Xcel Energy Inc. (XEL) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A session highlight strong financial metrics, optimistic future guidance, and strategic partnerships, particularly with NextEra for data centers. The reaffirmed and initiated earnings guidance, along with a significant data center pipeline expansion, suggest robust future growth. However, some concerns about regulatory processes and ongoing lawsuits slightly temper enthusiasm. Overall, the positive elements outweigh the negatives, suggesting a positive stock price movement.
Key Financial Performance
GAAP earnings per share (EPS) $3.42 per share in 2025, reflecting a $300 million charge ($0.38 per share) due to the Marshall wildfire settlement.
Ongoing earnings per share (EPS) $3.80 per share in 2025, up from $3.50 per share in 2024, marking a year-over-year increase of $0.30 per share. The increase was driven by higher electric and natural gas revenues, nonfuel riders, and sales growth, partially offset by higher expenses such as interest charges, depreciation, and O&M costs.
Electric sales growth Full-year weather-adjusted electric sales increased by 2.2% in 2025, driven by increased commercial and industrial (C&I) load in SPS and PSCo.
O&M expenses Increased by $190 million in 2025 due to accelerated wildfire mitigation costs in Colorado, excess liability insurance costs, higher benefit costs, and increased generation maintenance expenses.
Capital investment Nearly $12 billion invested in 2025, the largest 1-year total for Xcel Energy, including projects like the Sherco solar project and Harrington coal plant conversion to natural gas.
Energy assistance programs Provided nearly $200 million in funding to assist nearly 200,000 customers in 2025, marking the highest 1-year total.
Wind repowering projects Completed 370 megawatts of wind repowering at Border and Pleasant Valley facilities, expecting $750 million in production tax credit (PTC) benefits, exceeding the investment made.
Customer satisfaction Ranked in the top quartile for the Midwest region by J.D. Power and achieved the second-highest score for customer satisfaction.
Economic development projects Initiated 15 projects in 2025, projected to create over $7 billion in capital investment and nearly 1,400 jobs.
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Operating Highlights
Sherco Solar Project: Phase 2 started commercial operation in 2025, with a third phase expected in 2026. Once complete, it will be the largest solar facility in the Upper Midwest.
Harrington Coal Plant Conversion: Completed conversion to natural gas, enhancing energy resiliency and reliability.
Rocky Mountain Solar Project: 325-megawatt solar farm in Colorado, the first utility-scale solar farm in the state.
Wind Repowering Projects: Completed 370 megawatts of wind repowering at Border and Pleasant Valley facilities, with $750 million in PTC benefits.
Data Center Expansion: Signed ESA with a large data center in the Upper Midwest, bringing total contracted capacity to over 2 gigawatts. Targeting 3 gigawatts by 2026 and 6 gigawatts by 2027.
Transmission Line Development: Awarded over 760 miles of new 765 kV transmission lines in SPP and MISO, including a second line in SPP worth $1.5 billion.
One Xcel Energy Way Program: Achieved $1.5 billion in cumulative savings since 2020, improving customer and operational outcomes.
Wildfire Mitigation: Accelerated system investments, including 8x pole inspections and 25% more pole replacements. Installed 250 Pano AI cameras and weather stations.
Winter Storm Preparedness: Executed cold weather procedures flawlessly during Winter Storm Firm, maintaining reliability and managing costs.
Partnership with NextEra Energy: Announced MOU to co-develop generation, storage, and interconnections for data center projects.
Strategic Alliance with GE Vernova: Formed alliance to support wind and natural gas generation, transmission, and grid modernization projects into the 2030s.
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Risk or Challenges
Wildfire Settlements: Xcel Energy recorded a $300 million charge in 2025 due to a settlement related to the Marshall wildfire. Additionally, the company has ongoing liabilities related to the Smokehouse Creek wildfire claims, with $430 million estimated liability and $382 million already committed in settlements. These wildfire-related costs and liabilities could impact financial stability and operational focus.
Operational Costs: Higher O&M expenses in 2025, including accelerated wildfire mitigation costs, excess liability insurance, and increased generation maintenance costs, decreased earnings by $0.25 per share. These rising operational costs could strain profitability.
Regulatory Risks: Xcel Energy faces regulatory uncertainties with pending rate cases in Colorado, New Mexico, and other states. Delays or unfavorable outcomes in these cases could impact revenue and financial performance.
Supply Chain and Infrastructure: The company is heavily reliant on strategic alliances and supply chain agreements to deliver on its capital and growth plans. Any disruptions in these partnerships or supply chain issues could delay critical infrastructure projects and impact customer service.
