xcel energy ML_Sept_2008

Success Through Success Through Stakeholder AlignmentStakeholder Alignment

Merrill Lynch Power and Gas Leaders ConferenceMerrill Lynch Power and Gas Leaders ConferenceSeptember 22 September 22 -- 23, 200823, 2008

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; and other risk factors listed fof accounting regulatory bodies; and other risk factors listed from rom 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 2007.K for year 2007.

Safe HarborSafe Harbor

Ability to meet state RPS and environmental Ability to meet state RPS and environmental initiativesinitiatives

Well positioned for potential Federal climate Well positioned for potential Federal climate policypolicy

Uniquely able to provide clean energy to Uniquely able to provide clean energy to customers and hedge against fuel price customers and hedge against fuel price volatility volatility

Renewable portfolio extends the decision time Renewable portfolio extends the decision time horizon for new base load generationhorizon for new base load generation

Geographic advantageGeographic advantage

Why We are Positioned for Success Why We are Positioned for Success Why We are Positioned for Success

Addressing Public Policy Addressing Public Policy State legislative mandates and goalsState legislative mandates and goals

Minnesota: Minnesota: 30% RPS mandate by 2020 30% RPS mandate by 2020 30% carbon reduction goal by 202530% carbon reduction goal by 2025

Colorado: Colorado: 20% RPS mandate by 202020% RPS mandate by 202020% carbon reduction goal by 202020% carbon reduction goal by 2020

New Mexico: New Mexico: 20% RPS mandate by 202020% RPS mandate by 202010% carbon reduction goal by 2020 10% carbon reduction goal by 2020

Wisconsin: Wisconsin: 10% RPS mandate by 201510% RPS mandate by 2015Texas:Texas: 5% RPS mandate by 20155% RPS mandate by 2015

Expanding emphasis on DSM and conservationExpanding emphasis on DSM and conservationEmerging Federal climate policyEmerging Federal climate policy

If Lieberman Warner Bill had passed: If Lieberman Warner Bill had passed: •• 21% carbon reduction by 202021% carbon reduction by 2020•• 31% carbon reduction by 203031% carbon reduction by 2030•• 75% carbon reduction by 205075% carbon reduction by 2050

Federal climate policy likely in the next administrationFederal climate policy likely in the next administration

Projected Renewable Resources

Coal 49% Coal 49%

Renewables9%

Renewables9%

Natural Gas 31%

Natural Gas 31%

Nuclear 11%

Nuclear 11%

Coal 46% Coal 46%

Renewables24%

Renewables24%

Natural Gas 17%

Natural Gas 17%

Nuclear 13%

Nuclear 13%

200720072007 202020202020

Wind Hydro Solar Biomass RDF Landfill GeothermalWindWind HydroHydro SolarSolar BiomassBiomass RDFRDF LandfillLandfill GeothermalGeothermalMWMWMW2007 2,700 365 17 182 100 15 02020 7,400 400 600 250 60 20 2020072007 2,7002,700 365365 1717 182182 100100 1515 0020202020 7,4007,400 400400 600600 250250 6060 2020 2020

CapacityCapacityCapacity

EnergyEnergyEnergy

Wind DevelopmentWind Development

MinnesotaMinnesotaPropose adding 2,600 MW by 2020Propose adding 2,600 MW by 2020in Resource Planin Resource PlanNSP 500 MW Wind RFP NSP 500 MW Wind RFP

ColoradoColoradoPropose adding 800 MW by 2015 in Resource PlanPropose adding 800 MW by 2015 in Resource PlanPSCo 100PSCo 100--150 Wind RFP 150 Wind RFP

NSPNSP--Minnesota Wind OpportunitiesMinnesota Wind Opportunities

NSP 500 MW Wind RFP NSP 500 MW Wind RFP Issued December 2007Issued December 2007Bids received in March 2008Bids received in March 2008Currently negotiating with wind developers Currently negotiating with wind developers

Evaluating new wind generation resourcesEvaluating new wind generation resourcesCBED projects contracted via CBED projects contracted via PPAPPA’’s s and buildand build--transfer agreementstransfer agreementsPotential ownership in North DakotaPotential ownership in North Dakota

Capital expenditure forecast could increase if Capital expenditure forecast could increase if negotiations result in ownership of wind projectsnegotiations result in ownership of wind projects

Solar DevelopmentSolar Development

Central SolarCentral SolarAlamosa Central Solar PlantAlamosa Central Solar Plant 8.2 MW8.2 MW

