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    XEL
    Earnings call· Jun 2025(Q2 FY25)

    XCEL ENERGY Q2 FY25 earnings call XEL

    Jul 31, 2025 Source

    Executive summary

    Xcel Energy Q2 FY25 — Strong Earnings and Significant Capital Investment Upside

    Xcel Energy reported strong second-quarter earnings, driven by rate case outcomes and sales growth, and reaffirmed its full-year EPS guidance. The company highlighted a significant increase in its capital investment pipeline, with an additional $15 billion identified to meet growing energy demand and enhance grid reliability. Management also provided updates on wildfire risk mitigation efforts and ongoing legal proceedings, expressing confidence in its position for the upcoming Marshall trial.

    Highlights

    5

    • Delivered strong earnings of $0.75 per share in Q2 FY25, up from $0.54 in Q2 FY24.

    • Identified an additional $15 billion of capital investment opportunity beyond the existing $45 billion 5-year plan, driven by demand growth and reliability needs.

    • Weather-normalized electric sales increased 3.5% for Q2 FY25, driven by strong growth in SPS and PSCo.

    • Resolved 187 of 253 submitted Smokehouse Creek wildfire claims, reaffirming the low end of estimated liability at $290 million, well below $500 million insurance coverage.

    • Received regulatory approval for a $1.9 billion Wildfire Mitigation Plan in Colorado and a $500 million System Resiliency Plan in Texas.

    Concerns

    4

    • Higher interest charges decreased earnings by $0.04 per share in Q2 FY25 due to increased debt levels and interest rates.

    • Higher depreciation and amortization decreased earnings by $0.03 per share in Q2 FY25 due to increased system investment.

    • Increased O&M decreased earnings by $0.02 per share in Q2 FY25.

    • The Marshall trial is scheduled to begin on September 25 and conclude by mid-to-late November, with the company maintaining its equipment did not cause the second ignition.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year 2025 Adjusted EPS
    $3.75 to $3.85 per share
    high materiality
    High
    Long-term EPS growth rate
    Upper half of 6% to 8% target range
    high materiality
    High
    Weather-normalized electric sales growth
    3%
    medium materiality
    High
    Capital Investment Plan Update
    Formal update of 5-year forecast through 2030
    high materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Company-wide
    Weather-normalized electric sales increased 3.5% for the second quarter, driven by strong sales growth across segments in SPS and PSCo.
    Weather-normalized electric sales growth: 3.5% YoY
    		————

    Operational metrics

    19
    Adjusted EPS
    $0.75up from $0.54
    Q2 FY25

    Earnings for the second quarter of 2025.

    Earnings impact from higher revenue (electric and natural gas service)
    $0.24
    Q2 FY25

    Impact from rate case outcomes and sales growth.

    Earnings impact from higher AFUDC
    $0.07
    Q2 FY25

    Positive earnings driver.

    Earnings impact from higher interest charges
    -$0.04
    Q2 FY25

    Offsetting driver, reflecting higher debt levels and interest rates.

    Earnings impact from higher depreciation and amortization
    -$0.03
    Q2 FY25

    Offsetting driver, driven by increased system investment.

    Earnings impact from increased O&M
    -$0.02
    Q2 FY25

    Offsetting driver.

    Equity issued via ATM
    $1 billion
    Q2 FY25

    Part of the base plan's $4.5 billion equity need, with $2.5 billion already accomplished.

    Equity financing need (base plan)
    $4.5 billion
    Multi-year

    Total equity financing for the base capital plan.

    Equity financing accomplished (base plan)
    $2.5 billion
    YTD FY25

    Equity raised between late last year and Q2 FY25 ATM issuance.

    Equity financing mix for incremental capital
    40%
    Future

    Rule of thumb for balanced mix of debt and equity for incremental capital.

    Gas turbine reservations
    19
    Current

    Procured to meet reliability needs, with 9 required for the SPS portfolio.

    Wildfire claims resolved (Smokehouse Creek)
    187out of 253 submitted
    YTD FY25

    Progress on Smokehouse Creek wildfire claims process.

    Settlement agreements (Smokehouse Creek)
    $176 million
    YTD FY25

    Committed amount in settlement agreements.

    Settlement payments made (Smokehouse Creek)
    $123 million
    YTD FY25

    Amount paid through Q2 FY25 for Smokehouse Creek settlements.

