The paragraph is an introduction to Xcel Energy's Third Quarter 2024 Earnings Call, led by Melissa, the coordinator. The call features Paul Johnson, Vice President of Treasury and Investor Relations, along with Bob Frenzel and Brian Van Abel from the executive team. They will discuss the third quarter results, business and regulatory updates, capital and financing plans, and provide 2025 guidance. The presentation includes forward-looking information and non-GAAP measures. The paragraph notes a $46 million disallowance by the Minnesota Commission for 2011 Sherco plant outage costs, leading to a $35 million charge in Q3, in addition to a previous $11 million charge in Q2, both excluded from the earnings for being nonrecurring.

In the third quarter of 2024, Xcel Energy reported GAAP earnings of $1.21 per share and ongoing earnings of $1.25 per share, focusing on the latter in their earnings call. Bob Frenzel highlighted the company's solid operational and financial progress, emphasizing investments of $2 billion in energy infrastructure aimed at cleaner and more resilient power solutions. The company prides itself on industry-leading storm response, strong customer reliability, and wildfire risk reduction efforts. As a clean energy leader, Xcel Energy has been a top wind energy provider for over two decades and aims to continue this trajectory. With a long-term growth plan, the company focuses on clean generation, grid enhancements, and economic development, maintaining a 19-year record of meeting earnings guidance.

Since 2020, the company has achieved substantial savings and improved outcomes through continuous improvement programs, saving nearly $0.5 billion in O&M expenses and keeping costs below inflation. Their Steel for Fuel strategy has delivered over $4 billion in customer savings since 2017. They've managed to keep residential bills significantly lower than industry averages. Currently, they are ahead of 2023 earnings expectations and have set earnings guidance for 2024 and 2025. The company also unveiled a $45 billion capital investment plan focusing on clean energy, customer electrification, new load growth, and safety and reliability. They are addressing the rising demand, including having nearly 9,000 megawatts of potential opportunities from data centers by 2030.

The paragraph discusses Xcel Energy's strategic expansion and partnerships in the data center sector, aiming to secure contracts for 25% of its pipeline over five years while facilitating economic growth through decarbonization. Notable partnerships include agreements with Meta, QTS, and land transactions with Microsoft. The company is finalizing a new data center contract and progressing on its clean energy transition, notably in the Upper Midwest with investments in natural gas, batteries, and plans for 4,200 megawatts of renewable energy. A decision on this settlement by the Minnesota Commission is expected in early 2025. Additionally, a new energy resource proposal was filed in Colorado.

The paragraph outlines Xcel Energy's efforts to transition to renewable energy by projecting a need for 14,000 megawatts of new generation to phase out coal plants by 2026. It highlights the company's response to extreme weather in Minnesota and Wisconsin, with employees restoring power to 250,000 customers after storms. The company is also involved in mutual aid for hurricane recovery and wildfire risk reduction, with a Texas resiliency plan forthcoming. Additionally, during their annual day of service, Xcel Energy engaged nearly 2,200 volunteers to support nonprofit projects across eight states.

The paragraph discusses Xcel Energy's financial results for the third quarter of 2024, highlighting ongoing earnings of $1.25 per share, slightly up from $1.23 per share in 2023. Key earnings drivers were positive outcomes from rate cases and nonfuel riders, alongside higher AFUDC, which were partially offset by increased O&M expenses, higher depreciation, and rising interest charges. Electric sales for the third quarter increased by 1.3% after weather adjustment, and the company reaffirms its 1% growth guidance for the year. The five-year plan projects 5% annual electric sales growth, primarily fueled by data centers and sectors like oil, gas, and electric vehicles. Year-to-date O&M expenses grew by $58 million due to increased generation maintenance and other operational costs.

The paragraph discusses several financial updates and future plans for the company. The company is experiencing increased costs due to its recent excess liability insurance renewal and has adjusted its operation and maintenance forecast to a 3% to 4% increase for the year relative to 2023. Progress was made on several rate cases, including a finalized natural gas rate case in Colorado with an estimated $130 million increase. The company plans to file a $490 million Minnesota Electric Rate Case with a 10.3% ROE in early November. They are also addressing the Smokehouse Creek wildfire claims, settling 86 out of 179, with no change to the $215 million accrued liability. The company has $500 million in insurance coverage for the fire. Additionally, they updated a $45 billion five-year capital expenditure forecast with a 9.4% annual rate base growth, with potential additional investments exceeding $10 billion. These investments aim to meet electric demand, clean energy goals, and system reliability and safety.

