Xcel Energy Inc.

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.

Good morning and welcome to Xcel Energy's 2022 Third Quarter Earnings Call. Joining me today are Bob Frenzel, Chairman, President, and Chief Executive Officer, and Brian Van Ebel, Executive Vice President and Chief Financial Officer. In addition, we have others in the room available to answer questions if needed. This morning we will... discuss our 2022 results, share recent business and regulatory developments, update our capital and financing plans, and provide 2023 guidance. Slides that accompany today's call are available on our website. As a reminder, some of the comments made 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 will discuss certain measures that are non-GAAP.

metrics information on the comparable gap measures and reconciliations are included in our earnings release i'll now turn the call over to bob 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 five years. This investment plan provides significant benefits to our customers, supports community vitality and resiliency, and delivers rate-based 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, keeps 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 that's 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 to $4 billion, which would result in rate-based 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 footprints 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 in a top five installation in the United States, which will go into service in 2024 and 2025. Following the IRA passage, the levelized cost of Sureco 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-owned transfer projects, as well as some power purchase agreements. Our generation resource plans are consistent with our seal for fuel strategy, which provides a valuable hedge for our customers against rising commodity prices. As an example, our own 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 a 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. This 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.