Xcel reports flat profit; execs stick to full-year outlook

Xcel Energy's second-quarter profit was flat, missing analysts' estimates by a tad as the company experienced lower than expected energy sales.

Xcel executives also said Wednesday that the company has made significant progress toward settling contentious issues over its pending electricity rate case in Minnesota. In November, Xcel filed for a 9.8-percent rate hike over three years, drawing opposition from two state agencies.

Minneapolis-based Xcel, which operates in eight states, Wednesday reported earnings of $196.8 million dollars, or 39 cents per share, for the quarter ending June 30. Analysts polled by Thomson Reuters were expecting 40 cents per share.

Xcel's sales were $2.50 billion, lower than the $2.53 billion forecast by analysts. In 2015's second quarter, Xcel's sales were $2.52 billion, while profits were $196.9 million or 39 cents per share.

"While we continue to see lower than expected sales across much of our operating territory, our teams continue to carefully manage our [operating and maintenance expenses] and take a thoughtful approach to delivering on our business objectives," CEO Ben Fowke said in a statement. As a result, Xcel expects to deliver ongoing earnings "solidly within our 2016 guidance," he said.

Profit margins for both Xcel's electricity and gas businesses were higher than a year ago, due largely to higher retail electric and gas rates and favorable weather. During the second quarter, the weather in Xcel's territory was a bit hotter than normal and considerably more humid, increasing demand for air conditioning.

Those positive factors were offset by higher depreciation, interest charges and property taxes, the company said, though Xcel's overall operating expenses fell by 1 percent.

Xcel is Minnesota's largest utility and also has operations in Colorado, the Dakotas, Wisconsin, Texas, New Mexico and Michigan's Upper Peninsula.

The company is asking the Minnesota Public Utilities Commission for an electricity rate increase of $297 million over three years, the bulk of which — $195 million or 6.4 percent — would be realized in 2016.

In June, the Minnesota Department of Commerce and the state's attorney general filed comments with the PUC saying Xcel's proposed rate increase was excessive and should be significantly reduced. Commerce requested that the $195 million increase for 2016 be cut to $44 million. Both agencies are tasked with looking out for the public interest in rate cases. Nonprofit groups representing consumers have also filed opposition to the rate hike.

In a conference call with stock analysts, Fowke said Xcel has reached settlements in principle with several parties in the Minnesota rate case, though he declined to give details. The Department of Commerce declined to comment, and a spokesman for the attorney general's office said it had no settlement in principle with Xcel.

The rate case won't likely be concluded until early 2017.