xcel energy west_coast_road
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Reducing CarbonReducing CarbonDelivering ResultsDelivering Results
West Coast Investor MeetingsWest Coast Investor MeetingsAugust 18August 18--20, 200820, 2008
Safe HarborSafe HarborThis material includes forwardThis material includes forward--looking statements that are subject to looking statements that are subject to certain risks, uncertainties and assumptions. Such forwardcertain risks, uncertainties and assumptions. Such forward--looking looking statements include projected earnings, cash flows, capital statements include projected earnings, cash flows, capital expenditures and other statements and are identified in this docexpenditures and other statements and are identified in this document ument by the words by the words ““anticipate,anticipate,”” ““estimate,estimate,”” ““expect,expect,”” ““projected,projected,””““objective,objective,”” ““outlook,outlook,”” ““possible,possible,”” ““potentialpotential”” and similar and similar expressions. Actual results may vary materially. Factors that expressions. Actual results may vary materially. Factors that could could cause actual results to differ materially include, but are not lcause actual results to differ materially include, but are not limited to: imited to: general economic conditions, including the availability of credigeneral economic conditions, including the availability of credit, t, actions of rating agencies and their impact on capital expendituactions of rating agencies and their impact on capital expenditures; res; business conditions in the energy industry; competitive factors;business conditions in the energy industry; competitive factors;unusual weather; effects of geopolitical events, including war aunusual weather; effects of geopolitical events, including war and acts nd acts of terrorism; changes in federal or state legislation; regulatioof terrorism; changes in federal or state legislation; regulation; actions n; actions of accounting regulatory bodies; and other risk factors listed fof accounting regulatory bodies; and other risk factors listed from rom time to time by Xcel Energy in reports filed with the SEC, inclutime to time by Xcel Energy in reports filed with the SEC, including ding Exhibit 99.01 to Xcel EnergyExhibit 99.01 to Xcel Energy’’s report on Form 10s report on Form 10--K for year 2007.K for year 2007.
Attractive Investment OpportunityAttractive Investment Opportunity
Environmental leader with both a willingness and Environmental leader with both a willingness and the ability to address environmental challenges the ability to address environmental challenges
Constructive regulation with enhanced recoveryConstructive regulation with enhanced recoveryof major capital projectsof major capital projects
Rate base growth opportunitiesRate base growth opportunities
Track record of successful executionTrack record of successful execution
Strong corporate governanceStrong corporate governance
Environmental LeaderEnvironmental LeaderResource plans’ projected COResource plans’ projected CO22 emission reductionsemission reductions
Minnesota plan: 22% reduction by 2020Minnesota plan: 22% reduction by 2020Colorado plan: 10% reduction by 2017Colorado plan: 10% reduction by 2017
Innovative technologyInnovative technologySmart GridSmart GridSolarSolarWind to batteryWind to batteryWind to hydrogenWind to hydrogenDemand Side Management Demand Side Management
Geographic advantagesGeographic advantagesWindWindSolarSolarBiomassBiomassCarbon sequestrationCarbon sequestration
Geographic Competitive AdvantageGeographic Competitive Advantage
Solar ResourceSolar Resource
Biomass ResourceBiomass Resource
Wind ResourceWind Resource
Wind DensityWind DensityHighHigh
LowLow
Source: National Renewable Energy LaboratorySource: National Renewable Energy Laboratory
Xcel EnergyXcel EnergyStates ServedStates Served
Reducing Carbon Dioxide Emissions*Reducing Carbon Dioxide Emissions*
60
65
70
75
80
2003 2004 2005 2006 2007
Millions of tons Millions of tons
* Owned* Owned––generation carbon dioxide emissionsgeneration carbon dioxide emissions
Projected Renewable Resources
Coal 49% Coal 49%
Renewables9%
Renewables9%
Natural Gas 31%
Natural Gas 31%
Nuclear 11%
Nuclear 11%
Coal 46% Coal 46%
Renewables24%
Renewables24%
Natural Gas 17%
Natural Gas 17%
Nuclear 13%
Nuclear 13%
200720072007 202020202020
