Good day everyone. Welcome to the Xcel Energy Fourth Quarter 2014 Earnings Call. Today's call is being recorded. At this time, I would like to turn the conference over to Paul Johnson, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to Xcel Energy's 2014 Fourth Quarter Earnings Release Conference Call. Joining me today are Ben Fowke, Chairman, President and Chief Executive Officer; and Teresa Madden, Executive Vice President and Chief Financial Officer. In addition we have other members of the management team in the room to answer questions if necessary. This morning, we will review our 2014 full year results, reaffirm our 2015 earnings guidance range and update you on strategic plans related to business and regulatory developments. Slides that accompany today's call are available on our Web page. In addition, we will post a brief video on our Web site of Teresa summarizing our financial results later this morning. As a reminder, some of the comments during today'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'll now turn the call over to Ben.

Thank you, Paul, and good morning. I'm going start by highlighting some of the key successes of 2014 and update you on some exciting developments at Xcel Energy. Teresa will provide more detail on some of these items. 2014 was another strong year for Xcel Energy as the Company reported earnings of $2.03 per share. This marks the 10th consecutive year we’ve met or exceeded our earnings guidance and the fifth consecutive year we delivered earnings in the upper half of our guidance range. In addition, we raised our dividend for the 11th year in a row. From a regulatory perspective, we made significant progress, wrapping up rate cases in Wisconsin, New Mexico and Texas. We received a constructive ALJ recommendation in Minnesota and most recently reached a favorable three year settlement in our Colorado electric case. When we filed the case in Colorado, we stated that our objective was to establish a multi-year regulatory plan that provides certainty for PSCo and its customers. This settlement accomplishes that goal and provides us a reasonable opportunity during our authorized return in our Colorado electric business over the next three years. From an operational perspective I also wanted to take a moment to say how incredibly proud I am of the efforts of our employees this year. We hit record levels of safety in 2014 improving for the seventh straight year. And again we demonstrated our top tier operating performance with industry leading reliability scores. Recall last quarter we unveiled our refreshed strategic plan that was focused on improving utility performance, including the goal of closing the ROE gap by 50 basis points and increasing the amount of revenue generated from long term regulatory agreement. Driving operational excellence by focusing on limiting annual increases and O&M cost to between 0% and 2%,…

Thanks Ben and good morning. Today I'll be focusing my discussion on full year 2014 results. We are pleased to close out another solid year with ongoing earnings of $2.03 per share compared with 2013 ongoing earnings of $1.95 per share. The most significant drive related to 2014 earnings was improved electric and natural gas margins that benefited from new rates and increased rider revenues in many of our jurisdictions. Increased margins more than offset an unfavorable weather comparison and higher O&M depreciation and property taxes. It is worth noting that the weather in 2014 contributed $0.03 per share when compared to normal. In contrast in 2013, weather contributed $0.11 per share resulting in a $0.08 per share decline when comparing the two years. Now let me provide an update on sales and the economies in our local service territories. We experienced positive growth trends in 2014, with weather normalized retail electric sales increasing 1.3% and firm natural gas sales improving 4.6%. Sales in 2014 exceeded our original expectations for the year. While we are monitoring economic conditions in our service territories and are closely watching potential implications from changes in the E&P space. We remain confident in our 2015 electric weather adjusted sales growth assumption of 1%. Let me provide a little more detail on sales growth by company. Beginning with NSP was constant, weather adjusted retail sales increased 3.3% in 2014, due to strength in C&I sales from growth in the sand mining industry and related oil and gas businesses. Customer growth and modest usage increases drove higher residential sales. Electric sales at SPS increased 2.3% driven by growth in the C&I class. Oil and gas exploration in the Permian Basin continues to benefit the service territory and we saw additional growth in uranium enrichment. While we are…

Thank you very much [Operator Instructions]. We’ll take our first question today from Michael Weinstein, UBS.

Perhaps first if you can, you talked a lot about the future here, you talked about the IRP can you perhaps comment on the ability for itself to take advantage of opportunities perhaps in solar in the near term and perhaps in the long term. And perhaps also at the same time elaborate -- you introduced the comment other products and services perhaps could you elaborate a little bit on what you meant there as well.

