Xcel Energy Quarterly Earnings Exceed Expectations.
Business Editors
MINNEAPOLIS--(BUSINESS WIRE)--Oct. 24, 2001--Xcel Energy achieved
ongoing earnings of 79 cents per share in the third quarter of 2001,
compared with 72 cents per share in the third quarter of 2000,
excluding special charges and extraordinary items.
"Since the completion of our merger over one year ago, we have met
or exceeded our earnings targets for every quarter," said Wayne
Brunetti, chairman, president and chief executive officer. "Our
utility operations and subsidiary NRG Energy continue to deliver
excellent operational and financial results.
"We expect to achieve ongoing earnings per share of $2.30 for
2001. Our management team has the financial and operational discipline
to manage through both good times and difficult times. Despite a
slowing economy and declining prices for electricity on the spot
market, our guidance for 2002 remains $2.40 - $2.50 per share,"
Brunetti said.
Xcel Energy's 74-percent stake in NRG Energy, a leading global
energy company, contributed 31 cents per share in the third quarter of
2001, compared with 23 cents per share on an 82-percent ownership
basis in the third quarter of 2000.
For the 12 months ended Sept. 30, 2001, Xcel Energy had earnings
per share (excluding special charges, regulatory adjustments and
extraordinary items) of $2.34, compared with $2.13 per share for the
comparable period in 2000. NRG Energy contributed 60 cents per share
to Xcel Energy's earnings for the 12 months ended Sept. 30, 2001,
compared with 44 cents per share for the comparable period in 2000.
Xcel Energy will host an earnings conference call beginning at
1:30 p.m. Central Time on Oct. 24. The conference call will be
broadcast on our Web site at the following location:
http://www.xcelenergy.com, then click on: Investor Information. In
addition, the call can be accessed live at 1-888-273-9887. The call
will be available in a replay mode from 5:00 p.m. on October 24
through 11:59 p.m. on Oct. 26, Central Time. Replay numbers:
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U.S. Dial-In: 800-475-6701
International Dial-In: 320-365-3844
Access Code: 606083
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This release includes forward-looking statements that are subject
to certain risks, uncertainties and assumptions. Such forward-looking
statements are intended to be identified in this document by the words
"anticipate," "estimate," "expect," "projected," "objective,"
"outlook," "possible," "potential" and similar expressions. Actual
results may vary materially. Factors that could cause actual results
to differ materially include, but are not limited to: general economic
conditions, including their impact on capital expenditures; business
conditions in the energy industry; competitive factors; unusual
weather; changes in federal or state legislation; regulation; risks
associated with the California power market; currency translation and
transaction adjustments; the higher degree of risk associated with
Xcel Energy's nonregulated businesses compared with Xcel Energy's
regulated business; and the other risk factors listed from time to
time by Xcel Energy in reports filed with the Securities and Exchange
Commission (SEC), including Exhibit 99.01 to Xcel Energy's report on
Form 10-Q for the quarter ended June 30, 2001.
This information is not given in connection with any sale or offer
for sale or offer to buy any security.
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XCEL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Thousands of Dollars, Except per Share Data)
Three months ended Twelve months ended
Sept. 30 Sept. 30
---------------------- ----------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Operating revenues:
Electric utility .....$1,818,812 $1,666,914 $6,521,756 $5,315,069
Gas utility........... 216,589 176,914 2,150,083 1,276,107
Electric and gas
trading.............. 688,076 567,911 3,422,863 1,572,189
Nonregulated and
other................ 928,976 585,333 3,079,350 1,716,033
Equity earnings from
investments in
affiliates........... 111,021 95,995 212,484 218,263
---------- ---------- ---------- ----------
Total operating
revenues............ 3,763,474 3,093,067 15,386,536 10,097,661
Operating expenses:
Electric fuel and
purchased power -
utility.............. 940,161 790,809 3,307,457 2,268,755
Cost of gas sold and
transported -
utility.............. 135,734 84,194 1,605,113 744,253
Electric and gas
trading costs........ 678,735 555,001 3,320,788 1,539,896
Cost of sales -
nonregulated and
other................ 450,204 270,257 1,630,898 791,615
Other operating and
maintenance expenses
- utility........... 366,344 327,359 1,464,790 1,351,833
Other operating and
maintenance expenses
- nonregulated...... 226,162 167,371 817,230 673,912
Depreciation and
amortization......... 250,578 201,073 893,788 655,300
Taxes (other than
income taxes ) ..... 53,894 90,062 315,816 351,766
Regulatory adjustment
- postemployment
benefits............. - - 23,018 -
Special charges ...... - 201,482 39,560 230,122
---------- ---------- ---------- ----------
Total operating
expenses............ 3,101,812 2,687,608 13,418,458 8,607,452
---------- ---------- ---------- ----------
Operating income....... 661,662 405,459 1,968,078 1,490,209
Other income (expense):
Minority interest..... (39,699) (19,025) (69,997) (29,809)
Other income and
(expense) - net ..... 22,577 (5,203) 61,662 13,833
---------- ----------- ---------- ----------
Total other income
