Q4 2025 Earnings Call Transcript

Hello, and welcome to Xcel Energy's 2025 Year End Earnings Conference Call. My name is Jordan, and I will be your coordinator for today's event. Please note this conference is being recorded. For the duration of the call, your lines will be in listen-only mode.

A question and answer session will follow the prepared remarks, and questions will only be taken from institutional investors and analysts. Reporters can contact media relations with inquiries, and individual investors and others can reach out to investor relations. I would now like to turn the call over to your host today, Mr. Roopesh Aggarwal, Vice President of Investor Relations.

Please go ahead, sir.

Good morning, and welcome to Xcel Energy's 2025 year-end earnings call. Joining me today are Bob Frenzel, Chairman, President, and Chief Executive Officer, and Brian Van Abel, Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer your questions if needed. This morning, we will review our 2025 full-year results and highlights, provide updated 2026 assumptions, and share recent business and regulatory updates.

Slides that accompany today's call are available on our website. Some comments during today's call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and SEC filings. Today, we will discuss certain metrics that are non-GAAP measures.

Information on the comparable GAAP measures and reconciliations are included in our earnings release. As a reminder, we recorded a charge of $300 million or 38¢ per share in 2025 reflecting the settlement in principle reached with plaintiffs in the Marshall Wildfire. As a result, our GAAP earnings for 2025 were $3.42 per share while our ongoing earnings, which exclude this nonrecurring charge, were $3.80 per share. All further discussion on our earnings call will focus on annual ongoing earnings.

For more information on this, please see the disclosure in our earnings release. I will now turn the call over to Bob.

Thank you, Roopesh. Good morning, everybody. At Xcel Energy, we continue to deliver on a once-in-a-generation opportunity to meet the increasing demands of our customers as they electrify more parts of their lives, support the economic development of our communities, fuel the rapid growth of AI and data centers, and continue to lead a clean energy transition in the country. Over the next five years, Xcel Energy expects to invest in excess of $60 billion to modernize and expand the grid.

Adding advanced transmission and distribution infrastructure, new natural gas and renewable generation, smart, weather-hardened infrastructure, these upgrades will strengthen sustainability, reliability, and resiliency while keeping our customer bills as low as possible. We've also continued our decades-long track record of producing strong results for our owners. In 2025, Xcel Energy delivered ongoing earnings of $3.80 per share, marking the twenty-first consecutive year of meeting or exceeding our initial ongoing earnings. We achieved that outcome with some of the lowest electric and natural gas bills in the country.

This consistency reflects the strength of our strategy, the diversity of our business, and the dedication of our Xcel Energy team who show up every day for safety, reliability, affordability, and sustainability as their top priorities. 2025 showcased what our people are capable of as we reached several important customer and operational milestones. With our disciplined execution and geographic advantage for renewables, we continue to deliver for our customers. Our residential electric customers in Colorado have the lowest share of wallet out of all 50 states. And average electric bills in our other states occupy five of the top 11 spots in the country.

Since 2020, residential electric bills in Denver and Minneapolis have grown far less than inflation, and less than common expenses like groceries, gasoline, health care, insurance, and housing. And when compared to other national electricity providers, these bills have grown 40-80% less than other regions. It's a testament to our focus on affordability, our productive regulatory jurisdictions, and importantly, our integrated regulated utility model that allows for long-term asset investment. Also a testament to our one Xcel Energy Way continuous improvement program that has realized over $1.5 billion in cumulative savings since 2020, while also improving customer and operating outcomes.

As a result, when looking at our five-year average O&M expenses per megawatt hour, Xcel Energy ranked fourth lowest out of our peer utility companies. And even with some of the lowest energy bills in the country, we know some of our customers still struggle to make ends meet. In 2025, our energy assistance programs reached nearly 200,000 customers and provided nearly $200 million in funding, our highest ever one-year total. Our focus on reliability, affordability, and customer service was recognized by JD Power, who ranked Xcel Energy in the top quartile for the Midwest region and had the second-highest score in customer satisfaction.

Across our eight states, we continue to build and maintain the critical infrastructure that supports our customers' energy needs. In 2025, we invested nearly $12 billion, our largest one-year total. In September, phase two of our Sherco solar project started commercial operation, and a third phase will come online in 2026. Once complete, Sherco will be the largest solar facility in the Upper Midwest. We also completed the conversion of our 1,000-megawatt Harrington coal plant to natural gas, which provides essential energy resiliency and reliability to our customers.

And we source and deliver that natural gas for Harrington from the Permian. That combination will benefit the local community for years to come. We completed 370 megawatts of wind repowerings at our Border and Pleasant Valley facilities in the Upper Midwest. We expect $750 million in PTC benefits, which exceeds the investment that we made into these facilities, creating more affordable energy for our customers.

We placed our 325-megawatt Rocky Mountain solar project in service this year, our first utility-scale solar farm in Colorado, with many more to come. And we released our updated 2026 to 2030 capital plan, which includes, relative to our previous plan, an additional 7,000 megawatts of company-owned renewables, natural gas generation, and storage across our states to transition our fleet and build for growth. Speaking of enabling growth, over the past fifteen years, Xcel Energy has been the leading builder of new transmission line miles in the country. Last spring, we energized our first two segments of the Colorado Power Pathway ahead of schedule, on scope, and under budget, delivering significant value to our Colorado customers.