Resource Plan expands solarResource Plan expands solarCurrent RFPCurrent RFP 75 MW75 MWPotential RFPPotential RFP’’ss 600 MW600 MW

Distributed SolarDistributed SolarSolar*RewardsSolar*Rewards

8.5 MW / 1,600+ installations8.5 MW / 1,600+ installationsAccepted additional 5 MW for 2009Accepted additional 5 MW for 2009

Resource Plan expands solarResource Plan expands solar63.5 MW Customer63.5 MW Customer--sited by 2015sited by 2015

Transmission InvestmentTransmission InvestmentNet book value of $2.4 billion at yearNet book value of $2.4 billion at year--end 2007end 200717,619 miles of transmission pole lines 17,619 miles of transmission pole lines #3 in total transmission pole miles #3 in total transmission pole miles 232 miles of transmission pole lines added in 2007232 miles of transmission pole lines added in 2007

$300 $325$390

$500

$0

$100

$200

$300

$400

$500

$600

2008 2009 2010 2011

Capital Expenditure in $millionsCapital Expenditure in $millions

$12.5$13.7 $14.5 $15.4

$16.6

2007A 2008F 2009F 2010F 2011F

Rate Base Growth Drives EPS*Rate Base Growth Drives EPS*

CAGR = 7.3%CAGR = 7.3%

Dollars in billionsDollars in billions

* Growth based on middle of capital forecast range* Growth based on middle of capital forecast rangeannounced in October 2007announced in October 2007

Constructive RegulationConstructive Regulation

Transmission riders Transmission riders –– CO, MN, ND, SDCO, MN, ND, SDRenewable riders Renewable riders –– CO, MNCO, MNMERP rider MERP rider –– MNMNConservation/DSM riders Conservation/DSM riders –– CO, MNCO, MNEnvironmental riders Environmental riders –– MN, ND, SDMN, ND, SDCapacity rider Capacity rider –– COCOComanche 3 forward CWIP via general rate case Comanche 3 forward CWIP via general rate case –– COCOIGCC rider IGCC rider –– COCOAir quality improvement rider Air quality improvement rider –– COCO

Projected Rider RevenueProjected Rider Revenue

0

40

80

120

160

200

240

2006 2007 2008 2009

Metro Emissions Reduction Project (MN)Air Quality Improvement Rider (CO)Renewable Energy Standard (MN)Transmission Rider (CO)Transmission Rider (MN)

Dollars in millionsDollars in millions

$73$73

$107$107

$166$166

$195$195

Recovery on Capital Expenditures*Recovery on Capital Expenditures*

* Capital expenditure forecast based on middle of range* Capital expenditure forecast based on middle of rangeDepreciation

0

400

800

1,200

1,600

2,000

2,400

2,800

2008 2009 2010 2011

Traditional Recovery Enhanced Recovery


$2,150$2,150$1,900$1,900 $2,000$2,000

$2,350$2,350

Pending Rate CasesPending Rate Cases

North Dakota ElectricNorth Dakota Electric June 2008June 2008 PendingPending$17.9 million$17.9 million Fall 2008Fall 200810.75% ROE10.75% ROE Interim ratesInterim rates

SPS WholesaleSPS Wholesale March 2008March 2008 PendingPending$14.9 million$14.9 million Fall 2008Fall 200812.2% ROE12.2% ROE

Texas ElectricTexas Electric June 2008June 2008 Pending Pending $61.3 million overall Qtr 1 2009 $61.3 million overall Qtr 1 2009 11.25% ROE11.25% ROE

NSPNSP--Wisconsin Wisconsin August 2008August 2008 PendingPendingLimited ReopenerLimited Reopener Qtr 4 2008Qtr 4 2008$47.1 million$47.1 million

RequestedRequested StatusStatus

Financial ExecutionFinancial ExecutionDelivering on 5 Delivering on 5 –– 7% EPS Growth7% EPS Growth

$1.15$1.15$1.30$1.30

$1.43$1.43

2005 2005 Ongoing*Ongoing*



Guidance RangeGuidance Range

$1.45 $1.45 –– $1.55$1.55

2008 2008 GuidanceGuidance

* Ongoing EPS excludes the impacts of COLI and disc ops.* Ongoing EPS excludes the impacts of COLI and disc ops.A reconciliation to GAAP earnings is included in the appendixA reconciliation to GAAP earnings is included in the appendix..

