Xcel Energy Second Quarter 2023 Earnings Report

• Second quarter GAAP diluted earnings per share were $0.52 in 2023 compared with $0.60 in 2022.
• Xcel Energy reaffirms 2023 EPS guidance of $3.30 to $3.40.

MINNEAPOLIS–(BUSINESS WIRE)–Xcel Energy Inc. (NASDAQ: XEL) today reported 2023 second quarter GAAP and ongoing earnings of $288 million, or $0.52 per share, compared with $328 million, or $0.60 per share in the same period in 2022.

Earnings reflect the impact of unfavorable weather, higher operating and maintenance (O&M) expenses and interest charges, without expected increases in regulatory recovery to offset these drivers including the outcome of the Minnesota Electric Rate Case.

“While second quarter earnings were lower than last year due to unfavorable weather and other drivers, we are taking actions to offset the impacts and are reaffirming our 2023 earnings guidance,” said Bob Frenzel, chairman, president and CEO of Xcel Energy.

“While we move forward with these actions, I’m proud of the progress we continue to make in leading the nation’s clean energy transition,” Frenzel said. “As we reported in our annual Corporate Sustainability Report, more than half of the electricity we provide to our customers comes from carbon-free resources. This quarter, we also broke ground on the Sherco solar project and the Colorado Power Pathway transmission project, which is already spurring unprecedented opportunities for new renewable energy and economic development on the Colorado Eastern Plains.”

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:	(866) 580-3963
International Dial-In:	(400) 120-0558
Conference ID:	6716399

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 from July 27th through July 31st.

Replay Numbers
US Dial-In:	1 (866) 583-1035
Access Code:	6716199#

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 2023 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; cyber security 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 June 30								Six Months Ended June 30
			2023				2022				2023				2022
Operating revenues
Electric		$	2,601			$	2,923			$	5,364			$	5,556
Natural gas			393				476				1,681				1,566
Other			28				25				57				53
Total operating revenues			3,022				3,424				7,102				7,175
Operating expenses
Electric fuel and purchased power			1,030				1,181				2,147				2,275
Cost of natural gas sold and transported			170				251				1,014				961
Cost of sales — other			11				11				23				21
Operating and maintenance expenses			628				614				1,278				1,216
Conservation and demand side management expenses			63				81				139				173
Depreciation and amortization			565				638				1,189				1,200
Taxes (other than income taxes)			137				179				321				350
Total operating expenses			2,604				2,955				6,111				6,196
Operating income			418				469				991				979
Other income (expense), net			11				(6	)			16				(5	)
Earnings from equity method investments			9				11				20				26
Allowance for funds used during construction — equity			18				20				37				33
Interest charges and financing costs
Interest charges — includes other financing costs of $8, $8, $16 and $16, respectively			268				247				521				461
Allowance for funds used during construction — debt			(12	)			(7	)			(22	)			(12	)
Total interest charges and financing costs			256				240				499				449
Income before income taxes			200				254				565				584
Income tax benefit			(88	)			(74	)			(141	)			(124	)
Net income		$	288			$	328			$	706			$	708
Weighted average common shares outstanding:
Basic			551				546				551				545
Diluted			552				546				551				546
Earnings per average common share:
Basic		$	0.52			$	0.60			$	1.28			$	1.30
Diluted			0.52				0.60				1.28				1.30

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. We believe these measurements are useful to investors to evaluate the actual and projected financial performance and contribution of our subsidiaries. For the three and six months ended June 30, 2023 and 2022, there were no such adjustments to GAAP earnings and therefore GAAP earnings equal ongoing earnings for these periods.

Note 1. Earnings Per Share Summary

Xcel Energy’s second quarter diluted earnings were $0.52 per share in 2023, compared with $0.60 per share in 2022. The decrease was primarily driven by unfavorable weather experienced in Colorado and SPS territories as well as higher O&M and interest charges, without expected increases in regulatory recovery to offset these drivers including the outcome of the Minnesota Electric Rate Case. 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 June 30								Six Months Ended June 30
Diluted Earnings (Loss) Per Share			2023				2022				2023				2022
PSCo		$	0.17			$	0.24			$	0.56			$	0.56
NSP-Minnesota			0.23				0.22				0.48				0.45
SPS			0.15				0.17				0.25				0.27
NSP-Wisconsin			0.05				0.03				0.13				0.11
Earnings from equity method investments — WYCO			0.01				0.01				0.02				0.02
Regulated utility (a)			0.60				0.67				1.43				1.41
Xcel Energy Inc. and Other			(0.08	)			(0.07	)			(0.15	)			(0.11	)
Total (a)		$	0.52			$	0.60			$	1.28			$	1.30
(a) Amounts may not add due to rounding.