The remaining segments will be energized in 2026 and 2027. Across SPP and MISO in 2025-2026, Xcel Energy has been awarded over 760 miles of new 765 kV transmission lines. This includes the second 765 kV line in SPP that was awarded this week, which gives us line of sight to $1.5 billion in additional investment over our base five-year plan. This will be the first voltage lines of this class in SPP and constitute 20% of the approved new ultra-high voltage transmission in this country, recognizing Xcel Energy's expertise in building and operating transmission networks. We also reached several milestones as we continue to make efforts to protect our customers and communities from the threats of extreme weather.

In 2025, we rapidly accessed accelerated system investments, including completing eight times as many pole inspections and 25% more pole replacements than the previous year. We installed over 250 Pano AI cameras and weather stations. In 2025, we received approvals from both Colorado and Texas commissions for our wildfire mitigation and system resiliency plans, as well as published wildfire mitigation plans in each of our other states. Favorable wildfire legislation passed into law in Texas and North Dakota, and we're working on similar frameworks in other states.

And we continue to improve and refine operational measures to protect our communities, including daily wildfire risk monitoring, proactive customer communications, wildfire safety operations, and in very rare circumstances, public safety power shutoff capability. And our investments are paying off. During winter storm Uri this January, our electric and natural gas operations across NSP, PSCO, and SPS performed exceptionally well. Thanks to rigorous winter readiness, proactive fuel management, and strong coordination across our operations teams, we reliably served customers through periods of high demand, constrained gas supply, and challenging weather.

And we were able to export our generation length when the system needed us most, providing grid stability and incremental customer benefits. Our operators and field crews executed cold weather procedures flawlessly. We maintained system reliability and managed costs responsibly despite record-setting conditions. I'm very excited about our achievements in 2025. I want to turn to our strong start to 2026. Today, we are advancing our data center pipeline with a new recently signed ESA with a large data center in the Upper Midwest.

This brings Xcel Energy to over two gigawatts of new contracted data center capacity. Our goal for 2026 is another one gigawatt, bringing our total to three gigawatts of contracted data center service by 2026. And while we had length in the Upper Midwest this winter and forecast so through the end of the decade, we also know that it's critical that we have the right resources to develop new generation infrastructure to deliver on the opportunities in our 20-plus gigawatt large load pipeline. So earlier this week, Xcel Energy announced an MOU with longtime partner, NextEra Energy, to co-develop generation storage and interconnections to serve data center projects across our operating companies.

By engaging early with leading developers like NextEra, we can better anticipate system needs for new data centers, streamline development timelines, advance innovative grid technologies, and continue to provide the network benefits that data centers bring to all of our customers. With this agreement, we now expect to have six gigawatts total data center capacity contracted by 2027, with electricity sales and generation investment that will ramp into the 2030s. We will deliver the benefits of two of the best development teams in the industry to meet this moment for our country and our customers.

As we've talked about over the past two to three years, execution against our capital and growth plans are critical to our stakeholders. We believe that our scale and our diversity are assets we can deliver to the benefit of our customers and our regions. We have strategic agreements in place with multiple tier-one EPC firms across our portfolio of renewable and natural gas generation projects, as well as transmission, distribution, and natural gas systems. And earlier this week, we announced a landmark strategic alliance with GE Vernova to support our growing portfolio of wind and natural gas generation, transmission, distribution, and technology projects into the 2030s.

This partnership will focus on delivering key benefits to Xcel Energy's customers and stakeholders through enhanced certainty of supply, operational flexibility, and cost affordability. Each of the partnerships is a mutual commitment to innovation and strategic collaboration. We will work together to explore advancements in areas such as artificial intelligence, grid modernization, and joint research and development programs. As a first step, Xcel Energy has five additional natural gas turbines from GE Vernova, bringing our total to 24 gas CTs on order across our vendors.

Additionally, we're integrating GE Vernova into our renewable energy pipeline, bidding several gigawatts of wind projects with GE turbines in our pending and upcoming RFPs. Combined with agreements with other equipment and engineering construction firms, Xcel Energy has built a scalable, resilient, and flexible engine to ensure delivery of critical system investments. This engine has also enabled us to safe harbor equipment for approximately 20 gigawatts of renewable generation storage, preserving a significant volume of production and investment tax credits for the benefits of our customers. Finally, Xcel Energy's commitment is about much more than energy.

The heart of what drives our people is a deep compassion, connection, and commitment to the communities that we serve. That's because these communities are not just customers who receive our energy. It's because our people live in the same neighborhoods. Our children attend the same schools.

And we attend the same community events. And so it goes without saying that the tragic events across the Twin Cities have weighed heavily on our communities, our customers, and our employees. We've engaged extensively and proactively with senior federal, state, local, and community officials with a goal to deescalate and identify a sustainable path forward. I was pleased to sign on to the letter with 60 other Minnesota companies urging for a solution.

