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DATE
Thursday, October 30, 2025 at 10 a.m. ET
CALL PARTICIPANTS
Chairman, President, and Chief Executive Officer — Bob Frenzel
Executive Vice President and Chief Financial Officer — Brian Van Abel
Executive Vice President and Chief Legal and Administrative Officer — Roopesh Nair
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RISKS
Chief Financial Officer Brian Van Abel stated, "O&M expenses increased $37 million relative to 2024," with $25 million attributed to higher health and benefit costs during the quarter, and full-year O&M expense growth forecast at 5% for 2025.
Recorded a $290 million charge in 2025, or 30¢ per share in 2025, due to the Marshall wildfire settlement, explicitly cited as a nonrecurring charge excluded from ongoing earnings.
Chief Financial Officer Brian Van Abel noted, "higher financing costs decreased earnings by 15¢," reflecting the cost of infrastructure investments and balance sheet maintenance.
The low end of the estimated liability for the Smokehouse Creek wildfire has been updated to $410 million, and $360 million has been committed in settlements, with the potential for an additional $50 million based on submitted claims.
TAKEAWAYS
Ongoing Earnings Per Share (EPS) -- $1.24 per share in 2025, compared to $1.25 in 2024.
Full-Year EPS Guidance -- Reaffirmed at $3.75 to $3.85, with 2026 ongoing (non-GAAP) EPS guidance initiated at $4.04 to $4.16 per share, implying 8% midpoint growth over the 2025 ongoing earnings guidance midpoint.
Capital Expenditure Plan -- Five-year capital expenditure forecast updated to $60 billion, supporting annualized rate base growth of approximately 11%.
Dividend Growth Objective -- Maintained 4%-6% dividend growth objective, with expectations to be at the low end of this range and a projected payout ratio between 45%-55% over the 2026-2030 period.
Wildfire Settlement -- A comprehensive Marshall wildfire settlement was reached, resolving all plaintiff claims with no admission of fault, and resulted in a $290 million charge in 2025, excluded from ongoing EPS.
Sales Growth -- Weather-normalized, leap-year adjusted electric sales increased 2.5% in 2025, driven by strong residential and C&I load growth; full-year weather-normalized electric sales growth is forecast at 3% for 2025.
O&M Expenses -- Increased by $37 million in the quarter, largely due to a $25 million rise in health and benefit costs; full-year O&M expense growth now forecast at 5% for 2025.
Equity and Debt Issuance -- Issued or contracted approximately $3 billion in equity content in 2025, with a 2026-2030 capital plan reflecting $23 billion of debt and $7 billion in equity requirements.
Smokehouse Creek Wildfire Liability -- Estimated low-end liability updated to $410 million in 2025, with $360 million already committed in settlements; 212 of 254 submitted claims have been resolved.
Five-Year Infrastructure Plan Details -- Targets 7,500 MW zero-carbon generation, 3,000 MW natural gas generation, almost 2,000 MW energy storage, 1,500 new transmission line miles, and $5 billion for wildfire-related resiliency investments.
Data Center Pipeline -- Data center capacity base plan increased to approximately 3 GW in 2025, with contraction of all 2 GW expected by year-end 2025. This will drive 3% of the 5% assumed annual sales growth in the 2026-2030 capital plan.
Load Growth Outlook -- SPS electric load continues to be supported by high oil and gas sector electrification and growth, with industrial load in New Mexico anticipated to be in the 'teens' percentage range in 2025.
Regulatory Proceedings -- In October, the Wisconsin Commission verbally approved NSPW's $725 million acquisition of the 375 MW Elk Creek Solar plus storage project, and a Minnesota gas rate case will be filed imminently, seeking a $63 million total revenue increase.
EPS Growth Guidance -- Long-term EPS growth objective increased to "6%-8% plus," with an expectation to deliver 9% average EPS growth through 2030 (non-GAAP basis), based on the $60 billion investment program and current pipeline.
Supply Chain and Equipment Strategy -- 19 natural gas combustion turbines (CTs) have been ordered in advance, and all renewable and storage projects in the base capital plan are safe-harbored to secure tax credits.
SUMMARY
Xcel Energy (XEL 0.50%) is executing a $60 billion, five-year capital plan targeting approximately 11% annualized rate base growth over the five-year capital expenditure forecast and a blend of renewable, natural gas, and storage investments to support grid resiliency and projected load expansion. Management reaffirmed ongoing (non-GAAP) EPS guidance for 2025, and the midpoint of 2026 ongoing EPS guidance reflects approximately 8% growth from the midpoint of 2025 guidance, while raising the long-term average EPS growth objective above prior levels, citing a substantial pipeline of regulated investment and contracted data center capacity. The company resolved all major Marshall wildfire claims with a $290 million charge in 2025, excluded from ongoing results, committed $360 million for Smokehouse Creek wildfire claims, and maintained robust balance sheet management with equity and debt issuance aligned to projected capital needs. Dividend growth is projected at the low end of the 4%-6% range for the 2026-2030 forecast period, with an expected payout ratio trending toward 45%, allowing retention of capital for future accretive investment. Management detailed a shifting load mix, robust data center growth, and the utility's positioning for advanced AI-enabled operational efficiency, as well as the active management of labor and supply chain risk. Cost pressures, wildfire liabilities, and elevated O&M expense growth were directly cited as negative drags on quarterly performance and future forecasts.
Chief Financial Officer Brian Van Abel confirmed, "We are maintaining our dividend growth objective of 4% to 6% with the expectation to be at the low end," and the payout ratio is anticipated between 45%-55% for the 2026-2030 forecast period.
Chief Executive Officer Bob Frenzel explained that residential electric and natural gas bills have been 28%, and 12% below the national average, respectively, over the past five years, with "14% to 20% lower" typical bills adjusted for inflation versus 2014.