The company is adjusting its financial strategy to support growth and clean energy transition efforts. It plans to fund incremental capital investments with a 40% equity and 60% debt mix, maintaining its balanced financing approach. This year, $1.1 billion of equity was issued outside its 2025-2029 financing plan to uphold credit quality. The company reaffirms its 2024 earnings guidance and sets a 2025 guidance reflecting 7% growth. Long-term EPS growth is updated to 6%-8%, with a focus on the upper half, while dividend growth is adjusted to 4%-6% to retain cash for growth and reduce equity funding needs. Maintaining strong credit ratings and access to capital markets is emphasized.

The paragraph provides a summary of a company's recent achievements and future plans. The company has reached a settlement in its Minnesota resource plan and submitted its latest Colorado resource plan, aiming to lead in clean energy transition while ensuring customer affordability and economic growth. Progress has been made on wildfire mitigation, and a new capital investment program was announced to ensure rate base growth and customer value. A balanced financing plan has been provided to support growth while maintaining a strong balance sheet. The company is on track to meet its 2024 and 2025 earnings guidance and has revised its long-term earnings and dividend growth objectives. The remarks conclude as they open the floor for questions, and Nicholas Campanella from Barclays inquires about a customer land acquisition and its implications on load growth outlook and rate design.

The paragraph discusses ongoing negotiations and progress in establishing a services agreement with an undisclosed customer related to a data center in Minnesota. These efforts are seen as beneficial for economic growth and for all customers. A planning session involving the Minnesota Commission and other stakeholders took place to accelerate data center support. Bob Frenzel mentions that about 25% of a planned 9,000 megawatts is included in their five-year sales forecast, with the data center project being part of it. Nicholas Campanella asks a follow-up question about the pricing of $1.1 billion and whether they have completed their financing for the year or reduced risks for their five-year plan.

In the discussion, Brian Van Abel addresses a question from Nick regarding their equity issuance strategy, mentioning that they completed about $1 billion of ATM issuance in Q3, which meets their equity needs for the year. They remain open to other options if opportunities arise. Steve Fleishman then inquires about the disparity between the increase in CapEx and equity. Van Abel explains that although investor guidance typically suggests a 40%-60% mix, factors such as improved cash flows and the timing of capital affect their approach. Additionally, lowering the dividend growth rate provides more flexibility and stability in credit metrics.

In the paragraph, Bob Frenzel discusses the company's wildfire mitigation efforts, highlighting their progress since March. They have enhanced power line safety settings and improved Public Safety Power Shutoffs (PSPS) execution to protect customers and communities. They've also focused on system hardening and segmentation, drawing lessons from peers in California. They are working on improving situational awareness and customer alert systems and have invested in AI cameras to aid in these efforts.

The paragraph discusses the company's efforts to incorporate weather station data and other data feeds to improve system resiliency, particularly in the context of wildfire risks in Colorado and Texas. They plan to accelerate pole inspections, replacements, and vegetation management to protect the system in the short term and ensure long-term resilience. Brian Van Abel mentions that insurance premiums have increased, and the company is seeking regulatory deferral approval in Colorado and discussing excess liability premiums with peers in Texas. Constructive regulatory outcomes are included in their 2025 guidance, with a focus on cost recovery related to their wildfire mitigation plan. The paragraph concludes with a transition to a question from Carly Davenport of Goldman Sachs.

The paragraph is a discussion between Carly Davenport and Brian Van Abel about a $6 billion capital increase and a 40 basis point increase in the rate base compound annual growth rate (CAGR). Brian confirms that the increase is due to rolling forward a larger base over the next five years with no other influencing factors. Carly then asks about the 5% new load growth forecast, particularly regarding data centers. Brian explains that the growth will be back-end loaded, with a 3% sales guidance in 2025, expected to rise to 5%-8% in subsequent years, peaking in 2020. This growth is fueled by data centers, oil and gas growth from the Permian Basin, and beneficial electrification in Colorado. The conversation concludes with a transition to the next question from Jeremy Tonet with JPMorgan, who greets with a "Happy Halloween."

