Xcel Energy Third Quarter 2021 Earnings Report

• Third quarter GAAP diluted earnings per share were $1.13 in 2021 compared with $1.14 in 2020.
• Year-to-date GAAP diluted earnings per share for 2021 were $2.38 compared with $2.25 in 2020.
• Xcel Energy narrows its 2021 EPS earnings guidance range to $2.94 to $2.98 from $2.90 to $3.00.
• Xcel Energy initiates 2022 EPS earnings guidance of $3.10 to $3.20.

MINNEAPOLIS–(BUSINESS WIRE)–Xcel Energy Inc. (NASDAQ: XEL) today reported 2021 third quarter GAAP and ongoing earnings of $609 million, or $1.13 per share, compared with $603 million, or $1.14 per share in the same period in 2020.

Earnings reflect higher electric and natural gas margins and lower operating and maintenance (O&M) expenses, which were offset by additional depreciation and lower allowance for funds used during construction (AFUDC).

“Xcel Energy posted strong year-to-date results, so we’re narrowing our 2021 earnings guidance to $2.94 to $2.98 per share. We are also issuing an updated capital forecast of $26 billion for 2022 to 2026, which will provide significant benefits to our customers, help us to achieve our goal of an 80% reduction in CO₂ emissions from 2005 levels by 2030 and a carbon free electric system by 2050, and drive rate base growth of 6.5%. In addition, we are initiating 2022 earnings guidance of $3.10 to $3.20 per share, which is consistent with our long-term growth objective,” said Bob Frenzel, president and CEO of Xcel Energy.

“I’m also pleased the company is delivering on our vision to power 1.5 million electric vehicles by 2030. We just unveiled a suite of EV charging programs for our customers in Colorado that will make it easier, faster and more affordable for customers to charge their EVs, including those living in multifamily buildings. That program is one of the reasons that we were proud to have President Biden recognize Xcel Energy’s clean energy leadership during his visit to the National Renewable Energy Laboratory last month.”

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:				(888) 204-4368
International Dial-In:				(400) 120-9101
Conference ID:				5692678

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 12:00 p.m. CDT on Oct. 28 through 12:00 p.m. CDT on Oct. 31.

Replay Numbers
US Dial-In:				(888) 203-1112
International Dial-In:				(719) 457-0820
Access Code:				5692678

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 the 2021 and 2022 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, 2020 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: uncertainty around the impacts and duration of the COVID-19 pandemic; operational safety, including our nuclear generation facilities; 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; ability to recover costs, changes in regulation and subsidiaries’ ability to recover costs from customers; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including 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; 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; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; and costs of potential regulatory penalties.

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 Sept. 30								Nine Months Ended Sept. 30
		2021				2020				2021				2020
Operating revenues
Electric		$	3,176			$	2,941			$	8,643			$	7,430
Natural gas		268				219				1,364				1,082
Other		23				22				69				67
Total operating revenues		3,467				3,182				10,076				8,579
Operating expenses
Electric fuel and purchased power		1,210				981				3,643				2,611
Cost of natural gas sold and transported		86				54				603				425
Cost of sales — other		11				11				28				28
Operating and maintenance expenses		568				579				1,752				1,708
Conservation and demand side management expenses		78				73				222				215
Depreciation and amortization		537				513				1,586				1,449
Taxes (other than income taxes)		152				158				472				453
Total operating expenses		2,642				2,369				8,306				6,889
Operating income		825				813				1,770				1,690
Other (expense) income, net		(3		)		1				5				(6		)
Earnings from equity method investments		13				12				47				29
Allowance for funds used during construction — equity		21				30				53				91
Interest charges and financing costs
Interest charges — includes other financing costs of $7, $7, $22 and $21, respectively		211				221				628				628
Allowance for funds used during construction — debt		(7		)		(11		)		(18		)		(33		)
Total interest charges and financing costs		204				210				610				595
Income before income taxes		652				646				1,265				1,209
Income tax expense (benefit)		43				43				(17		)		24
Net income		$	609			$	603			$	1,282			$	1,185
Weighted average common shares outstanding:
Basic		539				526				539				526
Diluted		539				528				539				527
Earnings per average common share:
Basic		$	1.13			$	1.15			$	2.38			$	2.25
Diluted		1.13				1.14				2.38				2.25

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), electric margin, natural gas margin, 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.