Extreme Weather Events: Xcel Energy has accelerated investments in weather-hardened infrastructure and wildfire mitigation. However, extreme weather events remain a significant risk to operational reliability and could lead to increased costs.
Debt and Financing: Higher interest charges and common equity financing to fund infrastructure investments decreased earnings by $0.46 per share in 2025. This reliance on debt and equity financing could pose financial risks if market conditions change.
Customer Affordability: Despite efforts to keep energy bills low, some customers still struggle to afford services. This could lead to increased pressure on energy assistance programs and impact customer satisfaction.
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Guidance & Outlook
Investment Plans: Xcel Energy plans to invest over $60 billion in the next five years to modernize and expand the grid, including advanced transmission and distribution infrastructure, new natural gas and renewable generation, and smart, weather-hardened infrastructure.
Renewable Energy Expansion: The company plans to add 7,000 megawatts of company-owned renewables, natural gas generation, and storage from 2026 to 2030. It has also safe-harbored equipment for approximately 20 gigawatts of renewable generation and storage to preserve tax credits.
Data Center Capacity: Xcel Energy aims to contract 3 gigawatts of data center capacity by the end of 2026 and 6 gigawatts by the end of 2027, with electricity sales and generation investments ramping into the 2030s.
Strategic Alliances: The company announced partnerships with NextEra Energy and GE Vernova to co-develop generation, storage, and interconnections for data centers and other projects, focusing on innovation, grid modernization, and cost affordability.
Transmission Line Development: Xcel Energy has been awarded over 760 miles of new 765 kV transmission lines in SPP and MISO for 2025 and 2026, with an additional $1.5 billion in investment opportunities.
Earnings Growth: The company reaffirmed its 2026 EPS guidance of $4.04 to $4.16 and expects to deliver 6% to 8% long-term earnings growth, with an average of 9% EPS growth through 2030.
Regulatory Approvals: Xcel Energy received approvals for wildfire mitigation and system resiliency plans in Colorado and Texas, with similar frameworks being developed in other states.
Capital Plan Updates: The updated 2026-2030 capital plan includes significant investments in renewable energy, natural gas generation, and storage to transition the fleet and support growth.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What are the upcoming filings in Colorado for the JTS and how do they tie into the large tariff filing?
A:The large load tariff in Colorado is planned to be filed early in Q2. Once the tariff is in place, large loads will be brought forward within that framework, along with a package of generation to serve those loads. The 6 gigawatts target by 2027 is contemplated across the system, with current focus on the Upper Midwest and opportunities in Texas and New Mexico.
Q:Does the $10 billion CapEx pipeline include the full range of potential capacity data center-driven needs in Colorado?
A:No, the $10 billion CapEx pipeline only includes the low end of the 5,000 to 14,000 gigawatts range of potential capacity data center-driven needs in Colorado. There is notable upside beyond the $10 billion.
Q:How should we think about the ramp to sales CAGR reaching 5% across service territories with data centers coming online?
A:The 5% sales CAGR was based on 3 gigawatts of data centers tied to the last Q3 update. With the update to 6 gigawatts, significant sales growth is expected, particularly in the later part of the 5-year period and into the 2030s. Contracts are expected to be signed by 2027, with construction and energizing occurring in the 2030s.
Q:What is the status of the Smokehouse Creek lawsuits and estimated losses?
A:Over 320 claims have been settled out of roughly 420 total claims and lawsuits. The low-end estimate of losses remains around $50 million, with $380 million of the $430 million already settled. There are about 100 outstanding claims, and progress has been made in settling the largest claims and with subrogation insurers.
Q:What are the roles of Xcel Energy and NextEra in developing data center projects?
A:Xcel Energy and NextEra will combine their sales, development, and analytical teams to deliver solutions for data center customers. The partnership aims to increase speed and execution certainty, leveraging both companies' expertise and resources. The arrangement is not exclusive and is focused on sustainability goals, with no fuel type limitations.
Q:What are the early views on elections in Minnesota and Colorado and their impact on rate cases?
A:In Colorado, energy and clean energy goals are expected to be critical in the elections, with a focus on affordability and state energy policy. In Minnesota, the gubernatorial cycle is not expected to significantly affect ongoing rate cases. Xcel Energy has proposed enhanced affordability measures in Colorado to address higher energy burdens.
Q:What is the impact of the updated data center pipeline on sales growth and capital investment?
