Energy, Automobile, EV, Renewable News | Xcel Energy 2023 Year End Earnings Report

Xcel Energy 2023 Year End Earnings Report

January 25, 2024

2023 GAAP diluted earnings per share were $3.21 compared with $3.17 per share in 2022.
2023 ongoing diluted earnings per share were $3.35 compared with $3.17 per share in 2022.
Xcel Energy reaffirms 2024 EPS guidance of $3.50 to $3.60 per share.

MINNEAPOLIS–(BUSINESS WIRE)–Xcel Energy Inc. (NASDAQ: XEL) today reported 2023 GAAP earnings of $1.77 billion, or $3.21 per share, compared with $1.74 billion, or $3.17 per share in the same period in 2022 and ongoing earnings of $1.85 billion, or $3.35 per share, compared with $1.74 billion, or $3.17 per share in the same period in 2022. See Note 6 for reconciliation from GAAP to ongoing earnings.

Ongoing earnings reflect regulatory outcomes and lower operating and maintenance (O&M) expenses, partially offset by higher depreciation and interest charges.

“2023 was another strong year for Xcel Energy, our customers, our communities, and our investors. We delivered ongoing earnings of $3.35 per share. This is the 19th consecutive year we have met our earnings guidance, which is critical to maintaining a competitive cost of capital, which benefits our customers and shareholders,” said Bob Frenzel, chairman, president and CEO of Xcel Energy.

“In Colorado, we advanced our historic Colorado Energy Plan to establish the largest clean energy portfolio ever built in the state and corresponding transmission infrastructure to ensure reliable, low-cost service for customers. We also retired the first of three coal-fired units at the Sherburne County Generating Station in Minnesota, as we make way for the largest solar facility in the Midwest. This is a milestone as we work to exit coal by 2030 and another sign that we’re leading the nation’s clean energy transition.”

“All the while, our customer bills remained amongst the lowest in the country. The average Xcel Energy residential electric and natural gas bill over the last five years has been 28% and 14% below the national average, respectively.”

At 9:00 a.m. CDT today, Xcel Energy will host a conference call to review financial results. To participate in the call, please dial in 5 to 10 minutes prior to the start and follow the operator’s instructions.

US Dial-In:	1-866-580-3963
International Dial-In:	400-120-0558
Conference ID:	8637745

The conference call also will be simultaneously broadcast and archived on Xcel Energy’s website at www.xcelenergy.com. To access the presentation, click on Investors under Company. If you are unable to participate in the live event, the call will be available for replay through Jan. 29.

Replay Numbers
US Dial-In:	1-866-583-1035
Access Code:	8637745

Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to 2024 EPS guidance, long-term EPS and dividend growth rate objectives, future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impact on our results of operations, financial condition and cash flows of resettlement calculations and credit losses relating to certain energy transactions, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in Xcel Energy’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2022 and subsequent filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: operational safety, including our nuclear generation facilities and other utility operations; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee work force and third-party contractor factors; violations of our Codes of Conduct; our ability to recover costs and our subsidiaries’ ability to recover costs from customers; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including recessionary conditions, inflation rates, monetary fluctuations, supply chain constraints and their impact on capital expenditures and/or the ability of Xcel Energy Inc. and its subsidiaries to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; our subsidiaries’ ability to make dividend payments; tax laws; uncertainty regarding epidemics, the duration and magnitude of business restrictions including shutdowns (domestically and globally), the potential impact on the workforce, including shortages of employees or third-party contractors due to quarantine policies, vaccination requirements or government restrictions, impacts on the transportation of goods and the generalized impact on the economy; effects of geopolitical events, including war and acts of terrorism; cybersecurity threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather events; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; costs of potential regulatory penalties and wildfire damages in excess of liability insurance coverage; regulatory changes and/or limitations related to the use of natural gas as an energy source; challenging labor market conditions and our ability to attract and retain a qualified workforce; and our ability to execute on our strategies or achieve expectations related to environmental, social and governance matters including as a result of evolving legal, regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets

This information is not given in connection with any sale, offer for sale or offer to buy any security.

