Xcel Energy Inc. (XEL)
Q2 2010 Earnings Call
July 29, 2010 11:00 am ET
Paul Johnson - Managing Director, IR
Ben Fowke - President and COO
Dave Sparby - CFO
Scott Wilensky - VP, Regulatory and Resource Planning
Daniele Seitz - Dudack Research Group
Ali Agha - SunTrust Robinson Humphrey
Leslie Rich - JPMorgan
Dan Jenkins - State of Wisconsin Investment
Rudy Tolentino - Morgan Stanley
Daniele Seitz - Dudack Research Group
Timothy Yee - KeyBanc Capital Markets
Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Xcel Energy Second Quarter 2010 Conference Call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Thursday, July 29, 2010.
I'd now like to turn the conference over to Paul Johnson, Managing Director of Investor Relations and Assistant Treasurer. Please go ahead, sir.
Thank you, and welcome to Xcel Energy's second quarter 2010 earnings release conference call. I'm Paul Johnson. With me today are Ben Fowke, President and Chief Operating Officer; Dave Sparby, Vice President and Chief Financial Officer; Teresa Madden, Vice President and Controller; Scott Wilensky, Vice President, Regulatory and Resource Planning; and George Tyson, Vice President and Treasurer.
Today we plan to cover our second quarter results and provide a general business updates. Please note that there are slides that accompany the conference call, which are available on our web page. I want to remind everyone that some of our comments may contain forward looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and our filings with the SEC.
Today's press release refers to both GAAP and ongoing earnings. GAAP earnings for 2010 include a $0.01 per share benefit from discontinued operations, largely due to the recognition of previously unrecognized tax benefits. Our comments this morning will focus on ongoing earnings which do not include discontinued operation. A reconciliation of ongoing earnings per share to GAAP earnings per share is available in our press release.
With that, I will turn the call over to Ben Fowke.
Thanks, Paul and welcome everyone. This morning we reported second quarter ongoing earnings of $0.29 per share compared with $0.25 per share in 2009. In a few moments Dave will walk you through the details of our quarterly results. But I'd like to start by saying after two strong quarters we remain on track to deliver ongoing earnings within our 2010 earnings guidance range of $1.25 to $1.65.
Now let me bring you up today on some recent developments. In Colorado I'm pleased to report that (inaudible) went into service in May and achieve commercial operation earlier this month. The plant is certified at 802 net megawatts, which is above the expected output before 750 megawatts.
I'm also pleased to note we continue to make solid progress on our CapEx 20-20 transmission project with construction now underway at our (inaudible) substation. In July, we received two of the five route permits needed in Minnesota for the project. Minnesota commission approved our application for the first segment of the Fargo line and for all but one section of the bookings line associated with the river crossing.
We believe that we will be able to reach an agreement regarding this section, soon. Obviously, it takes a long time to build transmission lines and we've been very successful in all aspects of the process. It's really exciting to see construction actually begin.
Another development that promises to benefit our customers is our plan to acquire two natural gas plants from Calpine for approximately $739 million. In May we filed a request with the Colorado Commission seeking approval of the acquisition and interim rate recovery of the revenue requirements associated with the plants. In July we received FERT regulatory approval of the transaction and the order imposes no conditions or modifications, other than routine requirements for post closing reports and filings.
We've also received clearance into the Hart-Scott-Todino act. The Colorado Commission assigned an administrative law judge to our case and developed a procedural schedule which assumes a initial decision by the end of October. This is consistent with our request and puts us on track for a December closing.
One more update from Colorado. The clean air, clean jobs act was signed into law, in April. The bill establishes a timeline and a regulatory framework for PSCo to retrofit retire or replace 900 megawatts or more of older and less efficient coal fire generation.
The provisions of the bill are very similar to the successful Merck project we finished last year in Minnesota. We will file our plan with the Colorado PUC in mid August, and the commission will rule on the plan by year-end. Our plan will include several potential alternatives, and our recommended solution.
In light of the recent EPA proposals recording coal fire generation, the Colorado legislation is just another example of our ability to work with key stake holders to arrive at a creative solution to reduce emissions while ensuring timely recovery of cost.
I will now turn the call over to Dave, who will walk you through our second quarter results, discuss our financing plans, and provide a regulatory update.
Thanks, Ben. Let's start by reviewing second quarter results at each of our subsidiaries. Earnings, at (inaudible) increased $0.04 per share largely due to the rate increases in electric sales growth. Keep in mind PSCo's 2010 earnings for both the quarter and year-to-date periods reflect rate increases from both 2009 and 2010 electric rate cases. New rates associated with the 2009 rate case went into effect in July 2009. As a result, improvement in PSCo's earnings in the second half of the year will be driven primarily from the 2010 rate increase.