And alongside peer companies in the Twin Cities, the Xcel Energy Foundation has committed to help fund the Minneapolis Foundation to support local small businesses impacted by recent events. I know that our Xcel Energy community will continue to do what we do best, making energy work better for our customers while supporting our teammates and caring for our neighbors. Looking at the broader community engagement in 2025, Xcel Energy initiated 15 economic development projects for our local communities, which are projected to create more than $7 billion in capital and nearly 1,400 jobs. Additionally, nearly 53% of our supply chain spend was local, and we spent nearly a billion dollars with small and diverse suppliers.

Xcel Energy employees, contractors, and retirees supported by the company's foundation provided over $14 million in over 60,000 volunteer hours to support over 400 local charitable organizations and causes in 2025. And for the twelfth year, Xcel Energy was honored as one of the world's most admired companies by Fortune Magazine. We ranked first in social responsibility and placed fourth among the most admired electric and natural gas companies in the country. I continue to be thankful and grateful for each of our employees and partners who shared their time, resources, and talents this year to make energy work better.

With that, I'll turn it over to Brian.

Bob, and good morning, everyone. Starting with our financial results. Xcel Energy reported ongoing earnings of $3.80 per share for the full year 2025, compared to ongoing earnings of $3.50 per share in 2024. The most significant earnings drivers for the year include the following: Higher electric and natural gas revenues due to rate case outcomes, nonfuel riders, and sales growth, partially offset by higher fuel and purchased power expenses, increased earnings by $1.21 per share. Higher AFUDC increased earnings by 27¢ per share.

Offsetting these positive drivers, higher interest charges and common equity financing decreased earnings by 46¢ per share, reflecting funding of our infrastructure investments and financial discipline to maintain a strong balance sheet. Higher depreciation and amortization decreased earnings by 28¢ per share, reflecting our capital investment programs. Higher O&M expenses decreased earnings by 25¢ per share, and other items combined to decrease earnings by 19¢ per share. Turning to sales.

Full-year weather-adjusted electric sales increased by 2.2%, driven by increased C&I load in SPS and PSCO. For 2026, we continue to expect full-year weather-adjusted electric sales to increase 3%. Shifting to expenses. O&M expenses increased $190 million in 2025. Increases are primarily due to accelerated wildfire mitigation costs in Colorado, excess liability insurance costs, and higher benefit costs in late third and fourth quarter 2025, and increased costs from generation maintenance.

Moving to regulatory activity. During the fourth quarter, in Colorado, we filed both electric and natural gas rate cases. We anticipate commission decisions on each and the implementation of new rates by the end of Q3 2026. In November, we filed a New Mexico electric rate case and anticipate a commission decision in 2026. And in Wisconsin, we received final approval for our electric and natural gas rate case and implemented new rates in January. As we look to additional investments to our base capital plan, Xcel Energy has 10 to 12 plus gigawatts of additional generation RFP and transmission opportunities in SPP and MISO.

These investments align with our approved resource plans and are critical to ensure we have the energy we need to serve our customers, retire legacy generation, and ensure reliability. These RFPs also help capture expiring production and investment tax credits, which will help keep customer bills low. For the recommended portfolio in Colorado's near-term solicitation, we are now expecting the commission to review these resources in multiple tranches through early 2026. Additional needs under our approved IRP will be subject to RFPs later this year. In December, we issued an RFP in NSP for 4,100 megawatts of renewable generation and storage to be placed in service by 2030. Bids are due in March, and we expect a recommendation filing later this year.

In October, we issued an RFP for 1,500 to 3,000 megawatts of additional nameplate generation. Bids were received in January, and we expect a report from the independent monitor in late Q2 2026. And finally, as Bob mentioned, in SPP, we were awarded another 765 kV transmission line, which gives line of sight to $1.5 billion of additional investment over our base five-year plan. We also continue to make strong progress on the 222 of the 287 submitted claims. We've reached settlements with 79 of the 83 potential claims presented for mediation by parties represented by attorneys.

And finally, 22 of 47 complaints have been settled or dismissed. We have updated the low end of our estimated liability to $430 million. We've committed $382 million in settlement agreements, including agreements with the subrogated insurer plaintiffs and the three largest claims by acreage. As a reminder, we have approximately $500 million of insurance coverage.

Regarding the Marshall Wildfire settlement, final settlement agreements have been executed with the subrogation insurers and nearly all individual plaintiffs. Xcel Energy is aware of three individual plaintiffs, out of 4,000 plus, who have not yet accepted a settlement or otherwise stopped prosecuting claims. Moving to guidance. We are reaffirming our 2026 EPS guidance range of $4.04 to $4.16. We remain confident in our ability to deliver six to eight plus percent long-term earnings growth and expect to deliver 9% EPS growth on average through 2030. Updates to key assumptions are included in our slides and earnings release.

With that, I'll wrap up with a quick summary. Xcel Energy posted strong ongoing 2025 earnings of $3.80 per share, meeting or exceeding ongoing guidance for the twenty-first consecutive year. We continue to lead a clean energy transition while ensuring safe, clean, and reliable service and keeping customer bills as low as possible. We continue to make progress to realize our 10 plus billion dollar pipeline of additional investment opportunities, including a new 765 kV awarded in SPP this week.