Electric and Natural Gas Margins

Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Natural gas margin is presented as natural gas revenues less the cost of natural gas sold and transported. Expenses incurred for electric fuel and purchased power and the cost of natural gas are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues. Management believes electric and natural gas margins provide the most meaningful basis for evaluating our operations because they exclude the revenue impact of fluctuations in these expenses. These margins can be reconciled to operating income, a GAAP measure, by including other operating revenues, cost of sales – other, O&M expenses, conservation and demand side management (DSM) expenses, depreciation and amortization and taxes (other than income taxes).

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 nine months ended Sept. 30, 2021 and 2020, 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 third quarter diluted earnings were $1.13 per share in 2021, compared with $1.14 in 2020. Higher depreciation and lower AFUDC were partially offset by higher electric and natural gas margins (driven by capital investment recovery and other regulatory outcomes) and lower O&M expenses.

Summarized diluted EPS for Xcel Energy:

		Three Months Ended Sept. 30								Nine Months Ended Sept. 30
Diluted Earnings (Loss) Per Share		2021				2020				2021				2020
PSCo		$	0.40			$	0.42			$	0.96			$	0.87
NSP-Minnesota		0.46				0.46				0.91				0.89
SPS		0.25				0.24				0.48				0.46
NSP-Wisconsin		0.07				0.08				0.15				0.16
Earnings from equity method investments — WYCO		0.01				0.01				0.03				0.04
Regulated utility (a)		1.19				1.21				2.54				2.42
Xcel Energy Inc. and Other		(0.06		)		(0.07		)		(0.16		)		(0.17		)
Total (a)		$	1.13			$	1.14			$	2.38			$	2.25
(a) Amounts may not add due to rounding.

PSCo — Earnings decreased $0.02 per share for the third quarter of 2021 and increased $0.09 per share year-to-date. The increase in year-to-date earnings reflects higher natural gas and electric margins (regulatory outcomes to primarily recover capital investments), partially offset by additional depreciation, O&M expenses and other taxes (other than income taxes).

NSP-Minnesota — Earnings were flat for the third quarter of 2021 and increased $0.02 per share year-to-date. The increase in year-to-date earnings reflects higher electric margin (regulatory outcomes to primarily recover capital investments), partially offset by increased depreciation and O&M expenses.

SPS — Earnings increased $0.01 per share for the third quarter of 2021 and $0.02 per share year-to-date. The increase in year-to-date earnings reflects higher electric margin (capital investment recovery and regulatory outcomes), partially offset by decreased AFUDC.

NSP-Wisconsin — Earnings decreased $0.01 per share for the third quarter of 2021 and $0.01 year-to-date. The decrease in year-to-date earnings is largely driven by higher O&M expenses and income tax expense, partially offset by higher electric margin and lower depreciation.

Xcel Energy Inc. and Other — Primarily includes financing costs at the holding company and earnings from Energy Impact Partners (EIP) funds equity method investments.

Components significantly contributing to changes in 2021 EPS compared to 2020:

Diluted Earnings (Loss) Per Share		Three Months Ended Sept. 30				Nine Months Ended Sept. 30
GAAP and ongoing diluted EPS — 2020		$	1.14			$	2.25
Components of change – 2021 vs. 2020
Higher electric margin		0.01				0.25
Higher natural gas margins		0.03				0.15
Lower Effective Tax Rate (ETR) (a)		0.01				0.12
Higher other (expense) income, net		(0.01		)		0.02
Lower interest charges		0.01				—
Lower (Higher) O&M expenses		0.02				(0.06		)
Lower AFUDC		(0.02		)		(0.09		)
Higher depreciation and amortization		(0.03		)		(0.19		)
Other, net		(0.03		)		(0.07		)
GAAP and ongoing diluted EPS — 2021		$	1.13			$	2.38
(a) Includes production tax credits (PTCs) and plant regulatory amounts, which are primarily offset in electric margin.

