this the most I can we know execute is we

are call, have you invest lot willingness normal really to those with I sorts consumer previous our in investments the for are distribution of I things to at opportunities the have business. mentioned always And we the said, grid. those that spend, know, pay. and that of capped as of course always a the the transmission As are

So things to you we headroom. do the create take like commodity our Steel efficiency and initiatives Fuel that and advantage extent prices, falling of for can

billion. So we are in the confident quite $XX

about and Now me wanted forecast? you second I know if wrong, capital am correct part I in think was the to your upsides

Ali Agha

billion, case, two-part existing it guess well. versus in then $XX like have your gone case. I you this kind upside out CapEx? when don't last what put a base And were as you your Yes. thinking you had of was time has up what One,

one in all plan? now everything is So

Bob Frenzel

Bob. is this Ali, Yes.

simple of this I operations that's of their we think time have way And investor recognize under-forecasted lot to everything businesses looking years asset it in year the for into the to and right to and think at it. make plan get easy about back our structurally with single understand. the items. plan, a that trying We needs we the think may the to in some spent I a

you compilation projects company are in identify identified So the of I back six what of plan probably is worth months think have not the in that might of to gotten by previous maybe the plans. seeing good work the here trying part

aren't may plan. I there and comments I we in have this Ben I unidentified. are melded items think have we I called base though think going So on to think was what think historically do upside and and or that embedded upside

buyout opportunities XX,XXX we is continuation megawatts think I a $XX think acquisitions. Ben mentioned there in company the think one We we there third-party beneficial which today that XX,XXX, of have the still PPA of PPAs included of got our find to is that's from billion. out customer strategy. procures and None owners that

Ali Agha

you. Got

Ben Fowke

still to renewables come is process, And renewables we they IRP forecast not put are there into it's believe add some clear capital upside. be while usually a which of we yet our some opportunities that but might identified just out why

Ali Agha

third a other one sales And quarterly you. When on negative. normalized Got pattern, a out pretty big broken at look we question. quarter your trends I weather saw

two on side. electric trending the through You first sale had been the quarters positive

that anything caused the So third in negative changed has run the that quarter?

Ben Fowke

a at will maybe Bob stab I will augment it and take it.

had We generating when self remarks, we we First And you as that about think When bit in his as have a tell knew was don't that of off, of know, Bob some a quarters, don't that C&I we through did have have that were customers we But cetera. tell et trend. that as we mentioned trend. take did you it. all, cogen, little we planned. good

big So that's there. issue the

Bob Frenzel

the to and that Wisconsin, fracing competing the thing sand only of gas some softness I the softness is, attributable broadly. in some seen markets to it country the have products some in industry mining add Ali, we Yes. around and in would

Ali Agha

Thank you. Got you.

Ben Fowke

you. Thank

Operator

from with Next Angie Macquarie. question comes Storozynski

Angie Storozynski

Thank you.

Okay.

Should prepared So you one on it? question. there settlement you October deadline didn't still In a filing. that about for comment an in remarks, potential case. is Could your you mention anything expect I rate that? Colorado see XX we

Ben Fowke

settlement would we that after rebuttal. time the the listen, get discussions, Well, entering would be Angie,

done as we now or the been you in there that's period don't the it's some week anything think, for report And outreach to hearing, first would. thinking and have has scheduled to So November. but work I some know, and you we of being

in So report, would tell you. timeframe. we will that something if up we to something come But maybe have

Angie Storozynski

Okay. PPAs on base you into non-regulated you renewables? And existing And surprise. those secondly, by at me about a be Or are caught this those Mankato basis, unregulated? acquisition also converting buyouts of PPAs. basically Would talking least are rate mentioning renewable

Ben Fowke

to going is find let's beneficial to offer PPAs customer customers. our approach acquisition our let's always Well, opportunities be, them through and

the commission In we they always it case too variances is plan they put were modeled Mankato, in department the back-end in base. and them the in want benefits the benefits that to some decided didn't and our base. so those of And rate that ultimately loaded, decided rate how

However, valuable portfolio. it believe that very belongs a we still it's asset and in our

didn't with this want think that went forward have bring approach. We not Plan commissions be wouldn't But depending we or always something along situation. A. to So disputes then this. had We If always we isn't a in adjust we there's to to change the Plan see else. that customer non-regulated strategy anything a a Angie, to way, to base on our B, But benefit. going that's the

