Xcel Energy Earnings 2019-09-30

XEL 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Document

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, 2019 or



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



001-3034		41-0448030
(Commission File Number)		(I.R.S. Employer Identification No.)



(Registrant, State of Incorporation or Organization, Address of Principal Executive Officers and Telephone Number)
Xcel Energy Inc.
Minnesota



414 Nicollet Mall



Minneapolis	Minnesota	55401



612	330-5500

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



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $2.50 par value	XEL	NASDAQ

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, 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		Oct. 17, 2019
Common Stock, $2.50 par value		524,388,096 shares

Table of Contents

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	11
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3 —	Quantitative and Qualitative Disclosures about Market Risk	37
Item 4 —	Controls and Procedures	37

PART II	OTHER INFORMATION
Item 1 —	Legal Proceedings	37
Item 1A —	Risk Factors	37
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6 —	Exhibits	38

SIGNATURES		39

	Certifications Pursuant to Section 302
	Certifications Pursuant to Section 906

This Form 10-Q is filed by Xcel Energy Inc. Additional information is available on various filings with the Securities and Exchange Commission (SEC).

Table of Contents

ABBREVIATIONS AND INDUSTRY TERMS



Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former)
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 Co.
Utility subsidiaries	NSP-Minnesota, NSP-Wisconsin, PSCo and SPS
WGI	West Gas Interstate
WYCO	WYCO Development, LLC
Xcel Energy	Xcel Energy Inc. and its subsidiaries



Federal and State Regulatory Agencies
CEC	Colorado Energy Consumers
CPUC	Colorado Public Utilities Commission
D.C. Circuit	United States Court of Appeals for the District of Columbia Circuit
DOC	Department of Commerce
EPA	United States Environmental Protection Agency
FEA	Federal Executive Agencies
FERC	Federal Energy Regulatory Commission
IRS	Internal Revenue Service
MPUC	Minnesota Public Utilities Commission
NMPRC	New Mexico Public Regulation Commission
NRC	Nuclear Regulatory Commission
OAG	Minnesota Office of the Attorney General
OCC	Office of Consumer Counsel
PSCW	Public Service Commission of Wisconsin
PUCT	Public Utility Commission of Texas
SEC	Securities and Exchange Commission



Electric, Purchased Gas and Resource Adjustment Clauses
DSM	Demand side management
FCA	Fuel clause adjustment
FPPCAC	Fuel and Purchased Power Cost Adjustment Clause
GUIC	Gas utility infrastructure cost rider
RES	Renewable energy standard
TCR	Transmission cost recovery adjustment



Other
ACE	Affordable Clean Energy
AFUDC	Allowance for funds used during construction
ASC	FASB Accounting Standards Codification
ASU	FASB Accounting Standards Update
C&I	Commercial and Industrial
CAPM	Capital Asset Pricing Model
CC	Combined cycle
CCR	Coal combustion residual
CCR Rule	Final rule (40 CFR 257.50 - 257.107) published by the EPA regulating the management, storage and disposal of CCRs as a nonhazardous waste
CEO	Chief executive officer
CFO	Chief financial officer
CIG	Colorado Interstate Gas Company, LLC
CT	Combustion turbine
CWIP	Construction work in progress
DCF	Discounted Cash Flows
DR	Demand response
DRC	Development Recovery Company
DRIP	Dividend Reinvestment and Stock Purchase Program



EPS	Earnings per share
ETR	Effective tax rate
FASB	Financial Accounting Standards Board
FTR	Financial transmission right
GAAP	Generally accepted accounting principles
GE	General Electric
IPP	Independent power producing entity
MDL	Multi district litigation
MEC	Mankato Energy Center
MGP	Manufactured gas plant
MISO	Midcontinent Independent System Operator, Inc.
NAV	Net asset value
NOI	Notice of inquiry
NOL	Net operating loss
O&M	Operating and maintenance
OATT	Open Access Transmission Tariff
PPA	Power purchase agreement
PTC	Production tax credit
ROE	Return on equity
ROFR	Right-of-first refusal
ROU	Right-of-use
RTO	Regional Transmission Organization
SMMPA	Southern Minnesota Municipal Power Agency
SPP	Southwest Power Pool, Inc.
TCJA	2017 federal tax reform enacted as Public Law No: 115-97, commonly referred to as the Tax Cuts and Jobs Act
TOs	Transmission owners



