Dive Brief:
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Transitioning to more renewable sources of energy will help cut costs and bring stability to customer bills, Xcel Energy Chairman, President and CEO Bob Frenzel said Thursday during a company earnings call.
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The company’s first quarter net income jumped 10% to $418 million compared to the same quarter in 2022, as a result of increased energy sales.
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Frenzel assured analysts that legislation in Colorado, which aims to restrict the company’s ability to pass fuel costs on to customers following protests decrying high energy bills, should be manageable if passed.
Dive Insight
Although Xcel Energy reported healthy earnings and has ambitious energy transition plans in the works, company executives spent most of Thursday’s earnings call reaffirming their dedication to affordable energy following the Colorado protests.
“While the promise of a clean energy future is bright, we are keenly aware of challenges customers faced this winter given high natural gas prices,” Frenzel said, adding that the company is “looking at potential long-term solutions to reduce price volatility.”
For electric customers, he said, the company’s wind farms have generated $1.1 billion in customer benefits, and further investments in renewable energy and renewable fuels will continue to reduce the burden on customers, Frenzel said.
Xcel Energy has noted rising renewable energy costs over the past five years, said Brian Van Abel, executive vice president and chief financial officer. The median price of wind project proposals the company is currently reviewing is about $22/MWh and $33/MWh for solar, he said. But he estimated without the Inflation Reduction Act and its associated tax credits, the price would be closer to $50/MWh, suggesting that renewable energy is still a good opportunity for the company.
The company is also looking to capitalize on the IRA tax credits by selling future tax credits to raise capital. Xcel Energy is in discussions with some 20 would-be buyers and is prepared to move forward when the IRS issues the final guidance on tax credit transferability, Van Abel said. He said he anticipates the IRS guidance will be issued in the second quarter of 2023, and that Xcel Energy is prepared to begin monetizing its tax credits by the third quarter.
For natural gas customers, Frenzel said Xcel Energy is exploring renewable options such as blending hydrogen into the company’s gas distribution systems. The company participated in two multi-state applications for hydrogen hub grant funding that have received positive initial reviews from the Department of Energy, he said.
“I think the country really needs, as we think about decarbonization, a clean molecule, and hydrogen appears to be the most versatile molecule that we have been looking at, whether that can be converted to fertilizer, process heat and from our perspective, blended into the distribution system and co-fired in existing natural as plants,” he said.
The company has been cooperating with Colorado lawmakers whose proposed SB23-291 would restrict the company’s ability to pass fuel costs on to customers. The current version of the bill, which passed a third reading in the Colorado Senate on Wednesday, should be workable, Van Abel said.
