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xcel energy Lehman_Sept_2008-SEC
1. Success Through
Stakeholder Alignment
Lehman Brothers Conference
September 3-4, 2008
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. Why We are Positioned for Success
Ability to meet state RPS and environmental
initiatives
Well positioned for potential Federal climate
policy
Uniquely able to provide clean energy to
customers and hedge against fuel price
volatility
Renewable portfolio extends the decision time
horizon for new base load generation
Geographic advantage
4. Addressing Public Policy
State legislative mandates and goals
Minnesota: 30% RPS mandate by 2020
30% carbon reduction goal by 2025
Colorado: 20% RPS mandate by 2020
20% carbon reduction goal by 2020
New Mexico: 20% RPS mandate by 2020
10% carbon reduction goal by 2020
Expanding emphasis on DSM and conservation
Emerging Federal climate policy
If Lieberman Warner Bill had passed:
• 21% carbon reduction by 2020
• 31% carbon reduction by 2030
• 75% carbon reduction by 2050
Federal climate policy likely in the next administration
6. Wind Development
Minnesota
Propose adding 2,600 MW by 2020
in Resource Plan
NSP 500 MW Wind RFP in progress
• Issued December 2007
• Bids received in March 2008
• Currently negotiating with bidders
Colorado
Propose adding 800 MW by 2015 in Resource Plan
PSCo 100-150 Wind RFP in progress
7. Solar Development
Central Solar
Alamosa Central Solar Plant 8.2 MW
Resource Plan expands solar
Current RFP 75 MW
Potential RFP’s 600 MW
Distributed Solar
Solar*Rewards
8.5 MW / 1,600+ installations
Accepted additional 5 MW for 2009
Resource Plan expands solar
63.5 MW Customer-sited by 2015
8. Transmission Investment
Net book value of $2.4 billion at year-end 2007
17,619 miles of transmission pole lines
#3 in total transmission pole miles
232 miles of transmission pole lines added in 2007
Capital Expenditure in $millions
$600
$500
$500
$390
$400
$325
$300
$300
$200
$100
$0
2008 2009 2010 2011
9. Capital Expenditures Forecast*
Dollars in millions
2008 2009 2010 2011
Elec Generation $935 $480 $525 $745
Elec Transmission 300 325 390 500
Elec Distribution 355 345 355 360
Gas 140 155 160 155
Nuclear Fuel 145 150 140 105
Common/Other 225 145 130 135
Potential Projects 50 300 300 350
Total $2,150 $1,900 $2,000 $2,350
* Capital forecast based on middle of range
10. Rate Base Growth Drives EPS*
Dollars in billions
CAGR = 7.3%
$16.6
$15.4
$14.5
$13.7
$12.5
2007A 2008F 2009F 2010F 2011F
* Growth based on middle of capital forecast range
11. Constructive Regulation
Transmission riders – CO, MN, ND, SD
Renewable riders – CO, MN
MERP rider – MN
Conservation/DSM riders – CO, MN
Environmental riders – MN, ND, SD
Capacity rider – CO
Comanche 3 forward CWIP via general rate case – CO
IGCC rider – CO
Air quality improvement rider – CO
12. Projected Rider Revenue
Dollars in millions
240
Metro Emissions Reduction Project (MN)
Air Quality Improvement Rider (CO)
$195
200 Renewable Energy Standard (MN)
Transmission Rider (CO) $166
Transmission Rider (MN)
160
120 $107
$73
80
40
0
2006 2007 2008 2009
13. Recovery on Capital Expenditures*
Dollars in millions
2,800
$2,350
2,400
$2,150
$2,000
$1,900
2,000
1,600
1,200
800
400
0
2008 2009 2010 2011
Depreciation
Traditional Recovery Enhanced Recovery
* Capital expenditure forecast based on middle of range
14. Pending Rate Cases
Requested Status
New Mexico Electric March 2008 Order Pending
$16.6 million Fall 2008
10.7% ROE
North Dakota Electric June 2008 Pending
$17.9 million Fall 2008
10.75% ROE Interim rates
SPS Wholesale March 2008 Pending
$14.9 million Fall 2008
12.2% ROE
Texas Electric June 2008 Pending
$61.3 million overall Qtr 1 2009
11.25% ROE
NSP-Wisconsin August 2008 Pending
Limited Reopener Qtr 4 2008
$47.1 million
15. Financial Execution
Delivering on 5 – 7% EPS Growth
Guidance Range
2005 – 2008 CAGR = 9.3% $1.45 – $1.55
$1.43
$1.30
$1.15
2005 2006 2007 2008
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 2008 guidance range