Measurements
KV	Kilovolts
MMBtu	Million British thermal Units
MW	Megawatts
MWh	Megawatt hours

Table of Contents

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 the 2019 EPS guidance, long-term EPS and dividend growth rate, 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 elsewhere in this Quarterly Report on Form 10-Q and in other securities filings (including Xcel Energy’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018, and subsequent securities filings), could cause actual results to differ materially from management expectations as suggested by such forward-looking information: 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; ability of subsidiaries 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 and their impact on capital expenditures and 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; operational safety, including our nuclear generation facilities; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices; costs of potential regulatory penalties; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; fuel costs; and employee work force and third party contractor factors.

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
	2019			2018			2019			2018
Operating revenues
Electric	$	2,771		$	2,802		$	7,345		$	7,419
Natural gas	222			227			1,324			1,181
Other	20			19			62			57
Total operating revenues	3,013			3,048			8,731			8,657

Operating expenses
Electric fuel and purchased power	952			1,040			2,679			2,907
Cost of natural gas sold and transported	55			58			646			537
Cost of sales — other	9			9			28			26
Operating and maintenance expenses	580			593			1,764			1,729
Conservation and demand side management expenses	75			77			212			216
Depreciation and amortization	447			440			1,319			1,199
Taxes (other than income taxes)	137			135			429			417
Total operating expenses	2,255			2,352			7,077			7,031

Operating income	758			696			1,654			1,626

Other income (expense)	8			(7		)	14			(8		)
Equity earnings of unconsolidated subsidiaries	10			9			29			25
Allowance for funds used during construction — equity	15			30			55			79

Interest charges and financing costs
Interest charges — includes other financing costs of $6, $6, $19 and $18, respectively	199			177			578			523
Allowance for funds used during construction — debt	(7		)	(13		)	(27		)	(35		)
Total interest charges and financing costs	192			164			551			488

Income before income taxes	599			564			1,201			1,234
Income taxes	72			73			121			187
Net income	$	527		$	491		$	1,080		$	1,047

Weighted average common shares outstanding:
Basic	$	519		$	510		$	517		$	510
Diluted	521			511			518			510

Earnings per average common share:
Basic	$	1.02		$	0.96		$	2.09		$	2.05
Diluted	1.01			0.96			2.08			2.05

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
	2019			2018			2019			2018
Net income	$	527		$	491		$	1,080		$	1,047

Other comprehensive income

Pension and retiree medical benefits:
Net pension and retiree medical gains arising during the period, net of tax of $0, $(1), $1 and $(1), respectively	—			(2		)	2			(2		)
Amortization of losses included in net periodic benefit cost, net of tax of $0, $1, $1 and $2, respectively	1			4			3			6
	1			2			5			4

Derivative instruments:
Net fair value decrease, net of tax of $(3), $0, $(8) and $0, respectively	(9		)	—			(25		)	—
Reclassification of losses to net income, net of tax of $0, $0, $1 and $1, respectively	1			1			2			2
	(8		)	1			(23		)	2

Other comprehensive (loss) income	(7		)	3			(18		)	6
Comprehensive income	$	520		$	494		$	1,062		$	1,053

