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Xcel Energy Inc. (NASDAQ:XEL) has filed for a significant increase in natural gas rates in Colorado through its subsidiary, Public Service Company of Colorado (PSCo). The filing, made in January 2024, proposes a $171 million hike, which would raise the average residential customer bill by approximately 9.5%.
The rate request is grounded on a 2023 test year and includes a 10.25% return on equity (ROE), a 55% equity ratio, and a $4.2 billion rate base with projected capital additions through December 31, 2023. PSCo aims for the new rates to take effect on November 1, 2024, but suggests delaying the collection of the increased rates until February 15, 2025. This deferral is intended to ease the impact on customers' bills and would allow for the recovery of the deferred revenues over a 12-month period starting on that date.
On Thursday, intervenors submitted their testimony to the Colorado Public Utilities Commission (CPUC), with adjustments to the proposed rate increase. Staff and the Utility Consumer Advocate (UCA) recommended lower adjustments, resulting in proposed revenue changes of $72 million and $91 million, respectively. They also suggested an earlier effective date for the new rates of November 1, 2024, instead of the deferral to 2025.
The procedural schedule for the rate case includes rebuttal testimony on August 15, 2024, a settlement deadline of August 27, and an evidentiary hearing from September 4-12. A CPUC decision is anticipated in the fourth quarter of 2024.
Despite the ongoing regulatory process, Xcel Energy has reaffirmed its earnings guidance for 2024, with expectations of $3.50 to $3.60 per share. This outlook assumes positive regulatory outcomes and other key factors.
The company's forward-looking statements, detailed in the SEC filing, highlight the risks and uncertainties inherent in such projections, including operational, economic, and market challenges, as well as the potential impacts of regulatory changes, geopolitical events, and environmental considerations.
This news is based on a current report on Form 8-K filed by Xcel Energy with the Securities and Exchange Commission.
In other recent news, Xcel Energy has made significant strides in its regulatory and financial strategy. The company has requested a $171 million increase in retail natural gas rates in Colorado, a proposal that is currently under review by the Colorado Public Utilities Commission. Despite challenges to the proposed increase, Xcel Energy has reaffirmed its 2024 earnings guidance of $3.50 to $3.60 per share.
In a parallel development, Xcel Energy has outlined a $1.9 billion Wildfire Mitigation Plan set to span from 2025 to 2027, aiming to enhance safety and service reliability amid increasing wildfire risks. The company has also secured a settlement in its Minnesota natural gas rate case, resulting in a 7.5% rate increase, equating to an additional $46 million in annual revenue.
Analysts from Mizuho, BMO Capital Markets, and BofA Securities have shown optimism towards these recent developments. Mizuho has maintained an Outperform rating, while BMO Capital Markets and BofA Securities have increased their price targets for Xcel Energy shares. KeyBanc Capital Markets has also expressed confidence with an Overweight rating. These are recent developments reflecting Xcel Energy's strategic focus on safety, reliability, and regulatory compliance.
InvestingPro Insights
As Xcel Energy Inc. (NASDAQ:XEL) navigates through its proposed rate increase in Colorado, investors and customers alike are keenly observing the company's financial health and market performance. According to real-time data from InvestingPro, Xcel Energy boasts a sturdy market capitalization of $30.19 billion and maintains a Price-to-Earnings (P/E) ratio of 16.42, reflecting investor confidence in its earnings capacity. Notably, the company has demonstrated a commitment to shareholder returns, having raised its dividend for 20 consecutive years, with a current dividend yield of 4.05%.
InvestingPro Tips highlight two essential aspects of Xcel Energy's financial status: the company's significant debt burden and its high P/E ratio relative to near-term earnings growth. These factors could influence investor sentiment, especially as the company seeks regulatory approval for rate increases. Despite these challenges, Xcel Energy has shown resilience, maintaining dividend payments for an impressive 53 consecutive years, which signals a stable financial position and a potentially attractive opportunity for income-focused investors.
For readers interested in a deeper analysis and additional insights on Xcel Energy, InvestingPro offers a broader range of tips. There are 5 more InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/XEL. For those considering an InvestingPro subscription, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, granting access to valuable investment tools and data to inform your financial decisions.
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