XCEL ENERGY INC [XEL] Filings

10-Q 1 xel-20220930.htm 10-Q xel-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended Sept. 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-3034


Xcel Energy Inc.
(Exact Name of Registrant as Specified in its Charter)

Minnesota

41-0448030

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

414 Nicollet Mall

Minneapolis

Minnesota

55401

(Address of Principal Executive Offices)

(Zip Code)


(612)			330-5500
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $2.50 par value

XEL

Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at Oct. 25, 2022
Common Stock, $2.50 par value						547,248,496 shares

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION
Item 1 —	Financial Statements (unaudited)	5
	Consolidated Statements of Income	5
	Consolidated Statements of Comprehensive Income	6
	Consolidated Statements of Cash Flows	7
	Consolidated Balance Sheets	8
	Consolidated Statements of Common Stockholders’ Equity	9
	Notes to Consolidated Financial Statements	10
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3 —	Quantitative and Qualitative Disclosures A bout Market Risk	33
Item 4 —	Controls and Procedures	33

PART II	OTHER INFORMATION
Item 1 —	Legal Proceedings	33
Item 1A —	Risk Factors	34
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6 —	Exhibits	34

SIGNATURES		35

This Form 10-Q is filed by Xcel Energy Inc. Additional information is available in various filings with the SEC. This report should be read in its entirety.

Definitions of Abbreviations


Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former)
e prime			e prime inc.
NSP-Minnesota			Northern States Power Company, a Minnesota corporation
NSP System			The electric production and transmission system of NSP-Minnesota and NSP-Wisconsin operated on an integrated basis and managed by NSP-Minnesota
NSP-Wisconsin			Northern States Power Company, a Wisconsin corporation
PSCo			Public Service Company of Colorado
SPS			Southwestern Public Service Company
Utility subsidiaries			NSP-Minnesota, NSP-Wisconsin, PSCo and SPS
WYCO			WYCO Development, LLC
Xcel Energy			Xcel Energy Inc. and its subsidiaries


Federal and State Regulatory Agencies
CPUC			Colorado Public Utilities Commission
D.C. Circuit			United States Court of Appeals for the District of Columbia Circuit
DOC			Minnesota Department of Commerce
EPA			United States Environmental Protection Agency
FERC			Federal Energy Regulatory Commission

MPUC			Minnesota Public Utilities Commission

NDPSC			North Dakota Public Service Commission

NRC			Nuclear Regulatory Commission
OAG			Minnesota Office of Attorney General
PUCT			Public Utility Commission of Texas

SEC			Securities and Exchange Commission


Electric, Purchased Gas and Resource Adjustment Clauses
GCA			Gas cost adjustment
GUIC			Gas utility infrastructure cost rider
RES			Renewable energy standard
TCR			Transmission cost recovery adjustment


Other
AFUDC			Allowance for funds used during construction
ALJ			Administrative Law Judge
AMT			Alternative minimum tax
ATM			At-the-market
C&I			Commercial and Industrial
CCR			Coal combustion residuals
CCR Rule			Final rule (40 CFR 257.50 - 257.107) published by EPA regulating the management, storage and disposal of CCRs as a nonhazardous waste
CDD			Cooling degree-days
CEO			Chief executive officer
CERCLA			Comprehensive Environmental Response, Compensation, and Liability Act
CFO			Chief financial officer


CORE			CORE Electric Cooperative
CPCN			Certificate of Public Convenience and Necessity
CSPV			Crystalline Silicon Photovoltaic
CUB			Citizens Utility Board
DRIP			Dividend Reinvestment and Stock Purchase Program
EPS			Earnings per share
ETR			Effective tax rate
FTR			Financial transmission right
GAAP			United States generally accepted accounting principles
GE			General Electric Company
HDD			Heating degree-days
IPP			Independent power producing entity
IRA			Inflation Reduction Act
ITC			Investment Tax Credit
JSC			Just Solar Coalition
LLC			Limited liability company
LP&L			Lubbock Power and Light
MGP			Manufactured gas plant
MISO			Midcontinent Independent System Operator, Inc.
NAV			Net asset value
NOPR			Notice of Proposed Rulemaking
NOx			Nitrogen Oxides
O&M			Operating and maintenance
OATT			Open Access Transmission Tariff
PFAS			Per- and PolyFluroroAlkyl Substances
PIM			Performance Incentive Mechanism
PPA			Power purchase agreement
PTC			Production tax credit
ROE			Return on equity
RTO			Regional Transmission Organization
SMMPA			Southern Minnesota Municipal Power Agency
SPP			Southwest Power Pool, Inc.
THI			Temperature-humidity index
TOs			Transmission owners
UCA			Colorado Office of the Utility Consumer Advocate
VaR			Value at Risk
WACC			Weighted average cost of capital
XLI			Xcel Large Industrial Customers


