Paul Johnson - Managing Director, IR Ben Fowke - President and COO Dave Sparby - CFO Scott Wilensky - VP, Regulatory and Resource Planning

Daniele Seitz - Dudack Research Group Ali Agha - SunTrust Robinson Humphrey Leslie Rich - JPMorgan Dan Jenkins - State of Wisconsin Investment Rudy Tolentino - Morgan Stanley Daniele Seitz - Dudack Research Group Timothy Yee - KeyBanc Capital Markets

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Xcel Energy Second Quarter 2010 Conference Call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Thursday, July 29, 2010. I'd now like to turn the conference over to Paul Johnson, Managing Director of Investor Relations and Assistant Treasurer. Please go ahead, sir.

Thank you, and welcome to Xcel Energy's second quarter 2010 earnings release conference call. I'm Paul Johnson. With me today are Ben Fowke, President and Chief Operating Officer; Dave Sparby, Vice President and Chief Financial Officer; Teresa Madden, Vice President and Controller; Scott Wilensky, Vice President, Regulatory and Resource Planning; and George Tyson, Vice President and Treasurer. Today we plan to cover our second quarter results and provide a general business updates. Please note that there are slides that accompany the conference call, which are available on our web page. I want to remind everyone 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's press release refers to both GAAP and ongoing earnings. GAAP earnings for 2010 include a $0.01 per share benefit from discontinued operations, largely due to the recognition of previously unrecognized tax benefits. Our comments this morning will focus on ongoing earnings which do not include discontinued operation. A reconciliation of ongoing earnings per share to GAAP earnings per share is available in our press release. With that, I will turn the call over to Ben Fowke.

Thanks, Paul and welcome everyone. This morning we reported second quarter ongoing earnings of $0.29 per share compared with $0.25 per share in 2009. In a few moments Dave will walk you through the details of our quarterly results. But I'd like to start by saying after two strong quarters we remain on track to deliver ongoing earnings within our 2010 earnings guidance range of $1.25 to $1.65. Now let me bring you up today on some recent developments. In Colorado I'm pleased to report that (inaudible) went into service in May and achieve commercial operation earlier this month. The plant is certified at 802 net megawatts, which is above the expected output before 750 megawatts. I'm also pleased to note we continue to make solid progress on our CapEx 20-20 transmission project with construction now underway at our (inaudible) substation. In July, we received two of the five route permits needed in Minnesota for the project. Minnesota commission approved our application for the first segment of the Fargo line and for all but one section of the bookings line associated with the river crossing. We believe that we will be able to reach an agreement regarding this section, soon. Obviously, it takes a long time to build transmission lines and we've been very successful in all aspects of the process. It's really exciting to see construction actually begin. Another development that promises to benefit our customers is our plan to acquire two natural gas plants from Calpine for approximately $739 million. In May we filed a request with the Colorado Commission seeking approval of the acquisition and interim rate recovery of the revenue requirements associated with the plants. In July we received FERT regulatory approval of the transaction and the order imposes no conditions or modifications, other than routine requirements for post closing reports and filings. We've also received clearance into the Hart-Scott-Todino act. The Colorado Commission assigned an administrative law judge to our case and developed a procedural schedule which assumes a initial decision by the end of October. This is consistent with our request and puts us on track for a December closing. One more update from Colorado. The clean air, clean jobs act was signed into law, in April. The bill establishes a timeline and a regulatory framework for PSCo to retrofit retire or replace 900 megawatts or more of older and less efficient coal fire generation. The provisions of the bill are very similar to the successful Merck project we finished last year in Minnesota. We will file our plan with the Colorado PUC in mid August, and the commission will rule on the plan by year-end. Our plan will include several potential alternatives, and our recommended solution. In light of the recent EPA proposals recording coal fire generation, the Colorado legislation is just another example of our ability to work with key stake holders to arrive at a creative solution to reduce emissions while ensuring timely recovery of cost. I will now turn the call over to Dave, who will walk you through our second quarter results, discuss our financing plans, and provide a regulatory update.

