Operator:

Hello, and welcome to Xcel Energy Second Quarter 2024 Earnings Conference Call. My name is George, and I will be coordinator for today's event. Please note this conference is being recorded. And for the duration of the call, your lines will be in a listen-only mode. However, a question-and-answer session will follow-up at the prepared remarks and questions will only be taken from institutional investors and analysts, reporters can contact media relations with inquiries and individual investors and others can reach out to Investor Relations. [Operator Instructions] I'd now like to hand the call over to your host, Mr. Paul Johnson, Vice President, Treasurer and Investor Relations to begin today’s conference. Please go ahead, sir.

Bob Frenzel:

Thank you, Paul, and good morning, everyone. Thank you for joining us today. I'm pleased to report that the company delivered another quarter of solid operational and financial progress. Our long-term business model remains robust. We continue to deploy capital for the benefit of our customers and communities. We enable a future powered by cleaner fuels and a more resilient and intelligent grid. We partner with stakeholders to encourage economic development, we provide products and services capable of meeting our customers' most important needs. In the most recent quarter, we invested $1.7 billion in resilient and reliable energy infrastructure. We delivered earnings per share of $0.54 for our owners. We provided industry-leading storm response and strong customer reliability despite challenging weather conditions for our customers. We accelerated wildfire risk reduction measures to enable safer and more resilient communities. Xcel Energy's commitment to our communities and investors is anchored by our core investment thesis as an integrated pure-play utility and a clean energy leader. For more than two decades, we've been a leading provider of wind energy to our customers, and we were the first US energy company to commit to a carbon-free electric future. We delivered our earnings guidance for 19 straight years, one of the best records in our industry, and we look to make it 20 this year. We have a long-term and transparent growth plan, making investments in clean generation new to and enhanced energy grids and economic development programs to support our communities vitality. In 2020, our continuous improvement programs have saved $400 million in recurring O&M expense, while improving operating outcomes and reducing enterprise risk. Our steel for fuel strategy delivered more than $4 billion in customer fuel-related savings since 2017. This discipline alongside support of state and federal policies enables us to reduce emissions and keep residential electric and natural gas bills 28% and 14% below the industry average and growth well below the rate of inflation. With our 11,000-plus employees commitment to serving customers, we're $0.14 ahead of 2023 year-to-date earnings, and as a result, we are reaffirming our 2024 earnings guidance. During the quarter, continued our progress on our clean energy transition through multiple resource planning and RFP processes. We issued an RFP for 1,600 megawatts of wind, solar, storage and hybrid resources in the Upper Midwest. These are due in September, we expect commission decisions in 2025. We now have active RFPs for over 4,000 megawatts of resources in the Upper Midwest . In Mexico and Texas, commissions approved 418 megawatts of company-owned solar generation that's expected to be in service between 2026 and 2027. And last week, we issued an RFP and SPS seeking 3,100 megawatts of accredited capacity which could ultimately yield more than 5,000 megawatts of renewables and firm dispatchable generation. Bids are due in January of 2025, and we expect commission approval in 2026. Last quarter, I discussed a number of initiatives that Xcel Energy is taking to reduce wildfire risk. I'm incredibly proud of what our team has been able to accomplish in a short amount of time. Since March, we've developed the capability to deliver enhanced daily wildfire safety operations across the enterprise as well as the ability to conduct proactive, public safety power shutoff as evidenced by recent events in Colorado, Texas and New Mexico during threatening conditions. We've accelerated pole inspections, including replacing priority 1 and priority 2 poles across our system. We're expanding visual coverage with our Pano AI-enabled camera system to over 50,000 square miles in Colorado, enabling first responders access to critical information, including precision triangulation and fire locations. And we've accelerated deployment of Technosylva's risk modeling system and expect it to have it operational enterprise-wide by the end of the year. We recently filed an updated Colorado wildfire mitigation plan that integrates industry experience incorporates evolving risk assessment methodologies, adds new technology and expands the scope, pace and scale of our programs to reduce wildfire risk. The plan has four primary programs that include enhanced situational awareness, the improved meteorology, area risk mapping and modeling, artificial intelligence cameras and continuous monitoring. Operational mitigations that include enhanced power line safety settings and public safety, power shutoff capabilities, system resiliency through increased asset assessment and remediation, Pole replacements, line rebuilds, targeted undergrounding and vegetation management and improved coordination, technology and real-time data sharing with customers and other stakeholders as well as PSPS resiliency rebates. We expect to file resiliency plans with SPS that will include wildfire mitigation later this year and are developing former wildfire mitigation plans for the rest of our states. Finally, we're working with stakeholders at both the state and federal level on legislation to enhance the safety of our communities from evolving weather risks while protecting the financial integrity of companies that provide these essential services. Moving to economic development. We're seeing a material shift in long-term electric demand on our system after several years of relatively flat sales growth. Our current five-year electric sales forecast assumes approximately 3% annual growth. Nearly half of that growth is driven by electrification of oil and natural gas production, electric vehicle adoption, and beneficial electrification, economic growth and increasing customer counts. The remainder of that growth is driven by contracted and high-probability data center load, including previously announced deals of Meta and Microsoft in Minnesota and QTS in Colorado as well as others. We believe this forecast is now conservative, given a pipeline of data center requests totaling 6,700 megawatts by 2030. If all of the data center requests came to fruition, our data center sales CAGR would be over 9%. We continue working through the request and plan on updating our sales and capital investment forecast on the third quarter call. Xcel Energy is strategically positioned to secure economic data center load with high-quality partners due to our access low-cost renewable generation, the availability of water and fiber infrastructure, unencumbered land and our speed to market. At the same time, we'll continue to focus on the impacts to all customers, ensuring we have both economic contracts and system resources to provide safe, clean and reliable power to our communities. During the quarter, there were two regulatory outcomes that provide for cleaner and more resilient electric and natural gas distribution system, First, Colorado passed a bill that enables qualified electric utilities to make necessary distribution investments with timely recover to achieve state policy goals, including transportation and building electrification and enabling distributed energy resources. This was the result of extensive stakeholder process supported by the Colorado Energy office, our IBW labor partners, environmental advocates, NRDC and WRA as well as the Colorado Solar and Storage Association and others. Second, the Colorado Commission approved the modified clean heat plant, which establishes a starting point for reducing greenhouse gas emissions from our natural gas distribution system. Full year budget of up to $441 million was approved, which sets funding primarily for beneficial electrification and natural gas efficiency. We look forward to working with the stakeholders and regulators to implement these initiatives to meet our long-term sustainability goals in Colorado. Finally, we recently released our 19th sustainability report. We're proud of our history at Xcel Energy. And as we look forward, we're committed to delivering the essential energy services our customers value and need while driving positive change that supports the environment and communities. I'm deeply appreciative thankful for the commitment and hard work of our employees and partners to deliver a clean energy future. We remain relentless in our pursuit of our vision and will continue to deliver long-term value to shareholders an affordable, reliable and sustainable energy for the communities in which we live work. With that, I'll turn it over to Brian.

Operator:

Thank you very much, sir. [Operator Instructions] Our first question is coming from Jeremy Tonet of JPMorgan. Please go ahead.

Bob Frenzel:

Hey, good morning, Jeremy.

Bob Frenzel:

Yes, I appreciate the question. Look, as I said in my prepared remarks, I'm really proud of what we're going to accomplish on the operational side to provide the real-time risk reduction that we need today to give us the time to make the necessary enhancements and system resiliency and hardening for our system over time. Clearly, we're further ahead in Colorado. We just filed our second wildfire mitigation plan, and we've been working on the first one for over four years. But that shouldn't be taken as anything other than a huge focus that we also have in Texas and in Mexico around our plans there. Our capability to do wildfire safety operations and PSPS exists on a daily basis across the entire enterprise, which drives real-time risk reduction. We're benefited as a company by all the hard work of the people that have come in front of us in California. We expect to dramatically reduce our wildfire risk based on their experiences and doing some of the lessons learned from all of those organizations. They've been more than accommodating and helping us and others across the country. And clearly, the need is there and evidence, we think there's a real supportive backdrop in our states to help us pursue these necessary investments to continue to risk reduce our business.

Jeremy Tonet:

Got it. That’s all very helpful. Thank you for that. And then I just wanted to pivot here a little bit to the data center opportunity, as you outlined there, it seems like the opportunities are accelerating from when you discussed it with the market. Just wondering if you could frame that a bit more what you're seeing and where across your footprint that's happening? And just any more color would be helpful.

Brian Van Abel:

Yes, Jeremy, I can just expand on that a little bit. If you could pop the slide that we put in our earnings release today, which is updated from the data center slide that we had a couple of months ago. You can see it's a significant increase in the customer requests. As Bob said, the biggest opportunity was in Minnesota, now it's growing. We're seeing significant opportunity in Colorado now and even expanding outside of Minnesota and Wisconsin and South Dakota. And so we're working closely internally with our economic development team. We think about it as we're updating our long-term sales forecast right now, which will roll out in Q3. Our long-term sales forecast right now is in the 2% to 3% range. I would expect that to look more like the 4% to 5% range and our base long-term sales forecast when we roll that out as we incorporate some of these high probability loads into our five-year guidance. Just another good example about how we look to proactively work with our commissions. The Minnesota commission here in Minnesota has publicly stated, they didn't have planning sessions around how do we accommodate and meet this both economic development opportunity for our communities and also, how do we provide benefit to all of our current customers and create more opportunity for investment.

Jeremy Tonet:

Got it. Great to hear. Big numbers there. Congrats. I’ll leave it there. Thanks.

Bob Frenzel:

Thank you.

Carly Davenport:

Hey. Good morning. Thanks so much for taking my questions.

Carly Davenport:

Good morning. Wanted to just follow-up on a couple of Jeremy's questions there. Maybe just first on the wildfire front, is there any sort of feedback from stakeholders, you can share so far on the wildfire mitigation plan you filed in Colorado? And then you had mentioned plans to file additional wildfire mitigation or system resiliency plans in other states. Can you just talk about what forms that might take and where you're most focused in the near-term?

Carly Davenport:

Great. That’s really helpful. Thank you for that. And then the second one is just on the load growth in the data center piece. Could you just talk a little bit about your process for working down the request into the pipeline? Or I guess, said another way, what is sort of your bar for including load in that near-term pipeline estimate, which goes into your broader load growth estimate?

Carly Davenport:

Got it. Okay. Thank you so much for the time.

Julien Dumoulin-Smith:

Hey, good morning, team. Thanks guys very much. Good to chat again.

Julien Dumoulin-Smith:

Thank you. Appreciate that. Absolutely. Guys Nicely done here. I got to say, lots on that pipeline. Maybe to pick up where Carly lifted off here on just kind of probability weighting here. How do you think about that filtering through your processes? For instance, I know you didn't emphasize as much the relative load growth of the SPS, for instance, in the context of data centers. But how do you think about even the numbers that you guys were throwing out there of the 5 gigawatt number getting updated here sort of pro forma for that process that you're working through right now? Effectively, as you probability weight and update with 4Q, how does that filter into the processes you already have in flight for procurement given what seems like a perhaps more pressing need to address the RFPs that would need to be necessary?

Brian Van Abel:

Julien, just let me add to that a little bit. If we think about all the RFPs we have in flight, for example, Minnesota. We have multiple RFPs in flight while we're looking at this potential new load that's rapidly evolving. So we have that opportunity as we go through these RFPs and we're in a resource plan filing with the Minnesota Commission, which we provided kind of what call a base view, but also in electrification in a high load view. So we have processes in flight that helps us move quickly on the staff and secure resources and work with our stakeholders, similar in SPS. We just followed an RFP for over 3,000 megawatts of accredited capacity. Now that was based on our resource plan in New Mexico that had a base plan, but also a high electrification plan working with all of our oil and gas customers. And that's why you see us talking about this 5,000 to 10,000 megawatt nameplate capacity range in SPS because we see that load up there, we're working with our oil and gas customers. So SPS is much more of an electrification in the oil and gas industry. Down there, we're in Colorado, Minnesota, in the Midwest is much more of a potential data center opportunity.

Brian Van Abel:

Julien, and maybe I'll just take a step back and just say this is a really good piece of legislation now supported by a broad coalition of stakeholders. As we think about it, it's really, kind of, how do we help advance state policy around beneficial expectation, whether that's electrification of the transport sector, electrification of home heating and so worked with a very broad group of stakeholders to get support and passage of this legislation. As I think about it, there is a distribution system plan that we'll file in November in Colorado, which is really kind of the basis of this legislation and think of it almost a resource plan for the distribution system above their capacity investments we need to make and how do we think about the different levels of penetration and how it accelerated some of this can be. And so we'll file that in November, work through that. And so there's a -- the full rider will be implemented in 2026 around the investments needed to kind of drive our distribution system forward. And now when we think about from an earned ROE perspective, we've earned about 8% approximately Colorado over the past few years. So this will really help us drive a significant closure of that gap as we think about it as we go through kind of like I said, 2026 when it's fully implemented. But we also have other investments in Colorado as we think about the renewable investments we're making and the transition investments that we're making to help drive state policy and achieve our decarbonization goals of the state that could concur recovery too. And so as those investments ramp up, that will help close that gap too.

Operator:

Thanks for your question, sir. We'll now move to Sophie Karp calling from KeyBanc. Please go ahead, ma’am. Your line is open.

Brian Van Abel:

Yes. Sophie, as I think about it, right? I mean, I think about this data center opportunity in two ways. One is really getting the contracts right and having the data centers -- having -- adding new data centers provide benefit to all of our customers on the system. And that's really important to demonstrate benefit going to the commission with the contract that demonstrates benefit to our current customers. Now longer term, absolutely, there's an investment opportunity or investment need here to support these customers. These are large loads. And so as I think about it, we're moving through the planning process right now, both from, as I talk about a sales forecast perspective and the high probability loads and how did that translate into our capital forecast. So I expect a broader update from us bolt-on that 5-year capital plan and the sales forecast plan in Q3, and that should help address your question.

Bob Frenzel :

Hey, Sophie, it's Bob. So look, I think that -- great questions. We sit in a resource rich area for wind and solar. We see increasing needs for storage resources. But as evidenced by our most recent and our resource plans, we do have incremental combustion turbines that serve to back up and serve our customers to make sure that we have reliability when the wind or the sun or the storage is unavailable. So in our most recent ERPs in Colorado, our recent resource plan up here in the upper Midwest, we have incremental CTs coming back. And I think with increased load like of the magnitude we're talking about, we would actually see increased numbers of backup generation, almost as an insurance policy for our networks to make sure that we have reliable and affordable energy for all.

Bob Frenzel :

I'm sorry, can you say that again?

Bob Frenzel :

No. At this point, we don't have any plans today to add any combined cycles to our network. But I mean, we have to evaluate the probability of real load and what the resource availability is to serve it. So not today, but I wouldn't say that anything is off the table.

Operator:

Thank you. We'll now take questions from Greg Oro [ph] calling from UBS. Please go ahead.

Brian Van Abel :

Hey, Greg, I can provide some color on that. So 141 claims settled, and we're moving expeditiously through those and have already reached settlement on 43 of those claims. And so how I look at it, these claims have spanned, call it, a variety items, everything from homes to agriculture buildings, to fencing cattle, feed, personal property. So it gives us a pretty good data point while so -- well, 43 settled is not all encompassing, but it is a good data point. And I think the important point as we think about it, reassess our liability of $250 million and the claims so far support and help validate our accrual. Another data point, the report that received in Q2 was from the Texas A&M Agralife extension. And that report covered -- it was an economic estimate of the agricultural losses from the entire complex of fires down there. And that report for a value of $123 million agriculture losses. And that report included some very large buckets, cattle, feed, agricultural structures. And so when we look at that report, and that number and what we've included for our accrual, it does support our assumptions. And so that's the latest information we have through Q2, and we'll continue to try updates as we move through time.