Bob Frenzel

companies, contracts are to these PPA the of regulated one case long-dated all Angie, in NSP-M. from operating asset still this our

transaction. do we credit like So optics of like do the the the counterparty. We

customers I think for and shareholders alike. it works

with And expect the should so move one. you Mankato us forward to

to own in On them base. rate the wind preference our projects, is

and I them. their strategic customers good a said, preemptive just as It's we are are recognition made move wholesale they again, serve I that we don't this a of our own to customers. as to willing assets those a well. at to really if don't, shift. they have FERC But think But Ben beneficial is for filing the

Ben Fowke

still we Bob And opportunities. opportunities, mentioned, plenty in see find states, are just those or not one to PPA course, of buyout Yes. we two. as previously And of eight

our across are of all jurisdictions. they So

Angie Storozynski

a are and these that just types a it just as out was would you of It's that that as are that that regulated from and at the one-off. in a see acting I similar because acquisitions, I your we sign situation typically investor of here least that's to take And here, least that's It's But financial a obviously just not explanation. options contract I seemingly perspective. economics, could at a sense, accept you base you what's when a an profile, growth exceptional base understand the running that growth are be in superior case risk basically saying Mankato here? that

Ben Fowke

Well, Angie, think I continue to organic billion grow we our of that the forecast the growth period, the I opportunities even system. transparent have system is will see excellent to we think put have we forth which beyond tell you, and most $XX the we to

keep to headroom like create are can so that investments Fuel Steel We overburden customers. not and with low we bills things make for those

I important buyout think a which capital robust base change. very to that's plan. PPA is a is And very pure strategic a not strategies consideration. this upside The

these the there And front-end benefits commission. other proposals own I The over to renewables see Bob front very opportunities in gas. going on look in in as situation not to there have to a Minnesota are investor. is, where some come differences two are us preference benefits. modeling mentioned, You is much we loaded. for is a This wind think of had we financial difference the

proud we think So we of we the vertically play pure regulated goes. again, quite utility will are integrated see But where are. that I

Angie Storozynski

Thank you. Awesome.

Ben Fowke

Angie. you Thank

Operator

will we with Research. from Steve Next, Wolfe hear Fleishman

Ben Fowke

Steve. Hi

Steve Fleishman

morning. Good Hi.

on up is? is in access? it situation little MISO just to more needed and renewables just what talk may the congested is renewables Just what could And with a transmission cost you on your reasonable happening region have bit more be how

Ben Fowke

that long to work squeeze sure renewables up looking as to That door going your point, is are the XXXX in will come building of the we think next transmission for make two renewables, Steve, I And if into in region at And Well, did the we opened term, transmission do development and those of well. are interim the to some some market. the of with it's are opportunities. have think see continue you the get a in opportunities constrained. out, we need help that the MISO lot we will, with said, but CapEx that years the to to more can to available course, starting, transmission we we I capacity

Steve Fleishman

expand new this where Is can something you access need on of areas? transmission Or you kind existing get you of Okay. footprints? kind to

Ben Fowke

Well, and lot obviously is rules market certainly work FERC and transmission to on relates I the of the think some there existing there new how opportunities done be that with that. repurposing will I think a around in

Steve Fleishman

Okay.

Bob Frenzel

together, longer transmission on XXXX successful longer Steve, term, think, on came getting plan are CapEx consortium working said we and that formulate issue term I was executed a band that we together of this MISO in Ben is And are owners and and the a very back a successfully. very

going transmission is more current not probably this partnership I group where three, XX release ago years that to access. term a our put come in regional. capital with it MISO press with see in be is think but going together. longer solutions to five on that much through are we They four for like trying And back more up plan out in to weeks

regional more see you exactly about. to talking enable are what to expect We transmission

Ben Fowke

It coal to retire does sync plants. our up very plans nicely to

by towards than MISO, best more far a emphasis, better our which planning you initial So source. Steve, be the solar the wind, capacity, which on which tranches leads energy will is particularly type will have heavily if

Steve Fleishman

sounds really then think Colorado the it case, you settlement just and like really about talk And can't is in Okay. or next whether like on the the I week two timeline by something then you not should able going if don't able be to are assume are you we to going settle? not. probably be or settle we But then, see to to

Ben Fowke

timeframe have you the think I Well, right.

after right but rebuttal before is settlement for hearing. time So

would. that window in not If report, got something to interested to two pursuing have But I you a we that don't done. settlement. week try get want or we I So think to I had are to definitive something

Ben Fowke

first December new a is from are in settlement, also in the rates benefit there in Commission to expected is there perspective, a timing November. hearings real but decision the and is week Steve, January.

of is anyway So when the go terms rates. we relatively to in hearing from timeline final compressed

the itself a not is clock So driver.

