Paul A. Johnson - Vice President of Investor Relations & Financial Management Benjamin G. S. Fowke - Chairman, Chief Executive Officer and President Teresa S. Madden - Chief Financial Officer and Senior Vice President

Neil Mehta - Goldman Sachs Group Inc., Research Division Travis Miller - Morningstar Inc., Research Division Andrew Levi

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the First Quarter 2013 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, May 2, 2013. I would now like to turn the conference over to Paul Johnson, Vice President of Investor Relations and Business Development. Please go ahead, sir. Paul A. Johnson: Thank you, and welcome to Xcel Energy's 2013 first quarter earnings release conference call. Joining me today are Ben Fowke, Chairman, President and Chief Executive Officer; Teresa Madden, Senior Vice President, Chief Financial Officer; Dave Sparby, Senior Vice President and Revenue Group President; Scott Wilensky, Senior Vice President and General Counsel; George Tyson, Vice President and Treasurer; and Jeff Savage, Vice President and Controller. This morning, we will review our first quarter results, update you on recent business and regulatory developments and reiterate our 2013 guidance. There are slides that accompany today's call which are available on our web page. We will also post a brief video of Teresa summarizing our financial results on the website. As a reminder, some of the comments during this morning's conference call 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. I will now turn the call over to Ben Fowke. Benjamin G. S. Fowke: Thanks, Paul, and good morning. Today, we reported first quarter earnings of $0.48 per share compared with $0.38 per share in 2012. First quarter results reflect colder than normal weather, increased electric and gas margins from various rate cases and lower interest expense. Teresa will discuss our quarterly results and earnings guidance in greater detail in a few moments. Our first quarter results are a good start to 2013. However, there are challenges ahead. I'll now provide you with a few updates beginning with a review of some key regulatory developments. As you know, it is important to receive timely constructive recovery of the substantial investments we make in our utility business. That said, we were disappointed with the surrebuttal testimony filed by various parties in our Minnesota electric rate case. While we understand this case has some unique circumstances, for example, around our Serco Plant, we thought we provide a good support for our cause, as well as rate making alternatives that balance the interest of various parties. Clearly, the recommended level of recovery is not commensurate with over $5 billion of investment that is planned over the next 5 years. We will work with parties to narrow issues where we can and we will ask the commission to resolve our differences in a way that allows us to continue providing high-quality service to our customers over the long run. We remain cautiously optimistic that we can achieve a constructive outcome in this case. Our earnings guidance assumes constructive outcomes in all rate case and regulatory proceedings. We do not consider the current recommendations from the interveners to be constructive. And should the commission approves a rate increase at these levels, our ability to deliver earnings within our 2013 guidance range would be much more challenging. Looking ahead, initial briefs are due May 15, the ALJ Report is due July 3, and we continue to anticipate a Minnesota PUC decision in September. We also received disappointing recommendations from interveners in our proposed multiyear natural gas rate case in Colorado. Notably, the staff recommended a rate reduction of $14.4 million based on a historic test year, an ROE of 9% and an equity ratio of 52%. The office of consumer council recommended a rate increase of $0.5 million based on a historic test year and ROE of 9% and an equity ratio of 51%. Earlier this week, we filed rebuttal testimony and reduced our requested increase from $70 million to $65 million over 3 years which largely reflects lower than requested ROE to 10.3%. This initial wide range between the bid and ask on this case is not unusual in Colorado. We continue to work towards a constructive outcome either through settlement or through the normal proceedings. Looking ahead, the case will be heard by the ALJ later this month. On a positive note, I'm pleased that we've already reached settlements in our Texas and South Dakota rate cases. In Texas, our settlement agreement, which is pending commission approval calls for a $37 million annual increase effective in May and a step increase of approximately $14 million in September of this year. It also allows us to implement interim rates for our next transmission cost recovery rider in January of 2014 accelerating recovery by several months. Every settlement is a compromise and this one's no different. While the agreed-upon rate increase falls short of our requested amount, we believe we're making continued progress in Texas. In addition to the interim rates agreed on, one of the other positives of this settlement is that both sides are very interested in achieving constructive rate making outcomes and are interested in discussing alternatives such as a multiyear rate plan prior to our next filing. The commission will act on the settlement later this year. In South Dakota, we had requested a $19.4 million electric rate increase. In April, the commission approved the settlement agreement which we reached with staff. New rates include an $11.6 million base rate increase plus the implementation of a new rider to recover an additional $3.7 million that began on May 1. Similar to Texas, this settlement is a compromise, which represents a step in the right direction to improving earn return in the north -- rather South Dakota. However, we are making -- while we're making progress, however, we're not earning an acceptable return in South Dakota and need to continue to take steps to improve this jurisdiction's returns. We will continue to work with regulators then legislators to improve the earned ROE. Turning to our resource plans, we recently issued RFP in both Minnesota and Colorado. In Minnesota, we're seeking potential additions of up to 200 megawatts of wind generation. This could be in the form of a PPA or an ownership option. Since we are ahead of the renewable portfolio standard in Minnesota, we will only add incremental wind generation if it is at an attractive price point for our customers. There's also an RFP for 500 megawatts of thermal generation in Minnesota, which could also either be a PPA or a self build option introduced later in May and Part of this RFP, we have proposed to build up the 3 combustion turbines to meet our customer needs. We have requested that these investments include wider recovery with a sharing mechanism. Other independent parties have also did projects instead of process. Regulators in Minnesota and North Dakota will review our proposal and proposals from other party to determine which offering presents the best deal for customers. We expect a decision later this year. In Colorado, we also have an RFP for 250 megawatts of generation, which could also either be a PPA or self build option. Introduced later in May and we expect a commission decision later this year. It remains to be seen whether and ownership bid will be the best option for our customers. However, it is important to note that an ownership option would be incremental to