In this paragraph, Brian Van Abel discusses the company's potential for growth, highlighting two main areas of focus: the wires business and transitioning from coal to other energy sources. He outlines a strong growth plan centered on safety and resiliency in their wires business, which contributes significantly to the overall growth rate. Additionally, there are substantial opportunities linked to retiring coal plants and expanding electric growth, necessitating up to 30,000 megawatts of new generation by 2030. The company has demonstrated competitiveness through recent RFP processes, indicating confidence in their ability to execute projects worth at least $10 billion. Overall, there is optimism about achieving higher than projected growth rates in the coming years.

The paragraph discusses various projects and opportunities related to incremental capital expenditures (CapEx) over the next 12 to 24 months. Brian Van Abel outlines several key initiatives: the MISO tranche 2.1 and SPP, ITP, both representing around $2 billion in transmission projects requiring regulatory approval. Additionally, the SPS RFP involves 5,000 to 10,000 megawatts with bids expected by January and insights available by Q2 next year. The Minnesota resource plan decision is anticipated in Q1, and the Colorado resource plan is underway, potentially involving up to 14,000 megawatts. Execution opportunities are expected to continue over the next two years. Bob Frenzel expresses his excitement about these developments.

The paragraph discusses the company's progress in its energy transition, highlighting the proactive removal of coal plants and their replacement with cleaner, often more cost-effective generation resources. The in-house development team, initiated with the 2017 "steel for fuel" plan, has been instrumental. The company also leads in building new transmission lines nationwide, with significant projects like the Colorado Power Pathway and others in the Southwest. Jeremy Tonet acknowledges the exciting progress and Julien Dumoulin-Smith from Jefferies expresses interest in understanding how the sales growth aligns with their confidence in handling wildfire outcomes. Bob Frenzel begins to address these concerns, considering ongoing wildfire proceedings and litigation.

The paragraph discusses the company's confidence and strategies regarding its wildfire management and litigation issues in the Southwest and Colorado, related to areas like Marshall and Smokehouse Creek. The company believes it is taking the right steps to strengthen its systems and protect customers, acknowledging necessary investments and potential impacts from unexpected legal outcomes. The spokesperson emphasizes their consistent financial practices and insurance limits, and their commitment to community partnerships and resilience plans. They also discuss existing capabilities for implementing wildfire risk reduction measures, such as Public Safety Power Shutoffs (PSPS) and Enhanced Power Safety Settings (EPSS), highlighting routine wildfire risk assessments across multiple states.

The paragraph captures a discussion during an earnings call or investor meeting. One speaker, Julien Dumoulin-Smith, praises the granularity improvements planned for a utility's distribution line protection system, likening current methods to using a "sledgehammer" and advocating for a "scalpel" approach. This involves breaking down larger stretches of distribution lines into smaller, more manageable segments for targeted protection. Following that, Durgesh Chopra from Evercore ISI asks about the timing of a $4.5 billion equity plan, querying if its deployment will be consistent annually or concentrated at the front or back end. Brian Van Abel responds, indicating the timing aligns with the projected shape of their annual capital expenditures (CapEx) over the next five years, which are higher in the initial years.

In the paragraph, Brian Van Abel discusses the progress and plans related to credit sales for 2024 and 2025. He mentions that all credit sales for 2024 have been executed, with significant demand expected in 2025 and beyond. The company works closely with large buyers and expects to monetize over $700 million in credits annually. He also highlights collaborations with local Fortune 500 companies for long-term deals. Durgesh Chopra inquires about current performance, to which Brian responds that around $400 to $500 million has been achieved this year. The discussion transitions to Ross Fowler from Bank of America, who brings up the Marshall Fire, mentioning a recent judge's order, and inquires about its implications and related claim settlements. Bob Frenzel responds, indicating the company believes it acted properly regarding the Marshall Fire.

