The operator introduces the conference call and explains the format. Paul Johnson, Vice President, Treasurer and Investor Relations, welcomes participants and introduces the other members of the management team. They will review the company's second quarter results and recent business developments. The call may contain forward-looking information and non-GAAP measures will be discussed. Bob Frenzel, Chairman, President and Chief Executive Officer, reports that the company had a strong quarter and their long-term business model is doing well.

Xcel Energy is committed to investing in resilient and reliable energy infrastructure and providing clean energy solutions for their customers. They have a strong track record of delivering earnings and have a long-term growth plan in place. Through continuous improvement programs and support of government policies, they have been able to reduce emissions and keep customer bills below industry averages.

Xcel Energy has reaffirmed its 2024 earnings guidance thanks to the commitment of its 11,000 employees. The company is making progress on its clean energy transition through various resource planning and RFP processes. They have issued RFPs for 1,600 megawatts of renewable resources in the Upper Midwest and have active RFPs for over 4,000 megawatts. In Mexico and Texas, commissions have approved 418 megawatts of solar generation. Xcel Energy is also taking steps to reduce wildfire risk, including enhanced daily safety operations and proactive power shutoffs. They have also accelerated pole inspections and are expanding visual coverage with AI-enabled cameras. They expect to have a risk modeling system operational enterprise-wide by the end of the year.

The company has filed an updated wildfire mitigation plan in Colorado that includes enhanced situational awareness, improved meteorology, and the use of new technology. They also plan to file resiliency plans and are working on legislation to protect communities from weather risks. In terms of economic development, they are seeing a shift in long-term electric demand, with 3% annual growth expected, driven by factors such as electrification and data center load.

Xcel Energy's forecast for data center sales is expected to be even higher than previously predicted, with a potential 9% CAGR due to a pipeline of data center requests. They are well-positioned to secure economic data center load with access to low-cost renewable generation and other resources. Additionally, two regulatory outcomes in Colorado will allow for cleaner and more resilient distribution systems, and Xcel Energy has released their 19th sustainability report.

Xcel Energy is committed to delivering essential energy services while driving positive change for the environment and communities. In the second quarter of 2024, the company had earnings of $0.54 per share, with the most significant drivers being revenues from rate cases and riders, higher AFUDC, and natural gas rate cases. However, higher depreciation and amortization, interest charges, and O&M expenses offset these positive drivers. Electric and natural gas sales for the year have decreased and increased respectively, with an updated forecast predicting a 1% increase in electric sales due to expected growth in C&I load in the second half of the year. The company also anticipates continued demand in the C&I sector for the long term.

The company has made progress on their rate case calendar, with settlements reached in Minnesota and Colorado. They have also received approval for a distribution rider in Texas, which will reduce the need for future rate cases. Progress has also been made on the claims process for the Smokehouse Creek wildfire, with settlements reached for 43 out of 141 claims. The company's earnings guidance for 2024 remains unchanged, and they are continuing to invest in clean energy and wildfire mitigation efforts.

The speaker is confident in the company's ability to deliver long-term earnings growth and is now taking questions. The first question is about the wildfires and how the company is mitigating risk. The speaker is proud of the operational efforts to reduce risk and mentions specific plans in Colorado, Texas, and Mexico. They also mention the company's daily capability for wildfire safety operations and how they have learned from the experiences of other organizations in California.

The company believes that there is a strong demand for their investments in risk reduction and they have the support of their states. They also clarify that their assets were not affected by the recent fires in Colorado. The company is seeing a growing opportunity in the data center market, with the most significant growth in Minnesota and Colorado, but also across all their service territories. They have seen a significant increase in customer requests for data centers.

The speaker discusses how they are working with their economic development team to update their long-term sales forecast, which is expected to increase from 2-3% to 4-5% due to high probability loads. They also mention their proactive work with commissions, such as the Minnesota commission, to accommodate economic development opportunities and provide benefits for current customers. They believe that energy-intensive industries, such as data centers, will increasingly locate themselves in areas with lower energy costs and cleaner energy production, which could benefit the areas they serve. This is not currently included in their forecast, but they see it as a potential opportunity for economic development.