Thanks, Ben. Let's start by reviewing second quarter results at each of our subsidiaries. Earnings, at (inaudible) increased $0.04 per share largely due to the rate increases in electric sales growth. Keep in mind PSCo's 2010 earnings for both the quarter and year-to-date periods reflect rate increases from both 2009 and 2010 electric rate cases. New rates associated with the 2009 rate case went into effect in July 2009. As a result, improvement in PSCo's earnings in the second half of the year will be driven primarily from the 2010 rate increase. At (inaudible), earnings decreasing by $0.02 per share largely due to higher O&M costs which offset electric sales growth. At SPS, earnings increased $0.02 per share due to the resolution of fuel cost allocation issues, new rates that went into effect in New Mexico July 2009 in electric sales growth. And finally, earnings were flat for the quarter for NSP-Wisconsin. Now I would like to discuss the drivers that affected various lines of the income statement beginning with retail electric margin. Electric margin increased $118 million for the quarter largely driven by rate increases in Colorado, and to a lesser extent south Dakota, New Mexico and Wisconsin. Together, these rate increases improved electric margin by $70 million. In addition to rate increases, other factors that improved second quarter electric margin included conservation revenue, which increased by $14 million, but is largely offset by higher conservation and DSM expense. A $11 million associated with the reversal of the fuel cost a indication regulatory reserves at SPS, $10 million from warmer than normal weather, $8 million from retail sales increases, excluding the impact of weather, and other factors which are detailed in our earnings release. Now in addition, I am pleased to note that our weather adjusted electric sales increased 1.5% year-to-date. This is fairly consistent with our expectations. Turning to our natural gas business, margins increased $2 million for the quarter, driven primarily by conservation revenue, which is largely offset by conservation and DSM expenses. Offsetting some of the improvement in margins, second quarter O&M expenses increased $44 million or 9.4%. Factors driving this second quarter increase in O&M expenses included $13 million of higher employee benefit costs related to performance-based incentive compensation and pension costs; $12 million of increased nuclear outage and plant operation costs; $7 million of higher labor costs; $6 million of higher plant generation costs, and other factors totaling an increase of $6 million. Through the first half of the year, O&M expenses increased 5.6%. We continue to project annual O&M costs to increase approximately 6% to 7% in 2010. Let's move on to our financing plans. Our financing plans for the balance of the year are unchanged. In May we issued $550 million of 10 year unsecured notes at 4.7% at the Xcel Energy holding company. At NSP-Minnesota we plan to issue $500 million of first mortgage bonds early in the third quarter. At PSCo we plan to issue approximately $400 million of first mortgage bonds in the fourth quarter. Finally we plan to issue $400 million of equity in 2010 or 2011. The timing of our equity offering will take several factors into account including market conditions; the timing of the Calpine asset acquisition; capital expenditures; cash generation and overall liquidity. We have flexibility on the timing. And we will be opportunistic regarding our stock price. The proceeds of the transaction will be used to fund our capital investment program, term out our short term debt; fund 2010 bond maturities, and for general corporate purposes. In addition, we'll use a portion of the proceeds from the holding company transactions to infuse equity into our utility subsidiaries. Our financing plan will enable us to maintain a solid balance sheet and strong credit metrics. As I am sure you can appreciate, our financing plans are subject to change depending on the timing of our capital expenditures, internal cash generation, market conditions, and other factors. Given the number of investment opportunities, we have strong credit ratings are critical to support our strategy. We recently received positive news that Standard and Poor's upgraded the corporate credit rating on Xcel Energy and NSP-Minnesota, PSCo and SPS to A- from Triple B+ They also affirmed the A- corporate credit raining on NSP-Wisconsin. S&P stated that the rating upgrades reflected our successful execution of our strategy to invest in our regulated utilities and recover costs in our regulatory jurisdictions, most of which they consider to be credit supportive. In addition, Fitch recently reaffirmed Xcel Energy's credit ratings. Now let me give you a quick update on our pending and planned rate cases. In Colorado, we recently reached settlements with one of our wholesale customers. New rates reflecting an electric rate increase of approximately $17 million, for these customers, will be effective in July, subject to FERC approval of the settlement. In Minnesota we completed hearings in our gas rate case. Our request has been modified to a rate increase of about $10 million based on an ROE of 10.6%. The office of energy security is currently recommending a rate increase of approximately $7.5 million; we anticipate a commission decision this fall. In May we filed for $62 million electric rate increase in Texas. The request includes an 11.35 ROE and an equity ratio of 51%. On a net basis, the request seeks to increase customer bills by approximately $53.5 million or 7%. Intervener testimony for this case is scheduled to be filed in September. We anticipate final rates going into effect in early 2011. Looking ahead, we plan to file a limited re-opener in Wisconsin next month. In addition, we anticipate the need to file an electric rate case in Minnesota later this year. Finally we're pleased to put our discontinued corporate owned life insurance program call behind us for good. In July we reached a settlement with provident life and accident insurance company related to all our claims regarding our discontinued call program. Under the terms of the settlement we received $25 million earlier this month. The settlement of $25 million or approximately $0.05 of non-reoccurring earnings per share will be recorded during the third quarter. In summary, it's been a very good quarter. Comanche 3 came on line. We received route permits from two of our CapEx 20-20 projects. We reached a settlement in our call lawsuit. We continue to make good progress on various regulatory front and we received an important credit rating upgrade from S&P, which recognizes the successful execution of our business strategy. Year-to-date, our ongoing earnings are $0.07 ahead of last year. In addition, July weather has been warmer than normal. As a result, we're very comfortable reaffirming our ongoing earnings guidance of $1.55 to $1.65 per share. That concludes my prepared remarks. We're now ready for your questions.