Sure. And we’re going to add obviously as part of that the resource plan a tremendous amount of renewables both wind and solar. A lot of it comes in the ’20 through ’30 time frame. I think that gives us a great opportunity to own a good piece of those investment opportunities for couple of reasons. One, clearly technology will come down and it will most likely not have as much of the federal tax incentives that it does have now. Two, our tax appetite should grow in the coming year. So, I think we should be well positioned to take advantage of some of those opportunities. Your second question was regarding…

I suppose you’ve made this, curious comment about offering other products and services. I am just curious if there was anything tangible?

I mean there is a number of things that we want to do. I mean increasingly customer want different energy mix. They want greener products. They want different billing options. It’s basically just responding to the trend that we’ve seen that consumers, one size that’s all which has been the traditional utility role need to change. And we want to work with our commission and their staffs to make sure that we do that in a way that’s fair to all and be flexible enough to move forward with that.

Excellent and just if you don't mind commenting on transmission here, I would be curious, where does your transco strategy stand given some commentary from peers and the SPP market overall of perhaps a lackluster spend trajectory here at least for 2015? How does that jive with what you are baking into expectations and your own expectations for longer-term build out of the transco? And perhaps the clarification on the last question, does that mean for solar it's an opportunity for you all post the 2016 ITC? Is that what I'm hearing from you?

It means that it would be -- the opportunity improved significantly doesn’t mean we can’t do something before that. But as you know renewables are heavily driven by tax appetites and you need one to efficiently doesn’t mean you are fully precluded but to efficiently participate in those markets. Your question was about transcos and transmission. Well keep in mind that $4.5 billion of our CapEx over the next five years is in transmission, none of it is in a transco and none of it assumes that we win any of the competitive transmission projects. So when you looked at what’s come out of SSP and their ITP 10 plan I think it was about 300-odd million dollars of potential opportunities, by the way it looks like not an incident to get amount on that would go into the SPS. But we don’t have to -- that does not impact, that would be the icing on the cake. So, our strategy has always been two pronged. We have the utility vehicle to invest in, that’s where we are today. We’re in the process of getting approvals, final approvals on our transco so that we can participate in those competitive markets. I think we’re well positioned to do that. It’s gone a little bit slower as you mentioned than I think many people thought. It doesn’t really surprise us. I think there will be more opportunities in the years to come. And again I think we’ll be very well positioned to win in those markets.

But to summarize, you feel confident in the 4.5 billion you have already delineated in executing on that despite perhaps a little bit of the lack-lusterness in SPP, et cetera?

Those by and large are identified projects so yes we feel very confident in that.

Ali Agha with SunTrust is next.

Can you remind me, in your '15 guidance range right now, what kind of regulatory lag is assumed there? And best case scenario, how much of that do you think you can ultimately capture?

I mean just historically we've been writing about 100 basis points in terms of regulatory lag. And as we talked about is one of our properties is we intend to close that gap at 50 basis points. That's our target. Now if that's not evenly spread over the next year so we do intend to start to put that in place in 2015, so we are looking towards some improvements in that. It will -- the trajectory is again no ratable, but we'll move up. So it's smaller in the first year.

But to be clear, you said the starting point in '15 -- I think the 2 to 2015 guidance, that is still assuming at the midpoint about 100 basis point lag?

Yes it's a little -- it's right around there. We've assumed it's a slight piece.

Then my second question. As you mentioned, you ran -- weather normalized electric sales were up 1.3% in '14 ahead of perhaps your origin plan, but I noticed that for '15 you are still assuming 1% and I think for gas you're actually assuming a 2% decline, so why the slowdown in electric or what are you seeing in '15 that causes you to be more cautious?

We're just being conservative in terms of our overall outlook in terms of 2015. As we've talked to you and this goes for gas too in previous quarters, early in the year we had some extreme weather and we were always concerned. We had a little bit weather wrapped up in our overall sales, so both in the electric and gas business, so we're just being conservative Ali and saying that it's not any significant item that's driving us to keep it at that level the 1%.

