Xcel Energy's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Xcel Energy Inc. (

XEL

)

Q4 2011 Earnings Call

February 2, 2012; 11:00 am ET

Executives

Ben Fowke - Chairman, President & Chief Executive Officer

Teresa Madden - Senior Vice President & Chief Financial Officer

Dave Sparby - Senior Vice President & Group President

Scott Wilensky - Senior Vice President & General Counsel

George Tyson - Vice President & Treasurer

Analysts

Travis Miller - Morningstar

Ali Agha - SunTrust

Angie Storozynski - Macquarie

Paul Fremont - Jefferies

Dan Jenkins - State of Wisconsin Investment Board

Neil Kalton - Wells Fargo

Presentation

Operator

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Good morning ladies and gentlemen, thank you for standing by. Welcome to the Xcel Energy fourth quarter 2011 earnings conference call. During today’s presentation all parties will be in a listen-only mode and following the presentation the conference will be opened for questions. (Operator Instructions).

I would now like to turn the conference over to Paul Johnson, Vice President of Investor Relations and Financial Management. Please go ahead.

Paul Johnson

Thank you and welcome to Xcel Energy’s year-end 2011 earnings release conference call. I’m Paul Johnson. With me today are Ben Fowke, Chairman, President and Chief Executive Officer; Teresa Madden, Senior Vice President and Chief Financial Officer; Dave Sparby, Senior Vice President and Group President; Scott Wilensky, Senior Vice President and General Counsel, and George Tyson, Vice President and Treasurer.

Today, we’ll discuss our 2011 results, provide you with the recent business and regulatory developments and review our 2012 earnings guidance. Please note that there are slides that accompany the conference call and are available on our web page.

Before we begin, let me remind you 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.

I’ll now turn the call over to Ben Fowke.

Ben Fowke

Thanks Paul and good morning. I’m pleased to announce that Xcel Energy enjoyed another successful year. I’ll review some of the highlights from 2011 and also comment on some of the challenges we face in 2012. Teresa will then discuss our 2011 results in greater detail.

As you probably read in this morning’s press release, we reported 2011 earnings of $1.72 per share, compared with $1.62 per share in 2010, representing a 6% increase. We feel good about delivering earnings results in the upper half of our 2011 earnings guidance range of $1.65 to $1.75 per share. This marks the seventh consecutive year that we have met or exceeded our annual earnings objective.

We were also successful in meeting our other financial objectives. We raised an annual dividend of $0.03 per share or 3% to $1.04 per share and we maintained our strong credit ratings. Continuing to meet our financial objectives is certainly important; however, I’m equally proud that we delivered a high level of system reliability in a year that clearly presented us with some weather related challenges.

In addition to our hot summer throughout our service territory, we experienced some rather noteworthy storms in 2011, including a tornado in a densely populated Minneapolis neighborhood and early season snowstorms in the Denver area. All of these storms resulted in significant damage and widespread power outages.

I commend our employees for how rapidly and thoroughly they responded to these challenging events, restoring service in all situations in record time. Delivering value to our customers has led to a record customer satisfaction rating of 93% in 2011, slightly above the 92% rating we received in 2009 and 2010.

We had some significant operational successes in 2011 that should position us to continue to provide a high level of service to our customers for many years to come. To name a few, the NRC renewed the operating license for our Prairie Island plants, authorizing the units to generate emission free base load generation for another 20 years.

In Texas we put the Jones 3 combustion turbine into service one year early and substantially under budget. At NSP, the MISO Board approved multi value project status for the Brookings Hampton line with the projected investment by Xcel Energy of $480 million and we had the first segments of SB100, Power for the Plains and the CapX2020 transmission projects, which totaled over 180 miles going to service.

In addition, Xcel Energy was named to the 2011-2012 Dow Jones Sustainability Index. This is the fifth year we earned a place in the Index, which includes companies considered to be best in class in terms of economic, environmental and social performance. Xcel Energy also ranked second at a 2,500 publicly traded companies on Trust Across America’s 2011 list of Most Trustworthy Companies in the United States.

Another positive event occurred in late 2011 when the D.C. Circuit Court suspended the order on CSAPR. This is great news for our customers, particularly in Texas. The unexpected inclusion of Texas under CSAPR created significant issues for SPS. With limited options to comply by 2012, our plan was to alter the dispatching of our plants in Texas by simultaneously reducing the energy output of our coal plants, while increasing the operation of our natural gas plants.

This stay allows us to defer the rules significant cost increases and potential reliability problems, which would have affected our customers SPS. We are hopeful that the court’s decision on the merits of the rule expected later this year, will enable us to comply in a more reasonable, cost effective manner.

Our five-year capital forecast includes about $470 million for CSAPR. While it’s possible the timing and the total investment may change, we don’t plan to revise our forecast until there’s more clarity surrounding the court’s final determination on the rule.

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