The utility, which posted a profit increase, will ask Minnesota for approval to raise rates.
Minnesota's largest electric utility is still making money. But its customers in the Midwest aren't demanding more power the way they used to.
Xcel Energy Inc. reported a 17 percent jump in earnings per share for the third quarter but warned that electricity sales remain slack and that it will seek a Minnesota rate increase.
The Minneapolis-based company, which serves 3.4 million electric customers in eight states, reported earning $398 million, or 81 cents per share, in the quarter ended in September, beating Wall Street analysts' expectations by more than 5 cents. Xcel shares closed up 1.4 percent, or 38 cents, at $28.03.
Cost-cutting efforts launched earlier in the year and rate hikes in four states boosted the company's bottom line in the latest quarter, executives said. Yet the demand for power across the company's eight-state service area remained slack for a utility long accustomed to growth.
"We continue to forecast flat sales for 2012," Xcel's chief financial officer, Teresa Madden, told analysts on a conference call.
For 2013, Xcel expects only a 0.5 percent increase in electricity demand, with even less growth in Minnesota and no growth in Wisconsin, she said.
Mill fire hurt sales
So far this year, the company's Minnesota region, which includes parts of North Dakota and South Dakota, saw power sales drop 0.3 percent when adjusted for year-to-year weather variations and the leap year.
One customer, the Verso paper mill in Sartell, Minn., which shut down after a fire on Memorial Day and won't be reopening, accounted for 1.3 percent of Xcel's Minnesota-region electric sales, and 0.6 percent of all Xcel power sales, Madden said.
Xcel intends to file a request next week with the Minnesota Public Utilities Commission for a 2013 electric rate hike, with an interim increase to be sought on Jan. 1. Madden offered few details, but said higher rates are needed to pay for investments in Xcel's two nuclear power plants in Minnesota and to cover other cost increases.
CEO Ben Fowke said Xcel intends to seek additional rate increases in the years ahead in Minnesota under a new, multiyear regulatory process. He said Xcel also will file requests this year for a gas rate hike in Colorado and electric rate hikes in Texas, New Mexico and North Dakota.
For the third quarter, earnings were up or flat in all regions except Minnesota, which saw a decline. Warm summer weather drove electric sales in some places, but not in Minnesota, which was cooler compared with the hot 2011 summer, the company said.
Despite the weak sales forecast, Xcel offered a more favorable outlook for 2012 earnings, saying it expects them in the range of $1.75 to $1.85 per share. It had been forecasting earnings in the lower part of that range. For 2013, Xcel's outlook is for $1.85 to $1.95 per share earnings.
Xcel also said it won't need to invest as much in pollution control equipment at its Texas coal-burning power plants. In August, a federal appeals court threw out new federal rules to reduce pollution crossing state lines. Xcel, which had joined the legal challenge, said it can now defer $470 million in Texas emission-control upgrades for at least five years.
David Shaffer • 612-673-7090
Figures in millions except for earnings per share.