Xcel Q2 2020

Xcel's second-quarter retail sales.

Despite pandemic impacts that have significantly depressed commercial and industrial sales, Xcel Energy of Minneapolis on July 30 reported net income of $287 million, or 54 cents per share, for the second quarter. The figures reflect an increase of $49 million or 8 cents per share compared with the same period in 2019.

Utility executives on a conference call said the increase is due in part to declining operations and maintenance costs, which helped offset pandemic-related revenue declines. O&M costs are expected to decrease an additional 4 to 5 percent through the remainder of the year.

But the impacts of the pandemic were reflected in persistent commercial and industrial sales decreases across its eight-state territory since April. Despite a modest uptick in residential usage, second-quarter sales were "significantly impacted" by the pandemic, "but better than assumed," the company said in its second-quarter investor presentation. Xcel reported a 3.2-percent increase in residential sales and a 13.7-percent decrease in C&I sales for April; a 5.1-percent increase in residential and a 10.6-percent decrease in C&I for May; and an 8.9-percent increase in residential sales and a 10-percent decrease in C&I sales for June. The company attributed the June increase to warming temperatures.

Xcel reported around $5.2 billion in liquidity, bolstered by the April sale of the 760-MW, natural gas-fired Mankato Energy Center to Denver-based Southwest Generation for $680 million (see CEM No. 1586). This gives the company more of a cushion should economic recovery fall through or the pandemic persist, Chief Financial Officer Brian Van Abel said on the call. 

"Despite lower sales due to COVID-19, Xcel Energy achieved strong second quarter results primarily due to the positive impact of weather and cost management efforts," CEO Ben Fowke said in a news release. The company reaffirmed its 2020 earnings guidance, but will "continue to monitor and manage through the economic uncertainty of this pandemic," he added.  

Fowke, who was recently elected chairman of the Edison Electric Institute, told investors on the call he would use this position to focus on pandemic recovery, clean-energy advancement, and increasing diversity and inclusion in the energy sector. He noted that George Floyd, whose death in police custody in May ignited a series of protests across the country, died only a few miles from Xcel's headquarters in Minneapolis.

In light of the pandemic, utility regulators in New Mexico issued an accounting order for pandemic-related expenses that benefits Xcel subsidiary Southwestern Public Service Co., which serves customers in the southeastern portion of that state and across the Texas border (see CEM No. 1596). The New Mexico Public Regulation Commission on May 20 also approved a revised rate increase filed by SPS of $31 million, based on a return on equity of 4.5 percent; the rates went into effect May 28 [19-00170-UT].

Xcel Subsidiary Public Service Company of Colorado, the largest investor-owned utility in that state, reported earnings per share of 21 cents, down 1 cent per share compared with the same quarter last year; SPS reported earnings per share of 14 cents, compared with 11 cents per share for the same quarter in 2019.

PSCo on July 30 reached a settlement with Colorado Public Utilities Commission staff for a net rate increase of $77 million for its natural gas operations, based on a return on equity of 9.2 percent. The settlement is still awaiting commission approval and would not take effect until April 2021 [20AL-0049G]. PSCo also filed at the Colorado PUC for cost recovery related to its proposed wildfire mitigation plan and investments in grid-infrastructure upgrades in place of a rate case [20A-0300E and 20AL-0301E].The commission is expected to make a decision on that filing in the second quarter of 2021, according to the presentation.

"I'm really proud of how the entire Xcel workforce has really stepped up to mitigate the impacts of COVID-19 while still providing this important product we deliver . . . I'm optimistic that—we've got to work through it—but a lot of this will give us a lot of momentum as we go into 2021," Fowke said during the call.

Aria covers California and the Southwest from Albuquerque. Her work has appeared in a variety of popular and academic publications.