(expense)........... (17,122) (24,228) (8,335) (15,976)
Interest charges and
financing costs:
Interest charges - net
of amounts
capitalized.......... 212,037 175,881 744,543 611,271
Distributions on
redeemable preferred
securities of
subsidiary trusts.... 9,700 9,700 38,800 38,800
---------- ---------- ---------- ----------
Total interest
charges and
financing costs..... 221,737 185,581 783,343 650,071
---------- ---------- ---------- ----------
Income before income
taxes and
extraordinary item.... 422,803 195,650 1,176,400 824,162
Income taxes........... 149,900 97,734 388,529 268,853
---------- ---------- ---------- ----------
Income before
extraordinary item... 272,903 97,916 787,871 555,309
Extraordinary item, net
of tax................ - (5,302) - (18,960)
---------- ---------- ---------- ----------
Net income............. 272,903 92,614 787,871 536,349
Dividend requirements
and redemption premiums
on preferred stock.... 1,060 1,060 4,240 4,242
---------- ---------- ---------- ----------
Earnings available for
common shareholders... $271,843 $91,554 $783,631 $532,107
========== ========== ========== ==========
Weighted average common
shares outstanding -
diluted (1000's)...... 344,385 338,876 342,427 336,508
Earnings per share -
diluted:
Earnings before
unusual items ....... $ 0.79 $ 0.72 $ 2.34 $ 2.13
Regulatory decisions.. - - 0.03 -
Special charges....... - (0.43) (0.09) (0.49)
Extraordinary item.... - (0.02) - (0.06)
---------- ---------- ---------- ----------
Total................ $ 0.79 $ 0.27 $ 2.28 $ 1.58
========== ========== ========== ==========
See Notes to Consolidated Financial Statements
XCEL ENERGY INC.
Notes to Financial Statements (Unaudited)
Due to the seasonality of Xcel Energy's operating results,
quarterly financial results are not necessarily an appropriate base
from which to project annual results.
Note 1. Merger to Form Xcel Energy
On Aug. 18, 2000, New Century Energies, Inc. (NCE) and Northern
States Power Co. (NSP) merged and formed Xcel Energy Inc. The merger
was structured as a tax-free, stock-for-stock exchange for
shareholders of both companies (except for fractional shares), and
accounted for as a pooling-of-interests. Amounts reported for periods
prior to the merger have been restated for comparability with
post-merger results.
Xcel Energy directly owns six utility subsidiaries that serve
electric and natural gas customers in 12 states. These six utility
subsidiaries are Northern States Power Company, a Minnesota
corporation (NSP-Minnesota), Northern States Power Company, a
Wisconsin corporation (NSP-Wisconsin), Public Service Company of
Colorado (PSCo), Southwestern Public Service Company (SPS), Black
Mountain Gas Company (BMG) and Cheyenne Light, Fuel and Power Company
(Cheyenne). Xcel Energy's regulated businesses also include Viking Gas
Transmission Company and WestGas InterState Inc. (WGI), both
interstate natural gas pipeline companies.
Xcel Energy also owns or has an interest in a number of
nonregulated businesses, the largest of which is NRG Energy, Inc., a
publicly traded independent power producer. At Sept. 30, 2001, Xcel
Energy owned approximately 74 percent of NRG. Xcel Energy owned 100
percent of NRG until the second quarter of 2000, when NRG completed
its initial public offering and 82 percent until a secondary offering
was completed in March 2001.
In addition to NRG, Xcel Energy's nonregulated subsidiaries
include Utility Engineering (engineering, construction and design),
Seren Innovations, Inc. (broadband telecommunications services), e
prime inc. (natural gas marketing and trading), Planergy
International, Inc. (energy management, consulting and demand-side
management services), Eloigne Company (investments of rental housing
projects that qualify for low-income housing tax credits) and
Independent Power Corporation/Independent Power International
(IPC/IPI) (an international independent power producer).
Note 2. Significant Factors Affecting Operating Results
The following table summarizes the earnings-per-share
contributions of Xcel Energy's businesses.
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3 Mos. Ended 12 Mos. Ended
---------------- ---------------
9/30/01 9/30/00 9/30/01 9/30/00
------- ------- ------- -------
Utility before unusual items $ 0.53 $ 0.55 $ 1.91 $ 1.63
Special charges - merger costs 0.00 (0.35) (0.09) (0.35)
Regulatory decisions 0.00 0.00 0.03 0.00
Extraordinary items 0.00 (0.02) 0.00 (0.06)
------ ------- ------ -------
Total Utility $ 0.53 $ 0.18 $ 1.85 $ 1.22
Nonregulated before special charges 0.26 0.17 0.43 0.50
Special charges 0.00 (0.08) 0.00 (0.14)
------ ------- ------ ------
Nonregulated subsidiaries 0.26 0.09 0.43 0.36
------ ------ ------ ------
Total EPS $ 0.79 $ 0.27 $ 2.28 $ 1.58
====== ====== ====== ======
EPS before unusual items $ 0.79 $ 0.72 $ 2.34 $ 2.13
====== ====== ====== ======
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Special Charges
Merger Impacts - During the third quarter and fourth quarter of
2000, Xcel Energy expensed pretax special charges of $241 million, or
52 cents per share, for costs related to the merger between NSP and
NCE. Of these special charges, approximately 44 cents per share were
associated with the costs of merging regulated operations and 8 cents
per share were associated with merger impacts on nonregulated
activities. Of these pretax special charges, $201 million, or 43 cents
per share, was recorded during the third quarter of 2000, and $40
million, or 9 cents per share, was recorded during the fourth quarter
of 2000.