Chief Financial Officer Brian Van Abel directly stated, "we are reaffirming our 2025 ongoing earnings (non-GAAP) guidance range of $3.75 to $3.85 per share. We are also initiating our 2026 earnings (non-GAAP) guidance range of $4.04 to $4.16 per share, which reflects approximately 8% midpoint growth from the midpoint of our 2025 guidance."
Chief Financial Officer Brian Van Abel described the $60 billion five-year capital plan as underpinning annualized rate base growth of approximately 11%, and allowing for 9% EPS growth on average through 2030 (non-GAAP basis).
Chief Executive Officer Bob Frenzel outlined, "In total, we expect this plan to deliver 7,500 megawatts of zero-carbon renewable generation, 3,000 megawatts of natural gas-fired generation, and almost 2,000 megawatts of energy storage to ensure system reliability."
Brian Van Abel provided that of the 254 submitted Smokehouse Creek wildfire claims, "212" have been resolved, and "we have committed $360 million in settlement agreements implying $50 million potentially outstanding versus the $410 million estimated liability."
Chief Executive Officer Bob Frenzel explained Xcel's strategy for securing critical equipment amid supply chain strain through advanced bulk ordering and vendor integration, with all "safe-harbored" projects structured to preserve eligibility for available tax credits in the base capital plan.
Residential electric customers in Colorado now have the lowest energy 'share of wallet' nationally, according to management in 2025, and five additional states rank within the next 11 positions.
O&M expense pressure stems primarily from increased employee benefit costs, as directly identified by Chief Financial Officer Brian Van Abel: "O&M expenses increased $37 million relative to 2024, largely driven by a $25 million increase in health and benefit costs for the quarter."
Management added that pending regulatory proceedings, including a $63 million Minnesota gas rate case and new RFPs in Colorado and SPS, may further impact the investment pipeline and growth profile over the coming quarters.
INDUSTRY GLOSSARY
AFUDC: Allowance for Funds Used During Construction; a regulatory accounting practice that capitalizes financing costs for construction projects until the asset is in service.
IRP: Integrated Resource Plan; a utility's long-term roadmap for resource additions and retirements, subject to regulatory review.
Opco: Operating company; refers to individual regulated utility subsidiaries within Xcel Energy.
SPS: Southwestern Public Service Company; Xcel Energy's Texas and New Mexico electric utility subsidiary.
PSCO: Public Service Company of Colorado; Xcel Energy's Colorado electric and natural gas utility subsidiary.
CT (Combustion Turbine): A type of natural gas-fired electric generation asset that provides dispatchable capacity and fast-start reliability.
PanoAI: Artificial intelligence-based camera monitoring system for wildfire and situational awareness.
PSPS: Public Safety Power Shutoff; a utility-initiated power outage to prevent wildfires during extreme weather conditions.
MISO: Midcontinent Independent System Operator; a regional transmission organization serving the Midwest and parts of the South.
SPP: Southwest Power Pool; a regional transmission organization responsible for managing electric reliability across the central U.S.
RFP: Request for Proposals; a competitive solicitation process by which utilities acquire new generation or transmission resources.
Just Transition Solicitation (JTS): A Colorado-specific RFP supporting workforce and community transition tied to generation resource changes.
NTP: Near-term Procurement; quick-turnaround resource acquisition process to capture expiring tax credits.
NSPW: Northern States Power Company–Wisconsin; Xcel Energy's Wisconsin utility subsidiary.
Elk Creek Solar: A Midwest renewable and storage project, subject of a recent $725 million acquisition approved by regulators.
Full Conference Call Transcript
In 2025, Xcel Energy recorded a charge of $290 million or 30¢ per share, reflecting the settlement reached with plaintiffs in the Marshall wildfire. Given the nonrecurring nature of this item, it has been excluded from third quarter and year-to-date ongoing earnings. As a result, our GAAP earnings for 2025 were $0.88 per share, while our ongoing earnings, which exclude this nonrecurring charge, were $1.24 per share. All further references to earnings, drivers, and variances in our discussion today will refer to ongoing earnings. For more information on this, please see the disclosure in our earnings release.
Bob Frenzel: Thank you, Roopesh, and good morning, everybody. In 2025, Xcel Energy continued our commitment to our customers, our investors, and our communities to make energy work better. This quarter, we delivered solid earnings of $1.24 per share. We invested over $3 billion and $8 billion year-to-date in resilient and reliable energy infrastructure for our customers. We reached a comprehensive and constructive settlement with plaintiffs in the Marshall wildfire that helped our customers and our communities to move forward. We accelerated our wildfire risk reduction efforts to protect our communities from volatile weather.
Based on our results through the third quarter, we are reaffirming our earnings guidance for 2025 and remain confident in our ability to deliver on earnings guidance for the twenty-first year in a row, one of the best track records in the industry. As per our usual Q3 rhythm, today we are introducing our updated five-year infrastructure investment plan. Designed to serve increased energy demand, make needed investments to strengthen our transmission and distribution systems, provide a cleaner and more sustainable energy portfolio, and to keep energy safe, reliable, and affordable for all of our customers.
In total, we expect this plan to deliver 7,500 megawatts of zero-carbon renewable generation, 3,000 megawatts of natural gas-fired generation, and almost 2,000 megawatts of energy storage to ensure system reliability. 1,500 new high-voltage transmission line miles to support demand growth and regional delivery, and approximately $5 billion of investment in our distribution and transmission systems to improve resiliency and reduce future risk from wildfires. We are able to accomplish this plan because we have one of the best utility development and supply chain teams in the industry. In combination with our strong balance sheet, we can deliver infrastructure timely and affordably for our customers.
In connection with this forecast, we have safe-harbored all renewable and storage projects in our base capital plan and expect the same for the projects in our incremental plan. To ensure that we can capture available tax credits and help keep customers' bills low. We also have 19 natural gas CTs on order, which will provide over four gigawatts of natural gas generation to help ensure reliability and affordability. Our ability to deliver infrastructure with excellence and our strategic geographic advantage allows our customers to benefit from some of the lowest energy bills in the country. Over the past five years, our residential electric and natural gas bills have been 28% and 12% below the national average, respectively.