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from the line of [Ashar Khan] with Visium Asset Management. Please go ahead.

Just to check in. Could you just remind when you come up with your Colorado I guess environmental plan? When is that expected?

We expect to file that August 13.

August 13.

Yes.

And then just on your financing, if I could understand it, you said you could be opportunistic, with your stock at a 52-week hike, and then you said it depended upon the timing of the Calpine acquisition. I was just trying to get a better sense as to if you wanted could you do something in the immediate future, or you have to wait for some more nods on the Calpine acquisition?

I'm, Ashar, really not going to elaborate beyond the prepared remarks in our script this morning on our equity issuance.

Our next question comes from the line of Daniele Seitz of Dudack Research Group. Please go ahead. Daniele Seitz - Dudack Research Group: I was just wondering - could you explain the Minnesota re-opener and also the regulatory decisions that will be made regarding CapEx 20-20 just from the point of view of how does it go into rate base, etcetera?

What we have seen is the approval of our certificate of need, of our major lines here in the CapEx projects. Now we're currently recovering the cost of those projects through a rider mechanism and also as Ben spoke to we have received two of the very significant route permits that we were looking for with, you know, one segment of one of those lines, we have to yet clear up, and also, some of those certificates of need have been appealed and those appeals have been resolved. So we continue to advance on all fronts from a regulatory perspective and a cost recovery perspective. Daniele Seitz - Dudack Research Group: And also, I was wondering if you could elaborate on the PSCo pipeline and storage and what is the outlook and that at this substituting?

It continues to operate this year, very much as planned with storage and transportation and we have been very please with what we have seen to date. Daniele Seitz - Dudack Research Group: With some expansion expected in the future? What are your plans there?

I'm sorry Daniele… Daniele Seitz - Dudack Research Group: Do you see any expansion in the future?

No, not at this point.

Our next question comes are the line of Ali Agha with SunTrust Robinson Humphrey. Please go ahead Ali Agha - SunTrust Robinson Humphrey: Given where you ended up through the first half and your comments that July obviously is trending harder as well, is it fair to assume that probably more comfortable on the higher end of the range that you have laid out for us for this year?