Xcel Energy's earnings for the 12 months ended Sept. 30, 2001,
were reduced by 9 cents per share for special charges related to the
merger to form Xcel Energy. Xcel Energy's earnings for the 12 months
ended Sept. 30, 2000, were reduced by 43 cents per share for special
charges related to the merger to form Xcel Energy.
Nonregulated Write-offs - Xcel Energy's earnings for the 12 months
ended Sept. 30, 2000, were reduced by special charges of 6 cents per
share for the write-down of goodwill at Energy Masters International
(EMI) and a valuation write-down of Xcel Energy's investment in the
publicly traded common stock of CellNet Data Systems, Inc., as
discussed under Nonregulated Operations.
Regulatory Decisions
Conservation Incentive Recovery - Earnings for the 12 months ended
Sept. 30, 2001, were increased by 7 cents per share due to the
reversal of the Minnesota Public Utilities Commission (MPUC) decision
to deny NSP-Minnesota recovery of 1998 lost margins, load management
discounts and incentives associated with state-mandated programs for
electric energy conservation.
In June 1999, the MPUC denied NSP-Minnesota recovery of 1998 lost
margins, load management discounts and incentives associated with
state-mandated programs for electric energy conservation. Xcel Energy
recorded a $35 million charge in 1999, which reduced earnings by 7
cents per share, based on this action. NSP-Minnesota appealed the MPUC
decision and in December 2000, the Minnesota Court of Appeals reversed
the MPUC decision. In January 2001, the MPUC appealed the lower court
decision to the Minnesota Supreme Court. On Feb. 23, 2001, the
Minnesota Supreme Court declined to hear the MPUC's appeal. During the
second quarter of 2001, NSP-Minnesota filed with the MPUC a plan that
carried out, among other things, the court's decision.
On June 28, 2001, the MPUC approved the plan and issued an order
to that effect shortly thereafter. As a result, the previously
recorded liabilities of approximately $41 million (including carrying
charges) for potential refunds to customers are no longer required.
This accounting adjustment increased revenue by approximately $35
million and increased allowance for funds used during construction
(equity and debt) by approximately $6 million, increasing earnings by
7 cents per share for the second quarter of 2001.
Postemployment Benefits - Earnings for the 12 months ended Sept.
30, 2001, were decreased by 4 cents per share due to a Colorado
Supreme Court decision that resulted in a pretax write-off of $23
million of regulatory assets related to deferred postemployment
benefit costs at PSCo.
PSCo adopted accrual accounting for postemployment benefits under
Statement of Financial Accounting Standard (SFAS) No. 112 - "Employers
Accounting for Postemployment Benefits" in 1994. The costs of these
benefits were historically recorded on a pay-as-you- go basis and,
accordingly, PSCo recorded regulatory assets in anticipation of
obtaining future rate recovery of these costs. PSCo requested approval
to recover its Colorado retail natural gas jurisdictional portion in a
1996 retail rate case and its retail electric jurisdictional portion
in the electric earnings test filing for 1997. In the 1996 rate case,
the Colorado Public Utility Commission (CPUC) allowed recovery of
postemployment benefit costs on an accrual basis, but denied PSCo's
request to amortize the regulatory asset. PSCo appealed this decision
to the Denver District Court. In 1998, the CPUC deferred the final
determination of the regulatory treatment of the electric
jurisdictional costs pending the outcome of PSCo's appeals on the
natural gas rate case. On Dec. 16, 1999, the Denver District Court
affirmed the decision by the CPUC.
On July 2, 2001, the Colorado Supreme Court affirmed the District
Court decision. Accordingly, PSCo wrote off $23 million of regulatory
assets related to deferred postemployment benefit costs during the
second quarter of 2001.
Extraordinary Items - Electric Utility Restructuring
In the second quarter of 2000, SPS discontinued regulatory
accounting under SFAS 71 for the generation portion of its business,
based on the issuance of a final written order in May 2000 by the
Public Utilities Commission of Texas (PUCT) addressing the
implementation of electric utility restructuring. During the second
quarter of 2000, SPS wrote off its generation-related regulatory
assets and other deferred costs totaling approximately $19.3 million.
This resulted in an after-tax extraordinary charge of approximately
$13.7 million against the earnings of Xcel Energy and SPS. During the
third quarter of 2000, SPS recorded a charge of $8.2 million before
tax, or $5.3 million after tax, related to the defeasance of first
mortgage bonds. These extraordinary charges reduced Xcel Energy's
earnings by 4 cents per share for the second quarter of 2000 and 2
cents per share for the third quarter of 2000.
