01—Abstract
Summary
Summary of the 10-K filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.
Xcel Energy (XEL) reported 2010 results in its 10-K filed February 28, 2011, with GAAP diluted EPS of $1.62a (up from $1.48 in 2009) and ongoing diluted EPS of $1.62 (up from $1.50).
Total operating revenues rose to $10.31 billionb from $9.64 billion, and net income was $755.8 million versus $680.9 million. Growth was driven mainly by higher electric margins from new rate increases in Colorado, Wisconsin, South Dakota and New Mexico, plus warmer summer weather, partly offset by higher O&M, depreciation, and property taxes. The company is a holding company for four regulated utilities (NSP-Minnesota, NSP-Wisconsin, PSCo, SPS) serving electric and gas customers in eight states.
The balance sheet and capital plan point to a heavy investment cycle. Total assets reached $27.4 billion, long-term debt rose to $9.26 billionc, and property, plant and equipment grew to $20.7 billion. Management projects roughly $13 billion of capital spending from 2011 through 2015 and expects rate base to grow more than 7% annually over that period.
Financing was supported by a $449.8 milliond equity forward settlement, the late-2010 $739 million purchase of the Blue Spruce and Rocky Mountain gas plants, and the completion of Comanche Unit 3. Management guided 2011 ongoing EPS to $1.65 to $1.75 and set a long-term EPS growth target of 5% to 7%.
Key risks include environmental and climate regulation (CO2 rules, Colorado's CACJA plan costing about $1.0 billion, mercury and regional haze requirements), nuclear waste disposal litigation against the DOE, pending rate cases in Minnesota and North Dakota, and the loss of two NSP-Wisconsin wholesale customers (Rice Lake and Medford). Pension funding also remains a cost pressure, with the funded status improving to 88% after a $134 million contribution in January 2011.
02—Key points
Key Highlights
- GAAP diluted EPS of $1.62 for 2010, up 9% from $1.48 in 2009; ongoing EPS of $1.62 vs. $1.50, with the 2010 increase driven mainly by electric margin growth ($4.44B vs. $4.03B).
- Operating revenues rose 7% to $10.31 billion, and net income increased to $755.8 million from $680.9 million.
- Capital plan of about $13 billion over 2011–2015, with rate base projected to grow more than 7% annually.
- 2011 ongoing EPS guidance of $1.65–$1.75; long-term targets of 5%–7% EPS growth and 2%–4% annual dividend growth.
- Acquired Blue Spruce and Rocky Mountain Energy Centers (about 962 MW gas-fired) from Calpine for $739 million in December 2010; raised $449.8 million of equity via forward settlement in November 2010.
- Significant environmental exposure: CACJA plan (~$1.0 billion) to retire/convert Colorado coal units, Sherco mercury controls, and proposed EPA GHG and coal ash rules.
- Wisconsin's two largest wholesale customers (Medford and Rice Lake) canceled contracts, with terminations at the end of 2011 and 2012.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 28, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $10.31B$9.64B | +6.9% |
| Operating Expenses | $8.69B$8.18B | +6.3% |
| Operating Income | $1.62B$1.47B | +10.3% |
| Interest Expense | $577.29M$561.65M | +2.8% |
| Net Income | $751.59M$676.65M | +11.1% |
| EPS (Basic) | $1.63$1.48 | +10.1% |
| EPS (Diluted) | $1.62$1.48 | +9.5% |
| Shares Outstanding (Basic) | 462.05M456.43M | +1.2% |
| Shares Outstanding (Diluted) | 463.39M457.14M | +1.4% |
05—Questions
Frequently Asked Questions
How did Xcel Energy perform financially in 2010?
GAAP diluted EPS was $1.62, up from $1.48 in 2009. Operating revenues increased 7% to $10.31 billion, and net income rose to $755.8 million. Electric margin growth from rate increases and warmer summer weather was the main driver, partly offset by higher operating and maintenance costs.
What is the company's outlook and guidance?
Management guided 2011 ongoing EPS to $1.65–$1.75 per share, assuming normal weather, about 1.0%–1.3% weather-adjusted retail electric sales growth, and constructive rate case outcomes. It targets long-term EPS growth of 5%–7% and annual dividend increases of 2%–4%.
What are the major capital investments and how will they be funded?
Xcel plans about $13 billion of capital spending from 2011 to 2015, including wind generation, CapX2020 transmission, Black Dog repowering, and Colorado emissions controls. Funding will come from periodic issuance of debt and equity, including planned first mortgage bonds (NSP-Minnesota up to $300 million, PSCo about $250 million), senior notes, and about $75 million of DRIP equity in 2011.
What are the most significant risks disclosed?
Key risks include climate and GHG regulation that could require costly capital investments, cost-recovery uncertainty in rate cases (including NSP-Minnesota's $148 million electric request), nuclear waste disposal litigation against the DOE (NSP-Minnesota claims over $250 million in damages), pending FERC and NERC penalty investigations, and rising pension and health care costs. Capital market and credit rating risks could also raise financing costs.
Is the dividend safe and how strong is the balance sheet?
The 2010 dividend was $1.00 per share, up from $0.97, and the holding company capitalization ratio (84%) means the Articles' dividend restrictions do not effectively limit payments. Total assets were $27.4 billion and long-term debt was $9.26 billion. Utility subsidiaries had committed credit facilities of about $2.18 billion, with about $1.69 billion of total liquidity as of February 2011.
06—Continue