Utility Business Notes: Xcel Settles Colorado Fire Claims and Sempra Strikes Infrastructure Deal

Executives at Xcel Energy Inc. have, along with two telecommunications companies, finalized agreements to settle all claims stemming from the late-2021 Marshall Fire in Colorado.

Per the agreement, Xcel’s Public Service Co. of Colorado subsidiary will pay $290 million of its own money and use $350 million of remaining insurance coverage to cover claims from other insurers as well as public entities and individuals who have sued the company. Company officials say the agreements in principle still need to be finalized and that individual plaintiffs will need to opt into its terms.

“Despite our conviction that PSCo equipment did not cause the Marshall Fire or plaintiffs’ damages, we have always been open to a resolution that properly accounts for the strong defenses we have to these claims,” said Bob Frenzel, chairman, president and CEO of Xcel Energy. “We recognize that the fire and its aftermath have been difficult and painful for many, and we hope that our and the telecom defendants’ contributions in today’s settlement can bring some closure for the community.”

Word of the settlement deal came just hours before the scheduled start of a trial on the merits of a local sheriff’s office lawsuit that claimed Xcel was at fault for the second of two ignitions during the Marshall Fire. In early August, Frenzel told analysts his team was prepared to go to trial but that—despite formal mediation sessions ending in July—it was open to continued settlement talks.

Xcel executives will take a $290 million third-quarter charge to its profits to account for the settlement. Investors cheered the Sept. 24 news: Shares of Xcel (Ticker: XEL) popped and were up nearly 7% to about $78 in late trading.

Sempra Selling Another Stake in Infrastructure Group

The leaders of Sempra have struck a deal to sell 45% of the company’s Sempra Infrastructure Partners division to investment firms KKR and Canada Pension Plan Investment Board for a total of $10 billion.

KKR, one of the investing world’s most prominent names, will pay $7 billion to acquire 32% of Sempra Infrastructure, which runs a network of liquefied natural gas, pipeline and storage projects as well as some generation assets in the United States and Mexico. The Canada Pension Plan, through its CPP Investments unit, has committed to paying $3 billion for the other 13%.

The deal, plans for which were announced in the spring, is expected to close in the middle of next year and will result in a KKR-led group (that includes CPP) owning 65% of Sempra Infrastructure. Terms call for Sempra to receive nearly half of the $10 billion at close, another 41% at the end of 2027 and the remaining roughly $1.2 billion in mid-2033. Sempra executives said in a statement that such a schedule will let them bring in interest income while they invest sale proceeds “over time” in growth projects at the company’s Texas and California utilities.

Earlier this year, Sempra Chairman and CEO Jeff Martin and his team outlined a 2025-2029 capital spending plan of $56 billion, which was 16% larger than their previous capex outlook for 2024 through 2028. Those investments, the details of which will be updated early next year, will help grow the company’s rate base from about $57 billion this year to $80 billion in 2029.

Shares of Sempra (Ticker: SRE) jumped on the deal news Sept. 23 and traded higher still the following day. They closed Sept. 24’s session at $87.29, up 1.4% on the day. The move has grown Sempra’s market capitalization to about $57 billion.