Steve Fleishman

Okay. Thank you.

Operator

will America of from Bank Julien Merrill come question Dumoulin-Smith Next Lynch. with

Julien Dumoulin-Smith

team. morning Good Hi.

Ben Fowke

Hi Julien.

Julien Dumoulin-Smith

real can Hi, on the howdy. Perhaps just Interconnection if around follow-up issues the set of piece. quickly queue just have transmission I MISO last on questions and of late. accelerating been sounds effort. guys on working you about bit are timeline? a You MISO like XXXX about talking about this It you this. is transmission really talk Can talk little the MVP again.

We you from or your utilities. But what other have next even in little play look how XX does the five bit in the process would this planning at heard the months, whether peer process Again more talk this Can this peers elaborate process? XX on to with out? year that a plan. tangibly like, you MISO about and

Bob Frenzel

is there MISO a around of think uncertainty, still bit I the Julien, transmission process. planning

in obviously of process. participating and are them a We large are with MISO the transmission owner

in of it call this I together CapEx the still timelines quick XXXX might in very studies think how for terms early getting is and a back days progress. this I don't group, is own identifying group, its will Our process. engineering

to I getting into through before and real think we capital timeframes. least plans five construction this is at start planning years going take

well terms is up and in terms And in significant with the months don't MISO to assessed of are XX we SPP so being I backed as XX and to congestion region. congestion the queues just in projects something to year that seeing next being in similar stuff going And want suggest in upgrade costs. of change

Ben Fowke

of does first of get And built, Julien, we key remember states. some pretty when attractive have our in refusal legislation this right

too utilize other details, existing our do So transmission. and excited we bill about And are some getting the opportunities meantime. transmission see to access down slow queue in the not at the we in without opportunities specific to existing the plan

Julien Dumoulin-Smith

there a to go to or I talk you just this proposed? angle said if decision gas the suppose Can decision? the Excellent. be was it? might about this reaction behind would initial versus question. Angie understanding be with think this type. Obviously here she elaborate that surprised. of context of in I thinking on before, respect And others you Mankato my to specific the Is the bit more I focused terms fuel stuff a characterize more How it renewable versus can little back was any

Ben Fowke

it's weighing mean, of benefits. I the the just Well,

I think and the are make more also it with process. renewables consistent modeling gas, as department comes to the than with to a we sure definitely our the preference we commission working but have a we down into have I approach think IRP modeling go

think important, Julien. that's I

in But our customers back, Mankato for by always asset. it just want we step We We to of Mankato let our and me are walk to have from would shareholders. owned that's good the didn't But preference think prefer that's strategy. IRRs core want portfolio. we because the away first this our

our a will to And regulated but will are bad so commission in portfolio prefer ownership ownership, I think that what I side, but tell going it's not on comfortable am will shareholders with with projects, benefit does the either. and wind we speculate on see the what we not the, you I

a buyouts Colorado in opportunities megawatts, these and came am eight other XX,XXX And other so in had But states. PPA we we they not I And and are remember, just strategic when Bob remember, question, want answering in before are Calpine talks having across about initial I your it happens, hope just change. Minnesota. to And are states. there I reiterate all

focused growth the are the the as we Upper regulated to a opportunities Texas. have Midwest all way on down We definitely great utility in organic

Julien Dumoulin-Smith

it. I guys Well, thank appreciate right. very Awesome. much. All you

Ben Fowke

you. Thank

Operator

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

Travis Miller

Good morning. Thank you.

Ben Fowke

Travis. Hi

Travis Miller

Hi.

So versus utility? ParentCo do project the structure that just quick of to potential here subject on there. versus financing any stick on Would different real the you in PPA growth buyouts and terms

Bob Frenzel

Hi Travis, this is Bob.

with is mix to I think parent company finance company, of our equity. holding base debt a and at company parent plan the

any these is of I structure look capital long assets. at right think our way term the to

we So ratio about XX/XX debt think is to financing how the business. equity

Travis Miller

Okay. then XXXX in on you guys for how terms seeing industry guys wonder the policy to I the time fill think in the tax period? if same XXXX the tax that and in also if parts Great. the holes for broadly? of do both across then PTCs, credits you you And about for and those the could those what those are basis and talk a holistic stays solar industry ITC we How and