Measurements
MW			Megawatts


Forward-Looking Statements

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 2022 and 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, 2021 and subsequent filings with the SEC, 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, including potential workforce impacts resulting from vaccination requirements, quarantine policies or government restrictions, and sales volatility; 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; 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; costs of potential regulatory penalties; regulatory changes and/or limitations related to the use of natural gas as an energy source; 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.

Table of Contents

PART I — FINANCIAL INFORMATION


ITEM 1 — FINANCIAL STATEMENTS

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
	2022		2021		2022		2021
Operating revenues
Electric	$	3,699	$	3,176	$	9,255	$	8,643
Natural gas	357		268		1,923		1,364
Other	26		23		79		69
Total operating revenues	4,082		3,467		11,257		10,076

Operating expenses
Electric fuel and purchased power	1,497		1,210		3,772		3,643
Cost of natural gas sold and transported	173		86		1,134		603
Cost of sales — other	11		11		32		28
O&M expenses	611		568		1,827		1,752
Conservation and demand side management expenses	86		78		259		222
Depreciation and amortization	607		537		1,807		1,586
Taxes (other than income taxes)	173		152		523		472
Total operating expenses	3,158		2,642		9,354		8,306

Operating income	924		825		1,903		1,770

Other (expense) income, net	(15)		(3)		(20)		5
Earnings from equity method investments	1		13		27		47
Allowance for funds used during construction — equity	20		21		53		53

Interest charges and financing costs
Interest charges — includes other financing costs of $8, $7, $24 and $22, respectively	244		211		705		628
Allowance for funds used during construction — debt	(7)		(7)		(19)		(18)
Total interest charges and financing costs	237		204		686		610

Income before income taxes	693		652		1,277		1,265
Income tax expense (benefit)	44		43		(80)		(17)
Net income	$	649	$	609	$	1,357	$	1,282

Weighted average common shares outstanding:
Basic	548		539		546		539
Diluted	548		539		546		539

Earnings per average common share:
Basic	$	1.19	$	1.13	$	2.48	$	2.38
Diluted	1.18		1.13		2.48		2.38

See Notes to Consolidated Financial Statements

Table of Contents

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in millions)


	Three Months Ended Sept. 30				Nine Months Ended Sept. 30
	2022		2021		2022		2021
Net income	$	649	$	609	$	1,357	$	1,282
Other comprehensive income
Pension and retiree medical benefits:
Net pension and retiree medical losses arising during the period, net of tax of $4, $—, $4 and $—, respectively	10		—		11		—
Reclassifications of loss to net income, net of tax of $—, $1, $1 and $2, respectively	1		4		2		5
Derivative instruments:
Net fair value increase, net of tax of $—, $1, $6 and $1, respectively	—		3		15		4
Reclassification of losses to net income, net of tax of $—, $—, $1 and $1, respectively	1		2		4		6

Total other comprehensive income	12		9		32		15
Total comprehensive income	$	661	$	618	$	1,389	$	1,297

See Notes to Consolidated Financial Statements

Table of Contents

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)


	Nine Months Ended Sept. 30
	2022		2021
Operating activities
Net income	$	1,357	$	1,282
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	1,821		1,597
Nuclear fuel amortization	91		86
Deferred income taxes	(85)		(9)
Allowance for equity funds used during construction	(53)		(53)
Earnings from equity method investments	(27)		(47)
Dividends from equity method investments	30		31
Provision for bad debts	41		53
Share-based compensation expense	19		20
Changes in operating assets and liabilities:
Accounts receivable	(221)		(152)
Accrued unbilled revenues	69		58
Inventories	(272)		(82)
Other current assets	13		8
Accounts payable	152		61
Net regulatory assets and liabilities	239		(997)
Other current liabilities	51		(22)
Pension and other employee benefit obligations	(59)		(131)
Other, net	1		(124)
Net cash provided by operating activities	3,167		1,579

Investing activities
Capital/construction expenditures	(3,325)		(3,032)
Purchase of investment securities	(1,055)		(540)
Proceeds from the sale of investment securities	1,029		531
Other, net	30		(24)
Net cash used in investing activities	(3,321)		(3,065)

Financing activities
(Repayments of) proceeds from short-term borrowings, net	(847)		1,163
Proceeds from issuances of long-term debt	2,164		1,920
Repayments of long-term debt, including reacquisition premiums	(600)		(399)
Proceeds from issuance of common stock	156		13
Dividends paid	(754)		(698)
Other, net	(14)		(11)
Net cash provided by financing activities	105		1,988

Net change in cash, cash equivalents and restricted cash	(49)		502
Cash, cash equivalents and restricted cash at beginning of period	166		129
Cash, cash equivalents and restricted cash at end of period	$	117	$	631

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(628)	$	(592)
Cash paid for income taxes, net	(16)		(6)

Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	393	$	476
Inventory transfers to property, plant and equipment	34		87
Operating lease right-of-use assets	17		4
Allowance for equity funds used during construction	53		53
Issuance of common stock for reinvested dividends and/or equity awards	40		26


See Notes to Consolidated Financial Statements

Table of Contents

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in millions, except share and per share data)


	Sept. 30, 2022		Dec. 31, 2021
Assets
Current assets
Cash and cash equivalents	$	117	$	166
Accounts receivable, net	1,196		1,018
Accrued unbilled revenues	793		862
Inventories	870		631
Regulatory assets	1,275		1,106
Derivative instruments	456		123
Prepaid taxes	54		44
Prepayments and other	329		289
Total current assets	5,090		4,239

Property, plant and equipment, net	47,287		45,457

Other assets
Nuclear decommissioning fund and other investments	3,083		3,628
Regulatory assets	2,850		2,738
Derivative instruments	90		67
Operating lease right-of-use assets	1,155		1,291
Other	420		431
Total other assets	7,598		8,155
Total assets	$	59,975	$	57,851

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	651	$	601
Short-term debt	158		1,005
Accounts payable	1,586		1,409
Regulatory liabilities	596		271
Taxes accrued	545		569
Accrued interest	244		209
Dividends payable	267		249
Derivative instruments	100		69
Operating lease liabilities	211		205
Other	545		459
Total current liabilities	4,903		5,046

Deferred credits and other liabilities
Deferred income taxes	4,762		4,894
Deferred investment tax credits	50		53
Regulatory liabilities	5,567		5,405
Asset retirement obligations	3,296		3,151
Derivative instruments	114		105
Customer advances	187		196
Pension and employee benefit obligations	255		306
Operating lease liabilities	997		1,146
Other	151		158
Total deferred credits and other liabilities	15,379		15,414

Commitments and contingencies
Capitalization
Long-term debt	23,309		21,779
Common stock — 1,000,000,000 shares authorized of $2.50 par value; 547,006,076 and 544,025,269 shares outstanding at Sept. 30, 2022 and Dec. 31, 2021, respectively	1,368		1,360
Additional paid in capital	7,979		7,803
Retained earnings	7,128		6,572
Accumulated other comprehensive loss	(91)		(123)
Total common stockholders’ equity	16,384		15,612
Total liabilities and equity	$	59,975	$	57,851

See Notes to Consolidated Financial Statements

Table of Contents

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ EQUITY (UNAUDITED)

(amounts in millions, except per share data; shares in actual amounts)


	Common Stock Issued					Retained Earnings		Accumulated Other Comprehensive Loss		Total Common Stockholders' Equity
	Shares	Par Value		Additional Paid In Capital
Three Months Ended Sept. 30, 2022 and 2021
Balance at June 30, 2021	538,305,927	$	1,346	$	7,435	$	6,146	$	(135)	$	14,792
Net income						609				609
Other comprehensive income								9		9
Dividends declared on common stock ($0.4575 per share)						(247)				(247)
Issuances of common stock	153,025	—		10						10

Share-based compensation				(2)						(2)
Balance at Sept. 30, 2021	538,458,952	$	1,346	$	7,443	$	6,508	$	(126)	$	15,171

Balance at June 30, 2022	546,807,793	$	1,367	$	7,960	$	6,747	$	(103)	$	15,971
Net income						649				649
Other comprehensive income								12		12
Dividends declared on common stock ($0.4875 per share)						(267)				(267)
Issuances of common stock	198,283	1		13						14

Share-based compensation				6		(1)