Ali, I think you need to go back and look at that guidance, and understand that some of those lines of expenditures are not proportional to the quarter. And, you know, especially in northern utilities, O&M expenses are tilted a little bit more towards the third quarter, for example. Also, you go back and take a look at where we are on interest and depreciation, and you see some back-end waiting. So, we have had lesser expense in the first half. You will see us catch up a little bit in the second half of the year. We remain very comfortable with the guidance range though. And, among your larger utilities going into this year it appeared that Colorado electric was the one that appeared to be under earning relative to a lot of ROEs. You wonder rate increase that you have full year of '09 and then the '10 increase, is it fair to say that Colorado electric should pretty much earnings its authorized return this year?

We should get close to earning our authorized return. Ali Agha - SunTrust Robinson Humphrey: Okay. And last question. Whether David you or Ben would like to comment you folks are obviously fairly active with EEI, activities, and any recent read on how you thinking things are shaping up out of Washington, whether in regards to the dividend, tax, or, you know, the EPA regulations, any thoughts from your perspective?

This is the Ben. We're cautiously optimistic on the dividend, and I mean, what will obviously come down to is an overall tax bill and, hopefully, we can get that. As we all know that is very important for the business. As far as EPA goes, it is one of the reasons why we have tried to as an industry group get some comprehensive Federal legislation regarding climate change because we don't think the EPA approach is the right approach. And I think you have probably seen as we all have the death by thousand cuts or regulations that is out there with EPA is not great. I mean, as a company we're positioned pretty well for what came out just recently. But nevertheless, it is not the right way to go. But I think you're basically going to see gridlock on anything around that, for the foreseeable future. Hopefully, we won't see the same for the opportunity to reduce the dividend tax. Ali Agha - SunTrust Robinson Humphrey: From a CapEx perspective, then, can we expect any changes for '11 or even '12, what you're currently budgeting?

I will let Dave give you the details but I think the short answer is no.

Yes, the answer is no.

Our next question comes from the line of Leslie Rich with JPMorgan. Go ahead. Leslie Rich - JPMorgan: You discussed in Wisconsin that you might file for a limited re-opener. And I wondered if you could just elaborate on the magnitude of that and what items you're looking to address?

I will let Scott Wilensky in charge of our regulatory area and is managing that filing speak to that.

That is going to address the capital costs for production and transmission that we have planned to incur in 2011, as well as an update of our fuel expenses. We're going in the neighborhood of, relatively modest increase in the 3% to 6% range. We're still obviously finalizing things. Leslie Rich - JPMorgan: Okay and you said you would be doing that in the third quarter?

Early in August, yes. Leslie Rich - JPMorgan: And that would be decided how quickly?

We're hopeful that we will get a decision by the end of the year.

Our next question comes from the line of Dan Jenkins with State of Wisconsin Investment. Dan Jenkins - State of Wisconsin Investment: I was wondering if you could give us any insights on what you're seeing economically in your service territories, you know, are you seeing some pickup in activity or place the read in Colorado and Minnesota and in the Southwest?

We have seen some pickup, but it has not been across the board. When we talked to you last quarter, what we were seeing was, some sectors who have continued to be strong, like energy, and other sectors, continuing to be weak, like services, agriculture, and food. But we have seen more of, in the second quarter is a pick up in some segments of manufacturing. Things like mining, some steel, some industries that make parts for automobiles. All pick up a little bit. But the increase in production and manufacturing has not been broad-based and that's why we have a bit more cautious outlook than maybe others do. Dan Jenkins - State of Wisconsin Investment: And then I was curious, on your break down of the electric margin. You have one item is the retail sales increase, and then the other is sales mix and demand revenues. What's the distinction between those two items?

Well, what we see from time to time is a change in demand. (inaudible)And, that's often reflect of customers moving between classes, the particular tariffs into effect and how they are affected by ratchets and other items. Dan Jenkins - State of Wisconsin Investment: Okay. Then the last thing I was curious, part of increase in the O&M was related to line outages and nuclear outages just kind of what's the schedule going forward. How do you expect that to compare, say, in the second half?

