XCEL ENERGY INC [XEL] Filings

10-Q 1 xel-20220331.htm 10-Q xel-20220331

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 March 31, 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 April 21, 2022
Common Stock, $2.50 par value						544,653,284 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	8
	Consolidated Statements of Common Stockholders’ Equity	7
	Notes to Consolidated Financial Statements	9
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3 —	Quantitative and Qualitative Disclosures A bout Market Risk	30
Item 4 —	Controls and Procedures	30

PART II	OTHER INFORMATION
Item 1 —	Legal Proceedings	30
Item 1A —	Risk Factors	30
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6 —	Exhibits	31

SIGNATURES		32

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

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-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
IRS			Internal Revenue Service
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
GUIC			Gas utility infrastructure cost rider
PSIA			Pipeline System Integrity Adjustment
RES			Renewable energy standard
TCR			Transmission cost recovery adjustment


Other
AFUDC			Allowance for funds used during construction
ALJ			Administrative Law Judge
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
COVID-19			Novel coronavirus
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
GCA			Gas cost adjustment
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
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
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 Code 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 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; 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 March 31
	2022		2021
Operating revenues
Electric	$	2,633	$	2,870
Natural gas	1,090		647
Other	28		24
Total operating revenues	3,751		3,541

Operating expenses
Electric fuel and purchased power	1,094		1,386
Cost of natural gas sold and transported	710		299
Cost of sales — other	10		8
Operating and maintenance expenses	602		584
Conservation and demand side management expenses	92		73
Depreciation and amortization	562		521
Taxes (other than income taxes)	171		163
Total operating expenses	3,241		3,034

Operating income	510		507

Other income, net	1		5
Earnings from equity method investments	15		14
Allowance for funds used during construction — equity	13		14

Interest charges and financing costs
Interest charges — includes other financing costs of $8 and $7, respectively	214		205
Allowance for funds used during construction — debt	(5)		(5)
Total interest charges and financing costs	209		200

Income before income taxes	330		340
Income tax benefit	(50)		(22)
Net income	$	380	$	362

Weighted average common shares outstanding:
Basic	545		538
Diluted	545		539

Earnings per average common share:
Basic	$	0.70	$	0.67
Diluted	0.70		0.67

See Notes to Consolidated Financial Statements

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XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in millions)


	Three Months Ended March 31
	2022		2021
Net income	$	380	$	362
Other comprehensive income
Pension and retiree medical benefits:

Reclassifications of loss to net income, net of tax of $1 and $—, respectively	1		—
Derivative instruments:
Net fair value increase, net of tax of $1 and $—, respectively	5		—
Reclassification of losses to net income, net of tax of $1 and $1, respectively	1		3

Total other comprehensive income	7		3
Total comprehensive income	$	387	$	365

See Notes to Consolidated Financial Statements

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XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in millions)


	Three Months Ended March 31
	2022		2021
Operating activities
Net income	$	380	$	362
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization	567		517
Nuclear fuel amortization	30		30
Deferred income taxes	(55)		(23)
Allowance for equity funds used during construction	(13)		(14)
Earnings from equity method investments	(15)		(14)
Dividends from equity method investments	10		11
Provision for bad debts	17		14
Share-based compensation expense	4		9
Changes in operating assets and liabilities:
Accounts receivable	(191)		(57)
Accrued unbilled revenues	146		123
Inventories	107		39
Other current assets	(10)		8
Accounts payable	(34)		(21)
Net regulatory assets and liabilities	215		(961)
Other current liabilities	51		13
Pension and other employee benefit obligations	(31)		(132)
Other, net	(38)		(40)
Net cash provided by (used in) operating activities	1,140		(136)

Investing activities
Capital/construction expenditures	(942)		(1,024)
Purchase of investment securities	(156)		(199)
Proceeds from the sale of investment securities	147		194
Other, net	(1)		(6)
Net cash used in investing activities	(952)		(1,035)

Financing activities
Proceeds from (repayments of) short-term borrowings, net	(9)		893
Proceeds from issuances of long-term debt	—		1,821
Repayments of long-term debt, including reacquisition premiums	—		(400)

Dividends paid	(240)		(223)
Other, net	(15)		(10)
Net cash (used in) provided by financing activities	(264)		2,081

Net change in cash, cash equivalents and restricted cash	(76)		910
Cash, cash equivalents and restricted cash at beginning of period	166		129
Cash, cash equivalents and restricted cash at end of period	$	90	$	1,039

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(202)	$	(206)
Cash paid for income taxes, net	—		(3)

Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	288	$	412
Inventory transfers to property, plant and equipment	20		22

Allowance for equity funds used during construction	13		14
Issuance of common stock for reinvested dividends and/or equity awards	11		19