Operator:

Thank you. Our next question will be coming from Nick Campanella calling from Barclays. Please go ahead.

Brian Van Abel:

Yes. Nick, yes, we sort of received intervenor testimony relatively recently. We have a settlement deadline of August 27. And we certainly look forward to working with our stakeholders with interveners to attempt to reach a settlement. So, we've reached settlement in the past few cases in Colorado, so we're hopeful that we can reach this settlement, also ready to go through the fully litigated process if we need to, that'd be hearings in middle September and this CPUC decision by the end of the year.

Brian Van Abel:

Yes. I mean the ATM will be our primary vehicle. It doesn't mean we wouldn't be opportunistic if there's a potential block. We'll also look at some of the other equity content products as we go through the time. But overall, ATM is our plan. But also I look at where our CFO to debt is at 17%, right. Now we have flexibility, given we have strong credit metrics, and that's why maintain a strong balance sheet as we have flexibility in terms of when we can look at issuing equity.

Operator:

Thank you, very much. Mr. Campanella. We'll now go to Travis Miller calling from Morningstar. Please go ahead.

Brian Van Abel:

Travis. Yes, we're looking -- we're planning on November 1 filing for sort of a multiyear plan on the electric side. If you remember, we're in year 3 of our multiyear plan right now. So we've communicated that. As we think about the gas side, no, we always look to see if we're going to reach a constructive settlement with the parties, and we've been able to on the gas side. So I think that's a good data point as we think about it. So early days given that we haven't made the filing yet, but I think November 1 filing, it's longer process in Minnesota. But once we get through kind of the intervenor direct testimony or robotic testimony, we'll certainly look to see if there's an opportunity to settle.

Bob Frenzel:

Hey Travis, it's Bob. Look, when I think about the opportunity here that's in front of us, our obligation is the company is to make sure that we were able to serve current customers as well as our future customers and make sure that everyone is treated economically and fairly. I'll be honest, we don't have -- we're 21, 22 gigawatt peak load system today. We don't have 6,000 megawatts of capacity available today. We have some, but we would need to, as part of our existing RFPs and resource plans to add more generation to the stack. So that would take a resource planning process and a regulatory process. I think we've proven over the last seven or eight years, our ability to do that and do that with efficiency to make sure that we can address the expanding needs of our customers and states. So we will need generation over time. But I think we have plans and processes that are in place that allow us to speed the market to address the needs that our new customers might need today, as well as the growth that they forecast through the end of the decade.

Bob Frenzel:

So largely, these customers are largely transmission customers, so we'll talk transmission grid needs. And we've got, again, some capacity on the grid today to meet their needs today. In all of our jurisdictions, we're expanding our transition pretty aggressively, whether it's through the MISO LRTP processes, up here in the upper US and what's been approved and what's on the comment [ph], as well as the Power pathway in Colorado and other transmission proceedings in [indiscernible], and then our work in SPS with the Southwest Power Pool to build more transmission down there. So I think we've got transmission in flight. Again, the capacity today is available, but not the full extent of the 6,700. So our goal is to make sure the transmission generation needs are ramped according to what becomes our high probability customer needs.

Operator:

Thank you for the questions Mr. Miller. Our next question will be coming from Ryan Levine calling from Citi. Please go ahead.

Brian Van Abel:

Ryan, you broke up on the second part of your question, but first part of the question seemed like it was around the rate design as we think about these data center loads. So far, we've approached that on a contract-by-contract basis, and so it can be unique. But the principle is that we need to make sure that the revenue that we receive from these data centers covers more than the incremental cost that comes to our system. So what I mean simply is that our current customers are not harmed by adding these. And whether that means you have a provision in the contract, that's a ratchet if they don't deliver on the load they said they're going to deliver or a take-or-pay type contract. So these are fluid conversations, but the principle is that we need to bring something to our commission that is in the best interest of our current customers. And if you wouldn't -- I couldn't catch up. You broke a little bit on the second part of your question, so if you could repeat it, it would be helpful.

Brian Van Abel:

Look, I mean I think VPPs can almost be another demand-side management tool as we think about it. So we think there could be a role there. I didn’t know that was part of our distribution legislation in Colorado to do some planning and study work around VPPs. So I absolutely think they can play a role in the future. Just like if you think about some of this potential large load, could you have it on an interruptible load uncertainty period. So I think there's a lot of opportunity, as you think about the overall umbrella of more demand side management tools to address in sort of this significant loan growth that we see in our future.

Ryan Levine:

Thank you. And then, do you have a way of quantifying what percentage of historical Wildfire risk has been reduced or will be reduced by the implementation of the current WMP? And how do you see this risk evolving in the coming years?

Brian Van Abel:

Yeah. And Ryan, if you run our wildfire mitigation plan in Colorado, we say that the WMP investments and plan will reduce our risk similar to that of what we see in the leading utilities in this space.

Operator:

Thank you, sir. We do not have any further questions at this time. I'll turn the call back to CFO, Brian Van Abel, for closing remarks. Thank you.

Operator:

Thank you very much, sir. Ladies and gentlemen, that concludes today's conference. We wish everyone a good day. And you may now disconnect.

Operator:

Hello, and welcome to Xcel Energy's First Quarter 2024 Earnings Conference Call. My name is Melissa, and I will be your coordinator for today's event. Please note this conference is being recorded.

Paul Johnson:

Good morning, and welcome to Xcel Energy's 2024 First Quarter Earnings Call. Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer; and Brian Van Abel, Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer questions if needed.

Robert Frenzel:

Thanks Paul, and good morning, and welcome, everyone. It's been 2 months since wildfires impacted our Texas neighbors and before Brian walks through our financial results, I'd like to discuss the actions we're taking to protect the public and to strengthen our systems resiliency in the states that we serve.

Our strategy consists of 3 phases:

first, immediate near-term response; second, regulatory activities needed to address comprehensive wildfire mitigation and resiliency plans; third, additional state and federal legislation that could be valuable.

The most significant earnings drivers for the quarter included the following:

the impact of electric and natural gas rate reviews to recover our capital investments increased earnings by $0.12 per share. Lower O&M expenses increased earnings by $0.06 per share, reflecting lower labor and benefit costs, lower bad debt expenses and gains from a land sale for a data center.

Brian Van Abel:

Yes, certainly, Nick. If I go touch upon all that the multiple parts of that question, just please be feel free to follow up. Absolutely we're pretty excited about the upcoming RFP and SPS. We talked about it before seeking a range of generation between 5,000 and 10,000 megawatts combination of renewables and dispatchable firm capacity. And we'll look to launch that RFP in July. It's a little bit of a longer timeline. So I'll help you understand in terms of how -- what's underlying.

Nicholas Campanella:

Got it. That's really helpful. And then I guess just -- and you did hit all the points. To put a finer point on the equity needs, I guess, do you just see really kind of no change to current plans, even with the multiple a little bit lower here?

Steven Fleishman:

So just on the Texas fire. You mentioned the legislative report coming out in May. Just what should we expect to be coming out in that? Is that -- who caused it? Or how should we think about what's going to come out in that report, like we focus on?

Brian Van Abel:

I think, yes, Steve. I'll handle this one, and I'll give you [ key helpers], obviously, we'll point to our disclosures. But I'll give you a little bit more color in terms of that $215 million in the lower end of.

Brian Van Abel:

And here's very large that some of our pockets it includes. Residential properties and related losses, cattle and feed, agricultural structures and fencing, noneconomic damages and then a number of other items. So obviously, this is subject to changes again additional information since we're still early in the process.

Brian Van Abel:

Obviously, it's something you'd expect. Bob and I to evaluate in the normal course, what other options are there. I think we've been -- what you've seen from us is that we were a pretty straightforward conservative financing plan from a company perspective. So I don't -- I think right now, that's our current plan of action. I think I've been on record about not at all interested in minority interest sale in the line. So that's our fair plan of action as we sit here today.

Robert Frenzel:

That's a great question. In the conversation and Steve, and it's very topical, both inside the walls of the building as well as around the industry. On your specific questions with regard to the Sherco site, the site get powered with grid energy. And as you know, we're the first company to commit to being a 100% carbon-free electricity.

Jeremy Tonet:

Just want to continue with the data center question with one more finer point here, I guess, as it relates to SPS, just given the need for power and given the very cheap natural gas in that area, I don't -- wouldn't necessarily think of SPS as a place that would -- data centers would target, but just wondering if what you're seeing there if cheap Power is a draw? Just any thoughts in general?

Brian Van Abel:

Yes. Right now, there is no cap on noneconomic damages in Texas. There is a cap on [ punitive damages ] this 2x economic damages falls up to [ 750k ] cap for noneconomic.

Robert Frenzel:

Yes. Jeremy, it's Bob. Thanks for the question. First, I'm really proud of what the team did in Colorado in executing on behalf of public safety during a volatile weather event. As you can imagine, the -- [ because we have the second ] file on our wildfire mitigation plan, it's going to have a lot of continuation of the existing plan and probably incremental areas that we'd be looking for. But as I think about the big buckets of opportunity there, really early warning capabilities.

Jeremy Tonet:

Got it. Very helpful, there. And just a last one, if I could, as it relates to gas cases in Minnesota and Colorado, any updates there that we should be thinking about or conversations with stakeholders and regulators on those cases and how you feel about those cases.

Carly Davenport:

Thanks for all the details so far. Maybe just on the resiliency plan filing at SPS that you expect in late '24. Can you just remind us of the timing to getting that ultimately approved and when that spend would come into play? And then I guess any early views on kind of the sizing of that potential filing or in addition to the wildfire mitigation piece that you flagged what other buckets of spend do you think will be important there.

Carly Davenport:

Got it. Okay. That's helpful. And then the follow-up is just on O&M, nice benefit during the quarter there. Is that just a function of kind of year-over-year timing? Or is there a potential downside to that annual guidance on O&M being up 1% to 2% for the year?

Operator:

Our next question is from Anthony Crowdell with Mizuho.

Brian Van Abel:

Anthony. Yes, that's a good question as we think about it. So I assume you're asking specifically about wildfire insurance or excess liability.

Brian Van Abel:

I think yes, all our other programs, I would say, are relatively stable or don't have significant challenges. As I think about wildfire insurance and just let's say for the wildfire insurance versus the overall access liability is they are 2 different things. I think this is a very key industry issue, both at the state and federal level. And if you've been following with EEI, this is one of their top priorities this year from a federal perspective.

Robert Frenzel:

Anthony, thanks for the question. As Brian said, this is a big and emerging national issue. And we've seen pressure both on the retail side of insurance, homeowners struggling to get homeowner insurance that protects from wildfire risk, and you're seeing it in the commercial side on the wholesale side as well.

Operator:

Our next question is from Sophie Karp with KeyBanc.

Brian Van Abel:

Sophie, yes. I mean, so first of all, I'll talk about the claims process and still early, but we obviously encourage people to submit claims. It was [ 46 ] so far. But how it works is anyone can submit a claim, and when they submit that claim, they don't waive their right to pursue a lawsuit. But if there is a claim settlement, then that absolves or release any other potential lawsuits that they could file.

Sophie Karp:

Got it. Got it. And then my other question on Colorado and next to the gas got this clarification from the commission there that they want the utilities to pursue non-pipeline alternatives, I guess, for gas in Colorado. Could you comment on that and just sort of how that will impact your investment in that state, particularly with gas?

Brian Van Abel:

Yes. Sophie, so actually, you bring up increasing compression station, it's certainly an opportunity. I think generally it's thought of -- what are the electrification opportunities. Say, there's going to be a new neighborhood builds. What is the alternative, it's -- okay, you saw that [indiscernible] gas and expansion of a pipeline or what are the alternatives from electrification perspective. So that's probably the best way to think about it.

Operator:

Our next question is from Ryan Levine with Citi.

Robert Frenzel:

Ryan, it's Bob. Certainly, we think of PSPS as a kind of a tool of last resort. But public safety is our priority in making sure that our communities are protected in volatile wind events and wildfire risk case is really important to us as well. So are there opportunities for us to gain more public support, of course, there are. And the ways that we can improve our own performance as we, [ again ] more muscle here, because this is something that I don't love to do. But when we have to do it, I think there's areas of improvement that we as a company have identified and are working with our Colorado Commission to do so. And that includes early notification, excellence in outage maps, something I talked about earlier on segmentation.

Ryan Levine:

And then shifting gears on the financing plan as security prices continue to move. How do you look at maybe assessing a time to come to market for capital raises. I think in earlier question, you suggested the avoidance of asset sales, but any color around response to maybe different security prices and how that can impact your financing plan?

Robert Frenzel:

Yes. Ryan, it's Bob. Look, I think as we see reindustrialization, we see data center build-out. Certainly, there can be cost pressures that come from basic materials and construction materials like concrete, steel, and things like that. I think we take our best estimates when we put our capital forecast out, but something we watch pretty closely.

Paul Patterson:

Just -- I apologize if you guys have gone over this. But just on the [ NUC ] life extension, could you remind me what the impact financially is. Have you guys already -- it varies from company to company how the depreciation impact is reco -- when it's recognized, et cetera. I was just wondering if you could review that for me shortly, quickly if it's not a problem.

Brian Van Abel:

No, this would likely just be captured either how to defer here or likely if we're in a multiyear plan to have a [ true ] mechanism part.

Brian Van Abel:

Yes. Thank you all for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions.

Operator:

Hello, and welcome to Xcel Energy 2023 Year-end Earnings Conference Call. My name is Melissa, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions]. Questions will only be taken from institutional investors. Reporters can contact Media Relations with inquiries, and individual investors and others can reach out to Investor Relations.

Paul Johnson:

Good morning, welcome to Xcel Energy's 2023 Fourth Quarter Earnings Call. Joining me today are Bob Frenzel, Chairman, President, Chief Executive Officer; and Brian Van Abel, Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer your questions if needed.

Robert Frenzel:

Thanks, Paul, and good morning, everybody. We had another successful year at Xcel Energy continuing to provide our customers with safe, clean, reliable and affordable energy while delivering an operational and financial performance.

Julien Dumoulin-Smith:

Congratulations on a variety of different metrics here. But you guys had already been tracking above the midpoint of your 5% to 7% and given the -- the rate base going up say, 1.5% even with kind of incremental dilution, how do you think about that adding up, right? I mean I'm going to put it back to you a little bit, like how do you think about doing the math there, if you will? And just setting expectations. Obviously, every year might be slightly different here.

Brian Van Abel:

Yes. And Julien, I'd just add that we do expect -- that's a conservative growth rate. And as I noted in my remarks, going forward, we will rebase off of actual earnings. So important things to note in our script. And overall, as Bob said, we're really excited about it. We're excited about our opportunities and our steel for fuel and the clean energy transition. And I think we're one of the fastest transitioning utilities in the country. And our electric bills are 28% below the national average. So I think we're in a great place for our investors and our customers.

Julien Dumoulin-Smith:

Got it. Excellent. And then on Minnesota commissioner you've experienced, what's your relationship and maybe a little bit of a brief comment here on where we stand in Minnesota, if you will.

Operator:

Our next question is from Jeremy Tonet with JPMorgan.

Brian Van Abel:

Yes, we can.

Brian Van Abel:

No, the way we'll -- a pretty plain vanilla way we finance our company. So kind of the base case to be is a block issue. And something you can obviously look at doing a forwards or something. We look at mandatory converts, but our base case is just doing blocks above the level that we feel comfortable with on the ATM.

Brian Van Abel:

Yes. Let me hit the workforce reduction question first, and I'll transition to the longer-term O&M outlook for us.

Durgesh Chopra:

Bob, congrats, a solid quarter here to you as well Brian and the rest of the team. Just I thought the dividend growth trajectory change was interesting. You're now saying low end of the 5% to 7% because you have high growth rate. Maybe just talk through your thinking there. You were kind of growing faster, so that gives you more flexibility on the financing side. Just a little bit more color there would be helpful.