Wind Hydro Solar Biomass RDF Landfill GeothermalWindWind HydroHydro SolarSolar BiomassBiomass RDFRDF LandfillLandfill GeothermalGeothermalMWMWMW2007 2,700 365 17 182 100 15 02020 7,400 400 600 250 60 20 2020072007 2,7002,700 365365 1717 182182 100100 1515 0020202020 7,4007,400 400400 600600 250250 6060 2020 2020
CapacityCapacityCapacity
EnergyEnergyEnergy
Smart Grid Pilot ProjectSmart Grid Pilot ProjectPilot project in Boulder, Colorado:Pilot project in Boulder, Colorado:
Five major partnersFive major partnersTotal project cost ~ $100 millionTotal project cost ~ $100 millionXcel Energy portion ~ $15 millionXcel Energy portion ~ $15 millionBuild out completed in 2009Build out completed in 2009
Scope:Scope:Smart metersSmart metersReal time, high speed, twoReal time, high speed, two––way communications way communications Intelligent home/smart appliancesIntelligent home/smart appliancesDemand Side Management Demand Side Management Distributed generationDistributed generationRenewable energy sector growthRenewable energy sector growthEnergy storage devicesEnergy storage devices
Constructive RegulationConstructive Regulation
Transmission riders Transmission riders –– CO, MN, ND, SDCO, MN, ND, SDRenewable riders Renewable riders –– CO, MNCO, MNMERP rider MERP rider –– MNMNConservation/DSM riders Conservation/DSM riders –– CO, MNCO, MNEnvironmental riders Environmental riders –– MN, ND, SDMN, ND, SDCapacity rider Capacity rider –– COCOComanche 3 forward CWIP via general rate case Comanche 3 forward CWIP via general rate case –– COCOIGCC rider IGCC rider –– COCOAir quality improvement rider Air quality improvement rider –– COCO
Projected Rider RevenueProjected Rider Revenue
0
40
80
120
160
200
240
2006 2007 2008 2009
Metro Emissions Reduction Project (MN)Air Quality Improvement Rider (CO)Renewable Energy Standard (MN)Transmission Rider (CO)Transmission Rider (MN)
Dollars in millionsDollars in millions
$73$73
$107$107
$166$166
$195$195
Regulatory ResultsRegulatory Results
Rate relief granted 2006Rate relief granted 2006--2007: $400 million2007: $400 million
2006 Minnesota electric rate case: $131 million2006 Minnesota electric rate case: $131 million
2006 Colorado electric rate case: $151 million2006 Colorado electric rate case: $151 million
2006 Wisconsin gas and electric rate cases: $47 million2006 Wisconsin gas and electric rate cases: $47 million
2007 Colorado gas rate case: $32 million2007 Colorado gas rate case: $32 million
Other: $39 millionOther: $39 million
Pending Rate CasesPending Rate Cases
New Mexico ElectricNew Mexico Electric March 2008March 2008 PendingPending$16.6 million$16.6 million Fall 2008Fall 200810.7% ROE10.7% ROE
North Dakota ElectricNorth Dakota Electric June 2008June 2008 PendingPending$17.9 million$17.9 million Fall 2008Fall 200810.75% ROE10.75% ROE Interim ratesInterim rates
SPS WholesaleSPS Wholesale March 2008March 2008 PendingPending$14.9 million$14.9 million Fall 2008Fall 200812.2% ROE12.2% ROE
Texas ElectricTexas Electric June 2008June 2008 Pending Pending $61.3 million overall Qtr 1 2009 $61.3 million overall Qtr 1 2009 11.25% ROE11.25% ROE
NSPNSP--Wisconsin Wisconsin August 2008August 2008 PendingPendingLimited ReopenerLimited Reopener Qtr 4 2008Qtr 4 2008$47.1 million
RequestedRequested StatusStatus
$47.1 million
Recovery on Capital Expenditures*Recovery on Capital Expenditures*
* Capital expenditure forecast based on middle of range* Capital expenditure forecast based on middle of rangeDepreciation
0
400
800
1,200
1,600
2,000
2,400
2,800
2008 2009 2010 2011
Traditional Recovery Enhanced Recovery
Dollars in millionsDollars in millions
$2,150$2,150$1,900$1,900 $2,000$2,000
$2,350$2,350
Delivering on Rate Base Growth*Delivering on Rate Base Growth*
$12.5$13.7 $14.5 $15.4
$16.6
2007A 2008F 2009F 2010F 2011F
CAGR = 7.3%CAGR = 7.3%
Dollars in billionsDollars in billions
* Growth based on middle of capital forecast range* Growth based on middle of capital forecast range
Proven Track RecordProven Track RecordDelivering on 5 Delivering on 5 –– 7% EPS Growth7% EPS Growth
$1.15$1.15$1.30$1.30
$1.43$1.43
2005 2005 Ongoing*Ongoing*
2006 2006 Ongoing*Ongoing*
2007 2007 Ongoing*Ongoing*
Guidance RangeGuidance Range
13%10%
$1.45 $1.45 –– $1.55$1.55
5%**
2008 2008 GuidanceGuidance
~~
* Ongoing EPS excludes the impacts of COLI and disc ops.* Ongoing EPS excludes the impacts of COLI and disc ops.A reconciliation to GAAP earnings is included in the appendixA reconciliation to GAAP earnings is included in the appendix..