    Estimated liability (Smokehouse Creek)
    $290 millionlow end of estimate
    Current

    Reaffirmed low end of estimated liability, well below insurance coverage.

    Insurance coverage (Smokehouse Creek)
    $500 millionapproximately
    Current

    Total insurance coverage for Smokehouse Creek claims.

    Outages from storms
    200,000
    Recent

    Customers affected by two rounds of major storms in Minnesota, Wisconsin, and South Dakota.

    Crew members deployed for storm restoration
    2,000
    Recent

    Including crews from Colorado, Texas, contractors, and mutual aid partners.

    PSCo earned ROE (rolling 12-month average)
    7.8%
    Rolling 12-month

    Expected to improve through the balance of the year and next year with full implementation of the distribution rider and potential rate cases.

    Industry KPIs

    4
    MetricValueDetails
    Retail sales growth3.5%%
    Regulatory rate base growth—
    New gas generation builds upgrades2,100 MWMW
    Contracted large load capacity esas loas1.1 GWGW

    Orderbook & backlog

    2
    Data centers under construction and contract1.1 GWQ2 FY25

    Targeting an additional 1 GW by year-end, reaching 2.5 GW by 2030.

    Data center pipeline (Tier 2 opportunities)7 GWQ2 FY25

    Robust pipeline beyond current commitments.

    Deals & partnerships

    1
    Various (hyperscalers, data center developers)Energy Service Agreements (ESAs) for data centers

    Making solid progress on the target pipeline and in active negotiations on several ESAs. Aiming to meet the goal of contracting the toll base plan by the end of this year.

    Capital programs

    9
    5-year infrastructure investment forecastunderway$45 billion
    Period spend: $2.6 billion
    Start: Fall 2024

    Benefit: Resilient and reliable energy infrastructure

    Initial 5-year capital plan set last fall. $2.6 billion invested in Q2 FY25.

    Incremental capital investment opportunityidentified$15 billion

    Benefit: Meet customer needs, support increased energy demand, strengthen T&D systems

    Additional capital investment identified beyond the base $45 billion plan, largely within the current 5-year forecast and some beyond. Formal update expected in Q3 FY25.

    SPS Generation Planfiled

    Benefit: 5,200 MW of generation storage (4,500 MW company-owned: 1,300 MW wind, 700 MW solar, 2,100 MW natural gas CTs, 500 MW storage)

    Filed in June to support energy needs in Texas and New Mexico region. Anticipate filing for regulatory approval over remainder of year with commission decisions in 2026.

    Upper Midwest Firm Dispatchable Projectsapproved

    Benefit: 720 MW

    Received approval in Minnesota for two projects.

    Upper Midwest Wind Generationapproved

    Benefit: 2,800 MW

    Company-owned wind that will use the new Minnesota Energy Connection transmission line.

    Regional Transmission Projectsplanned$3 billion to $4 billion

    Benefit: Two 765 kV lines (MISO tranche 2.1, SPP ITP portfolio)

    Incremental investment to support reliability and regional growth.

    Colorado Resource Planworking through

    Benefit: 5 GW to 14 GW of new generation

    Actively working through the resource planning process, likely requiring significant new generation to meet reliability and customer demand. Commission decision expected in Q3 FY25.

    Colorado Wildfire Mitigation Planapproved$1.9 billion
    Funding: partial securitization mechanism

    Benefit: Enhanced reliability and resiliency, managed customer bill impacts

    Approved by Colorado PUC in June, included an extension of excess liability insurance deferral.

    Texas System Resiliency Planapproved$500 million

    Benefit: Enhanced reliability and resiliency

    Approved by Texas Commission in July.

    Risks & headwinds

    6
    Higher interest rates and debt levelsQ2 FY25

    Decreased earnings by $0.04 per share in Q2 FY25

    Increased depreciation and amortizationQ2 FY25

    Decreased earnings by $0.03 per share in Q2 FY25

    Increased O&M expensesQ2 FY25

    Decreased earnings by $0.02 per share in Q2 FY25

    Marshall Fire litigationQ3-Q4 FY25

    Trial starting September 25, expected to conclude mid-to-late November

    Mitigation: Company maintains its equipment did not cause the second ignition; prepared for court; open to settlement discussions.

    Policy landscape changes (federal legislation, executive orders, trade/tariff actions)Ongoing

    Challenges to wind and solar tax credits, potential limitations to credits

    Mitigation: Monitoring and managing through changes; adjusting as needed; leveraging positive outcomes like lower corporate tax rates, accelerated depreciation, and transferability of eligible credits.

