Good day, ladies and gentleman. And welcome to the Xcel Energy First Quarter 2020 Earnings Call. Questions will only be taken from institutional investors. Reporters can contact media relations with inquiries, individual investors and others can reach out to Investor Relations. Thank you. Today’s conference is being recorded. At this time, I turn conference over to Paul Johnson, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good morning. And welcome to Xcel Energy's 2020 first quarter earnings conference call. Joining me today are Ben Fowke, Chairman, President and Chief Executive Officer; Bob Frenzel, Executive Vice President and Chief Operating Officer; and Brian Van Abel, Executive Vice President and Chief Financial Officer. This morning we'll review our 2020 first quarter results, share business development and regulatory developments, discuss how we're managing through uncertainty around coronavirus. There's an expanded list of slides today that accompany our call on our Web site. As a reminder, some of the comments during today's conference call may contain forward looking information, significant factors that could cost results to different than those anticipated are designated in earnings release and our filings with the SEC. On today's call, we will discuss certain metrics that are non-GAAP measures, including ongoing earnings and electric and natural gas margins. Information on the comparable GAAP measures and reconciliations are included in our earning release. I will now turn the call over to Ben.

Well, thank you, Paul and good morning, everyone. You know, as I reflect back on the past few months, my heart really goes out to the individuals and families impacted by the coronavirus, the devoted health care professionals so bravely serving our communities and the businesses across all sectors experiencing tremendous economic challenges. At Xcel Energy, we understand how critical our work is to the health and safety of our communities and local businesses. I'm so pleased with how our employees and industry have responded during this unprecedented time, working to keep people safe, delivering reliable service to customers and providing support to those in need as we've done for over a 100 years. I also want to thank our employees for their dedication, spirit, and creativity in finding ways to support our communities and stimulate local economic growth. Now turning to the quarter. We've gotten off to a solid start, booking $0.56 per share for the first quarter of 2020 compared with $0.61 per share last year. We believe we can take actions that will allow us to weather the impacts of COVID-19. And as a result, we are reaffirming our 2020 guidance. Brian will discuss the financial results in more detail. At Xcel Energy, we're taking significant strides to help our customers and protect our employees, while continuing to deliver critical energy services. Some of our actions include both committing to not disconnecting residential customer service and arranging payment plans if they're having difficulty paying their bills. In Minnesota, we were proposing to reduce our approved field forecast by $25 million to give immediate relief to our customers. We stepped up our charitable giving and are helping our communities during this time of need. And we are working closely with our regulators and state and local leadership to…

Thanks, Ben, and good morning everyone. We achieved solid results recording $0.56 per share for the first quarter of 2020 compared to $0.61 per share last year. The majority of the quarterly deviation is driven by weather. We experienced warmer than normal winter weather this year compared with cooler than normal weather last year, which results in $0.04 per share unfavorable comparison. While significant earnings drivers for the quarter include lower O&M expensive increased earnings by $0.03 per share, our lower effective tax rate increased earnings by $0.03 per share. However, majority of the lower ETR is due to an increase in production tax credits are sold back to customers through electric margin and tax reform impacts, both of which are largely earnings neutral. Offsetting these positive drivers were, lower margins due largely to unfavorable weather, which reduced earnings by $0.03 per share and which offsets riders and regulatory outcomes. Increased depreciation and interest expense, reflecting our capital investment program reduced earnings by $0.05 per share and other items combined decreased earnings by $0.03 per share. Next, I want to discuss the potential impact to COVID-19 and the actions we are taking to mitigate our range of outcomes. Starting with sales, our first quarter of weather and leap-year adjusted electric sales declined by 1.1%, while natural gas sales increased by 0.4%. The coronavirus virus crisis had a minor impact in first quarter sales. The economic shutdown started in mid-March, so we did not experienced the full monthly impact. From March, our total residential sales increased slightly, while C&I sales declined 4%, resulting in a total retail electric sales decline of 3% on a weather adjusted basis. However, a better reference point on the monthly COVID-19 impact is what we saw in our preliminary April numbers in which almost all of…

Thank you [Operator Instructions]. We'll take our first question from Stephen Byrd with Morgan Stanley. Please go ahead.