PSCo — Earnings decreased $0.07 per share for the second quarter of 2023 and were flat year-to-date. Year-to-date earnings primarily reflect higher recovery of infrastructure investment (electric and natural gas), offset by increased depreciation, O&M expenses, interest charges and unfavorable weather.

NSP-Minnesota — Earnings increased $0.01 per share for the second quarter of 2023 and $0.03 year-to-date. The year-to-date change was driven by increased electric infrastructure investment (non-fuel riders).

SPS — Earnings decreased $0.02 per share for the second quarter of 2023 and year-to-date. The impact of regulatory rate outcomes and sales growth was more than offset by unfavorable weather, increased depreciation and interest expenses (excluding the impact of the prior year Texas rate case surcharge amounts).

NSP-Wisconsin — Earnings increased $0.02 per share for the second quarter of 2023 and year-to-date. Additional electric and natural gas infrastructure investment recoveries were partially offset by higher depreciation and O&M expenses.

Xcel Energy Inc. and Other — Primarily includes financing costs at the holding company and earnings from Energy Impact Partners (EIP) funds equity method investments. Earnings decreased $0.01 per share for the second quarter and $0.04 year-to-date, largely attributable to higher interest charges.

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

Diluted Earnings (Loss) Per Share		Three Months Ended June 30				Six Months Ended June 30
GAAP and ongoing diluted EPS — 2022		$	0.60			$	1.30
Components of change – 2023 vs. 2022
Lower electric revenues, net of electric fuel and purchased power			(0.23	)			(0.09	)
Higher O&M expenses			(0.02	)			(0.09	)
Higher interest charges			(0.03	)			(0.08	)
Higher natural gas revenues, net of cost of natural gas sold and transported			—				0.08
Lower taxes (other than income taxes)			0.06				0.04
Higher other income (expense)			0.02				0.03
Lower depreciation and amortization			0.10				0.02
Lower effective tax rate (ETR) (a)			—				0.02
Other, net			0.02				0.05
GAAP and ongoing diluted EPS — 2023		$	0.52			$	1.28

(a) Includes production tax credits (PTCs) and plant regulatory amounts which are primarily offset as a reduction to electric revenues.

 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, decoupling mechanisms in Colorado and sales true-up mechanisms in Minnesota predominately mitigate the positive and adverse impacts of weather for the electric utility 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 June 30												Six Months Ended June 30
	2023 vs. Normal				2022 vs. Normal				2023 vs. 2022				2023 vs. Normal				2022 vs. Normal				2023 vs. 2022
Retail electric	$	0.001			$	0.028			$	(0.027	)		$	0.003			$	0.049			$	(0.046	)
Decoupling and sales true-up		(0.017	)			(0.013	)			(0.004	)			(0.023	)			(0.023	)			—
Electric total	$	(0.016	)		$	0.015			$	(0.031	)		$	(0.020	)		$	0.026			$	(0.046	)
Firm natural gas		(0.003	)			0.003				(0.006	)			0.026				0.019				0.007
Total	$	(0.019	)		$	0.018			$	(0.037	)		$	0.006			$	0.045			$	(0.039	)

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

		Three Months Ended June 30
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Actual
Electric residential		(8.0	)%		3.3	%		(13.1	)%		(1.1	)%		(3.5	)%
Electric C&I		(3.1	)		1.3			2.9			1.6			0.5
Total retail electric sales		(4.6	)		1.9			0.2			0.9			(0.6	)
Firm natural gas sales		3.7			(16.5	)		N/A			(11.4	)		(4.1	)

		Three Months Ended June 30
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Weather-Normalized
Electric residential		(1.3	)%		0.1	%		(3.1	)%		(1.0	)%		(1.0	)%
Electric C&I		(1.1	)		0.7			4.0			1.5			1.2
Total retail electric sales		(1.1	)		0.5			2.8			0.9			0.6
Firm natural gas sales		6.0			(3.5	)		N/A			(2.0	)		2.5

		Six Months Ended June 30
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Actual
Electric residential		(3.4	)%		(0.6	)%		(7.6	)%		(4.1	)%		(2.9	)%
Electric C&I		(2.1	)		(0.2	)		5.0			0.8			0.8
Total retail electric sales		(2.5	)		(0.4	)		2.7			(0.6	)		(0.3	)
Firm natural gas sales		5.3			(11.6	)		N/A			(13.6	)		(1.8	)