And then I wanted to be clear you know the comments you made that in your next Colorado gas case, you do plan to also ask to put some of your gas reserves into rate base. Can you remind us if that happens, what kind of increment rate base does that mean? And also, what is the mechanism? I was unclear, is it part of the rate case? Is it a separate filing? Just want to be clear on how this goes.

Yes I don’t know if we're actually going to talk very much about it in the actual case that we'll file to get recovery of core infrastructure investments, Ali. What I said is that we would do a concurrent filing, a separate filing that will take place most likely in the second half of this year. We're going to gather stakeholder input, understand what the important issues with our stakeholders are. Assuming those conversations and the filing goes well and I assume there'll be kind of open type meetings, then look for us to pursue a defined and more flushed out plan obviously in the 2016 timeframe. We purchased about 450 Bcf a year, so what is that, $3 that's about $1.2 billion of gas. Obviously we wouldn’t do it all, so you'd have -- you would lay into it slowly. I think with the emphasis more on our LDC business -- gas business in Colorado.

Okay, but just the mechanism I mean, if it moves into rate base, you would want rate increases to reflect that. So would that be sort of put in as part of this rate case filing? Would that be a separate rate case? How would the rates be adjusted if you do get it into rate base?

It would be separate and it -- the whole premise is it's fuel for rate base and so how that mechanism would be determined there's different models out there as I think you're aware and we would -- that's the kind of input we want from stakeholders to understand what risk they're willing to bear and which risk they're not willing to bear and then we can move forward accordingly.

And final question. In the past, Ben you’ve also talked about looking at opportunities where you have current BPAs and that may be expiring. Is that an opportunity to rate base some of those plants? As we look at calendar 2015, just looking at where you are in terms of contracts, et cetera, are there opportunities that could play out this year, or is this something that we should think about beyond 2015?

I mean I think there's always opportunities I mean -- and we're always looking for those opportunities to your point and so I can't promise anything, but we certainly are diligently looking at those opportunities.

It could happen this year if something comes together?

It could.

Our next question comes from Greg Gordon, Evercore ISI.

First question is on the Colorado rate case. How much of a depreciation increase had you initially asked for that was subsequently removed in the context of the settlement?

Greg it was north of $30 million so.

Second question is on cap spending. And I'm referring to the slides you brought to my conference a couple weeks ago. They were pretty consistent, I think, with prior disclosures. You have a $3.375 billion spend in 2015. Declines to more or less $2.8 billion in ’16, ’17, then dips a little bit in ’18, comes back up in ’19. So that averages 4.7 but it's front-end loaded. And then you have made these subsequent filings in Minnesota, specifically on resource planning. So is the bias to potentially see if you get by in Minnesota to see that ’17, ’18, ’19 spend potentially go up?

Well, maybe I will just add there in terms of the spend, why we have that peak just as a reminder Greg it’s the wind in Minnesota the two wind farms that will go in service. And so that is really the peak up. And then in terms of relative to going forward, that once rates would change, assuming they do, we should level off in terms of our relative increases. So we do have the initial peak.

Right. I guess I am asking -- I know you are working; you have a rate plan to smooth in those increases. My question goes more towards the overall level of cap spending which declines as you get out into ’17, ’18, ’19?

Typically Greg and there are obviously no guarantee but as you know -- as we get into those out years the actual spend has historically tended to increase as we identify new opportunities or new needs within our spending parameters. And I think you also were asking about the resource plan itself that we found, and as I said I think that could create some opportunities for us albeit most of them would be in the later part of that five year forecast or even outside of that five year forecast.

Got you. So when we think about your 5% to 7% growth aspiration, this plan drives slightly less in terms of rate-based growth, and then improving regulatory lag to inside the range. But should you, in fact, identify more cap spending than that whole sort of calculus just moves up a bit.

We've tempered back the 5 to 7 to be closer to around 5% rate base growth as we look forward, so it’s a little bit lower than the 5 to 7 in past years I talked about.

