XCEL ENERGY INC [XEL] Filings

10-Q 1 xel-20220630.htm 10-Q xel-20220630

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 June 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 July 21, 2022
Common Stock, $2.50 par value						546,991,330 shares

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION
Item 1 —	Financial Statements (unaudited)	4
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Consolidated Balance Sheets	7
	Consolidated Statements of Common Stockholders’ Equity	8
	Notes to Consolidated Financial Statements	9
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	32
Item 4 —	Controls and Procedures	32

PART II	OTHER INFORMATION
Item 1 —	Legal Proceedings	32
Item 1A —	Risk Factors	32
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6 —	Exhibits	33

SIGNATURES		34

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
NMPRC			New Mexico Public Regulation 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
PSIA			Pipeline System Integrity Adjustment
RES			Renewable energy standard
TCR			Transmission cost recovery adjustment


Other
ACE			Affordable Clean Energy
AFUDC			Allowance for funds used during construction
ALJ			Administrative Law Judge
ATM			At-the-market
BART			Best available retrofit technology
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
CFO			Chief financial officer
CORE			CORE Electric Cooperative
CPCN			Certificate of Public Convenience and Necessity
CPP			Clean Power Plan
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
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
O&M			Operating and maintenance
OATT			Open Access Transmission Tariff
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


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 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; 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 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; and regulatory changes and/or limitations related to the use of natural gas as an energy source.

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 June 30				Six Months Ended June 30
	2022		2021		2022		2021
Operating revenues
Electric	$	2,923	$	2,597	$	5,556	$	5,467
Natural gas	476		449		1,566		1,096
Other	25		22		53		46
Total operating revenues	3,424		3,068		7,175		6,609

Operating expenses
Electric fuel and purchased power	1,181		1,047		2,275		2,433
Cost of natural gas sold and transported	251		218		961		517
Cost of sales — other	11		9		21		17
O&M expenses	614		600		1,216		1,184
Conservation and demand side management expenses	81		71		173		144
Depreciation and amortization	638		528		1,200		1,049
Taxes (other than income taxes)	179		157		350		320
Total operating expenses	2,955		2,630		6,196		5,664

Operating income	469		438		979		945

Other (expense) income, net	(6)		3		(5)		8
Earnings from equity method investments	11		20		26		34
Allowance for funds used during construction — equity	20		18		33		32

Interest charges and financing costs
Interest charges — includes other financing costs of $8, $7, $16 and $14, respectively	247		212		461		417
Allowance for funds used during construction — debt	(7)		(6)		(12)		(11)
Total interest charges and financing costs	240		206		449		406

Income before income taxes	254		273		584		613
Income tax benefit	(74)		(38)		(124)		(60)
Net income	$	328	$	311	$	708	$	673

Weighted average common shares outstanding:
Basic	546		539		545		539
Diluted	546		539		546		539

Earnings per average common share:
Basic	$	0.60	$	0.58	$	1.30	$	1.25
Diluted	0.60		0.58		1.30		1.25

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 June 30				Six Months Ended June 30
	2022		2021		2022		2021
Net income	$	328	$	311	$	708	$	673
Other comprehensive income
Pension and retiree medical benefits:

Reclassifications of loss to net income, net of tax of $—, $—, $1 and $1, respectively	1		1		2		1
Derivative instruments:
Net fair value increase, net of tax of $4, $—, $6 and $—, respectively	11		—		16		—
Reclassification of losses to net income, net of tax of $—, $—, $1 and $1, respectively	1		2		2		5

Total other comprehensive income	13		3		20		6
Total comprehensive income	$	341	$	314	$	728	$	679

See Notes to Consolidated Financial Statements

Table of Contents

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)


	Six Months Ended June 30
	2022		2021
Operating activities
Net income	$	708	$	673
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	1,210		1,043
Nuclear fuel amortization	61		56
Deferred income taxes	(135)		(67)
Allowance for equity funds used during construction	(33)		(32)
Earnings from equity method investments	(26)		(34)
Dividends from equity method investments	20		21
Provision for bad debts	30		27
Share-based compensation expense	14		21
Changes in operating assets and liabilities:
Accounts receivable	(97)		(63)
Accrued unbilled revenues	70		14
Inventories	(44)		7
Other current assets	26		24
Accounts payable	137		(15)
Net regulatory assets and liabilities	213		(794)
Other current liabilities	(134)		(265)
Pension and other employee benefit obligations	(32)		(128)
Other, net	—		1
Net cash provided by operating activities	1,988		489

