XCEL ENERGY Q1 FY26 earnings call XEL

The quarter's defining disclosure was the detail behind the Google data-center agreement, which management repeatedly framed as a model for responsible large-load development: the customer covers the entire cost of its service and infrastructure, credit protections apply, and existing customers come out ahead rather than subsidizing growth. The contract has been filed with the Minnesota PUC, and the structural protections — minimum bills, termination fees, credit requirements and incremental cost tests — are being codified into large-load tariffs, with Colorado filed in April and Texas, New Mexico and Wisconsin to follow. Sustainability is embedded in the template as well: the data center will use air-cooled rather than water-cooled technology, a point management highlighted as meaningful even in water-rich Minnesota. Commissions have been receptive precisely because existing customers are protected.

Interest from hyperscalers and developers continues to build across all eight states, with the deepest near-term traction in the Upper Midwest where the company has the most generation length, while the Southwest is attractive on price and Colorado is pursuing legislation to create a framework for attracting data centers. The definitive, non-exclusive joint development agreement with NextEra reached in April pairs Xcel's regulated development and transmission strength with a national development platform, and management described it as unbounded in scale, created for speed-to-power. Management attributes its win rate to regional diversity, speed, and sustainability, and sees hyperscaler willingness to fund newer technologies — Google's long-duration storage today, potentially advanced geothermal in Colorado if pending legislation passes — as a durable theme aligning data-center growth with state clean-energy policy.

One quarter into the largest annual capital program in company history, management moved a substantial majority of the incremental opportunity flagged last October into line of sight, spanning SPP-allocated transmission, Colorado-approved generation, and the generation and storage supporting the Google project. The remaining unchecked catalysts follow a defined calendar: the SPS RFP filing in New Mexico this quarter, the NSP RFP filing in Minnesota later this year, a Colorado GTS RFP, a competitive 765 kV bid, and further data-center ESAs. Most of the identified spend lands in the back half of the five-year plan with some flowing into the early 2030s, which management views as the mechanism for extending growth visibility beyond 2030; a comprehensive plan roll-forward comes with Q3 results.

The quarter produced constructive regulatory momentum: an approved settlement in North Dakota, a black-box settlement with staff in South Dakota awaiting a commission decision, and a Minnesota ALJ report management characterized as balanced and constructive, with full detail to come in the 10-Q. In Colorado, intervenor testimony landed consistent with the prior case, and management pointed to its record of settling three of the past four electric cases as grounds for optimism ahead of the settlement deadline. Management also sees the newly available comprehensive capital riders as a path to filing rate cases less frequently, contingent on a constructive Colorado electric settlement setting the base framework. Separately, the Colorado PUC Sunset Bill would expand securitization authority — a tool Xcel already holds for the Comanche 3 retirement balance at the end of 2030 and has proposed for wildfire investment and Winter Storm Uri fuel costs — and the company is engaged on the legislation through the end of session.

The financing message was pre-funding: equity forwards and hybrid issuance completed just one quarter into a sixty-month plan already cover more than half of the base plan's equity need, with forward structures giving flexibility to time draw-downs against capital deployment. Management defended the Moody's position by pointing to its long-term cash-flow-to-debt framework, acknowledging metrics get pressured in a large build cycle while insisting a strong balance sheet is essential to weather market volatility^🌐 through an extended growth period. The incremental-equity rule of thumb for new capex is revisited at each plan roll-forward based on cash profile, project timing and tax benefits, and alternative financing structures used by peers are under evaluation.

The Smokehouse Creek claims process is well advanced, with the statute of limitations for property claims now passed at the two-year mark and settlements reached with the subrogated insurance plaintiffs in the three largest claims by acreage; management committed to quarterly updates on the remaining tail. In Colorado, the company enters wildfire season with low snowpack and drier conditions, but pointed to years of investment in situational awareness, more surgical operational protocols with less customer impact, system hardening in fire-prone areas, new outage-management and customer-notification systems, and community engagement as the basis for expecting a safe summer (portions of this passage were garbled in transcription). The quarter also benefited from an increase in estimated insurance proceeds for the Marshall Wildfire litigation, treated as nonrecurring.

Management devoted unusual airtime to execution de-risking, acknowledging that supply chains and qualified labor will tighten industry-wide as generation, transmission and distribution buildouts accelerate. Beyond the gas-turbine slots secured with Siemens and GE, the company cited available wind turbines, solar equipment, breakers and high-voltage transformers, plus negotiated framework agreements with multiple Tier 1 EPC and equipment vendors across transmission, distribution and gas. Scale is the argument: a long visible project pipeline lets EPCs move crews site-to-site for efficiency, supports multi-gigawatt equipment orders, and makes the company's regulated bids more competitive in its own RFPs. The Sherco retirement remains on track with transmission and generation ready to reuse the interconnection.

Affordability is the strategic underpinning of the large-load pitch: customer bills are among the lowest in the country, tax credits from the 2026-2030 project portfolio flow back to customers, and data-center contracts are structured to push bills lower still by spreading fixed transmission costs over more megawatt-hours. On the MISO capacity auction, management dismissed the recent print as a near-term signal — the market is volatile and largely bilateral, and Xcel's length in the Upper Midwest lets it sell into the market while basing capacity additions on long-term planning with MISO rather than auction results. Field crews earned EEI's Emergency Recovery Award for 2025 storm restoration in the Upper Midwest, and Ethisphere named Xcel a World's Most Ethical Company honoree for the seventh consecutive year.