		Six Months Ended June 30
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Weather-Normalized
Electric residential		(1.1	)%		(0.6	)%		0.3	%		(0.9	)%		(0.7	)%
Electric C&I		(1.3	)		(0.3	)		5.5			1.1			1.2
Total retail electric sales		(1.2	)		(0.4	)		4.6			0.5			0.6
Firm natural gas sales		1.5			(1.8	)		N/A			(2.1	)		0.1

Weather-normalized electric sales growth (decline) — year-to-date

• PSCo — Residential sales declined due to decreased use per customer, partially offset by a 1.3% increase in customers. The C&I sales decline was related to decreased use per customer, primarily due to the manufacturing and agricultural sectors.
• NSP-Minnesota — Residential sales declined due to decreased use per customer, partially offset by a 1.1% increase in customers.
• SPS — Residential sales growth was primarily attributable to a 0.8% increase in customers, partially offset by decreased use per customer. C&I sales increased due to higher use per customer, primarily driven by the energy sector.
• NSP-Wisconsin — Residential sales declined due to decreased use per customer, offset by a 0.7% increase in customers. C&I sales growth was associated with customer growth, experienced largely in the transportation and professional services sectors.

Weather-normalized natural gas sales growth (decline) — year-to-date

• Natural gas sales reflect a lower use per residential customer in all jurisdictions, partially offset by an increase in C&I use per customer in PSCo. In addition, residential and C&I customer growth was 1.2% and 0.7%, respectively.

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. However, these price fluctuations generally have minimal 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 June 30								Six Months Ended June 30
(Millions of Dollars)			2023				2022				2023				2022
Electric revenues		$	2,601			$	2,923			$	5,364			$	5,556
Electric fuel and purchased power			(1,030	)			(1,181	)			(2,147	)			(2,275	)
Electric margin		$	1,571			$	1,742			$	3,217			$	3,281

(Millions of Dollars)		Three Months Ended June 30, 2023 vs. 2022				Six Months Ended June 30, 2023 vs. 2022
Revenue recognition for the Texas rate case surcharge (a)		$	(85	)		$	(85	)
Conservation and demand side management (offset in expense)			(18	)			(35	)
Estimated impact of weather (net of decoupling/sales true-up)			(23	)			(33	)
PTCs flowed back to customers (offset by lower ETR)			(11	)			(23	)
Regulatory rate outcomes (Minnesota, Colorado, Texas, New Mexico, Wisconsin and South Dakota) (b)			(38	)			51
Non-fuel riders			13				29
Wholesale transmission (net)			6				23
Sales and demand (c)			(1	)			22
Other (net)			(14	)			(13	)
Total decrease		$	(171	)		$	(64	)

(a)	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.
(b)	Decrease primarily relates to the Minnesota Electric Rate Case (approximately $60 million — see Note 4). Reduced electric margin was offset by corresponding reductions in depreciation expense, taxes (other than income taxes) and other items.
(c)	Sales excludes weather impact, net of partial decoupling in Colorado and sales true-up mechanism in Minnesota.

Natural Gas Margin — Natural gas margin is presented as natural gas revenues less the cost of natural gas sold and transported. Expenses incurred for the cost of natural gas sold are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues.

Natural gas expense varies with changing sales and the cost of natural gas. However, fluctuations in the cost of natural gas generally have minimal earnings impact due to cost recovery mechanisms.

Natural gas revenues, cost of natural gas sold and transported and margin:

		Three Months Ended June 30								Six Months Ended June 30
(Millions of Dollars)			2023				2022				2023				2022
Natural gas revenues		$	393			$	476			$	1,681			$	1,566
Cost of natural gas sold and transported			(170	)			(251	)			(1,014	)			(961	)
Natural gas margin		$	223			$	225			$	667			$	605

(Millions of Dollars)		Three Months Ended June 30, 2023 vs. 2022				Six Months Ended June 30, 2023 vs. 2022
Regulatory rate outcomes (Colorado and Wisconsin)		$	1			$	49
Estimated impact of weather			(5	)			5
Infrastructure and integrity riders			—				4
Other (net)			2				4
Total (decrease) increase		$	(2	)		$	62

O&M Expenses — O&M expenses increased $14 million for the second quarter and $62 million year-to-date. The increase was primarily due to timing of planned generation outages; additional bad debt expenses; higher insurance and the impact of inflationary pressures, including labor increases, partially offset by the recognition of previously deferred costs associated with the Texas Electric Rate Case in 2022 (approximately $16 million, offset in Electric revenues).

Contacts

Paul Johnson, Vice President – Treasurer & Investor Relations, (612) 215-4535

Roopesh Aggarwal, Senior Director – Investor Relations, (303) 571-2855

Xcel Energy website address:

www.xcelenergy.com

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