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xcel energy AB7A4639-F266-4C1B-8624-A2DC294B5C02_2009_NEWFixedIncomeFebruary
1. Strategy Is On Track
Fixed Income Investor Meetings
Boston and New York City
February 25, 2009
2. Safe Harbor
This material includes forward-looking statements that are subject to
certain risks, uncertainties and assumptions. Such forward-looking
statements include projected earnings, cash flows, capital
expenditures and other statements and are 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; effects of geopolitical events, including war and acts
of terrorism; changes in federal or state legislation; regulation; actions
of accounting regulatory bodies; and 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 2007.
3. Strategy and Objectives
Grow our core business and
meet the environmental challenge
Achieve long-term annual EPS growth of 5% – 7%
Increase dividend by 2% – 4% annually
Senior unsecured ratings in BBB+ to A range
Reduce emissions by 2020
4. Strengths
We are positioned to execute our strategy –
despite economic headwinds
Strong liquidity
Balance sheet strength
Solid credit quality
Constructive regulatory relationships
Safe, secure and growing dividend
Good growth prospects
5. Solid Liquidity
Dollars in millions as of February 19, 2009
Credit Total
Lines Available Cash Liquidity
Hold Co. $ 772 $ 304 $3 $ 307
NSPM 482 476 36 512
PSCo 675 670 52 722
SPS 248 238 248 486
Other 0 0 81 81
Total $2,177 $1,688 $ 420 $2,108
6. Strong Balance Sheet
As of December 31, 2008
Millions Percent
Equity $ 6,964 44%
Preferred Equity 105 1%
Current Portion LT Debt 559 3%
Short-term Debt 455 3%
Long-term Debt * 7,732 49%
Total Capitalization $15,815 100%
* Long-term debt includes $400 million of hybrid securities which receives
50% equity treatment from the rating agencies.
7. Solid Credit Ratings
Secured Unsecured
Fitch Moody’s S&P Fitch Moody’s S&P *
Hold Co. – – – BBB+ Baa1 BBB
NSPM A+ A2 A A A3 BBB+
NSPW A+ A2 A A A3 A-
A-
PSCo A A3 A A– Baa1 BBB+
A–
SPS – – – BBB+ Baa1 BBB+
* S&P upgraded the unsecured ratings for NSPM, NSPW and PSCo
on November 5, 2008
8. Manageable Debt Maturities
Dollars in millions
$1,200
SPS
$1,000 PSCo
NSPW
$800
NSPM
$600 Xcel Energy
$400
$200
$0
2009 2010 2011 2012 2013 2014 2015
9. Pension Funding
Dollars in millions at year-end
year-end
2008 2007
Fair value of pension assets $2,185 $3,186
Projected benefit obligation 2,598 2,662
Funded status $(413) $524
Funded status % 84% 120%
Pension Assumptions 2009 2008
Discount rate 6.75% 6.25%
Expected long-term rate of return 8.50 8.75
Potential Contributions
2009: $70 million to $130 million
2010: $150 million to $250 million
10. Capital Forecast
Dollars in millions
$2,350 $2,350
$2,300
$1,800
2009 2010 2011 2012
Other Nuclear Fuel Gas
Electric Distribution Electric Transmission Electric Generation
Wind
11. Potential Cash from Operations
Dollars in millions
2,400
2,000
1,600
1,200
800
400
0
2009 2010 2011 2012
Net Income * Depreciation NOL
* Assumes Net Income growth based on middle of range
12. Modest Financing Needs in 2009
NSPM $400 million of first mortgage bonds
PSCo $400 million of first mortgage bonds
Both companies are “A” rated for secured debt
13. Minnesota Electric Rate Case
Filed November 3, 2008
2009 forward test year
Seeking rate increase of $156 million or 6.1%
— Electric rate base of $4.1 billion
— Requested ROE of 11.0%
— Equity ratio of 52.5%
Commission approved interim rates of $132 million
effective January 2009, subject to refund
Decision expected fall/winter 2009
14. 2009 Colorado Electric Rate Case
Filed November 14, 2008
2009 forward test year
Seeking a rate increase of $174 million or 7.4%
— Electric rate base of $4.1 billion
— Requested ROE of 11%
— Equity ratio of 58%
Decision expected summer 2009
Partial-year revenue increase beginning in July
15. Colorado Electric Rate Case
Intervenor Recommendations
Staff Recommendation:
— $110.3 million based on a forward test year
$69.9 million to be effective in July 2009
$40.4 million effective in January 2010
— ROE of 10.37%
— Equity ratio of 58.08%
Office of Consumer Council Recommendation:
— $3.8 million increase based on a historic test year
— ROE of 9.75%
— Equity ratio of 53%
16. 2010 Colorado Electric Rate Case
Expected filing April 2009
2010 forward test year
Purpose is to recover costs associated with major
plan investments, including full-year costs for
Comanche and Ft. St. Vrain and other 2010 costs
Decision expected winter 2009
Full-year revenue increase in 2010
17. New Mexico Electric Rate Case
Filed December 18, 2008
Historic test year based on year-ending June 2008
Seeking rate increase of $24.6 million or 5.1%
— Electric rate base of $321 million
— Requested ROE of 12.0%
— Equity ratio of 50%
Seeking interim rates of $7.6 million for Lea Power
capacity contract
18. Recent Rate Case Outcomes
Dollars in millions
Dollar Increase Return on Equity
Requested Granted Requested Granted
Texas Electric * $94.4 $57.4 11.25% N/A
Wisconsin Electric $10.0 $5.6 11.0% 10.75%
North Dakota $17.9 $12.8 11.5% 10.75%
* Settlement pending commission approval
19. Delivering on Rate Base Growth
Dollars in millions
$17.9
$16.8
CAGR = 7.4%
$15.6
$14.4
$13.7
2008 2009 2010 2011 2012
20. Financial Execution
Delivering on 5 – 7% EPS Growth
Guidance Range
2005 – 2009 CAGR = 6.9% ** $1.45–$1.55
$1.45
$1.43
$1.30
$1.15
2005 2007 2008 2009
2006
Ongoing * Ongoing * Ongoing * Ongoing * Guidance
* Ongoing EPS excludes the impacts of COLI and disc ops.