So we always look for rate based opportunities Greg, to your point and also to your point the thing that will really drive earnings is closing that ROE gap, as Teresa mentioned. I think we are making good progress on that, and we're excited about continuing what has been a good deal for customers and shareholders in Colorado and I am encouraged with the progress we are making here in Minnesota.

Great. And then the final question is last year you raised the dividend first quarter, whereas in prior years you had raised it later in the year. What is your expectation of the current dividend cycle to this year and going forward?

Yes, we addressed that with the Board and so that you probably can assume that last year’s cycle will be more consistent going forward.

Our next question will come from Travis Miller with Morningstar.

Hi. I wondered if you could talk a little bit about the impact on you guys from the oil price drop and how that might be incorporated or not in that 1% demand forecast, anything around that that would have a material impact?

I guess, let me start and I will let Teresa add if she thinks I have missed anything. One as Teresa we have got a 1% is probably all things equal fairly conservative sales forecast. So we have margin, reserve margin, if you will, but actually we don’t really see much in the way of we do sales coming out of the decline in oil prices, and to the extent we do keep in mind that, that is probably the lowest margin part of our business. So, I don’t think it’s a big impact Travis, really don’t and we don’t think it’s going to be a big impact on our capital expanding profile either.

Okay. Great. And then one on the Colorado case, on the electric side. How much given though the adjustments you were able to get out of the Clean Air Clean Jobs, and the transmission into riders and such, how much now, give us a sense on a percentage basis or idea, is subject to demand? Demand sensitive in terms of earning ROE?

In terms of just a sales growth?

Yes, needing sales growth to compensate for the net capital investment that you guys would see over this three-year period.

I think it’s very moderate in terms of that, because those were our biggest drivers in terms of that cost recovery and having those mechanisms in place. We are definitely predicting sales growth but it’s not dependent in terms of earning our ROE on having an aggressive sales growth achievement.

I would agree with that what Teresa said, I mean, of course the riders help with the incremental but I mean you got your core business, so sales growth is always an issue. But I think we have that reasonably paid and to Teresa’s point we are not assuming an aggressive sales forecast in those numbers.

Next is Chris Turnure, JPMorgan.

Good morning, guys. I wanted to follow up on the e21 initiative. You mentioned that you came out with the initial blueprint back in December and then you actually filed with the MPEC this month for a specific rider mechanism of some kind. You were a little bit high level with the description there. I wanted to find out a little bit more in the way of detail and find out more in the way of timing. And then also I wanted to understand the interplay between that request and then the fact that you have kind of bundled in some futuristic carbon goals as well. How do those two relate within that request?

I guess to try to answer that it’s all about having a longer term approach to what we're trying to accomplish in Minnesota. So, the resource plan we went out further here is what we can do by 2030 here is how we get there. Let’s focus on the key objective which is carbon reduction, must be very disciplined about how we achieve that carbon reduction using what we like to call technologies at the speed of value. So disciplined on how we approach it. And let’s make sure that our regulatory compact reflects that longer view. So yes we outlined general frameworks but generally what we’re looking for is longer term regulatory compacts. We like to see compacts three, four maybe even out to five years long. And within that things you can augment that with writers, you could use formulaic recovery type mechanisms and then have the incentives for achieving what I think the state wants us to achieve. So we less deliberately beg but we’re building off that e21 initiative which we participated in but we didn’t drive. So I really think there is an excitement here in Minnesota as we’ve outlined these plans and talked about how we can achieve these carbon reduction goals at a very-very modest price to consumers. So more to come on that but I think it’s a pretty exciting time.

Maybe just to add to that I mean and just to clarify Ben outlined the framework but I think you mentioned that we had made a rider request, we haven’t specifically done that, so just to add to Ben’s comment in terms of the overall framework.

Okay. Got you. So nothing specific with a rider request and then just stepping back, overall this is more driven by future growth, future spending, demands and initiatives, and then those are going to potentially necessitate some kind of rider or catch-up mechanism to compensate you for that?