Residential electric customers in Colorado have the lowest share of wallet out of all 50 states. The average residential bills in our other states occupy five of the next 11 spots. Since 2014, our residential electric and natural gas bill growth has been well under the rate of inflation. In fact, a typical residential Xcel Energy electric and natural gas bill is 14% to 20% lower than it was in 2014 when adjusted for inflation. Our steel-for-fuel program has saved customers nearly $6 billion through 2025. Our One Xcel Energy Way continuous improvement program has realized over a billion dollars in cumulative savings since 2020 while improving customer and operating outcomes.
Our industry-leading demand-side management programs have saved enough energy to avoid building 30 average-size power plants. As customers continue to electrify transportation and other parts of their lives, they can further reduce their overall monthly energy costs with low electric rates. We also continue to support critical programs to help our customers who may need assistance with their energy bills. Since 2024, Xcel Energy has connected over 200,000 customers with almost $300 million in financial resources. We are also exploring new opportunities to help even more customers across our jurisdictions, including proposals in our current Minnesota, Wisconsin, and upcoming Colorado rate cases.
Moving to the topic of artificial intelligence, opportunities for Xcel Energy go well beyond our ability to power data centers. Of course, our load interconnection queue continues to grow even as we move some of our backlog into the contracted category. But across Xcel Energy, we are in the early stages of using AI in the business to bend the cost curve and to provide improvements to both customer satisfaction and operational outcomes. We are harnessing AI to empower our people, accelerate innovation, and build a smarter, more resilient energy future for our customers and communities. Automated analysis across our diverse enterprise data sources is delivering actionable insights that strengthen security, improve operations and planning, and drive process improvement.
We are bridging knowledge gaps and empowering faster, more informed decisions across the organization. We are leveraging AI built by others to advance our business, including high-resolution imagery to transform how we inspect and maintain our distribution infrastructure. Through drone-based data collection and automated image analysis, AI-enabled processes can identify defects, assess risks, and enable our teams to prioritize maintenance with greater speed and accuracy. With wildfire mitigation, AI is transforming our risk models by leveraging internal models and tools like TechnoSilva, significantly improving our model coverage and accuracy, as well as reducing analytical times to a fraction. This means faster, more reliable risk assessments, protecting communities and infrastructure in real-time.
AI is truly an engine that's driving enterprise-wide innovation and transformation at Xcel Energy, making energy work better for our employees, our customers, and our communities. Moving to Marshall, on September 23, Xcel Energy, Quest Corporation, and Teleport Communications America reached settlement agreements in principle that resolve all claims asserted by the subrogation insurers, the public entity plaintiffs, and individual plaintiffs. While Xcel Energy does not admit any fault or wrongdoing and disputes their equipment caused the second ignition, we believe this provides a positive outcome for our communities and our investors. Looking forward, Xcel Energy continues to make significant progress to mitigate risk from wildfires and extreme weather, with public-facing wildfire mitigation plans in each of our states.
This includes investments in situational awareness tools like weather stations and PanoAI cameras, advanced meteorology, fire science, and AI-enabled risk modeling tools, hardening our systems and deploying advanced wildfire safety operations and PSPS capabilities, and operational actions including daily stand-ups to address the threat from extreme weather across every part of our system and taking proactive actions as appropriate. Finally, each September, Xcel Energy employees and community members come together to honor the spirit of service and the communities we serve, coming together to support local nonprofit organizations. Together, volunteers dedicated almost nine thousand hours of service across more than 100 projects.
It's one of my favorite days of the year and exemplifies the spirit and dedication of our employees and partners who show up every day to provide safe, clean, reliable, and affordable energy to our customers and our communities. With that, I'll turn it over to Brian.
Brian Van Abel: Thanks, Bob. Good morning, everyone. Starting with our financial results, Xcel Energy delivered earnings of $1.24 per share for 2025, compared to earnings of $1.25 per share in 2024. The most significant earnings drivers for the quarter include the following. Regulatory outcomes in electric and natural gas sales growth increased earnings by 8¢, and higher AFUDC increased earnings by 8¢. Offsetting these positive drivers, higher financing costs decreased earnings by 15¢, reflecting the funding of our infrastructure investments and our financial discipline of maintaining a strong balance sheet. Higher depreciation and amortization decreased earnings by 9¢, driven by increased system investments, and the higher O&M expenses decreased earnings by 5¢.
Turning to sales, weather-normalized and leap-year adjusted electric sales increased 2.5% through 2025, driven by strong residential sales growth across all opcos and increased C&I load in SPS and PSCO. During the third quarter, we also energized Med's new data center in Minnesota that will continue to scale in the coming years. For full-year 2025, we continue to forecast 3% weather-normalized electric sales growth. In the third quarter, O&M expenses increased $37 million relative to 2024. This increase was largely driven by a $25 million increase in health and benefit costs for the quarter. For full-year 2025, we now forecast that O&M expenses will increase 5%.
Shifting to RFP and rate case activity, in Colorado, in partnership with the Colorado Energy Office, UCA, and commission staff, we issued a near-term procurement for 4,000 megawatts of renewable resources and 500 megawatts of thermal and firm dispatchable resources. This RFP is intended to accelerate the deployment of a portion of our Colorado IRP to capture production tax credits before they sunset. Bids were received this month, and we expect to file a recommendation in December 2025 with the commission decision by February 2026. In SPS, we issued an all-source RFP to meet an 870 megawatt accredited capacity need. This represents 1,500 to 3,000 megawatts of nameplate capacity that will be online by 2032.