Investing activities
Capital/construction expenditures	(2,040)		(1,967)
Purchase of investment securities	(787)		(628)
Proceeds from the sale of investment securities	769		410
Other, net	3		(17)
Net cash used in investing activities	(2,055)		(2,202)

Financing activities
(Repayments of) proceeds from short-term borrowings, net	(869)		1,161
Proceeds from issuances of long-term debt	2,066		1,821
Repayments of long-term debt, including reacquisition premiums	(600)		(399)
Proceeds from issuance of common stock	151		11
Dividends paid	(497)		(460)
Other, net	(15)		(12)
Net cash provided by financing activities	236		2,122

Net change in cash, cash equivalents and restricted cash	169		409
Cash, cash equivalents and restricted cash at beginning of period	166		129
Cash, cash equivalents and restricted cash at end of period	$	335	$	538

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(425)	$	(390)
Cash paid for income taxes, net	(9)		(5)

Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	401	$	509
Inventory transfers to property, plant and equipment	30		43
Operating lease right-of-use assets	15		1
Allowance for equity funds used during construction	33		32
Issuance of common stock for reinvested dividends and/or equity awards	27		35


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)


	June 30, 2022		Dec. 31, 2021
Assets
Current assets
Cash and cash equivalents	$	335	$	166
Accounts receivable, net	1,084		1,018
Accrued unbilled revenues	792		862
Inventories	645		631
Regulatory assets	1,085		1,106
Derivative instruments	534		123
Prepaid taxes	51		44
Prepayments and other	316		289
Total current assets	4,842		4,239

Property, plant and equipment, net	46,535		45,457

Other assets
Nuclear decommissioning fund and other investments	3,229		3,628
Regulatory assets	2,965		2,738
Derivative instruments	105		67
Operating lease right-of-use assets	1,202		1,291
Other	439		431
Total other assets	7,940		8,155
Total assets	$	59,317	$	57,851

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	651	$	601
Short-term debt	136		1,005
Accounts payable	1,590		1,409
Regulatory liabilities	682		271
Taxes accrued	415		569
Accrued interest	219		209
Dividends payable	266		249
Derivative instruments	142		69
Operating lease liabilities	210		205
Other	554		459
Total current liabilities	4,865		5,046

Deferred credits and other liabilities
Deferred income taxes	4,708		4,894
Deferred investment tax credits	51		53
Regulatory liabilities	5,498		5,405
Asset retirement obligations	3,271		3,151
Derivative instruments	120		105
Customer advances	184		196
Pension and employee benefit obligations	259		306
Operating lease liabilities	1,047		1,146
Other	138		158
Total deferred credits and other liabilities	15,276		15,414

Commitments and contingencies
Capitalization
Long-term debt	23,205		21,779
Common stock — 1,000,000,000 shares authorized of $2.50 par value; 546,807,793 and 544,025,269 shares outstanding at June 30, 2022 and Dec. 31, 2021, respectively	1,367		1,360
Additional paid in capital	7,960		7,803
Retained earnings	6,747		6,572
Accumulated other comprehensive loss	(103)		(123)
Total common stockholders’ equity	15,971		15,612
Total liabilities and equity	$	59,317	$	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 June 30, 2022 and 2021
Balance at March 31, 2021	538,076,662	$	1,345	$	7,411	$	6,082	$	(138)	$	14,700
Net income						311				311
Other comprehensive income								3		3
Dividends declared on common stock ($0.4575 per share)						(246)				(246)
Issuances of common stock	229,265	1		14						15

Share-based compensation				10		(1)				9
Balance at June 30, 2021	538,305,927	$	1,346	$	7,435	$	6,146	$	(135)	$	14,792

Balance at March 31, 2022	544,530,987	$	1,361	$	7,801	$	6,686	$	(116)	$	15,732
Net income						328				328
Other comprehensive income								13		13
Dividends declared on common stock ($0.4875 per share)						(266)				(266)
Issuances of common stock	2,276,806	6		153						159

Share-based compensation				6		(1)				5
Balance at June 30, 2022	546,807,793	$	1,367	$	7,960	$	6,747	$	(103)	$	15,971