Durgesh Chopra:

Got it. And Brian, just as you -- there's obviously a ton of CapEx opportunity, you outlined $5 billion additional CapEx. Do you expect -- is that 5% the floor? Or could you -- could the dividend growth be further lowered in case you have -- you're adding more capital to the plan?

Durgesh Chopra:

That's fair. Okay. And then just one last one for me is just thank you for the color on Marshall Fire, the additional complaints and other things. Maybe just what are the key steps for us to watch there? And when could we expect updates?

Steven Fleishman:

Yes. So I just wanted to clarify, all your growth rate commentary is that based on the base plan? The updated base plan?

Steven Fleishman:

Okay. And on the -- could you just talk to the PIMs in Colorado and just how you're feeling about being able to manage any -- I guess it could be good or bad, but just any risk exposure from that?

Robert Frenzel:

Steve, it's Bob. The last one seems like a lot of fun to talk about, but I'll probably pass on that fastball. On Washington, in particular, the hydrogen production tax credit, we were very active, we've been very stalwart in our position that we believe that clean fuels and clean molecules are going to be needed as part of a broader, cleaner energy economy. We felt that hydrogen was probably the most attractive molecule that we could produce in a clean and green way.

Brian Van Abel:

Yes, I can just chime in on nuclear. So we expect guidance here in Q2 is our current thinking. Obviously, the guidance we're looking for is how do you calculate the gross receipts, meaning how do you calculate the value. We've got advocated for the use of LMPs, obviously, given that we're in an RTO.

Anthony Crowdell:

Just hopefully 2 quick ones if I could follow up on Steve and Julien's math class question. When you think of the 5% to 7%, you're at or above the high end, and that's all in the base capital. What would cause you to get to 6% growth?

Anthony Crowdell:

Great. And then I think you mentioned you're filing a Colorado Wildfire mitigation plan later this year, I believe. Just could you give us a look into that? I mean, is that also a potential for additional capital -- CapEx and then -- or any changes in operation you're thinking once you make that filing?

Anthony Crowdell:

And Bob, just lastly, do you -- does that plan have to get approved or just accepted, just a procedure that goes on in Colorado on a wildfire mitigation plan?

Operator:

Our next question is from Carly Davenport with Goldman Sachs.

Brian Van Abel:

And just one more thing to add. We'll be filing a resource plan in Minnesota on February 1, which is a continuation of the transition of our generation fleet as we shut down our coal plants in Minnesota by 2030. And pretty excited about just all the opportunities across our service territories.

Sophie Karp:

So I noticed that you showed the Colorado, I guess, earned ROE like sub 8%, if I'm reading this correctly. Just given how much capital you're going to be investing in the state, do you see a path to improve that? And what is that?

Brian Van Abel:

Yes. And as we mentioned, yes, it is the regulatory lag, the capital lag. We had a historic test year in Colorado gas. And as we mentioned in my opening remarks, we'll be filing a Colorado Natural Gas Case here in the next week or so. And so we'll be working through that.

Brian Van Abel:

So as we think about it, yes, our guidance here is 2% to 3% in 2024. The biggest driver continues to be in SPS and the electrification and growth we're hearing from our customers, obviously, we work very closely with our large industrial customers down there, so I have a good sense of what their low growth forecasts are in 2024 and even beyond. We're starting to see some large C&I growth in Colorado with the data center coming online and a couple of other large customers coming online. So really driven by C&I load growth in 2024. We do continue to have customer -- residential customer growth of roughly 1%, so that contribute some. But overall, it's driven by our C&I growth, particularly in SPS.

David Arcaro:

I had a quick question just on tax credit transfers. Let's see -- are you changing kind of the anticipated level over the course of the plan given the increased CapEx here? And did that contribute? I saw that the cash flow from ops increased versus the prior slide deck. I'm wondering if that was part of it.

Operator:

Our next question is from Travis Miller with Morningstar.

Robert Frenzel:

Tavis, it's Bob. Thanks for the question. We really want to own and operate the infrastructure that serves our customers. I think this is a core skill set of the company. We think we're competitive. We think we can do a price competitively for our customers. I think we've proven that over the last 5 or 6 years and delivering value to our customers from our clean energy investments. I think -- it wasn't in our original pro forma estimates, but I think our total over the last 5 years is close to $5 billion worth of tax credits and avoided fuel costs from installing wind into our system for the benefit of our customers, which was never included in our forecast when we put those wind farms in.

Brian Van Abel:

No. No. That was the last one outstanding. So we're pretty excited about it assuming we get PUCT approval of the settlement. That's the last one.

Brian Van Abel:

No.

Unknown Analyst:

A couple of quick questions. In terms of the Marshall fire, I appreciate the clarifications and updates. Is there any opportunity for settlement there outside of the formal court process?

Unknown Analyst:

Okay. And given the balance sheet, operator challenges and needs to raise capital over the coming years. Are there any M&A opportunities in terms of asset sales that you'd contemplate to derisk your funding plans?

Operator:

Our next question is from Paul Fremont with Ladenburg.

Robert Frenzel:

Paul, it's Bob. Thanks for the question. No, no update. I mean the insurance commissioner said that the property damage was in excess of $2 billion. But as far as the total amount of suits, they haven't claimed any liability in the suits or from the plaintiffs.

Paul Patterson:

Just one of my questions have been asked. But on the -- to follow up on Steve Fleishman's question on the PIMs. It seemed like meeting the order and stuff that there was a greater -- that they basically anticipated looking at additional PIMs and sort of we're intrigued with sort of PBR in general. And I was wondering just sort of how you -- I know it's early to say, and it depends obviously what the PIMs are. But given that they seem to be sort of more performance-based PBR directionally driven. How you think you're positioned to deal with that?

Robert Frenzel:

Paul, you were breaking up a little bit, but let me see if I understand the question. Given the recent PIMs in Colorado, how do you feel broadly about performance-based ratemaking and things like that.

Brian Van Abel:

Yes, Paul, in the written orders, certainly there's a discussion. We'll work with the staff as we work on the Just Transition plan in terms of looking at well-designed PIMs. And there's also a PIM around potential kind of the emissions achievement. So we look forward to working with staff on that as we move through time.

Brian Van Abel:

Well, thank you all for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions. Have a great day.

Operator:

Hello, and welcome to the Xcel Energy Third Quarter 2023 Earnings Conference Call. My name is George, I'll be a coordinator for today's events. Please note, this conference is being recorded. [Operator Instructions].

Paul Johnson:

Thank you. Good morning, and welcome to Xcel Energy's third quarter earnings call. Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer; and Brian Van Abel, Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer questions if needed. This morning, we will review our third quarter results and highlights, share recent business and regulatory developments, update our capital and financing plans and provide 2024 guidance. Slides that accompany today's call are available on our website.

Operator:

[Operator Instructions] Our first question today is coming from Julien Dumoulin-Smith of Bank of America.

Brian Van Abel:

Yes. So we met with the credit rating agencies in September. And as we are sitting right now, we've included tax credit transferability in our financing plan, and we expect that they will include it in the way they look at our credit metrics. And for us, we use the income tax election method, so it will flow through our cash from operations in our financial statements. So all of that is included in our baseline as we think about it.

Robert Frenzel:

Yeah. Hey, Julien, it's Bob. We're really excited about the Colorado Energy Plan. It's great to see it sort of nearing conclusion and approval milestones. We've been working on this for two years. We've actually been working with the counterparties on the bids for over six months. I recognize that it might be quick timing for the external world, but we've been working with these people for a while and we're really excited about what we've done here. We've been working with stakeholders very collaboratively and the PUC over the past two years to bring this plan to life for our Colorado customers. Obviously a great wrinkle, right in the middle of it with the IRA, right? And so we've basically been able to double the renewable portfolio, have the fossil portfolio, increase our storage component dramatically.

Brian Van Abel:

And Julien, a couple of the other pieces in that steel for Fuel 2.0 plan is the SPS Solar plus Storage, we should get the decision in Q2 of next year. And then we just launched in a sort of 1200 megawatt wind RFP. Bids are due in December, should get a short list in Q2 of next year on that.

Julien Dumoulin-Smith:

Yes. It's incredible, again, update. With that, though, and then given the timing early 1Q for at least a good chunk of that. I mean, 4Q could we see an update to your earnings CAGR outlook and/or any other related metrics as you get that clarity affirmed here, at least on the preponderance of it?

Operator:

We'll now move to Nicholas Campanella coming from Barclays.

Brian Van Abel:

The way we look at it, the base capital plan pretty programmatic as we think about it, most likely in ATM with the base capital plan. When you look at the -- not just in Colorado, but the $10 billion of the Steel for Fuel 2.0 opportunities, this is really kind of the '25, '26, '27 time frame or the heavy spend. So I would look at it as that's in the time frame that would align with the spend for that incremental and additional opportunities.

Robert Frenzel:

Yes. Consistent with past practice, Nick, we would expect some forms of customer protection, capital costs or energy cost providers. We've submitted some proposals to the commission that they -- so they are purview. It will go along with their overall decision. And on the portfolio side, of course, there's always a chance to look at it, but we've looked at this sideways, back ways, front ways. I think we've put together a great plan that complements the geographic diversity in the state where the wind and solar physically come into the grid to provide high resilience and reliability from the renewable resources. And so always a chance to move it around a little bit, but we'll think the substantial changes coming from the plan.

Brian Van Abel:

Thanks, Nick. I'll take that one. The way I think about it is -- yes. So we're starting to see a number of things in our long-term sales forecast. We updated our sales forecast for 2024, 2% to 3%. But we think over the 5 years at that 2% to 3% CAGR to hold, if not, call it conservative, given what we're seeing on the potential load from data centers. Data centers represent less than 1% of our sales right now. We see some potential where that could grow to 5% over this next 5 years.

Operator:

We'll now move to Durgesh Chopra coming from Evercore ISI.

Brian Van Abel:

Yes. So you're actually thinking about it correctly. When we went into this year before the market has even fully set up, we're a little bit conservative in saying around $200 million. We've already executed 2 contracts for $250 million and working on another. So we feel very good about our $300 million to $400 million in total for the balance of the year.

Durgesh Chopra:

That's really helpful. And then maybe just -- I didn't see this in your prepared remarks on slide deck and maybe I missed it, but just any update on the gas price risk management plan that you have to file in Colorado? I believe that's due next month.

Operator:

We'll now move to Carly Davenport of Goldman Sachs.

Brian Van Abel:

Carly, thanks for the question. So it's evolved pretty close to how we expected it to this year, bilateral transactions in kind of the pricing we anticipated. There has been significant amount of demand. The demand is much, much greater than our supply of PTCs. Now we're still waiting for a little -- for the treasury staying up their portal and additional administrative requirements. So we feel comfortable executing contracts.

Robert Frenzel:

Sure. So Carly, it's Bob. We're really excited about our clean fuels program, but it is fairly long dated. We are at a place where we are invited to negotiate with the DOE on this upper Midwest Hydrogen Heartland hub. Negotiations, final engineering, those processes are going to take probably 2 years. I wouldn't say we'd start capital deployment until probably the end of our 5-year plan and runs through the end of the decade. I would think that parts of the hub could be activated by 2029 -- 2028, 2029. So it's long-dated investment cycle.

Brian Van Abel:

And Carly, the second part of your question, you asked about kind of the guidance around. Obviously, we're still waiting for the guidance from Treasury unless we provided our comments, industry's driver comments. One of the things important to us is on the nuclear qualifying for hydrogen PTC. So hopeful that we get guidance here, rumor sometime in November, but it could push a little bit.

Jeremy Tonet:

Clearly, an incredible update in Colorado here and just wanted to dive in a little bit more, if I could. Just given the rate base growth as you outlined there, and how should we think about, I guess, the EPS growth relative to the rate base growth, given the higher interest rate environment here, thinking about potentially greater than 10% rate base growth, do you see the gap kind of widening at that point? Or how should we think about that at a high level?

Jeremy Tonet:

Got it. Yes. No, good math to do there. So that makes sense. And just wanted to kind of come in on the O&M side for the guidance there. And I think it's been kind of flat to down, if I recall correctly, but targeting a little bit of an uplift in '24 here. I'm just wondering, if you could provide a bit more color on the increase here and how this O&M, I guess, impacts how '24 guidance could fall out, particularly given Minnesota being a bit lighter than expected?

Brian Van Abel:

Yes. And I think really next year, as you mentioned, in the Permian Basin, significant growth down in SPS as we're supporting electrification and working closely with our large customers there.

Robert Frenzel:

Yeah. Hey, it's Bob. I don't think we've seen a lot of material updates in Marshall, I think in our disclosures in our Q and in our earnings release are up-to-date. We've seen 675 plaintiffs. To put it in perspective we think there are about 1,100 structures that had some amount of physical damage and estimated by the by the state of Colorado at about $2 billion worth of damage. None of that's changed or been updated. The cases into 14 complaints and has been consolidated into a single case right now.

Operator:

We'll now move to Anthony Crowdell of Mizuho.

Robert Frenzel:

Anthony, Look, we've been operating under WMP in Colorado for the past 4 years. I think that plan was around $400 million in total. We are looking at more capital investments as we roll forward. I think a lot of that's going to be built into the base plan already. I don't think it has anything of the magnitude of Steel for Fuel 2.0. Obviously, the big needle in there would be if we did something very dramatic on undergrounding. I don't see a proposal that will move the needle necessarily in capital expenditures going forward, but something worth looking at.

David Arcaro:

I was wondering, it's clearly a step change in the renewables aspirations and opportunity for Colorado. Could this also apply to Minnesota in terms of potentially seeing an acceleration and a step change in renewables there as you fully realize the benefits of IRA going forward?

Brian Van Abel:

Yes. And we have -- as we mentioned we have the 1,200 megawatts of wind RFP in flight. We actually have Wisconsin RFP, solar RFP in flight that we're working on. we think we'll file another resource plan, but also significant opportunities in Minnesota longer date is around our wind repowerings.

David Arcaro:

Got it. That all makes sense. That's helpful to frame it up. And I was curious what's the latest that you're seeing in Renewables economics in terms of LCOE? In your service territories there's been market concerns about rising PPA prices inflationary pressures in the renewable supply chain. But just curious what your experience has been in terms of latest data points how attractive have renewables projects looked?

Operator:

We'll now move to Travis Miller of Morningstar.

Brian Van Abel:

Just easiest rule of thumb is I'll call it a 1% change in sales, there's about a $25 million change in the revenue from our sales. So, that's a good rule of thumb for you, Travis.

Brian Van Abel:

No. That was revenue -- sorry, that's revenue. And that takes into account our true-up in decoupling mechanisms.

Robert Frenzel:

Hey Travis, it's Bob. Good morning. Our proposed plan would certainly put the assets into regulatory rate base here in the Upper Midwest. If you think about our proposals at the DOE, we've got green hydrogen off of wind and solar. We've got pink hydrogen off of nuclear plants and the end users are going to help partners create green fertilizers, green ammonia to green urea to fertilizer, as well as some amount of blending into our gas plants and into our LDCs with some of the output. So the expectation is they would go through a regular state process around that capital investment and those ultimate uses for the fuel.

Robert Frenzel:

Yes, so sorry, thanks. We went through a reconsideration process in mid-September. I think our appeal plan would be early November.

Brian Van Abel:

Sometime into next year.

Ross Fowler:

So Brian maybe one for you, since you guys are sort of on the leading edge of lets transferability and feel free to take us offline, if we can't do it in seven minutes. But I'm just thinking through like how do you think about the accounting? Do you record the nonmonetary assets at fair value and then book a sort of gain and loss against that when you get to cash? Or there's no FASB guideline here right if I've got it right. So how are you walking through the accounting of these source ones that you're doing? And can we get clarification from FASB or the IRS at some point about how the accounting should work?