The paragraph discusses a legal situation involving a fire that was allegedly started on the property of the 12 tribes, with a dispute over whether Xcel Energy's equipment caused a second ignition. The court has structured the trial into two phases: the first to determine liability, and the second, if necessary, to assess damages, requiring each claimant to individually prove their damages. The trial is scheduled for next September, with no immediate milestones anticipated. Additionally, questions relate to the impact on customer bills and the company's capital expenditures and rate base growth.

The paragraph discusses the advantageous position of a company in the renewable energy sector, highlighting several reasons for its success in keeping customer bills low. The company benefits from being in a region favorable for renewables, allowing lower-cost clean energy investments. It has managed operating expenses prudently over a decade, and has effective energy efficiency and demand management programs. The company filed a 20-year plan in Colorado expecting only a 2.2% customer bill increase, with efforts to mitigate even these increases through aggressive cost management. Additionally, there's been a significant achievement in lowering bills on an inflation-adjusted basis compared to a decade ago.

The paragraph features a discussion about settlements before the Minnesota Commission related to a resource plan and a gas rate case. Brian Van Abel, responding to Sophie Karp's questions, expresses optimism that the unanimous settlement for the Minnesota gas case will be approved, with a commission decision expected in Q1. He also feels positive about the resource plan settlement, which involves major stakeholders and resolves an outstanding RFP, expecting it to be approved by the Minnesota Commission in Q1 as well. Additionally, Sophie Karp inquires about legislative solutions for wildfires, seeking insights into states, possibly in the West, where such measures might be considered in upcoming sessions.

The paragraph involves a discussion by Bob Frenzel and Brian Van Abel regarding regulatory and legislative activities related to wildfire proceedings and resilience plans in Colorado and Texas. Frenzel mentions expectations for regulatory decisions in 2024 and addresses the need for ongoing legislative dialogue, particularly in Western states, to protect customers and communities. Brian Van Abel adds that there's significant focus on stakeholder education and collaboration with utilities and legislatures in both Colorado and Texas, highlighting the importance of these discussions across the industry. Following this, Travis Miller from Morningstar inquires about the company's green hydrogen initiatives, noting it was once a significant focus. Frenzel responds that it has become a secondary priority both for the company and nationally.

The paragraph discusses the current state and potential of hydrogen as a clean energy source in Europe and the U.S. A major energy pipeline for hydrogen was recently approved in Germany, highlighting its importance as a flexible and clean molecule. Progress on hydrogen initiatives in the U.S. has slowed partly due to pending regulations and finalization of the 45Q production tax credit for hydrogen. Although promising, hydrogen technology, particularly green hydrogen, is not yet part of immediate capital forecasts. The focus is currently on short-term energy solutions like gas and batteries, with potential future acceleration in hydrogen and nuclear R&D. The conversation between Travis Miller and Bob Frenzel confirms no capital forecast includes hydrogen at this point, indicating it is too early for green hydrogen to be part of current resource plans.

The paragraph is a discussion between Paul Patterson, Bob Frenzel, and Brian Van Abel regarding the rate trajectory in Colorado. They discuss a 2.2% long-term rate growth over a 20-year period according to the Colorado resource plan, aligning with inflation and supported by a rate base growth of 9% and a retail sales growth of roughly 5%. This helps provide customer and bill headroom. For the next five years, they anticipate a manageable 3% bill impact, varying by jurisdiction. Paul Patterson also inquires about the potential impact of data centers, as mentioned on Slide 9.

The paragraph discusses the process of managing customer requests for data center services and the anticipated growth in this sector. Brian Van Abel explains that their pipeline of requests is managed by considering high-probability projects that have publicly announced plans or agreements, leading to an expected 2.6% growth. He emphasizes that this growth is conservative, with a significant pipeline ensuring continued growth beyond 2029. Bob Frenzel adds that the high demand for transmission and generation services across the country highlights the need for accelerated development in these areas to manage the concentrated load pockets effectively.

The paragraph discusses the importance of strategic investments and partnerships to address the country's needs, particularly focusing on improving load factors by incorporating high load activities like EV charging. This could help reduce per unit energy costs as the country updates its transmission and generation infrastructure. The speaker expresses enthusiasm for quickly embracing this opportunity alongside existing and new partners. The conversation concludes the earnings call, inviting follow-up questions to the Investor Relations team.

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