Xcel Energy(XEL) - 2021 Q1 - Quarterly Report

Report Preamble This section details SEC filing information, the report's structure, key definitions, and forward-looking statement risks SEC Filing Information This document is Xcel Energy Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2021. The company is a large accelerated filer and has filed all required reports - Xcel Energy Inc. is filing its Quarterly Report on Form 10-Q for the period ended March 31, 2021[2] - The registrant is a large accelerated filer and has filed all required reports during the preceding 12 months[3][4] - As of April 22, 2021, there were 538,206,800 shares of Common Stock, $2.50 par value, outstanding[6] Table of Contents The table of contents outlines the structure of the 10-Q report, dividing it into Part I (Financial Information) and Part II (Other Information), detailing specific items and their corresponding page numbers within the report's internal numbering system - The report is structured into Part I: Financial Information and Part II: Other Information[7] - Part I includes Financial Statements, Management's Discussion and Analysis, Market Risk Disclosures, and Controls and Procedures[7] - Part II covers Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities, and Exhibits[7] Definitions and Forward-Looking Statements This section provides definitions of abbreviations used throughout the report, including company subsidiaries, regulatory agencies, and financial terms. It also includes a cautionary statement regarding forward-looking statements, highlighting various risks and uncertainties that could cause actual results to differ materially from projections - The report defines abbreviations for Xcel Energy Inc.'s subsidiaries (e.g., NSP Minnesota, PSCo, SPS), federal and state regulatory agencies (e.g., FERC, MPUC, CPUC), and financial/operational terms (e.g., AFUDC, EPS, GAAP)[9][10][11] - Forward-looking statements are subject to risks, uncertainties, and assumptions, and actual results may vary materially[12] - Key risk factors include the impacts of the COVID-19 pandemic, operational safety, commodity risks, regulatory changes, economic conditions, and climate change[12][13] PART I — FINANCIAL INFORMATION This section presents unaudited financial statements, management's discussion, market risk, and controls Item 1 — Financial Statements (unaudited) This section presents Xcel Energy Inc.'s unaudited consolidated financial statements for the three months ended March 31, 2021 and 2020, including statements of income, comprehensive income, cash flows, balance sheets, and common stockholders' equity, along with detailed notes explaining significant accounting policies, financial instruments, and commitments Consolidated Statements of Income Xcel Energy Inc. reported a significant increase in net income and diluted EPS for Q1 2021 compared to Q1 2020, driven by higher operating revenues, particularly in electric and natural gas segments, despite increased operating expenses | Metric | Three Months Ended March 31, 2021 (Millions) | Three Months Ended March 31, 2020 (Millions) | | :----- | :------------------------------------------- | :------------------------------------------- | | Electric Operating Revenues | $2,870 | $2,203 | | Natural Gas Operating Revenues | $647 | $583 | | Total Operating Revenues | $3,541 | $2,811 | | Electric Fuel and Purchased Power | $1,386 | $797 | | Total Operating Expenses | $3,034 | $2,356 | | Operating Income | $507 | $455 | | Net Income | $362 | $295 | | Diluted EPS | $0.67 | $0.56 | Consolidated Statements of Comprehensive Income Total comprehensive income increased in Q1 2021, primarily due to higher net income and a positive shift in other comprehensive income, moving from a loss in the prior year to a gain, mainly influenced by derivative instruments | Metric | Three Months Ended March 31, 2021 (Millions) | Three Months Ended March 31, 2020 (Millions) | | :----- | :------------------------------------------- | :------------------------------------------- | | Net Income | $362 | $295 | | Total Other Comprehensive Income (Loss) | $3 | $(7) | | Total Comprehensive Income | $365 | $288 | Consolidated Statements of Cash Flows Operating cash flow significantly decreased in Q1 2021, primarily due to the deferral of Winter Storm Uri costs. Investing cash flow saw a reduction in cash used, while financing cash flow substantially increased due to higher debt issuances | Metric | Three Months Ended March 31, 2021 (Millions) | Three Months Ended March 31, 2020 (Millions) | | :----- | :------------------------------------------- | :------------------------------------------- | | Net Cash (Used in) Provided by Operating Activities | $(136) | $669 | | Net Cash Used in Investing Activities | $(1,035) | $(1,606) | | Net Cash Provided by Financing Activities | $2,081 | $933 | | Net Change in Cash, Cash Equivalents and Restricted Cash | $910 | $(4) | | Cash, Cash Equivalents and Restricted Cash at End of Period | $1,039 | $244 | - The decrease in operating cash flow was primarily due to the deferral of net natural gas, fuel, and purchased energy costs related to Winter Storm Uri[265] - The increase in financing cash flow was primarily attributable to proceeds from issuances of short-term and long-term debt, partially offset by higher repayments of long-term debt[267] Consolidated Balance Sheets Total assets increased at March 31, 2021, driven by higher cash, property, plant and equipment, and regulatory assets. Total liabilities also rose, with notable increases in short-term and long-term debt | Metric | March 31, 2021 (Millions) | Dec. 31, 2020 (Millions) | | :----- | :------------------------ | :----------------------- | | Total Current Assets | $4,315 | $3,275 | | Property, Plant and Equipment, Net | $43,582 | $42,950 | | Total Other Assets | $8,614 | $7,732 | | Total Assets | $56,511 | $53,957 | | Total Current Liabilities | $4,877 | $4,239 | | Total Deferred Credits and Other Liabilities | $15,464 | $15,498 | | Long-Term Debt | $21,470 | $19,645 | | Total Common Stockholders' Equity | $14,700 | $14,575 | | Total Liabilities and Equity | $56,511 | $53,957 | Consolidated Statements of Common Stockholders' Equity Total common stockholders' equity increased in Q1 2021, primarily due to net income and other comprehensive income, partially offset by dividends declared | Metric | March 31, 2021 (Millions) | Dec. 31, 2020 (Millions) | | :----- | :------------------------ | :----------------------- | | Balance at Period End | $14,700 | $14,575 | | Net Income | $362 | $295 (from Dec 31, 2019 to Mar 31, 2020) | | Other Comprehensive Income (Loss) | $3 | $(7) (from Dec 31, 2019 to Mar 31, 2020) | | Dividends Declared on Common Stock | $(246) | $(227) (from Dec 31, 2019 to Mar 31, 2020) | | Shares Outstanding at Period End | 538,076,662 | 537,438,394 | Notes to Consolidated Financial Statements These notes provide detailed disclosures on Xcel Energy's accounting policies, recent pronouncements, balance sheet data, borrowings, revenues, income taxes, EPS, fair value measurements, benefit plans, commitments, and segment information, offering crucial context to the unaudited financial statements 1. Summary of Significant Accounting Policies This section states that significant accounting policies are consistent with those in the 2020 Annual Report on Form 10-K - Significant accounting policies are consistent with those outlined in the Xcel Energy Inc. Annual Report on Form 10-K for the year ended Dec. 31, 2020, and are incorporated by reference[29] 2. Accounting Pronouncements Xcel Energy adopted ASC Topic 326 on January 1, 2020, with a minor impact on financial statements - Xcel Energy adopted ASC Topic 326 (Financial Instruments - Credit Losses) on January 1, 2020, recognizing a cumulative effect charge of $2 million (after tax) to retained earnings[30][31] - The adoption did not have a significant impact on Xcel Energy's consolidated financial statements, other than the first-time recognition of an allowance for bad debts on accrued unbilled revenues[31][35] 3. Selected Balance Sheet Data This section provides detailed breakdowns of inventories, property, plant and equipment, and accounts receivable | Metric | March 