Ben Fowke

the that Well, they accelerated want at that's our why have the pedal put PTC level. and wind reasons the in the XXX% really for a at of expansion Fuel the biggest before It's we in Steel question. did now great those one XX% on even program because credits country and expired down lock to level the we we and

You are right.

industry time wind will to frankly, when a adjust take the the quite think roll-off. I little PTCs Travis,

there they course, chance a is won't. Of

this to of is approach the solar Our the think solar I that quickly. to pretty on continues decline curve cost piece

the ITC so we And very, most offset the in we gains of by than in the the absence retirement plants itself that of mid-XXXX. think it very nicely and think solar more to the even just anyway or of be our of coal roll-off will that of times

wait ITC So legislation, need again, more cost et we change anything the that. think see than we a because And will cetera the don't lock if offset out to see will might reduction. we to in clearly go is curve and there

Travis Miller

XXXX? solar lot real the just of of solar been quick, here, have and wind a extreme XXXX talking exiting, what then and know has other been guys a you Being lot beyond saves a about Okay. companies a follow-up. And I investment. little but

Ben Fowke

off capacity think attractively the And will and think will an nicely you wind I more will think and on I system, And I Well, priced. against energy basis. recover find always all, first comes the more might bit. on will solar that compete a fall solar wind of as little planning very be

to just think going focus are as so we happen coal We retiring to to our be want plants. always on solar I So is there. wind

some has advantages. Solar

farmers and Just know, we up come had I get have think gosh, on land, we if have might gone about farm it, you under. wind our me to we say, a didn't

going you still you the have there. a farm So land wind when project

repurposed. so then, shines. basically sun different wind not mean much. I And is are with characteristics blows the the Solar, of when land versus you there the being when course,

is going to transition I I each very And wind And the think will clean indefinitely. nicely. so two our in there energy other think complement

Travis Miller

Great. your Okay. appreciate Thanks. thoughts. I

Ben Fowke

Just one comment on that too.

to belt You have States. of the wind remember, the in are got United we

for the our of one Fuel it's reasons so strategies well. work why So Steel

are going advantage. And inherent that so always we have to

Travis Miller

Yes.

you. Thank Okay.

Operator

Mizuho. Our next Fremont from come will with question Paul

Ben Fowke

morning Good Paul.

Paul Fremont

beat your dead that of in Colorado, in Thanks. the but settlement improve, case? that revised you mind, your to ask when in possibility Not to horse reaching does a death,

Ben Fowke

short answer Yes. The is yes.

Paul Fremont

Okay.

Ben Fowke

Look, if to we we with not we a are but explicitly, for can did something distinct I possibilities what we you have at what case, at you possibility, are in look talk you asking look the there. versus about rebuttals,

Paul Fremont

fair? acquisition the I would CapEx Okay. that Is for guess done Mankato Power of that And entity. non-regulated that number couple be previously I am for on of through down had of revision. the you XXXX States Northern questions would $XXX assuming come the then an a because million by sort

Bob Frenzel

Yes. is Paul, this Bob.

assumption, to the that's the correct. assumption, capital asset. capital the that still For rate are we spend base going procure But for to

Paul Fremont

Right.

would like other, it So assume? go to would I right,

Bob Frenzel

Correct.

Paul Fremont

Okay.

Bob Frenzel

way to That's it. think about the

Paul Fremont

pickup XXXX. for million Can like is sort us a looks driving that? you of it there Northern And in Power Minnesota what's $XXX States give then

Bob Frenzel

I think years. across is driver of largest plan wind that of movements sort the

have we build-own-transfer So to our with a project Cheyenne project. going previously were wind

built And We XXXX of PTC. bunch ourselves. moved are of from it to some for In XXXX XXX% build wind time XXXX. to get going into capital the into XXXX, that moved we has that in a

guidance XXXX probably total, In the territory. line that's NSPM be for to And in the $X.X is expected pickup capital of bigger in with our billion. so original

Paul Fremont

spend in $X billion of almost as another us then is driving XXXX. And there that? sort what's Can some pickup give in ideas of to big your you

Bob Frenzel

think about it's distribution as big and gas and grid that's spending for spend networks. year our when initiatives. that picture, Ben dollars in transmission, network a our lot well. of advanced start And lot for us gas investments I for big That's a the networks in the of additional talked we

or So lot over spent the four again, last money a years. of renewables in we three

carefully We and and of seen have the networks both are have a we at there. amount created bill need businesses opportunity little significant more headroom to look we and customer a starting

Paul Fremont

Great.

think that's in it questions. terms I of

Operator

Karp Markets. with from And KeyBanc our come will next question Sophie Capital

Sophie Karp

that think morning. consideration coming your approach strategy Minnesota you was regulatory a the and rate wondering Is I I any there in docket state? is and Good up. my would for changing taking Thank Is Mankato question, case maybe you there Hi. that following have just you about differently?