Operator:

We'll now take questions from Paul Patterson calling from Glenrock Associates.

Brian Van Abel:

Yes. I mean it's -- we will appeal. We feel that we have a strong legal challenge against -- there's 2 items and the award is related to lost power. I mean the majority upon no liability in all the other allegations, including no word for diminution of plant value. So as Paul mentioned in the opening comments, we view it as a onetime charge, and we have a strong legal basis for challenging that $26 million of award.

Robert Frenzel:

That's correct.

Ryan Levine:

What's your current thought on PPAs buy-ins in light of some of the tax tenability dynamics and some of the developments that you're having?

Robert Frenzel:

Ryan, it's Bob. I don't know if there's more dollars in the DOE bucket in the grid resiliency program. Obviously, we're going to take these dollars and continue to do additional work. Those were discrete projects that were approved with the DOE and are earmarked across our various states. Some of which is for wildfire. Some of it is in technology development. So we're excited about partnering with the DOE. It's about 60-40 split in terms of their funding versus our capital, and our piece is embedded within our forecast. So it's not going to be a big upside in terms of capital investment opportunities.

Brian Van Abel:

Yes. And I was in just taking a step back. We're proud of the 4 grants that we've received really focusing on how can we help lower the cost of our customers, others for new technology around and specifically on the form long-duration battery. And not only do we get $70 million in deal refunding for that, but we also got $20 million from Breakthrough Energy Ventures. So $90 million for those 2 pilots. So really a great story and looking forward to working with our commissions on all the DOE funding that we've received so far. And certainly, we'll look for other opportunities out there.

Brian Van Abel:

Thank you all for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions.

Operator:

Hello, and welcome to Xcel Energy's Second Quarter 2023 Earnings Conference Call. My name is Melissa, and I will be your coordinator for today's event. Please note, this conference is being recorded and for the duration of the call, your lines will be listen-only. [Operator Instructions]. Questions will only be taken from institutional investors, reporters can contact Media Relations with inquiries and individual investors and others can reach out to Investor Relations. I will now hand you over to your host, Paul Johnson, Vice President, Treasurer and Investor Relations to begin today's conference. Thank you.

Robert Frenzel:

Thanks, Paul, and good morning, everybody. Let's start with our results. We faced some headwinds from weather and other items in the second quarter, recording earnings of $0.52 per share for the second quarter of 2023 as compared to $0.60 per share in 2022. We've got tangible plans in place for the second half of the year to overcome the inflationary pressures as well as the impact of the lower-than-expected ROE in the Minnesota electric rate case and allow us to deliver on our 2023 guidance. But our strategic priorities are unchanged. Leading the clean energy transition, enhancing our customers' experience and keeping our customers' bills low. And we've delivered on this strategic vision across our eight states for the past decade. We invest in clean energy resources that provide both financial cost savings to our customers while transitioning to a lower carbon economy. We invest in network infrastructure to foster economic development for new businesses to provide top quartile reliability and to provide resiliency in the face of more volatile and unpredictable weather. We're also building infrastructure to accelerate clean transportation for all of our customers and exploring innovative technologies like batteries and clean fuels to enable the policy objectives and the customer desires for a lower carbon economy, and we focused on continuous improvement to operate efficiently with a lower expense burden to our customers. And as a result, we've been able to keep our operating expenses nearly flat for over the past -- for over a decade. Our customers benefit from these actions, including significant carbon reductions and residential bills that are 20% below the national average. As you can see, we have a long history of delivering on our commitments to all of our stakeholders and are confident in our ability to meet our earnings guidance again in 2023. This quarter, we made progress on our clean energy transition plans with a growing portfolio of both company-owned resources and power purchase agreements. In our NSP solicitation, we recommended an incremental 250 megawatts of self-build solar generation in a 100-megawatt power purchase agreement. This brings our total company-owned solar projects at Sherco to over 700 megawatts which will utilize the transmission rights for the first of the three retiring coal units there. In the SPS RFP, we recommended a portfolio of 418 megawatts and self-build solar projects and a 230-megawatt power purchase agreement. We're also proposing a battery storage project to one of the new self-build solar facilities. In addition, later in the quarter, we expect to file our recommended Colorado portfolio for nearly 4,000 megawatts of potential resources. And based on our interim analysis, the outcomes should be very beneficial to our customers. Across our eight-state footprint, we enjoy a geographic advantage for wind and solar resources, which enables higher capacity factors. And as a result, Xcel Energy can deliver new renewables at low and competitive prices due to a combination of high capacity factors, IRA tax benefits and the ability to reuse transmission from retiring plants, all of which provides significant benefits to our customers. enables a faster transition to a clean energy economy. Each of these RFPs would represent incremental opportunities as compared to our base capital forecast. We anticipate commission decisions on these proceedings in the second half of 2023 for Minnesota and Colorado, and in the first half of 2024 for SPS. In May, Breakthrough Energy Ventures announced a $20 million grant to support our two 10-megawatt pilot projects for Form Energy's 100-hour battery technology. In July, the Minnesota Commission unanimously approved the Form Energy pilot to be installed at our Sherco site alongside our new solar projects. We plan on filing for our second Form Energy pilot later in the quarter and are evaluating sites that could be supportive of this exciting new clean energy technology. We're also working with the Department of Energy and additional funding opportunities to further reduce the cost of these projects for our customers. In May, we filed our second transportation electrification plan in Colorado, the proposed plan, which covers the 2024 to 2026 period includes expanded solutions and rebates to support new public charging stations and charging at homes, businesses, multifamily buildings and community locations. It also proposes programs supporting electric school buses, innovation and income qualified customers. Our focus is to bring clean transportation to all customers and communities and to expeditiously assist in the build-out of quarter charging to reduce range anxiety of EZ purchasers. Next month, we plan to file our Clean Heat plant in Colorado and will follow with our natural gas innovation plan for Minnesota during the fourth quarter. These plans will be similar to our electric resource plans and provide a framework for our natural gas system to achieve our carbon reduction goals while meeting the reliability and affordability needs of our customers. Taken as a whole, these innovative projects and partnerships in electricity and clean transportation and home heating are essential for Xcel Energy to meet our sustainability goals and to continue to deliver our customers the safe, clean, reliable and affordable energy that they expect now and long into the future. In June, the Boulder County Sheriff office announced the findings of its investigation into the cause of the Marshall Fire in December of 2021. Our thoughts continue to be with the families and the communities impacted by this devastating fire, including our own employees whose homes and families were directly affected. The report states that the first Marshall Fire started as a result of an ignition on a property affiliated with an entity called the Twelve Tribes and that this ignition had nothing to do with Xcel Energy's power lines. The Sheriff's report also discusses a second ignition that started more than an hour after the first fire at a different location, which the report estimates is approximately 80 to 110 feet away from our power lines. Sheriff's report says that the most probable cause of the second ignition was PSCo's power lines, and we strongly disagree with that conclusion. Because of the pending litigation has been filed, we're not in a position to discuss the Marshall fire in more detail at this time, but we will vigorously defend ourselves and look forward to presenting our position in court. Importantly, additional information about the lawsuits and some of the relevant legal standards is included in our earnings release and our 10-Q filing, and I would direct you there. Finally, we recently released our comprehensive sustainability report. The report focuses on four core ESG pillars

Operator:

[Operator Instructions]. And our first question comes from Jeremy Tonet from JPMorgan. Please go ahead.

Robert Frenzel:

Hey, good morning, Jeremy. How are you?

Brian Van Abel:

Sure. Hey, good morning, Jeremy and thanks for the question. So I think I'll hit on it a couple of different ways. Talk about kind of the near-term actions and we think about it. How do we hit our year-end O&M guidance? One is we look at second half of last year we had elevated O&M, if you look at versus the first half of last year, and particularly in Q4 as there was some one-time items in Q4 relative to having a good year, investing in the system. And then there are some impacts this year where we've had some timing of generation outages earlier in this year. And we also expect bad debt expense to decline. We saw some higher bad debt expense levels given the commodity price impacts earlier in this year. So as I think about that, bad debt expense level should be more sustainable. You have some timing and generation outages, but then we're also looking at a number of what I call it near-term and long-term opportunities. Near-term is what you'd call more one-time discretionary items around program spend, consulting, third-party contracts and variable compensation levers, more traditional management initiatives. But I think we're spending a lot of time on longer-term initiatives around our Innovation and Transformation team. We've invested heavily in driving what we call waste elimination and process improvements across our orgs. And then we're also investing heavily in technology. You heard me, I've talked about before something we call the Digital Operations Factory, which is focused on using AI in our operations. We started that in nuclear with our Corrective Action program. Now we're rolling that out to distribution and gas in our field operations and that's using traditional AI. We're also looking at now use cases for Gen AI. So as we look at it, our goal is to hit 3% down for the year. Longer term, our goal is to kind of keep O&M flat. And as Bob said, we've done that for nearly a decade and so we have some work to do to get there a balance of a year, but then think longer term O&M flat as we go forward.

Brian Van Abel:

No, I don't think it does. I think about our long-term assumptions and our long-term 5% to 10% earnings growth rate. We continue to expected to leverage on upper half of that long-term guidance.

Robert Frenzel:

Hey, Jeremy, it's Bob. I appreciate the question. As you know, we've been operating under -- in Colorado under a Wildfire Mitigation Plan that was instituted probably more than three years ago. And that plan is due to be refreshed in Colorado at the end of this year. And we expect to propose continuation of existing programs and new programs in Colorado that understand the volatility of weather in the west and the footprint of the Colorado company in particular. So we're still working through that. Nothing specific right now, but certainly looking at everything that we can in terms of the risk and the opportunities to strengthen our own system and make sure that we protect our communities and our customers.

Robert Frenzel:

Look I think, as I said in my opening remarks, we feel like we've run a really good utility in Minnesota and across our eight states, focusing on our customers and our communities and helping our states achieve their policy objectives around clean energy and clean transportation. And the outcome, I'll say, was disappointing for two reasons. Paul and Brian mentioned one, which was -- it was inconsistent with previous decisions in Minnesota that have been 94 to 965. But equally important, probably didn't recognize what I think Xcel Energy is a national leading utility in advancing a lot of these initiatives. Making sure we do it reliably and affordably and sustainably. We'll continue to review our investment opportunities and our programs in the state, but I think generally really confident that this is our headquarters state. We want to work proactively with the Governor and the legislature and the PUC to advance these initiatives.

Operator:

Thank you. Our next question comes from Durgesh Chopra of Evercore. Please go ahead.

Brian Van Abel:

Hey, Durgesh.

Durgesh Chopra:

Okay, can you hear me now? I'm sorry.

Durgesh Chopra:

Okay, perfect. Sorry about that, guys. Brian, I heard you mention the Minnesota rate case item. Just appeal or rehearing. Could you just give us a little bit more color there as to what the next steps are timeline?

Durgesh Chopra:

Got it. Okay, so that should be coming out shortly, and then 60 days after is a decision whether they take it up or not. That's just the Minnesota Commission?

Durgesh Chopra:

Okay. Thank you. And then know you mentioned the transferability guidance was in line with your expectations. There's been a lot of discussion within the industry, investors and credit agencies on the implications to CFO -- I know you're very knowledgeable on this topic in general. So just get your thoughts there, how you're seeing this play out and implications for your credit metrics?

Durgesh Chopra:

That's very helpful. Thanks. And then maybe just to the extent you're willing to comment on this, just a little bit more pointed question on 2023 guidance. Obviously, you mentioned the history of meeting and exceeding expectations. Just with the unfavorable weather and the regulatory decision, where are you tracking and with your sort of cost efforts in place, what are you targeting? Or where are you tracking within that guidance range?

Durgesh Chopra:

Very clear. Thanks so much, Brian. Appreciate the time.

Julien Dumoulin-Smith:

Hey, good morning team. Thank you so much for the time and appreciate it. I wanted to focus on the wildfire dynamics. Obviously, a lot of sensation on this, perhaps principally coming from out of state as well. Can you elaborate a little bit? I know in the prepared remarks, you said you referred us to the 10-Q immediately here, but can you elaborate at least on your insurance levels today, your insurance programs across the states as well as how do you frame the risk here from the lawsuits that have been filed? I imagine that some of the commentary you alluded to in the Q here, but can you help frame up your understanding as well as maybe some of the differences critically from some of the out-of-state considerations that are drawn with new scrutiny?

Brian Van Abel:

Yes. And Julien, the insurance coverage is included in our disclosure is approximately $500 million.

Robert Frenzel:

Yes, it's all included in disclosures an entire page of disclosures in the earnings release in the Q.

Robert Frenzel:

Thanks, Julien.

Anthony Crowdell:

Hey, good morning, Bob. Good morning, Brian. And good morning, Paul. Sorry, I didn't want to leave you out. Just hopefully two quick questions, one on Julien -- following up on Julien with the Marshall fire. Is there a timing when that resolves itself? Or you just have to let it play to the courts and you can't give any real feel of when that proceeding will wrap up and that overhang lifted?

Paul Johnson:

Yes. And Anthony, we really can't go beyond what we've already said in the disclosure. So we have to limit the questions on that.

Robert Frenzel:

No. Anthony, that will all be decided within the rate case decision that the commission will make here in Q3. So they deliver -- they had hearings on it in July, and so it's all part of the record. So it's kind of either the $95 million one or the alternative if you defer some additional depreciation is $47 million. And that $48 million difference is just the deferral of depreciation. So all will be decided.

Anthony Crowdell:

Great, thanks. I'm good from here. Thanks again for taking the questions.

Operator:

Thank you. Our next question comes from Sophie Karp of KeyBanc. Please go ahead.

Brian Van Abel:

Sophie, yes, if I think about sales and really looking at the weather normalized sales, we continue to see really strong growth on the C&I side out of SPS and in Q2 on a weather normalized basis. We had strength in Minnesota and Wisconsin to Colorado on a year-to-date basis on C&I. There is a large manufacturing facility was down for the first quarter in the first quarter of this year in Colorado. So that had some weakness on the residential side, the residential while we're down close to 1% for the year. It's tracking in line with our forecast or expectations for the year, right? We continue to see good customer growth, but we do see continued use for customer declines as our -- we have really strong energy efficiency and DSM program. So I think overall, it is tracking both on the C&I side and on the resi side, is tracking to expectations for kind of through the first six months and for the balance of the year with our guidance on sales.

Robert Frenzel:

It's Bob. We look, we -- as a company, we certainly have a view on nuclear, both current and future. Key priority for us is preserving the existing nuclear fleet and making sure that -- there's a potential for a nuclear future for the country. We have been working with a company called NuScale on their technology. It's an SMR technology mostly helping them through the nuclear regulatory process and making sure that their applications meet the NRC guidelines and hoping to get that, that technology can get through the regulatory process. We don't have plans as a company to own or operate a SMR at this point. We really are just taking our nuclear expertise and helping with the nuclear future for that company with -- so we don't have any specific plans to announce on SMRs in specifics.

Operator:

Thank you. Our next question comes from Carly Davenport of Goldman Sachs. Please go ahead.

Robert Frenzel:

Hi, Carly. Welcome aboard.

