Why did GAAP EPS decline in 2025 even though ongoing EPS grew strongly?

GAAP diluted EPS fell to $3.42 from $3.44 mainly because of the $298 million pre-tax Marshall Wildfire litigation charge at PSCo, which reduced EPS by about $0.38. Excluding that charge, and the $0.06 Sherco Unit 3 refund that affected 2024, ongoing EPS rose to $3.80 from $3.50. Underlying growth came from infrastructure cost recovery and electric sales growth, partly offset by higher interest, depreciation, and O&M expenses.

Is the 2026 EPS guidance achievable, and what does it assume?

Guidance of $4.04 to $4.16 per share, about 6% to 9% above the 2025 ongoing base, assumes constructive outcomes in all pending rate cases, normal weather, about 3% growth in weather-normalized retail electric sales, and about 1% growth in firm natural gas sales. It also assumes capital rider revenue rises by $535 million to $545 million, O&M grows about 3%, and depreciation rises $350 million to $360 million. Pending cases include NSP-Minnesota's electric case (decision expected Q3 2026), PSCo's Colorado electric and gas cases (decisions expected Q3 2026), and SPS's New Mexico case (decision expected in the second half of 2026). Any adverse rate outcome would pressure these assumptions.

How will Xcel fund its $60 billion capital plan, and what does that mean for shareholders?

The plan is funded with about $30.2 billion of cash from operations (net of dividends and pension funding), $22.8 billion of new debt, and $7.0 billion of equity, with the company stating about 40% equity and 60% debt for incremental investment. Share issuance dilutes existing holders, although 2025 already showed share growth (weighted diluted shares rose to 589 million from 563 million). The company also expects to issue equity through its at-the-market program during 2026 and has 27.2 million forward-sold shares remaining, with minimum expected proceeds of $2.02 billion. Rising debt and dilution are the main trade-offs against the EPS and dividend growth targets.

What is the wildfire liability exposure, and how much could it affect results?

Marshall Fire: settlements are largely executed and most payments made, with $5 million of remaining liability recorded and possible further litigation from remaining individual plaintiffs who did not settle. Smokehouse Creek (SPS, Texas): $430 million of cumulative estimated losses is recorded before insurance, with $56 million of liability remaining at year-end. The company says damages could exceed its roughly $500 million annual insurance coverage if SPS is found liable, which could have a material adverse effect. The estimate excludes potential penalties, punitive damages, and government claims, and the Texas Attorney General's lawsuit adds further uncertainty.

Do the credit rating outlooks and leverage create risk for the dividend or financing costs?

Xcel Energy Inc. is rated Baa1 by Moody's with a negative outlook, BBB by S&P (stable), and BBB+ by Fitch (stable). PSCo has negative outlooks at Moody's and S&P. Debt was 59% of total capitalization at year-end 2025, and interest charges rose to $1.47 billion from $1.26 billion. Management targets a 4% to 6% annual dividend increase, a 45% to 55% payout ratio, and senior secured debt ratings in the A range. The 2025 declared dividend was $2.28 per share, up from $2.19. A downgrade would raise borrowing costs for a company planning about $22.8 billion of new debt, so the negative outlooks are a key risk to monitor.

XEL/XELLL 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 5, 2026. Cited figures are marked; the original filing is the authoritative source.

Xcel Energy reported fourth-quarter and full-year 2025 results on February 5, 2026.

GAAP diluted EPS for 2025 was $3.42^a, down slightly from $3.44 in 2024, because of a $298 million pre-tax Marshall Wildfire settlement charge at PSCo. Excluding that item, ongoing diluted EPS rose to $3.80 from $3.50, a gain of about 8.6%. Growth came from higher recovery of infrastructure investment and electric sales growth, partly offset by higher interest, depreciation, and O&M expense.

Fourth-quarter GAAP EPS was $0.95^b, versus $0.81 a year earlier, and ongoing EPS was $0.96. Net income for the full year was $2.02 billion, against $1.94 billion in 2024. Management reaffirmed 2026 ongoing EPS guidance of $4.04 to $4.16, which implies roughly 6% to 9% growth from the 2025 ongoing base.

The guidance assumes constructive outcomes in all pending rate cases. Base capital expenditures are forecast at $60 billion^c for 2026 through 2030, with roughly 40% equity and 60% debt funding for incremental investment. The company also plans about $7 billion of equity issuance over that period, and it announced a new large data center customer and two strategic alliances.

Investors should weigh the earnings-growth story against a sizable capital plan, a growing debt load, and continuing wildfire liability exposure at SPS (Smokehouse Creek, with $430 million^d of estimated losses before insurance and potential exposure above roughly $500 million of coverage) and PSCo. Credit profile is a watch item. Moody's rates Xcel Energy Inc. Baa1 with a negative outlook, and Moody's and S&P both carry negative outlooks on PSCo.