XCEL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (amounts in millions, except per share data)
	Three Months Ended Dec. 31						Twelve Months Ended Dec. 31
		2023			2022			2023			2022
Operating revenues
Electric	$	2,695		$	2,868		$	11,446		$	12,123
Natural gas		719			1,157			2,645			3,080
Other		28			28			115			107
Total operating revenues		3,442			4,053			14,206			15,310

Operating expenses
Electric fuel and purchased power		950			1,233			4,278			5,005
Cost of natural gas sold and transported		372			776			1,456			1,910
Cost of sales — other		12			12			49			44
Operating and maintenance expenses		580			664			2,444			2,491
Conservation and demand side management expenses		71			72			286			331
Depreciation and amortization		641			606			2,448			2,413
Taxes (other than income taxes)		168			165			657			688
Loss on Comanche Unit 3 litigation		1			—			35			—
Workforce reduction expenses		72			—			72			—
Total operating expenses		2,867			3,528			11,725			12,882

Operating income		575			525			2,481			2,428

Other income (expense), net		3			7			22			(13	)
Earnings from equity method investments		8			9			35			36
Allowance for funds used during construction — equity		28			22			91			75

Interest charges and financing costs
Interest charges — includes other financing costs of $8, $8, $32 and $31, respectively		265			248			1,055			953
Allowance for funds used during construction — debt		(15	)		(9	)		(51	)		(28	)
Total interest charges and financing costs		250			239			1,004			925

Income before income taxes		364			324			1,625			1,601
Income tax benefit		(45	)		(55	)		(146	)		(135	)
Net income	$	409		$	379		$	1,771		$	1,736

Weighted average common shares outstanding:
Basic		554			549			552			547
Diluted		554			549			552			547

Earnings per average common share:
Basic	$	0.74		$	0.69		$	3.21		$	3.18
Diluted		0.74			0.69			3.21			3.17

XCEL ENERGY INC. AND SUBSIDIARIES

Notes to Investor Relations Earnings Release (Unaudited)

Due to the seasonality of Xcel Energy’s operating results, quarterly financial results are not an appropriate base from which to project annual results.

Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with generally accepted accounting principles (GAAP), as well as certain non-GAAP financial measures such as ongoing return on equity (ROE), ongoing earnings and ongoing diluted EPS. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that adjusts measures calculated and presented in accordance with GAAP. Xcel Energy’s management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.

Ongoing ROE

Ongoing ROE is calculated by dividing the net income or loss of Xcel Energy or each subsidiary, adjusted for certain nonrecurring items, by each entity’s average stockholder’s equity. We use these non-GAAP financial measures to evaluate and provide details of earnings results.

Earnings Adjusted for Certain Items (Ongoing Earnings and Ongoing Diluted EPS)

GAAP diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock (i.e., common stock equivalents) were settled. The weighted average number of potentially dilutive shares outstanding used to calculate Xcel Energy Inc.’s diluted EPS is calculated using the treasury stock method. Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items. Ongoing diluted EPS for Xcel Energy is calculated by dividing net income or loss, adjusted for certain items, by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period. Ongoing diluted EPS for each subsidiary is calculated by dividing the net income or loss for such subsidiary, adjusted for certain items, by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period.

We use these non-GAAP financial measures to evaluate and provide details of Xcel Energy’s core earnings and underlying performance. For instance, to present ongoing earnings and ongoing diluted earnings per share, we may adjust the related GAAP amounts for certain items that are non-recurring in nature. We believe these measurements are useful to investors to evaluate the actual and projected financial performance and contribution of our subsidiaries. These non-GAAP financial measures should not be considered as an alternative to measures calculated and reported in accordance with GAAP.

