Xcel Energy's second quarter profits fell 12% and missed analysts' forecasts as the company grappled with unfavorable weather in Colorado and an adverse rate case ruling in Minnesota.
Xcel posted second quarter earnings of $288 million, or 52 cents a share, down from $328 million, or 60 cents a share, a year ago. Stock analysts polled by Zacks Investment Research were expecting profits of 55 cents per share on average.
"While second quarter earnings were lower than last year due to unfavorable weather and other drivers, we are taking actions to offset the impacts and are reaffirming our 2023 earnings guidance," Xcel CEO Bob Frenzel in a press statement.
Those actions include reviewing Xcel's "staffing levels," the company's CFO Brian Van Abel said in a conference call with analysts Thursday.
Unfavorable weather in the utility business refers to sustained higher-than-normal temperatures during heating season — sapping gas demand — and lower-than-normal temps during air conditioning season.
Xcel said its earnings weakness was also fueled by higher interest and operating costs, combined with rate case decisions that went against the company, leaving it with less-than-expected revenue.
Minneapolis-based Xcel singled out its recent Minnesota rate case.
On June 1, the Minnesota Public Utilities Commission (PUC) granted Xcel a three-year rate hike of 9% or $306 million, far short of the $440 million or 21% increase that Xcel wanted. Xcel has said it was "extremely disappointed" with the PUC, while ratepayer advocates cheered the decision.
Xcel's second quarter revenue tallied $3 billion, down from $3.42 billion a year ago. Xcel's stock closed Thursday at $62.87, down $2.18 or 3.4 %.
Given rising costs combined with the Minnesota rate case outcome, Xcel is "taking action to mitigate" operation and maintenance costs, "which will include evaluating discretionary programs, staffing levels, consulting, employee expenses, variable compensation and other management actions," Van Abel said.
Asked by the Star Tribune whether layoffs are in offing, Xcel said: "We have responded aggressively to control costs through actions such as scrutinizing hiring levels and reducing employee expenses through limits to non-essential business travel and similar cost-saving measures."
Xcel is Minnesota's largest electricity provider and its second-biggest natural gas supplier.
The company's largest markets are Colorado and Minnesota. It also operates in Texas, New Mexico, Wisconsin, the Dakotas and a small slice of Michigan's Upper Peninsula.
