Paul A. Johnson - Managing Director of IR Benjamin G.S. Fowke, III - VP and CFO

Dan Jenkins - State of Wisconsin Investment Paul Ridzon - KeyBanc Capital Markets

Welcome to the Xcel Energy first quarter 2008 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions from members of the investment community only. [Operator Instructions]. This conference is being recorded today, May 1st, 2008. I would now like to turn the conference over to Mr. Paul Johnson, Managing Director of Investor Relations and Assistant Treasurer. Please go ahead, sir. Paul A. Johnson - Managing Director of Investor Relations: Thank you, and welcome to Xcel Energy's first quarter 2008 earnings release. I'm Paul Johnson. With me today is Ben Fowke, Vice President and Chief Financial Officer for Xcel Energy, and several others who can help answer your questions. Today we plan to cover our first quarter results and provide a general business update. Please note that there are slides that accompany this conference call which are available on our web page. Let me remind you that some of our comments may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and our filings with the SEC. Today, our discussion will focus on ongoing results which we believe represents the fundament earnings power of Xcel Energy. Before I turn the call over to Ben, I will cover our overall results and how we calculate ongoing earnings. We are pleased to report that first quarter 2008 GAAP earnings were $153 million or $0.35 per share compared with $120 million or $0.28 per share in 2007. As you recall during the second half of 2007, we reached a settlement resolving our dispute with the IRS regarding our COLI program. Our 2008 first quarter earnings results do not include any material impacts from the discontinued COLI program. However our 2000 first quarter results included earnings of $0.01 per share associated with the COLI program. This morning's discussion will focus on ongoing earnings which exclude the impact of COLI on our results. Ongoing earnings for the first quarter of 2008 were $.035 per share versus $0.27 per share, last year. With that, I'll turn the call over to Ben. Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Thanks Paul and welcome everyone. As Paul just mentioned, this morning we reported ongoing earnings of $0.35 per share compared to $0.27 per share a year ago. As you look into the details you will notice that some of the 30% increase in quarterly earnings is due to timing. It will also be clear that we're off to a great start. Let's take a closer look at the details. First quarter 2008 ongoing earnings increased by $0.08 compared to the same period last year, largely due to the higher electric margins which increased earnings by $0.07 per share and higher natural gas margins which increased earnings by $0.03 per share. These positive items were slightly offset by higher O&M expense, which reduced earnings by $0.02 per share. Starting with the top of the income statement, electric margin increased by about $49 million due to several factors. We experienced normalized electric sales growth of 2.1%, which increase margin by $10 million. In addition to normalized sales growth, an extra day of sales from the leap year increased margin by $9 million and cooler whether this year increased margin by $3 million. And electric increase was constant and interim rate increase in North Dakota and various riders combined to increase electric margin by $23 million for this quarter. For more information on the other items that had an impact on electric margin for the quarter, please refer to the table in our earnings release. Turning to natural gas margins, rate increases in Colorado and Wisconsin, cool weather and other items combined to increase natural gas margins by $25 million. A few items partially offset the increases in electric and natural gas margins that I just discussed. Let's look at those partial effects starting with operating expenses. First quarter O&M expenses increased approximately $15 million or 3.3%. Several items contributed to the increase, including higher planned operating cost, timing of nuclear outages, and increases in contract labor and consulting costs. In addition, we had increased spending on conservation programs. Our conservation program costs are recovered in revenue and expenses are offset with increased margin. A positive trend we saw on the quarter were lower benefit costs, which was largely due to improved employee healthcare experience and a change to a high deductible healthcare plan. Moving on, first quarter depreciation and amortization expense increased $6 million or 2.8% driven by normal system expansion. As you develop your quarterly models keep in mind that in the third quarter of 2007, the Minnesota Commission approved our depreciation life filing, and we recorded a year-to-date true up that reduced depreciation expense. As a result, depreciation expense was higher in the first half of 2007, and then lower in the second half of the year. That explains the significant quarterly deviations. Now let me give you a quick regulatory update. The cases that we had filed are not expected to have a material impact on 2008, but will contribute in 2009 and demonstrates our focus on earning our authorized return in each of our jurisdictions. Last July, SPS filed to increase electric rates by about $17 million in New Mexico. The request is based on a historic test year and includes an ROE of 11%, rate base of $307 million, and an equity ratio of about 51%. Intervener testimony was filed in March. The staff recommended an $8 million increase based on a 9.1% ROE. While the attorney general recommended a $2 million decrease based on a 9.2% ROE, and a consolidated tax adjustment. Hearings were held in April, we anticipate a decision later this summer. In December 2007, NSP-Minnesota filed to increase North Dakota electric rates by just over $20 million, based on an equity ratio of 51.8% and ROE of 