I wanted to just get an update at a high level in terms of the opportunity for additional PPA buyouts. Just what are you seeing in terms of the opportunity, or is that sort of a little bit on pause just given the COVID-19 dynamics? And just curious at a high level what your views are on that opportunity?

We're all focused on COVID-19, but we're still running a business and still looking for opportunities. Brian, do you want to give a little more detail?

And so as we think about it, we're in regular contact with our counterparties. Obviously, there could be potential here as you see what's happening. And if any of them have an interest of selling, we're certainly regular in contact. We have our proceeding of the Mower acquisition in front of the commission, and we hopefully see a decision of that in Q2 or Q3. But then we're also looking at how we use the ERP and our IRP processes to help jump start some of that too. Some of the discussions around our acquisitions in Minnesota is how can we better improve the process with the department, our stakeholders, to ensure that we're bringing it forward and have a comprehensive discussion. So we're certainly active on that stage. And you know, we've talked before it continues to be part of our plan, but we don't include any of that in our base capital plan.

And just maybe at a high level in terms of resource planning. How do you think about the opportunity for further acceleration of renewables? I guess on the positive side, renewable costs keep dropping. We may -- there's always a potential for tax credits to get extended. The wind credit got extended again last year. On the negative side, I guess you have demand uncertainty from COVID. In Texas, we have uncertainty around the status of the energy sector overall. But how do you think about the potential for additional sort of renewables growth, additional shutdowns of some of your coal assets? Do you feel about the same as you felt before? Are there reasons to be more bullish or more cautious? How would you think about that?

I guess the short answer is probably a little more bullish. The cost, as you mentioned, Stephen, continued to come down. And so our feel for fuel strategy continues to be, I think, obviously economically attractive. And I think the test of that was the ability to get our renewables approved in Texas and in New Mexico and basically on economic terms. I think the other element too, Stephen, which makes me bullish is that, and this is where I think we can partner with our states and our commissions and state administrations, to be part of the solution in getting people back to work and that's potentially accelerating some of our capital opportunities. And using that to bring on more renewable at a great price point that actually helps save customers’ money and employees’ jobs, good jobs. So not unlike when we had the great recession and can tell you many times that we have people stop me, people typically working in our labor unions and actually thank myself and really the company for continuing to go forward with projects, because that was the only job we have. And that's something to be really proud of and I think we can replicate that again.

We'll take our next question from David Peters with Wolfe Research. Please go ahead.

I was wondering if you could just give a view of where you guys see yourself with earnings guidance range in any of this base scenario?

Where we are in the guidance range…

Yes…

I guess first I would say take a look at our track record over the last 15 years. I think we've demonstrated that we can deliver within the earnings guidance range, typically that's been at the middle or above. So we're quite proud of that and we expect we'll be able to do that this year. But if you look at what we've done in the past and our track record, on the first quarter earnings call, we don't give any additional guidance whether we're going to be the bottom, the top or whatever. So that's the first quarter. We're confident onto the base case scenario we'll be in the earnings guidance range. And as the months and quarters roll on as we've done in the past, we’ll potentially get more color on it.

And then just preliminary sales data for April. Do you have a sense of which states are seeing more weakness than others, just understanding that you have decoupling in Minnesota and some protection in Colorado as well?

David, well, the question about what states were affected, what the divergence in the states for April. Is that basically what you're asking, you're kind of breaking up on…

Yes, that's right.

I think as we look at it, we saw the most resiliency on the C&I side in SPS, and probably the biggest impact on the C&I side in Minnesota and Wisconsin, the northern territory. So I think that's the color certainly we'll watch it as we go over time. Now, part of what we saw in Minnesota is we did have a combined heat and power plant as we've talked about on our call before go online in May of last year. So that's part of what we see and we look at month over month, but overall commentary greatest weakness in C&I side, Minnesota and Wisconsin and less so in SPS and Colorado is roughly in the middle of those two.

And then last question I had is just I think you said the equity forward that you expect to settle around year end, but just on the Mankato sale. Does that impact the equity plans at all either for this year or next? Just kind of what you guys weighed out last year?