Note 1. Earnings Per Share Summary

Xcel Energy’s 2023 GAAP diluted earnings were $3.21 per share compared to $3.17 per share in 2022 and ongoing diluted earnings were $3.35 per share in 2023, compared with $3.17 per share in 2022. The increase in ongoing earnings per share was driven by increased recovery of infrastructure investments, higher sales and demand and lower O&M expenses, partially offset by higher depreciation and interest charges and unfavorable weather.

Fluctuations in electric and natural gas revenues associated with changes in fuel and purchased power and/or natural gas sold and transported generally do not significantly impact earnings (changes in costs are offset by the related variation in revenues).

Summarized diluted EPS for Xcel Energy:

	Three Months Ended Dec. 31						Twelve Months Ended Dec. 31
Diluted Earnings (Loss) Per Share		2023			2022			2023			2022
NSP-Minnesota	$	0.33		$	0.29		$	1.28		$	1.23
PSCo		0.29			0.31			1.26			1.33
SPS		0.15			0.12			0.70			0.64
NSP-Wisconsin		0.06			0.04			0.25			0.23
Earnings from equity method investments — WYCO		0.01			0.01			0.04			0.04
Regulated utility ^(a)		0.84			0.78			3.52			3.47
Xcel Energy Inc. and Other		(0.10	)		(0.09	)		(0.31	)		(0.29	)
GAAP diluted EPS ^(a)	$	0.74		$	0.69		$	3.21		$	3.17
Loss on Comanche Unit 3 litigation (See Note 6)		—			—			0.05			—
Workforce reduction expenses (See Note 6)		0.09			—			0.09			—
Ongoing diluted EPS ^(a)	$	0.83		$	0.69		$	3.35		$	3.17

^(a)	Amounts may not add due to rounding.

NSP-Minnesota — GAAP earnings increased $0.05 per share and ongoing earnings increased $0.09 per share for 2023 compared to 2022. The change to ongoing earnings was driven by increased recovery of electric infrastructure investments, partially offset by increased interest charges and unfavorable weather.

PSCo — GAAP earnings decreased $0.07 per share and ongoing earnings was flat for 2023. Ongoing earnings primarily reflects higher recovery of infrastructure investment and lower O&M expenses, which were partially offset by increased depreciation, interest charges and unfavorable weather.

SPS — GAAP earnings increased $0.06 per share and ongoing earnings increased $0.07 per share for 2023. Ongoing earnings were largely impacted by regulatory rate outcomes, sales growth, partially offset by increased depreciation, interest charges and unfavorable weather.

NSP-Wisconsin — GAAP and ongoing earnings increased $0.02 per share for 2023 compared to 2022. The increase in ongoing earnings was primarily a result of higher recovery of electric infrastructure investment, partially offset by unfavorable weather and higher depreciation, O&M expenses and interest charges.

Xcel Energy Inc. and Other — Primarily includes financing costs and interest income at the holding company and earnings from Energy Impact Partners (EIP) funds equity method investments. Fluctuations from 2022 levels were largely attributable to increased interest rates.

Components significantly contributing to changes in 2023 EPS compared with 2022:

Diluted Earnings (Loss) Per Share	Three Months Ended Dec. 31			Twelve Months Ended Dec. 31
GAAP and ongoing diluted EPS — 2022	$	0.69		$	3.17

Components of change — 2023 vs. 2022
Higher electric revenues, net of electric fuel and purchased power		0.15			0.07
Lower O&M expenses		0.11			0.06
Lower conservation and demand side management expenses (offset in electric revenues)		—			0.06
(Lower) higher other income (expense)		(0.01	)		0.05
(Higher) lower taxes (other than income taxes)		(0.01	)		0.04
(Lower) higher natural gas revenues, net of cost of natural gas sold and transported		(0.04	)		0.03
Higher interest expense		(0.03	)		(0.14	)
Higher depreciation and amortization		(0.05	)		(0.05	)
Workforce reduction expenses		(0.09	)		(0.09	)
Loss on Comanche Unit 3 litigation		—			(0.05	)
Other (net)		0.02			0.06
GAAP diluted EPS — 2023	$	0.74		$	3.21
Workforce reduction expenses (See Note 6)		0.09			0.09
Loss on Comanche Unit 3 litigation (See Note 6)		—			0.05
Ongoing Diluted EPS — 2023	$	0.83		$	3.35

