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Xcel Energy Third Quarter 2013 Earnings Report

The only common equity securities that are publicly traded are common shares of Xcel Energy Inc. The earnings and earnings per share (EPS) of each subsidiary discussed below do not represent a direct legal interest in the assets and liabilities allocated to such subsidiary but rather represent a direct interest in our assets and liabilities as a whole. EPS by subsidiary is a financial measure not recognized under GAAP that is calculated by dividing the net income or loss attributable to the controlling interest of each subsidiary by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period. We use this non-GAAP financial measure to evaluate and provide details of earnings results. We believe that this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of our subsidiaries. This non-GAAP financial measure should not be considered as an alternative to our consolidated fully diluted EPS determined in accordance with GAAP as an indicator of operating performance.

Note 1. Earnings Per Share Summary

The following table summarizes the diluted earnings per share for Xcel Energy:
       
Three Months Ended Sept. 30 Nine Months Ended Sept. 30
Diluted Earnings (Loss) Per Share 2013     2012 2013     2012
Public Service Company of Colorado (PSCo) $ 0.33 $ 0.36 $ 0.77 $ 0.75
NSP-Minnesota 0.31 0.28 0.67 0.57
Southwestern Public Service Company (SPS) 0.11 0.12 0.19 0.20
NSP-Wisconsin 0.05 0.04 0.11 0.09
Equity earnings of unconsolidated subsidiaries 0.01   0.01   0.03   0.03  
Regulated utility — continuing operations (a) 0.81 0.81 1.77 1.64
Xcel Energy Inc. and other costs (0.04 ) (0.03 ) (0.12 ) (0.10 )
Ongoing (a) diluted earnings per share 0.77 0.78 1.65 1.54
SPS 2004 FERC complaint case orders (b) (0.04 ) (0.04 )
Prescription drug tax benefit (b)   0.03     0.03  
GAAP diluted earnings per share $ 0.73   $ 0.81   $ 1.61   $ 1.57  
 

(a) See Note 2.

(b) See Note 7.
 

PSCo — PSCo’s ongoing earnings decreased $0.03 per share for the third quarter of 2013 and increased $0.02 per share for the nine months ended Sept. 30, 2013. Third quarter earnings declined as a result of lower electric margins and higher operating and maintenance (O&M) expenses. Electric margins were impacted by cooler weather compared to prior year and accruals for potential customer refunds associated with the 2013 earnings test. These factors were partially offset by lower interest charges.

NSP-Minnesota — NSP-Minnesota’s ongoing earnings increased $0.03 per share for the third quarter of 2013 and $0.10 per share for the nine months ended Sept. 30, 2013. Earnings were positively impacted by electric rate increases in Minnesota, South Dakota and North Dakota interim rates, subject to refund, and lower interest charges. These were partially offset by higher O&M expenses and property taxes.

SPS — SPS’ ongoing earnings decreased $0.01 per share for the third quarter of 2013 and for the nine months ended Sept. 30, 2013. Higher O&M expenses, depreciation, interest charges and the impact of cooler summer weather were partially offset by electric rate increases in Texas.

NSP-Wisconsin — NSP-Wisconsin’s ongoing earnings increased $0.01 per share for the third quarter of 2013 and $0.02 per share for the nine months ended Sept. 30, 2013. Higher earnings from electric and natural gas rates were partially offset by higher depreciation, O&M expenses and cooler summer weather.

The following table summarizes significant components contributing to the changes in 2013 EPS compared with the same period in 2012, which are discussed in more detail later in the release:
       

 

 

Three Months

Nine Months Ended
Diluted Earnings (Loss) Per Share

Ended Sept. 30

Sept. 30
2012 GAAP diluted earnings per share $ 0.81 $ 1.57
Prescription drug tax benefit (b) (0.03 ) (0.03 )
2012 ongoing (a) diluted earnings per share 0.78 1.54
 
Components of change — 2013 vs. 2012
Higher electric margins (excludes impact of SPS 2004 FERC complaint case orders) (b) 0.15
Higher natural gas margins 0.01 0.07
Lower interest charges (excludes impact of SPS 2004 FERC complaint case orders) (b) 0.02 0.04
Higher AFUDC — equity 0.01 0.04
Lower effective tax rate 0.02 0.02
Higher O&M expenses (0.05 ) (0.11 )
Lower (higher) depreciation and amortization 0.01 (0.03 )
Dilution from at-the-market program, direct stock purchase plan and benefit plans (0.02 ) (0.03 )
Higher taxes (other than income taxes) (0.01 ) (0.02 )
Other, net   (0.02 )
2013 ongoing (a) diluted earnings per share 0.77 1.65
SPS 2004 FERC complaint case orders (b) (0.04 ) (0.04 )
2013 GAAP diluted earnings per share $ 0.73   $ 1.61  
 

(a) See Note 2.

(b) See Note 7.
 

Note 2. Regulated Utility Results — Continuing Operations

Estimated Impact of Temperature Changes on Regulated Earnings — Unusually hot summers or cold winters increase electric and natural gas sales while, conversely, mild weather reduces electric and natural gas sales. The estimated impact of weather on earnings is based on the number of customers, temperature variances and the amount of natural gas or electricity the average customer historically uses per degree of temperature. Accordingly, deviations in weather from normal levels can affect Xcel Energy’s financial performance, from both an energy and demand perspective.

Degree-day or Temperature-Humidity Index (THI) data is used to estimate amounts of energy required to maintain comfortable indoor temperature levels based on each day’s average temperature and humidity. Heating degree-days (HDD) is the measure of the variation in the weather based on the extent to which the average daily temperature falls below 65° Fahrenheit, and cooling degree-days (CDD) is the measure of the variation in the weather based on the extent to which the average daily temperature rises above 65° Fahrenheit. Each degree of temperature above 65° Fahrenheit is counted as one cooling degree-day, and each degree of temperature below 65° Fahrenheit is counted as one heating degree-day. In Xcel Energy’s more humid service territories, a THI is used in place of CDD, which adds a humidity factor to CDD. HDD, CDD and THI are most likely to impact the usage of Xcel Energy’s residential and commercial customers. Industrial customers are less sensitive to weather.

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