We've announced two strategic alliances with industry-leading development and supply chain partners to ensure we have the resources, technology, and capacity to deliver on our capital plan. We now have signed ESAs for over two gigawatts of data centers and remain on track to contract three gigawatts total by 2026. In addition, we have updated our plan to contract six gigawatts of total data center capacity by 2027. We continue to maintain a strong balance sheet and credit metrics, using a balance of debt and equity to fund accretive growth. We are reaffirming our 2026 EPS guidance of $4.04 to $4.16 per share.

And finally, we remain confident in our ability to deliver 6% to eight plus percent long-term earnings growth and expect to deliver 9% EPS growth on average through 2030. This concludes our prepared remarks. Operator, we will now take questions.

In order to ask a question, press 1 on your telephone keypad. Your first question comes from the line of Julien Dumoulin-Smith. Your line is live.

Good morning. It's Brian Russell on for Julien. Hey. Good morning.

Hey. Just, I want to just understand more clearly what the upcoming filings in Colorado for the JTS and how that ties into the large tariff filing. Should we expect as you sign customers to the large tariff, you'll then submit the capacity need to the commission and issue an independent RFP for each, or will you group them together to make the process more efficient? And then how does it tie into that six-gigawatt target by 2027?

Yeah. I'll start with that answer. And if I didn't answer all the pieces of that question, just feel free to chime in. As we think about it, we're aiming to file that large load and work through that regulatory proceeding in Tariff in Colorado early in Q2. And once we have that kind of large load tariff and that construct, we'll seek to bring forward large loads within that framework along with likely a package of generation to serve that large load.

But really focused on driving customer benefit for all of our current customers. So that's really the timing in terms of getting the large load tariff filing in Colorado. The kind of six gigawatts, right, we doubled our data center expected contracted capacity from three gigawatts to six gigawatts. That six gigawatts is contemplated across our system right now.

You saw the one we just signed is focused on the Upper Midwest, and I think that's our focus on the Upper Midwest right now. We have some really good opportunities that we're working through. And then as we work through the large load tariff filing, not only in Colorado but Texas and New Mexico, we'll seek for opportunities there too.

Okay. Great. And then just to follow on that, the $10 billion CapEx pipeline, right, that only includes kind of that low end of the 5,000 to 14,000 gigawatts of range of potential capacity data center-driven needs in Colorado. Right? So there's notable upside even at the $10 billion.

Yes. That's absolutely a fair characterization. Right? As we think about it. And, really, that kind of low end didn't include significant data center growth in Colorado. So as we look to data center opportunities thereafter, the large load tariff filing would include additional generation to serve those resources.

Alright. Great. Thank you very much.

Your next question comes from the line of Jeremy Tonet from JPMorgan. Your line is live.

Hey. Good morning. This is Diana Niles on for Jeremy.

Morning.

Hi. Good morning. So my question is considering data centers coming online in the coming years, how should we think about that ramp to sales CAGR reaching 5% across service territories? And do you still expect 3% of this 5% from data centers?

Yeah. Thanks for the question. This is Brian. Now we'll update our five-year sales forecast as we typically do in Q3. That 5% sales CAGR was based on the three gigawatts of data center that we had all tied in our last Q3 update.

Clearly, we've updated that from three gigawatts to six gigawatts. But I think there's some of it when you look at the timing, and we expect to have these contracts signed by 2027. In the construction cycle, a lot of those may come in kind of that '29 type period. And then it's really about energizing in the 2030 and the early 2030s and about extending our capital investment opportunity, our generation need. So, certainly, significant sales growth opportunity, but we think about it more in this later part of this five-year driving significant growth, significant sales growth, and benefit for our other customers into the 2030s, about extent.

So it's really about extending our growth opportunities, sales growth, capital investment growth, and benefit to our current customers.

Great. Thank you. And then on the Smokehouse Creek, I saw the low-end estimate rose about the same amount as the finalized settlement agreements. So there were estimated losses to the low end stay around $50 million. I'm just wondering how many lawsuits that $50 million might represent and sort of how sticky finalizing those might be.

Maybe I'll take a step back and try and answer that question. I think we've made really good progress if you look at just the number of claims we've settled. We have over 320 claims settled. And about roughly 420 claims and lawsuits in total.

So we've settled on a significant number, only about 90 to 100 outstanding. And I think you look at and I've talked about it before, is we've settled some of the largest claims. We settled the three largest claims by acreage, which were high-value ranches. We settled with our subrogation insurers.

So when I think about it, we've made considerable progress from this time last year to today. This time last year, we just had over 100 settlements, and now we have three times that amount. So we'll continue to evaluate it. We expect to get some additional claims in as we near the two-year deadline.

And then we'll evaluate it like we do every quarter. But we continue to make really good progress on the overall claims. And, again, it's a low-end estimate, but we feel good when we think about we have $380 million of that $430 million already settled. And so it's really our low-end estimate focused on that $50 million.

Relative to about $120 million of insurance proceeds left when you look at our coverage amount.

Great. Thank you.

Next question comes from the line of Carly Davenport from Goldman Sachs. Your line is live.