Bids are due in January 2026, with an expected portfolio announcement by June 2026. In October, the Wisconsin Commission verbally approved NSPW's $725 million acquisition of the 375 megawatt Elk Creek Solar plus storage project. Tomorrow, we expect to file a natural gas rate case in Minnesota requesting a $63 million total revenue increase, based on a 10.65 ROE and a 52.5% equity ratio. Interim rates of $51 million will also be requested effective January 1, 2026. Regarding future cases, we expect to file a Colorado Electric and Natural Gas and New Mexico Electric rate case later this year.
Moving to data centers, we remain on track to contract the remainder of our original two-gigawatt base plan by the end of the year. In addition, we have updated our total base plan to include approximately three gigawatts of data center capacity. Additional projects included in the base case are considered high probability and expected to be contracted by 2026. This will drive 3% of the 5% assumed annual sales growth in our 2026 to 2030 capital plan. We also continue to make strong progress on the Smokehouse Creek wildfire claims process. We've resolved 212 of the 254 submitted claims, and we have settled or dismissed 21 of 34 lawsuits.
We've updated the low end of our estimated liability to $410 million. We have made significant progress in the third quarter with the resolution of the three largest claims by acreage. We have committed $360 million in settlement agreements, considering the low-end estimated liability of $410 million, we're estimating approximately $50 million more on top of the $360 million that has been committed based on our current information. As a reminder, we have approximately $500 million of insurance coverage. Shifting to our investment plan, today we are providing an updated $60 billion five-year capital expenditure forecast, which reflects annualized rate base growth of approximately 11%.
These investments are critical to serving growing electric demand, meeting clean energy goals, and ensuring the safety and reliability of our system. We also have an additional pipeline of investments to our $60 billion plan, specifically from our recent RFPs across jurisdictions, incremental data center load, and transmission projects from future MISO and SPP tranches. We're excited about our growth opportunities and will continue to finance accretive growth in a balanced manner. This year, we have issued or contracted approximately $3 billion of equity and equity-like content between our ATM program and our 2025 hybrid financing. Our updated 2026 through 2030 capital plan reflects an additional $23 billion of debt and $7 billion of equity content.
We anticipate that any incremental capital investments would be funded by 40% equity content and 60% debt. We continue to maintain a balanced financing strategy, which includes a mix of debt and equity to fund accretive growth while maintaining a strong balance sheet and credit metrics. Moving to earnings, we are reaffirming our 2025 ongoing earnings guidance range of $3.75 to $3.85 per share. We are also initiating our 2026 earnings guidance range of $4.04 to $4.16 per share, which reflects approximately a midpoint of 8% growth from the midpoint of our 2025 guidance. Key assumptions are detailed in our earnings release.
We are updating our long-term EPS growth objective to 6% to 8% plus, with expectations to deliver 9% growth on average through 2030. This update reflects our significant investment needs to serve our customers and drive state policies along with confidence in our financial outlook. We are maintaining our dividend growth objective of 4% to 6% with the expectation to be at the low end of the range. Over our 2026 to 2030 forecast period, we expect our dividend payout ratio will trend toward the bottom end of our updated payout ratio range of 45% to 55%, which allows greater financial flexibility and dry powder for the future. With that, I'll wrap up with a quick summary.
We continue to lead the clean energy transition, ensuring safe, clean, and reliable service and keeping customer bills as low as possible. We announced an updated five-year capital investment program that provides strong, transparent rate-based growth and significant customer value. We reached a constructive settlement in the Marshall wildfire to make investments to reduce risk to our system and communities from extreme weather. Our customers have and will continue to enjoy some of the lowest bills in the country with our investment plan. We maintain a strong balance sheet and credit metrics, using a balance of debt and equity to fund accretive growth.
We reaffirm our 2025 EPS guidance of $3.75 to $3.85 and have initiated 2026 EPS guidance of $4.04 to $4.16, which reflects a midpoint of 8% growth from the midpoint of our 2025 guidance. And finally, we expect to deliver 9% EPS growth on average through 2030. This concludes our prepared remarks. Operator, we will now take questions.
Operator: Thank you much, sir. Once again, for analysts to register for questions, please press 1 on your telephone keypad. Our first question is coming from Nicholas Campanella from Barclays. Please go ahead. Your line is open.
Nicholas Campanella: Hey. Good morning. Thanks for all the updates. Morning, Nick. Morning. Just wanted to be clear. 2026 at the midpoint, you did about 8%, and, you know, I hear you on the 9% through 2030. Does that start beyond 2026, or is that how you're kind of viewing this year? Thank you.
Brian Van Abel: Hey, Nick. I'll take that. No. That includes 2026, so 9% over the next five years inclusive of 2026 guidance. So that 9% would be based off the midpoint of this year, so $3.80.
Nicholas Campanella: Okay. Great. I appreciate that. And then just one other clarification, $7 billion of equity in the plan. I know you talked about $1.3 billion already priced forward. Is that kind of net against that $7 billion, or is it still $7 billion from here on out? Thank you.
Brian Van Abel: No. Think of it as we do as kind of $7 billion from here on out with our new 2026 to 2030 plan. If you kind of look at what we did this year relative to last year's plan, which had $4.5 billion in it, and kind of take those two pieces, we're right online with kind of what we've been messaging around incremental capital drives about 40% incremental equity content. So we feel really good about our equity content plans and where we are in terms of maintaining our credit metrics and executing on a $60 billion investment plan.
Nicholas Campanella: Great. Well, thanks so much. We'll see you at the Absolutely.
Operator: Thank you very much, sir. Our next question is coming from Steven Fleishman calling from Wolfe Research. Please go ahead.
Steven Fleishman: Yeah. Hi. Good morning. Thanks for the updates. So I guess, first on just kind of the profile of the growth rate or growth. When you look at the CapEx plan and the rate base growth, it's very heavily front-end loaded, and then CapEx actually falls right now, $29.30. A decent amount. A lot of the other companies are kind of the opposite where it's lower now and it's, like, ramping up. Could you maybe just kind of talk to that? And is a lot of that just we just don't know some of these RFPs and other factors out in 29-30?