During the second quarter of 2001, both Texas and New Mexico
delayed restructuring in SPS' service territory. As a result of these
legislative developments, SPS reapplied the provisions of SFAS No. 71
- "Accounting for the Effects of Certain Types of Regulation" for its
generation business during the second quarter of 2001. SPS has not
restored regulatory assets or capitalized defeasance costs previously
written off in 2000. Due to the regulatory uncertainty regarding the
recovery of these costs in future rates, SPS has delayed the
restoration of regulatory assets until it is determined that specific
regulatory recovery is achieved. Consequently, SPS has not recognized
any earnings impact for financial reporting purposes as a result of
its reapplication of SFAS 71 through Sept. 30, 2001. However, future
regulatory developments may create earnings increases (should
additional cost recovery be provided) or decreases (should deferred
costs not be fully recovered).
As of Sept. 30, 2001, SPS had incurred approximately $45 million
of restructuring costs, including $8 million of debt defeasance costs
allocated to the generation business that was expensed as an
extraordinary item in the third quarter of 2000, and $37 million of
restructuring costs which have been deferred based on anticipated
future recovery in jurisdictional rates.
SFAS 133 - "Accounting for Derivative Instruments and Hedging
Activities"
During the first quarter of 2001, Xcel Energy adopted SFAS 133,
which establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as
either an asset or liability and measured at its fair value. SFAS 133
requires that changes in the derivative instrument's fair value be
recognized currently in earnings unless specific hedge accounting
criteria are met or specific exclusions are applicable. Special
accounting for qualifying hedges allows a derivative instrument's
gains and losses to offset related results on the hedged item in the
income statement, to the extent effective, and requires that a company
must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting.
Xcel Energy's earnings for the third quarter of 2001 were
decreased by approximately $11.5 million (net of minority interest and
after tax), or 3 cents per share, primarily at NRG, due to the
mark-to-market impacts of SFAS 133 on the valuation of derivative
instruments. Xcel Energy's earnings for the 12 months ended Sept. 30,
2001, were decreased by approximately $13.9 million (net of minority
interest and after tax), or 4 cents per share, primarily at NRG, due
to the mark-to-market impacts of SFAS 133 on the valuation of
derivative instruments. The earnings impact for the adoption of SFAS
133 as of Jan. 1, 2001, was less than $1 million and is not being
reported separately as a cumulative effect of accounting change due to
immateriality.
Utility Operations
Estimated Impact of Temperature Changes on Regulated Earnings -
Xcel Energy analyzes the approximate effect of variations from
historical average temperatures on actual sales levels. The following
summarizes the estimated impact of temperature variations on actual
utility operating results (in relation to sales under normal weather
conditions).
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Increase (Decrease)
-----------------------------------------
2001 2000 2001
Earnings per Share for the vs. vs. vs.
Period ended Sept. 30: Normal Normal 2000
---------------------- ------ ------ ----
Quarter Ended $0.04 $0.04 $0.00
12 Months Ended $0.11 ($0.08) $0.19
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Sales Growth - The following table summarizes Xcel Energy's
regulated growth for actual electric and gas sales for the three-month
and 12-month periods ended Sept. 30, 2001, compared with the same
periods in 2000.
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Third Quarter 12 Months Ended
Actual Actual
Electric Residential 5.3% 6.3%
Electric Commercial & Industrial 0.8% 2.0%
Total Retail Electric Sales 2.1% 3.2%
Electric Sales for Resale (38.1)% (26.5)%
Total Firm Gas Sales (1.8)% 20.8%
Total Gas Sales 2.7% 8.2%
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Trading and Electric Utility Margins - Electric and gas trading
margins (representing revenues from proprietary trading at PSCo and
natural gas trading at e prime net of costs) decreased approximately
$4 million for the third quarter of 2001 and increased approximately
$70 million for the 12 months ended Sept. 30, 2001, compared with the
same periods in 2000. The increase reflects an expansion of Xcel
Energy's trading operation and favorable market conditions, including
strong prices in the western markets, particularly before the
establishment of pricing caps. The decline in the third quarter of
2001 reflects lower prices for electricity.
Electric utility margins (represents utility revenues net of fuel
and purchased power costs) increased approximately $3 million for the
third quarter of 2001 and approximately $168 million for the 12 months
ended Sept. 30, 2001, compared with the same periods in 2000. Electric
utility margin for the third quarter of 2001 reflects lower short-term
wholesale margins due to lower prices for electricity. The increase
for the 12 months ended Sept. 30, 2001, reflects more favorable
temperatures, retail sales growth, an expansion of Xcel Energy's
wholesale operations and favorable market conditions.
Other Operating and Maintenance Expenses - Utility - Utility
operating and maintenance expense for the third quarter of 2001
increased by approximately $39 million, or 11.9 percent, compared with
the third quarter of 2000. The change is largely due to increased bad
debt reserves reflecting higher energy prices, increased transmission
costs from the Southwest Power Pool (which are offset in electric
revenue), increased costs due to customer growth and increased nuclear
cost to establish the Nuclear Management Co. and to maintain and
improve operational excellence at the nuclear plants.