31, 2021 (Millions) | Dec. 31, 2020 (Millions) | | :----- | :------------------------ | :----------------------- | | Total Inventories | $469 | $535 | | Electric Plant | $48,008 | $47,104 | | Natural Gas Plant | $7,218 | $7,135 | | Total Property, Plant and Equipment, Net | $43,582 | $42,950 | | Metric | March 31, 2021 (Millions) | Dec. 31, 2020 (Millions) | | :----- | :------------------------ | :----------------------- | | Accounts Receivable, Net | $959 | $916 | | Less Allowance for Bad Debts | $(86) | $(79) | 4. Borrowings and Other Financing Instruments This section details Xcel Energy's borrowing limits, outstanding amounts, credit facilities, and debt issuances | Metric | Three Months Ended March 31, 2021 (Millions) | Year Ended Dec. 31, 2020 (Millions) | | :----- | :------------------------------------------- | :---------------------------------- | | Borrowing limit | $4,300 | $3,100 | | Amount outstanding at period end | $1,477 | $584 | | Weighted average interest rate at period end | 0.73% | 0.23% | | Credit Facility (Millions) | Credit Facility | Drawn | Available | | :------------------------- | :-------------- | :---- | :-------- | | Xcel Energy Inc. | $1,250 | $277 | $973 | | PSCo | $700 | $8 | $692 | | NSP-Minnesota | $500 | $10 | $490 | | SPS | $500 | $2 | $498 | | NSP-Wisconsin | $150 | $0 | $150 | | Total | $3,100 | $297 | $2,803 | - In February 2021, Xcel Energy Inc. entered into a $1.2 billion 364-Day Term Loan Agreement maturing Feb. 17, 2022[39] - During Q1 2021, PSCo, SPS, and NSP-Minnesota issued a total of $1,821 million in first mortgage bonds[43] - Xcel Energy Inc. issued $13 million of equity through its Dividend Reinvestment and Stock Purchase Program (DRIP) during Q1 2021[41] 5. Revenues This section provides a breakdown of Xcel Energy's electric and natural gas revenues by customer type | Revenue Type (Millions) | Q1 2021 | Q1 2020 | | :---------------------- | :------ | :------ | | Electric Residential | $733 | $676 | | Electric C&I | $1,033 | $1,066 | | Electric Wholesale | $743 | $166 | | Natural Gas Residential | $384 | $355 | | Natural Gas C&I | $187 | $180 | | Total Revenues | $3,541 | $2,811 | 6. Income Taxes This section details Xcel Energy's effective income tax rates and potential changes in unrecognized tax benefits | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :----- | :-------------------------------- | :-------------------------------- | | Federal Statutory Rate | 21.0% | 21.0% | | State Tax (net of federal tax effect) | 4.9% | 4.9% | | Wind PTCs | (24.6)% | (17.2)% | | Effective Income Tax Rate | (6.5)% | (2.1)% | - It is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $27 million in the next 12 months[48] 7. Earnings Per Share This section presents basic and diluted common shares outstanding and their impact on earnings per share | Metric (Shares in Millions) | 2021 | 2020 | | :-------------------------- | :--- | :--- | | Basic Common Shares Outstanding | 538 | 526 | | Diluted Common Shares Outstanding | 539 | 527 | - Diluted common shares outstanding included common stock equivalents of 0.2 million and 0.8 million for the three months ended March 31, 2021 and 2020, respectively[55] 8. Fair Value of Financial Assets and Liabilities This section outlines the fair value hierarchy for financial instruments, including nuclear decommissioning funds and long-term debt - Fair value measurements are categorized into a hierarchical framework: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (significant unobservable inputs)[66] | Nuclear Decommissioning Fund (Millions) | March 31, 2021 Fair Value | Dec. 31, 2020 Fair Value | | :-------------------------------------- | :------------------------ | :----------------------- | | Cash equivalents | $32 | $40 | | Commingled funds (NAV) | $1,052 | $1,041 | | Debt securities | $586 | $585 | | Equity securities | $1,155 | $1,111 | | Total | $2,825 | $2,777 | | Long-Term Debt (Millions) | March 31, 2021 Carrying Amount | March 31, 2021 Fair Value | Dec. 31, 2020 Carrying Amount | Dec. 31, 2020 Fair Value | | :------------------------ | :----------------------------- | :------------------------ | :---------------------------- | :----------------------- | | Long-term debt, including current portion | $21,491 | $23,654 | $20,066 | $24,412 | - As of March 31, 2021, accumulated other comprehensive loss related to settled interest rate derivatives included $6 million of net losses expected to be reclassified into earnings during the next 12 months[75] - Derivative liabilities with credit-related contingent features totaled $4 million at March 31, 2021, and those with cross default provisions were approximately $59 million[87] 9. Benefit Plans and Other Postretirement Benefits This section details Xcel Energy's net periodic benefit costs for pension and postretirement health care plans | Metric (Millions) | Q1 2021 Pension Benefits | Q1 2020 Pension Benefits | Q1 2021 Postretirement Health Care Benefits | Q1 2020 Postretirement Health Care Benefits | | :---------------- | :----------------------- | :----------------------- | :---------------------------------------- | :---------------------------------------- | | Service cost | $26 | $24 | $0 | $0 | | Interest cost | $26 | $31 | $4 | $5 | | Expected return on plan assets | $(52) | $(52) | $(4) | $(5) | | Net periodic benefit cost (credit) | $27 | $27 | $(1) | $(1) | | Net benefit cost recognized for financial reporting | $26 | $29 | $0 | $0 | - In January 2021, $125 million in contributions were made across four of Xcel Energy's pension plans, with no additional pension contributions expected during 2021[93] 10. Commitments and Contingencies This section covers legal settlements, regulatory rulings on ROE, environmental compliance, lease obligations, and guarantees - A settlement of approximately $3 million was reached in February 2021 for the Breckenridge/Colorado gas trading litigation, awaiting court approval[98] - The FERC issued Opinion No. 569-B, setting the MISO base ROE at 10.02% effective Sept. 28, 2016, and denying refunds for the second complaint period; each 10 basis point ROE reduction would reduce net income by $1-2 million[109][110] - The EPA's final rule requires Xcel Energy to expedite closure plans for two CCR impoundments, with NSP-Minnesota initiating closure activities for an existing ash pond at an estimated cost of $4 million[123][124] | Lease Type (Millions) | Total Minimum Obligation | Interest Component of Obligation | Present Value of Minimum Obligation | Noncurrent Liabilities | | :-------------------- | :----------------------- | :------------------------------- | :---------------------------------- | :--------------------- | | PPA Operating Leases | $1,592 | $(248) | $1,344 | N/A | | Other Operating Leases | $201 | $(37) | $164 | N/A | | Total Operating Leases | $1,793 | $(285) | $1,508 | $1,287 | | Finance Leases | $253 | $(178) | $75 | $71 | - Xcel Energy's utility subsidiaries had approximately 4,062 MW of capacity under long-term PPAs with Variable Interest Entities (VIEs) at March 31, 2021[128] - Guarantees and bond indemnities issued and outstanding for Xcel Energy were approximately $60 million at March 31, 2021[132] 11. Other Comprehensive Income (Loss) This section presents the accumulated other comprehensive loss and net current period other comprehensive income | Metric (Millions) | March 31, 2021 | Jan. 1, 2021 | | :---------------- | :------------- | :----------- | | Accumulated Other Comprehensive Loss | $(138) | $(141) | | Net Current Period Other Comprehensive Income (Loss) | $3 | N/A | 12. Segment Information This section provides a breakdown of total revenues and net income (loss) by regulated electric, natural gas, and other segments | Segment (Millions) | Q1 2021 Total Revenues | Q1 2021 Net Income (Loss) | Q1 2020 Total Revenues | Q1 2020 Net Income (Loss) | | :----------------- | :--------------------- | :------------------------ | :--------------------- | :------------------------ | | Regulated Electric | $2,870 | $269 | $2,203 | $227 | | Regulated Natural Gas | $647 | $118 | $583 | $91 | | All Other | $24 | $(25) | $25 | $(23) | | Consolidated Total | $3,541 | $362 | $2,811 | $295 | Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Xcel