See Notes to Consolidated Financial Statements

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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 March 31, 2022 and 2021
Balance at Dec. 31, 2020	537,438,394	$	1,344	$	7,404	$	5,968	$	(141)	$	14,575
Net income						362				362
Other comprehensive income								3		3
Dividends declared on common stock ($0.4575 per share)						(246)				(246)
Issuances of common stock	638,268	1		14						15

Share-based compensation				(7)		(2)				(9)
Balance at March 31, 2021	538,076,662	$	1,345	$	7,411	$	6,082	$	(138)	$	14,700

Balance at Dec. 31, 2021	544,025,269	$	1,360	$	7,803	$	6,572	$	(123)	$	15,612
Net income						380				380
Other comprehensive income								7		7
Dividends declared on common stock ($0.4875 per share)						(265)				(265)
Issuances of common stock	505,718	1		11						12

Share-based compensation				(13)		(1)				(14)
Balance at March 31, 2022	544,530,987	$	1,361	$	7,801	$	6,686	$	(116)	$	15,732























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)


	March 31, 2022		Dec. 31, 2021
Assets
Current assets
Cash and cash equivalents	$	90	$	166
Accounts receivable, net	1,190		1,018
Accrued unbilled revenues	716		862
Inventories	505		631
Regulatory assets	1,049		1,106
Derivative instruments	125		123
Prepaid taxes	40		44
Prepayments and other	307		289
Total current assets	4,022		4,239

Property, plant and equipment, net	45,837		45,457

Other assets
Nuclear decommissioning fund and other investments	3,492		3,628
Regulatory assets	2,841		2,738
Derivative instruments	94		67
Operating lease right-of-use assets	1,239		1,291
Other	460		431
Total other assets	8,126		8,155
Total assets	$	57,985	$	57,851

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	851	$	601
Short-term debt	996		1,005
Accounts payable	1,257		1,409
Regulatory liabilities	359		271
Taxes accrued	685		569
Accrued interest	209		209
Dividends payable	265		249
Derivative instruments	97		69
Operating lease liabilities	203		205
Other	430		459
Total current liabilities	5,352		5,046

Deferred credits and other liabilities
Deferred income taxes	4,822		4,894
Deferred investment tax credits	52		53
Regulatory liabilities	5,470		5,405
Asset retirement obligations	3,210		3,151
Derivative instruments	107		105
Customer advances	192		196
Pension and employee benefit obligations	262		306
Operating lease liabilities	1,094		1,146
Other	158		158
Total deferred credits and other liabilities	15,367		15,414

Commitments and contingencies
Capitalization
Long-term debt	21,534		21,779
Common stock — 1,000,000,000 shares authorized of $2.50 par value; 544,530,987 and 544,025,269 shares outstanding at March 31, 2022 and Dec. 31, 2021, respectively	1,361		1,360
Additional paid in capital	7,801		7,803
Retained earnings	6,686		6,572
Accumulated other comprehensive loss	(116)		(123)
Total common stockholders’ equity	15,732		15,612
Total liabilities and equity	$	57,985	$	57,851

See Notes to Consolidated Financial Statements

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XCEL ENERGY INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (UNAUDITED)

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly, in accordance with GAAP, the financial position of Xcel Energy Inc. and its subsidiaries as of March 31, 2022 and Dec. 31, 2021; the results of Xcel Energy’s operations, including the components of net income, comprehensive income, and changes in stockholders’ equity for the three months ended March 31, 2022 and 2021; and Xcel Energy’s cash flows for the three months ended March 31, 2022 and 2021.

All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after March 31, 2022, up to the date of issuance of these consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2021 balance sheet information has been derived from the audited 2021 consolidated financial statements included in the Xcel Energy Inc. Annual Report on Form 10-K for the year ended Dec. 31, 2021.

Notes to the consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the consolidated financial statements and notes thereto included in the Xcel Energy Inc. Annual Report on Form 10-K for the year ended Dec. 31, 2021, filed with the SEC on Feb. 23, 2022.

Due to the seasonality of Xcel Energy’s electric and natural gas sales, interim results are not necessarily an appropriate base from which to project annual results.


1. Summary of Significant Accounting Policies

The significant accounting policies set forth in Note 1 to the consolidated financial statements in the Xcel Energy Inc. Annual Report on Form 10-K for the year ended Dec. 31, 2021 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.


2. Accounting Pronouncements

As of March 31, 2022, there was no material impact from the recent adoption of new accounting pronouncements, nor expected material impact from recently issued accounting pronouncements yet to be adopted, on Xcel Energy’s consolidated financial statements.


