Xcel Energy Inc. 6.25% Junior Subordinated Notes, Series due 2085 (XELLL) Q4 2012 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Xcel Energy Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Thursday, January 31, 2013. At this time, I'd like to turn the conference over to Mr. Paul Johnson, Vice President of Investor Relations and Business Development. Please go ahead, sir.

Thank you, and welcome to Xcel Energy's 2012 Year-end Earnings Release Conference Call. Joining me today are Ben Fowke, Chairman, President and Chief Executive Officer; Teresa Madden, Senior Vice President and Chief Financial Officer; Dave Sparby, Senior Vice President and Revenue Group President; Scott Wilensky, Senior Vice President and General Counsel; George Tyson, Vice President and Treasurer; and Jeff Savage, Vice President and Controller. This morning, we will review our 2012 results, update you on recent business and regulatory developments and reiterate our 2013 earnings guidance. There are slides that accompany today's call available on our Web page. In addition, later today, we will post a brief video of Teresa Madden summarizing our financial results. As a reminder, some of the comments during this morning's conference call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and our filings with the SEC. Today's press release refers to both ongoing and GAAP earnings. 2012 GAAP earnings of $1.85 per share reflect a $0.03 per share positive impact of the restoration of tax benefits expense in 2010 associated with federal subsidies for prescription drug plans. This benefit is not included in ongoing earnings, which is consistent with our treatment in 2010. Management believes ongoing earnings provides a more meaningful comparison. As a result, comments this morning will focus on ongoing earnings. I'll now turn the call over to Ben Fowke.

Thanks, Paul, and good morning, everyone. I'm very pleased to report 2012 ongoing earnings of $1.82 per share compared to $1.72 per share in 2011. This represents a 6% increase, consistent with our long-term objective of growing EPS 5% to 7%. It also marks the eighth consecutive year in which we have met or exceeded our earnings guidance and the third consecutive year in which we've delivered earnings in the upper half of our guidance range. In addition to strong earnings growth, we raised our dividend $0.04 or nearly 4%, consistent with our long-term commitment to increase the dividend 2% to 4% annually. The financial results are particularly satisfying, considering some of the headwinds we faced in the beginning of 2012. But our financial results are only one part of many successes we had in 2012. Notably, we continue to make significant investments to refresh aging infrastructure and improve reliability. Key projects remain on track and on budget. For example, in Texas, construction of the Jones 4 unit is now 85% complete, and we continue to target a May 2013 in-service date. In Colorado, we continue to make progress on the Clean Air-Clean Jobs Act project. Also in 2012, we continued our transmission build-out, investing over $700 million in a variety of projects throughout our service territories. All 4 initial CapX2020 projects have received state regulatory approval and are now in the construction phase. In addition, the entire Bemidji-Grand Rapids 230 kV line is now fully energized. Looking ahead, we plan to invest over $1 billion in 2013 transmission projects. To finance these initiatives, we took advantage of historically low interest rates, issuing $1.8 billion in first mortgage bonds in 2012. Our credit quality remains high, and there's strong demand for our bonds. More specifically, at NSP-Minnesota, we issued a $300 million 10-year bond priced at a 2.15% coupon, and a $500 million 30-year bond priced at a 3.4% coupon. Both of these represented record low utility coupons for their respective tenors. The $800 million of PSCo bonds were issued at slightly higher rates, but still among the lowest for the utility sector. Locking in these low rates will provide benefits to our customers for years to come. Our customers also benefited from continued high levels of reliability. As you recall, the mild winter gave way to a hot and stormy summer season. I'm proud to say that our system held up extraordinarily well, and our reliability scores were among the best in the nation. Good reliability underscores how our strategy of prudently investing in our systems results in excellent service, even when faced with extreme weather cycles and events. Our customers appreciate excellent service, as our consistently high satisfaction scores indicate. And 2012 was a big year with several rate cases completed and filed. Of note, we implemented a multi-year plan in Colorado and reached constructive outcomes in several other cases. Finally, I'm really proud of how we achieved these results. We improved employee safety by almost 20%, making 2012 our best year ever. In summary, I couldn't have asked for a better first full year as Chairman and CEO. We certainly plan to build on these successes and add to our solid track record of performance in 2013 and beyond. So with that, I'll now turn the call over to Teresa.