There is different ways you can get there. So the point is that we’re moving to a different environment and we’re going to need the regulatory compact to evolve with it. And so the key takeaway I hope we it is that what we’re really seeking is a more comprehensive multiyear approach.

Okay. And then do you guys have any color around initial conversations there with regulators and then, separately, in either Minnesota or in Texas, initial conversations with policy makers and the timing around your legislative initiatives in both those states?

Well, let me just say that, I’ve had opportunity as have others on the Xcel team to talk about what we’re trying to accomplish. And as I mentioned I think there is a lot of excitement and I think there is -- the devil is always in the details as you know. But I think there is a lot of excitement that this is a way we ought to be going as a state. So that’s from a regulatory perspective. We like to potentially have legislation that would support that new regulatory framework in Minnesota. So, more to come on that obviously. In Texas I think we’re getting some traction it’s still little bit early days they haven’t even assigned - made committee assignments to the key committees that would drive legislation for us. But we haven’t seen any major road blocks at this point.

At this time, we’ll take the question from Jonathan Arnold, Deutsche Bank.

Quick one, you mentioned exploring ways to avoid a 2016 Minnesota rate case. Could you elaborate?

Let me take a stab at it. I mean first of all where there is a will there is a way. And I think as I’ve said there is really a will to let’s get to 2016 case out of the way and let’s focus on this longer term framework. So how we do that mechanically? Well, it starts with using the ALJ recommendations, getting our interim rate proposal adopted close to what we’ve proposed and then taking a look at our excess depreciation and maybe reshaping that a bit along with using some of our nuclear depreciation as well. So, there is a way Jonathan and it would be nice to free up the time so we could spend time on these other more longer term ideas that the community and we have.

It sounds like you might be reasonably well along with having getting that done? Is that fair?

Well, I think the first step in getting it done was a constructive ALJ settlement. So we've got something to work with now and then again if parties want to do it, I think we've got the pathway forward.

And then still another topic, the gas rate basing subject. How -- given the change in the commodity price, obviously it would seem interesting for some of your stakeholders to lock that in. How confident are you that you will be able to find the other side of the deal?

There's definitely an economic benefit to moving forward especially where gas prices are today, but we have to make sure that -- there'll be a lot of concerns. I mean this won't be an easy lift. But I think the economics are compelling enough that I would -- that I have optimism that ultimately we can get something done, but it's going to take time Jon.

My question was a bit more to the appetite -- you see appetite from producers to lock in these prices?

Well I mean that's -- yes, I think you can find the producers, that's not going to be an issue.

You're more focused on your side?

Yes, right.

[Operator Instructions] Next we hear from Ashar Khan, Visium Asset Management.

Teresa can you -- you mentioned the bonus appreciation, what is the cash flow impact?

Well the bonus appreciation I mean for basically the extension and.

Yes.

It's a combination, it's about 1.8 billion and it's [indiscernible] between the two years about 1.4 billion in '14 and about 400 million in '15 because we have some carry over.

So that's extra cash you'll get.

Well that's the bonus depreciation amount so that's a tax impact on that so.

So I can take that number and do a tax impact on that.

Yes.

And so is that now factored in into your -- I guess how does that help? Does that lower debt needs or how is that cash being used in the process?

Well we've factored into our overall guidance in terms of the effects of the bonus depreciation so we've taken that all into account. To the extent we have that, we also have some rate base offsets, so it's a combination, but we've factored that all into our 2015 guidance and our updates.

One thing you'll note Ashar is that we have reduced our debt plan debt issuance over the five year time period. The other thing is obviously some [indiscernible] depreciation comes in NOL and push forward because you can only utilize so much of it per year. So it's had a modest improvement in our cash flow needs or our financing needs.

And that does conclude our question-and-answer session. And at this time I will turn the conference over to Teresa Madden for any closing or additional remarks.

Well thank you for all participating in our earnings call this morning and please contact Paul Johnson and the IR team with any follow up questions. Thanks again.

Thank you everyone.

And that does conclude today's conference call. Thank you for your participation.