Ben Fowke

to see in the with controversial week No, interim don't of think I that. so. first rates plan don't file November. anything for I We too

We expect the case. will the And strategy we process constructive sure, not rates we then we still to go with outcome. a our place. into I expect same am see the alignment and

want make sure I So that I your answers Sophie. did. to question,

Sophie Karp

Yes.

your rate doing color Mankato sounds asset merchant like the don't you proceeding that are expect to acquisition now it as in anyway? you case So

Ben Fowke

relationship not and at lot there the around relationship. no a the all do. a was no No, But all. upon strain It's we think deciding there just is No, difference We is benefit enough still in of of that. reflection think benefit. don't commission strained at there

Sophie Karp

you. Thank Great.

Operator

with Next, Associates. we will Glenrock from Paul hear Patterson

Paul Patterson

Hi. Good morning. doing. How are you

Ben Fowke

morning. Good

Paul Patterson

to transmission. with the So you base touch I on wanted

recently commissioners from really Order the concerned As as you competition you been order well, there have in that voices we out providing in would wanted out an the containment And worked comments and about they the I have certain FERC it level had and as thought guess, that what XXXX know, cost to. have area. of some some of FERC terms they put hasn't

outlook wondering issue with competition to just talk associated could think order touching And concern? so, How FERC I related week, this that if think we you on what should the about be a you those well how And might sort about we well. had transmission? as or of last in was respect reported was I as to see with this it issues

Ben Fowke

utilities with everything is, real sizes and getting idea about and I of trying process biggest coming which that's with done, think course to you then getting transmission a it and I municipalities is not was that would look transmission don't it cost really really of think competitive the else XXXX, plan the CapEx co-ops if to is And accomplished, fact, be the Well, In how an the permitting good that. build what barriers allocated the transmission form a to build, as all together and works mentioned. we at that to barrier are of because question. get goes with was I that who pays done for

not personal of whole mentioned, necessary really my clouds think opinion, that is refusal as we process you goes. it's Paul, where see that Minnesota. FERC I I a XXXX So it that got first as and right will have and But in and know, we

We it jurisdictions. in have other

We in are not RTO Colorado. an

get that. And are being time we takes get realistic built. to I will we some the advantages built. it transmission to real think it there is this in But

Paul Patterson

Thanks. Great. Okay.

Ben Fowke

Thank you.

Operator

And with next, we Murti Capital. will hear from Vedula Avon

Ben Fowke

Hi Vedula.

Vedula Murti

to little wanted discussion Just are follow-up Mankato bit having. the we on

You from strong the terms just terms picking choosing you referenced have capital versus capital opportunities across in capital system other internal it of more allocation of in does this allocation? the IRRs. perspective How compete

Ben Fowke

Well, certainly, the returns certainly attractive capital as our the of and result. from are an is project Mankato a a shareholders' above cost perspective

Bob, if anything add I don't you to to know that? want

Bob Frenzel

No.

utility expectations I looks think asset, over consolidated the of the it the like returns. life are like our corporate return

otherwise, bit We structure the a just on back-end, little I contracts. with of higher bit agree comments. on lower the that a and it's have given little stated the front-end Ben's the But

Ben Fowke

life, towards anti-gas And that existing are I over that Let me opinion, very, we the makes trend we with that and reliability. assets very do plants when modeling. utility keenly conservative coal our returns about think is we on just are valuable. talk the in like retiring gas add focused

portfolio it and that this the keep going we to it of CC is gas plant really very existing conservatively. our thought I So modeled was to because value is very, think a grow we assets that important Vedula, only in

it's So from why away reason one. walk want not to we did this

Vedula Murti

much. Okay. Thank you very

Operator

further turn Frenzel the to closing I will no back are There conference Bob for questions. remarks.

Bob Frenzel

participation very today. our call much Thank you for in your

relations. investor any questions, have you if always, As please follow-up with

Operator

today's your that We participation. thank conclude And you conference. ladies gentlemen, does and for

now may disconnect. You

Xcel Energy (XEL) 24 Oct 192019 Q3 Earnings call transcript