Utility operating and maintenance expense for the 12 months ended
Sept. 30, 2001, increased by approximately $113 million, or 8.4
percent, compared with the same period in 2000. The change is largely
due to increased bad debt reserves reflecting higher energy prices,
increased transmission costs from the Southwest Power Pool (which are
offset in electric revenue), higher performance-based incentive costs,
increased costs due to customer growth, timing of plant outages and
increased nuclear cost to establish the Nuclear Management Co. and to
maintain and improve operational excellence at the nuclear plants.
Nonregulated Operations
The following table summarizes the earnings-per-share
contributions of Xcel Energy's nonregulated businesses.
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3 Mos. Ended 12 Mos. Ended
--------------- ---------------
9/30/01 9/30/00 9/30/01 9/30/00
------- ------- ------- -------
NRG Energy Inc. $0.31 $0.23 $0.60 $0.44
Yorkshire Power 0.00 0.02 0.02 0.19
Seren Innovations Inc. (0.02) (0.02) (0.07) (0.06)
e prime 0.00 (0.02) 0.02 (0.03)
Planergy International 0.00 (0.05) (0.04) (0.10)
Financing Costs & Preferred Dividends (0.03) (0.02) (0.10) (0.07)
Other 0.00 (0.05) 0.00 (0.01)
----- ----- ----- -----
Total Nonregulated $0.26 $0.09 $0.43 $0.36
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NRG - NRG's earnings increased for the third quarter of 2001 and
the 12 months ended Sept. 30, 2001, due to increased returns from a
larger generation portfolio, contracted electricity sales, returns on
power marketing activities and superior operating performance.
The NRG earnings for the third quarter of 2001 and the 12 months
ended Sept. 30, 2001 in this report exclude earnings of approximately
11 cents per share and 18 cents per share, respectively, related to
minority shareholder interests. In comparison, NRG earnings for the
third quarter of 2000 and the 12 months ended Sept. 30, 2000, in this
report exclude earnings of approximately 5 cents per share and 6 cents
per share, respectively, related to minority shareholder interests.
Yorkshire Power - During February 2001, Xcel Energy reached an
agreement to sell the majority of its investment in Yorkshire Power to
Innogy Holdings plc. As a result of this sales agreement, Xcel Energy
did not record any equity earnings from Yorkshire Power after January
2001. In April 2001, Xcel Energy closed the sale of Yorkshire Power.
Xcel Energy retains an interest of approximately 5 percent in
Yorkshire Power to comply with pooling-of-interests accounting
requirements associated with the merger of NSP and NCE in 2000.
Seren - As expected, Seren's construction of its broadband
communications network in Minnesota and California resulted in higher
losses for the 12 months ended Sept. 30, 2001.
Seren is constructing a combination cable television, telephone
and high-speed Internet access system in two locations: St. Cloud,
Minn., and Contra Costa county in the east bay area of northern
California. As of Sept. 30, 2001, Xcel Energy's investment in Seren
was approximately $235 million. Seren had capitalized $156 million for
plant in service and had incurred another $60 million for construction
work in progress for these systems at Sept. 30, 2001. The majority of
the system construction in St. Cloud is expected to be completed this
year. The ultimate viability of Seren is dependent on securing a
customer and revenue base sufficient to recover the capital investment
and ongoing operating costs.
e prime - e prime's results for the 12 months ended Sept. 30,
2001, reflect favorable market opportunities utilizing gas
transmission and storage positions. These favorable market conditions
may not continue to exist during the remainder of 2001 in the volatile
natural gas markets.
e prime's results for the third quarter of 2000 and the 12 months
ended Sept. 30, 2000, were reduced by special charges of 2 cents per
share for contractual obligations and other costs associated with
post-merger changes.
Planergy International - Planergy's results for the 12 months
ended Sept. 30, 2001, reflect lower margins on performance contracts,
higher project development expenses and final costs related to the
consolidation of Planergy and EMI operations.
Planergy's results for the 12 months ended Sept. 30, 2000, were
reduced by special charges of 4 cents per share for the write-offs of
goodwill and project development costs at Planergy. During the third
quarter of 2000, the operations of Planergy and EMI, both wholly owned
subsidiaries of Xcel Energy, were combined and now do business as
Planergy International. As a result of this merger, Planergy
International reassessed its business model and made a strategic
realignment, which resulted in the write-off of $22 million (before
tax) of goodwill and project development costs. In addition,
Planergy's results for the 12 months ended Sept. 30, 2000, were
reduced by a special charge of 4 cents per share to write off goodwill
that was recorded for two acquisitions. EMI wrote off approximately
$17 million of goodwill (before tax) during the fourth quarter of
1999.
Financing Costs and Preferred Dividends - Nonregulated results
include interest expense and preferred dividend costs, which are
incurred at the Xcel Energy and intermediate holding company levels
and are not directly assigned to individual subsidiaries.
