xcel energy bofa_09/16/03
TRANSCRIPT
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Banc of America Securities33rd Annual Investment Conference
September 17, 2003
Banc of America Securities33rd Annual Investment Conference
September 17, 2003
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This material includes forward-looking statements that are subject tocertain risks, uncertainties and assumptions. Such forward-looking statements include statements regarding projected earnings, cashflows, capital expenditures and other statements that are intended to be identified in this document by the words “anticipate,” “estimate,” “expect,”“projected,” “objective,” “outlook,” “possible,” “potential” and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including the availability of credit, actions of rating agencies and their impact on capital expenditures; business conditions in the energy industry; competitive factors; unusual weather; changes in federal or state legislation; regulation; risks associated with the California power market; currency translation and transaction adjustments; the higher degree of risk associated with Xcel Energy’s nonregulated businesses compared with Xcel Energy’s regulated business; the failure to realize expectations regarding the NRG settlement agreement; financial conditions of NRG; actions by the bankruptcy court in NRG’s bankruptcy case; and the other risk factors listed from time to time by Xcel Energy in reports filed with the SEC, including Exhibit 99.01 to Xcel Energy’s report on Form 10-K for year 2002.
Safe HarborSafe Harbor
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Wayne BrunettiChairman, President and CEO
Wayne BrunettiChairman, President and CEO
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Xcel Energy Investment MeritsXcel Energy Investment Merits
Integrated utility
No restructuring anticipated
Constructive regulation
Positive cash flow
Improving credit profile
Sustainable dividend
Liquid stock
Integrated utility
No restructuring anticipated
Constructive regulation
Positive cash flow
Improving credit profile
Sustainable dividend
Liquid stock
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Financial SummaryFinancial Summary
Dividend Yield 5%Earnings Growth 2-3% per yearDividend Payout Ratio 60-65%Market Capitalization $6 billionTrading Volume 1.2 million shares/dayInstitutional Ownership 42%
(Excludes 5% EmployeeOwnership)
Bond Ratings Moody’s S&PHolding Co. (Unsecured Debt) Baa3 BBB-Operating Utilities (Secured Debt) A3 to Baa1 BBB+
Dividend Yield 5%Earnings Growth 2-3% per yearDividend Payout Ratio 60-65%Market Capitalization $6 billionTrading Volume 1.2 million shares/dayInstitutional Ownership 42%
(Excludes 5% EmployeeOwnership)
Bond Ratings Moody’s S&PHolding Co. (Unsecured Debt) Baa3 BBB-Operating Utilities (Secured Debt) A3 to Baa1 BBB+
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Divesting NRG EnergyDivesting NRG Energy
NRG was 3rd largest independentpower producerBecame unprofitable with the collapseof wholesale power pricesWritten-off over $3 billion Relinquish ownership to NRG’s creditorsat completion of bankruptcy (expectedmid-December)Up to $752 million settlement payment to creditors in exchange for release from claims$1.1 billion tax benefit
NRG was 3rd largest independentpower producerBecame unprofitable with the collapseof wholesale power pricesWritten-off over $3 billion Relinquish ownership to NRG’s creditorsat completion of bankruptcy (expectedmid-December)Up to $752 million settlement payment to creditors in exchange for release from claims$1.1 billion tax benefit
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ForecastAnnual
Electric Gas Growth Rate
ForecastAnnual
Electric Gas Growth Rate
PSCoPSCo 1.31.3 1.21.2 1.9%1.9%NSPMNSPM 1.41.4 0.40.4 1.51.5NSPWNSPW 0.20.2 0.10.1 1.81.8SPSSPS 0.40.4 —— 0.30.3Total 3.3 1.7 1.6%
Customers (Millions)Customers (Millions)
Minneapolis/St. PaulMinnesotaMinneapolis/St. PaulMinneapolis/St. PaulMinnesotaMinnesota
Generating PlantsGenerating Generating PlantsPlants
Denver ColoradoDenver Denver ColoradoColorado
AmarilloTexasAmarilloAmarilloTexasTexas4th Largest Utility Based
on Customer Count4th Largest Utility Based
on Customer Count
Dynamic Service AreaDynamic Service Area
Headquarters to 21 Fortune 500 Companies
Headquarters to 21 Fortune 500 Companies
