Xcel Energy Unveils $70B Plan, Mostly Renewables

Renewable energy will make up nearly three-fourths of the new generation in Xcel Energy's five-year, $70 billion capital plan, which the company unveiled on Thursday during its third-quarter earnings call. The plan is 17% larger than the earlier $60 billion version.

"These investments are critical to serve growing electric demand, to keep customer bills low, to deliver clean energy, and to ensure system safety and reliability," Chairman, President and CEO Bob Frenzel said. He added that Xcel believes its commitment to clean energy will attract additional data centers to its service territory.

It calls for 9.2 GW of renewable generation, 2.3 GW of energy storage and 3.3 GW of natural gas generation. Xcel expects the renewable part to cost about $21.7 billion. The plan also covers 2,400 miles of new transmission and $4 billion for wildfire mitigation.

Data centers and financing

About $7 billion of the plan is earmarked for data center projects that Xcel already has under contract. CEO Bob Frenzel said the company could spend another $10 billion on work not yet in the plan. That would cover more than 15 GW in pending utility requests for proposals, high-voltage transmission projects and the infrastructure needed for 4 GW of new data centers that Xcel expects to contract before the end of next year.

"We believe in responsible development. We believe that existing customers should not subsidize new large loads," Frenzel said.

To pay for the plan, Xcel will take on $26 billion in debt and issue $8 billion in equity, about 40% of which is already contracted, according to CFO Brian Van Abel.

Earnings and rate cases

Net income rose 83% in the third quarter to $960 million, up from $524 million a year earlier. Van Abel credited favorable weather, higher electric sales and this year's heavy rate case calendar.

In Minnesota, regulators approved a 2.9% annual rate increase in July, expected to bring in $211 million over two years. On Oct. 9, Xcel filed a rate stability plan that would freeze rates at that level in 2027 and 2028, as an alternative to the rate case due in 2027. In Colorado, a September decision approved a 1.7% annual increase worth $184 million. A final decision on a New Mexico rate case is expected by the end of this year.

Earlier this month Xcel also agreed to sell gas and electric assets in Michigan to Upper Peninsula Power Co. and SEMCO ENERGY Gas Co. The assets include 9,000 electric customers and 6,000 gas customers and are valued at $150 million. Van Abel said the sale should close by the end of 2027. The price is confidential.

Xcel cannot yet estimate its total liability for the 2024 Smokehouse Creek fire, which burned more than 1 million acres in the Texas Panhandle. Litigation brought by the Texas Attorney General's office is expected to continue into 2027. The company has settled 358 claims for $410 million, and 141 plaintiffs remain unresolved. According to the SEC filing, liabilities could exceed Xcel's $525 million insurance policy.

Source: Utility Dive