Brian Van Abel: Yeah. Hey. It's Steve. I can take that one. I think you're exactly right in terms of, you know, we're always conservative of what we portfolio in there. They were approved by our Minnesota commission in one of this year. But at 29-30, it's, you know, we're launched RFPs with Colorado SPS. That was pretty early in the process, and that's just in the kind of our additional pipeline. Bucket. That is, you know, as we see as we move through that process, kind of into next year and even beyond, that we expect there'll be opportunities to fill it full.
Fill in there both generation to serve load growth for our customers, but also transmission that we expect to see out of SPP in the near term here. The next tranche of SPP should be a Q4 event that we get visibility in. But then also longer term on MISO tranche too.
Steven Fleishman: Okay. And I know just maybe related at times, you've given kind of a some rough idea of the range of spending on the upside cases in those different things that you mentioned there. Is there any you can share on the potential capital in the upside case, things not in here?
Brian Van Abel: Yeah. I would say there's a slide we have in our deck here for today, you know, that's gonna be a range of six to 9,000 total megawatts. We think all those are plus some transmission. We've always guided people to, you know, being, you know, competitive in our generation processes and winning about half of that. Plus that transmission. So I see, you know, $10 billion plus sitting in that pipeline. Now not all will be in 2030. Some of those generation processes run through 31, '32, but really good opportunity as we look at the low growth and then transmission needs in our system. Yeah. Steve, I think this is Bobby. I think you're right.
In terms of shape. You know, the earnings generally will follow the capital investment plan with some amount of lag and financing costs, and then we look to fill in the back part of our plan with some of the incremental opportunities that Brian had.
Steven Fleishman: Okay. Great. Thanks for the update.
Brian Van Abel: Thanks.
Operator: Thank you. What's your next question will be coming from Jeremy Tonet of JPMorgan. Please go ahead.
Jeremy Tonet: Hi. Good morning. Morning, Jeremy. It appears that he is just moved Jeremy, please hit the star one again, and we'll put you back in the queue. We'll go to Carly Davenport. Please go ahead.
Carly Davenport: K.
Operator: Carly, same thing. We'll go to Julien Dumoulin-Smith of Jefferies. Please ask your question.
Julien Dumoulin-Smith: Can you guys hear me? Yes, sir. Good morning, Julien. Alright. There we go. Third time's the charm, I say. Alright. Awesome, guys. Well done. I seriously. Look, if I can, just going back to where you left off with Steve, I'll just see it up this way. Of those different points that you raised here, what are the more substantive pieces? I mean, it seems like the SPP element could be more substantive. That seems more front-loaded. A. And then, b, the acceleration of some of these renewable procurements get in light of tax credit expiration could be more substantive and lumpy. And don't seem to be in there.
But, you tell me what are the bigger pieces that are not yet in that 60. Again, you've laid out a whole bunch of them. I'm just curious which one moves the needle more. As best you see it initially.
Bob Frenzel: Hey, Julien. I'll start, and Brian can chime in. So a large piece of the SPP RFP is embedded into our base capital plan. There's a second RFP for SPP capacity and energy that is not included in the plan. And then when I think about Colorado generation, we have really two RFPs sitting in front of the commission out there. We have a near-term procurement portfolio that's designed to accelerate and take advantage of renewable credits. And that looks like a 4.5 billion dollar sorry. Four and a half gigawatt plan. And then there's the just transition solicitation that's been in progress with the commission for a while.
Which we expect some amount of adjudication later this year or early next. Which had somewhere between four and fifteen gigs of generation needs in it. A bit of overlap between the NTP and the JTS in terms of what's needed and timing, so I wouldn't count those as additive. But there's a big piece of Colorado generation that's likely to come in the 28, 29, 30 time frame that's not included in our base capital plan. And then there's a handful of smaller RFPs in the Upper Midwest for generation that are not included in our base plan as well.
Second, with regard to transmission, you know, we have ITP and 2.1 and MISO 2.1 embedded in there, although those they're longer-dated capital plans and longer-dated in-service spends that will result in stuff drifting through this time period and into, you know, later into the early 2030s. MISO LRTPs that are coming that are not also embedded in this plan. So I think about Colorado Gen being probably the biggest driver of back-end investment in this five-year plan. And transmission that's not announced out of the SPP ITP process sort of the second biggest. Brian, you got anything to add to that?
Brian Van Abel: Yeah. No. And I think just absolutely in the Colorado side, you know, we're working through that process. It's a really good engagement with our stakeholders to accelerate procurement for these renewable resources given that we have the credit cliff in 2030. We should get visibility into that portfolio in December with a commission decision in Q1. We've got the bids in, robust bid pool working through that. And so that's one of the big drivers. But also as we work through, you know, as we think about longer term is incremental data center opportunities and working with our stakeholders in our states in terms of driving economic development and low growth that can drive longer-term generation and transmission churn.
Transmission needs which wouldn't be incorporated, but that's just a longer-term opportunity that I know the industry is seeing.
Julien Dumoulin-Smith: Excellent, guys. Thank you very much. And I don't mean to but I let me ask you this way. The six to 8% plus versus the 9% that you guys have out there, is the idea that the 9% is sort of at the at this point in time and the six to eight the six to 8% plus is designed to be for any eventual roll forwards with a large of lot the so lot of large numbers. Kinda drive some deviation. From the 9% if you roll forward a couple of years.
Brian Van Abel: Yeah. Julian, we think about it this way as that six to 8% Well, the six to 8% is what we think about our long-term view on EPS growth when you balance the investment needs of our system, the low growth we're seeing on opportunities and also affordability. But when we look at our current five-year plan and the $60 billion infrastructure projects for our customers serving the low growth and the needs of our system derisking our communities. That plus really wrap we're at represents the 9% that we see over the next five years. If that helps differentiate in terms of how we're thinking about it.
Julien Dumoulin-Smith: Excellent. Alright, guys. I'll leave it there. Thank you.
