Dive Brief:
- Xcel Energy reported earnings of $196 million for Q4 2014, an increase over the $150 million earned over the same period last year, according to a release from the company. Xcel also reported earnings of $1.02 billion for all of 2014, compared to $948 million for 2013.
- On an earnings call, Xcel CEO Ben Fowke told analysts that "2015 is going to be a transformational year in Minnesota." Xcel and other stakeholders in Minnesota are developing a performance-based regulatory model for the utility in order "to better align with the clear direction that customer preferences, federal policies and state initiatives are moving," said Fowke.
Dive Insight:
In Minnesota, Xcel will look to shift its utility away from the traditional cost-of-service regulatory model towards a more performance-based approach. That's a big move that, if successful, Xcel may look to replicate in other jurisdictions as well.
Xcel recently laid out its vision for the future with Minnesota regulators. Xcel plans to reduce its carbon dioxide emissions 40% by 2030, modernize the distribution grid, provide new products and services, and pursue "more predictable and nimble rate recovery," Fowke said.
"In order to effectively bring about these changes, it is essential that the company have a longer term more holistic regulatory compact," Fowke said, adding that the company and other stakeholders would meet over the coming months to flesh out the details of the new model.
The new model may reduce Xcel's reliance on electric sales to drive revenue growth. Utility Dive reported over the summer that Xcel saw 1.7% weather-adjusted electric sales growth in its service territories in the year to date — this was "better-than-expected," according to Fowke, but he was still "hesitant to call this a trend."
Turns out that was the right approach. Xcel saw 1.3% weather-adjusted sales growth in 2014, CFO Teresa Madden reported on the earnings call. The company predicts just 1% growth for 2015, though improving economic conditions and oil and gas exploration and production could drive more sales growth.
