Xcel Energy Inc.’s top executives expect residential demand growth to slow this year from its stronger-than-expected 2021 while commercial and industrial customers’ demand is expected to pick up the slack.
Minneapolis-based Xcel, which runs utilities in the Upper Midwest as well as Colorado, New Mexico and Texas, on Jan. 27 reported fourth-quarter profits of $315 million on operating revenues of nearly $3.4 billion, numbers that were up from $288 million and $2.9 billion, respectively, in the last three months of 2020. Higher electric fuel, purchased power and natural gas costs meant operating income was essentially flat year over year.
Sales during the quarter rose 0.3% on an actual basis and 1.3% when adjusted for weather versus late 2020 but those figures were bifurcated between residential and C&I customers: Weather-normalized, residential sales fell 2.3% in the last three months of the year while C&I sales rose 2.8%. (Through the first nine months of the year, those numbers had been 1.4% and 1.5%, respectively.) But Chairman, President and CEO Bob Frenzel and CFO Brian Van Abel took the numbers in stride, pointing out that residential demand had been surprisingly strong earlier in 2021, that extreme weather may have produced a little “noise” even in the adjusted numbers and expressing confidence in their outlook for the coming year.
“I feel good on the C&I side,” Van Abel said. “And we do expect those residential numbers to decline a little bit as you […] return to normal. So we do feel comfortable with where we're sitting for 2022 on the overall basis, with stronger C&I sales offsetting some of the residential decline.”
Frenzel and Van Abel this week reiterated that they expect decisions later this quarter from Colorado and Minnesota officials on resource plans that would further Xcel’s plan to drastically lower its carbon emissions and ramp up renewable energy projects. The company’s subsidiaries in those states are slated to spend more than $20 billion of the projected $26 billion of capital projects Xcel has in the works over the next five years. Those longer-term plans, first outlined three months ago, could grow by between $1.5 billion and $2.5 billion that would go to renewable and transmission expansions.
“We don't know exactly where that's going to happen until the final projects are picked,” Frenzel said. “We know they'll cost some money. We just don't know what it is and where exactly it will happen.”
Shares of Xcel (Ticker: XEL) rose 2% Jan. 27 to about $69. They are essentially flat over the past six months.