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Retail Electric Rate* ComparisonCentral US
Retail Electric Rate* ComparisonCentral US
* EEI typical bills – Winter 2002* EEI typical bills – Winter 2002
0
2
4
6
8Cents per KwhCents per Kwh
Amarillo
Amarillo
Kansas City
Kansas CityDenverDenver
Mpls/St. Paul
Mpls/St. Paul
St. Louis
St. Louis
Des Moines
Des Moines
Chicago
Chicago
Milwaukee
Milwaukee
Phoenix
Phoenix
Salt Lake City
Salt Lake City
4.424.42
5.845.84 5.855.85
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Balanced Power Supply2003 Energy (Projected)
Balanced Power Supply2003 Energy (Projected)
Purchases24%
Purchases24%
Other2%
Other2%
Nuclear12%
Nuclear12%
Coal51%Coal51%
Gas11%Gas11%
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0
1
2
3
4
5
6
1997 1998 1999 2000 2001 2002 2003*
Sulfur Dioxide Emission RateNitrogen Oxide Emission Rate
Sulfur Dioxide and NitrogenOxide Emission Rates
Sulfur Dioxide and NitrogenOxide Emission Rates
Pounds per MwhPounds per Mwh
* Estimated emission rates* Estimated emission rates
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Sources 2003 2004 2005Sources 2003 2004 2005Cash from Operations $1,300 >$1,300 >$1,300Avoided Tax Payment/Refund 125 475 125Citadel Greenshoe Option 58Dividend Reinvestment 20 40 40
Total Sources $1,503 >$1,815 >$1,465
UsesCapital Expenditures $ 932 $1,023 $1,115Current Dividend Payment Rate 300 320 320NRG Settlement 0 752
Total Uses $1,232 $2,095 $1,435
Cash from OperationsCash from Operations $1,300$1,300 >$1,300>$1,300 >$1,300>$1,300Avoided Tax Payment/RefundAvoided Tax Payment/Refund 125125 475475 125125Citadel Greenshoe OptionCitadel Greenshoe Option 5858Dividend ReinvestmentDividend Reinvestment 20 20 4040 4040
Total Sources $1,503 >$1,815 >$1,465
UsesCapital ExpendituresCapital Expenditures $ 932$ 932 $1,023$1,023 $1,115$1,115Current Dividend Payment RateCurrent Dividend Payment Rate 300300 320320 320320NRG SettlementNRG Settlement 00 752752
Total Uses $1,232 $2,095 $1,435
Positive Cash FlowPositive Cash Flow
* Excludes $391 million of Xcel Energy cash on hand as of August 27, 2003** Assumes exercise of convertible option* Excludes $391 million of Xcel Energy cash on hand as of AugustExcludes $391 million of Xcel Energy cash on hand as of August 27, 200327, 2003** Assumes exercise of convertible optionAssumes exercise of convertible option
**
**** ****
Dollars in MillionsDollars in Millions
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2003 Earnings Guidance2003 Earnings Guidance
Utility Operations $1.25 – $1.30Holding Company Interest Expense (0.09)Other Nonregulated Subsidiaries
(Excluding NRG) (0.01)
Xcel Energy — Pro forma Continuing Oper $1.15 – $1.20
Xcel Energy Share of NRG’s Losses (0.62)Tax Effect of Settlement Payments 0.65Additional NRG Tax Benefit 0.24Gain on Sale of Viking Gas 0.05
Xcel Energy — GAAP $1.47 – $1.52
Utility Operations $1.25 – $1.30Holding Company Interest Expense (0.09)Other Nonregulated Subsidiaries
(Excluding NRG) (0.01)
Xcel Energy — Pro forma Continuing Oper $1.15 – $1.20
Xcel Energy Share of NRG’s Losses (0.62)Tax Effect of Settlement Payments 0.65Additional NRG Tax Benefit 0.24Gain on Sale of Viking Gas 0.05
Xcel Energy — GAAP $1.47 – $1.52
EPS Range Dollars per ShareDollars per Share
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Projected Retained EarningsYear-end 2003
Projected Retained EarningsYear-end 2003
Dollars inDollars inMillionsMillions
Retained Earnings Balance (6/30/2003) $(245)Earnings July – December* 290Additional Tax Benefit from NRG Basis Study 105Tax Benefit for Settlement Payments** 260Reversal of Negative NRG Investment** 115Dividend Declaration** (150)Projected Year-End Retained Earnings $ 375
Retained Earnings Balance (6/30/2003) $(245)Earnings July – December* 290Additional Tax Benefit from NRG Basis Study 105Tax Benefit for Settlement Payments** 260Reversal of Negative NRG Investment** 115Dividend Declaration** (150)Projected Year-End Retained Earnings $ 375
* For illustration purposes, assumes earnings at the low-end of earnings guidance range
** Assumes NRG emerges from bankruptcy prior to year-end 2003
* For illustration purposes, assumes earnings at the low-end of earnings guidance range
** Assumes NRG emerges from bankruptcy prior to year-end 2003
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2003 Priorities2003 Priorities
Complete resolution of NRG
Pay full dividend in 2003
