Xcel Energy Q3 2025 slides: $60B capital plan to drive 11% rate base growth

Introduction & Market Context

Xcel Energy Inc. (NASDAQ:XEL) presented its third-quarter 2025 earnings on October 30, revealing an ongoing earnings per share (EPS) of $1.24, slightly below the $1.25 reported in the same period last year and missing analyst expectations of $1.32. Despite this shortfall, the utility’s stock rose 2.05% in pre-market trading to $81.32, as investors focused on strong revenue performance of $3.92 billion (exceeding forecasts of $3.89 billion) and the company’s ambitious growth plans.

The company reported GAAP EPS of $0.88 for Q3 2025, impacted by a $0.36 per share charge related to the Marshall Fire settlement. Year-to-date ongoing EPS reached $2.84, up from $2.69 in the same period of 2024.

As shown in the following summary of quarterly highlights, Xcel has maintained its 2025 guidance while introducing 2026 targets:

Quarterly Performance Highlights

Xcel’s Q3 2025 results revealed mixed performance across its operating companies. While NSPM showed improvement with $0.53 EPS compared to $0.45 in Q3 2024, PSCo experienced a significant decline to $0.08 from $0.45, primarily due to the Marshall Fire settlement. SPS and NSPW remained relatively stable year-over-year.

The following table provides a comprehensive breakdown of EPS results by operating company:

Several factors contributed to the slight decline in ongoing EPS compared to Q3 2024. As illustrated in the waterfall chart below, positive impacts from electric revenues and AFUDC were offset by increased depreciation and amortization, higher interest charges, and equity financing costs:

Year-to-date performance shows more positive momentum, with ongoing EPS improving to $2.84 from $2.69 in 2024. This growth was driven primarily by increased electric and natural gas revenues, partially offset by higher depreciation, O&M expenses, and interest charges:

Strategic Initiatives

The centerpiece of Xcel’s presentation was its ambitious $60 billion five-year capital investment plan for 2026-2030, which is expected to drive approximately 11% annual rate base growth. This represents a significant commitment to infrastructure development, with investments strategically allocated across electric generation (39%), transmission (26%), distribution (23%), natural gas (6%), and other areas (6%).

Within the electric generation category, Xcel is heavily prioritizing renewable energy, with 36% allocated to wind, 24% to solar, and 16% to storage projects, while maintaining 24% investment in natural gas generation for system reliability:

This substantial capital investment is projected to drive Xcel’s rate base from $56 billion in 2025 to $94 billion by 2030, representing a compound annual growth rate (CAGR) of approximately 11%. The strongest growth is expected in SPS (22% CAGR) and NSPW (13% CAGR):

A key growth driver in Xcel’s strategy is the expansion of data center load, with approximately 3 GW contracted by 2026. The company has identified a substantial pipeline of potential data center projects, including over 20 GW of additional opportunities, approximately 2 GW in high-probability projects, and 1 GW already contracted or under construction:

Forward-Looking Statements

Xcel reaffirmed its 2025 ongoing EPS guidance range of $3.75 to $3.85 and initiated 2026 guidance of $4.04 to $4.16. The 2025 guidance assumes approximately 3% growth in weather-adjusted retail electric sales, flat natural gas sales, and increases in capital riders, depreciation, property taxes, interest expenses, and AFUDC-equity:

For 2026, the company projects continued growth with approximately 3% increase in retail electric sales, 1% growth in natural gas sales, and further increases in capital riders, O&M expenses, depreciation, property taxes, interest expenses, and AFUDC-equity:

Xcel has updated its long-term EPS growth objective to 6-8+%, which combined with its approximately 3% dividend yield, is expected to deliver a total shareholder return of 10+%. The company has maintained its dividend growth for 22 consecutive years and has met or exceeded earnings guidance for 20 consecutive years.

Detailed Financial Analysis

To fund its ambitious capital plan, Xcel outlined a comprehensive financing strategy for 2026-2030. The $60 billion plan will be funded through a combination of cash flow from operations ($30.18 billion), refinanced long-term debt ($3.58 billion), incremental debt ($22.82 billion), and equity and equity content ($7 billion):

Despite this significant capital investment, Xcel expects to maintain strong credit metrics throughout the 2026-2030 period, with FFO/Debt ratios of approximately 16-17% and Debt/EBITDA ratios improving from 5.7x in 2026 to 5.0x by 2030. The company’s equity ratio is projected to remain stable at around 40-42%:

A notable aspect of Xcel’s strategy is its ability to balance substantial infrastructure investments while keeping customer bills affordable. The company highlighted that its average residential electric bill is approximately 28% lower than the national average, and its natural gas bill is about 12% lower. From 2014 to 2025, the compound annual growth rate for residential electric bills has been approximately 1.6%, and for natural gas bills, about 0.8%, both well below inflation:

Xcel’s balanced investment thesis emphasizes its track record as a reliable regulated utility that consistently delivers results, maintains affordability while investing in resilient infrastructure, and offers transparent long-term growth plans:

In summary, while Xcel Energy’s Q3 2025 EPS slightly missed analyst expectations, the company’s robust revenue performance, ambitious $60 billion capital investment plan, and strong guidance for 2025-2026 have resonated positively with investors. The utility’s strategic focus on renewable energy and data center growth, combined with its commitment to maintaining customer affordability, positions it well for sustainable long-term growth in an evolving energy landscape.

Full presentation:

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