Thanks, Ben, and good morning. Today, I will discuss year-end results, provide an update on our regulatory proceedings, review our 2013 financing plan and reiterate our 2013 earnings guidance. Let's begin a review of 2012 results at each of our 4 operating companies. 2012 earnings at PSCo increased $0.08 per share, primarily due to the multi-year electric rate plan implemented in May and warmer summer weather. Earnings at NSP-Minnesota decreased $0.03 per share due to warmer than normal winter weather, lower weather-normalized electric sales, as well as higher property taxes, O&M and depreciation expenses. SPS earnings increased $0.04 per share as a result of rate increases implemented in both New Mexico and Texas in January 2012. Finally, earnings at NSP-Wisconsin were flat. While we had some ups and downs by company, the consolidated results clearly emphasize the benefits of diversification. Now I'll review some of the key items that affected the consolidated income statement beginning with electric margin. For the year, electric margin increased $118 million, driven primarily by $125 million of rate increases across all 8 states. Other positive factors included increased demand and transmission revenue. In addition, conservation and DSM incentives also helped to improve retail electric margin. Overall, weather was not a driver of the increase in electric margin. While summer weather was warmer than normal in 2012, we also experienced a hot summer in 2011. These positive drivers were partially offset by a $48 million decrease related to the expiration of a long-term power sale agreement with Black Hills Corporation, effective at the beginning of 2012. While it varies by jurisdiction, weather-normalized consolidated electric sales were flat for the year. However, when eliminating the impact of Leap Day in 2012, sales declined by 0.3%. We believe that sluggish sales were driven by a combination of the economy, conservation efforts and improvements in appliance, efficiency and saturation. In addition, we lost a couple of large customers in Minnesota, which reduced our sale by about 0.5%. Natural gas margins increased $8 million for the year, reflecting the implementation of the pipeline system integrity rider in Colorado, as well as new rates in Colorado and Wisconsin. These positive factors were primarily offset by the negative impact of weather and a decrease in conservation and DSM revenue. Due to the record warm winter experienced across much of our service territory, firm natural gas sales decreased 11%, reducing consolidated EPS by approximately $0.035 when compared to 2011. On a weather-normalized basis, sales declined by about 1%. Turning to expenses. O&M increased $36 million or 1.7% for the year. Virtually the entire annual O&M increase occurred during the fourth quarter. Primary drivers of the increase were employee benefits, including pension costs; the pipeline system integrity costs, partially offset by lower plant generation costs, lower bad debt expense and other smaller items. After implementing cost management initiatives at the beginning of the year to offset warmer than normal winter weather and other headwinds, we held O&M flat for the first 3 quarters of the year. However, after experiencing a very hot summer, we took advantage of this favorable situation, investing more in our operating infrastructure to help maintain high levels of reliability going forward. Additionally, during the fourth quarter, we recognized a $10 million charge related to the Minnesota Commission's approval to terminate the Prairie Island upgrade project as well as an $11 million charge associated with the recent ALJ recommendation to disallow the recovery of certain costs of our smart grid city project in Colorado. Because we pursued the Prairie Island upgrade project under the terms of an approved certificate of need and the investment did yield tangible and significant benefits for these customers, we plan to seek recovery of our full investment including return on these costs in our 2014 rate case. Looking ahead, we anticipate that higher nuclear, health care, chemical and other costs will drive a 2013 O&M increase of approximately 4% to 5% over 2012. Longer term, we forecast O&M to grow 3% to 4% annually. One additional year-end variance of note was within other taxes, which increased $34 million or 9.1%, largely due to increased property taxes in Minnesota. I'll now provide an update on a few of our regulatory proceedings touching on certain key items. Significant details related to our rate cases can be found in today's press release. Late last year, we filed several cases, which will impact both 2013 and 2014. These rate cases reflect the continued investment in our utilities. Primary drivers of such investments are to replace aging infrastructure to ensure excellent reliability. These investments are expected to provide outstanding value to our customers and create jobs in our community. In December, we reached