Operator: Thank you very much, sir. Next question will be coming from Carly Davenport of Goldman Sachs. Please go ahead.
Carly Davenport: Hey. Good morning. Thanks for taking the questions. Welcome back.
Operator: Thank you. Glad to be back. Maybe just on the load growth outlook, looks like continued strength in SPS, which is great to see. And then a couple of the other opcos shifting a bit lower from the prior plan. So could you just talk a little bit with driving those moving pieces on load growth across the regions?
Brian Van Abel: Yeah. You think you know, when we look at it, really, SPS continues to be strength in our oil and gas sector. We've seen that for years. This year out in New Mexico, we're gonna see teens type of growth at this large C&I sector. We can continue to see that with electrification out of that industry in New Mexico. So strong growth there. Also, you know, we've you know, Fermi America is down in Texas, New Mexico. There's certainly opportunities there that we've talked about, and so we're seeing that. The other one's more just to kinda shifting around potentially a timing of data centers. As we think about it when they're coming in.
But when you look at our sales growth across all goes all are in the call it, 4% roughly four to 5% with SPS at 88%. When we look at it. So we're pretty excited when we see our data center opportunities really mixed across our service territory. Strong opportunities in Minnesota, working through some really good opportunities in Colorado, and then we talked about some opportunities in Texas and New Mexico. The one other thing is it I'd like to say is, you know, we that 5% sales growth that we talked about having the diverse is not all data centers.
Only three of that 5% is data centers, so we also have you know, one and a half percent of that 5% is driven by the SPS oil and gas electrification. We just have customer growth, residential customer growth. We're starting to see some electrification on residential side. So that's about half a percent. So really kinda diversified growth which I think is important as we look forward.
Carly Davenport: Great. That's really clear. Thank you for that. And then maybe just to follow-up on the financing and the balance sheet. Seems like you're targeting kind of now sixteen to 17% FFO to debt targets. I guess, can you just talk about sort of comfort level there with the cushion versus downgrade threshold levels and how confident you are in the past to kind of squarely getting back to that 17% level on a longer-term basis.
Brian Van Abel: Yeah. Carly, the way I think about it is, you know, we have not changed our long-term view on our credit metrics in that 17% level. That has not changed. It's we it's important to maintain a strong balance sheet and healthy credit metrics. Just when you look at our spending over the next few years, we kind of grow into that 17%. And so it's really just, you know, we designed our equity plan and our content plan to get back to that 17% in the latter part of this forecast, which, you know, that is our long-term view. So that has not fundamentally changed from a credit perspective, maintaining our balance sheet, protecting our metrics.
Just when you have this type of elevated CapEx over the next few years, there is some pressure there.
Carly Davenport: A ton of sense. Thank you so much for the time.
Operator: Thanks for your questions, ma'am. Next question will be coming from Jeremy Tonet of JPMorgan. Please go ahead.
Jeremy Tonet: Hi, good morning. Second time's a charm, Jeremy. Thank you for the color today. Just want to step into equipment availability a little bit more if I could. You know, such as transformers, transmission, you know, two CGTs and components there. Just wondering if you could frame for us how long the queues are there. And, I guess, you know, how you see, you know, aligning that with, new data center, interest or contract?
Bob Frenzel: Yeah. Great question. Very timely, and very You know, I said in my prepared remarks, I'm really proud of the team here at Xcel Energy. I think we have the best team working on this. We have been very, very progressive in terms of securing the assets that we need to build the infrastructure that sits in front of us. You're absolutely right. Lead times have elongated I'll let Brian comment on any particular components, but know, we think that given our scale, our scope, and our approach to our major vendors, that we have access to inventory and supplies you know, maybe that others don't have.
We've we've taken a very, progressive shift in how we work with our vendors, making sure that they see that our entirety of our capital plan they can plan for the work that they do with us. We find out who's you know, best able to serve us both on the services side as well as the equipment side. We backward integrate them into our capital plan in a way that is both we protect ourselves from pricing side as well as we get certainty of equipment and certainty of labor in a pretty tight market.
That's been the strategic focus for the team for a year or two as we saw the market start to tighten, particularly with data center build. And maybe I'll let Brian just comment on what we're seeing in turbines and transformers and things like that.
Brian Van Abel: Yeah. I mean, I think it's it's absolutely no secret in terms of where the turbine market is. In terms of having those 19 turbines on order. And that's one of the benefits of scale is we can order a significant amount of equipment knowing that we'll use it somewhere in our system. And being able to deploy it throughout our system with the low growth we're seeing. Main power transformers is another one that's taken, you know, that's these large-scale transformers, three forty-five k b, you're out service. A few years. So it's really how do you get ahead of it make sure that you have the right supplier relationships.
Working through all the potential tariffs and supply chain challenges that currently exist there. But we feel really good about where we are. Also, I think about that also within the context of our safe harbor strategy. In terms of having all the equipment for both our base plan and any incremental project that coming out of our incremental plan and ensuring that not only are the safe harbor, but we're Fiat compliant. So we feel really good about our overall place from the supply chain perspective. That's on the equipment side.
There's also a labor side of it too from an EPC perspective, ensuring that we have top-tier EPC firms lined up only for this year and next year, but for our five-year plan and beyond and having those key partnerships is really, really important. And I think a differentiator as we go to market here in terms of executing on our plan.
Jeremy Tonet: Got it. Very thoughtful process there. And I was just wondering, might be able to align that a little bit more with growth. It seems like the data center pipeline that as you described in the slides stepped up quite nicely versus before. And just wondering what you see on, you know, the type of the discussions and the speed to market world and how this all fits together.
Bob Frenzel: It's all obviously, very strategic and timely, you know, as we watch our industry work very progressively to bring speed to power here and making sure that we energize this very critical national asset in terms of artificial intelligence and data center development. Not surprising, we've got great interest and our pipeline continues to build and we continue to move stuff from, you know, highly profitable into the contracted categories. We have some of the most affordable energy in the country, as I mentioned in my prepared remarks. We have an incredibly good strong development team.