Robert Frenzel:

Yes, happy to. Look, as we think about it as a company, first utility to announce 100% carbon free. Given our geographic position, our ability to transition with wind and solar cost effectively for our customers through the end of this decade allowed us to make an interim target of an 80% carbon reduction, we feel very confident in that. But we've always been focused on we need new technology, new research, development and deployment of new technologies to achieve our 100% goal in the nation's clean energy goal One of the big pieces of that is obviously energy storage. We have a lot of lithium ion for our batteries around the country, and we have some on our own systems. The long-duration energy storage is a critical part of the energy future. And so the Form Energy battery is a 100-megawatt hour battery. So instead of 4 hours, it's 4 days. And that's a nice asset class as we think about periods when the wind doesn't blow and the sun doesn't shine. And we've seen evidence of that as recently as early June of this year. In the Southwest, where we had very limited wind production. We've seen it in polar vortexes, where in Winter Storm Uri, where we had no wind production for almost a 3-day period. So this idea of a long-duration battery is really interesting. What's exciting about Form, in particular, it's a pretty old technology really. This was found by the Department of Energy almost 60 years ago. But it's becoming commercializable by a new company, Form Energy and they're a breakthrough energy VC-funded company, an Energy Impact Partners-funded company. And the technology is pretty interesting. I want to call it simple because that would minimize the impact and the efforts of the development team and the founders of that company but it's basically resting and de rusting iron. And the great part about that is iron is readily available. It's domestically available, not subject to counter parties and regimes in the world where we have challenges. And so when I think about new technologies, sometimes it's not the best that wins, it's the one that's most commercializable and the 1 that can deploy the fastest. And I was really proud to be in West Virginia last month and breaking ground with the Form Energy team with Secretary Grand Home and Sender Mansion. We're building an 800-megawatt capable factory in West Virginia as we speak, with low guarantees and grants from the government. So this is a technology that's going to come to fruition. It's a technology that's going to be scalable. We're really pleased to be their first partner in sales of that, but it's a pilot. It's 10 megawatts and we're going to put it on a 9,000 megawatt system. So we have a great opportunity to build it with them and invest alongside and then the breakthrough energy grants and the potential DOE grants buy down that cost and buy down that risk for the company. So very exciting technology, really excited about the future, what this can mean.

Carly Davenport:

Awesome. I appreciate those perspectives. And then the follow-up just around earnings guidance, and obviously, you're reiterating the guidance for 2020. I just wanted to check in on temperature on the 5% to 7% long-term guidance. As you kind of think about the incremental spending opportunities from a CapEx perspective along with some of the regulatory outcomes that you've seen kind of how are you thinking about that long-term range?

Carly Davenport:

Great, thank you.

Steven Fleishman:

Yes, hi. Good morning. Good to have all of you. On the phone including Paul. Just first, one Marshall fire question. Is there a deadline when any claims need to be filed by?

Steven Fleishman:

Okay. Second question, a different topic on the Colorado settlement. Is there -- I know I think you mentioned Q3 for the final order. Is there a specific date for that approval?

Steven Fleishman:

Okay. And then lastly, just I know you all have been pretty focused on a number of IRA provisions, including the hydrogen one. And I'm just kind of curious latest thoughts on the ability to look at hydrogen production green hydrogen, all those kind of pillars of the green hydrogen, when do you think you'll get -- we'll get that out and whether nuclear might be included in that or this additionality going to be a problem for that?

Paul Johnson:

Steve, you asked about timing. The statutory deadline in August 22. And they haven't missed a statutory deadline yet, but what we're hearing is that there's still a lot of uncertainty around the position of it outlined given some of the polarizing viewpoints. So it certainly could slip into September or October.

Paul Johnson:

Thank you.

Ryan Levine:

Hi, everybody. In terms of the $500 million insurance, what was the cost of that insurance and when was it occurred? And then I guess, going forward, are you seeing changes in pricing for wildfire-related insurance? And what's your strategy on a go-forward basis related to insurance?

Ryan Levine:

Have you already procured it in '23 for the next year? Or is that an upcoming event for the back half of the year?

Ryan Levine:

Okay. And I guess one last question on that. I mean, so the $500 million, any associated costs with procuring it. Is that passed on to ratepayers? Or is that embedded in your O&M cost outlook?

Ryan Levine:

It's included in...

Ryan Levine:

Okay, appreciate the color. Thank you.

Brian Van Abel:

Thank you all for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up. Thank you.

Operator:

Hello, and welcome to the Xcel Energy First Quarter 2023 Earnings Conference Call. My name is George, and I'll be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I'll now hand it over to Mr. Paul Johnson, Vice President, Treasurer, and Investor Relations, to begin this conference. Please go ahead, sir.

Bob Frenzel:

Thanks, Paul, and good morning, everyone. Let's start with our first quarter results. We had another solid financial quarter, recording earnings of $0.76 per share for 2023 compared to $0.70 per share in 2022. The increase in earnings largely reflects new revenue to recover our investments in clean energy and grid systems for the benefit of our customers. Our business plan is on track for the year, and as a result, we are reaffirming our 2023 earnings guidance of $3.30 to $3.40 per share. This quarter, we continue to make progress on our industry-leading clean energy transition plans. We've received and reviewed a significant number of proposals in our pending solicitations for nearly 6,000 megawatts of new electric generation across multiple jurisdictions. We anticipate commission decisions on these various proceedings in the second half of '23 and remain confident in our ability to deliver a beneficial mix of both company-owned and third-party resources across those plans. We also continue to pursue the benefits and opportunities provided by the Infrastructure Investment and Jobs Act and the Inflation Reduction Act to accelerate the clean energy transition. We recently submitted multiple projects to the Department of Energy for funding consideration, including the multiparty Heartland and Western Interstate Hydrogen Hub and grid resilience investments in Colorado. In addition, we recently applied for DOE and venture capital grants for our long-duration energy storage proposals in Colorado and Minnesota and believe we are well-positioned to receive some or all of our requests. Our country and our company need new technologies, like long-duration storage, like hydrogen and clean fuels to commercialize in order to realize a clean energy future. And at Xcel Energy, we are actively working to do our part for the regions and the customers that we serve. And while the promise of a clean energy future is bright, we are keenly aware of the financial challenges that some of our customers experienced this winter with a significant rise in gas prices that we saw in 2022, driven by macroeconomic and geopolitical issues. Xcel Energy is proud of our long track record of keeping customer bills amongst the lowest in the country and to transition to a cleaner energy future with bill increases below the rate of inflation. We believe that affordability, reliability and sustainability can be realized concurrently through thoughtful energy policy and excellent operations. We've taken a number of steps in recent years that have saved customers' money and reduced exposure to commodity volatility. In our electric business, Xcel Energy's nearly 4,500 megawatts of owned wind farms continue to be a leader in capacity factor performance and generated $1.1 billion of fuel-related customer benefits in 2022 and more than $3 billion since 2017. Future investments in renewable generation and clean fuels will continue to reduce our reliance on fossil fuels and add further benefits to our customers. Since 2014, we've kept our operating and maintenance expenses nearly flat and well below inflation through our continuous improvement programs, which is a benefit that accrues to our customers' bills. Our numerous energy efficiency and demand management programs have saved enough energy to avoid building approximately 25 average-sized power plants. And in 2022, we disbursed a record $216 million in state and federal payment assistance funds to customers across our states, and we expect to exceed that record in 2023. Also, in partnership with Colorado Staff, Colorado Energy Office, Energy Outreach Colorado and the Utility Consumer Advocate, we proposed to the commission to increase funding to support income-qualified customers burdened by high energy costs. We expect to provide those increased benefits to our customers throughout 2023 and beyond. And with recent declines in natural gas prices, we proactively lowered our gas recovery mechanism in Colorado 4x, reducing customers' gas costs by 58%. Our customers in our other states are seeing comparable benefits. In Colorado, we've been working with stakeholders on proposed legislation regarding customer affordability, rate stability and the regulatory process. And finally, in addition to our energy efficiency programs, we are relooking at potential long-term solutions to reduce price volatility that could include physical and financial hedging, additional natural gas storage, long-term natural gas supply contracts, multiyear rate plans, natural gas cost deferrals, energy decoupling and the use of renewable energy to generate clean fuels for blending in the natural gas LDC. We are confident that if implemented, these actions can help reduce natural gas volatility in the future for our customers. As I wrap up, I'm pleased to share some of the company's recent recognition. For the tenth year in a row, we've been honored as one of the world's most admired companies by Fortune Magazine. We ranked first in social responsibility and quality of management, placing second overall amongst the most admired electric and gas companies in the country. In addition, for the fourth year in a row, Xcel Energy has been named one of the world's most ethical companies by Ethisphere, a global leader in defining and advancing the standards of ethical business practices. None of this will be possible without the commitment of our employees, contractors and our partners. And while we're proud of our track record and our accolades, we will never rest on our mission to provide our customers with safe, clean, reliable energy services at a competitive price. With that, I'll turn it over to Brian.

Operator:

[Operator Instructions] Today's first question is coming from Julien Dumoulin-Smith of Bank of America.

Bob Frenzel :

Yes. Julien, good to hear your voice on a Thursday morning. So we've been -- I appreciate your question. Look, as I think about legislation in Colorado that got introduced last week, pretty late in the session. We've been very keenly aware, as I said in my prepared remarks around the impacts to our customers from the volatility in natural gas prices that occurred largely last year and the declines that we've seen this year. And we've taken a lot of steps, both on the communications side and on the price mitigation side to assist there and obviously more to do. The legislation itself as proposed, was introduced in the Senate. And with the idea that we look at both price and price volatility that we saw over the past year, really with the benefit of our customers in mind, requires the company in the PUC. And again, this is still in -- it was approved by the Senate, I believe, yesterday, and it's going to go to the house maybe today or tomorrow. But requires a company in the PUC to look at all the mechanisms that can be helpful for our customers on price and price volatility. As I think about it, I think it provides tools on both the front end and the back end of the gas procurement cycle. So think on the front end, hedging and hedging tools, thinking -- rethinking about long-term storage, physical and financial hedging and things like that on the front end of the cycle. The legislation also takes a look at the back end of the cycle in the event that there are price volatility that exceeds a forecast, then we look at mechanisms for deferrals so that it may not be felt immediately in the pocket books of our customers. And I think those mechanisms much to be determined in the regulatory process, but the legislation contemplates those mechanisms being very beneficial to mitigate the volatility that we saw over the past year. I think the third piece of the legislation looks at something we've been already working with -- proactively with the commission on, which is incentive mechanism that provides an incentive to the company to meet or beat gas price forecast and manage the volatility for our customers. Again, lots of details that have to get worked through the regulatory process. But on balance, the intention is to really protect customers from the volatility we saw over the last year with regulatory mechanisms.

Bob Frenzel :

Yes. Look, I think on the gas procurement side, it applied to procurement for both the electric and the gas business. More broadly speaking, it also looks at -- it asked us to do a cost causation study around gas LDC customers and how we make future long-term investments into the gas system allows for some distributed energy resources and the ability to add those to our systems maybe in a more expeditious manner. So there's some factors like that in the electric and gas, probably a little too early to say what the long-term implications on our capital forecasting are in the state, but I don't think it will be necessarily material in totality.

Operator:

Our next question will be coming from Durgesh Chopra calling from Evercore ISI.

Brian Van Abel:

Durgesh, thanks for the question. Something we're very focused on, not only transferability guidance, but guidance for the other aspects of the IRA. But specific to transferability on the guidance, we expect guidance to be issued in Q2 for transferability. And for us, we're looking for a fairly straightforward guidance, right? We would call it clean, no pun intended, a clean seller of these tax credits here from wind farms that have already been in service. And so we're looking for documentation and the certification requirements, in terms of sale, registration requirements, so pretty basic stuff. So that's really what we're looking for out of the guidance from the IRS. The other aspect is we've talked to about 20 counterparties already, and there is a significant amount of interest in the purchases of our tax credits, not only this year but for a longer term. So we're pretty confident in terms of our ability to execute on this at a good price for our customers. And so I think about this, we get guidance in Q2, I would expect us to start executing in Q3. And this year, we took a pretty conservative approach. We really expected to sell about $200 million of tax credits in our financing plan. That's about of half of what we could sell this year. So -- and then we'd assume we sell the remainder of it in the year after. But that's kind of our view on transferability and I think is a great mechanism as we think about the longer-term cost of renewable projects and how we can be the most tax efficient with those tax credits.

Brian Van Abel:

No, I think we just included in our quarterly earnings calls. Obviously, there may be – depending on the counterparty, they may want to make some announcement about it if they’re thinking about – how they’re thinking about they’re supporting the clean energy transition by other counterparties may not want to. So – but the expectation would be in our quarterly earnings calls.

David Arcaro:

I was wondering if you could comment a little bit on what you're seeing in the RFPs that you've got outstanding right now, how Xcel is competing. And if you're seeing cost increase or decrease just in terms of inflationary pressures or if some of these project proposals are coming in at more attractive prices?

David Arcaro:

Okay. Got it. Great. And then could you also give any more color just related to the water leak at the Monticello plant? What was the cost of the repair? Curious if you see any broader or more significant issues that popped up just in inspecting it. And then what's the status of the plant now and when it would be coming back online?

Operator:

We'll now take questions from Jeremy Tonet of JPMorgan.

Bob Frenzel :

Sure. No, look, I appreciate the question. The process really continues. Since we last got together, we filed our -- the ALJ filed their recommendations at the end of March. We certainly didn't get all that we asked for in the ALJ filing, but as litigation goes, that's not atypical for the process. We'll file some exceptions and some things that the ALJ recommended we take up in a future proceeding or have the commission take up, I wouldn't say it's terribly material on the exception side. We haven't had a general rate case since 2016, prosecuted in the state on the electric side. And so we think that the recommendation from the ALJ was pretty thoughtful for all sides of the argument. And expect the commission to look at the ALJ's recommendation as well as some of the mitigation mechanisms that we put in place as a company to mitigate the impact to customers for having been out for a long time. We shall take it up in probably early June, and we expect the decision by the end of the second quarter.

Brian Van Abel:

Yes. Thanks for the question, Jeremy. I think we're thinking about it right now. And obviously, this is a little bit of a moving target with MISO, but we're thinking an announcement in the first part of next year. But like I said, that has the potential to shift as we've seen. And we're expecting kind of the next tranche or tranche 2 to be as big at lease as tranche 4, potentially bigger. And as we think about it, we'd expect a similar share as we received in tranche 1. So that's where our thoughts are today. But obviously, working with MISO and the stakeholders as we move through the process.

Bob Frenzel:

It's Bob. Thanks for the question. We -- look, I think as we think about the future and the future of hydrogen, I think the country really needs as we think about decarbonization across the economy, why we need a clean molecule for some of those harder to decarbonize sectors and hydrogen appears to be the most versatile of the clean energy molecules that we've been looking at. Certainly, the Department of Energy supports that through the hydrogen hub programs and in the IIJA. So we're excited about the application process. We expect decisions by end of year, where then we would go into future proposals around the proceedings. So we have two, one in the Rocky Mountain region, one in the upper Midwest region, both are consortiums with our multiple states and both involve the goal of creating what I think about as an ecosystem of both producers and users of a clean molecule like hydrogen and whether that can then be converted into fertilizer for ag, process heat -- burning for process heat and from our perspective, blending into the distribution system and co-firing in our existing natural gas plants. So we're excited around the versatility that the molecule provides. We appreciate what Congress and DOE are doing, and we look forward to progressing our applications at the DOE this year.

Operator:

We'll now take question from Sophie Karp calling from KeyBanc.

