Xcel Energy Inc.

Hello and welcome to Xcel Energy 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 listened only. If you require assistance at any point, please press star zero and you'll be connected to an operator. You will have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question. 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.

Good morning, and welcome to Xcel Energy's 2023 Second 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 Officers. In addition, we have other members of the management team in the room to answer your questions if needed. This morning, we will review our 2023 second 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 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. And with that, I'll turn it over to Bob 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 52 cents per share for the second quarter of 2023 as compared to 60 cents 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 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 commitment 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-built 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 self-built solar projects and a 230 megawatt power purchase agreement. We're also proposing a battery storage project in one of the new self-built 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 provide significant benefits to our customers and 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 SHRCO 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 on 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 corridor charging to reduce range anxiety of EV purchasers. Next month, we plan to file our Clean Heat Plan 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 in 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's 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. The Sheriff's report says that the most probable cause of the second ignition was Piesco's power lines, and we strongly disagree with that conclusion. Because of the pending litigation that's 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 filing, and I would direct you there. Finally, we recently released our Comprehensive Sustainability Report. The report focuses on four core ESG pillars. Reach net zero responsibly. Strengthen our communities. Operate with integrity and to value people. It details our progress in achieving our industry-leading ESG goals as well as our priorities moving forward. Some of the key highlights include Xcel Energy has reduced our carbon emissions by 53% since 2005. and more than half of the electricity we provide to our customers comes from carbon-free resources as compared to 41% nationwide. We outperformed the industry reliability standard, restoring power to 94% of customers within 24 hours during major storm events. In this past year, in addition to contributing over $10 million to local organizations through the Xcel Energy Foundation, our employees contributed $3 million and volunteered over 74,000 hours for nonprofit, and community improvement projects. We're proud of our track record. It's keeping with our corporate strategy, and it's based on our values of connected, committed, trustworthy, and safe. With that, I'll turn it over to Brian.