** ** Estimated CAGR is based on middle of 2008 guidance rangeEstimated CAGR is based on middle of 2008 guidance range

2005 2005 –– 2008 CAGR = 9.3%2008 CAGR = 9.3%

Financial ExecutionFinancial ExecutionDelivering 2 Delivering 2 –– 4% Dividend Growth*4% Dividend Growth*

$0.83 $0.86 $0.89 $0.92 $0.95

2004 2005 2006 2007 2008

2004 2004 –– 2008 CAGR = 3.4%2008 CAGR = 3.4%

Annualized dividend per shareAnnualized dividend per share

* Xcel Energy increased the dividend by 3* Xcel Energy increased the dividend by 3¢¢ on May 21, 2008on May 21, 2008

Strong Access to Credit Markets in 2008Strong Access to Credit Markets in 2008

Hold Co Hold Co -- issued $400 million of retail hybrid securities issued $400 million of retail hybrid securities with a 7.6% coupon in Januarywith a 7.6% coupon in January

NSPNSP--Minnesota Minnesota -- issued $500 million of first mortgage bonds issued $500 million of first mortgage bonds with 10 year maturity and 5.25% coupon in Marchwith 10 year maturity and 5.25% coupon in March

PSCo PSCo -- issued $600 million of first mortgage bonds in August: issued $600 million of first mortgage bonds in August: 10 year tranche with a 5.8% coupon10 year tranche with a 5.8% coupon30 year tranche with a 6.5% coupon 30 year tranche with a 6.5% coupon

NSPNSP--Wisconsin Wisconsin –– issued $200 million of first mortgage bonds issued $200 million of first mortgage bonds with 30 year maturity and 6.375% coupon in Septemberwith 30 year maturity and 6.375% coupon in September

Potential debt issuances: 2nd half 2008Potential debt issuances: 2nd half 2008SPS: Up to $250 million of unsecured debtSPS: Up to $250 million of unsecured debt

Equity IssuanceEquity IssuanceIssued 17.25 million shares in September 2008Issued 17.25 million shares in September 2008Proceeds of approximately $345 millionProceeds of approximately $345 millionWhy now?Why now?

Fund capital expenditure growth planFund capital expenditure growth planKeeps balance sheet strongKeeps balance sheet strongPrudently took advantage of a stable period in a Prudently took advantage of a stable period in a disruptive capital market disruptive capital market Took equity off the table based on current capital forecastTook equity off the table based on current capital forecast

Do we see the need for future equity beyond DRIP? Do we see the need for future equity beyond DRIP? Depends on level of capital expenditures Depends on level of capital expenditures Preserving credit metricsPreserving credit metricsPotential for hybrids Potential for hybrids Potential asset salesPotential asset sales

Value PropositionValue Proposition

Low risk, fully regulated and integrated utilityLow risk, fully regulated and integrated utilityConstructive regulation with enhanced recovery Constructive regulation with enhanced recovery of major capital projectsof major capital projectsPipeline of investment opportunitiesPipeline of investment opportunitiesEnvironmental leader, wellEnvironmental leader, well––positionedpositionedfor changing rulesfor changing rules

Attractive Total ReturnAttractive Total ReturnSustainable annual EPS growth of 5% Sustainable annual EPS growth of 5% –– 7%7%with upside potentialwith upside potentialStrong dividend yield of Strong dividend yield of ~~ 4.6%4.6%Sustainable annual dividend growth of 2% Sustainable annual dividend growth of 2% –– 4%4%

AppendixAppendix

Traditional RegulationTraditional Regulation

Operate in 8 StatesOperate in 8 States

Combination UtilityCombination UtilityElectric 85% of net incomeElectric 85% of net incomeGas 15% of net incomeGas 15% of net income

CustomersCustomers3.3 million electric3.3 million electric1.8 million gas1.8 million gas

2007 Financial Statistics2007 Financial StatisticsNI Ongoing: $612 million NI Ongoing: $612 million NI GAAP: $577 millionNI GAAP: $577 millionAssets: $23 billionAssets: $23 billionEquity ratio: 43%Equity ratio: 43%

Company ProfileCompany Profile

NSPNSP--WisconsinWisconsin6% of earnings *6% of earnings *NSPNSP--MinnesotaMinnesota

40% of earnings *40% of earnings *

SPSSPS5% of earnings *5% of earnings *

PSCoPSCo49% of earnings *49% of earnings *

2007 EPS Ongoing: $1.43; GAAP: $1.352007 EPS Ongoing: $1.43; GAAP: $1.352008 Dividend $0.95 per share annualized2008 Dividend $0.95 per share annualized

* Percentages based on 2007 Ongoing Earnings* Percentages based on 2007 Ongoing Earnings

