Xcel CEO: Company has made ‘excellent progress’ on steel for fuel strategy

Xcel Energy (NYSE:XEL) has made “excellent progress” on its “steel for fuel” strategy, and has proposed adding nearly 3,400 MW of new wind to its systems by 2020, Xcel Chairman, President and CEO Ben Fowke said during the company’s 1Q17 earnings call on April 27.

“In addition, we plan to own more than 80% of this new wind generation,” he said.

He noted that Colorado regulators last year approved the company’s 600-MW Rush Creek wind project, which “is progressing as planned and is expected to go into service in 2018.”

In Minnesota, the company recently proposed adding 1,550 MW of new wind generation, reflecting ownership of 1,150 MW and power purchase agreements of 400 MW.

“We have requested that the Minnesota commission approve this proposal no later than July,” Fowke added.

Xcel also recently proposed adding 1,000 MW self-build wind and 230 MW of power purchase agreements in Texas and New Mexico, he said.

“We have requested that the commissions approve these projects and associated recovery mechanisms by the end of the year,” he said. “As a result of our safe harbor actions in 2016, we’re able to secure 100% of the production tax credit benefits and maximize savings for our customers. Based on current forecast, we estimate billions of dollars of savings over the life of these projects, which will offset the capital costs to the benefit of our customers. In addition to the financial benefits, we expect to continue our long trend of decarbonization and realize CO2 reductions of at least 45% by 2021.”

Also speaking on the call was Robert (Bob) Frenzel, executive vice president and CFO, who noted that in March, an administrative law judge recommended that Minnesota regulators approve the company’s settlement in its multi-year rate case in that state. Regulators are expected to deliberate in May and issue an order in June, he said, noting that the company has been collecting interim rates since January 2016.

As noted in a company document, Xcel asked the Minnesota Public Utilities Commission for a three-year increase in electricity rates – for 2016, the requested increase is for $194.6m; for 2017, the company requested an additional $52.1m; and for 2018, Xcel requested an additional $50.4m.

Frenzel said during the call that the company has several regulatory proceedings before regulators in Colorado.

“In our decoupling docket, hearings are complete and we expect a commission decision in the next month or so,” he said. “In our Advanced Grid certificate of need proceeding, we are in settlement discussions with several of the intervenors and have made significant progress. As a result, we’ll likely spread out the capital investment associated with Advanced Grid over a longer period of time to minimize the customer impact. Hearings are scheduled for May, [and] we expect a final decision in mid-2017.”

As noted on the company’s website, “Advanced Grid Intelligence and Security (Advanced Grid)” is a long-term strategic initiative that aims to improve power reliability, reduce power outages, make service smarter, integrate increasingly clean energy onto the grid, and empower customers with more information to control and track their energy use.

As TransmissionHub reported, Xcel’s Public Service Company of Colorado is requesting a certificate of public convenience and necessity from the Public Utilities Commission of Colorado for the implementation of the company’s proposed advanced metering infrastructure (AMI) and Integrated Volt-VAr Optimization (IVVO) programs, as well as the components of the communications network that are necessary to support AMI and IVVO. Those programs are part of a broader effort to advance the electric grid through Public Service’s Advanced Grid Intelligence and Security initiative, the company said in an August 2016 filing submitted to the commission.

Among other things, Frenzel noted during the call that New Mexico regulators recently dismissed the company’s rate case in that state, and that the company has filed for reconsideration. He also said that the company plans to file rate cases in Colorado and Wisconsin during 2Q17, and expects decisions in those cases by year-end, or early 2018.

Earnings report

Xcel on April 27 reported 1Q17 GAAP and ongoing earnings of $239m, or 47 cents per share, compared with $241m, or 47 cents per share, in the same period in 2016. 

Higher electric and natural gas margins to recover infrastructure investments, along with a lower effective tax rate were offset by higher depreciation and interest expenses, the company said.

About Corina Rivera-Linares 3286 Articles
Corina Rivera-Linares was TransmissionHub’s chief editor until August 2021, as well as part of the team that established TransmissionHub in 2011. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial from 2005 to 2011. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines.