xcel energy merrill_09/16/03
TRANSCRIPT
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
Xcel Energy Investment MeritsXcel Energy Investment Merits
Integrated utilityNo restructuring anticipatedConstructive regulation Earnings growth 2-3% per yearPositive cash flowImproving credit profileSustainable dividendLiquid stock
Integrated utilityNo restructuring anticipatedConstructive regulation Earnings growth 2-3% per yearPositive cash flowImproving credit profileSustainable dividendLiquid stock
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
AmarilloTexasAmarilloAmarilloTexasTexas
Unemployment Rate:Xcel Energy Service Area: 5.1%Nationwide: 6.5%
Unemployment Rate:Xcel Energy Service Area: 5.1%Nationwide: 6.5%
Diverse Economic BaseDiverse Economic Base
Xcel Energy’s 10 largest customers account for about 8% of retail sales
Xcel Energy’s 10 largest customers account for about 8% of retail sales
Finance &Real Estate
6%
Finance &Real Estate
6%
Government18%
Government18%
Trade25%
Trade25%
Transportation, Communications
& Utilities6%
Transportation, Communications
& Utilities6%
Construction& Mining
6%
Construction& Mining
6%
Services21%
Services21%
Manufacturing18%
Manufacturing18%
EmploymentEmployment
Dynamic Service AreaDynamic Service Area
TargetUnited HealthCareSuperValueU.S. Bancorp3MBest Buy CompanyXcel EnergyNorthwest AirlinesSt. Paul CompaniesCenex Harvest StateGeneral MillsMedtronic, Inc.Nash Finch companyPepsiAmericasC.H. Robinson Worldwide
TargetUnited HealthCareSuperValueU.S. Bancorp3MBest Buy CompanyXcel EnergyNorthwest AirlinesSt. Paul CompaniesCenex Harvest StateGeneral MillsMedtronic, Inc.Nash Finch companyPepsiAmericasC.H. Robinson Worldwide
Fortune 500 CompaniesFortune 500 Companies
1.2%1.2%
1.6%1.6%
Xcel EnergyService AreaXcel EnergyService Area
US*US*
Projected Annual Employment Growth, 2002-2012
Projected Annual Employment Growth, 2002-2012
* Global Insight forecast* Global Insight forecast
QwestCommunications
First DataEchostar
CommunicationsBallAdolph CoorsLevel 3
Communications
QwestCommunications
First DataEchostar
CommunicationsBallAdolph CoorsLevel 3
Communications
MinnesotaMinnesota ColoradoColorado
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
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
Balanced Power SupplyBalanced Power Supply
2003 Energy (Projected)2003 Energy (Projected) 2003 Capacity2003 Capacity
ContractedPurchases
28%
ContractedPurchases
28%
OwnedGeneration
72%
OwnedGeneration
72%
< 1 Yr3%
< 1 Yr3%
Purchases24%
Purchases24%
Other2%
Other2%
1- 5 Yrs4%
1- 5 Yrs4%
> 5 Yrs21%
> 5 Yrs21%
Nuclear12%
Nuclear12% Coal
51%Coal51%
Gas11%Gas11%
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%
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
0
1
2
3
4
5
6
1997 1998 1999 2000 2001 2002 2003*
Sulfur Dioxide Emission RateNitrogen Oxide Emission Rate
Sulfur Dioxide and Nitrogen Oxide Emission Rates
Sulfur Dioxide and Nitrogen Oxide Emission Rates
Pounds per MwhPounds per Mwh
* Estimated emission rates* Estimated emission rates
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
Avail-Company Facility Drawn able Cash* Liquidity*
Avail-Company Facility Drawn able Cash* Liquidity*
NSPM $ 275 $ 40 $235 $110 $ 345NSPW 0 0 0 7 7PSCo 350 266 84 21 105PSCo Bridge 300 300 0 0 0SPS 100 38 62 32 94Xcel Hold Co. 400 1 399 221 620Total $1,425 $645 $780 $391 $1,171
NSPMNSPM $ 275$ 275 $ 40$ 40 $235$235 $110$110 $ 345$ 345NSPWNSPW 00 0 0 00 77 77PSCoPSCo 350350 266266 8484 2121 105105PSCo BridgePSCo Bridge 300300 300300 00 00 00SPSSPS 100100 3838 6262 3232 9494Xcel Hold Co.Xcel Hold Co. 400400 11 399399 221221 620620Total $1,425 $645 $780 $391 $1,171
LiquidityLiquidityDollars in MillionsDollars in MillionsDollars in Millions
* Reflects balances as of August 27, 2003eflects balances as of August 27, 2003
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
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
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
2003 Earnings Guidance2003 Earnings Guidance
Utility Operations $1.25 – $1.30Seren (0.05)Eloigne 0.03Holding Company Financings (0.09)Other Nonregulated Subsidiaries 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 – $1.30Seren (0.05)Eloigne 0.03Holding Company Financings (0.09)Other Nonregulated Subsidiaries 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
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
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.
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