Energy's financial performance, condition, and cash flows for Q1 2021. It details the impact of weather, sales trends, changes in electric and natural gas margins, operating expenses, and the effects of significant events like Winter Storm Uri and the COVID-19 pandemic. It also covers regulatory updates, risk management strategies, liquidity, capital resources, and future earnings guidance Non-GAAP Financial Measures Xcel Energy utilizes non-GAAP financial measures such as electric margin, natural gas margin, ongoing earnings, and ongoing diluted EPS to supplement GAAP results, providing a clearer view of core performance for internal analysis and investor communication. For Q1 2021 and 2020, GAAP earnings were equivalent to ongoing earnings - Electric margin is defined as electric revenues less electric fuel and purchased power expenses, while natural gas margin is natural gas revenues less the cost of natural gas sold and transported[146] - Ongoing earnings and ongoing diluted EPS adjust GAAP earnings for certain non-recurring or infrequent items to evaluate core performance[147][148] - For the three months ended March 31, 2021 and 2020, GAAP earnings equaled ongoing earnings, as no adjustments were made[149] Results of Operations Xcel Energy's diluted EPS increased by $0.11 in Q1 2021, primarily driven by higher electric and natural gas margins, which offset increased depreciation, interest charges, and lower AFUDC. PSCo, NSP-Minnesota, and SPS all contributed positively to this earnings growth | Subsidiary | Q1 2021 Diluted EPS | Q1 2020 Diluted EPS | | :--------- | :------------------ | :------------------ | | PSCo | $0.31 | $0.24 | | NSP-Minnesota | $0.24 | $0.20 | | SPS | $0.11 | $0.08 | | NSP-Wisconsin | $0.06 | $0.06 | | Equity earnings of unconsolidated subsidiaries | $0.01 | $0.01 | | Regulated utility | $0.73 | $0.60 | | Xcel Energy Inc. and Other | $(0.06) | $(0.04) | | Total | $0.67 | $0.56 | | Components of Change - 2021 vs. 2020 | Diluted EPS Impact | | :----------------------------------- | :----------------- | | Higher electric margin | $0.11 | | Higher natural gas margins | $0.07 | | Lower ETR | $0.06 | | Higher other income (expense), net | $0.02 | | Higher depreciation and amortization | $(0.08) | | Lower AFUDC | $(0.02) | | Higher interest charges | $(0.01) | | Higher O&M | $(0.01) | | Other, net | $(0.03) | | GAAP and ongoing diluted EPS - 2021 | $0.67 | Statement of Income Analysis Q1 2021 saw a positive EPS impact from weather due to higher Heating Degree Days. While overall retail electric sales declined, residential sales increased, and natural gas sales grew. Electric and natural gas margins both improved, driven by regulatory outcomes and non-fuel riders. Operating expenses increased, particularly depreciation and amortization due to new assets and rate changes | Metric | 2021 vs. Normal | 2020 vs. Normal | 2021 vs. 2020 | | :----- | :-------------- | :-------------- | :------------ | | HDD | 1.3% | (5.5)% | 6.5% | | Weather Impact on EPS (Millions) | 2021 vs. Normal | 2020 vs. Normal | 2021 vs. 2020 | | :------------------------------- | :-------------- | :-------------- | :------------ | | Retail electric | $0.00 | $(0.011) | $0.011 | | Decoupling and sales true-up | $0.002 | $0.006 | $(0.004) | | Electric total | $0.002 | $(0.005) | $0.007 | | Firm natural gas | $0.003 | $(0.007) | $0.010 | | Total | $0.005 | $(0.012) | $0.017 | | Sales Growth (Decline) - Q1 2021 vs. Q1 2020 | PSCo | NSP-Minnesota | SPS | NSP-Wisconsin | Xcel Energy | | :------------------------------------------- | :--- | :------------ | :-- | :------------ | :---------- | | Actual Electric Residential | 6.3% | 5.1% | 8.8% | 4.7% | 6.0% | | Actual Electric C&I | (4.8)% | (6.6)% | (7.1)% | (1.8)% | (5.8)% | | Total Retail Electric Sales | (1.0)% | (2.9)% | (4.3)% | 0.2% | (2.4)% | | Firm Natural Gas Sales | 4.7% | 0.5% | N/A | 0.8% | 3.1% | | Electric Margin (Millions) | Q1 2021 | Q1 2020 | Change | | :------------------------- | :------ | :------ | :----- | | Electric revenues | $2,870 | $2,203 | $667 | | Electric fuel and purchased power | $(1,386) | $(797) | $(589) | | Electric margin | $1,484 | $1,406 | $78 | | Natural Gas Margin (Millions) | Q1 2021 | Q1 2020 | Change | | :---------------------------- | :------ | :------ | :----- | | Natural gas revenues | $647 | $583 | $64 | | Cost of natural gas sold and transported | $(299) | $(285) | $(14) | | Natural gas margin | $348 | $298 | $50 | - O&M expenses increased by $5 million (0.9%) due to new wind farms, software/infrastructure costs, compensation, and storm-related expenses[167] - Depreciation and amortization increased by $58 million (12.5%) due to new wind farms going into service and new depreciation rates in Colorado, New Mexico, and Texas[168] - AFUDC decreased by $14 million due to various wind projects being placed into service[169] - Interest charges increased by $6 million (3.0%) due to higher debt levels, partially offset by lower interest rates[170] - Income tax benefit increased by $16 million, primarily driven by an increase in wind Production Tax Credits (PTCs) due to additional wind facilities going into service[171] Other Winter Storm Uri in February 2021 led to approximately $965 million in net natural gas, fuel, and purchased energy costs, largely deferred as regulatory assets, with Xcel Energy mitigating customer impact by $190 million. The COVID-19 pandemic continues to affect sales patterns and bad debt, with regulatory deferrals approved for incremental costs in several jurisdictions - Winter Storm Uri resulted in approximately $965 million in net natural gas, fuel, and purchased energy costs, largely deferred as regulatory assets[175] - Xcel Energy mitigated customer impact by approximately $190 million, primarily through sales of excess generation[175] - Higher market prices during Winter Storm Uri resulted in $27 million of net gains (after customer sharing) related to proprietary commodity trading[175] - Utility subsidiaries are proposing to recover Winter Storm Uri cost increases over a period of up to two years with no associated financing costs to mitigate customer bill impacts[177] - COVID-19 has led to higher residential sales and lower C&I sales, with decoupling and sales true-up mechanisms in Minnesota and Colorado mitigating some impacts[180] - Several commissions have approved the deferral of incremental COVID-19 related costs, including bad debt expense, as regulatory assets[182][183] Public Utility Regulation Xcel Energy's utility subsidiaries are subject to extensive rate regulation, with ongoing rate cases and rider filings across various states. Key regulatory developments include NSP-Minnesota's resource plan for carbon reduction, PSCo's wildfire protection and electric resource plans, and SPS's pending electric rate cases in New Mexico and Texas, all aiming to recover investments and manage costs through approved rates - NSP-Minnesota's 2020 Minnesota Electric Rate Case was withdrawn in favor of a stay-out alternative, which includes extending true-up mechanisms, delaying nuclear decommissioning accrual, not seeking COVID-19 cost recovery, and an earnings test[190][191][192] - NSP-Minnesota is requesting a $19 million annual retail electric revenue increase in North Dakota, with interim rates of $13 million implemented[195] - NSP-Minnesota's Minnesota resource plan aims for an 80% carbon reduction by 2030 and 100% carbon-free by 2050, including early retirement of coal plants, extending nuclear plant life, and adding 3,500 MW of solar and 2,250 MW of wind[199][210] - PSCo's Wildfire Protection Rider was approved for the mitigation program, but the rider request was denied in favor of deferred accounting with future rate case recovery[207] - PSCo's 2021 Electric Resource Plan proposes early retirement of Comanche Unit 3 (2040), Hayden Units 1 & 2 (2028, 2027), conversion of Pawnee to natural gas (2028), and adding 2,300 MW wind, 1,600 MW large-scale solar, 400 MW energy storage, and 1,300 MW flexible dispatchable resources[219][226] - SPS filed for an $88 million electric rate increase in New Mexico and a $143 million increase in Texas, both with offsetting fuel cost reductions and PTCs from the Sagamore wind