With respect to the outage schedule, it will say strong. As I talked about earlier, this is a point in the year when a fair amount of that is done. I think it's important to keep in mind when you look year-over-year this is a lot more normal summer for us. There was some things that we didn't have to do last year because it was much cooler. This year, the maintenance schedule, particularly that maintenance that's key to the run hours and the starts of a lot of units, is going to look much more like our historic spend pattern. Dan Jenkins - State of Wisconsin Investment: As far as the nuke unites, what's that? Are there any outages planned in the second half and…

There is just one outage this year, Dan.

And Dan, just a point to remember is that we have a deferral and amortization that's it for nuclear outages. As a result of that what you see is a fairly levelized cost. Now, obviously if nuclear outages increase in cost that cost would be reflected. And there is a little bit of a pick-up in 2010 because we're starting to this is probably the last year of the step increase of making the accounting change.

(Operator Instructions) Our next question comes from the line of Rudy Tolentino with Morgan Stanley. Please go ahead. Rudy Tolentino - Morgan Stanley: Just a kind of as a follow-up to Dan's question. Was there a part of the country in your service territory that had higher load increases than others? Was Minnesota stronger than Texas or Colorado? If you could give a little color on that?

Sure, Rudy. What we saw in first quarter was as we moved from south to north, and from west to east, we went from seeing recovery being above average to recovery being much closer to average. So, we saw recovery, and in fact the downturn being very slight in Texas. We've seen Colorado with an above average recovery. And what we've seen in Minnesota and Wisconsin parallels very much the national recovery. Rudy Tolentino - Morgan Stanley: Okay and then, speaking of Texas I know you send the Texas rate case 11.35 ROE and 51% equity ratios, which send a release as far as what you asked for. What is it currently?

Yeah. Scott, do you want to address that?

Our last two rate cases in Texas have been achieved through black box settlements where those items have not been identified specifically. There really isn't an authorized ROE at this point.

Our next question comes as a follow-up from the line of Daniele Seitz with Dudack Research Group. Please go ahead. Daniele Seitz - Dudack Research Group: In your August filing in Colorado will that also include assuming your plan is adopted, riders associated to different projects and will that also include the two gas plants that you just purchased or are the gas plants separate from in terms of rate consideration.

Daniele, the answer to that question is yes. The plan will include a regulatory recovery component. Daniele Seitz - Dudack Research Group: Okay and the gas plants will be part of it or are the new gas plants that you just purchased? Or are they going to be considered separately from the plan?

If you're referring to the Calpine plants that is proceeding under a different docket, and that's one that is to be resolved in October. Daniele Seitz - Dudack Research Group: Okay. And that will include the rate consideration as well?

Yes.

our next question comes from the line of Timothy Yee with KeyBanc Capital Markets. Please go ahead. Timothy Yee - KeyBanc Capital Markets: Do you have any sense of when you might get that third route permit on CapEx 2020 for that third line? I think it's (inaudible)?

Scott, do you have an answer?

We're expecting that in the third quarter. Timothy Yee - KeyBanc Capital Markets: I guess what happens after the route permit as to when the construction begins for each of these lines and the timing of the investments for those lines?

We begin all of the classic instruction process require land for lay down yards, acquire any land that remains to be acquired and begin construction.

I think the ramp up, though, probably occurs a couple of years from now really when it relates to CapEx 2020 and continues…

Sure the span.

So if that's your question.

So kind of we are looking for a couple of years from now when the ramp up begins.

Transaction transmission will be a very big part of our capital profile as you get to the middle and latter part of the decade it's a result of all the years of efforts we've already put into project like CapEx 2020. It takes a very long time to get these things done.

And at this time there are no further questions in queue. I would like to turn the call back over to management for closing remarks.

I want to thank everyone for attending our second quarter conference call. We look forward to seeing many of you on the road over the next several weeks. And if there are any follow up questions, Paul Johnson and the IR team are available to take your calls. Thank you.

Thank you. And ladies and gentlemen, this concludes the Xcel Energy's second quarter 2010 earnings conference call. If you would like to listen to a replay of today's conference please dial 303-590-3030 or 800-406-7325 and enter the access code 432-4981. ACT would like to thank you for your participation and you may now disconnect.