Ongoing Earnings $1.15 $1.30 $1.43PSRI/COLI 0.05 0.05 (0.08)Continuing Operations $1.20 $1.35 $1.35Disc Ops 0.03 0.01 –GAAP Earnings $1.23 $1.36 $1.35

Ongoing Earnings Ongoing Earnings $1.15 $1.15 $1.30$1.30 $1.43$1.43PSRI/COLIPSRI/COLI 0.050.05 0.050.05 (0.08)(0.08)Continuing OperationsContinuing Operations $1.20$1.20 $1.35$1.35 $1.35$1.35Disc Ops Disc Ops 0.030.03 0.01 0.01 ––GAAP Earnings $1.23 GAAP Earnings $1.23 $1.36$1.36 $1.35$1.35

Reconciliation Reconciliation ––Ongoing EPS to GAAPOngoing EPS to GAAP

200720072007Dollars per shareDollars per share

200620062006200520052005

As a result of the termination of the COLI program, Xcel Energy’s management believes that ongoing earnings provide a more meaningful comparison of earnings results between different periods in which the COLI program was in place and is more representative of Xcel Energy’s fundamental core earnings power. Xcel Energy’s management uses ongoing earnings internally for financial planning and analysis, for reporting of results to the Board of Directors, in determining whether performance targets are met for performance-based compensation,and when communicating its earnings outlook to analysts and investors.

As a result of the termination of the COLI program, Xcel EnergyAs a result of the termination of the COLI program, Xcel Energy’’s management s management believes that ongoing earnings provide a more meaningful comparibelieves that ongoing earnings provide a more meaningful comparison of earnings son of earnings results between different periods in which the COLI program was results between different periods in which the COLI program was in place and is in place and is more representative of Xcel Energymore representative of Xcel Energy’’s fundamental core earnings power. s fundamental core earnings power. Xcel EnergyXcel Energy’’s management uses ongoing earnings internally for financial plans management uses ongoing earnings internally for financial planning ning and analysis, for reporting of results to the Board of Directorsand analysis, for reporting of results to the Board of Directors, in determining , in determining whether performance targets are met for performancewhether performance targets are met for performance--based compensation,based compensation,and when communicating its earnings outlook to analysts and inveand when communicating its earnings outlook to analysts and investors.stors.

Regulated Utility $1.55 $1.61 – $1.71 Holding Company (0.12) (0.16) Ongoing Earnings $1.43 $1.45 – $1.55

PSRI/COLI $(0.08) –Continuing Operations 1.35 1.45 – 1.55Disc Ops – –GAAP Earnings $1.35 $1.45 – $1.55

Regulated UtilityRegulated Utility $1.55 $1.55 $1.61 $1.61 –– $1.71 $1.71 Holding CompanyHolding Company (0.12)(0.12) (0.16) (0.16) Ongoing Earnings Ongoing Earnings $1.43$1.43 $1.45 $1.45 –– $1.55$1.55

PSRI/COLIPSRI/COLI $(0.08)$(0.08) ––Continuing OperationsContinuing Operations 1.351.35 1.45 1.45 –– 1.551.55Disc Ops Disc Ops –– ––GAAP EarningsGAAP Earnings $1.35$1.35 $1.45 $1.45 –– $1.55$1.55

Earnings Guidance Range Earnings Guidance Range

2007A2007A2007A 200820082008Dollars per shareDollars per share

Debt MaturitiesDebt Maturities

$0

$200

$400

$600

$800

$1,000

$1,200

2008 2009 2010 2011 2012 2013 2014 2015

SPSPSCoNSPWNSPMXcel Energy

Dollars in millionsDollars in millionsDollars in millions

Credit RatingsCredit Ratings

Holding Co. – – – BBB+ Baa1 BBB

NSPM A+ A2 A A A3 BBB

NSPW A+ A2 A A A3 BBB+

PSCo A A3 A A– Baa1 BBB

SPS – – – BBB+ Baa1 BBB+

Holding Co.Holding Co. –– –– –– BBB+BBB+ Baa1Baa1 BBBBBB

NSPMNSPM A+A+ A2A2 A A AA A3A3 BBBBBB

NSPWNSPW A+A+ A2 A2 A A AA A3A3 BBB+ BBB+

PSCoPSCo AA A3A3 A A AA–– Baa1Baa1 BBBBBB

SPSSPS –– –– –– BBB+BBB+ Baa1Baa1 BBB+BBB+

Fitch Moody’s S&P Fitch Moody’s S&PFitch Moody’s S&P Fitch Moody’s S&PSecuredSecured UnsecuredUnsecured