A:The data center pipeline has doubled from 3 gigawatts to 6 gigawatts, providing significant sales growth opportunities, particularly post-2030. Capital investment to build generation for these data centers is expected in the later part of this decade, with updates to the capital plan expected in Q3.
Q:What is the status of the Colorado near-term RFPs and their timeline?
A:The Colorado commission has approved about 1 gigawatt of projects and requested additional analysis for a new portfolio, potentially including up to 1 gigawatt of company-owned solar plus storage. A third tranche may follow in the first half of the year. Any projects not picked up in the near-term procurement will shift to the overall resource plan.
Q:What is the regulatory process for ESAs in the Upper Midwest?
A:There will be a regulatory filing and commission approval process for ESAs in the Upper Midwest. Large-load tariff filings are being aligned with these ESAs to ensure benefit for current customers and manage risks.
Q:What is Xcel Energy's approach to 'bring your own generation' for data centers?
A:Xcel Energy focuses on bringing incremental generation to its networks to support new large loads, ensuring price protection for existing customers. While some developers may build their own generation, most data centers prefer utilities to own and operate generation for them.
Q:Is the 6 gigawatts data center target inclusive of Colorado opportunities?
A:The 6 gigawatts target is not specific to any region and includes opportunities across all service territories. Colorado opportunities are not explicitly included but are part of the overall pipeline.
Q:What is Xcel Energy's response to concerns about power shutoffs in Colorado?
A:Xcel Energy is committed to protecting communities from wildfire risks and has improved coordination, early warning, and restoration times. The company is investing in technology and working with local partners to minimize the impact of power shutoffs.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timeline and process for some regulatory approvals, such as the exact timing of tranche 3 in the Colorado near-term RFPs. Additionally, while they emphasized the importance of affordability and customer benefits, they did not provide detailed data or metrics to substantiate these claims in some instances.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Energy generation
Foundation
GE
Harrington
Minneapolis
NextEra
Sherco
Twin Cities
Upper Midwest
benefit Xcel
bill country
center capacity
charge share
community energy
country year
development
diversity
electricity
employee
engine
facility Upper
firm
gas generation
generation storage
gigawatts center
length
milestone
network
people
program
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reliability affordability
safety
segment
supply
sustainability
team
testament
transmission distribution
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XEL Transcript
Xcel Energy Inc. (XEL) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call summary and Q&A session highlight strong financial metrics, optimistic future guidance, and strategic partnerships, particularly with NextEra for data centers. The reaffirmed and initiated earnings guidance, along with a significant data center pipeline expansion, suggest robust future growth. However, some concerns about regulatory processes and ongoing lawsuits slightly temper enthusiasm. Overall, the positive elements outweigh the negatives, suggesting a positive stock price movement.
Xcel Energy Inc. (XEL) Q3 2025 Earnings Call Transcript
Positive10-30
The company shows strong growth prospects with a 9% growth rate including 2026, significant capital investments, and strategic planning to meet future demand. Despite increased O&M expenses, cost-saving programs and competitive pricing bolster financial health. Positive Q&A insights, such as strong growth in SPS and effective management of equipment availability, further support a positive sentiment. However, the lack of specific guidance on ROEs and potential CapEx drop in later years slightly tempers expectations. Overall, the company's proactive strategies and robust growth outlook suggest a positive stock price movement.
Xcel Energy Inc. (XEL) Q2 2025 Earnings Call Transcript
Positive7-31
The earnings call reflects a positive sentiment overall. The company has reaffirmed its earnings guidance and reported strong weather-normalized electric sales growth. Despite increased O&M expenses and depreciation, the company has a robust investment pipeline and data center contracts, indicating growth potential. The Q&A reveals confidence in CapEx plans and turbine procurement, with no major risks from federal land issues or the Marshall Fire trial. The company's approach to equity issuance and settlement handling shows strategic planning. The positive guidance and growth outlook suggest a likely stock price increase.
Xcel Energy, Inc. (XEL) Q1 2025 Earnings Call Transcript
Unknown4-24
The earnings call revealed several negative factors: a decrease in EPS, increased O&M expenses, and ongoing litigation risks related to wildfires. Despite positive electric sales growth and a large capital investment, the lack of specific shareholder return plans and the absence of guidance adjustments contribute to a negative outlook. The Q&A session did not provide reassuring insights, with management avoiding direct answers to critical questions. Without a market cap, the stock's reaction is uncertain, but the overall sentiment suggests a negative movement.
XEL Slides
XEL Report
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