our capital forecast. Let me touch on a few other highlights of the quarter. Once again, Xcel Energy was recognized as the #1 Wind Provider by WEA. This is our ninth year in which we have earned this distinction. This underscores our proactive approach to environmental leadership. In Texas, we are nearing completion of the Jones 4 combustion turbine. This additional capacity is needed to meet growth at SPS. This project is coming in on time and under budget. We also continue to make good progress in our transmission investments. One of our key projects is the CapEx 2020 plan. Since February, Xcel Energy and 4 other utilities started construction on the estimated 500 million, 150-mile Hampton Rochester Lacrosse 345 KB project. This line will enhance system reliability and allow for future growth and economic development. At SPS, the final segment of the Texas North transmission portfolio projects was placed into service in March. Work began in 2008 on this $150 million multiproject portfolio to service new load into Texas and Oklahoma Panhandle areas. This project also maintain area service reliability and meet our compliance. Also at SPS, I think it's important to highlight our transmission construction and renewal efforts paid off during the Texas Panhandle blizzard. In February, a portion of our service territory, the stretch from west of Lobbock to Farrington received over 2 feet of snow and experienced 65 to 75 mile per hour winds. During the storm, we experienced only 2 momentary outages and no sustained outages on our transmission system. Over the past 5 years, we've replaced 5200 cross arms, 820 poles the area covered by the blizzard and we rebuilt 100 miles of transmission lines. These efforts were credited for our system resiliency during the blizzard. I'd like to take this opportunity to commend our transmission employees for jobs well done. Our storm restoration capabilities were put through another test earlier this month in South Dakota. On April 9, the worst ice storm in decades hit Southeastern South Dakota. Sioux Falls, a city of 150,000 in County was especially hard hit but almost 90,000 outages. By April 11, we had more than tenfold increase over normal staff in place to complete the restoration. Shortly thereafter, Xcel Energy was recognized by the county for the extraordinary efforts of its employees to restore power and in keeping citizens safe. With that, I'll turn the call over to Teresa. Teresa S. Madden: Thanks, Ben, and good morning. Today, I will discuss first quarter results, our 2013 financing plan and our 2013 earnings guidance. I'll begin with a review of first quarter results. As you might recall, last year, we experienced a very warm first quarter which reduced our earnings by about $0.05 per share. This year we experienced slightly colder than normal temperatures across most of our service territory. As a result, first quarter earnings benefited from a $0.06 per share improvement in weather. For the quarter, earnings at PSCo increased by $0.05 per share, primarily due to the multiyear electric rate increase, as well as higher electric and gas sales due to cooler winter weather. At NSP in Minnesota, earnings increased by $0.05 per share due to interim rate increases in Minnesota and North Dakota and an electric rate increase in South Dakota. Orders and results also benefited from cooler weather and lower interest charges as a result of a 2012 debt refinancing. Earnings at NSP Wisconsin increased $0.01 per share due to new electric and gas rates implemented in Colorado -- or in January and cooler weather. Earnings at SPS were flat for the quarter. Let's now take a look at the drivers that affected various lines at the income statement beginning with retail electric margin. Our first quarter electric margin increased $94 million. Primary drivers of the higher margin were: $75 million from retail rate increases in Colorado, Wisconsin and South Dakota as well as interim rate increases in Minnesota and North Dakota and $22 million from cooler weather. These positive items were partially offset by smaller negative factors including the 2012 leap day impact. Weather normalized retail electric sales decreased 0.6%. However, the comparable period a year ago included the benefit of an extra day of sales due to the leap day. Adjusting for leap day, weather normalized retail electric sales increased 0.5%, which is consistent with our 2013 forecast. Higher electric sales were driven by 1.3% increases in both PSCo and SPS, partially offset by 0.5% sales decline in Minnesota. Natural gas margins increased $28 million in the first quarter, primarily due to cooler weather. Turning to expenses, first quarter O&M expense increased $18.5 million or 3.6%. The primary drivers of this increase were higher employee benefit costs, nuclear outage amortization and nuclear plant operation costs. We continue to forecast that our 2013 expenses will increase in the 4% to 5% range for the year. Depreciation and amortization increased $20 million or 8.8% with normal system expansion and additional rate case. Other taxes increased approximately $7.8 million or 7.4%, largely due to increased property taxes in Minnesota. This is a significant driver in our Minnesota electric rate case as approximately $40 million of our rate requested to cover -- recover higher property taxes. Higher property taxes in Colorado related to our electric Retail businesses are -- as part of the multiyear settlement approved by the Colorado Commission in 2012. The effective income tax rate for the first quarter was 33.4% compared to 29.1% during the comparable period a year ago. Recall that last year, we recognized a discrete tax benefit during the first quarter which lowered our overall effective rate for that period. For the year, we continue to forecast our 2013 effective tax rate will be in the range from 34% to 36%. During the first quarter, we completed 2 financings. In March we issued $500 million of first mortgage bonds at PSCo and 2 tranches of $250 million each, a 10 year tranche with price at 2.5% and a 30-year tranche was at 3.95%. Also in March, we announced an At-The-Market or ATM equity program of up to $400 million. During March, we sold 7.7 million shares of common stock resulting in a net proceed of $223 million. As you recall, our 5-year CapEx forecast requires $400 million of external equity financing. Completing a portion of our planned equity financing in March allowed us to call the $400 million of 7.6% junior subordinated notes or hybrid security that we issued in 2008. This transaction lowers our overall cost of capital and simplifies our capital structure. Financing plans for the remainder of 2013 include plans to issue $400 million of First Mortgage Bonds at Minnesota and $100 million of first mortgage bonds at SPS. In addition, we also plan to issue $400 million of unsecured debt at the holding company during the second quarter. The financing plans are subject to change based on a variety of factors, including changes of our capital investment plan and financial market condition. Before we take your questions, I'll comment on our 2013 earnings guidance. This first quarter results, finally financing and resolution several rate cases have positioned us well to once again meet our annual financial objectives. So while we continue to forecast 2013 EPS to be in the range of $1.85 to $1.95, we highlight the importance of meeting constructive outcomes in our pending rate cases in order to meet this objective. That concludes my prepared remarks. Operator, we'll now take questions.