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, sales true-up and decoupling mechanisms in Minnesota and Colorado predominately mitigate the positive and adverse impacts of weather.

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 Sept. 30												Nine Months Ended Sept. 30
	2021 vs. Normal				2020 vs. Normal				2021 vs. 2020				2021 vs. Normal				2020 vs. Normal				2021 vs. 2020
Retail electric	$	0.067			$	0.079			$	(0.012	)		$	0.122			$	0.096			$	0.026
Decoupling and sales true-up	(0.035		)		(0.035		)		—				(0.076		)		(0.044		)		(0.032		)
Electric total	$	0.032			$	0.044			$	(0.012	)		$	0.046			$	0.052			$	(0.006	)
Firm natural gas	—				—				—				0.004				(0.005		)		0.009
Total	$	0.032			$	0.044			$	(0.012	)		$	0.050			$	0.047			$	0.003

Sales — Sales growth (decline) for actual and weather-normalized sales in 2021 compared to 2020:

		Three Months Ended Sept. 30
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Actual
Electric residential		0.4	%		0.3	%		(7.8	)%		(2.0	)%		(1.0	)%
Electric C&I		2.1			3.4			4.4			1.9			3.1
Total retail electric sales		1.4			2.3			1.7			0.8			1.8
Firm natural gas sales		(2.0	)		(0.8	)		N/A			(7.8	)		(2.0	)

		Three Months Ended Sept. 30
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Weather-Normalized
Electric residential		2.2	%		(0.3	)%		(1.4	)%		0.1	%		0.5	%
Electric C&I		1.8			3.1			5.3			2.2			3.2
Total retail electric sales		1.9			2.0			3.8			1.6			2.4
Firm natural gas sales		2.2			4.2			N/A			(4.6	)		2.4

		Nine Months Ended Sept. 30
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Actual
Electric residential		2.1	%		3.5	%		(2.1	)%		1.7	%		2.0	%
Electric C&I		1.0			2.1			1.5			3.6			1.7
Total retail electric sales		1.4			2.5			0.8			3.0			1.8
Firm natural gas sales		6.9			(1.8	)		N/A			(0.9	)		3.7

		Nine Months Ended Sept. 30
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Weather-Normalized
Electric residential		2.6	%		0.9	%		0.4	%		0.4	%		1.4	%
Electric C&I		0.9			1.4			2.0			3.2			1.5
Total retail electric sales		1.5			1.2			1.7			2.4			1.5
Firm natural gas sales		2.4			(1.1	)		N/A			(1.0	)		1.0

		Nine Months Ended Sept. 30 (2020 Leap Year Adjusted)
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Weather-Normalized
Electric residential		3.0	%		1.2	%		0.7	%		0.8	%		1.8	%
Electric C&I		1.3			1.8			2.4			3.6			1.9
Total retail electric sales		1.9			1.6			2.0			2.7			1.9
Firm natural gas sales		3.2			(0.3	)		N/A			(0.2	)		1.8

Weather-normalized and leap-year adjusted electric sales growth (decline) — year-to-date (excluding leap day)

Weather-adjusted sales results for each of our utility subsidiaries in 2021 reflect improving economies as the adverse effects of COVID-19 lessen. The recovery reflects increased sales in the C&I sector as businesses return to a more normal level. Residential sales remain elevated from pre-pandemic levels due to continuance of individuals working from home.

• PSCo — Residential sales rose based on a 1.2% increase in customers combined with higher use per customer. The growth in C&I sales was due to a 1.1% increase in customers and slightly higher use per customer, primarily in the services sector.
• NSP-Minnesota — Residential sales growth reflects a 1.2% increase in customers. The growth in C&I sales was due to a 0.9% increase in customers and slightly higher use per customer, primarily in the manufacturing sector.
• SPS — Residential sales rose based on a 0.8% increase in customers despite slightly lower use per customer. C&I sales increased due to higher use per customer, primarily driven by the energy sector.
• NSP-Wisconsin — Residential sales growth was attributable to a 0.8% increase in customer additions. The growth in C&I sales was due to a 1.1% increase in customers, primarily led by increases in the services sector.