Geographic Competitive AdvantageGeographic Competitive Advantage

Wind ResourceWind Resource

Solar ResourceSolar Resource

Biomass ResourceBiomass Resource

Xcel EnergyXcel EnergyStates ServedStates Served

Wind DensityWind DensityHighHigh

LowLow

Source: National Renewable Energy LaboratorySource: National Renewable Energy Laboratory

Reducing Carbon Dioxide Emissions*Reducing Carbon Dioxide Emissions*

60

65

70

75

80

2003 2004 2005 2006 2007

Millions of tons Millions of tons

* Owned* Owned––generation carbon dioxide emissionsgeneration carbon dioxide emissions

Smart Grid Pilot ProjectSmart Grid Pilot ProjectPilot project in Boulder, Colorado:Pilot project in Boulder, Colorado:

Five major partnersFive major partnersTotal project cost ~ $100 millionTotal project cost ~ $100 millionXcel Energy portion ~ $15 millionXcel Energy portion ~ $15 millionBuild out completed in 2009Build out completed in 2009

Scope:Scope:Smart metersSmart metersReal time, high speed, twoReal time, high speed, two––way communications way communications Intelligent home/smart appliancesIntelligent home/smart appliancesDemand Side Management Demand Side Management Distributed generationDistributed generationRenewable energy sector growthRenewable energy sector growthEnergy storage devicesEnergy storage devices

Regulatory ResultsRegulatory Results

Rate relief granted 2006Rate relief granted 2006--2007: $400 million2007: $400 million

2006 Minnesota electric rate case: $131 million2006 Minnesota electric rate case: $131 million

2006 Colorado electric rate case: $151 million2006 Colorado electric rate case: $151 million

2006 Wisconsin gas and electric rate cases: $47 million2006 Wisconsin gas and electric rate cases: $47 million

2007 Colorado gas rate case: $32 million2007 Colorado gas rate case: $32 million

Other: $39 millionOther: $39 million

2008 Regulatory Outcomes2008 Regulatory Outcomes

New Mexico ElectricNew Mexico Electric December 2007December 2007 August 2008 August 2008 $17.3 million$17.3 million $10.7 million $10.7 million 11.0% ROE 11.0% ROE 10.18% ROE10.18% ROE

PSCo WholesalePSCo Wholesale February 2008February 2008 SettlementSettlementBase rates $8.8 millionBase rates $8.8 million $6.5 million$6.5 millionCWIP $3.7 million CWIP $3.7 million Blackbox Blackbox 11.5% ROE11.5% ROE

RequestedRequested ApprovedApproved

2007 Rate Base and ROE2007 Rate Base and ROE

Minnesota ElectricMinnesota Electric $4,054$4,054 11.02%11.02%Minnesota GasMinnesota Gas 456456 7.747.74North Dakota ElectricNorth Dakota Electric 202202 2.962.96North Dakota GasNorth Dakota Gas 4444 7.667.66South Dakota ElectricSouth Dakota Electric 251251 9.289.28Colorado ElectricColorado Electric 3,5693,569 10.0910.09Colorado GasColorado Gas 1,0961,096 10.4510.45Wisconsin ElectricWisconsin Electric 554554 8.338.33Wisconsin GasWisconsin Gas 7777 8.598.59Texas ElectricTexas Electric 940940 4.61*4.61*New Mexico Electric**New Mexico Electric** 276276 2.24*2.24*WholesaleWholesale 982 Not Reported982 Not ReportedTotal Rate Base $12,501Total Rate Base $12,501

Weather NormalizedRate Base Earned ROE

Weather NormalizedWeather NormalizedRate BaseRate Base Earned ROEEarned ROE


* Texas and New Mexico * Texas and New Mexico ROEROE’’s s are actual earned, not weather normalizedare actual earned, not weather normalized** Results impacted by fuel disallowance** Results impacted by fuel disallowance

Strong Corporate Governance Strong Corporate Governance

Independent Lead Director Independent Lead Director

Annual election of all directorsAnnual election of all directors

12 independent directors on 13 person board 12 independent directors on 13 person board

Management compensation aligned with Management compensation aligned with shareholders shareholders –– stock ownership guidelines:stock ownership guidelines:

CEO ownership 5x annual base salary CEO ownership 5x annual base salary

CFO/Other Officers ownership 3x base salary CFO/Other Officers ownership 3x base salary

xcel energy ML_Sept_2008

Economy & Finance

Transcript of xcel energy ML_Sept_2008