[Operator Instructions] Our first question is from the line of Neil Mehta with Goldman Sachs. Neil Mehta - Goldman Sachs Group Inc., Research Division: Your O&M came in at 3.6%, as you said, versus the 4% to 5% guidance. Are you tracking at the lower end or even below this guidance for this year? And how should we think about O&M growth rates after 2013? Teresa S. Madden: Well, I mean, we are still anticipating to be in the 4% to 5%. We just have some timing that's why we're a little bit lower. But when we look to the longer term, I would say we would look to may be more a 3% to 4%. In product test, 4% to 5% is occurring because we only increased from '11 to '12, 1.7%. So '12 is a little bit low because it's part of our management initiatives and other things so I would look in the long term, the more 3% to 4% and on track to 4% to 5%. Neil Mehta - Goldman Sachs Group Inc., Research Division: Got it. And then on interest you mentioned the remarkably low interest rates that you've done from debt out here in the first quarter. Given the low interest environment, could there be upside to the $30 million of interest reductions that you outlined for 2013? Teresa S. Madden: That's consistent with that. We even assume the lower one. Neil Mehta - Goldman Sachs Group Inc., Research Division: And can you provide a little more color on the RFPs? Can you confirm that self build options are available for you for both of them? And any color in terms of the number of bidders if that information is in the public. Benjamin G. S. Fowke: Neil, this is Ben. Self build options are available for both. We've seen I think some, I would say wide variety of bidders and opportunities and really just in the preliminary stages of evaluating both the wind and the fossil bids. Neil Mehta - Goldman Sachs Group Inc., Research Division: Okay, but we don't know the exact numbers out there yet? Benjamin G. S. Fowke: No. We're not disclosing that at this point.

