Xcel Energy Q2 Earnings Call Highlights

Key Points

• Second-quarter earnings rose to $0.93 per share from $0.75 a year earlier, driven by higher electric revenue, AFUDC and lower depreciation. Xcel reaffirmed its 2026 EPS guidance of $4.04–$4.16 and expects average annual EPS growth above 9% through 2030.
• Xcel invested more than $6 billion year to date in generation, transmission and distribution infrastructure, with over $10 billion in additional investment opportunities identified beyond its base plan. Its pipeline includes nearly 13 gigawatts of renewable generation and storage, more than 3 gigawatts of natural-gas generation and nearly 2,000 miles of transmission.
• Data-center demand is becoming a major growth driver, with more than 20 gigawatts in the high-probability pipeline and 4 gigawatts of additional load expected by the end of 2027. Xcel is introducing large-load tariffs to ensure these customers cover their share of generation and interconnection costs, while continuing regulatory and wildfire-mitigation efforts.

Xcel Energy NASDAQ: XEL reported second-quarter 2026 earnings of $0.93 per share, up from $0.75 per share a year earlier, as higher electric revenues, allowance for funds used during construction (AFUDC), and lower depreciation and amortization more than offset increased financing costs.

The utility reaffirmed its 2026 ongoing earnings guidance of $4.04 to $4.16 per share and said it remains confident in delivering long-term earnings growth of 6% to 8% or more. The company also said it expects average EPS growth of more than 9% through 2030, supported by a growing pipeline of investment opportunities beyond its base capital plan.

Infrastructure investment and generation pipeline

Chairman, President and Chief Executive Officer Bob Frenzel said Xcel invested $3 billion during the second quarter and more than $6 billion year to date in generation, transmission and distribution infrastructure across its eight-state service territory.

During the quarter, the company placed Group 2 of Colorado’s Power Pathway transmission project into commercial operation, began construction on a 150-mile, 345-kilovolt transmission project in the Upper Midwest, and completed Phase III of the Sherco Solar facility. The latter brought Sherco Solar’s total capacity to 710 megawatts, which Frenzel said makes it one of the country’s largest utility-scale solar facilities.

Xcel also highlighted an independent monitor’s report related to its SPS competitive request for proposals in Texas and New Mexico. The company was selected to provide 2,400 megawatts of renewable generation and 200 megawatts of natural gas-fired generation, representing about 70% of the recommended portfolio and approximately $6 billion in potential investment.

Chief Financial Officer Brian Van Abel said the company now has line of sight to more than $10 billion in investments beyond its base plan, though some of those opportunities are expected to extend into the early 2030s. The company’s five-year portfolio includes nearly 13 gigawatts of renewable generation and battery storage, more than 3 gigawatts of new natural-gas generation, and nearly 2,000 miles of high-voltage transmission.

Management said it has sought to support project execution by deepening partnerships with major suppliers and engineering, procurement and construction firms, while consolidating project planning and execution under one organization. Frenzel said the approach is intended to improve capital efficiency, lower execution risk and provide greater schedule certainty.

Financial drivers and financing plan

Van Abel said higher electric revenues from non-fuel riders and sales growth increased second-quarter earnings by $0.17 per share. Higher AFUDC added $0.08 per share, while lower depreciation and amortization also contributed $0.08 per share. Other items contributed $0.03 per share, primarily due to positive returns from venture capital portfolios.

These gains were partly offset by a $0.12-per-share impact from higher interest expense and a $0.06-per-share impact from common equity financing. Van Abel said the financing costs reflect the company’s efforts to fund infrastructure investment while maintaining a strong balance sheet.

Weather-adjusted electric sales rose 2.1% year to date, driven by activity in the energy sector at Southwestern Public Service and manufacturing growth across operating companies. Xcel continues to expect weather-adjusted electric sales to increase 3% for the full year.

The company said it has addressed approximately $6 billion, or 85%, of the $7 billion equity need associated with its base five-year plan through equity forward and collar contracts, its at-the-market program and junior subordinated note issuances.

Van Abel said Xcel still expects a long-term difference of roughly 200 to 250 basis points between rate-base growth and EPS growth. He said the company plans to provide an updated five-year capital plan, financing plan and 2027-2031 outlook during its third-quarter update.

Data centers, tariffs and customer affordability

Xcel said it has 1 gigawatt of data-center load either operating or under construction and another 1 gigawatt under signed electric service agreements. The company expects to secure an additional 4 gigawatts of data-center load by the end of 2027, including at least 1 gigawatt by the end of 2026.

Frenzel said the company’s high-probability data-center pipeline exceeds 20 gigawatts, with near-term interest concentrated in the Upper Midwest and Southwest. The pipeline includes projects ranging from smaller urban facilities to campuses of roughly 1,000 megawatts.

Management said future investments tied to data centers are generally part of its upside plan rather than its base plan. Frenzel said that in Xcel’s resource-rich regions, a gigawatt of data-center demand could require roughly $5 billion to $6 billion, or more, of generation investment when supported by wind, solar, storage and natural-gas backup.

Xcel received approval for a large-load tariff in Minnesota and has filed similar tariffs in Colorado and Wisconsin. The company also expects to file a tariff in Texas during the third quarter and is working on one in New Mexico. Management said the tariffs are designed to ensure large-load customers pay their full and fair share of generation and interconnection costs while allowing existing customers to benefit from greater use of grid assets.

Regulatory progress and wildfire mitigation

Frenzel said Xcel advanced settlements or decisions in six active rate cases, including commission decisions in Minnesota’s electric rate case and a South Dakota electric rate-case settlement. The company also cited proposed settlements in Colorado electric and natural-gas cases, as well as New Mexico electric and Minnesota natural-gas cases.

The company said its Colorado settlement would provide a path to nearly double the size and participation in energy-assistance programs, while its Minnesota electric rate case expanded access to and funding for customer assistance programs.

In Colorado, Frenzel said Xcel has intensified wildfire-mitigation work amid drought conditions and a low snowpack year. The company has installed more than 50 artificial-intelligence-enabled cameras and nearly 300 weather stations in the state, while also using enhanced power-safety settings, public-safety power shutoffs, system hardening and customer communication measures.

Xcel expects to file its next Colorado wildfire mitigation plan in early 2027 and said it will also pursue state-level wildfire legislation during the 2027 legislative session.

About Xcel Energy (NASDAQ:XEL)

Xcel Energy NASDAQ: XEL is a Minneapolis-based, publicly traded utility holding company that develops, owns and operates regulated electricity and natural gas delivery systems. The company's core activities include generation, transmission and distribution of electricity, the delivery of natural gas to customers, and related customer service operations. Xcel provides a mix of utility services to residential, commercial and industrial customers and participates in wholesale energy markets where appropriate.

Its generation portfolio combines nuclear, natural gas, coal and a growing share of renewable resources such as wind and solar.

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