Hey, good morning. Thanks so much for taking my question. Maybe just to start on the partnership with NextEra. Could you talk a little bit more about the roles that each of you will play in developing these data center projects? And maybe if there are any time-to-market advantages given that is still the top priority for data center customers?

Yeah. Hey, Carly. It's Bob. Thanks for the question.

The last time we got together, it was in the third quarter last year sometime. We talked a lot about executing on a capital backlog plan, executing on a data center large load plans for the company, and really finding the mechanisms that allowed us to execute in totality across the company. And I think what you heard from the team today was execution across all three of those areas. With regards to NextEra in particular, you used a word that I use a lot here, which is speed.

So we do think there'll be increased clock speed as we think through combining two of the best sales teams, two of the best development teams, two of the best analytical teams in the country to deliver solutions for a very sophisticated customer set. We also think that it brings scale, and the ability to put an inflection point in the curve of data center delivery and signed ESAs and contracts and ultimately investment opportunities in all three of our big regions. When I think about roles and role clarity, you know, still at MOU stage, although I'd tell you a lot of the terms and conditions have been really agreed upon by the organizations.

We've got to get to sort of final joint development agreement type framework, which I think will get too quickly. I think about us having a great backlog and visibility and conversations with hyperscalers and data center developers. We know NextEra has a national platform of this as well. And bringing those two together and being able to sit in a room and compare notes of who we're talking to, where is the best place to do this as it pertains to our regulated footprint.

And then do we have generation that we can bring to the table that we need to bring to the table with speed, with certainty, price transparency, and with competitiveness. I think that's what the teams are gonna bring together collectively. It's not an exclusive arrangement, but we expect to do a lot of work through this agreement, and it's not fuel type limited. If you think about where we sit in sustainability goals as a company, where these hyperscalers and data centers and customers of data center developers wanna be, it's a highly sustainable product, and no one's delivered more wind or solar or storage development across the country than NextEra.

And we've been twenty-year partners with them, signed our first PPA with them in 2006, our first PSA for a development transfer a decade ago. So this is a great working relationship. All we're doing, I think, here is codifying it for the purposes of speed and execution certainty.

That's super helpful. Thanks, Bob. And then, maybe just the follow-up. Just there are a number of elections across your states this year. Any early views in particular on Minnesota and Colorado? Where you have ongoing rate cases and just sort of the role that you'd expect affordability to play in the respective campaigns?

Yeah. Great question. Something we pay a ton of attention to. And if you saw my heard my prepared remarks, I spent a lot of time talking about where I think we sit as a company in terms of affordability.

You know, Colorado number one, lowest energy bills, electric and gas in the country. I think that's a great starting spot. We needed to file both electric and gas cases there. We've invested substantially into that state over the last two or three years.

We haven't filed a case. We did file a case at the end of last year, and that'll go through prosecution through the course of this year. You know, the election, probably early to tell. There's a lot of great candidates in Colorado for governor.

Two big names on the Democratic side, one big name on the Republican side of the ticket, and probably early innings for us to see how that's gonna play out in November. Certainly, energy and energy goals for the state have been very critical. We know that one of the things the state legislature is gonna look at is 2040 legislation for some clean energy standards. It's been a Governor Polis priority for a long time.

So we know that clean energy is gonna be on the table. We are a huge leader here and in Colorado, and I think we got a great seat at the table when it comes to energy policy in that election. In Minnesota, obviously, Senator Klobuchar just put her hat in the ring for the governor's election. And there's a crowded field of folks on the Republican side as well.

So probably early innings to tell what might happen there. You know, we've got a rate case here in Minnesota that we've been prosecuting for about a year. We expect decisions here by, call it, midyear this year. And potential to settle between now and then.

So I'm not certain how much the gubernatorial cycle will affect the outcomes of the cases that we have in front of us in Minnesota. That's right. And, Carly, just a couple things to add. I mean, we have echo all Bob's points on affordability, and we have a great affordability story while we're driving state in those two states.

And so we're really aligned both on state energy policy and the affordability narrative. And then if you looked at our Colorado electric rate case filing, we put forth an enhanced affordability proposal, really getting at our customers that do have a higher energy burden, and we proposed something for customers that were at a five to 6% energy burden down to two and a half percent in the combined electric and gas bill. So, really, looking at where can we address the affordability issues. So we were pretty excited about where we sit from affordability story.

Our narrative but also looking to address it in the pockets where we can.

Really helpful. Thank you both.

Your next question comes from the line of Steven D’Ambrisi from RBC Capital Markets. Your line is live.

Steven D’Ambrisi: Bob. Hey, Brian. Thanks very much for taking my question. Good morning.

Morning, Steve.

Steven D’Ambrisi: Good morning, Bob. I just had a quick one about, this the effectively the data center pipeline update. You know, I think on the third quarter when you rolled out your formal financial plan, you had talked about roughly three gigawatts between the two buckets of contracted and high probability, and that those two buckets would drive 3% of the 5% total sales growth. And so can you just give me a little color about now that that combined bucket looks like it's doubling to almost six gigawatts. What does that mean for your sales growth? And then the attended question would just be as we get clarity on some of the high probability pipeline, you know, when do we see do we see updated IRPs that reflect some of this load? Incremental load growth, and just how does that filter down into capital ultimately? Thanks.