And our next question is from the line of Travis Miller with Morningstar. Travis Miller - Morningstar Inc., Research Division: I wonder if you could characterize, in Minnesota, I wonder if you could characterize a change in the interveners testimony especially on the ROE from 10.2% to 9.8%, what were some of the drivers there and how does that relate to potentially changing your requested ROE? Benjamin G. S. Fowke: Well, Travis, let me take the first part of your question. And I think that was around ROE. I think that's just typically they do update their ROE recommendation and analysis. And they looked -- it's a formulaic approach and frankly, the whole industry has seen some pretty significant stock appreciation in the last 4 months and when you run that through some of the models that does yield a lower ROE and that's was we saw there, it's very formulaic. And did you have a second part to your question? Travis Miller - Morningstar Inc., Research Division: I was just going to say would that effect, you changing your 10.6% to a lower number. Benjamin G. S. Fowke: We filed our surrebuttal testimony and I guess we're just where we are now in the group. I don't know if you want to... Teresa S. Madden: That's correct. We've left it at the same level so we have not revised our request at this point -- our requested 10.6%. Benjamin G. S. Fowke: Typically, Travis, typically the recommendation on ROE plays a very -- is listened to very closely by the commission. Travis Miller - Morningstar Inc., Research Division: Real quick housekeeping. You mentioned that you recognize a liability for that change, the difference when you're expected and interim -- can you just give me what that number was? Benjamin G. S. Fowke: I'll let Teresa take that. Teresa S. Madden: I think, I would just say, we're assuming that we're going to have a reasonable regulatory outcome and we went through and looked at all the positions as we do in terms of establishing our guidance and we recognize that amount that we thought was reasonable. Travis Miller - Morningstar Inc., Research Division: What was that amount? Teresa S. Madden: We're not going to give you the specific amount but we would assume it's a reasonable outcome. Benjamin G. S. Fowke: Travis, I mean, we typically -- I mean, we actually did it a little bit earlier than we normally would where we would recognize any kind of refund based upon where we are. But given where we are, it's -- what we're assuming in the accrual that, we're not going to disclose a number, but that -- we're not, it's going to be less than our interim rates but still what we would consider a constructive level so hopefully that helps you frame it a bit.

And our next question is from the line of Andy Levi with Avon Capital.

Actually, Travis asked my question. I guess, the only other question I have -- so just on the equity, so you did, was it, $227 million? Teresa S. Madden: We had a net proceeds of $223 million.

$223 million, excuse me, I apologize. Okay, so you're more than halfway there I guess. Teresa S. Madden: Right.

Equity. And that would take you through what year absent any new projects once you do the $400 million? Teresa S. Madden: We have previously indicated that we had intended to do $400 million between '13 and '14.

Okay. And that would take you through what year once you get that $400 million done? Through '14 or through '15? Teresa S. Madden: Yes, and it's for the next 5 years. We don't have any...

Next 5 years, right okay. Unless, of course, I guess if you have some of these new projects, that could change? Teresa S. Madden: Yes, that's correct. We would reevaluate that.

[Operator Instructions] I'm showing no further questions. I'll turn the call back to Teresa Madden for closing remarks. Teresa S. Madden: I want to thank you all for participating in our First Quarter Earnings Call this morning. I look forward to meeting with many of you at AGA and at the Deutsche Bank conference in the coming weeks. So please contact Paul Johnson and the IR team with any follow-up questions.

Ladies and gentlemen, this concludes our conference for today. We thank you for your participation. You may now disconnect.