Other - The Other Nonregulated results for the third quarter 2000
include approximately 2 cents of losses associated with IPC/IPI.
The Other Nonregulated results for the third quarter 2000 and the
12 months ended Sept. 30, 2000, were reduced by special charges of 2
cents per share. These special charges include $10 million (before
tax) in asset write-downs and losses resulting from various other
nonregulated business ventures that are not being pursued after the
merger. In addition, Other Nonregulated results for the 12 months
ended Sept. 30, 2000, were also reduced by a special charge of 2 cents
per share for a valuation write-down of Xcel Energy's investment in
the publicly traded common stock of CellNet Data Systems, Inc. during
the fourth quarter of 1999.
Note 3. NRG Acquisitions
Completed Asset Acquisitions
Audrain - In June 2001, NRG purchased an approximately
640-megawatt natural gas-fired power plant in Audrain County, Missouri
from Duke Energy North America LLC.
Brazos Valley - In June 2001, NRG closed on the construction
financing for a 633-megawatt gas-fired power plant in Texas that NRG
will build, operate and manage. At the time of the closing, NRG also
became the 100- percent owner of the project by purchasing STEAG Power
LLC's 50-percent interest in the project. NRG estimates that its
investment in the project will total approximately $170 million. NRG
expects the project to begin commercial operation in February 2003.
Conectiv - In June 2001, NRG purchased 1,081 megawatts of
interests in power generation plants from a subsidiary of Conectiv for
approximately $644 million. NRG acquired a 100 percent interest in the
784-megawatt coal-fired Indian River Generating Station located in
Delaware and in the 170-megawatt oil-fired Vienna Generating Station
located in Maryland. In addition, NRG acquired 64 megawatts of the
1,711-megawatt coal-fired Conemaugh Generating Station and 63
megawatts of the 1,711-megawatt coal-fired Keystone Generating
Station, both located near Pittsburgh, Penn.
Vattenfall - In June 2001, NRG acquired Vattenfall's interests in
three South American projects. Those projects consist of Compania
Boliviana de Energia Electrica S.A. - Bolivian Power Company Ltd.
(COBEE) and Compania Electrica Central Bulo Bulo S.A., both in
Bolivia, and Itiquira Energetica S.A. in Brazil. In addition, NRG
acquired the ownership interest of Inepar Energia S.A. (Inepar) in the
Itiquira project. NRG now owns 98.9 percent of COBEE, 60 percent of
Bulo Bulo and 99 percent of the common shares of Itiquira. COBEE, with
220 megawatts of predominantly hydroelectric generation, is the second
largest electric generator in Bolivia. Bulo Bulo is an 88-megawatt,
natural gas-fired facility in Bolivia. Itiquira is a 156-megawatt
hydroelectric project in the advanced stage of construction in Brazil.
Full commercial operation of Itiquira is expected in March 2002.
PowerGen - In June 2001, NRG purchased a 389-megawatt gas-fired
power plant and a 116-megawatt thermal power plant, both of which are
located in Hungary, from PowerGen. In April 2001, NRG also purchased
PowerGen's interest in Saale Energie GmbH and MIBRAG BV. By acquiring
PowerGen's interest in Saale Energie, NRG increased its ownership
interest in the 960-megawatt coal-fired Schkopau power station,
located in Germany from 200 megawatts to 400 megawatts. By acquiring
PowerGen's interest in MIBRAG, consisting primarily of two lignite
mines and three power stations in Germany, NRG increased its ownership
of MIBRAG from 33.3 percent to 50 percent. NRG paid approximately $190
million to PowerGen for all of these interests.
Hsin Yu - In July 2001, NRG acquired approximately 60 percent of
Hsin Yu Energy Development Co. Ltd, a Taiwan company that owns and
develops power generation facilities. Hsin Yu currently owns a
170-megawatt cogeneration facility, Hsinchu Phase I. Hsin Yu is
developing a 245-megawatt expansion of the Hsinchu facility and a new
490-megawatt greenfield project.
Indeck - In August 2001, NRG acquired an approximately
2,255-megawatt portfolio of operating projects and projects in
advanced development that are located in Illinois and upstate New York
from Indeck Energy Services, Inc. Approximately 402 megawatts are
currently in operation and NRG expects that an additional $1.3 billion
will be required to complete construction of the projects.
McClain - In May 2001, NRG acquired Duke Energy's 77-percent
interest in the 500-megawatt, natural gas-fired McClain Energy
Generating Facility located in Oklahoma for approximately $283
million. The Oklahoma Municipal Power Authority owns the remaining
23-percent interest.
Pending NRG Asset Acquisitions
Conectiv - In June 2001, NRG extended purchase agreements that it
had entered into with a subsidiary of Conectiv to acquire 794
megawatts of coal and oil-fired electric generating capacity and other
assets in New Jersey and Pennsylvania, including an additional 66
megawatts of the Conemaugh Generating Station and an additional 42
megawatts of the Keystone Generating Station. NRG will pay
approximately $180 million for these assets. NRG expects the
acquisition to close in the fourth quarter of 2001 following approval
of the New Jersey Board of Public Utilities.