constructive outcomes in our Wisconsin electric and gas cases, with new rates becoming effective earlier this month. In the electric case, the Commission approved a $35.5 million increase compared to our $39.1 million request. In the natural gas case, the Commission approved a $2.7 million increase compared to our $5.3 million request. As part of this approval, we will begin cost recovery for the Ashland environmental remediation, which for the first time includes a return on the unamortized balance. This was done to offset the longer amortization time period, which will minimize the customer impact. In South Dakota, we implemented interim rates in January, subject to refunds, while we continued to work with the staff to reach a settlement in the ongoing rate case. In November, in Minnesota, we filed a $285 million electric rate increase request based on a 2013 test year, and a 10.6% ROE and a 52.56% equity ratio. An interim increase of $251 million was approved and implemented on January 1. The procedural schedule for this case has been established. Key dates include Intervenor's testimony on February 28, rebuttal testimony on March 25, evidentiary hearings beginning April 18 and an ALJ report on July 3. We anticipate a Commission decision this fall. We also filed several other cases during the fourth quarter of 2012, which include a $90 million electric rate request in Texas, which is based on an ROE of 10.65%. We anticipate a decision this summer with final rates effective by midyear. In Colorado, we filed a $70 million multi-year natural gas rate case based on a forward test year and a 10.5% ROE. This request includes a $48.5 million increase in 2013 with step increases of $9.9 million in 2014 and $12.1 million in 2015. As part of the Colorado natural gas case, we also requested an extension and expansion of the pipeline integrity rider. In addition, we requested a $5 million increase in steam rates over the next 3 years. We anticipate a Commission decision on these requests later this year, with final rates expected to be effective in the third quarter. In North Dakota, we filed an electric case seeking a $17 million increase based on a forecast test year and a 10.6% ROE. Interim rates, subject to refunds, have been approved by the Commission and will go into effect in mid-February. We anticipate a Commission decision in the third quarter, with final rates effective in the fourth quarter. Finally, in New Mexico, we filed an electric case seeking a $46 million increase based on a forecast test year and a 10.65% ROE. We anticipate a Commission decision later this year, with final rates effective in 2014. We remain confident that while each request will receive scrutiny, the requests are well-grounded, driven primarily by necessary capital investments. And as a result, we will ultimately add to our track record of constructive outcomes. Turning to capital expenditures. We've updated our 5-year forecast to reflect the termination of the Prairie Island uprate project. We now anticipate spending approximately $13 billion over the next 5 years. In addition, we've updated our projected cash from operations to reflect a recent extension of bonus depreciation. As a result of these changes, we've reduced our overall projected 5-year financing needs. In 2013, we intend to issue approximately $1 billion of first mortgage bonds to finance our capital expenditures during the first half of the year, including $500 million at PSCo, $400 million at NSP-Minnesota and $100 million at SPS. This morning, we are reaffirming our 2013 ongoing guidance of $1.85 to $1.95 per share. We've updated some of the guidance assumptions to reflect 2012 actual results. Details of these changes can be found in today's press release. In closing, we're pleased to deliver another solid year. Despite experiencing early challenges, we moved aggressively to rightsize our O&M without negatively impacting customer service or safety. These efforts, combined with constructive outcomes in several rate cases and hot summer weather, helped us achieve ongoing earnings growth of 6%, consistent with our 5% to 7% target. As Ben indicated, we have now met or exceeded our annual earnings guidance 8 years in a row. We also raised dividend by nearly 4%, consistent with our goal of 2% to 4% annual increases and marking this as the ninth consecutive year of achieving this objective. We issued $1.8 billion of first mortgage bonds at attractive rates, lowering our coupon rates and extending our maturities. On the regulatory front, we again achieved constructive outcomes in a variety of cases, adding to our solid track record of managing multiple rate cases across our jurisdiction. On the operational front, we made excellent progress on our capital investment program, delivered strong reliability and improved our customer satisfaction scores. Overall, it was another great year for Xcel Energy. That concludes my prepared remarks. Operator, we will now take questions.