ROE for Xcel Energy and its utility subsidiaries:

2023

NSP-

Minnesota

PSCo

SPS

NSP-

Wisconsin

Operating

Companies

Xcel Energy

GAAP ROE

8.82

7.32

9.80

10.38

8.45

10.33

Ongoing ROE

9.11

7.77

9.98

10.67

8.79

10.79

2022

NSP-

Minnesota

PSCo

SPS

NSP-

Wisconsin

Operating

Companies

Xcel Energy

GAAP and ongoing ROE

8.76

8.23

9.36

10.57

8.74

10.76

Note 2. Regulated Utility Results

Estimated Impact of Temperature Changes on Regulated Earnings — Unusually hot summers or cold winters increase electric and natural gas sales, while mild weather reduces electric and natural gas sales. The estimated impact of weather on earnings is based on the number of customers, temperature variances, the amount of natural gas or electricity historically used per degree of temperature and excludes any incremental related operating expenses that could result due to storm activity or vegetation management requirements. As a result, weather deviations from normal levels can affect Xcel Energy’s financial performance. However, electric decoupling mechanisms in Colorado (mechanism expired in September 2023) and electric sales true-up mechanisms in Minnesota and electric decoupling mechanism in Minnesota predominately mitigate the positive and adverse impacts of weather in those jurisdictions.

Normal weather conditions are defined as either the 10, 20 or 30-year average of actual historical weather conditions. The historical period of time used in the calculation of normal weather differs by jurisdiction, based on regulatory practice. To calculate the impact of weather on demand, a demand factor is applied to the weather impact on sales. Extreme weather variations, windchill and cloud cover may not be reflected in weather-normalized estimates.

Weather — Estimated impact of temperature variations on EPS compared with normal weather conditions:

	Three Months Ended Dec. 31									Twelve Months Ended Dec. 31
	2023 vs. Normal			2022 vs. Normal			2023 vs. 2022			2023 vs. Normal			2022 vs. Normal			2023 vs. 2022
Retail electric	$	(0.022	)	$	0.007		$	(0.029	)	$	0.013		$	0.138		$	(0.125	)
Decoupling and sales true-up		0.008			(0.007	)		0.015			(0.007	)		(0.061	)		0.054
Electric total		(0.014	)		—			(0.014	)		0.006			0.077			(0.071	)
Firm natural gas		(0.034	)		0.018			(0.052	)		(0.010	)		0.037			(0.047	)
Decoupling		0.012			—			0.012			0.013			—			0.013
Gas total		(0.022	)		0.018			(0.040	)		0.003			0.037			(0.034	)
Total	$	(0.036	)	$	0.018		$	(0.054	)	$	0.009		$	0.114		$	(0.105	)

Sales — Sales growth (decline) for actual and weather-normalized sales in 2023 compared to 2022:

	Three Months Ended Dec. 31
	NSP-Minnesota		PSCo		SPS		NSP-Wisconsin		Xcel Energy
Actual
Electric residential	(1.7	)%	(2.4	)%	(2.1	)%	(2.7	)%	(2.1	)%
Electric C&I	(2.2	)	(1.4	)	4.2		(1.2	)	—
Total retail electric sales	(2.1	)	(1.8	)	3.2		(1.6	)	(0.6	)
Firm natural gas sales	(15.1	)	(13.1	)	N/A		(12.4	)	(13.7	)

	Three Months Ended Dec. 31
	NSP-Minnesota		PSCo		SPS		NSP-Wisconsin		Xcel Energy
Weather-normalized
Electric residential	2.5	%	2.2	%	2.0	%	1.7	%	2.3	%
Electric C&I	(2.0	)	(0.8	)	4.3		(1.2	)	0.3
Total retail electric sales	(0.6	)	0.1		3.8		(0.3	)	0.8
Firm natural gas sales	3.0		3.7		N/A		2.9		3.4

