Xcel Energy Inc.

Good day and welcome to Xcel Energy's third quarter 2021 earnings conference call. Today's conference is being recorded. 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. At this time, I would like to turn the conference over to Paul Johnson, Vice President, Treasurer, and Investor Relations. Please go ahead, sir.

Good morning and welcome to Xcel Energy's 2021 Third Quarter Earnings Conference Call. Joining me today are Bob Frenzel, President and Chief Executive Officer, Brian Van Abel, Executive Vice President and Chief Financial Officer, Amanda Rome, Executive Vice President and General Counsel, and a few others. This morning we will review our 2021 results, share recent business and regulatory developments, update our capital and financing plan, and provide 2022 guidance. Slides that accompany today's call are available on our website. As a reminder, some of the comments during today's call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and our SEC filings. Today, we'll discuss certain metrics that are non-GAAP measures, including ongoing earnings and electric and natural gas margins. Information on the comparable GAAP measures and reconciliations are included in our earnings release. With that, I'll turn it over to Bob.

Thank you, Paul, and good morning, everybody. Today we reported solid third quarter earnings of $1.13 per share compared with $1.14 per share last year. And given our strong year-to-date results, we're narrowing our 2021 guidance to $2.94 to $2.98 per share. We're also initiating 2022 guidance of $3.10 to $3.20 per share, which reflects our 5% to 7% long-term EPS growth objectives. Consistent with our past tradition, we've updated our base investment plan, reflecting $26 billion of capital expenditures over the next five years, which provides significant benefits to our customers and supports community vitality. This investment plan delivers rate-based growth of 6.5% off of a projected 2021 year-end rate base. This plan is robust, but there are certain investment opportunities that are not included in our base plans. including potential renewable generation assets authorized in our Minnesota or Colorado resource plan proceedings, and additional transmission capital that's needed to integrate new renewable generation additions in Colorado beyond the base Colorado power pathway proposal. The base plan also does not include any capital for green hydrogen production for our LDC or generation needs, which we believe could be material over the balance of the decade. We have our hydrogen pilot at the Prairie Island Nuclear Plant, and we're exploring five to eight additional greenfield and brownfield projects. And with favorable state backdrops in Minnesota and in Colorado, which have passed clean fuel legislation, as well as a potential for a federal hydrogen production tax credit, we believe that our favorable renewable generation conditions will help us push beyond pilots and into green hydrogen production resources. that can be valuable to a clean energy future. We're very excited about our investment plan, which supports continued execution of our long-term strategy and clean energy leadership. It provides for sustainability of our local communities, enhances reliability and resiliency, advances our fleet transition, keeps customer bills low, and delivers attractive returns for our investors. We're well positioned for sustainable organic growth over the next decade, including renewable additions in our proposed Minnesota and Colorado resource plans and the transmission needed to enable those carbon-free resources. Together, our resource plans are going to add nearly 10,000 megawatts of renewables to our system and achieve an 85 percent carbon reduction by 2030, while keeping customer bills at or below the rate of inflation. We expect decisions on both the Minnesota and the Colorado resource plans in the first quarter of next year. The clean energy transition is also going to need substantial transmission investment. We continue to make good progress on the Colorado Power Pathway transmission project, which is essential for us to deliver on our Colorado energy resource plan. It will enable over 5,500 megawatts of new renewables in the state, and it's vital as we explore further Western market integration over time. To date, comments from most parties have been generally supportive, and we expect a commission decision in the first quarter of 2022. In the Midwest, MISO has experienced some minor delays, but we still expect MTEP 21 to be announced in the first half of next year. We also had a strong operational quarter. Our industry-leading nuclear fleet set another record, with two units having run over 700 consecutive days prior to their refueling outages. Another highlight this quarter was the dedication of the 300 megawatt Big Horn solar facility at the Everest Steel Mill in Pueblo, Colorado. In partnership with LightSource BP and state and local leaders, we've enabled the largest on-site solar array in the country serving a single customer. This was a really creative solution between multiple parties to ensure the continued operation and expansion of the steel mill and its 1,100 employees. It reduces carbon emissions and creates valuable property tax base that helps sustain the local economy. We also continue to partner with our states and OEMs to electrify the transportation sector. This quarter, we implemented new programs for our Colorado customers that will help us to achieve our goal of enabling 1.5 million electric vehicles across our states by 2030. We appreciate the collaboration of so many stakeholders as we collectively work to reduce carbon emissions and enable sustainable communities. We remain well-positioned with a sound strategy, a robust five-year capital plan, and sustainable long-term growth trajectory that provides attractive returns to our investors while keeping bills low for our customers. These plans are not dependent on changes in federal policy. However, it's our understanding the Biden administration has reached an agreement on a framework for the reconciliation package which would include extensions for investment tax credits and production tax credits, a solar and a hydrogen production tax credit, a storage and a transmission investment tax credit, and direct pay options for all tax credits. This proposed plan creates significant customer benefits by lowering the cost of our proposed resource plans and potentially accelerating our clean energy transition. Our Steel for Fuel program has demonstrated our geographic advantages in renewables. Proposed tax credit extensions for ITCs and PTCs, including a solar production tax credit, would make future projects even more competitive, providing additional benefit to our customers. Additionally, a direct pay option would provide greater financial flexibility, increased corporate cash flow and credit metrics, which would reduce our financing needs. A PTC for green hydrogen would also bring significant value in technology advancement and cost. It could help accelerate the timeframe in which we could begin incorporating hydrogen into power generation and into our natural gas distribution operations at a cost that's more economic for our customers. While discussions continue at the federal level on the final bill, we are optimistic that this plan will be passed and will have significant benefits for our customers. With that, I'll turn it over to Brian.