[Operator Instructions] And our first question is from the line of Anthony Crowdell with Jefferies & Co. Anthony C. Crowdell - Jefferies & Company, Inc., Research Division: Just 2 quick questions. One is, actually, when I compare third quarter '12 and fourth quarter '12 interest expense, it looks like interest expense has gone down by $10 million. I know, I think, third quarter you guys had some maybe principal payments in there, but that was roughly $3 million. I just want to know if you can give some more color on the $7 million. And the second question is, I guess, you've had an increase in AFUDC year-over-year, I just want to know if you can highlight what projects you have that are building up the equip balance?

Well, maybe if we start with the AFUDC. In terms of the rate will, in part, be higher because we have higher equip balances this year. So that's a primary driver in terms of the variance there. And then the interest expense, the changes in that, I mean, we basically refinanced a substantial amount of debt during the year. But that was all completed by the end of the third quarter, so the differences are driving that fourth quarter variance. Anthony C. Crowdell - Jefferies & Company, Inc., Research Division: Are there any particular projects though that are driving the higher equip balances?

Well, it's -- in Minnesota, we've had a lot of spend in CapX2020. We've also had a lot of spend in Clean Air-Clean Jobs in Colorado. So those are the 2 biggest, and Jones 4 also in Texas. So those are the big projects that we're working on right now.

Our next question is from the line of Neil Mehta with Goldman Sachs.

As you mentioned, your guidance embeds O&M expenses growth of 4% to 5% in 2013. That's a little higher than the utility average and higher than you came in this year as well. Can you provide more details on what's driving this? And is there flexibility to manage this if low disappoints?

Well, maybe if we could start with 2012 variance to '11, we only had an increase of 1.7%. So we have a relatively low level that we're starting from in 2012. So it's driving somewhat the increase of 4% to 5%. But the drivers in terms of 2013, we'll start with nuclear. We do have some increases in our nuclear costs. The second piece of that is pensions. Pensions, we are assuming now a 4% discount rate, so we're seeing increases in that. And then we have just some -- across the board, some higher insurance, some small amount of bad debt and some chemicals in some of our plant-related costs. In the long run, we expect to go back to a 3% to 4% overall increase on an annual basis.

Got it. And in Minnesota, obviously, a lot of attention on the regulatory front there. Do you think there's the possibility of a multi-year rate deal in Minnesota? And if not, should we be thinking about Xcel going back and filing in 2014 for 2015 rates?

Well, I mean, I don't know if I -- first of all, I don't know if I'd classify it as tension, if I heard you right. As far as the multiyear plans go, I mean, the Commission continues to study that and we'll get their reaction -- their formal reaction later in the year. So that, along with some other reasons is the reason why we filed a single test year case this year, and that's what we're proceeding to march forward with. As far as what we'll do in 2014 and 2015 we'll obviously take a look at what the Commission decides on the applicability of a multi-year test years, and we'll file accordingly.

Got it. And then the last question is in terms of regional trends in terms of demand growth. Are you continuing to see strength in Texas and relative challenges in Minnesota? And what are you seeing in Colorado?

Well, everything -- overall, on the residential side, it's safe to say everything is pretty flat. So then you move to the C&I side, and actually, the strongest C&I growth was in Wisconsin this year, followed by Texas, I think, followed by Colorado, which had small growth. And then we were -- we didn't grow at all in Minnesota for a number of reasons. That said, the economy definitely saw some signs of improvement in 2012. Housing permits were up. Job growth was better than the national average. Unemployment was equal to or better than the national average. So I think the economies are in decent shape across all our jurisdictions. Doesn't necessarily mean it translates to high sales growth. And that's consistent with our forecast. I mean, we're not anticipating that we're going to see a tremendous rebound in sales, even as the economies start to improve. I mean, I think, that's our new normal, frankly.

Our next question is from the line of Travis Miller with Morningstar.