Brian Van Abel:

Sophie. Yes, thanks for the follow-up question. We do -- so the way we see this playing out is we have absolutely submitted our own self-bid -- self-build projects in all 3 of the RFPs, Minnesota, Colorado and SPS. And those range from solar to wind and storage and combinations of each of those and depends on the RFP. Minnesota was only a solar RFP. But we've spent probably the last 18 to 24 months, working on our self-build projects. As we know, we have a massive renewable build-out over the next decade in our territories. So -- not only do we see potentially our own self-build projects being selected, we have a good partnership with Vestas in the Colorado with their Colorado facility. And so we have some geographical advantages with having wind turbine -- wind blades being manufactured there, and we have a lot of opportunities around. We're using the interconnection of our retiring coal plants. So we feel really good. Now, publicly, we talk about targeting 50% ownership. Obviously, we think we'll be very cost competitive and would love to demonstrate to our commissions that we could do more than 50% ownership because we think we have really good projects that will show a lot of benefit to our customers. And I think this is just -- as I think about this, let me give you a little view of longer-term. I really think this is a start of steel for fuel 2.0 as we think about it. And I don't think there are many utilities can do this clean energy transition at the price point that we can because of the solar and wind resources in our backyard. And we think that's a true competitive advantage over the longer term as being able to deliver 80% to 85% clean energy in 2030 at or below inflation. So we're excited to continue to work on these RFPs. And following these RFPs, we'll do multiple more RFPs in our jurisdictions. So I'm looking forward to giving you and everyone on this call and our stakeholders further updates as we work through the process.

Brian Van Abel:

Yes. Thanks for the question. No, Monticello -- Monticello maybe a couple of million dollars from a repair cost perspective. So pretty immaterial relative to the quarter. As we think about it, last year, if you look at our pattern of O&M last year, it was significantly higher in the latter part of the year. Part of that is due to some regulatory deferrals that were in place of Q1 last year than unwound as we got rates in Texas. And then we also had good weather last year, so we invested in our system later in the year. So as we think about it, we're still good with our year-end guidance, and we'll continue to work on that. Now that being said, we are facing inflationary pressures and it's something that we're very focused on internally is keeping those O&M expenses down as I think is important from a customer build perspective long term. But overall, we feel good with where we are and expect to deliver on our year-end numbers as we've done for 18 years.

Unidentified Analyst:

Just a clarification around the transferability. Is it sort of the legal basis that you're looking for? Getting the clarification enables you to move forward. Or is there something that you're looking for in terms of the content?

Operator:

The next question is coming from Ryan Levine calling from Citigroup.

Brian Van Abel :

Ryan, thanks for the question. As we think about it in New Mexico, a wide range of intervenor testimony. I think some of that from large industrials is call it par for the course. Look at the staff testimony, we think it's a good starting point, the staff testimony. I think one of the key aspects is we filed the forward test year. And I think there's support from a forward test year construct perspective, which is different from historical standards. So absolutely, just got the testimony in last Friday, have digested it, and then we'll see if there is an opportunity to work with the parties and reach a balanced and constructive outcome from a settlement perspective. If you look at the schedule we have -- hearings are June 20. And so that would be kind of from now until June 20, and it's actually a stipulation period in their native, in terms of looking at settlement opportunities. But we've been -- we've reached a settlement in our last couple of rate cases in New Mexico and certainly look forward to working with the parties on it to get a balanced outcome for our customers. The second part of your question was around guidance. This goes into effect late in the year, so relatively small impact on 2023 guidance.

Brian Van Abel:

No. From a timeline perspective, no, I do not. In terms of it getting pushed out.

Ryan Levine:

Okay. And then on New Mexico, what are you seeing for weather-normalized load for that region?

Operator:

Our next question is coming from Mr. Paul Patterson calling from Glenrock Associates.

Bob Frenzel:

Yes, Paul.

Bob Frenzel :

Paul, it's Bob. I didn't comment earlier but no new concerns there. We -- the bill as it passed the Senate and the amendments that were provided make the bill workable, I think, from our perspective. We continue to watch it as it moves through the house process. But as it stands right now, I think it's something that we can work with. We think if there still leaves a lot at the commission for decision-making, and we would very much work with the CPUC and the staff to implement some of that legislation through the regulatory process.

Bob Frenzel:

Yes. Thanks, Paul. I think you’re talking about stratification of residential customers from an income perspective. I think at this point, what we do in that regard is we direct a lot of assistance through regulatory state and federal agency programs to mitigate the income-qualified customers. And that process, I think, has worked pretty well. I don’t see us proposing any changes to customer stratification at this point.

Brian Van Abel:

Thanks, everyone, for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions.

Operator:

Good day, ladies and gentlemen, and welcome to today's Xcel Energy Year End 2022 Earnings Conference Call. For your information, today's conference is being recorded. Questions will be taken from institutional investors, reporters can contact media relations with inquiries and individual investors and others can reach out to Investor Relations. At this time, I’d like to turn the conference over to your host today, Mr. Paul Johnson, Vice President, Investor Relations and Treasurer. Please go ahead, sir.

Bob Frenzel:

Thanks Paul, and good morning, everyone, and welcome to our fourth quarter call. We had another very successful year at Xcel Energy, continuing to execute on our strategy while delivering strong financial and operational performance. For our investors, we delivered EPS of $3.17 representing the 18th consecutive year of meeting or exceeding our initial earnings guidance. In February, we raised our annual dividend for the 19th straight year increasing at $0.12 per share or 6.6%. More recently, in November, we extended our long-term investment plan which features a 10-year capital outlook with an approximate 7% rate base growth. We ranked in the top quartile in customer reliability or CAIDI and our residential electric builds are more than 20% below the national average. And amidst the backdrop of significant commodity increases this year, Xcel Energy's 4,500 megawatts of owned wind farms continue to be an industry-leader in net capacity factor performance, generated approximately $1 billion of fuel-related customer savings in 2022 and almost $3 billion since 2017. Our nuclear fleet remains the top performing fleet in the country and achieved a capacity factor of 96% last year. We had an active regulatory year and resolved multiple rate cases and Uri storm cost recovery proceedings. The commissions in Minnesota and Colorado approved resource plans that will add nearly 10,000 megawatts of utility scale renewables to our systems through this decade. The Minnesota Commission approved our 460 megawatt Sherco Solar project. The Colorado Commission approved our $2 billion Power Pathway transmission project and MISO awarded us $1.2 billion of transmission projects and we accelerated our timeline for transitioning out of coal and now expect to be coal free by the end of 2030, all of which contribute to our leadership in clean energy transition for our customers. We continue to lead in carbon reduction as well. In 2022, our estimated carbon emissions were approximately 52% below 2005 levels and we remain on track to achieve 80% carbon reduction across the company by 2030. The passage of the Inflation Reduction Act will reduce the cost of renewables for our customers, improves cash flow and credit metrics for the company and enhances the competitiveness of our renewable offerings. We continue to execute on our electric vehicle vision, implementing multiple new programs for our customers. We also filed comprehensive transportation plans in Minnesota and Wisconsin that are pending commission approval. We've advanced our ESG leadership and have been recognized by multiple entities, including an upgraded rating by MSCI from AA to AAA. And finally, we were named among the world's most ethical, admired and responsible companies and we're recognized for being the best veteran employer as well as for our disability inclusion in the workplace. I'm really proud to lead a team that can deliver on operational, financial, environmental and diversity goals, all simultaneously. Looking ahead, we're well-positioned for sustainable organic growth over the next decade, including affordable renewable additions in our resource plans, the transmission needed to enable those carbon-free resources and responsible community transitions as we retire our coal plants. We've recently issued a requests for proposals in Minnesota, Colorado and at SPS seeking approximately 6,000 megawatts of new renewable generation, a portion of the 10,000 megawatts that have been approved in our jurisdiction. We'll submit our recommended portfolios of generation assets to our commissions by the middle of this year and anticipate decisions in the second half of this year. We also expect to issue additional RFPs in Minnesota and Colorado this year and next year for the remainder of our approved needs. As we've discussed in the past, we believe that we have a geographical advantage in the clean energy transition due to the strong wind and solar resources in our service territory. This access to low cost renewable energy should also give us further advantage in developing green hydrogen and other clean fuel projects, which are becoming more feasible as a result of federal support from the Infrastructure and Jobs Act and the IRA. Late last year, we submitted hydrogen hub concept papers for both the Rocky Mountain and the Upper Midwest regions to the Department of Energy to compete for awards from the $8 billion hydrogen hub program. In December, we received favorable notice from the DOE for our concepts and we're encouraged to submit full applications in April. In addition, our pink hydrogen production pilot at our Prairie Island nuclear generating station is expected to be operational this year. Finally, we expect to bring forward opportunities this year to utilize clean fuels and green hydrogen blending at both our gas-fired generation stations and in our gas networks for Home and Building heating. As we continue to utilize innovative technologies to decarbonize our business, we are well-positioned to take advantage of potentially significant hydrogen capital investment opportunities in the future. As the penetration of renewable assets in our states increases, we're also interested in pursuing advanced storage opportunities to balance our electric system needs. Today, we're excited to announce a new partnership with Form Energy to develop two long-duration energy storage pilot projects. Form Energy's 100-hour battery technology could be a critical component to our decarbonization strategy providing the resiliency and reliability that we need on the system to support our significant renewable portfolio. We plan to deploy a 10 megawatt multi-day storage system at a retiring coal plant in both Minnesota and Colorado. These projects are expected to be online as early as 2025. And as we wrap up, I want to thank the thousands of employees who worked in below zero temperatures, and sustained high winds in several feet wet, heavy snow to keep the lights on and the houses warm during our recent winter storms. Your efforts exemplify our company values of connected, committed, trustworthy and safe. And I believe that our dedicated employees and partners are what distinguishes Xcel Energy with our customers. With that, I'll turn it over to Brian.

Operator:

[Operator Instructions] First question is coming from Mr. Nick Campanella calling from Credit Suisse. Please go ahead. Your line is open, sir.

Brian Van Abel:

Hi, Nick. Yes, good question. And a couple -- let me make a couple of points on it. One is a little bit of a function of where actuals in 2022 ended up in terms of updating our 2023 O&M guidance, but we're really proud of the continuous improvement efforts that we've had underway and they've been underway for a long-time from 2014 to 2021, we kept O&M flat and that's something I'm really proud of our employees who are doing and there is a really good benefit to our customers. We did have inflationary pressures in 2022 but also took actions given the good weather year to reinvest in 2022 in the system and our employees. As I think about 2023, a couple of things. One is, now we're investing a lot in technology and how do we make us more efficient in our plants, we have some of the digital operations factory which is really using AI in our plants to move from more reactive, proactive maintenance. We're investing significantly in, call it, real time scheduling in other opportunities to use AI. We also are starting to get on a treadmill of shutting down our coal plants, we have a broader coal unit a year that will start to shut down which provides us with a tailwind as we think not only in '23 but through basically the end of this decade in terms of as we lead this clean energy transition. And then we also do see some abatement of, call it, the high diesel costs, we had a storm year that was above normal in 2022, for example, we had quintuple the number of storm days in December. So there are some things that happened in '22 that won't happen in '23 that should help us achieve it. So, a long answer, but a lot there to unpack and hopefully that helped provide some color on it.

BobFrenzel:

Nick, it's Bob, thanks for the question. And as we said in the prepared remarks, we filed this case over a year-ago, we probably actively working with parties since the September timeframe and we've reduced our total initial ask dramatically through extension of asset lives through the MISO capacity revenues and for bringing down the actual sales that we experienced in the state. So we think that reduced revenue ask is really a tailwind for us in the case, there's probably some pretty decent -- recent decisions in Minnesota, you saw the Minnesota Power case the other day and our gas settlement that Brian mentioned in his prepared remarks are data points that we feel confident in taking this, as you say, all the way, but we're always open to engaging with all the parties and if there is an opportunity to move forward with a settlement, we would certainly think to do so.

David Arcaro:

Thanks so much for taking my questions. I was wondering if you might be able to give any preview of what we could expect from the Clean Heat Plan filing later this year in Colorado, whether there might be potential CapEx investments additions to the plan and what new technologies and opportunities that might be to invest there?

Brian Van Abel:

Yes, David and I'd just add a couple of points there. One is, we don't have anything in our current five-year plan related to hydrogen investment opportunities. So to the point, if there's an opportunity to pull that forward and move faster on hydrogen, absolutely an upside opportunity as we think about it over the next five years. But also lot of, call it, industry discussion about natural gas commodity cost and the volatility we think longer-term now us owning renewables and creating green hydrogen blending it into the LDC creates more price certainty for our customers and takes that volatility out, so I think that's a longer-term opportunity and benefit as we think about how do we help our natural gas customers and improve the certainty of our overall bills.

David Arcaro:

That's really helpful color. Thanks for that, lot of initiatives, it sounds like related to that program that you'll be rolling out. And then separately on the announcement with Form Energy and long-duration storage, it's nice to see that crystallizing here. I was wondering if you might have a sense for how much long-duration storage might make sense on your system over time? Is there a certain number of megawatts or a proportion relative to your generation fleet that might make sense. Wondering how you might see the scale up to the extent these initial projects are successful and make it through the regulatory process?

Brian Van Abel:

Yes, and I would just add to that, we're really excited about this technology, shows that we're leading and really demonstrating that we're on the forefront of this clean energy transition and we've always talked about we know how to get to our 2030 goals of 80% plus carbon reduction and so this is really about taking that last 15% to 20% out of the sack and providing one of the solutions. So if you think about that and when you look at our resource mix in 2030, you can start to size what do we need to do beyond that in terms of storage capabilities that will be one of the solutions.

Unidentified Analyst:

Hi, good morning. It's actually Rich [indiscernible] on for Jeremy. Thank you for the time today. Maybe starting with changes to one of your drivers. I know we hit O&M already but just curious if you can parse the full range of what are effectively true-ups for '22 actuals versus new expectations for '23, are any of these changes you're putting in higher or lower within the guidance range at this point in time?

Unidentified Analyst:

Great, thanks for the color there. And then turning back to Colorado and a lot of their focus on the gas system planning side that you addressed this a little bit from the Clean Heat Plan perspective, but I'm curious for your higher level thoughts on how this might impact your electric operations in state as well?

Operator:

Thank you very much, sir. We'll now move to Julien Dumoulin-Smith of Bank of America. Please go ahead.

Brian Van Abel:

Yes. Hi, Julien. Good question, and we think about -- I'll talk a little bit about both sides of the business because we think about on the electric side really well-positioned from overall customer bill perspective. Now we're, call it, 85% electric and if you just look at our income statement and the cost of goods sold and fuel impacts on the electric side is modest given the inflationary environment we saw in 2022, Bob talked about it, right, it's really -- it's our wind build out that we've always talked about been the hedge for rising commodity costs and that's played out in 2022 and really good to see from a customer bill perspective. And also we went into the year, being on a national average, more than 20% lower on residential customer per bill. So, good place and a good place to be on the electric side. Obviously, on the natural gas LDC side, you have a lot fewer levers and lot fewer assets. And so you saw some of the headlines of 40% to 50% bill impacts for our customers, obviously, we do not like to see any sort of bill impacts of that magnitude, but you're absolutely right that that is starting to subside with where natural gas prices are going. And if you caught it, we've just, in the past two months, we’ve twice updated our gas commodity clause in Colorado which lowered the gas -- the commodity portion of the customers' bills by about 30% that will start to feel in Q1 relative to Q4 because we're actually going to be over collected, so we proactively did that and the commission was appreciative of that. So we're certainly taking every opportunity we can to make sure that we have reflecting the lower commodity costs in our customers. So that's really where we see, I think longer-term, we feel really good about delivering bills at the level of inflation as we think about 2030 and beyond and what the IRA is doing for us and for our customers. So we feel good both near-term and longer-term as we think about it.

Julien Dumoulin-Smith:

Yes, absolutely. You bet, hi listen, just going back to one of the questions from earlier. On the settlement conversations versus fully litigated cases obviously with curve backdrop is an ideal for having rate increases altogether. Can you talk a little bit about expectations we will settle cases broadly speaking here, to what extent could Minnesota be an isolated data point in the current instance given the current fact pattern or are you seeing challenges more broadly, here again without pointing fingers at specific statements necessarily?

Operator:

Thank you very much, sir. We'll now take questions from Travis Miller calling from Morningstar. Please go ahead, sir.