Narva Power - In August 2000, NRG signed an agreement with Eesti
Energia, the Estonian state-owned electric utility, to purchase for
approximately $72 million a 49 percent stake in Narva Power, the owner
and operator of the oil shale-fired Eesti and Balti power plants,
located near Narva, Estonia. The plants have a combined capacity of
approximately 2,500 megawatts. NRG is working to close the acquisition
in the fourth quarter of 2001.
Meriden - In December 2000, NRG signed a purchase agreement to
acquire a 540-megawatt natural gas-fired generation facility being
developed in Connecticut, for a purchase price of approximately $25
million. NRG expects to close the acquisition in the fourth quarter of
2001. NRG estimates it will cost approximately $384 million to
complete construction of the plant, which has a planned commercial
operation date of June 2003.
Note 4. Commitments and Contingencies
California Power Market - NRG's California generation assets
consist primarily of its interests in the Crockett and Mt. Poso
facilities and a 50-percent interest in West Coast Power LLC, formed
in 1999 with Dynegy Inc. The West Coast Power facilities sold power
through the California Power Exchange (PX) and the California
Independent System Operator (ISO) to Pacific Gas and Electric Company
(PG&E), Southern California Edison Company (SCE) and San Diego Gas and
Electric Company (SDG&E). Currently, the West Coast Power facilities
sell power through the California ISO to the California Department of
Water Resources (CDWR). Crockett, Mt. Poso and certain other NRG
California facilities also sell directly to PG&E, SCE and SDG&E. The
combination of rising wholesale electric prices, increases in the cost
of natural gas, the scarcity of hydroelectric power and regulatory
limitations on the rates that PG&E and SCE may charge their retail
customers caused both PG&E and SCE to default in their payments to the
California PX, the California ISO and other suppliers, including NRG.
In March 2001, the California PX filed for Chapter 11 bankruptcy and
in April 2001, PG&E filed for Chapter 11 bankruptcy.
NRG's share of the net amounts owed to its California affiliates
by the California PX, the California ISO and the three major
California utilities totaled approximately $230 million as of Sept.
30, 2001. This amount reflects NRG's share of (a) total amounts owed
to our California affiliates of $371 million, less (b) amounts that
are currently treated as disputed revenues and are not recorded as
accounts receivable in the financial statements of NRG's California
affiliates, and reserves taken against accounts receivable that have
been recorded in the financial statements, which together totaled $141
million. NRG believes that it will ultimately collect in full the net
amount of $230 million owed to its California affiliates; however, if
some form of financial relief or support is not provided to PG&E and
SCE, the collectibility of this amount may become questionable in
terms of both timing and amount. Disputed revenues related to billing
that arise in the ordinary course of business must include
justification for pricing higher than the California ISO and the FERC
imposed revenue caps on the wholesale price of electricity. None of
these disputed revenues will be recorded until issues are resolved.
Since the date of the PG&E bankruptcy filing, PG&E has been paying
NRG's Crockett and Mt. Poso affiliates on a current basis.
The delayed collection of receivables owed to West Coast Power
resulted in a covenant default under its credit agreement. West Coast
Power has entered into a forbearance agreement with its lenders in
connection with the covenant default. In addition, NRG's Crockett
affiliate was notified by its lenders that it has incurred a covenant
default under its loan agreement. As a result, NRG has reclassified
the long-term portion of the Crockett debt to current. Defaults under
the Crockett and West Coast Power credit agreements do not trigger
defaults under any of NRG's corporate-level financing debt securities
or borrowing arrangements.
FERC has jurisdiction over sales for resale of electricity in the
California wholesale power markets. In March 2001, FERC issued orders
that presumptively approved prices up to $273 per megawatt-hour during
January 2001 and $430 per megawatt-hour during February 2001. The
orders direct electricity suppliers either to refund a portion of
their January and February sales or justify prices charged above these
approved prices. The orders, if finalized, could require West Coast
Power to refund approximately $45 million in revenues from January and
February, of which NRG's share would be approximately $22.5 million.
While Dynegy Power Marketing, Inc., as the power marketer for West
Coast Power, has submitted information to justify each component of
the prices it charged that were in excess of the presumptively
approved prices, FERC has rejected all of the generators' submissions
for excess prices for April 2001 through June 2001 (currently under
appeal).
Note 5. Independent Transmission Company
On Sept. 28, 2001, Xcel Energy and five other electric utility
companies applied to the Federal Energy Regulatory Commission (FERC)
to let them integrate operations of their electric transmission
systems into a single system through the formation of TRANSLink
Transmission Co. LLC (TRANSLink), a for-profit, transmission-only
company. The utilities will participate in TRANSLink through a
combination of divestiture, leases and operating agreements. The
applicants are: IES Utilities Inc. (IES), Interstate Power Company
(IPC), Corn Belt Power Cooperative, MidAmerican Energy Company,
Nebraska Public Power District, Omaha Public Power District and Xcel
Energy. The participants asked FERC to expedite consideration of their
application and hope action will occur by early 2002. The TRANSLink
proposal is subject to receipt of all required federal and state
regulatory approvals.