16. Financial Execution
Delivering 2 – 4% Dividend Growth*
Annualized dividend per share
2004 – 2008 CAGR = 3.4%
$0.95
$0.92
$0.89
$0.86
$0.83
2004 2005 2006 2007 2008
* Xcel Energy increased the dividend by 3¢ on May 21, 2008
17. Value Proposition
Low risk, fully regulated and integrated utility
Constructive regulation with enhanced recovery
of major capital projects
Pipeline of investment opportunities
Environmental leader, well–positioned
for changing rules
Attractive Total Return
Sustainable annual EPS growth of 5% – 7%
with upside potential
Strong dividend yield of ~ 4.6%
Sustainable annual dividend growth of 2% – 4%
19. Company Profile
Traditional Regulation
NSP-Wisconsin
Operate in 8 States
NSP-Minnesota 6% of earnings *
40% of earnings *
Combination Utility
Electric 85% of net income
Gas 15% of net income
PSCo
49% of earnings * Customers
3.3 million electric
1.8 million gas
SPS 2007 Financial Statistics
5% of earnings * NI Ongoing: $612 million
NI GAAP: $577 million
* Percentages based on 2007 Ongoing Earnings
Assets: $23 billion
Equity ratio: 43%
2007 EPS Ongoing: $1.43; GAAP: $1.35
2008 Dividend $0.95 per share annualized
20. Reconciliation – Ongoing
EPS to GAAP
Dollars per share
2007
2005 2006
Ongoing Earnings $1.15 $1.30 $1.43
PSRI/COLI 0.05 0.05 (0.08)
Continuing Operations $1.20 $1.35 $1.35
Disc Ops 0.03 0.01 –
GAAP Earnings $1.23 $1.36 $1.35
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.
22. Capital Expenditure Forecast
Denotes enhanced recovery mechanism
Dollars in millions
2008 2009 2010 2011
Base & Other $1,245 $1,285 $1,310 $1,300
MERP 170 25 10 0
Comanche 3 330 60 10 0
MN Wind Tran/CapX 2020 40 65 115 270
Sherco Upgrade 5 20 75 230
MN Wind Generation 135 0 0 0
Nuclear Capacity/Life Ext 75 120 180 200
Fort St. Vrain CT 100 25 0 0
Total Committed $2,100 $1,600 $1,700 $2,000
Potential Projects 0-100 200-400 200-400 200-500
Range $2,100- $1,800- $1,900- $2,200-
$2,200 $2,000 $2,100 $2,500
23. Capital Expenditures
by Operating Company*
Dollars in millions
2008 2009 2010 2011
NSPM $935 $955 $1,060 $1,380
PSCo 945 650 680 750
SPS 170 205 180 140
NSPW 100 90 80 80
Total $2,150 $1,900 $2,000 $2,350
* Capital forecast based on middle of range
24. Credit Ratings
Secured Unsecured
Fitch Moody’s S&P Fitch Moody’s S&P
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
A–
SPS – – – BBB+ Baa1 BBB+
25. Debt Maturities
Dollars in millions
$1,200
SPS
$1,000 PSCo
NSPW
$800
NSPM
$600 Xcel Energy
$400
$200
$0
2008 2009 2010 2011 2012 2013 2014 2015
26. Strong Access to Credit Markets in 2008
Hold Co - issued $400 million of retail hybrid securities
with a 7.6% coupon in January
NSP-Minnesota - issued $500 million of first mortgage bonds
with 10 year maturity and 5.25% coupon in March
PSCo - issued $600 million of first mortgage bonds in August:
10 year tranche with a 5.8% coupon
30 year tranche with a 6.5% coupon
Potential debt issuances: 2nd half 2008
NSP–Wisconsin: Up to $250 million of first mortgage bonds
SPS: Up to $250 million of unsecured debt
27. Geographic Competitive Advantage
Biomass Resource
Wind Resource
Source: National Renewable Energy Laboratory
Solar Resource
Wind Density
High
Low
Xcel Energy
States Served
29. Smart Grid Pilot Project
Pilot project in Boulder, Colorado:
Five major partners
Total project cost ~ $100 million
Xcel Energy portion ~ $15 million
Build out completed in 2009
Scope:
Smart meters
Real time, high speed, two–way communications
Intelligent home/smart appliances
Demand Side Management
Distributed generation
Renewable energy sector growth
Energy storage devices
30. Regulatory Results
Rate relief granted 2006-2007: $400 million
2006 Minnesota electric rate case: $131 million
2006 Colorado electric rate case: $151 million
2006 Wisconsin gas and electric rate cases: $47 million
2007 Colorado gas rate case: $32 million
Other: $39 million
31. 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 ROE’s are actual earned, not weather normalized
