Xcel Energy Earnings 2019-06-30

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 June 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 and 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		July 25, 2019
Common Stock, $2.50 par value		515,010,683 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	24
Item 3 —	Quantitative and Qualitative Disclosures about 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	36

SIGNATURES		37

	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
CPUC	Colorado Public Utilities Commission
D.C. Circuit	United States Court of Appeals for the District of Columbia Circuit
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
NMSC	New Mexico Supreme Court
NRC	Nuclear Regulatory Commission
OAG	Minnesota Office of the Attorney General
PSCW	Public Service Commission of Wisconsin
PUCT	Public Utility Commission of Texas
SDPUC	South Dakota Public Utility Commission
SEC	Securities and Exchange Commission



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



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
CACJA	Clean Air Clean Jobs Act
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
CIG	Colorado Interstate Gas Company, LLC
CT	Combustion turbine
CWIP	Construction work in progress
DCF	Discounted Cash Flows
DOC	Department of Commerce
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
LIUNA	Laborers’ International Union of North America
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	Purchased power 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 June 30						Six Months Ended June 30
	2019			2018			2019			2018
Operating revenues
Electric	$	2,249		$	2,348		$	4,574		$	4,617
Natural gas	308			292			1,102			954
Other	20			18			42			38
Total operating revenues	2,577			2,658			5,718			5,609

Operating expenses
Electric fuel and purchased power	813			935			1,727			1,867
Cost of natural gas sold and transported	112			104			591			479
Cost of sales — other	10			8			19			17
Operating and maintenance expenses	586			578			1,184			1,135
Conservation and demand side management expenses	65			69			137			139
Depreciation and amortization	439			377			872			760
Taxes (other than income taxes)	142			137			292			282
Total operating expenses	2,167			2,208			4,822			4,679

Operating income	410			450			896			930

Other income (expense)	2			(2		)	6			(1		)
Equity earnings of unconsolidated subsidiaries	9			9			19			16
Allowance for funds used during construction — equity	20			26			40			49

Interest charges and financing costs
Interest charges — includes other financing costs of $6, $6, $13 and $12, respectively	189			175			379			346
Allowance for funds used during construction — debt	(10		)	(11		)	(20		)	(22		)
Total interest charges and financing costs	179			164			359			324

Income before income taxes	262			319			602			670
Income taxes	24			54			49			114
Net income	$	238		$	265		$	553		$	556

Weighted average common shares outstanding:
Basic	$	516		$	510		$	515		$	509
Diluted	518			510			517			510

Earnings per average common share:
Basic	$	0.46		$	0.52		$	1.07		$	1.09
Diluted	0.46			0.52			1.07			1.09

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
	2019			2018		2019			2018
Net income	$	238		$	265	$	553		$	556

Other comprehensive income

Pension and retiree medical benefits:

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

Derivative instruments:
Net fair value decrease, net of tax of $(3), $0, $(5) and $0, respectively	(10		)	—		(17		)	—
Reclassification of losses to net income, net of tax of $0	1			1		2			1
	(9		)	1		(15		)	1

Other comprehensive (loss) income	(8		)	2		(11		)	3
Comprehensive income	$	230		$	267	$	542		$	559

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
	2019			2018
Operating activities
Net income	$	553		$	556
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	881			769
Nuclear fuel amortization	58			62
Deferred income taxes	47			110
Allowance for equity funds used during construction	(40		)	(49		)
Equity earnings of unconsolidated subsidiaries	(19		)	(16		)
Dividends from unconsolidated subsidiaries	20			18
Share-based compensation expense	35			10
Changes in operating assets and liabilities:
Accounts receivable	122			(11		)
Accrued unbilled revenues	115			115
Inventories	25			101
Other current assets	19			39
Accounts payable	(157		)	(1		)
Net regulatory assets and liabilities	25			143
Other current liabilities	(195		)	(247		)
Pension and other employee benefit obligations	(139		)	(142		)
Other, net	(16		)	(20		)
Net cash provided by operating activities	1,334			1,437

Investing activities
Utility capital/construction expenditures	(1,689		)	(1,854		)
Purchases of investment securities	(488		)	(367		)
Proceeds from the sale of investment securities	478			357
Other, net	(9		)	(1		)
Net cash used in investing activities	(1,708		)	(1,865		)

Financing activities
Proceeds (repayments) from short-term borrowings, net	559			(132		)
Proceeds from issuances of long-term debt	819			1,186
Repayments of long-term debt, including reacquisition premiums	(400		)	(1		)
Dividends paid	(387		)	(359		)
Other, net	(11		)	(17		)
Net cash provided by financing activities	580			677

Net change in cash and cash equivalents	206			249
Cash and cash equivalents at beginning of period	147			83
Cash and cash equivalents at end of period	$	353		$	332

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	(344	)	$	(313	)
Cash received (paid) for income taxes, net	54			(3		)

Supplemental disclosure of non-cash investing and financing transactions:
Accrued property, plant and equipment additions	$	304		$	266
Inventory transfers to property, plant and equipment	40			35
Operating lease right-of-use assets	1,843			—
Allowance for equity funds used during construction	40			49
Issuance of common stock for equity awards	32			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, 2019		Dec. 31, 2018
Assets
Current assets
Cash and cash equivalents	$	353	$	147
Accounts receivable, net	737		860
Accrued unbilled revenues	639		755
Inventories	483		548
Regulatory assets	425		464
Derivative instruments	86		87
Prepaid taxes	41		79
Prepayments and other	175		154
Total current assets	2,939		3,094

Property, plant and equipment, net	37,651

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$56.06	515	$28,850

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	2019-08-08	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

EXPO	Exponent	2,890
SCHL	Scholastic	1,390
OSBC	Old Second Bancorp	396
MTNB	Matinas Biopharma Holdings	139
TRX	Tanzanian Royalty Exploration	99
MTEX	Mannatech	43
CJJD	China Jo-Jo Drugstores	39
PKTX	Protokinetix	0
HBK	Hamilton Bancorp	0
JDCC	Deere John Capital	0

EX-31.01	xcelex3101q22019.htm
EX-31.02	xcelex3102q22019.htm
EX-32.01	xcelex3201q22019.htm