No, it doesn't. When I say we’ll use it to reduce our financing costs for this year but we don't expect to not sell our equity forward this year. We do plan to settle it but what Mankato does is really it’s infusion of cash of $650 million, and it’ll provide some additional headroom on capital investment if we have an opportunity to potentially accelerate investments, and really help our communities, and customers, and the regulators accelerate some of this rebound from this crisis. So I think it gives us just an additional capital headroom. As we think about longer term, we think about our five year plan. We'll reevaluate that and overall financing plans as we get to Q3 and lay out a new five year capital plan.

And I think final question is the two renewable projects that you've mentioned that could flip into ‘21, which ones were that?

Those are the two Minnesota farms that we're looking at. But I would say we've done, as you'd expect from us, we've taken a very conservative approach and then made sure we've had all the documentation since 2016, and we've maintained continuous efforts since then. So we're highly competent even if they do slip a month or two into 2021 that will qualify for 100% PTCs.

We’ll take our next question from Jeremy Tonet with JP Morgan.

Just wanted to start off, I guess, do you have any regulatory obligations or guarantees associated with the wind that could impact our earnings, because of the project delay into ‘21 here? Just want to touch base on that point.

We have no obligations in terms of getting in service in 2020 and we're certainly working towards that, and that's our goal is to get them completed in 2020. But in terms of obligations and in term of timing we don't. There are obligations in terms of overall cost gap, but we're certainly working to mitigate any impacts on that as you start to see a delay in schedule. We're certainly working with our suppliers and our plant contractors to get those, to ensure that we bring it in under the original order PTC cost cap.

Yes, so we're pretty comfortable with that, Jeremy.

In addition, the SPS has been projects that we have 100% PTC guarantee. But again, we think that those are getting into construction by the end of the year and we're fairly confident on 100% PTC.

And just a cleanup questions, Slide 17. It seemed like AFUDC equity ticked up a bit there. Just wondering if you could give a little bit more color on that?

Yes, from our regional guidance it did as you start to see some delays in some projects, and part of that was our Blazing Star 1 wind farm that we just put in service in April. That took as we were in the winter time, it took a little bit longer, so that's part of it. So just kind of across the board as you see part of it’s wind farm and part of it some other investments that we're making. And there's also a little bit higher -- as we took steps to improve our liquidity also a little bit higher AFUDC rate.

We'll take our next question from Julian Smith with Bank of America. Please go ahead.

This is Alex McKerrell calling in for Julian. My first question is about your rate case filings that you have for this year. I was wondering, if you have any updates on whether or not you could potentially push out Minnesota again or potentially push out Colorado? And maybe how you're thinking about using existing trackers to track that rate base instead?

We recognize that these are challenging times, and we do like to work with our regulators in advance. In both Colorado and Minnesota, we have been investing in infrastructure and assets that our customers value and our regulators support. But like in the past, we do think there are mechanisms that will allow us to not file those rate cases. And you can be assured that those conversations are happening with the staff in the commissions as applicable in the respective states. We like to not file those cases and we probably have more information for you on the second quarter call later this year.

My second question and my last question, just about your CAGR overtime. I was wondering if you're still anticipating potentially upper end of that long term guidance? And thank you again.

Yes, I think it's a great question. Again and I talked a little bit about it with an earlier question. But you look at what drives our 5% to 7% growth and it's investing in projects and opportunities that are very much aligned with our states, our communities, our regulators, our legislators. So, I don't see that changing and I don't see changes to our CapEx forecast unless to the upside going forward. So that's what drives the growth and that’s where we'll get it from.

One of the things I think we've done as a company is on sunny days prepare for the stormy days, and we've got great dry powder on our balance sheet and Brian mentioned the other things we did. We also continue to invest in our system, keeping it strong and reliable. And so that allows you to weather situations like that and potentially come back stronger and a partner with our states as we look to jump start the economy when we get, all get through this.

We'll take our next question from Travis Miller with Morningstar.

