xcel energy 1d kenvironmental_leadership_xcel_energy_12052007
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Financial SuccessFinancial SuccessThrough Environmental LeadershipThrough Environmental Leadership
New York Analyst MeetingNew York Analyst MeetingDecember 5, 2007December 5, 2007
Safe HarborSafe Harbor
This material includes forwardThis material includes forward--looking statements that are subject to looking statements that are subject to certain risks, uncertainties and assumptions. Such forwardcertain risks, uncertainties and assumptions. Such forward--looking looking statements include projected earnings, cash flows, capital statements include projected earnings, cash flows, capital expenditures and other statements and are identified in this docexpenditures and other statements and are identified in this document ument by the words by the words ““anticipate,anticipate,”” ““estimate,estimate,”” ““expect,expect,”” ““projected,projected,””““objective,objective,”” ““outlook,outlook,”” ““possible,possible,”” ““potentialpotential”” and similar and similar expressions. Actual results may vary materially. Factors that expressions. Actual results may vary materially. Factors that could could cause actual results to differ materially include, but are not lcause actual results to differ materially include, but are not limited to: imited to: general economic conditions, including the availability of credigeneral economic conditions, including the availability of credit, t, actions of rating agencies and their impact on capital expendituactions of rating agencies and their impact on capital expenditures; res; business conditions in the energy industry; competitive factors;business conditions in the energy industry; competitive factors;unusual weather; effects of geopolitical events, including war aunusual weather; effects of geopolitical events, including war and acts nd acts of terrorism; changes in federal or state legislation; regulatioof terrorism; changes in federal or state legislation; regulation; actions n; actions of accounting regulatory bodies; the higher degree of risk assocof accounting regulatory bodies; the higher degree of risk associated iated with Xcel Energywith Xcel Energy’’s nonregulated businesses compared withs nonregulated businesses compared withXcel EnergyXcel Energy’’s regulated business; and other risk factors listed from s regulated business; and other risk factors listed from time to time by Xcel Energy in reports filed with the SEC, inclutime to time by Xcel Energy in reports filed with the SEC, including ding Exhibit 99.01 to Xcel EnergyExhibit 99.01 to Xcel Energy’’s report on Form 10s report on Form 10--K for year 2006.K for year 2006.
Environmental LeadershipEnvironmental Leadership
Dick KellyDick KellyChairman, President and CEOChairman, President and CEO
Xcel Energy Corporate StrategyXcel Energy Corporate Strategy
Grow our core business andGrow our core business andmeet the environmental challengemeet the environmental challenge
Achieve annual EPS growth of 5 Achieve annual EPS growth of 5 –– 7%7%Increase dividend by 2 Increase dividend by 2 –– 4% annually4% annuallyReduce emissions by 2020Reduce emissions by 2020
Key to Successful ExecutionKey to Successful Execution
Value toValue toCustomersCustomers
EnvironmentalEnvironmentalStewardshipStewardship
Regulators/Regulators/LegislatorsLegislators
FinancialFinancialPerformancePerformance
Invest in Regulated Utility BusinessInvest in Regulated Utility Business
Organization Structure Organization Structure
CEOCEO
GeneralGeneralCounselCounsel
ChiefChiefFinancialFinancialOfficerOfficer
CustomerCustomerandand
EnterpriseEnterpriseSolutionsSolutions
EnergyEnergySupplySupply
PSCoPSCo
UtilitiesUtilitiesGroupGroup
NSPMNSPM
SPSSPS
NSPWNSPW
Optimize efficiency Optimize efficiency whilewhile
maximizing maximizing accountabilityaccountability
Significant Accomplishments Since 2005Significant Accomplishments Since 2005
EPS from continuing operations CAGR of 10% EPS from continuing operations CAGR of 10%
Dividend CAGR of 3.5%Dividend CAGR of 3.5%
Credit ratings upgrade by S&PCredit ratings upgrade by S&P
Strong construction management (MERP/Comanche)Strong construction management (MERP/Comanche)
Resolution of COLI dispute with IRSResolution of COLI dispute with IRS
Constructive rate case resolutions in multiple statesConstructive rate case resolutions in multiple states
Implementation of riders/enhanced revenue recovery Implementation of riders/enhanced revenue recovery
Success FactorsSuccess Factors
Key components of past growthKey components of past growth—— Constructive rate case outcomesConstructive rate case outcomes—— MERPMERP—— Comanche 3Comanche 3
Key components of future growthKey components of future growth—— Transmission riders (MN, CO, ND, SD)Transmission riders (MN, CO, ND, SD)—— Favorable wind recovery (MN, CO)Favorable wind recovery (MN, CO)—— Environmental rider (MN)Environmental rider (MN)—— Planned forward test year (CO)Planned forward test year (CO)—— Nuclear recovery mechanism (MN)Nuclear recovery mechanism (MN)—— Southwestern Public Service (SPS)Southwestern Public Service (SPS)
