Xcel Energy (XEL) Q3 2026 Earnings Call: Q&A Summary

Q: How should investors interpret the 10-plus percent EPS growth target for the 2027 to 2030 period given the 11% rate base CAGR?

A: Brian Van Abel explained that the company typically sees a 200 to 250 basis point delta between rate base growth and EPS growth. He noted that while the current 5-year plan is inside that rule of thumb, the 2026 to 2030 period might be outside it due to front-loaded equity financing, but the 6-year period from 2026 to 2031 remains in line.

Q: Will the 4 gigawatt NSP RFP lead to another plan revision soon?

A: Bob Frenzel stated that while this is an annual update, they have a robust pipeline and will provide updates as projects are identified, similar to their approach last year.

Q: What is the confidence level in signing 1 gigawatt of data center capacity by year-end and tracking toward the 3 gigawatt 2027 target?

A: Brian Van Abel confirmed they are in active negotiations with a large counterparty and feel good about the 4 gigawatt total through 2027, noting that these projects help extend growth and drive customer affordability.

Q: Has there been a shift in the NextEra JDA disclosure?

A: Brian Van Abel clarified that the change is simply a function of identifying more opportunities and working with additional developers, though they remain engaged with NextEra.

Q: What are your thoughts on productive CapEx in Colorado?

A: Brian Van Abel stated that all CapEx is productive, focusing on safety, reliability, and load growth. Bob Frenzel added that the steel-for-fuel program and large load customers help lower costs for all customers.

Q: Could you provide thoughts on the Michigan asset sale?

A: Brian Van Abel noted that the Michigan assets represent 0.2% of the overall company rate base and they expect the sale to close by the end of next year.

Q: Can you clarify the equity lag rule of thumb and the FFO to debt outlook?

A: Brian Van Abel reiterated that the rule of thumb is intact and noted that FFO to debt metrics are improving, giving them financial flexibility. He added that they have always targeted a 17% FFO to debt metric.

Q: How do data center sales tax exemptions and distribution-level data centers impact ROE lag?

A: Brian Van Abel noted that distribution-level opportunities are developing and they remain competitive across states due to geographic diversity and low-cost renewables.

Q: What is the quantum of potential upside CapEx and its impact on rate base growth?

A: Brian Van Abel stated that every $1 billion of CapEx adds 15 to 20 basis points to the rate base CAGR.

Q: What are the policy priorities for the next 12 months?

A: Bob Frenzel highlighted federal siting and permitting legislation, wildfire mitigation legislation in various states, and timely recovery for generation projects.

Q: What is the runway for SPS growth and visibility?

A: Bob Frenzel noted robust oil and gas growth and hyperscaler interest. Brian Van Abel added that SPS has an 8% sales growth CAGR over 5 years.

Q: Is there room for CCGT in the generation plan?

A: Bob Frenzel said they evaluate combined cycle, but currently, CTs make more sense due to depressed local gas prices.

Q: Can the Minnesota rate stability plan be replicated elsewhere?

A: Brian Van Abel said it is a creative use of clean energy tax credits and they will look at applying it in other jurisdictions.

Q: What is the growth outlook for PSCO?

A: Bob Frenzel noted real load growth and generation needs in Colorado, and Brian Van Abel emphasized the diversity of their business helps manage affordability.

Q: How should we think about the ratio of equity need for future CapEx increases?

A: Brian Van Abel said they target 40% equity for incremental capital, but longer-term, it may be less due to improved financial flexibility.

Q: What are the drivers of rising cash flow?

A: Brian Van Abel attributed it to long lead time projects going into service and the overall project development cycle, noting that cash from operations covers about 65% of their overall capital.

Q: What are the drivers of 2027 load acceleration?

A: Brian Van Abel stated it is primarily driven by SPS, including the annualization of oil and gas growth and data center energization.

Q: When do minimum bill payments begin for data center contracts?

A: Brian Van Abel said that payment obligations generally begin at energization.

Q: What are the drivers of the transmission CapEx increase?

A: Brian Van Abel attributed it to 765 kV projects, particularly in SPS and MISO.