We're working through either ESAs or large load tariffs in all of our states and making sure that we protect our existing from the addition of new large loads. And we've laid out in the past our principles around this and terms of cost causation and who's funding. And if they if we trigger a transmission investment, new generation investments, making sure that we protect our customers along the way, there's net benefit for the entirety of the system. When you bring on some of these new large loads I think that it should also be noted that, you know, I mentioned sort of strategic geographic advantage.
In addition to low energy bills, we have enormous high clean energy content in our systems already. That's a very attractive component to these data center developers as well as their end-use customers. I think that between our sustainability portfolio and where we're trending as a company across all of our states and making sure that we can deliver a cleaner energy product as well as a highly reliable and highly affordable product is very strategic as we approach economic development with data center developers.
Jeremy Tonet: Got it. Helpful. Thank you.
Operator: Thank you so much, sir. Next question will be coming from Anthony Crowdell of Mizuho. Please go ahead. Your line is open.
Anthony Crowdell: Hey. Good morning, team. I just have, I guess, two super quick cleanups I think to Steve's question, I think you mentioned about $10 billion of incremental CapEx. That is an addition or would be on top of the current 9% EPS growth. Is that accurate?
Brian Van Abel: That is accurate.
Anthony Crowdell: Great. And then this one and I probably should wait for EEI, but just you know, the time is right. Currently talking 9% growth, but you've kept the guidance at 6% to 8% plus. Just curious on why not readjusting the six to messaging that shows all the potential upside that you have? Like, it doesn't even seem likely that you hit six or even seven. Like, I'm just curious on the thought process of keeping it six to 8% plus.
Brian Van Abel: Yeah. Anthony, look, we, you know, we balance a lot of perspectives as we think through this in terms of, you know, what is the right long-term. And when I say long-term, six to eight is beyond the five years about balancing affordability and everything else that goes into that. And so we thought plus is the way to message that we do have a lot of infrastructure needs on behalf of our customers here in the next five years. But longer term, you know, when you start to roll beyond twenty, thirty, you know, continue to evaluate that.
And then just quick on your first question, We said 10 billion plus, but some of that could fall outside of this five-year you think about some of the generation procurement and some of the particularly, the MISO transmission will be longer dated. But really excited about our overall five-year opportunity and beyond that.
Anthony Crowdell: Great. Thanks for taking the questions. See you in Hollywood.
Operator: Thank you much, sir. Next question will be coming from Sophie Karp calling from KeyBanc. Please go ahead.
Sophie Karp: Hi. Good morning. Congrats on the strong I guess, guidance revision, guys. Couple of questions for me. So maybe if you could talk a little bit about the trends in SPS. I know you continue to flag the electrification of Permian as one of the drivers of the volume growth there. With the oil prices, I've been kind of where they are there any reason to be concerned about that trend at all at this point?
Bob Frenzel: Hey, Sophie. It's Bob. I think the growth you see in the Permian is probably a function of two things. One is you know, continued strength in mining in the Permian Basin. So just more wells, more infrastructure, more fields being open. The second is the trend towards electrification of those fields and of existing fields. So I think if there's two big drivers out there, you know, when I talk to our largest customers, down in the Permian, in the Delaware Basins, this continues to be their lowest cost, around the globe.
And so I think even when you start to see oil and gas prices fluctuate I think these properties in the Southwest are still very in the money for them, and they'll continue see mining and mining growth down the Southwest. So I don't have a lot of concern about that load growth profile. And then as we talked about the data centers, you know, that load growth profit we feel very confident in and see opportunity to add to it.
Sophie Karp: Got it. Thank you. That's pretty clear. And then only on the renewables versus gas. Right? You guys are clearly stepping into more like, accelerating the renewables to harvest the tax credits. The same time, a lot of your peers are actually going more towards gas, and they are you know, flagging that they need we will need to build more gas to firm up the system for data center demand.
So I guess my question is, like, would we see this in trend play out in your service territories at some point, or is it just the renewables are so attractive that you feel good by, I guess, still going full speed on renewables as opposed to more dispatchable generation?
Bob Frenzel: Yeah. A couple of themes in there for sure. One, we as I said in my prepared remarks, we sit in one of the most geographically attractive areas for both wind and solar assets. And so we see real customer benefits from continuing down a trend of investing and taking advantage of those natural resources, particularly while tax credits help to make them affordable for our customers. But you also see us adding you know, we've got four and a half gigs of natural gas capability coming into the plan in the next five years. As well as, I think, probably north of five gigs of energy storage as well.
So we are firming the system backing the wind and the solar with you know, attractively priced backup energy and making sure that we are both reliable, affordable, and sustainable for our customers, which is sort of the holy you know, trinity of our business.
Sophie Karp: Alright. Thank you so much.
Operator: Thank you for your questions. This will be Next question will be coming from Steven Wreezy calling from RBC Capital Markets. Please go ahead.
Steven Wreezy: Hi, Bob and Brian. Thanks very much for taking my question. Just had a quick one Thanks very much. It's good to be back. Just had a quick one. You know, and I appreciate the color on the 9% because one of the things, I guess, I was scratching my head about and I was hoping to get a little color on clearly 29 rate base moves up something on the order of 20 plus percent. And so if you run, you know, the midpoint of your EPS guidance out now at 9% versus where you were previously in the plan it implies a pretty significant compression in earned ROEs, implied earned ROEs.
Obviously, you're spending a lot more capital and spending it quicker, so that kinda makes sense to me. But you do have pretty good mechanisms, so can you talk about any embedded conservatism that's in the plan around assumed earned ROEs that you would get given the significant increase in rate base?