** ** Estimated growth rate based on middle of guidance rangeEstimated growth rate based on middle of guidance range
Proven Track RecordProven Track RecordDelivering 2 Delivering 2 –– 4% Dividend Growth*4% Dividend Growth*
2003 2004 2005 2006 2007 2008
$0.75$0.75
2004 2004 –– 2008 CAGR = 3.4%2008 CAGR = 3.4%
Annualized dividend per shareAnnualized dividend per share
$0.83$0.83 $0.86$0.86 $0.89$0.89 $0.92$0.92 $0.95$0.95
* Xcel Energy increased the dividend by 3* Xcel Energy increased the dividend by 3¢¢ on May 21, 2008on May 21, 2008
Strong Corporate Governance Strong Corporate Governance
Independent Lead Director Independent Lead Director
Annual election of all directorsAnnual election of all directors
12 independent directors on 13 person board 12 independent directors on 13 person board
Management compensation aligned with Management compensation aligned with shareholders shareholders –– stock ownership guidelines:stock ownership guidelines:
CEO ownership 5x annual base salary CEO ownership 5x annual base salary
CFO/Other Officers ownership 3x base salary CFO/Other Officers ownership 3x base salary
Value PropositionValue Proposition
Low risk, fully regulated and integrated utilityLow risk, fully regulated and integrated utilityConstructive regulation with enhanced recovery Constructive regulation with enhanced recovery of major capital projectsof major capital projectsPipeline of investment opportunitiesPipeline of investment opportunitiesEnvironmental leader, wellEnvironmental leader, well––positionedpositionedfor changing rulesfor changing rules
Attractive Total ReturnAttractive Total ReturnSustainable annual EPS growth of 5% Sustainable annual EPS growth of 5% –– 7%7%with upside potentialwith upside potentialStrong dividend yield of Strong dividend yield of ~~ 4.6%4.6%Sustainable annual dividend growth of 2% Sustainable annual dividend growth of 2% –– 4%4%
AppendixAppendix
Company ProfileCompany Profile
Traditional RegulationTraditional Regulation
Operate in 8 StatesOperate in 8 States
Combination UtilityCombination UtilityElectric 85% of net incomeElectric 85% of net incomeGas 15% of net incomeGas 15% of net income
CustomersCustomers3.3 million electric3.3 million electric1.8 million gas1.8 million gas
2007 Financial Statistics2007 Financial StatisticsNI Ongoing: $612 million NI Ongoing: $612 million NI GAAP: $577 millionNI GAAP: $577 millionAssets: $23 billionAssets: $23 billionEquity ratio: 43%Equity ratio: 43%
NSPNSP--WisconsinWisconsin6% of earnings *6% of earnings *NSPNSP--MinnesotaMinnesota
40% of earnings *40% of earnings *
SPSSPS5% of earnings *5% of earnings *
PSCoPSCo49% of earnings *49% of earnings *
2007 EPS Ongoing: $1.43; GAAP: $1.352007 EPS Ongoing: $1.43; GAAP: $1.352008 Dividend $0.95 per share annualized2008 Dividend $0.95 per share annualized
* Percentages based on 2007 Ongoing Earnings* Percentages based on 2007 Ongoing Earnings
Reconciliation Reconciliation ––Ongoing EPS to GAAPOngoing EPS to GAAP
Ongoing Earnings $1.15 $1.30 $1.43PSRI/COLI 0.05 0.05 (0.08)Continuing Operations $1.20 $1.35 $1.35Disc Ops 0.03 0.01 –GAAP Earnings $1.23 $1.36 $1.35
Ongoing Earnings Ongoing Earnings $1.15 $1.15 $1.30$1.30 $1.43$1.43PSRI/COLIPSRI/COLI 0.050.05 0.050.05 (0.08)(0.08)Continuing OperationsContinuing Operations $1.20$1.20 $1.35$1.35 $1.35$1.35Disc Ops Disc Ops 0.030.03 0.01 0.01 ––GAAP Earnings $1.23 GAAP Earnings $1.23 $1.36$1.36 $1.35$1.35