On the 1% decline in gas sales that you're projecting for 2013, what are you seeing now that we're in 2013 and essentially know what some of the drivers would be on that demand side? What are the key drivers that you're seeing on that?

Well, maybe I'll start with 2013. We haven't closed out January, so we haven't actually seen our January results. But we would expect to see consistent what we saw last year. Again, the drivers of it are primarily the same thing in terms of some efficiency use among our customers, but the same overall trends to a certain degree that we've seen in our electric business.

What's the EPS impact on that in your guidance?

Very minimal, Travis. There's not a lot of gas margin, so it's not going to have much impact.

Our next question is from the line of Ali Agha with SunTrust.

Can you again remind us, Teresa, at the OpCo level, what's the current regulatory lag in your system in terms of earned ROEs versus authorized?

Well, the regulatory lag tends to be between 50 to 100 basis points, and it's going to depend which jurisdiction has had the most recent rate increase in place. So we tend to have more regulatory lag, like in Texas, where we're using a historical test year. Although I will say that in terms of ROEs relative to the 2012 period, they actually ended up in the 9%. So really, if we just look at 2012, all utilities, except for NSP-Min, we're in 9% return range, actually in the middle, and NSP-Minnesota was slightly less than 9%. But we're seeing some regulatory lag in part. That's why we're filing such a large case.

Okay. And also on that Minnesota case, how concerned are you guys about this recent -- the request that the Commission posed to you about looking at potentially reducing the authorized equity ratio? Can you give us some insight on that?

Well, Ali, I mean, we're always concerned when we're filing a rate case. But I mean, we've been filing rate cases for a number of years now and these issues are always reviewed. What is the Commission going to be interested in? The appropriate ROE, the appropriate equity ratio, whether expenses are justified. And I think we'll do fine in just all of those areas. I mentioned, and I think Teresa did too, I mean, we issued some of the lowest record coupons of debt last year. Well, you can't do that unless you have a good credit profile. And if you -- and I think our Commissions understand that. And so while I think it gets looked at, I think, at the end of the day, the constructive regulatory compact continues.

And also, the impact of bonus depreciation, as we look into '13, your share count still implies some potential for equity issuance on the higher end. But can you just give us an update on your insights there because of bonus depreciation? Is it less likely as you'll issue equity this year or what are you thinking right now?

Well, I mean, as you can see in the release, Ali, we expect -- we have changed that number now to $400 million over the next 5 years. We do have, as you can see, our capital program is very front-end loaded in terms of the 5-year period. So we do think we have flexibility in terms of issuing equity and it probably will be more front-end loaded, either 2013 or 2014. But we've provided for that range and that's really indicating we do believe we have some flexibility.

Last question, also, if you can remind us, if you look at your CapEx program '13 through '17, if you translate that into rate base growth using '12 as a base year, so over the next 5 years, what kind of rate base growth does that support?

If we look at the first 2 years, I mean, we continue at our 6% rate, and then that will -- that'd be '13 and '14, and then, of course then, we taper down after that through the remainder of the period.

What, like 5% to 10%?

Yes, it's around there.

Yes, and, Ali, I think it's important to note that we are not anticipating a tremendous amount of sales growth. Therefore, we aren't anticipating the need for new generation. So, as you know, having followed us for years, our CapEx forecasts can certainly change as those out years become the current years. And we'll look at what's happening with the economy and what our customer needs are, et cetera. I think as we've also spoke about, if those CapEx plans don't change, Teresa is right, the rate base grow slows and that will translate to slower growth for us and of course, that's when we can do more with the dividend. And I think we've got lots of options to reward investors.

Our next question comes from the line of Andrew Weisel with Macquarie capital.

A few questions on behalf of Angie Storozynski. First question is you talked quite a bit qualitatively about the load growth expectations, but can you give us the number that you're expecting for 2013 and in the long term?

Sure. I mean, in terms of 2013, maybe if I just talk about it by operating company. We're -- for NSP-Minnesota, we're looking at a decrease of about 1.2%, NSP-Wisconsin expected to be flat. In Colorado, just under 1%, actually, that's more about 0.6%. And in Colorado -- I mean, excuse me, and in Texas, over -- just around 3%, I would say. So overall, we expect it to come in between up to 0.5% on a consolidated basis.