Weather-normalized and leap-year adjusted natural gas sales growth (decline) — year-to-date (excluding leap day)

• Natural gas sales primarily reflect a 1.2% increase in residential customers and a 0.6% increase in C&I customers, combined with slightly higher customer use.

Electric Margin — 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 impact on electric margin due to fuel recovery mechanisms that recover fuel expenses. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue, margin and income taxes. See Note 5 for discussion of Winter Storm Uri.

Electric revenues and margin:

		Three Months Ended Sept. 30								Nine Months Ended Sept. 30
(Millions of Dollars)		2021				2020				2021				2020
Electric revenues		$	3,176			$	2,941			$	8,643			$	7,430
Electric fuel and purchased power		(1,210		)		(981		)		(3,643		)		(2,611		)
Electric margin		$	1,966			$	1,960			$	5,000			$	4,819

Changes in electric margin:

(Millions of Dollars)		Three Months Ended Sept. 30, 2021 vs. 2020				Nine Months Ended Sept. 30, 2021 vs. 2020
Non-fuel riders		$	59			$	196
Regulatory rate outcomes (Texas, New Mexico, Colorado, Wisconsin and North Dakota)		30				106
Proprietary commodity trading, net of sharing (a)		11				49
Sales and demand (b)		10				20
Estimated impact of weather (net of decoupling/sales true-up)		(8		)		(3		)
Texas 2019 rate case surcharge (c)		(70		)		(70		)
PTCs flowed back to customers (offset by lower ETR)		(31		)		(111		)
Other (net)		5				(6		)
Total increase in electric margin		$	6			$	181

(a)		Includes $27 million of net gains previously recognized in the first quarter of 2021, driven by market changes associated with Winter Storm Uri. Additional amounts are primarily related to long-term physical generation contracts, which have increased in value as a result of higher energy prices.
(b)		Sales excludes weather impact, net of decoupling/sales true-up, and demand is net of sales true-up.
(c)		Impact to electric margin is due to the Texas rate case outcome, which was recognized in the third quarter of 2020 and was largely offset by recognition of previously deferred costs.

Natural Gas Margin — Natural gas expense varies with changing sales and the cost of natural gas. However, fluctuations in the cost of natural gas generally have minimal impact on natural gas margin due to cost recovery mechanisms. See Note 5 for discussion of Winter Storm Uri.

Natural gas revenues and margin:

		Three Months Ended Sept. 30								Nine Months Ended Sept. 30
(Millions of Dollars)		2021				2020				2021				2020
Natural gas revenues		$	268			$	219			$	1,364			$	1,082
Cost of natural gas sold and transported		(86		)		(54		)		(603		)		(425		)
Natural gas margin		$	182			$	165			$	761			$	657

Changes in natural gas margin:

(Millions of Dollars)		Three Months Ended Sept. 30, 2021 vs. 2020				Nine Months Ended Sept. 30, 2021 vs. 2020
Regulatory rate outcomes (Colorado)		$	13			$	84
Infrastructure and integrity riders		3				7
Estimated impact of weather		(1		)		7
Other (net)		2				6
Total increase in natural gas margin		$	17			$	104

O&M Expenses — O&M expenses decreased $11 million, or 1.9%, for the third quarter and increased $44 million, or 2.6% year-to-date. Significant changes are summarized as follows:

(Millions of Dollars)		Three Months Ended Sept. 30, 2021 vs. 2020				Nine Months Ended Sept. 30, 2021 vs. 2020
Wind		$	14			$	36
Information technology and security		3				20
Distribution		9				16
Bad debt expense – PSCo settlement (See Note 4)		11				11
Natural gas systems		(4		)		5
Texas rate case deferral (offset in electric margin)		(17		)		(14		)
Benefits		(24		)		(31		)
Other		(3		)		1
Total (decrease) increase in O&M expenses		$	(11	)		$	44

Contacts

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

For news media inquiries only, please call Xcel Energy Media Relations, (612) 215-5300

Xcel Energy website address: www.xcelenergy.com

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