Sunny Weather Means Sunny Results for Xcel, as Third-Quarter 2010 Shows Improvement

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Researched by Industrial Info Resources (Sugar Land, Texas)--Warmer weather and favorable rate activity proved beneficial to leading energy company Xcel Energy Incorporated (NYSE:XEL) (Minneapolis, Minnesota) in the third quarter of 2010. Net earnings were reported to be $311.25 million, a 41.62% increase from third-quarter 2009.

Total revenues stood at $2.63 billion, a 13.58% increase from the same period last year. The company cited rate increases, a lower effective tax rate, the effect of seasonal rates on the timing of revenue collection, and warmer temperatures as major reasons for the gains. Temperatures for third-quarter 2010 were warmer than normal, whereas they were cooler than normal in third-quarter 2009.

"The warmer temperatures also produced severe weather throughout our service territory, including flooding in Minnesota and Wisconsin, and a significant increase in lightning strikes in the twin cities," said Ben Fowke, president and chief operating officer of Xcel, in a conference call. "I'm proud to note that we maintained our system integrity and delivered a high level of customer service, despite the impact that severe weather had on our system. Residential customer satisfaction ended the quarter at 92%, which is above our goal for 2010."

Costs increased slightly for fuel and purchased power in the Electric segment, but the segment saw a higher margin nonetheless. Sales and transport costs declined in the Natural Gas segment, further boosting its margin:

• Electric segment revenues stood at $2.44 billion, a 14.65% increase from third-quarter 2009, and the margin was reported to be $1.33 billion, a 15.95% increase.
• Natural Gas segment revenues stood at $170.59 million, a 0.59% increase from the same period last year, and the margin was reported to be $104 million, a 6.12% increase.
• Total revenues from all other segments were reported to be $17.28 million, a 7.93% increase.

Richard C. Kelly, chairman and chief executive officer, said that Xcel's year-to-date earnings are outpacing those of last year, although he expects the timing of seasonal rates will yield less favorable results in fourth-quarter 2010.

"We're pleased to be in a position to deliver 2010 ongoing earnings in the upper half of our guidance range, and initiate 2011 earnings guidance consistent with our long-term growth objectives," said Dave Sparby, vice president and chief financial officer of Xcel, in the conference call.

Industrial Info is tracking 58 active Xcel projects in the U.S. that are worth a total of more than $2.4 billion, including the $116.4 million addition to the Jones Power Station in Lubbock, Texas. The project involves the installation of a natural gas-fired, simple-cycle combustion turbine/generator to supply up to 168 megawatts of peaking power to the grid. For more information, visit Industrial Info's North American Power Project Database.

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