Hey. Hey, Steve. Thanks for the question. And absolutely right in terms of we said on the Q3 call, three gigawatts of data centers in our high probability bucket.

We also said on the Q3 call that we would execute on two gigawatts by this time, and we did execute on two gigawatts by this time. So want to ensure that we're delivering on what we tell our investors because I think that's really important. And so, you know, we feel that we have clear conviction by essentially doubling our data center opportunity from three gigawatts to six gigawatts. And so excited about that.

In terms of our sales forecast, that three gigawatts translated to three of the 5% growth. We'll provide a holistic update in Q3 like we normally do when we roll forward our five-year sales forecast plan. But certainly an opportunity. Although I do think if you look at the timing and when you'd execute an ESA, we say through 2027, and kind of think about that cycle.

You might see a lot of these coming in maybe that 2029-2030 as they energize and then ramp up into the 2030s. So I think it's really the opportunity is how do we think about extending our growth beyond 2030. So some potential sales impact within this five years, but, really, it's post-2030 as we think about these, particularly with the call it, the very large data centers, the one gigawatt plus where they ramp up over time. And then you would see there's really two ways they could come in through our you asked if they come in through the resource planning process. Certainly could come in through the resource planning process, but I think more often, you'll see them come packaged with an ESA.

You know, in terms of we're gonna bring forward a specific data center, and here's the package of resources. That will serve it with.

Yeah. Steve, it's Bob. Let's just I'll add on to what Brian said. Is, you know, look.

We're gonna expect some modest sales this decade. We'll have to update our plan accordingly. We'd expect to start investing probably capital to build the generation to serve those sales? In the later part of this decade as well.

We'll update our capital plan accordingly in the third quarter. And I'd just say, give us a little bit of time with the NextEra partnership to figure out how fast we can get our feet underneath us, how fast we can run, and how fast can bring this stuff to the table. So give us a little bit of time, and we'll keep this group informed as we go through the year and certainly a fulsome update in the third quarter.

Yes. And I think about it, you know, we have that 10 plus billion dollar pipeline slide. When you look at our current base capital plan in terms of we have very strong growth in investing for our customers in the front three years but then it's how do we fill in and strengthen that pipeline in year '29 and '30 and beyond. So that's a really good way to think about it deepening our pipeline of opportunities, and extending that pipeline of opportunities post-2030.

Steven D’Ambrisi: Great. That's super helpful. And then just one one other one quickly. Just you had mentioned that maybe the Colorado near-term RFPs were going to get bifurcated or trenched out, I guess. And so you just talk about you know, I think it was the proposal was 2.1 gigs company-owned across a portfolio of 4.9 gigawatts. And so what does that look like in the you know, in the this tranching out looks like the timeline around some of these trench updates, I guess? Thanks.

Yeah. And the commission is working through the deliberation. So kind of what what at least as we understand is here today, they approved about one gigawatt of projects including our gas plant in the last set of And then they asked for some additional analysis over the next call, one or two months that we're working on expeditiously. And so they're gonna look at a new portfolio, which could potentially include up to one gigawatt of our company-owned solar plus storage in that next tranche.

And then potentially a tranche three the timing is unclear, but likely in the first half. So we'll work with our stakeholders. Obviously, we brought forward this near-term procurement. With a number of our key stakeholders in the state to really drive projects, ensure they come online before the tax credits expire.

We will continue to work with the stakeholders about the importance of that from a customer affordability perspective. But if anything doesn't get picked up in the near-term procurement, it just shifts to overall resource plan, the just transition plan that is in flight. It's really this is a subset of what we expect to execute in the resource plan, which will be follow-on RFPs later this year.

Steven D’Ambrisi: Understood. Thanks very much for the time, guys. A great update. Appreciate it.

Your next question comes from the line of Nicholas Campanella from Barclays. Your line is live.

Can you guys hear me?

Hey, Nick. We can hear you.

Hello?

Hey. Hey. How's everything? I'm really sorry. I just I jumped on late. From another call, but just wanted to to kinda clarify you know, the six the six gigawatts now is pressured higher. On on the 5% long-term low growth factor. Is is that correct? Apologies if I'm repeating.

Yeah. Nick, that's correct. And we really think about it. In terms of, you know, our like we said, we doubled our data center expectations here from three to six when you peel back from Q3. Obviously, I have clear conviction because what we put on our slides, expect to execute on.

And so that does provide sales growth opportunity, and that what I would expect more in the twenty-nine to thirty timeline when you look at kind of the schedule and what it takes from an executing ESA to the energization. So the way we look at that is really later in this sales force forecast, but really prolonged into 2030 when you think about the ramp schedules on some of these very large data centers, you know, multiple-year ramp schedules, which just means a multi-year generation build-out for us. As we think about it. So deepening the opportunity in late in this five-year and extending our opportunity into the 2030s.

Alright. That's great. That's great. I'm sorry if I made you repeat yourself.