The question on the contingency plans, I think you might have answered this real quickly. But on the O&M side how much of these contingency plans have you been able to accomplish so far? We've been talking about first in the four or five months of the year. And then any change in the CapEx plan within those contingency plans? I think you just answered no, but just want to clarify the O&M side and then the CapEx side.

We've really see no plans in our CapEx for this year. On the O&M side this crisis hit relatively recently so working through all those plans. And we have a plan for balance of the year in terms of implementing them. I think Ben said it pretty well is you often hear Ben and Bob talk about dry powder and you know that's been used in the context of our financial dry powder with our strong balance sheet, our conservative dividend payout ratio, but we also have operational dry powder. And you know we've invested in the system and then in the good days and as the time of crisis here, we’re able to weather it. And we look at, when we think about the O&M contingency plans, we're putting in place, whether it's we’ve implemented the hiring freeze, we're looking at reducing employee expesens and that will happen over time, reducing consulting spend or other programs. And as we think about it we're targeting, as I talked about, targeting 4% to 5% purely mitigate that base case scenario. So we do have the ability to flex up all those, but it's a little bit worse.

So evenly spread more or less throughout the year?

That's a fair assumption.

And then on the renewable development. How much are those delays project specific and how much are you seeing just across the entire industry supply chain issues or other financing delays, construction delays, stuff like that industry wide versus couple of projects you mentioned?

We work with our OEM vendors as well as our balance of plant providers to execute the schedules. We have seen some supply chain disruptions started when China shut down for a while. We've had mild disruptions from other plants where we get some of our components. We think that's an industry wide phenomena. I think, as Brian mentioned, we've been exceptionally diligent in tracking our costs. We are really comfortable with our ability to meet the safe harbor provisions for achieving 100% PTC. These are projects that were originally scheduled to be later in this year anyway. And so while we're trying actively to get them completed in 2020, there's the potential that do slip into ’21. But I do think it's stuff we're seeing around the industry and also not only is it our vendors but there's a logistics and a supply chain issue with ports and parts transport that we're seeing. It's not, I wouldn't say it's catastrophic by any stretch, it's just mild we just happen to have these later dated projects for us.

We're very, very confident. I've worked with outside firms to know we’ll pass the continuous efforts test.

Any difference you're seeing between solar and wind in terms of what you just talked about with supply chain and other logistics?

Right now, Travis, we're only building wind farms on our own balance sheet. I haven't seen or heard a lot of solar delays. There's been a couple of public force majeure filings on some solar farms around the country, but I don't think we could speak with any authority on the solar side.

We'll take our next question from Sophie Karp with KeyBanc. Please go ahead.

I was curious if you could provide a little bit more color on the supply chain disruptions that we've been talking about, particularly with these two wind farms. What you guys have seen in the supply chain? And also do you expect that the issues may in fact sort of other areas, maybe traditional power generation, transmission, distribution businesses where it might affect the the availability of parts and things like that as we move forward and the lockdowns and disruptions continue? Thank you.

We haven't seen any supply chain disruptions on any of our other components other than maybe toilet paper and hand sanitizer and face mask. But on the wind farms themselves, a lot of the components are manufactured in overseas and assembled here. And so depending on the progress of the pandemic and which country it hit, which factories has caused, two, three, four week delays in various places, which compounded equals maybe a six, or seven, or eight week delay on our projects and that was enough to push them across, potentially push them across the go line. We're seeing not just constraints on the OEM sidebut we do see logistics constraints around ports and air travel and shipping as well, and so that's caused some of the problems. I can't say that we've seen any other disruptions on any of our other components, we just haven't. Those discrete items are suffer watching closely. As Ben and Brian has said, we feel very confident in our ability to qualify for the PTCs at 100%, and we're working diligently with our vendors and our transportation providers to get all the components here and get them constructed by the end of the year.

Ladies and gentlemen, this will conclude today's question and answer session. At this time, I turn the conference back to Brian Van Abel for any additional or closing remarks.

Yes, thank you. And thank you for all participating in our earnings call this morning. Please contact our investor relations team for any follow up questions, and have a good day. Thank you.

Ladies and gentlemen, this concludes today's conference. We appreciate participation. You may now disconnect.