Strategic Environmental InitiativesStrategic Environmental Initiatives
Achieve carbon reduction goals Achieve carbon reduction goals
Increase companyIncrease company--owned generationowned generation
Grow transmission portfolioGrow transmission portfolio
Enhance regulatory/legislative frameworkEnhance regulatory/legislative framework
Improve customer understandingImprove customer understanding
Achieve Carbon Reduction GoalsAchieve Carbon Reduction Goals
Increase renewable energyIncrease renewable energy
Uprate and extend lives of nuclear plantsUprate and extend lives of nuclear plants
Expand DemandExpand Demand--Side Management (DSM),Side Management (DSM),energy efficiency and conservation effortsenergy efficiency and conservation efforts
Upgrade environmental systems and improve Upgrade environmental systems and improve generation plant efficiencygeneration plant efficiency
Replace/repower inefficient generationReplace/repower inefficient generation
Evaluate clean coal carbon capture and storageEvaluate clean coal carbon capture and storage
Scope and develop Smart Grid conceptScope and develop Smart Grid concept
Increase CompanyIncrease Company--Owned GenerationOwned Generation
Reduce impact of S&P imputed debt methodology Reduce impact of S&P imputed debt methodology for purchased power contractsfor purchased power contracts
Improve system reliability, particularly with Improve system reliability, particularly with increases in intermittent generation increases in intermittent generation
Targets for incremental generation ownershipTargets for incremental generation ownership—— Wind generation ownership Wind generation ownership >> 50%50%—— Natural gas generation ownership up to 100%Natural gas generation ownership up to 100%
Grow Transmission PortfolioGrow Transmission Portfolio
Xcel Energy transmission consists of:Xcel Energy transmission consists of:—— Net plant = $2 billion (yearNet plant = $2 billion (year--end 2006)end 2006)—— Pole miles = 17,400 (6th highest)Pole miles = 17,400 (6th highest)—— Annual capital expenditures approx. $400 millionAnnual capital expenditures approx. $400 million
System reliability and renewable strategy System reliability and renewable strategy ––critical componentscritical components—— Minnesota “CapX 2020” and beyondMinnesota “CapX 2020” and beyond—— Colorado “High Plains Express”Colorado “High Plains Express”
Transmission rider/cost recovery mechanismsTransmission rider/cost recovery mechanisms—— Minnesota, North Dakota, South Dakota, ColoradoMinnesota, North Dakota, South Dakota, Colorado
Enhance Regulatory/Enhance Regulatory/Legislative FrameworkLegislative Framework
Partner in public policy implementationPartner in public policy implementation
National Clean Energy Portfolio Standard (CEPS)National Clean Energy Portfolio Standard (CEPS)—— Alternative to cap & trade carbon legislationAlternative to cap & trade carbon legislation—— Provides credits for positive actionsProvides credits for positive actions
rather than penaltiesrather than penalties
Constructive rate case filingsConstructive rate case filings
DSM/ConservationDSM/Conservation—— ShortShort--term: DSM cost recovery mechanismsterm: DSM cost recovery mechanisms—— LongLong--term: Comprehensive DSM business modelterm: Comprehensive DSM business model
Nuclear cost recovery mechanismNuclear cost recovery mechanism
Improve Customer UnderstandingImprove Customer Understanding
Improve customer awareness of costs and value Improve customer awareness of costs and value associated with clean energy standardsassociated with clean energy standards—— Clean energy costsClean energy costs—— Costs of access to renewable energy resourcesCosts of access to renewable energy resources—— System integration costs to manage variable System integration costs to manage variable
renewable energy resourcesrenewable energy resources—— Plant retirement, retrofit and replacement costsPlant retirement, retrofit and replacement costs
Communication process to ensure credibilityCommunication process to ensure credibilityand trustand trust
Shift customer understanding from commodityShift customer understanding from commodityto serviceto service
Changing Supply Mix Changing Supply Mix
Coal Coal ****46%46%
GasGas17%17%
NuclearNuclear13%13%
Estimated 2020 Estimated 2020 Energy Supply Mix *Energy Supply Mix *
** Includes purchasesIncludes purchases**** LowLow--sulfur western coalsulfur western coal
20062006Energy Supply Mix *Energy Supply Mix *
NuclearNuclear12%12%
Coal Coal ****52% 52%
GasGas27%27%
RenewablesRenewables9%9%
Renewables Renewables 24%24%
Keys to Creating Shareholder ValueKeys to Creating Shareholder Value
Continue collaborative approach with stakeholdersContinue collaborative approach with stakeholders
Get the rules rightGet the rules right
Strategy provides for rate base growthStrategy provides for rate base growth
Continue disciplined portfolio management Continue disciplined portfolio management ––fix or exit underperformersfix or exit underperformers
Mitigate customer rate increasesMitigate customer rate increases