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
	2019			2018
Operating activities
Net income	$	1,080		$	1,047
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	1,332			1,213
Nuclear fuel amortization	89			92
Deferred income taxes	130			184
Allowance for equity funds used during construction	(55		)	(79		)
Equity earnings of unconsolidated subsidiaries	(29		)	(25		)
Dividends from unconsolidated subsidiaries	30			27
Share-based compensation expense	47			25
Changes in operating assets and liabilities:
Accounts receivable	39			(48		)
Accrued unbilled revenues	132			114
Inventories	(60		)	37
Other current assets	3			52
Accounts payable	(56		)	37
Net regulatory assets and liabilities	(6		)	164
Other current liabilities	(100		)	(158		)
Pension and other employee benefit obligations	(138		)	(134		)
Other, net	119			(55		)
Net cash provided by operating activities	2,557			2,493

Investing activities
Utility capital/construction expenditures	(3,018		)	(2,681		)
Purchases of investment securities	(472		)	(494		)
Proceeds from the sale of investment securities	462			479
Other, net	(101		)	(10		)
Net cash used in investing activities	(3,129		)	(2,706		)

Financing activities
Repayments from short-term borrowings, net	(105		)	(376		)
Proceeds from issuances of long-term debt	1,937			1,381
Repayments of long-term debt, including reacquisition premiums	(399		)	(301		)
Proceeds from issuance of common stock	457			203
Dividends paid	(587		)	(544		)
Other, net	(14		)	(20		)
Net cash provided by financing activities	1,289			343

Net change in cash and cash equivalents	717			130
Cash and cash equivalents at beginning of period	147			83
Cash and cash equivalents at end of period	$	864		$	213

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(544	)	$	(491	)
Cash received (paid) for income taxes, net	53			(4		)

Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	420		$	340
Inventory transfers to property, plant and equipment	64			74
Operating lease right-of-use assets	1,718			—
Allowance for equity funds used during construction	55			79
Issuance of common stock for equity awards	46			52

See Notes to Consolidated Financial Statements

Table of Contents

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$64.60	515	$33,248

10-Q	2019-09-30	Quarter: 2019-09-30
10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-11-07	Other Events, Exhibits
8-K	2019-10-31	Other Events
8-K	2019-10-30	Enter Agreement, Other Events, Exhibits
8-K	2019-09-20	Other Events
8-K	2019-08-30	Other Events
8-K	2019-08-29	Other Events
8-K	2019-08-08	Other Events
8-K	2019-08-01	Earnings, Exhibits
8-K	2019-07-01	Other Events
8-K	2019-06-07	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2019-05-28	Other Events, Exhibits
8-K	2019-05-23	Other Events
8-K	2019-05-20	Other Events
8-K	2019-05-20	Shareholder Vote
8-K	2019-04-25	Earnings, Exhibits
8-K	2019-02-15	Other Events
8-K	2019-01-31	Earnings, Exhibits
8-K	2018-12-10	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2018-11-13	Enter Agreement, Other Events, Exhibits
8-K	2018-11-06	Other Events
8-K	2018-10-25	Earnings, Exhibits
8-K	2018-09-10	Other Events
8-K	2018-09-05	Other Events, Exhibits
8-K	2018-08-27	Other Events
8-K	2018-08-21	Officers, Exhibits
8-K	2018-07-26	Earnings, Exhibits
8-K	2018-07-03	Other Events
8-K	2018-06-25	Other Events, Exhibits
8-K	2018-06-07	Other Events
8-K	2018-05-18	Shareholder Vote
8-K	2018-05-15	Other Events
8-K	2018-05-04	Other Events
8-K	2018-04-26	Earnings, Exhibits
8-K	2018-02-07	Earnings, Exhibits
8-K	2018-01-11	Earnings, Regulation FD

DUK	Duke Energy	66,507
EXC	Exelon	45,081
ED	Consolidated Edison	28,830
AEE	Ameren	18,867
LNT	Alliant Energy	12,470
PCG	Pg&E	5,938
PCG	Pacific Gas & Electric	5,938
NWE	Northwestern	3,615
AVA	Avista	3,057
VVPR	VivoPower	19

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EX-31.02	xcelex3102q32019.htm
EX-32.01	xcelex3201q32019.htm