And then maybe just, like, when we kinda look at the earned returns just for 2025 actuals, they are pretty significantly, you know, under authorized. So can you just kinda talk a little bit about just the past you authorized and what's embedded in the plan I'm specifically kinda thinking about, you know, Colorado, as well as SPS. And where you kinda see your earned ROEs trending as you get to you know, on the other side of these rate cases. Thanks.

Yeah. Yeah. Thanks, Nick. I think, you know, SPS is clear.

We had pretty challenging weather in the Q4 in SPS and a couple other unique items in '25. So I expect that to get back closer to where it's been the last few years. As we get rider recovery, and we have a New Mexico rate case in flight that we filed last year. Colorado specifically, yeah, significant under earnings. But I think maybe refresh from that perspective.

We really wanted to get through the Marshall trial and get a constructive settlement with that respect. And we get if you didn't catch the opening remarks, we only have three known plaintiffs left. To settle out of 4,000 plaintiffs. So we feel really good about where we are with that.

We filed the Colorado Electric and the Colorado Gas case here late last year. So from an ROE improvement perspective, you know, those cases play out, and we expect a decision in revenue late Q3 of this year. So some revenue in the door this year, but you see the full impact of those rate cases in 2027. So I expect significant ROE improvement from where we landed in 2025 in Colorado. In '27 as we think about those rate cases.

And then the last one, if I could, and I appreciate all those answers, Brian. Just maybe clarify what's kind of embedded in the low end of this $10 billion plus incremental bucket. It just seems like there's potential for this to be well above that figure. So is there any way that you could kinda bookend that if we're thinking about, at minimum, what could kinda be coming into the next full-year update when you could quickly do your refresh?

In the third quarter?

Maybe I'll walk through a couple of the markers that we're watching, Nick, to help you think about how we're gonna roll forward this year into Q3. We have if I think through the significant RFPs that we have outstanding, we talked about the Colorado near-term plan, which the commission's looking at approving in tranches. But we should have visibility on that as we work through the next several months. The 1,500 to 3,000 megawatts of nameplate capacity. We already received the bids.

And we're working through the analysis of those bids and the independent monitor will make a filing in Q2. So we'll have visibility on that opportunity. Then the significant opportunity in Minnesota with 4,100 megawatts of renewables all in service by 2030 to really capture the tax benefits. For the benefit of our customer. And so those were that's likely a filing later this year.

You'll have visibility, but certainly not regulatory approval on. But that's a really important filing as we think about accelerating projects for our benefits of our customers in the Midwest. So that's kind of the generation side on the current outstanding RFPs. We just this earlier this week received approval of a 765 kV transmission line in SPP.

In SPS, $1.5 billion for a 765 line. So, clearly, we'll roll that into our plan. That COD by the 2030 all within our five-year plan. And then we think about all the data center upside we have as we look at bringing on potential data centers and the generation that come with that.

So there's a reason why we put a plus next to that $10 billion. We feel really good about these opportunities. And we think about filling in our 2029-2030 investment pipeline. And then extending it into 2030 beyond that.

So don't I don't think there's an upside and a high-end number to put that beyond. We feel really good about these opportunities and the partnership that we talked about with GE Vernova, the data center joint development agreement that we're working on with NextEra, just kinda strengthens that pipeline and also when we think about these data centers, it's really about driving benefit for our current customers too. Really important as we think about when we bring forward some of these data center opportunities.

Thank you very much. Appreciate you taking these questions.

Your next question comes from the line of Travis Miller from Morningstar. Your line is live.

Good morning, everyone. Thank you.

Morning, Travis.

Wonder if you could quickly go over what's the regulatory process for some of these ESAs that either you're signing now or that you're negotiating in the Upper Midwest, understand the Colorado situation. But what about in the Upper Midwest?

Yeah. So, you know, we announced an additional data center deal just on this call as Bob spoke about in his remarks. There'll be a regulatory filing in the Upper Midwest associated with that. And then commission approval associated with that.

It's still confidential, so we won't we can't speak much about it. But we look forward to bringing those details. And there'll just be a regulatory approval. Really important in terms of showing overall benefit.

And so think about that. If we have a large load tariff filing in place, we'll align with that large load tariff filing. And that should help from a regulatory approval process. So that's the best way to think about it.

Get the large load tariff filings in place and then move forward with specific ESAs that align with that.

And, Travis, those tariffs are in process in Minnesota, Wisconsin, Colorado, Texas. I may miss the state in there, but our goal is to get large load tariffs and then sign contracts underneath those tariffs that resemble those. And that should be the sort of regular path for data center contracting.

Okay. Can those data centers come online before those large tariffs? Or not? It's just under the timing here?

Yes. We would align, and I think it's to understand. We have one data center that's already energized. We have three data centers that are energizing in 2026. And we can well, do we just make sure we align those ESAs with the large load tariff.

So, yes, they can. It's just important. You know? And then we've been very clear only with our stakeholders, but with our investors about the importance of those principles.

And how we manage both benefit for our current customers and manage risk to our customers and the company for these large loads.

Okay. Got it. Thanks. And then higher level, obviously, hearing a lot around the country, etcetera, about bring your own generation. What's that look like in your area? Are you seeing data centers bringing their own generation, making proposals, and then if you're seeing that or even if you're anticipating that, what does that mean for your system and reliability? How does that all work together?

