Xcel Reports Higher Profits; Hearing Held Over City Utility
Xcel Energy, Inc., announced Thursday that its second-quarter profit and revenue were up, partly due to increased electric and natural gas margins stemming from widespread rate increases.
The Minneapolis-based company raised its interim rates by 9 percent at the start of this year in Colorado, Wisconsin, South Dakota, and Texas—and also implemented rate increases, which are subject to refund, in North Dakota and Minnesota.
Xcel said natural gas margins also improved due to the cooler weather, compared with the second quarter of last year.
The same day Xcel released its earnings report, the Minneapolis City Council held a public hearing to discuss the concept of forming a municipal utility, which would involve cutting ties with Xcel.
Although there is no vote planned for the meeting, it has been described as an important step toward adding a “municipalization” measure to the November ballot.
The council only has until August 16 to vote on whether the measure would be added to this year’s ballot. The city’s “franchise agreement” with Xcel, as well as its contract with Houston-based CenterPoint Energy, is set to expire at the end of 2014.
If the city does move forward with the proposal and take over the distribution of electric services, Xcel reportedly said it would move from its Nicollet Mall headquarters—in which it employs about 2,000 people.
Xcel President and CEO Ben Fowke said during a Thursday conference call that he doesn’t believe Minneapolis will choose a municipal utility over his company, according to the Star Tribune. “We have been a partner for 100 years,” he said. “I suspect we’ll be a partner in Minneapolis for another 100 years.”
There were about 150 people who participated in a rally in front of City Hall Thursday, organized by Minneapolis Energy Options, which supports placing the city-owned utility measure on the upcoming ballot, according to Minnesota Public Radio.
For Xcel’s second quarter, which ended June 30, the company announced net earnings of $196.9 million, or $0.40 per share, up 7.5 percent from $183.1 million, or $0.38 per share, during the same period in 2012. Earnings per share were $0.01 higher than what analysts polled by Thomson Reuters had expected.
Revenue, meanwhile, totaled $2.58 billion, up 13.4 percent from $2.27 billion in the second quarter of 2012. Second-quarter revenue was above analysts’ projections of $2.42 billion.
Earlier this month, a Minnesota administrative law judge found that Xcel’s request for a 10.7 percent electric rate hike was too high and recommended it be set at a 4.7 percent increase. The state Public Utilities Commission will ultimately set the new rates.
“Regarding developments in our Minnesota electric rate case, the administrative law judge’s recommendation provided for approximately $127 million in revenue, well below our request,” Fowke said in a statement Thursday.
“However, the [judge] also recommended approximately $34 million in additional cost deferrals. The additional deferrals combined with favorable weather and certain other items position Xcel Energy to deliver 2013 earnings within the guidance range of $1.85 to $1.95 per share,” added Fowke.
Even with the judge’s recommendation, Xcel customers in Minnesota would be paying more than they did last year, but less than they do now.