Total debt rose to $33.9 billion at year-end 2025, about 59% of total capitalization, up from 60% a year earlier, with equity rising to 41% on the share issuance. Book value per share increased to $40.07 from $34.65.

02—Key points

Key Highlights

2025 ongoing diluted EPS of $3.80 rose about 9% from $3.50, while GAAP diluted EPS was $3.42 versus $3.44, reflecting the Marshall Wildfire settlement charge.
Fourth-quarter 2025 GAAP diluted EPS was $0.95 versus $0.81 a year earlier; ongoing EPS was $0.96 versus $0.81.
2026 ongoing EPS guidance of $4.04 to $4.16 was reaffirmed, supported by capital rider growth of $535 million to $545 million and weather-normalized electric sales growth of about 3%.
Base capital expenditures total $60.0 billion for 2026 to 2030 ($13.8 billion in 2026), funded by about $30.2 billion of operating cash flow, $22.8 billion of new debt, and $7.0 billion of equity.
Marshall Wildfire: PSCo agreed to $640 million of settlement payments, with a $287 million charge in Q3 and $12 million in Q4 2025. Insurance receivables of $353 million offset part of the cost.
Smokehouse Creek Fire Complex (SPS): $430 million of cumulative estimated losses before insurance, $374 million paid through 2025, a Texas Attorney General lawsuit filed in December 2025, and potential exposure above roughly $500 million of insurance coverage.
Credit ratings are under pressure: Xcel Energy Inc. Baa1 (Moody's, negative outlook); PSCo carries negative outlooks at Moody's and S&P. Total debt is 59% of capitalization.

03—Questions

Frequently Asked Questions

Why did GAAP EPS decline in 2025 even though ongoing EPS grew strongly?
GAAP diluted EPS fell to $3.42 from $3.44 mainly because of the $298 million pre-tax Marshall Wildfire litigation charge at PSCo, which reduced EPS by about $0.38. Excluding that charge, and the $0.06 Sherco Unit 3 refund that affected 2024, ongoing EPS rose to $3.80 from $3.50. Underlying growth came from infrastructure cost recovery and electric sales growth, partly offset by higher interest, depreciation, and O&M expenses.
Is the 2026 EPS guidance achievable, and what does it assume?
Guidance of $4.04 to $4.16 per share, about 6% to 9% above the 2025 ongoing base, assumes constructive outcomes in all pending rate cases, normal weather, about 3% growth in weather-normalized retail electric sales, and about 1% growth in firm natural gas sales. It also assumes capital rider revenue rises by $535 million to $545 million, O&M grows about 3%, and depreciation rises $350 million to $360 million. Pending cases include NSP-Minnesota's electric case (decision expected Q3 2026), PSCo's Colorado electric and gas cases (decisions expected Q3 2026), and SPS's New Mexico case (decision expected in the second half of 2026). Any adverse rate outcome would pressure these assumptions.
How will Xcel fund its $60 billion capital plan, and what does that mean for shareholders?
The plan is funded with about $30.2 billion of cash from operations (net of dividends and pension funding), $22.8 billion of new debt, and $7.0 billion of equity, with the company stating about 40% equity and 60% debt for incremental investment. Share issuance dilutes existing holders, although 2025 already showed share growth (weighted diluted shares rose to 589 million from 563 million). The company also expects to issue equity through its at-the-market program during 2026 and has 27.2 million forward-sold shares remaining, with minimum expected proceeds of $2.02 billion. Rising debt and dilution are the main trade-offs against the EPS and dividend growth targets.
What is the wildfire liability exposure, and how much could it affect results?
Marshall Fire: settlements are largely executed and most payments made, with $5 million of remaining liability recorded and possible further litigation from remaining individual plaintiffs who did not settle. Smokehouse Creek (SPS, Texas): $430 million of cumulative estimated losses is recorded before insurance, with $56 million of liability remaining at year-end. The company says damages could exceed its roughly $500 million annual insurance coverage if SPS is found liable, which could have a material adverse effect. The estimate excludes potential penalties, punitive damages, and government claims, and the Texas Attorney General's lawsuit adds further uncertainty.
Do the credit rating outlooks and leverage create risk for the dividend or financing costs?
Xcel Energy Inc. is rated Baa1 by Moody's with a negative outlook, BBB by S&P (stable), and BBB+ by Fitch (stable). PSCo has negative outlooks at Moody's and S&P. Debt was 59% of total capitalization at year-end 2025, and interest charges rose to $1.47 billion from $1.26 billion. Management targets a 4% to 6% annual dividend increase, a 45% to 55% payout ratio, and senior secured debt ratings in the A range. The 2025 declared dividend was $2.28 per share, up from $2.19. A downgrade would raise borrowing costs for a company planning about $22.8 billion of new debt, so the negative outlooks are a key risk to monitor.

04—Continue

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