11.5% and rate base of approximately $242 million. Interim rates of $17.2 million went into affect in early February 2008. We reached the stipulation with the staff for an ROE of 10.75% and this stipulation is subject to approval by the commission. The staff will file testimony on all other issues in May and we expect this decision later this summer. During the first quarter, we filed two wholesale rate cases. In February, PSCo requested a $12.5 million increase in wholesale rates based on an ROE of 11.5%. The request was composed of an $8.8 million of traditional base rate recovery and $3.7 million of DRIP recovery of Comanche 3 and Fort St. Vrain. In March, PSCo reached agreements which resolved all issues and increased annual revenue by $6.6 million with AFUDC continuing for Comanche and Fort St. Vrain. The agreement will allow us to expedite the implementation of new rates by several months. It also allows us to implement new rates in a more timely fashion, when Comanche 3 comes into service in 2009. The agreements are pending a FERC decision and rates could go into effect in May. In March SPS also fought a wholesale case, seeking an annual rate increase of almost $15 million, based on a requested ROE of 12.2%, a decision by FERC is expected later in 2008. In April, we received a FERC order in the 2004 SPS wholesale customer complaint case. The FERC approved us settlement agreement with Golden Spread and Occidental. The order also addressed base rates and fuel disputes. In a base rate case we were disappointed that the FERC approved a 9.3% ROE, but the effect is limited to the 18-month period from January 2005 to June 2006. We have since entered into more favorable settlement with all of our wholesale customers for the subsequent period. In the fuel dispute, the FREC found that incremental costs should be assigned to most of our market base sales. But determined that the new methodology be applied as of January 1st, 2005, rather than that through 1999, as recommended by the ALJ. The order is subject to some interpretation, but we don't expect that the fuel refunds to our fuel requirement customers will exceed $11 million, which we have fully reserved for. More importantly through this decision and pending approval of other settlements, we are bringing closure to this last piece of the system average fuel dispute, that has had an adverse impact on SPS since 2005. We also took regulatory action to extend and increase the output of our nuclear power plants. This is a key component of our plants to meet our customers growing demand for energy, while reducing CO2 emission in a cost effective manner. During the first quarter, NSP-Minnesota filed an application with the Minnesota Commission to increase the capacity at our Monticello Nuclear facility by 70 megawatts. The cost of the project is estimated between $100 million to $135 million, which represents a cost of less than 2000 a KW even at the high side of the estimate. In April, NSP-Minnesota filed with the NRC to extend the operating life of its two nuclear reactors at Prairie Island. We are in the process of finalizing a certificate of need application, which will be filed later this spring with the Minnesota Commission. This application will seek to increase the number of spent fuel storage containers at Prairie Island, to support the license extensions. We also intend to seek approval to increase the output of Prairie Island by 160 megawatts. As most of you are aware, last year, we filed resource plans in the both Colorado and Minnesota that provide a foundation of our strategic initiatives over the next decade. These plants demonstrate how we can meet increasing customer demands for energy, while reducing overall carbon emissions in a cost effective manner. We are currently in the discovery stages of the process. We expect that hearings will occur in the second half of the year, and we should have a decision in both states by the end of 2008 or in early 2009. Now I would like to quickly update you on our construction projects, which are being managed very well. We continued to make significant progress with our emission reduction effort in Minnesota. So far, we spent approximately $900 million, which represents approximately 85% of the total capital expenditures related to MERP. Construction on the High Bridge Combined Cycle Project is nearly complete. The plant should be online this month and is forecasted to be significantly under budget. Construction on the Riverside Combined Cycle Project is about 40% complete and is scheduled to be operational in May of 2009. With significant portions of the project either completed or under contract, we expect to earn an ROE of about 10.7% on the project through a MERP rider. In Colorado, Comanche 3 construction is approximately 50% complete and we spent approximately $585 million, which represents about 55% of the estimated total cost. All major contracts are signed and a vast majority of the engineering and procurement is complete. Comanche 3 remains on track and on budget. Another way to look at the success of the project is based on installed cost. The cost of Comanche 3 is under 1,500 per K/w, when you consider just the cost of the plant itself. The all in [ph] cost of Comanche 3 is just 1,900 per K/w, if you include the cost of transmission and environmental retrofits that units wanted to. This is significantly below the cost of building a new coal plant and it further highlights the significant value Comanche 3 will provide to our customers when it comes online in 2009. In summary, we are very pleased with our first quarter results and accomplishments. In addition, during the first quarter, we raised $900 million of favorable terms despite market volatility to help officially fund our build to core strategy. With a good start to the year, we are reaffirming our annual earnings guidance range of $0.45 to $0.55 per share. So with that let's open it up for questions. Question and Answer