Yeah. Hey, Travis. It's Bob. I think the bring your own gen is maybe a mnemonic construct that is sort of if you're we don't want you to take existing supply out of the stack.

It doesn't necessarily mean that data centers are gonna show up with their own generation per se. We think that as you think as you look across the country and the sort of different regulatory frameworks that are out there, you know, we think data centers by and large and our conversations with them have affirmed this they don't really wanna own and operate their own generation. They'd rather have someone own and operate for them. In a deregulated market, that may mean working with a developer to build that generation, leave it through a regulated utility, and sell it to the customer, that seems a normal path for a deregulated market.

For our markets, it would be we want to bring in incremental generation to our networks to support these new large loads. And in doing so, when you bring that generation, you price protect your existing customer base from any incremental costs that may come from that new generation. And then the shared benefit comes from this big fixed asset, we call it the grid, and spreading that across more units of production. And that's where all customers will benefit by bringing large loads in.

And if you can protect them from the price side of new generation, which we think we have the capability of in all of our states, I think that's how I think about bring your own generation in the country. There will be some people developers that will build their own generation over time, but we think that's a pretty small, small set of data center developers and hyperscalers.

Okay. That makes sense. And then one real quick one. The Colorado, if you get that large load tariff in place, is that upside to the six gigawatts? I think you had mentioned that you could see more projects or more interest come in. Once you got that or that embedded in the six gigawatt?

You know, when we think we have not specified where those well, we have two gigawatts under contract. We have not specified those remaining four where they will come from. We have significant interest across all of our service territories and operating companies. I think we're most focused in the Upper Midwest in the near term.

As we move forward, but interest across all operating companies. And I think, you know, we put that six gigawatts up there, but that's through 2027. You don't stop there. You continue to look at how can we drive overall data center development. Beyond that.

So I would you know, we'll continue to provide updates on that, but it's just we haven't specified we haven't given anyone the specificity. We have a large pipeline across all of our territories.

Sure. Okay. Got it. Thanks so much.

Your next question comes from the line of Paul Patterson from Glenrock Associates. Your line is live.

Hey. Good morning.

Morning.

Just wanted to just had one question left on these PSPSs, these power shutoffs and sort of some of the news that's come out about them from the fire districts and from these lawmakers. Just to you elaborate a little bit? I know you guys are working hard on this issue, and, obviously, it's a safety issue that you guys are focused on. Just any thoughts on this that we've been seeing a bit of stuff coming out of Colorado on this?

Hey, Paul. It's Bob. Look. Let me start with we are 100% committed to protecting the communities and our customers from the risk of volatile weather and wildfires.

And we absolutely don't take lightly the need to potentially turn the power off in selected locations for short periods of time to protect them. We have spent an enormous amount of time, energy, effort, and investment in making our system harder, making our operational intelligence better, and minimizing the scope and the impact and the number of these items. And we expect that to continue as we go forward in time. We continue to operate under a wildfire mitigation plan in Colorado and a system reliability plan in Texas.

Gonna help us continue to further segment our system, continue to build out the operational intelligence, and the ability to continue to minimize the impact of these occurrences. I will share with you, though, that the December outcome in Colorado was some, you know, high winds, and it pertained to a dangerous situation in Colorado. So we stand by our decision. We took the right action.

And all we're trying to do is minimize the impact on our vulnerable customers when we have to do that. And so we're working on a battery pilot for our durable medical good customers. We are increasing our collaboration and partnership with our local partners, and we had enormous amounts of support from the broad community, the OEMs, the counties, everybody in the fire districts, we feel good. It's not our preferred choice of action, but we are absolutely gonna protect our customers, our communities.

From the risk that we cause a catastrophic wildfire.

Absolutely. No. I guess my question is sort of, like, I guess, I'm a little bit surprised by sort of some of this reaction. Is it a communication issue, do you think?

I mean, I just in terms of I mean, obviously, you guys are not you're not taking this lightly. So I just you know, in terms of you you're doing it to protect people. You know? So I guess what I guess what I'm a little surprised by is sort of this pushback or at least the coverage of it.

Do you follow what I'm saying of is this an issue of communication? Do you think that people don't really understand that I apologize. That's what my question is.

Our year-over-year performance between, you know, 2024, 2025 was a remarkable improvement in terms of our coordination, our early warning, and our performance and our restoration times. Certainly room for improvement. We work hard on communication. We work hard on outage maps.

We're investing in technology to do that. It's all part of our road map. I think one of the challenging things for people just to understand is sometimes you may be in the circuit that gets turned off proactively. Sometimes because of the weather, you might be in a circuit that gets knocked down that we didn't proactively turn off.

So some people are on, some people are off, they don't know why they're on, and they don't know why they're off. And so we're trying to work through sort of real information sharing with our customers, to make sure that we give them the best recovery times, the best reasons for why they may be out in a certain situation and, again, trying to minimize all of those as they happen.

Okay. Great. Awesome. Thanks so much.

Thank you.

There are no further questions. And with that, I'd like to turn the call over to CFO, Brian Van Abel, for closing remarks.

Thank you all for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions.

That concludes today's meeting. You may disconnect.