Carly Davenport from Goldman Sachs asks about the feedback on the wildfire mitigation plan filed in Colorado and plans for similar filings in other states. Brian Van Abel responds that the response has been positive so far and they are also focusing on developing a system resiliency plan in Texas and New Mexico, with plans for incorporating it into their multiyear rate case in Minnesota.

The speaker thanks the previous questioner and responds to a question about the process for including load growth in the data center pipeline estimate. They explain that they have a contract with QTS and Meta that is included in their five-year forecast, and they also have a near-term pipeline with an 80% probability of coming into their sales forecast. Anything above that is not included in their forecast, but they see it as a huge opportunity. They work closely with their operating companies and economic development team to determine the probability of including load in the forecast. The next questioner, Julien Dumoulin-Smith, congratulates the team and asks about their process for filtering through probability weighting.

The speaker is discussing the process for forecasting and updating sales and capital investment opportunities for the company. They mention a conservative approach and a comprehensive update expected in the third quarter earnings call. They also mention the need to address RFPs and other factors such as wildfire mitigation plans and resiliency and reliability plans. The speaker expects a more detailed update in the fourth quarter.

The speaker discusses the opportunities for resource planning and securing resources through RFPs in different regions. They also mention the recent legislation in Colorado and its potential impact on the company's ROE. The legislation is seen as a positive step towards advancing state policy on beneficial electrification.

The company is planning to file a distribution system plan in November in Colorado, which will help drive investments and accelerate the penetration of renewable energy. This will also help to close the gap in earned ROE and contribute to earnings growth. The company sees the data center trend as a significant opportunity for loan growth and sales, and is considering when to make the leap towards increased earnings.

The speaker discusses the importance of getting contracts right and adding new data centers to benefit customers. There is a need for investment to support large loads, and a sales forecast and capital plan update is expected in Q3. The question of whether there is a need for additional gas-fired generation is addressed, with the speaker mentioning the area's resources for wind and solar and the inclusion of combustion turbines in recent resource plans.

The company has settled 141 claims related to the Smokehouse fire and is moving quickly to resolve them. So far, 43 of the claims have been settled, providing a good data point for reassessing the company's liability of $250 million. The report from the Texas A&M Agralife extension also supports and validates the company's accrual.

The report discussed in this paragraph estimated the economic losses from the fires in Colorado, which totaled $123 million in agricultural damages. This supports the company's assumptions and they will continue to update as more information becomes available. The company is open to settling the case in Colorado, but is also prepared to go through the fully litigated process. The company's primary vehicle for financing will be the ATM, but they may also be opportunistic if a potential block becomes available.

The company plans to focus on ATM as their main strategy, but will also consider issuing equity in the future due to their strong balance sheet. They plan to file for a multiyear plan on the electric side in November and will look for opportunities to settle with parties involved. The potential for 6,700 data centers is sensitive to various regulatory proceedings.

The company's main goal is to serve current and future customers fairly and efficiently. They currently have some capacity available, but would need to add more generation to meet the needs of new customers. They have plans and processes in place to address this growth and have been successful in doing so in the past. In terms of transmission, they are expanding aggressively and have capacity available, but not enough to meet the full needs of 6,700 new customers.

The speaker discusses the company's goal of meeting the transmission generation needs of high probability customers, particularly in the data center industry. They mention that rate design for data centers is approached on a contract-by-contract basis, with the goal of ensuring that current customers are not harmed. The speaker also mentions the potential impact of VPPs on the company's ability to serve data center load in Colorado and other service territories.

Brian Van Abel and Bob Frenzel discuss the potential role of virtual power plants (VPPs) in demand-side management and reducing the risk of wildfires in Colorado. They mention the recent distribution legislation in Colorado and the existing demand response program. They also mention that they do not have a specific quantitative number for the reduction of wildfire risk, but the operational mitigations they have put in place have significantly reduced real-time risk. They hope to further improve their tools and techniques to more precisely manage the risk in the future.

The speakers discuss the Wildfire Mitigation Plan and its goal to use operational tools in a more targeted manner to minimize customer impact. They also mention that the plan will reduce risk similar to other leading utilities in the industry. The call has now ended and the audience is encouraged to contact the Investor Relations team for any further questions.

This summary was generated with AI and may contain some inaccuracies.