XCEL ENERGY INC [XEL] Filings

10-Q 1 xel-20210930.htm 10-Q xel-20210930

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, 2021


☐			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)


N/A
(Former name, former address and former fiscal year, if changed since last report)

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. 26, 2021
Common Stock, $2.50 par value						538,675,570 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	22
Item 3 —	Quantitative and Qualitative Disclosures A bout Market Risk	35
Item 4 —	Controls and Procedures	35

PART II	OTHER INFORMATION
Item 1 —	Legal Proceedings	35
Item 1A —	Risk Factors	35
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6 —	Exhibits	35

SIGNATURES		37

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
COEO			Colorado Energy Office
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
ERCOT			Electric Reliability Council of Texas
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
PSCW			Public Service Commission of Wisconsin
PUCT			Public Utility Commission of Texas

SEC			Securities and Exchange Commission
UCA			Colorado Office of the Utility Consumer Advocate


Electric, Purchased Gas and Resource Adjustment Clauses
DSM			Demand side management
FCA			Fuel clause adjustment
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
ASC			FASB Accounting Standards Codification
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
COVID-19			Novel coronavirus
DRIP			Dividend Reinvestment and Stock Purchase Program
EIP			Energy Impact Partners
EPS			Earnings per share
ETR			Effective tax rate
FASB			Financial Accounting Standards Board
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
KEPCO			Korea Electric Power Corporation
LLC			Limited liability company
LP&L			Lubbock Power and Light
MDL			Multi district litigation
MEC			Mankato Energy Center
MGP			Manufactured gas plant
MISO			Midcontinent Independent System Operator, Inc.
NAV			Net asset value
NOL			Net operating loss
NOPR			Notice of Proposed Rulemaking
O&M			Operating and maintenance
OATT			Open Access Transmission Tariff


PFAS			Per- and PolyFluoroAlkyl Substances
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
VIE			Variable interest entity


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 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 filing 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; 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.

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
	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

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
	2021		2020		2021		2020
Net income	$	609	$	603	$	1,282	$	1,185
Other comprehensive income (loss)
Pension and retiree medical benefits:

Reclassifications of loss to net income, net of tax of $1, $—, $2 and $1, respectively	4		1		5		4
Derivative instruments:
Net fair value increase (decrease), net of tax of $1, $—, $1 and $(3), respectively	3		—		4		(10)
Reclassification of losses to net income, net of tax of $—, $—, $1 and $1, respectively	2		1		6		4

Total other comprehensive income (loss)	9		2		15		(2)
Total comprehensive income	$	618	$	605	$	1,297	$	1,183

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
	2021		2020
Operating activities
Net income	$	1,282	$	1,185
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	1,597		1,459
Nuclear fuel amortization	86		94
Deferred income taxes	(9)		45
Allowance for equity funds used during construction	(53)		(91)
Earnings from equity method investments	(47)		(29)
Dividends from equity method investments	31		32
Provision for bad debts	53		39
Share-based compensation expense	20		60
Changes in operating assets and liabilities:
Accounts receivable	(152)		(108)
Accrued unbilled revenues	58		124
Inventories	(82)		(37)
Other current assets	8		(68)
Accounts payable	61		(97)
Net regulatory assets and liabilities	(997)		(139)
Other current liabilities	(22)		(54)
Pension and other employee benefit obligations	(131)		(138)
Other, net	(124)		(103)
Net cash provided by operating activities	1,579		2,174

Investing activities
Capital/construction expenditures	(3,032)		(3,681)
Sale of MEC	—		684
Purchase of investment securities	(540)		(1,275)
Proceeds from the sale of investment securities	531		1,260
Other, net	(24)		(9)
Net cash used in investing activities	(3,065)		(3,021)

Financing activities
Proceeds from (repayments of) short-term borrowings, net	1,163		(95)
Proceeds from issuances of long-term debt	1,920		2,940
Repayments of long-term debt, including reacquisition premiums	(399)		(701)
Proceeds from issuance of common stock	13		5
Dividends paid	(698)		(638)
Other, net	(11)		(27)
Net cash provided by financing activities	1,988		1,484

Net change in cash, cash equivalents and restricted cash	502		637
Cash, cash equivalents and restricted cash at beginning of period	129		248
Cash, cash equivalents and restricted cash at end of period	$	631	$	885

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(592)	$	(582)
Cash paid for income taxes, net	(6)		(17)

Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	476	$	933
Inventory transfers to property, plant and equipment	87		250
Operating lease right-of-use assets	4		361
Allowance for equity funds used during construction	53		91
Issuance of common stock for reinvested dividends and/or equity awards	26		51


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, 2021		Dec. 31, 2020
Assets
Current assets
Cash and cash equivalents	$	631	$	129
Accounts receivable, net	1,022		916
Accrued unbilled revenues	656		714
Inventories	587		535
Regulatory assets	1,073		640
Derivative instruments	228		49
Prepaid taxes	55		42
Prepayments and other	235		250
Total current assets	4,487		3,275

Property, plant and equipment, net	44,730		42,950

Other assets
Nuclear decommissioning fund and other investments	3,446		3,096
Regulatory assets	3,101		2,737
Derivative instruments	72		30
Operating lease right-of-use assets	1,342		1,490
Other	339		379
Total other assets	8,300		7,732
Total assets	$	57,517	$	53,957

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	621	$	421
Short-term debt	1,747		584
Accounts payable	1,319		1,237
Regulatory liabilities	338		311
Taxes accrued	553		578
Accrued interest	206		203
Dividends payable	246		231
Derivative instruments	76		53
Operating lease liabilities	218		214
Other	440		407
Total current liabilities	5,764		4,239

Deferred credits and other liabilities
Deferred income taxes	4,913		4,746

Regulatory liabilities	5,389		5,302
Asset retirement obligations	3,094		2,884
Derivative instruments	99		131
Customer advances	199		197
Pension and employee benefit obligations	515		666
Operating lease liabilities	1,187		1,344
Other	207		228
Total deferred credits and other liabilities	15,603		15,498

Commitments and contingencies
Capitalization
Long-term debt	20,979		19,645
Common stock — 1,000,000,000 shares authorized of $2.50 par value; 538,458,952 and 537,438,394 shares outstanding at Sept. 30, 2021 and Dec. 31, 2020, respectively	1,346		1,344
Additional paid in capital	7,443		7,404
Retained earnings	6,508		5,968
Accumulated other comprehensive loss	(126)		(141)
Total common stockholders’ equity	15,171		14,575
Total liabilities and equity	$	57,517	$	53,957

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, 2021 and 2020
Balance at June 30, 2020	525,204,978	$	1,313	$	6,679	$	5,538	$	(145)	$	13,385
Net income						603				603
Other comprehensive income								2		2
Dividends declared on common stock ($0.43 per share)						(226)				(226)
Issuances of common stock	302,321	1		9						10
Repurchase of common stock	(54,475)	—		(4)						(4)
Share-based compensation				10		(3)				7
Balance at Sept. 30, 2020	525,452,824	$	1,314	$	6,694	$	5,912	$	(143)	$	13,777

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	—