3. Selected Balance Sheet Data


(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Accounts receivable, net
Accounts receivable	$	1,303	$	1,124
Less allowance for bad debts	(113)		(106)
Accounts receivable, net	$	1,190	$	1,018


(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Inventories
Materials and supplies	$	299	$	289
Fuel	147		182
Natural gas	59		160
Total inventories	$	505	$	631


(Millions of Dollars)	March 31, 2022		Dec. 31, 2021
Property, plant and equipment, net
Electric plant	$	49,495	$	48,680
Natural gas plant	7,881		7,758
Common and other property	2,715		2,602
Plant to be retired (a)	1,151		1,200
Construction work in progress	1,733		1,969
Total property, plant and equipment	62,975		62,209
Less accumulated depreciation	(17,420)		(17,060)
Nuclear fuel	3,085		3,081
Less accumulated amortization	(2,803)		(2,773)
Property, plant and equipment, net	$	45,837	$	45,457

(a)Includes regulator-approved retirements of Comanche Units 1 and 2 and jointly owned Craig Unit 1 for PSCo and Sherco Units 1, 2 and 3 and A.S. King for NSP-Minnesota. Also includes SPS’ expected retirement of Tolk and conversion of Harrington to natural gas, and PSCo’s planned retirement of jointly owned Craig Unit 2.


4. Borrowings and Other Financing Instruments

Short-Term Borrowings

Short-Term Debt — Xcel Energy Inc. and its utility subsidiaries meet their short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under their credit facilities and term loan agreements.

Commercial paper and term loan borrowings outstanding for Xcel Energy:


(Amounts in Millions, Except Interest Rates)	Three Months Ended March 31, 2022			Year Ended Dec. 31, 2021
Borrowing limit	$	3,100		$	3,100
Amount outstanding at period end	996			1,005
Average amount outstanding	1,061			1,399
Maximum amount outstanding	1,357			2,054
Weighted average interest rate, computed on a daily basis	0.42		%	0.57		%
Weighted average interest rate at period end	0.93			0.31

Letters of Credit — Xcel Energy Inc. and its utility subsidiaries use letters of credit, generally with terms of one year, to provide financial guarantees for certain obligations. There were $39 million and $19 million of letters of credit outstanding under the credit facilities at March 31, 2022 and Dec. 31, 2021, respectively. Amounts approximate their fair value and are subject to fees.

Revolving Credit Facilities — In order to issue commercial paper, Xcel Energy Inc. and its utility subsidiaries must have revolving credit facilities at least equal to the amount of commercial paper borrowing limits and cannot issue commercial paper exceeding available credit facility capacity. The lines of credit provide short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

As of March 31, 2022, Xcel Energy Inc. and its utility subsidiaries had the following committed revolving credit facilities available:


(Millions of Dollars)	Credit Facility (a)		Drawn (b)		Available
Xcel Energy Inc.	$	1,250	$	780	$	470
PSCo	700		31		669
NSP-Minnesota	500		11		489
SPS	500		214		286
NSP-Wisconsin	150		—		150
Total	$	3,100	$	1,036	$	2,064

(a)Expires in June 2024.

(b)Includes outstanding commercial paper and letters of credit.

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Xcel Energy Inc., NSP-Minnesota, PSCo, and SPS each have the right to request an extension of the credit facility termination date for two additional one-year periods. NSP-Wisconsin has the right to request an extension of the credit facility termination date for an additional one-year period. All extension requests are subject to majority bank group approval.

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available credit facilities capacity. Xcel Energy Inc. and its utility subsidiaries had no direct advances on the credit facilities outstanding as of March 31, 2022 and Dec. 31, 2021.

Bilateral Credit Agreement

In April 2022, NSP-Minnesota’s uncommitted bilateral credit agreement was renewed for an additional one-year term. The credit agreement is limited in use to support letters of credit.

As of March 31, 2022, NSP-Minnesota’s outstanding letters of credit under the bilateral credit agreement were as follows:


(Millions of Dollars)	Limit		Amount Outstanding		Available
NSP-Minnesota	$	75	$	45	$	30

Other Equity — Xcel Energy Inc. issued $10 million and $13 million of equity through the DRIP during the three months ended March 31, 2022 and 2021, respectively. The program allows shareholders to reinvest their dividends directly in Xcel Energy Inc. common stock.


5. Revenues

Revenue is classified by the type of goods/services rendered and market/customer type. Xcel Energy’s operating revenues consisted of the following:


	Three Months Ended March 31, 2022
(Millions of Dollars)	Electric		Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	817	$	663	$	9	$	1,489
C&I	1,235		356		2		1,593
Other	32		—		14		46
Total retail	2,084		1,019		25		3,128
Wholesale	259		—		—		259
Transmission	152		—		—		152
Other	23		45		—		68