A reconciliation to GAAP earnings is included in the appendix
** Estimated CAGR is based on middle of 2009 guidance range
22. Key Take-Aways
Our strategy remains unchanged and on track
Constructive regulatory environment
Modest financing needs in 2009
We have the liquidity and balance sheet
to finance our rate base growth strategy
We are well-positioned to execute our
business plan
We offer an attractive total return, based on
A long-term annual EPS growth objective of 5% – 7%
A dividend yield of approximately 5.3%
24. Reconciliation – Ongoing EPS to GAAP
Dollars per share
2007 2008
2005 2006
Ongoing Earnings $1.15 $1.30 $1.43 $1.45
PSRI/COLI 0.05 0.05 (0.08) 0.01
Continuing Operations $1.20 $1.35 $1.35 $1.46
Disc Ops 0.03 0.01 – –
GAAP Earnings $1.23 $1.36 $1.35 $1.46
As a result of the termination of the COLI program, Xcel Energy’s management
Energy’s
believes that ongoing earnings provide a more meaningful comparison of earnings
comparison
results between different periods in which the COLI program was in place and is
more representative of Xcel Energy’s fundamental core earnings power.
Energy’s
Xcel Energy’s management uses ongoing earnings internally for financial planning
Energy’s planning
and analysis, for reporting of results to the Board of Directors, in determining
Directors,
whether performance targets are met for performance-based compensation,
performance-based
and when communicating its earnings outlook to analysts and investors.
investors.
25. Capital Expenditures
by Operating Company
Dollars in millions
2009 2010 2011 2012
NSPM $ 880 $1,340 $1,410 $1,350
PSCo 610 600 600 710
SPS 210 245 205 195
NSPW 100 115 135 95
Total $1,800 $2,300 $2,350 $2,350
26. Capital Expenditure Forecast
Denotes enhanced recovery mechanism
Dollars in millions
2009 2010 2011 2012
Base & Other $1,305 $1,500 $1,520 $1,665
Nuclear Capacity/Life Ext 130 170 185 150
Comanche 3 130 15 0 0
MN Wind Generation 110 420 370 0
MN Wind Tran/CapX 2020 60 165 240 485
MERP 30 10 0 0
Fort St. Vrain CT 25 0 0 0
Sherco Upgrade 10 20 35 50
Total $1,800 $2,300 $2,350 $2,350
27. Minnesota Recovery Mechanisms
Forward test year with interim rates
MERP rider
Transmission rider
Conservation improvement program rider
Mercury reduction & environmental
improvement rider
RDF rider
State energy policy rider
Fuel clause adjustment
Purchased gas adjustment
28. Colorado Recovery Mechanisms
Ability to file either historic or forecast test years
Purchased capacity cost adjustment
Comanche 3 - forward CWIP via general rate case
Transmission rider
Renewable energy rider
Demand-side management cost adjustment rider
Air quality improvement rider
Energy cost adjustment
Natural gas cost adjustment
Partial decoupling on retail natural gas
29. SPS Recovery Mechanisms
Historic test year (Texas & New Mexico)
Texas fixed fuel factor recovery
New Mexico fuel clause adjustment
Ability to establish interim rates through rate case
to recover capacity costs associated the Lea Power
contract (Texas)
30. Wisconsin Recovery Mechanisms
Forward test year
Ability to file for prospective fuel & purchase
energy adjustments (Wisconsin)
Fuel clause adjustment – wholesale
Purchased gas adjustment
Fuel clause factor (Michigan retail)
31. Dakota’s Recovery Mechanisms
Forward test year with interim rates (ND)
Historic test year (SD)
Environmental rider (ND & SD)
Transmission rider (ND & SD)
Fuel clause adjustment (ND & SD)
Full decoupling on retail natural gas (ND)
32. 2007 Rate Base and ROE
Dollars in millions Weather Normalized
Rate Base Earned ROE
Minnesota Electric $4,054 11.02%
Minnesota Gas 456 7.74
North Dakota Electric 202 2.96
North Dakota Gas 44 7.66
South Dakota Electric 251 9.28
Colorado Electric 3,569 10.09
Colorado Gas 1,096 10.45
Wisconsin Electric 554 8.33
Wisconsin Gas 77 8.59
Texas Electric 940 4.61*
New Mexico Electric** 276 2.24*
Wholesale 982 Not Reported
Total Rate Base $12,501
* Texas and New Mexico ROEs are actual earned, not weather normalized
** Results impacted by fuel disallowance