Thank you. Ladies and gentlemen we will now begin the question and answer session for members of the investment community only. [Operator Instructions]. Our first question comes from the line of Dan Jenkins, State of Wisconsin Investment Board. Please go ahead. Dan Jenkins - State of Wisconsin Investment: Hello. Good morning. Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Hey, Dan how are you? Dan Jenkins - State of Wisconsin Investment: Very good. I was wondering on the… your rate filing in North Dakota, were you stipulated on the ROE. What's the revenue impact of what you filed versus using the new ROE, how much does that take the rate request down? Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: The overall rate request was for just over $20 million. Interim rates went to effect at $70 million. The 10.75% ROE agreement… Paul A. Johnson - Managing Director of Investor Relations: It would be a less than $1 million. Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Very minimal. Dan Jenkins - State of Wisconsin Investment: Okay. So… Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: And there are some other issues, Dan, that they'll have to decide as well and that's what they are filing testimony on, but we do expect to get a decision by the end of… early in the summer. Dan Jenkins - State of Wisconsin Investment: Okay. And then just kind of a status in Minnesota, do you see any need in this calendar year to do any more… any rate proceedings in Minnesota at all? Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: You mean like a general rate case? Dan Jenkins - State of Wisconsin Investment: Right. What's your, kind of what your ROE, your earning, versus what you… you are allowed in Minnesota? Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: In Minnesota it will continue to track how the… the performance of this year and what the forecasted performance of next year will be and if we need to follow rate case we will. But we haven't made any determination on that yet. Dan Jenkins - State of Wisconsin Investment: Okay. And then the last thing I was wondering about is, when you talked about the lower employee benefit expenses in the first quarter. Do you expect that level to be sustained or were there unusual items that caused the first quarter to be lower than maybe what you have going forward. Do you have a feel for that? Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Yeah. I don't know if you can commit to taking of quarterly trend and taking it through a full year. But we are happy to see the lower experience rates. I think that has a lot to do with the change in rate plan design. Perhaps it's showing some of the benefits of some of our more proactive health awareness programs. And I think based upon the rate plan designs, employees are taking more ownership of their healthcare cost in dollars. And so I think we will continue to see a benefit from it. I just couldn't tell you if the trend line will continue. Dan Jenkins - State of Wisconsin Investment: Okay, thank you. Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Thanks, Dan

Our next question comes from the line of Paul Ridzon, KeyBanc Capital Markets. Please go ahead. Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Hey Paul. Paul Ridzon - KeyBanc Capital Markets: Hey Ben. How are you? Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Good. Paul Ridzon - KeyBanc Capital Markets: You talked about timing issues, was that just a depreciation and could you go through that again? Sorry. Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: The primary timing issue was depreciation, which you remember, as I said in my prepared remarks, we made a depreciation life extension last year that was approved by the Minnesota Commission. So we did a catch-up entry since it was retro back to the beginning of the year. But that entry didn't happen to the third quarter of last year. So you are going to have a little bit of variance there. Paul Ridzon - KeyBanc Capital Markets: Okay. And I notice in your… kind of your modeling assumptions you have ratcheted up the share count [inaudible]. How do you plan to raise that… that way? Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: I'm not sure what you are talking about? Paul Ridzon - KeyBanc Capital Markets: That the fourth quarter release said you used $433 million diluted share and now that's at 438. Paul A. Johnson - Managing Director of Investor Relations: Well, the 438 Paul, that relates to that assumption has been for 2008 since the fourth quarter. The 434 was a 2007 assumption and the increase in the share count captures the DRIP program, the benefit programs that we have that are equity based. Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Paul, keeping mind that we issued DRIP and other benefit plan equity that ranges between $60 million and $70 million a year. Paul Ridzon - KeyBanc Capital Markets: In fact, I was looking at your fourth quarter release and it kind of, I guess I grabbed the wrong release real quick this morning. Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Okay I will talk to you offline on it. Paul Ridzon - KeyBanc Capital Markets: That sounds good.

[Operator Instructions]. At this time, this will conclude our question-and-answer session. I will turn the conference back to management for closing remarks. Please go ahead. Benjamin G.S. Fowke, III - Vice President and Chief Financial Officer: Well thanks everyone for participating the call this morning. Probably see many of you next week at the AGA Conference in Miami. In the meantime, if you got any follow-up questions please call Paul Johnson or the IR team and we will take your calls and thanks again and look forward to seeing you many of you soon.

Ladies and gentleman this concludes the Xcel Energy first quarter 2008, earnings release conference call. If you would like to listen to a replay of today' conference, please dial 303-590-3000 or 1800-405-2236. The passcode for today's conference is 11112267#. ACT would like to thank you for your participation. You may now disconnect and please have a pleasant day.