Improve credit ratings
Manage costs and capital expenditures
Deliver good value to our customers
Complete refinance plan
Meet earnings per share objective
Complete resolution of NRG
Pay full dividend in 2003
Improve credit ratings
Manage costs and capital expenditures
Deliver good value to our customers
Complete refinance plan
Meet earnings per share objective
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AppendixAppendix
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Minnesota EmissionReduction Proposal (MERP)
Minnesota EmissionReduction Proposal (MERP)
Coal to gas conversion— High Bridge 272 Mw— Riverside 79
Refurbish— King (coal-fired plant) 60
Total 411 MwEmission reduction
— SO2 36,000 tons/year— NOX 29,000 tons/year
Capital expenditures $1 billion 2005-2009Contingent on approval of costrecovery through rate rider mechanism
Coal to gas conversion— High Bridge 272 Mw— Riverside 79
Refurbish— King (coal-fired plant) 60
Total 411 MwEmission reduction
— SO2 36,000 tons/year— NOX 29,000 tons/year
Capital expenditures $1 billion 2005-2009Contingent on approval of costrecovery through rate rider mechanism
Net DependableCapacity IncreaseNet Dependable
Capacity Increase
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Capital ExpendituresCapital Expenditures
2003 2004 20052003 2004 2005
Core Utility $862 $ 861 $ 954Prairie Island Steam
Generator 25 71 9Minnesota MERP 13 68 137 Total Utility $900 $1,000 $1,100Nonregulated 32 23 15Total Capital Expenditures $932 $1,023 $1,115
Core UtilityCore Utility $862$862 $ 861$ 861 $ 954$ 954Prairie Island SteamPrairie Island Steam
GeneratorGenerator 2525 7171 99Minnesota MERPMinnesota MERP 1313 6868 137 137 Total Utility $900 $1,000 $1,100NonregulatedNonregulated 3232 2323 1515Total Capital Expenditures $932 $1,023 $1,115
Dollars in MillionsDollars in Millions
Other
Customer Additions
Upgrade
50%15%
25%10%
Refurbishment
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Financing PlanFinancing Plan
NSPMNSPM $408$408 7.0%7.0% $ 375$ 375 3.8%3.8%PSCoPSCo 589589 7.27.2 250250 4.8754.875PSCoPSCo 575575 4.94.9Xcel EnergyXcel Energy 195195 3.43.4TotalTotal $997$997 7.1%7.1% $1,395$1,395 4.4%4.4%
Redeemed IssuedRedeemed IssuedDollars in MillionsDollars in Millions
NSPWNSPW $150$150 6.9%6.9%PSCoPSCo 3030 6.456.45SPSSPS 100100 7.857.85
Potential Future Redemptions**Potential Future Redemptions**
**
* Used to pay down Xcel Energy credit facility** Includes maturing debt and opportunistic redemptions* Used to pay down Xcel Energy credit facility** Includes maturing debt and opportunistic redemptions
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2002 Generation Production CostS&P Electric Index Companies
2002 Generation Production CostS&P Electric Index Companies
0
10
20
30
40
50
60Dollars per MwhDollars per Mwh
Xcel EnergyXcel EnergySource: Platts PowerdatSource: Platts Powerdat
$21.39$21.39
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Fossil Generation*Equivalent Forced Outage Rate
Fossil Generation*Equivalent Forced Outage Rate
1999 2000 2001 2002 2003
* Greater than 100 Mw* Greater than 100 Mw
Percent of TimePercent of Time
4.6%4.6%4.1%4.1% 3.8%3.8%
2.8%2.8%
YTD June 30YTD June 30
2.8%2.8%
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1999 2000 2001 2002
Fossil Generation Operating and Maintenance Costs
Fossil Generation Operating and Maintenance CostsDollars per Mwh Generated Dollars per Mwh Generated
$3.87$3.87$3.65$3.65 $3.61$3.61 $3.56$3.56
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Jul Aug Sep Oct Nov Dec
SEC Acts on NRG’s Reorganization Plan andDisclosure Statement
SEC Acts on NRG’s Reorganization Plan andDisclosure Statement
Confirmation Hearing on NRG’s Plan of ReorganizationConfirmation Hearing on NRG’s Plan of Reorganization
FERC Approval of Transfer of AssetsFERC Approval of Transfer of Assets
NRG Settlement Schedule — 2003*NRG Settlement Schedule — 2003*
Completion of SolicitationProcess of NRG’sReorganization Plan
Completion of SolicitationProcess of NRG’sReorganization Plan
* The actual timing of the schedule for NRG’s bankruptcy proceeding is beyond the control of Xcel Energy and is dependent on actions by the SEC, FERC and the bankruptcy court.
* The actual timing of the schedule for NRG’s bankruptcy proceeding is beyond the control of Xcel Energy and is dependent on actions by the SEC, FERC and the bankruptcy court.