Xcel Energy Inc.

hello and welcome to the excel energy first quarter 2023 earnings conference call my name is george i'll be a coordinator for today's event please note this conference is being recorded and for the duration of the call your lives will be in the list only mode a question answer session will follow 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. To register for a question, please press star 1 on your telephone keypad. If you require assistance at any point, please press star 0 and you will be connected to an operator. And now the hat off goes to Mr. Paul Johnson, Vice President, Treasurer, and Investor Relations to begin today's conference. Please go ahead, sir.

Thank you. Good morning and welcome to Xcel Energy's 2023 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. This morning, we will review our 23 first quarter results and highlights and share recent business developments. 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 metrics that are non-GAAP measures. Information on the comparable GAAP measures and reconciliations are included in our earnings release. With that, I'll turn it over to Bob.

Thanks, Paul, and good morning, everyone. Let's start with our first quarter results. We had another solid financial quarter. recording earnings of 76 cents per share for 2023 compared to 70 cents 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 multi-party 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 experience this winter with the 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 dispersed 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 the Colorado staff, the 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 four times 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 re-looking 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, multi-year 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 recognitions. For the 10th 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 would 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.