Brian Van Abel:

Hi, Travis. Yes, I can take that one. No, I think we continue to see similar to what we saw in 2022 where strong growth in the C&I, if I parse it out, we have -- what we're expecting is about 2% up in C&I for 2023 and about a 1% decline in residential rate, continued decline from the COVID levels that we saw the increase in residential. C&I particularly good growth in SPS and I think just under the 2022 sales, when you look at the C&I numbers, you see that Colorado C&I is negative, but if you actually make an adjustment, we helped a large customer installed 240 megawatts solar farm to ensure that they stated in Colorado, ensured those jobs stayed in Colorado. And so if you made that adjustment Colorado C&I would actually have been a plus 2% for the year. So strong economic activity in C&I growth across all of our service territories, we expect that albeit a little bit of slowing in 2023 but to remain there.

Brian Van Abel:

Yes, Travis, I think it's early innings with the departments. April is the next filing date for, I'll call it, full plans, I think the Department of Energy is looking at probably around two dozen. So it's going to take them a while to parse through that in award grants for the -- I'm going to guess four to six that move forward from that perspective. We think both of our projects are incredibly interesting, provide lots of regional benefits from multiple sources and multiple users, which I think is a criteria that the department is going to look at. But if you're going to ask me to guess, I'd say it's at least end of next year before we get any clarity on those April applications potentially longer.

Travis Miller:

Sure, okay. End of next year being 2024?

Travis Miller:

Okay. And then just real quick on that, how many partners are in those two proposals, Rocky Mountain, Midwest proposals?

Travis Miller:

Okay, let's just looking for a rough number. Okay, very good. That's all I had. Thanks.

Operator:

Thank you very much, sir. We'll now take questions from Mr. Paul Patterson from Glenrock Associates. Please go ahead. Your line is open.

Christopher Clark:

Hi, Paul, this is Chris Clark. I'm the President of our Minnesota company. Yes, there is a goal and statute that seeks to have our prices for our commercial and industrial class, be within 95% of the national average. I think the starting point here is really that we provide our customers a great value and I think the look that got some attention is simply a look at the rate. But if you actually look at our total bills for our C&I class, you'll see that over a 10-year period, they've been relatively flat and that's because the EIA data that gets pulled for rates is only one component of the bill. So I think when you look at what we achieved for our C&I class, if you take into account the conservation programs that have been really nation leading here in Minnesota and other credits, and things that those customers have done to be successful, you'll see that our C&I class rates are competitive, and in fact, we do a great job of attracting new business to our state. So, I think it's important when we look at the picture of how we're doing with our C&I rates and really take that into account. And as Brian and Bob have said, when we look at the plans for our clean energy transition, we're confident that we can deliver those results in line or less than CPI. And I think over the long-term, we've shown that we can continue to be a successful company and navigating this, keeping rates affordable for our customers and delivering great value.

Brian Van Abel:

Yes, good question. No, we haven't disclosed the cost of these batteries, yet. We haven't made the regulatory filings yet and we are looking forward to having a discussion on our stakeholders and the commission, but we certainly will O&M, we think there are a valuable grid asset and important to us to own them as we think about how do we start to deploy these new technologies as we look to decarbonize and get to 100% carbon-free. So obviously, with any new technology the cost of more expensive, but this is a 100 hour battery that we don't see other solutions out there that are viable and it also iron oxide, right, if you think about rare metals, this is something that's readily available as we think about supply chains and what's the ability to scale. So overall, we're pretty excited about this. I think it demonstrates our leadership as an innovative clean tech company and we're excited to work with our commissions, but certainly more to come in terms of disclosing the cost.

Brian Van Abel:

Later this year, it will be this year.

Brian Van Abel:

Yes.

Anthony Crowdell:

Thanks for squeezing me in here. Just hopefully two quick ones. I guess when you look at the four major rate filings you guys have, they're all asking for a forward test year. When we look at 2023 and beyond, what do you think is a reasonable assumption for structural lag? Can that be reduced from say 90 to a 100 basis points to maybe 50, 60?

Anthony Crowdell:

Great. And just one follow up on top of Julien's question. I think Bobby had mentioned you prefered the settlement route and not just specific to Minnesota, but just in general. It seems like lately some commissions may be or tinkering with settlements if I use that term, it seems that's maybe turning at a greater frequency, does that give you pause on achieving your settlement?

Operator:

Thank you so much, sir. And as it appears to have no further questions, Brian I'd like to the conference back over to you for any additional or closing remarks. Thank you.

Operator:

Thank you so much, sir. Ladies and gentlemen that will conclude today's conference. Thank you for your attendance and you may now disconnect.

Operator:

Good day, and welcome to Xcel Energy's Third Quarter 2022 Earnings Conference Call. Today's conference is being recorded. After the presentation, we will open up for questions. Questions will only be taken from institutional investors. Reporters can contact Media Relations with inquiries, and individual investors and others can reach out to Investor Relations. I will now hand the call over to Paul Johnston, Vice President, Treasurer and Investor Relations. Please go ahead.

Bob Frenzel:

Thanks, Paul, and good morning, everyone. Welcome to our third quarter earnings call. Let's start with our financial results. We had another solid quarter, recording earnings of $1.18 per share for 2022 compared to $1.13 per share in 2021. Our earnings are on track, and as a result, we are narrowing our '22 earnings guidance range to $3.14 to $3.19 per share. We're also initiating 2023 earnings guidance of $3.30 to $3.40 per share, which reflects our 5% to 7% long-term EPS growth objective. Consistent with past practices, we've updated our base investment plan, which reflects $29.5 billion of capital expenditures over the next 5 years. This investment plan provides significant benefits to our customers, supports community vitality and resiliency and delivers rate base growth of 6.5%. We're very excited about our investment plans, which support continued execution of our long-term strategy and clean energy leadership. It enhances reliability and resiliency, advances our generation fleet transition, allows for the electrification of transportation, keep customers' bills low and delivers attractive returns for investors. And while our base plan is robust, it does not include any potential renewable generation assets that are approved in our Minnesota and Colorado resource plans, or additional transmission capital is needed to integrate new renewable generation in Colorado beyond the Power Pathway Project. For these assets, we expect further regulatory clarification in the second half of 2023, which could result in incremental capital expenditures of $2 billion to $4 billion, which would result in rate base growth of 7.6% at the midpoint. Our updated capital plan, which reflects the benefits of the IRA, extends the growth rate and improves the quality of rate base, reduces financing risk, improves credit metrics, and delivers substantial customer and environmental benefits. During the quarter, the Inflation Reduction Act was passed into law, which includes new and extended tax credits for wind, solar, hydrogen, storage, carbon sequestration and nuclear. It also includes tax credit transferability. Some of the key takeaways for the IRA include substantial customer benefits and a continuation of our clean energy leadership while keeping customer bills affordable. The inclusion of the new solar production tax credit makes our company-owned projects more affordable for our customers relative to the solar ITC. The hydrogen production tax credit should improve our competitive advantage in delivering low-cost, clean fuels for our combustion turbines for electric reliability and for blending into our local gas distribution systems that will help our customers lower their carbon footprint in the future. The nuclear production tax credit will provide additional customer credits depending on MISO marginal pricing thereby lowering the cost of electricity from our existing nuclear assets. The tax credit transferability will increase liquidity and improve credit metrics. An excellent example of the IRA tax benefits is our 460-megawatt Sherco Solar proposal that was recently approved by the Minnesota Commission with strong stakeholder support. This will be the largest solar facility in the Midwest and a top 5 installation in the United States, which will go into service in 2024 and 2025. Following the IRA passage, the levelized cost of Sherco solar is projected to decline by over 30%, even after accounting for inflation and supply chain pressures. Due to the project qualified for both solar PTCs and community energy bonus as we are reinvesting in the community around our retiring coal facility. This is a substantial benefit to our customers. Earlier this year, the commissions in both Minnesota and Colorado approved resource plans that will add nearly 10, 000 megawatts of utility scale renewables to our systems and achieve an 85% carbon reduction by 2030. These resource plans were approved prior to the passage of the IRA, but the final recommended portfolios are expected to capture the benefits of the IRA which will significantly reduce the levelized cost of these renewable projects for our customers. We've issued a request for proposal in Minnesota and plan to issue an RFP in Colorado later this year. After evaluation of proposals, we anticipate submitting our recommended portfolios to our respective commissions by the middle of next year and expect decisions in the second half of next year. We expect the recommended portfolios of generation assets will include a mixture of self-build, build-own-transfer projects as well as some power purchase agreements. Our generation resource plans are consistent with our Steel for Fuel strategy, which provides a valuable hedge for our customers against rising commodity prices. As an example, our owned wind farms are projected to generate nearly $1 billion of fuel-related customer savings in 2022 alone and almost $3 billion since 2017. While these fuel savings were not included in our investment case, it shows the tremendous customer benefits of being an early leader in the clean energy transition. We also continue to advance our broader ESG leadership as MSCI recently upgraded Xcel Energy's rating from AA to AAA and categorized our company as leader in their nomenclature for managing the most significant ESG risks and opportunities. It's is an outstanding accomplishment and reflects our continued progress, including adopting a water management goal, greater disclosure of human capital management practices and an improved governance score. We were also named to investor business daily's 100 best ESG companies, which is further recognition of our ESG leadership. And with that, I'll turn it over to Brian.

Operator:

[Operator Instructions] We will take our first question from Nicholas Campanella with Credit Suisse.

Brian Van Abel :

Yes. Absolutely, Nick, and I'll handle that one. Yes. I mean when we look at the IRA, huge win for our customers and us. And really -- and when we think about our financing plan, it's around transferability. And there is an offset because a majority of those tax credits were on our balance sheet as a deferred tax asset, which would increase the cost of our renewable projects. So by being able to monetize them, we reduced that tax asset on our balance sheet, lower the overall LCOE for our wind projects and solar projects to our customers and improve our cash flow. So you do have lower rate base from that in a vacuum but it allows us to reduce our equity needs, increase CapEx and have basically a higher quality rate base as we think about it. Much of the steel in the ground and the tax assets on our balance sheet.

Nicholas Campanella :

Got it. That's helpful. That's helpful. And then in the electric rate case in Minnesota, if I heard you correctly, I think you're engaging parties for a possible settlement. Can you just kind of give us a sense of overall confidence level and just getting it across the finish line? And then is there a drop dead kind of date that you need to get this done by if you were to? Like is there a hearing date we should have in mind?

Operator:

We will now take the next question from David Arcaro with Morgan Stanley.

Bob Frenzel:

David, it's Bob. Thanks for the question. We filed the case back in January with the commission, and we're looking for a 3-year forward gas case. We have expected capital expenditures continuing next year and the year after, and we have real visibility into the case -- sorry, the commission granted us a historic test year case, means we likely need to go back in sometime in 2023 for a new gas case.

Brian Van Abel :

Yes. Yes, I'll take that one. I think it absolutely does. And the way I think about it, it extends our PPA buyout opportunity for a long time, right? What we've been successful at, we bought out about $750 million of PPAs over the past number of years. And we were successful because we brought forward a win for our customers ,a win for us, right? We were able to buy out a PPA, put steel in the ground and save our customers' money. And we did that by buying out the PP and repowering it and qualifying for new set -- new strip of tax credits on the wind side. So pre IRA, the buyout opportunities were stepping down as your tax credit stepped down. Now since we have a 10-year-plus runway of PTCs and also, we'll look at evaluating solar buyout opportunities, if you can repower on a solar PTC farm. So I think there's a much longer runway for buyout opportunities. And none of that is our capital forecast is in our 5-year plan as upside. And I think that longer term, as you think about repowering, as you mentioned repowering is we put over 3,000 gigawatts or 3,000 megawatts of wind in service between '18 and '21. And we'll look at potentially repowering those in 2028, 2029, 2030 and save our customers' money, like we're doing with our 4 wind repowerings in Minnesota right now. So I think this really extends our opportunity on the PPA buyout and our own repowering opportunities.

Brian Van Abel :

I think what we could potentially see in the Colorado, like we talked about potentially seeing bids in the RFP and the Minnesota RFP is focused on solar. The Colorado 1 will be an all-source RFP so we could potentially see something in that RFP that we'll launch later this year that Bob mentioned, will -- you'll get visibility in call it, mid to later next year, could be the first time. Because when we were middle of kind of the resource plan and RFP processes, we want to follow those and make sure we align with the other acquisitions. So that's probably the first time I'd look at it. Longer term, it's much more opportunistic, right? You got to find a developer that is willing to transact at a price that's beneficial for our customers.

Brian Van Abel :

Jeremy, nice headline.

Bob Frenzel:

I appreciate the question. A couple of things. Brian highlighted what we would call incremental capital that we've been talking about for the better part of the year. And this is the competitively bid generation in both Minnesota and Colorado, as well as the incremental transmission that we would need on the power pathway in Colorado to integrate those renewables. That opportunity is $2 billion to $4 billion. At the midpoint of that, we probably have rate base growth in the mid-7s. Additional to that, things -- early things we're starting to think about, I mean, you heard the previous caller's comments around PPA buyouts and repowerings that’s certainly in our sites. We haven't put bookends around those for the community, but we certainly will. Secondly, as we think about generation in our Southwestern service territory, I think with the IRA, we see economics in solar and wind down there that can make an acceleration of renewables in the SPS territory, also not in our plan would be towards the back end of the 5-year plan, maybe in the middle of the 10-year plan. We're still evaluating our resiliency expenditures. We feel very solid about what we're doing to harden our grids for climate change. But some of that will happen with the intelligence we need on the distribution grid to enable electrification and transportation and the potential beneficial electrification of gas. Those are the big buckets that I think we need to be continuing to think about. Brian, do you have anything.

Jeremy Tonet:

Got it. That's great to hear. And I just wanted to go into '23 guide a little bit more there. I think there's 1% growth next year instead of 2% this year. Just wondering, is this primarily post-COVID normalization or some, I guess, conservatism here? And just thoughts, I guess, on achieving flat O&M in 2023, including, I guess, work that you've done this year to derisk the 23 outlook, if you could kind of give us thoughts as to how that factors into the '23 guide?

Jeremy Tonet:

Yes.

Jeremy Tonet:

Got it. That's all very helpful. One last one, if I could. If you might be able to speak on the Colorado gas step increase denial there. Do you see this as a signal from the commission to continue regularly filing rate cases? And are there any takeaways on the electric side?

Brian Van Abel :

Yes. And I just think about longer term on the gas LDC side, like our net 0 plans for 2030 and 2050 and the LDC side are aligned with the climate science, they're aligned with the state goals, and we're looking forward to working through the clean heat plant in Colorado. Really, I think about resource planning on the gas side. And I think that will help us align with the commission and our stakeholders on how we achieve these carbon reduction targets on the LDC side because it is a critical asset for us and our customers really see demand and interest in it.

Jeremy Tonet:

Got it. That all makes a lot of sense. Just checking.

Durgesh Chopra:

Solid quarter here. Thank you time. Just I actually had 2 questions, Brian, for you. Just one, I think you mentioned this in your remarks, but the jump in CFO between the 2 plants the $1.8 billion or $2 billion is included in that CFO number, right, from the tax.

Durgesh Chopra:

Okay. Then maybe just because it's a newer concept, how does that actually work? Is there a market for it? And how should we think about you monetizing those taxes? I heard Paul say that that's for newer assets, if I'm not wrong. So maybe just any color that you could give us there, which will sort of help us profile the cash flows through the 5 years?

Durgesh Chopra:

Got it. Sounds like the process is already underway. And just to be clear, these are tax credits in excess of what you wouldn't be able to offset your taxes currently. Am I thinking about that correctly, Brian?

Operator:

We will now take the next question from Ross Flower with UBS.