200720072007Dollars per shareDollars per share
200620062006200520052005
As a result of the termination of the COLI program, Xcel Energy’s management believes that ongoing earnings provide a more meaningful comparison of earnings results between different periods in which the COLI program was in place and is more representative of Xcel Energy’s fundamental core earnings power. Xcel Energy’s management uses ongoing earnings internally for financial planning and analysis, for reporting of results to the Board of Directors, in determining whether performance targets are met for performance-based compensation,and when communicating its earnings outlook to analysts and investors.
As a result of the termination of the COLI program, Xcel EnergyAs a result of the termination of the COLI program, Xcel Energy’’s management s management believes that ongoing earnings provide a more meaningful comparibelieves that ongoing earnings provide a more meaningful comparison of earnings son of earnings results between different periods in which the COLI program was results between different periods in which the COLI program was in place and is in place and is more representative of Xcel Energymore representative of Xcel Energy’’s fundamental core earnings power. s fundamental core earnings power. Xcel EnergyXcel Energy’’s management uses ongoing earnings internally for financial plans management uses ongoing earnings internally for financial planning ning and analysis, for reporting of results to the Board of Directorsand analysis, for reporting of results to the Board of Directors, in determining , in determining whether performance targets are met for performancewhether performance targets are met for performance--based compensation,based compensation,and when communicating its earnings outlook to analysts and inveand when communicating its earnings outlook to analysts and investors.stors.
Earnings Guidance Range Earnings Guidance Range
Regulated Utility $1.55 $1.61 – $1.71 Holding Company (0.12) (0.16) Ongoing Earnings $1.43 $1.45 – $1.55
PSRI/COLI $(0.08) –Continuing Operations 1.35 1.45 – 1.55Disc Ops – –GAAP Earnings $1.35 $1.45 – $1.55
Regulated UtilityRegulated Utility $1.55 $1.55 $1.61 $1.61 –– $1.71 $1.71 Holding CompanyHolding Company (0.12)(0.12) (0.16) (0.16) Ongoing Earnings Ongoing Earnings $1.43$1.43 $1.45 $1.45 –– $1.55$1.55
PSRI/COLIPSRI/COLI $(0.08)$(0.08) ––Continuing OperationsContinuing Operations 1.351.35 1.45 1.45 –– 1.551.55Disc Ops Disc Ops –– ––GAAP EarningsGAAP Earnings $1.35$1.35 $1.45 $1.45 –– $1.55$1.55
2007A2007A2007A 200820082008Dollars per shareDollars per share
Capital Expenditure ForecastCapital Expenditure ForecastDollars in millionsDollars in millionsDollars in millions Denotes enhanced recovery mechanismDenotes enhanced recovery mechanismDenotes enhanced recovery mechanism
20082008 20092009 20102010 20112011Base & Other Base & Other $1,245$1,245 $1,285$1,285 $1,310$1,310 $1,300$1,300MERPMERP 170170 2525 1010 00Comanche 3Comanche 3 330330 6060 1010 00MN Wind Tran/CapX 2020MN Wind Tran/CapX 2020 4040 6565 115115 270270Sherco UpgradeSherco Upgrade 55 2020 7575 230230MN Wind GenerationMN Wind Generation 135135 00 00 00Nuclear Capacity/Life ExtNuclear Capacity/Life Ext 7575 120120 180180 200200Fort St. Vrain CTFort St. Vrain CT 100100 2525 00 00Total CommittedTotal Committed $2,100$2,100 $1,600$1,600 $1,700$1,700 $2,000$2,000