Brian Van Abel: Hey, Steve. Yeah. I can answer that question for you. And I think that's really why I wanted to provide some color with 11% rate base growth that we expect 9% rate base growth or 9% earnings growth over the next five years to really highlight that you know, we don't expect significant compression in ROEs by any means. So we see if you think where we are, we've talked about some of the rate cases that we have coming up in terms of driving some ROE improvement because we delayed some rate cases for some reasons.
And so when I think about it, it's really we've always talked about when you get to this kind of high growth, you know, we're at 11% rate base growth, significant CapEx, comes with financing needs. That you would see about a 200 basis points delta between your rate base growth and your earnings growth over a five-year period. And so I think we wanna just highlight that it's you know, as we move through the next few years, our financing is lined up with kind of our CapEx spend, and we're working through some regular proceedings over the next couple of years. You start to catch up on that rate base versus EPS growth.
But over the five-year period, we feel really good about where we are that in the long term, EPS growth coupled with our financing plan and maintaining a strong balance sheet. Is we feel good about that and don't see ROE compression at all. You know, we certainly have conservative ROEs in our plan. But don't see ROE compression as we sit here today and look at where we are today.
Steven Wreezy: K. That's all I had. Really appreciate it. Great result, guys. Thanks very much.
Brian Van Abel: Yeah. Thank you.
Operator: Thank you, sir. Next question will be coming from Travis Miller calling from Morningstar. Please go ahead, sir.
Travis Miller: Good morning. Thank you. Morning, Travis. Questions around the transmission spend. Obviously, this has been a big thing for you for many years. But as you ramp that up and think about these large customers, how easy or difficult is it to identify specific customers who might pay for some of this transmission spend. I you know, we see contracts between generation and data centers that can you take some of those transmission spend essentially off of residential cost commercial customer bills? And identify specific comps customers to pay for it.
Bob Frenzel: Yeah. Great question. First, thanks for recognizing leadership in transmission I like to say that we have been the you know, leading builder of new transmission line miles over the last fifteen years. Know, when you come from the state of hockey, you gotta skate to where the puck is. And we feel like we've built a grid and an infrastructure system that is enabling us to energize this new data class.
When I think about incremental willing to spend incremental money on transmission, I think our first principle with regard to hooking up data center is if they require a new transmission line, particularly a lateral, usually, they're paying for that 100%, and we put that into sort of a kayak bucket as a opposed to net rate-based spend, and it's gonna be attributable directly to that customer. When you talk about you identify those customers, those customers are knocking on our door freely and willingly, to spend the money particularly on the transmission interconnection, make sure that they can get service as quickly as possible.
So this is really a management of the inbound as opposed to us having to go find people that are willing to do it. I think that's a pretty common approach that the data center developers and the hyperscalers are willing and able to do. We're protecting our customers, from the transmission build. And then when you think about the net benefit, if you're taking the entirety of our system cost and adding more megawatts to it, that's a net benefit on a per kilowatt hour you know, rate on the transmission system in totality and a benefit for all customers.
Travis Miller: Okay. Okay. So not all of that transmission spend then is would go on commercial residential. Bills.
Bob Frenzel: Well, that's the transition spend that we highlight in our plan is regional, super regional, know, we have stuff that's connecting MISO and STP markets. We have big regional transmission coming out of the long-range transmission planning out of MISO process that is regionally allocated, not necessarily coming directly on to our customers. Same with our build-out. A lot of that is regional cost allocated, not coming into the directly 100% into retail rates.
Travis Miller: Okay. Great. And then how much are the you talked about that lateral just to follow-up on that You know, a scale or kind of share of how much that specific lateral type of demand you're getting relative to, like, what you just talked about, the regional type of transmission.
Brian Van Abel: Travis, those are really customer specific. You do system impact studies to just, you know, wherever that customer is locating on the transmission system, the size of that customer, the ramp of that customer. And so those are really specific hard put a number on it in general in a general with general sense.
Travis Miller: Okay. That's fair. And I appreciate all the thoughts. Thank you.
Operator: Well, thank you very much, sir. Question will be coming from Alexia Kania calling from BTIG. Please go ahead. Alex Kania, that is. Thank you.
Alexia Kania: Good morning. Thanks. Thanks for taking my question. Maybe just question on the regulatory side. Obviously, it's great to see all this CapEx. You know, and then also the transmission as well. But I'm kind of thinking about, also your comments about relative share of wallet and rates. But I'm just wondering, because the nature of communications that you're having with regulators just on kind of expectations or set or you know, for where, you know, rate trends may be going over the next five years within this within this window. Maybe there's kind of a balance between revenue requirements and, you know, volume growth or whatnot, but I'm just kinda curious about what the reception is.
Those types of conversations.
Bob Frenzel: Yeah. Great. I think it's it's really fundamental and foundational for our team here to make sure that we keep our bills for our product as affordable as possible for our customers. We wake up every day thinking about that. We have to balance that with other desires, reliability, sustainability, resiliency, and safety across our system, to make sure that we can meet those needs of our customers as well. I mean, you don't have to look any further than Jamaica or Cuba to realize the devastating effect that communities have when our system and our product isn't available.
So we are spending time and energy, as you say, with our regulators, with our legislators, making sure that we recognize all of the things that we're bringing to the system. And that while affordability is a hugely important piece, we think we, a, we start from a very good spot. We think we've been a very good steward of our customers' money over the last decade. We'll continue to be very prudent, very focused on making sure that we can deliver the system that they need and want. The policy objectives that they need and want. At a price that is as affordable as possible.
So work through that with each state and each class of customer and making sure that we keep our product very affordable and attractive.
Alexia Kania: Great. Thanks very much.
Operator: And thank you very much for your questions, Alex. As we have no further questions, for closing remarks, I'll turn the call back over to CFO, Brian Van Abel, for closing remarks. Thank you.
Brian Van Abel: Thank you all for participating in our earnings call this morning. Please contact our investor relations team for any follow-up questions.
Operator: Thank you much, sir. Ladies and gentlemen, that concludes today's conference. We wish you a very good day. You may now disconnect. Have a good day.