    Resource adequacy and grid reliabilityThrough 2031

    Need for 15-29 GW of new generation before 2031

    Mitigation: Aggressively building generation and transmission; procuring gas turbine reservations; investing in wind, solar, storage, and natural gas CTs.

    What to watch in Q3 FY25

    5

    5-year Capital Plan Update

    Q3 FY25
    CurrentAdditional $15B identified beyond $45B base plan
    TargetFormal updated 5-year forecast through 2030

    Why it matters

    This update will provide clarity on the scope, timing, and financing of the significant capital investment opportunities, directly impacting future rate base and EPS growth.

    We expect to formally update our 5-year forecast through 2030 on our third quarter earnings update.

    Q&A highlights

    7

    How will the $15 billion CapEx upside convert into the base capital plan, and are there regulatory or timing considerations that might keep dollars out of the Q3 update?

    Management stated that the SPS RFP and transmission projects are largely for the 2026-2030 timeframe, with some beyond. They are generally conservative with regulatory views and will provide a clear, transparent update in Q3. The Colorado resource plan's commercial operations extend through 2031, impacting both the 5-year plan and longer-term CapEx.

    “A lot of that will be in the kind of '26 to 2030 time frame with a little bit falling out. But as I think about it, we're generally conservative with what we view from a regulatory perspective. So we'll be really clear and transparent on Q3 in terms of what's in our base plan. And what's outside of it.”

    asked by Carly Davenport · answered by Brian Van Abel

    2 min read6 chapters

    Detailed Narrative

    01

    Significant Capital Investment Upside

    Xcel Energy anticipates an additional $15 billion in capital investment beyond its current $45 billion 5-year plan, driven by increased energy demand from electrification, onshoring, and data centers. This incremental need includes nearly 5,200 MW of generation and storage by 2030 in Texas and New Mexico, 720 MW of firm dispatchable projects and 2,800 MW of wind in the Upper Midwest, and $3-4 billion in regional transmission projects. Regulatory approvals are pending, with a formal update to the 5-year forecast expected in Q3 FY25.

    02

    Strong Q2 FY25 Financial Performance

    The company reported Q2 FY25 earnings of $0.75 per share, an increase from $0.54 per share in Q2 FY24. This growth was primarily driven by higher revenue from electric and natural gas service due to rate case outcomes and sales growth, contributing $0.24 per share, and increased AFUDC, adding $0.07 per share. These positive drivers were partially offset by higher interest charges, depreciation, and O&M expenses.

    03

    Robust Energy Demand and Data Center Growth

    Xcel Energy is experiencing strong energy demand from electrification of transportation, manufacturing, and home heating, as well as the AI boom and onshoring trends. The company has 1.1 GW of data centers under construction and contract, with a target to contract an additional 1 GW by year-end, reaching 2.5 GW by 2030. A robust pipeline of 7 GW of Tier 2 opportunities exists beyond current commitments, indicating sustained growth potential across all operating regions.

    04

    Wildfire Risk Mitigation and Regulatory Support

    The company continues to invest in wildfire risk reduction, including advanced camera/weather station technologies and enhanced power line safety. In June, the Colorado PUC approved a $1.9 billion Wildfire Mitigation Plan, and in July, the Texas Commission approved a $500 million System Resiliency Plan. Constructive wildfire legislation was also signed into law in Texas and North Dakota, providing liability protection when utilities comply with approved mitigation plans.

    05

    Regulatory Filings and Rate Case Activity

    Xcel Energy filed an electric rate case in South Dakota requesting a $44 million increase based on a 10.3% ROE and 52.9% equity ratio. The company is evaluating options for electric rate cases in New Mexico and Colorado, and a natural gas rate case in Minnesota later this year. The Colorado resource plan, which may require 5-14 GW of new generation by 2031, is also awaiting a commission decision in Q3 FY25.

    06

    Smokehouse Creek and Marshall Fire Updates

    Progress continues on Smokehouse Creek wildfire claims, with 187 of 253 claims resolved and $123 million paid out of $176 million in settlement agreements. The company reaffirmed the low end of its estimated liability at $290 million, well below its $500 million insurance coverage. For the Marshall trial, scheduled for September 25, Xcel Energy maintains its equipment did not cause the second ignition and is prepared for court, though open to settlement discussions.

    AI-generated summary of the company’s earnings call. Not investment advice.