Potential ProjectsPotential Projects 00--100100 200200--400400 200200--400 400 200200--500500RangeRange $2,100$2,100-- $1,800$1,800-- $1,900$1,900-- $2,200$2,200--
$2,200 $2,200 $2,000$2,000 $2,100$2,100 $2,500$2,500
Capital ExpendituresCapital Expendituresby Operating Company*by Operating Company*
NSPMNSPM $935$935 $955$955 $1,060$1,060 $1,380$1,380
PSCoPSCo 945945 650650 680680 750750SPSSPS 170170 205 205 180 180 140140NSPWNSPW 100100 90 90 8080 80 80 TotalTotal $2,150$2,150 $1,900$1,900 $2,000$2,000 $2,350$2,350
Dollars in millionsDollars in millions
* Capital forecast based on middle of range* Capital forecast based on middle of range
20082008 20092009 20102010 20112011
Capital Expenditures by Function*Capital Expenditures by Function*
20082008 20092009 20102010 20112011
Elec GenerationElec Generation $935$935 $480$480 $525$525 $745$745Elec TransmissionElec Transmission 300300 325325 390 390 500500Elec DistributionElec Distribution 355355 345 345 355 355 360360GasGas 140140 155 155 160160 155 155 Nuclear FuelNuclear Fuel 145145 150150 140140 105105Common/OtherCommon/Other 225225 145145 130130 135135Potential ProjectsPotential Projects 5050 300300 300300 350350TotalTotal $2,150$2,150 $1,900$1,900 $2,000$2,000 $2,350$2,350
* Capital forecast based on middle of range* Capital forecast based on middle of range
Dollars in millionsDollars in millions
Credit RatingsCredit Ratings
Holding Co. – – – BBB+ Baa1 BBB
NSPM A+ A2 A A A3 BBB
NSPW A+ A2 A A A3 BBB+
PSCo A A3 A A– Baa1 BBB
SPS – – – BBB+ Baa1 BBB+
Holding Co.Holding Co. –– –– –– BBB+BBB+ Baa1Baa1 BBBBBB
NSPMNSPM A+A+ A2A2 A A AA A3A3 BBBBBB
NSPWNSPW A+A+ A2 A2 A A AA A3A3 BBB+ BBB+
PSCoPSCo AA A3A3 A A AA–– Baa1Baa1 BBBBBB
SPSSPS –– –– –– BBB+BBB+ Baa1Baa1 BBB+BBB+
Fitch Moody’s S&P Fitch Moody’s S&PFitch Moody’s S&P Fitch Moody’s S&PSecuredSecured UnsecuredUnsecured
Debt MaturitiesDebt Maturities
$0
$200
$400
$600
$800
$1,000
$1,200
2008 2009 2010 2011 2012 2013 2014 2015
SPSPSCoNSPWNSPMXcel Energy
Dollars in millionsDollars in millionsDollars in millions
Strong Access to Credit Markets in 2008Strong Access to Credit Markets in 2008
Hold Co Hold Co -- issued $400 million of retail hybrid securities issued $400 million of retail hybrid securities with a 7.6% coupon in Januarywith a 7.6% coupon in January
NSPNSP--Minnesota Minnesota -- issued $500 million of first mortgage bonds issued $500 million of first mortgage bonds with 10 year maturity and 5.25% coupon in Marchwith 10 year maturity and 5.25% coupon in March
PSCo PSCo -- issued $600 million of first mortgage bonds in August: issued $600 million of first mortgage bonds in August: 10 year tranche with a 5.8% coupon10 year tranche with a 5.8% coupon30 year tranche with a 6.5% coupon 30 year tranche with a 6.5% coupon
Potential debt issuances: 2nd half 2008Potential debt issuances: 2nd half 2008NSPNSP––Wisconsin: Up to $250 million of first mortgage bondsWisconsin: Up to $250 million of first mortgage bondsSPS: Up to $250 million of unsecured debtSPS: Up to $250 million of unsecured debt