project[225][232] - The D.C. Circuit vacated and remanded the EPA's Affordable Clean Energy rule, potentially allowing alternate regulation of coal-fired power plants, with expected cost recovery through rates for any new investments[237] Environmental This section discusses the regulatory landscape for environmental matters, specifically the vacating and remanding of the EPA's Affordable Clean Energy rule. Xcel Energy anticipates that any new rules requiring additional investment for greenhouse gas reductions from coal-fired power plants would be recoverable through rates - The U.S. Court of Appeals for the D.C. Circuit vacated and remanded the EPA's Affordable Clean Energy rule, which required states to develop plans for greenhouse gas reductions from coal-fired power plants[237] - If new rules require additional investment, Xcel Energy believes the cost of these initiatives or replacement generation would be recoverable through rates[237] Derivatives, Risk Management and Market Risk Xcel Energy manages commodity price and interest rate risks through physical contracts and financial derivatives. The company's Value at Risk (VaR) for commodity trading spiked to $52 million during Winter Storm Uri. Nuclear fuel supply from Russia is a monitored risk, and credit risk is managed through counterparty reviews and credit enhancements - Xcel Energy manages commodity price risk through physical purchase/sales contracts and financial derivative instruments, adhering to commission-approved hedge plans[241] - The Value at Risk (VaR) for commodity trading operations reached a high of $52 million on Feb 17, 2021, during Winter Storm Uri, compared to $1 million before and after the event[249][250] - A 10% increase in market prices for commodity trading contracts would increase pre-tax income by approximately $14 million, while a 10% decrease would decrease it by $13 million[247] - A 100-basis-point change in the benchmark rate on Xcel Energy's variable rate debt would impact pre-tax interest expense annually by approximately $15 million[252] - NSP-Minnesota has contracted for approximately 11% of its 2021 and 28% of its long-term (through 2030) enriched nuclear material requirements from sources potentially impacted by sanctions against entities doing business with Iran[251] - Fluctuations in equity prices or interest rates affecting the nuclear decommissioning fund do not have a direct impact on earnings due to regulatory accounting[255] Liquidity and Capital Resources Operating cash flow decreased significantly in Q1 2021 due to Winter Storm Uri cost deferrals, while financing cash flow increased substantially from higher debt issuances. Xcel Energy maintains strong liquidity, with $3,590 million available as of April 26, 2021, and plans to meet future capital needs through a mix of debt and equity issuances | Cash Flow Activity (Millions) | Q1 2021 | Q1 2020 | Change (2021 vs 2020) | | :---------------------------- | :------ | :------ | :-------------------- | | Operating Activities | $(136) | $669 | $(805) | | Investing Activities | $(1,035) | $(1,606) | $571 | | Financing Activities | $2,081 | $933 | $1,148 | - The decrease in operating cash flow was primarily due to the deferral of net natural gas, fuel, and purchased energy costs related to Winter Storm Uri[265] - The increase in financing cash flow was primarily attributable to proceeds from issuances of short-term and long-term debt, partially offset by higher repayments of long-term debt[267] - Xcel Energy plans to issue approximately $75 to $80 million of equity through the DRIP and benefit programs in 2021[276] | Available Liquidity (Millions) as of April 26, 2021 | Credit Facility | Drawn | Available | Cash | Total Liquidity | | :------------------------------------------------ | :-------------- | :---- | :-------- | :--- | :-------------- | | Xcel Energy Inc. | $1,250 | $200 | $1,050 | $3 | $1,053 | | PSCo | $700 | $8 | $692 | $144 | $836 | | NSP-Minnesota | $500 | $10 | $490 | $518 | $1,008 | | SPS | $500 | $2 | $498 | $43 | $541 | | NSP-Wisconsin | $150 | $0 | $150 | $2 | $152 | | Total | $3,100 | $220 | $2,880 | $710 | $3,590 | - Xcel Energy does not have any material off-balance-sheet arrangements other than those currently disclosed[277] Earnings Guidance and Long-Term EPS and Dividend Growth Rate Objectives Xcel Energy's 2021 earnings guidance is set at $2.90 to $3.00 per share. The company aims for long-term annual EPS growth of 5% to 7% and similar dividend increases, targeting a dividend payout ratio of 60% to 70% while maintaining strong credit ratings - Xcel Energy's 2021 GAAP and ongoing earnings guidance is a range of $2.90 to $3.00 per share[279] - Long-term objectives include annual EPS growth of 5% to 7% (based off a 2020 base of $2.78 per share) and annual dividend increases of 5% to 7%[288] - The company targets a dividend payout ratio of 60% to 70% and aims to maintain senior secured debt credit ratings in the A range[288] Item 3 — Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to the market risk disclosures previously provided in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - There have been no material changes to the market risk disclosure included in the Annual Report on Form 10-K for the year ended Dec. 31, 2020[280] Item 4 — Controls and Procedures As of March 31, 2021, Xcel Energy's disclosure controls and procedures were deemed effective, and no material changes occurred in internal control over financial reporting during the most recent fiscal quarter - As of March 31, 2021, Xcel Energy's disclosure controls and procedures were effective[282] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, Xcel Energy's internal control over financial reporting[283] PART II — OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and exhibits Item 1 — Legal Proceedings Xcel Energy is involved in various ordinary course legal proceedings. While management accrues for probable and estimable losses, the timing and ultimate resolution of certain matters, especially those in early stages or involving novel legal theories, remain uncertain. No current proceedings are anticipated to have a material effect on the consolidated financial statements beyond what is already reported - Management maintains accruals for losses probable of being incurred and subject to reasonable estimation in various litigation matters[284] - For current proceedings not specifically reported, management does not anticipate that the ultimate liabilities, if any, would have a material effect on Xcel Energy's consolidated financial statements[285] Item 1A — Risk Factors This section confirms that there have been no material changes to the risk factors previously disclosed in Xcel Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 - There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended Dec. 31, 2020[287] Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds During March 2021, Xcel Energy Inc. purchased 4,399 common shares at an average price of $58.59 per share to fulfill obligations under its Stock Equivalent Plan for Non-Employee Directors | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----- | :------------------------------- | :--------------------------- | | March 1, 2021 - March 31, 2021 | 4,399 | $58.59 | - The purchases were made to satisfy obligations under the Stock Equivalent Plan for Non-Employee Directors[289] Item 6 — Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, supplemental indentures for debt issuances, a term loan agreement, and Sarbanes-Oxley Act certifications - Exhibits include amended articles of incorporation, bylaws, supplemental trust indentures for bond issuances, a term loan agreement, and certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[290] SIGNATURES The report is officially signed on behalf of Xcel Energy Inc. by its Senior Vice President, Controller (Principal Accounting Officer) and Executive Vice President, Chief Financial Officer (Principal Financial Officer) on April 29, 2021 - The report was signed by Jeffrey S. Savage, Senior Vice President, Controller (Principal Accounting Officer), and Brian J. Van Abel, Executive Vice President, Chief Financial Officer (Principal Financial Officer), on April 29, 2021[293]