TRANSLink's business will be the development, maintenance and
operation of a robust transmission system capable of meeting the
increasing energy demands both locally and throughout the region.
TRANSLink will oversee 26,000 miles of transmission lines, linking
generators producing 35,000 megawatts of electric power to
approximately 6.9 million customers in 14 states, making it one of the
largest transmission companies in the nation.
The six participants believe TRANSLink is the most cost-efficient
option available to manage transmission and to comply with regulations
issued by FERC in 1999 (known as Order No. 2000) that require
investor-owned electric utilities to transfer operational control of
their transmission system to an independent regional transmission
organization (RTO).
TRANSLink will comply with these regulations by operating
independently of both buyers and sellers in the electricity market,
including the applicant utilities. However, its board of directors
will also be responsible for maximizing the value of the transmission
system and increasing the efficiency of its operations. Other options
for complying with the FERC regulations leave ownership with the
utilities, but do not allow the owners any operational control.
Under the proposal, TRANSLink will be responsible for planning,
managing and operating both local and regional transmission.
Transmission service pricing will continue to be regulated by FERC,
but construction and permitting approvals will continue to rest with
regulators in the states served by TRANSLink. The participants have
also entered into a memorandum of understanding with the Midwest
Independent Transmission Operator, Inc. (MISO) in which they agree
that TRANSLink will contract with MISO for certain other required RTO
functions and services.
Note 6. Credit Ratings
In October 2001, Moody's downgraded Xcel Energy's commercial paper
rating to Prime-2 from Prime-1 and affirmed Xcel Energy's A3 long term
rating. In addition, Moody's downgraded its long- and short-term
ratings for SPS to A3 (senior unsecured)/Prime-2 and affirmed its long
and short term ratings for NSP-Minnesota Aa3 (senior secured)/Prime-1.
These actions conclude Moody's previously announced reviews of Xcel
Energy, SPS and NSP-Minnesota ratings. Moody's outlooks on all of the
ratings are stable.
Moody's SPS ratings had anticipated SPS selling much of its
generating assets and possibly applying some proceeds to reduce debt,
thereby improving cash coverage of debt service. With the delay of
restructuring in SPS' service territory exempting SPS from the sale of
its generation, however, SPS' credit statistics are not projected to
show significant improvement in the near term. Moody's NSP-Minnesota
ratings continue to reflect the company's healthy service area
economy, competitive power costs and rates and supportive regulatory
environment.
-0-
*T
XCEL ENERGY INC.
Unaudited Earnings Release Summary
All dollars in thousands, except earnings per share
3 months ended Sept. 30 2001 2000
----------------------------------------------------------------------
Operating revenue $ 3,763,000 $ 3,093,000
Net income $ 273,000 $ 93,000
Earnings available for common shareholders $ 272,000 $ 92,000
Average shares - common and potentially
dilutive (1000's) 344,000 339,000
Earnings per share - diluted
Earnings before unusual items $0.79 $0.72
Special charges $0.00 ($0.43)
Regulatory decisions $0.00 $0.00
Extraordinary item $0.00 ($0.02)
----- ------
Total earnings per share $0.79 $0.27
===== =====
9 months ended Sept. 30 2001 2000
----------------------------------------------------------------------
Operating revenue $11,693,000 $ 7,898,000
Net income $ 650,000 $ 389,000
Earnings available for common shareholders $ 647,000 $ 386,000
Average shares - common and potentially
dilutive (1000's) 343,000 337,000
Earnings per share - diluted
Earnings before unusual items $1.85 $1.57
Special charges $0.00 ($0.43)
Regulatory decisions $0.03 $0.00
Extraordinary item $0.00 ($0.06)
----- ------
Total earnings per share $1.88 $1.14
===== =====
12 months ended Sept. 30 2001 2000
----------------------------------------------------------------------
Operating revenue $15,387,000 $10,098,000
Net income $ 788,000 $ 536,000
Earnings available for common shareholders $ 784,000 $ 532,000
Average shares - common and potentially
dilutive (1000's) 342,000 337,000
Earnings per share - diluted:
Earnings before unusual items $2.34 $2.13
Special charges ($0.09) ($0.49)
Regulatory decisions $0.03 $0.00
Extraordinary item $0.00 ($0.06)
----- ------
Total earnings per share $2.28 $1.58
===== =====
Return on Equity, before unusual items 13.8% 12.6%
Return on Equity - total 13.4% 9.9%
Book value $17.99 $16.17
*T
--30--cr/ms*
CONTACT: Xcel Energy, Minneapolis
Investor Relations:
E J McIntyre, 612/215-4515
R J Kolkmann, 612/215-4559
or
Media Relations:
612/215-5300
Xcel Energy Internet Address: http://www.xcelenergy.com
KEYWORD: MINNESOTA
INDUSTRY KEYWORD: CONSUMER/HOUSEHOLD ENERGY TELECOMMUNICATIONS
UTILITIES EARNINGS
SOURCE: Xcel Energy
COPYRIGHT 2001 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.
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