Public Service Company of Colorado (PSCo), a wholly owned subsidiary of Xcel Energy Inc (NASDAQ:XEL)., has filed an electric resource plan with the Colorado Public Utilities Commission (CPUC), as disclosed in a recent 8-K filing. The plan, referred to as the Just Transition Solicitation, was submitted on Tuesday and outlines anticipated system growth, necessary generation resources, and the evaluation process for new generation bids.
The plan forecasts a base scenario with a 7% compound annual sales growth through 2031, and an alternative scenario with a 3% growth. It indicates a need for 5-14 gigawatts (GW) of new generation capacity over the same period, including renewable energy sources and dispatchable resources. The specific mix of resources, such as wind, solar, natural gas, and storage, will be determined after a competitive solicitation process.
In addition to the resource plan, PSCo is seeking a natural gas rate increase of $171 million, or 9.5%, based on a 10.25% return on equity and a $4.2 billion retail rate base. The CPUC has concluded its deliberations on the rate case, resulting in several key decisions, including the use of a historic test year, a weighted-average cost of capital at 7.0%, and the denial of PSCo’s decoupling proposal. The preliminary estimate indicates an annual revenue increase of about $135 million, which includes $15 million of accelerated depreciation for future decommissioning costs. A written CPUC decision is expected before the new rates take effect in November 2024.
Xcel Energy has reaffirmed its 2024 earnings guidance of $3.50 to $3.60 per share, assuming constructive regulatory outcomes. The company cautions that forward-looking statements in the filing are subject to risks and uncertainties, and actual results may differ. Factors that could affect outcomes include operational safety, commodity risks, economic conditions, availability of capital, and regulatory changes, among others.
In other recent news, Xcel Energy's subsidiary, Public Service Company of Colorado, has filed a growth-oriented electric resource plan with the Colorado Public Utilities Commission. The plan anticipates an annual sales growth of 7% in its base scenario and 3% in a low-growth scenario, necessitating 5-14 GW of new generation capacity.
Additionally, Xcel Energy reported an earnings per share of $0.54 and a substantial $1.7 billion investment in energy infrastructure, reaffirming its 2024 earnings guidance of $3.50 to $3.60 per share.
Xcel Energy has also been the center of analyst attention. Mizuho Securities maintained an Outperform rating on the company, with a price target of $70.00. Meanwhile, Jefferies initiated a Hold rating on Xcel Energy, setting the same price target. Argus upgraded its rating from Hold to Buy, citing the stock's favorable trading position.
Todd Wehner was recently appointed as the new treasurer and vice president, bringing extensive experience in financial management, treasury operations, and investment banking to Xcel Energy. The company is managing the aftermath of the Smokehouse Creek wildfire, having settled 43 out of 141 claims.
InvestingPro Insights
Xcel Energy's recent filing aligns with several key metrics and trends highlighted by InvestingPro. The company's commitment to dividend growth is evident, with InvestingPro Tips noting that Xcel has raised its dividend for 20 consecutive years and maintained payments for 53 years. This consistent dividend policy supports the company's attractiveness to income-focused investors, especially in light of its current dividend yield of 3.42%.
The company's reaffirmed earnings guidance for 2024 is reflected in InvestingPro's data, which shows a P/E ratio of 17.57 based on the last twelve months as of Q2 2024. This valuation metric, combined with the InvestingPro Tip that Xcel is "trading at a high P/E ratio relative to near-term earnings growth," suggests that investors are pricing in the company's growth prospects, including the anticipated system growth outlined in the electric resource plan.
Xcel's strong recent performance is also noteworthy, with InvestingPro data showing a 16.72% price total return over the past three months. This aligns with the InvestingPro Tip indicating a "strong return over the last three months" and that the stock is "trading near 52-week high." These metrics reflect investor confidence in Xcel's strategic initiatives and regulatory outcomes.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Xcel Energy, providing deeper insights into the company's financial health and market position.
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