	Twelve Months Ended Dec. 31
	NSP-Minnesota		PSCo		SPS		NSP-Wisconsin		Xcel Energy
Actual
Electric residential	(0.5	)%	(4.0	)%	(3.0	)%	(2.6	)%	(2.3	)%
Electric C&I	(1.1	)	(1.9	)	5.2		(0.5	)	0.5
Total retail electric sales	(0.9	)	(2.6	)	3.6		(1.1	)	(0.3	)
Firm natural gas sales	(12.0	)	(1.5	)	N/A		(12.6	)	(5.7	)

	Twelve Months Ended Dec. 31
	NSP-Minnesota		PSCo		SPS		NSP-Wisconsin		Xcel Energy
Weather-normalized
Electric residential	1.0	%	1.6	%	1.1	%	0.1	%	1.2	%
Electric C&I	(1.1	)	(0.4	)	5.3		(0.4	)	1.0
Total retail electric sales	(0.4	)	0.3		4.5		(0.3	)	1.0
Firm natural gas sales	—		2.3		N/A		(0.4	)	1.4

Annual weather-normalized electric sales growth (decline)

NSP-Minnesota — Residential sales increased due to a 1.2% increase in customers outpacing declines in use per customer. The decline in C&I sales was due to lower use per customer, particularly due to weakness in the manufacturing sector compared to prior year.
PSCo — Residential sales increased due to increased use per customer and a 1.3% increase in customers. The decline in C&I sales was attributable to decreased use per customer, primarily in the manufacturing sector.
SPS — Residential sales growth was primarily attributable to a 0.7% increase in customers and increased use per customer. C&I sales increased due to higher use per customer, primarily driven by the energy sector.
NSP-Wisconsin — The C&I sales decline was associated with lower use per customer, experienced primarily in the transportation and manufacturing sectors.

Annual weather-normalized natural gas sales growth (decline)

Natural gas sales reflect 1.2% residential and 0.7% C&I customer growth and an increase in C&I use per customer at PSCo. Partially offsetting these increases were lower use per residential customer in all jurisdictions.

Electric Margin — Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Expenses incurred for electric fuel and purchased power are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues.

Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas, coal and uranium. These price fluctuations generally have minimal impact on earnings impact due to fuel recovery mechanisms. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and income taxes.

Electric revenues, fuel and purchased power and margin:

	Three Months Ended Dec. 31						Twelve Months Ended Dec. 31
(Millions of Dollars)		2023			2022			2023			2022
Electric revenues	$	2,695		$	2,868		$	11,446		$	12,123
Electric fuel and purchased power		(950	)		(1,233	)		(4,278	)		(5,005	)
Electric margin	$	1,745		$	1,635		$	7,168		$	7,118

(Millions of Dollars)	Three Months Ended Dec. 31, 2023 vs. 2022			Twelve Months Ended Dec. 31, 2023 vs. 2022
Regulatory rate outcomes (MN, CO, TX, NM, WI, SD and MI)	$	83		$	100
Non-fuel riders		17			89
Sales and demand^(a)		19			57
Wholesale transmission (net)		13			28
Revenue recognition of the Texas rate case surcharge ^(b)		—			(85	)
Estimated impact of weather (net of decoupling/sales true-up)		(11	)		(51	)
Conservation and demand side management (offset in expense)		6			(43	)
PTCs flowed back to customers (offset by lower ETR)		5			(28	)
Other (net)		(22	)		(17	)
Total increase	$	110		$	50

^(a)		Sales excludes weather impact, net of partial decoupling in Colorado (mechanism expired in September 2023) and sales true-up mechanism in Minnesota.
^(b)		The decline in electric margin is due to the recognition of the Texas rate case outcome in the second quarter of 2022, which was largely offset by recognition of previously deferred costs.