Brian Van Abel :

Yes. So I think, Ross, the way we think about it is really 5 to 7, we publicly target the upper half of that guidance range for EPS growth. And when we look at it, we feel very confident in delivering there. We've delivered in the upper half of our guidance for the past 12 years when you look at our annual earnings guidance and delivering on our guidance for 17 straight years. So we feel good about the plan we put in place. Yes, it's -- we have generally been known to put a conservative plan in place, and we have a lot of incremental upside. And I think you hit the nail on the head. If you look at 1 of our slides, we show where we think that incremental capital is going to be in the back half of the plan or the back 2 years of the plan. So I think that's the way to think about it as we kind of have that continued year-over-year strong rate base growth.

Bob Frenzel:

Yes, Ross, it's Bob. We are certainly sensitive to the commodity impact on our natural gas customers in their bills this winter. We've been very active in energy efficiency programs. We've been very active in the federal and the state levels on identifying and trying to secure significant portions of LIHEAP funding and then working with our customers directly to find and enable those customers that may not even know they're LIHEAP eligible to benefit from some of the mechanisms that we have at the state and at the federal level to mitigate impacts on our customers. We start with some of the lowest rates in the country in our Colorado gas company but we recognize and are empathetic to everything is up from a starting point for customers who are feeling it at the pump, they're feeling it in rent and they're feeling it at the grocery store. So we're empathetic. We're doing everything we can to mitigate the impacts. We have extended the cost of the winter storm Yuri costs in various jurisdictions anywhere from 2 to 5 years. So we have mitigated regulatory outcomes on that gas piece, but very active with our customers and communications as we go into the winter time.

Operator:

We will now take the next question from Steve Fleishman with Wolf Research.

Brian Van Abel :

Steve, the way I think about it is a little bit of balance between FFO to debt and then the holding company debt to total debt. And that metric right now for Moody's has us at about a 25% threshold on that and certainly going to have a conversation about what that right threshold is. But -- great to see our FFO to debt with strong improvement of 100-plus basis points relative to pre IRA. So -- but we look at both of those in combination because it really is important to have -- maintain that strong credit quality, not only at the holding company, but also to work with our commissions ensure we have strong credit quality at all the operating companies too, because it really is in the best interest of the customer.

Brian Van Abel :

It is consistent with the consolidated capital structure.

Steve Fleishman:

So there would be more equity needed then to fund that if you --

Steve Fleishman:

Okay. Okay. Yes, because it just -- I mean I love strong balance sheet, just 18% is kind of off the charts these days. So it's -- but it's also obviously better to be strong than not.

Steve Fleishman:

Okay. And then another question, just on all the data that you gave on the IRA savings for the cost of solar and wind. So like Sherco 30% lower and some of the data. Just I want to just make sure I understand the starting point there because there have been a lot of inflationary pressures for like the last 18 months. And so when you're seeing these savings, are you going back to before that? Are you going to kind of where you'd be now, is the baseline including those inflationary cost pressures that had already occurred? I just want to make sure I understand the baseline for that -- for these.

Steve Fleishman:

So the 30% -- so the 30% goes back to the initial filing or to the revised.

Steve Fleishman:

So those are savings, yes.

Steve Fleishman:

Okay. That's great.

Sophie Karp :

I was curious if you could talk a little bit about this -- the collaboration with Bloom Energy on the zero-emission electrolyzer, I guess, produce hydrogen and try nuclear plants? Just curious if you could give any color on the milestones there. And also, can you describe why it makes sense to have this type of process at the nuclear plant, which is a base load plan and presumably could dispatch into the grade at all times as opposed to a wind facility that may have more variability.

Brian Van Abel :

Yes. And Sophie, I'll just add to it. We're working through the development of it, it should be online probably later in 2023. And as we think we -- this is a really interesting aspect of potentially how we could use our nuclear plants and create pink hydrogen. We're working with a consortium in our states around the hydrogen hub announcement and applying for a DOE grant. And so this is part of a broader opportunity as we think we work with our states, both in Minnesota and the Upper Midwest and also in Colorado and the surrounding states on another hydrogen hub.

Brian Van Abel :

And so this is 1 of the unique aspects of this, is high-temperature steam electrolysis. So we're taking waste steam off the nuclear plant to heat the water, which makes it 30% -- the electrolysis process 30% more efficient.

Julien Dumoulin-Smith :

Appreciate it. Listen, I want to just pick up real quickly around the $2 billion to $4 billion real quickly with respect to the upside CapEx. How do you think about that materializing just on a high level perspective? I know you flagged the back half of the year, but can you talk about some of the dynamics here in the near term that would result in that upside in the back half, i.e., is a lot of predicated on the Colorado RFP process this year. How do you think about that, you're manifesting itself here in just in terms of procurement processes? And related to that, what about the upside to this 50% renewable assumption that we've used in the past? You alluded to it in your script remarks on that front. It seems like there could be some latitude whether to have the repowerings or greenfield opportunity.

Julien Dumoulin-Smith :

Got it. And maybe let me just clarify a little bit. On the repowering side, are you thinking that that's pretty strictly going to be done through the RFP process here? And the time line and opportunities that sort of dictated through it or is there more of an opportunistic ability to approach customers on a one-off? I think you're implying the former.

Bob Frenzel:

But I would come back to the PPA buyout concept. And we think that RFPs and preferred plans as part of our resource plans are an opportunity to bring some of the PPA buyout toward, and we have talked about that. So we have a history of doing it outside of an RFP process as well as that being an emphasis and a driver for it. So I would expect that some of this stuff to come to fruition over the next 9 months to 12 months as we work through the process with our commissioners and with the RFP results.

Bob Frenzel:

Across -- all of the above.

Ryan Levine:

I just wanted to follow up on the hydrogen hub comments. To the extent that hydrogen hub is developed in your neighborhood or in your backyard, can you talk to the materiality for your business outlook in light of the IRA and your opportunities both on the gas and the electric side?

Ryan Levine:

And just to be clear, you have some disclosure in Minnesota around hydrogen-ready combined CTs. Is there any of that spending that's already in your plan? Or is this all incremental?

Operator:

And we will now take the next question from Travis Miller with Morningstar.

Bob Frenzel:

Travis, it's Bob. Thanks for the inquiry on hydrogen. Glad we can answer your question. On the election, I think we're about 10 days away, lots of activity on the television, lots of signs, lots of mailers, lots of e-mails and texts. We're obviously interested in outcomes. But I think as a company, we've been very successful working with all administrations. Our policies of energy transition, protecting our customers, enabling a good experience and having clean energy for all is really important. And I think we can work with any of our elected officials. We've got great relationships with those sitting officers today, and we look forward to continuing those into the future. But I don't see anything that's going to dramatically change our plans, our investment philosophy and our 10-year trajectory that we laid out today.

Operator:

And there are no further questions. So I will turn the call back to Brian Van Abel, CFO, for closing remarks.

Operator:

Thank you for joining today's call. You may now disconnect.

Operator:

Good day, and welcome to Xcel Energy's Second Quarter 2022 Earnings Conference Call. Questions will only be taken from institutional investors. Reporters can contact Media Relations with inquiries and individual investors and others can reach out to Investor Relations. Today's conference is being recorded. At this time, I would like to turn the conference over to Paul Johnson, Vice President, Treasurer, Investor Relations. Please go ahead, sir.

Robert Frenzel:

Thanks, Paul. Good morning, everybody. It was certainly an interesting 11th hour twist in legislative news last evening, but we'll get to that in just a minute. Let's start with our financial results. We had another solid quarter, recording earnings of $0.60 per share in 2022 compared with $0.58 per share in '21. Our earnings are on track with expectations, and as a result, we are reaffirming our 2022 earnings guidance of $3.10 to $3.20 per share. During the quarter, we made good progress on our clean energy plan, achieving constructive regulatory outcomes. In June, the Colorado Commission approved our resource plan settlement, which includes approximately 4,000 megawatts of utility scale renewable additions. The conversion of our Pawnee coal plant to natural gas by the end of 2025, and the early retirement of our Comanche 3 coal unit by the end of 2030, which will be the final coal plant retirement in Colorado. We now have the approval of both our Minnesota and our Colorado resource plans, which together will add 10,000 megawatts of utility-scale renewables to our system and achieve an 85% carbon reduction by 2030. We anticipate issuing RFPs later this year, submitting our recommended portfolios by mid-2023 and receiving commission decisions in the second half of 2023. We expect the recommended portfolio -- we expect the recommended portfolio of generation assets will include self-build, build-own transfers and power purchase agreements. Our plans are consistent with our steel for fuel strategy, which provides a valuable hedge for our customers against rising commodity prices. Our owned wind farms are projected to generate nearly $1 billion of fuel-related customer savings in 2022 alone and a total of $2.7 billion since 2017. We're excited about our transmission expansion opportunity. MISO's long-term planning approach identified projects in Futures 1 with an estimated investment of $30 billion that will be awarded in 4 discrete tranches. Earlier this week, the MISO board approved tranche 1, which includes $10 billion in projects. Based on the most recent information from MISO, we anticipate a $1.2 billion investment opportunity for Xcel Energy within tranche 1. Turning to electric vehicles. We're making progress on our goal to power 1.5 million EVs by 2030, supporting our states in achieving their electrification goals. We are excited to be the first U.S. energy company to introduce all electric bucket trucks to our fleet, and we expect to file comprehensive transportation plans in Minnesota and Wisconsin in early August. These state proposals include single and multifamily residential offerings, commercial customer programs as well as a school bus pilot. In addition, we're looking to accelerate EV adoption through the development of high-speed public charging infrastructure, a partnering with our states and other organizations. The proposed programs will also foster customer affordability, providing significant fuel savings for EV drivers and helping to keep bills affordable for all customers through load growth and enabling more efficient utilization of distribution grid infrastructure. The Minnesota, Wisconsin proposals reflect capital investment of approximately $325 million from 2024 to 2026, which does not include distribution investments needed to upgrade the grid. Xcel Energy's clean energy leadership, including our long-standing track record of carbon reduction is a direct result of the passion that our dedicated employees bring to serve our customers and our communities. Earlier this month, we received another exemplary rating from the Institute of Nuclear Power Operators for our Prairie Islan Nuclear Power Plant. We've continued to improve performance and cost efficiencies, demonstrating sustainable excellence in operations. I want to congratulate and thank all of our nuclear employees, support teams, contractors and suppliers for their commitment and impact. Nuclear remains a very important source of reliable carbon-free energy. We're proud to be 1 of the top operators in the nation. Yesterday, it was announced that Senator Schumer and Manson had reached agreement on the inflation Reduction Act of 2022. While we still need to analyze the details to understand all of the nuances of the act, it appears to include nearly all the broader clean energy tax credits, including new and extended tax credits for wind, solar, hydrogen storage and nuclear. While doesn't include direct pay for all taxpayers for all tax credits, it does include tax credit transferability as an option when direct pay is unavailable. As we previously discussed, our capital investment plan is not dependent on changes in federal policy. However, the energy provisions included in the act would provide substantial customer benefits and help enable our clean energy transition while keeping our customer bills affordable. There's still a lot of twists and turns that can happen in Washington, but we're optimistic that the bill could become long. This past quarter, we were honored to be among the first companies inducted into the Climate Leadership Hall of Fame, which recognizes different organizations across the country for exemplary leadership in response to climate change. We're also recognized with the Hubert H. Humphrey Public Leadership Award for our groundbreaking sustainability goals in Minnesota. And finally, we received the EEI National Key Accounts Award for outstanding customer engagement, which recognizes companies and their account executives for providing excellent support and offerings to corporate customers. Our customers are at the heart of everything we do. And it's great to be recognized for our work and helping them achieve their goals. I want to thank these organizations for the recognition, along with our employees, partners and stakeholders who make it possible. And with that, I'll turn it over to Brian.

Operator:

[Operator Instructions]. All right. And our first question will come from Nicholas Campanella with Credit Suisse.

Brian Van Abel:

Hey, Nick. Good morning. This is Brian. Yes, it's a good question. So we think about that book AMT is -- we look at it in a couple of different ways. First is we have credits available where you can offset 75% of that book AMT impact. And then also when we look at the transferability that's included in the legislation, that ultimately, when we put those 2 together, that we see this as cash flow accretive for us. Now I'll caveat that. This came out yesterday and the 700 pages of legislative text. So we're still working through it. But that's our view on the book AMT.

Brian Van Abel:

So that's a good question. And we've seen -- you're right, both in Q1 and Q2, we've increased our sales guidance for the year. And I would say there's probably some more opportunity there as we look into the balance of the year. Now certainly, the dependence on the macro impacts that could occur with what the Fed is doing, but we see strong C&I sales. And it's even better if you look at where Colorado is, the C&I sales in Colorado, that's -- this is an adjustment there when you normalize this large solar farm that we helped with a major customer behind the meter. C&I sales in Colorado are strong, too. So we're seeing that across our service territories with that C&I strength, good economic rebound. We're seeing it on the residential side, we expected that, call it, reduction. And when we look at our budget, we're actually higher on residential than we expected. So structurally, I think we've seen a strong economy in the first half of the year and is certainly in the energy sector, in the manufacturing sector across the board. So as I think about longer term, obviously, you could have some potential headwinds if there's a recession or what happens and how big of an impact interest rates have. But I think we're bullish longer term when we start to think about the electrification opportunities, when we start to see EV penetration, when you start to see electrification of industrial processes. So I think there's a longer-term tailwind as I look at our service territories. And just another example down in the Permian Basin. We've seen extremely strong growth. But longer term, we're talking to their customers about electrification. They have their own ESG goals and net zero goals in the Permian, and so we're in discussions of how you electrify pumps and rigs and compressors and ensuring that we have the capacity and the investments in our distribution and transmission system on there to serve them. So I think there are tailwinds longer term, and it's great to see the rebound that we have in the C&I sector.

Jeremy Tonet:

Just want to dive into MISO a little bit here now that we have some more developments and touching on your $1.2 billion. Just wondering if you could characterize a bit more in terms of greenfield versus brownfield. And I guess this is just a preliminary estimate, but what's the scope, I guess, of what could possibly fall in incremental into this? Is this some competitive processes that still could make the way in? Just trying to feel our way through what this could mean.

Brian Van Abel:

And Jeremy, I'd just add to that, like Bob said, we feel good about our point estimate and the Wisconsin projects were deemed upgrades, so they're not expected to be competitively bid. So what you see as we put in our earnings presentation, are what we expect to be ours and owned, and that's our good estimate right now.

Jeremy Tonet:

Got it. So this $1.2 billion replaces the 1 to 2 range, but there's still potentially competitive processes that could add to this is a fair way to think about it?

Jeremy Tonet:

Got it. And thanks for all the comments on the climate policy so far and noting that this is hot off the press. But just wondering if there's any particular items in there, if we peel back the onion more, what do you see as the largest potential impact and points of opportunity to your plan near and long term? I mean, could CCS be something that's thought about more now?

Brian Van Abel:

Yes. And I'll just add to that, Bob. I mean, as we're in the middle of developing our clean heat plans for our gas LDCs in Colorado and Minnesota and have a hydrogen PTC. So you couple that with a long-term PTC for wind or solar, it really gives -- should give green hydrogen a jump start. And so we're excited about that. And so I think there's a number of great things in this bill. And ultimately, we look at it, it's really in the looks and feel similar to what I talked about on Q3 of last year in terms of the impacts to us. But ultimately, we look as cash flow accretive and slightly, there's some slight rate base reductions from we become more tax efficient, but slightly EPS beneficial. Now again, that's with a caveat, we're digging into it and make sure we understand everything, particularly around transferability but when we look at this whole package, as we talked about, our current plan is not built on this, right? Our current 5-year plan and long-term plan, our research plans were approved with current tax law. This just makes our plans even better for our customers. And that's the important point long run. Great for our customers as we make this clean energy transition even more affordable. So we're excited about this and optimistic that it gets passed.

Paul Johnson:

I think the estimates I've seen are about $1 billion.