And in the longer term?

In the longer term, for the next 5 years, we're projecting just up to 1%.

Okay, great. Then with the CapEx, obviously some downsizing of certain -- or termination of projects and downsizing of the overall. Are there any other projects that you see as particularly at risk if the load growth doesn't recover or gets worse?

I don't think we see any particularly at risk. I mean, a lot of them are infrastructure projects. We have some transmission projects that are underway that we need to complete like CapX2020. We have some larger ones in progress in Texas as well, so in terms of that risk, we don't see that right now.

Okay, great. Then lastly, you've talked in the past about the long-term EPS guidance of 5% to 7%. Is that still your target and expectation?

Well, I mean, as Teresa and I both said, I think that's our expectation for the next couple of years. And after that, we'll have to take a look at what happens with our CapEx plans. Again, we're not -- as we just spoke to, we're not anticipating too much sales growth. That would certainly change. We'll have to see how the regulatory outcomes proceed and the macroeconomic conditions, et cetera, and environmental regulations which, by the way, we're very well-positioned to meet. But if the CapEx forecast stays the same, yes, I think you'll see that EPS growth rate modulate as we -- and again, it gives us a chance to take a look at what the growth rate of our dividend ought to be.

Okay, very good. And just one last thing here. You mentioned, I believe, that in the quarter, Wisconsin was actually stronger than Texas. Yet for '13, you're expecting Wisconsin flat and Texas up 3%. Was there anything unusual in the quarter in Wisconsin driving that?

We were speaking year-to-date, weren't we, right?

Yes. We were speaking year-to-date. And what Ben indicated, we have seen some uptick in the sand mining industry. So maybe we have some more upside in Wisconsin as we look forward. But we're being conservative about that. Clearly, we've seen the oil and gas impact.

[Operator Instructions] And our next question is from the line of Michael Bates with D.A. Davidson & Co. Michael Bates - D.A. Davidson & Co., Research Division: If we could, I'd like to circle back to your financing plan a little bit. When you compare this forecast with what you had previously indicated, it looks like your cash from operations increased roughly $400 million, can you just go over that with us again? What has changed in the last few months that drove that increase?

Well, there's 2 things that have changed. First, we've taken out the $200 million related to the EPU uprate in Minnesota that we're -- that's the Prairie Island, which we're not pursuing. And then we've also incorporated the impacts of -- President Obama just signed into law the extension of bonus depreciation for 2013 at the 50% level, which for us, will actually continue into 2014, because of our long-term projects. So it's a combination of those that are driving the decrease in terms of that need.

Next question is from the line of Eli Kraicer with Millennium Partners.

It's actually Steve Gambuzza. The impacts of bonus depreciation that you just highlighted, can you just review the impact that it will have on the rate base that you've, I guess, previously disclosed for '13 and '14?

Sure. I mean, in total, it's about $300 million, about 2/3 of that or about $200 million in '13, and $100 million in '14.

Our next question is a follow-up question from the line of Travis Miller with Morningstar.

One more. What's the situation in Boulder? An update there? And any impacts in 2013 or even 2014 depending on how the negotiations go?

I don't think there will any impacts in '13 or '14. I mean, what's going on there is that the staff, the consultants, et cetera, will make a recommendation to the city council whether or not they go forward, and that's supposed to take place, I believe, in April?

Well, February, yes.

February is when they get the recommendation, and they'll rule on it in April.

Right.

And so we'll see. But regardless, I mean, we currently serve them, as you know, Travis. And so if they decide they don't want to serve us, that begins what is a pretty lengthy and long process, and we'll continue to serve them through that process.

Our next question is a follow-up from the line of Andy Levi with Avon capital.

Just back to Minnesota because I think there's been some, I don't know if you want us to call it misinformation or maybe people being a little bit overzealous in their assumptions. But just back to the kind of equity debt issue that's been brought up, I know you made a filing on Friday regarding that. Can you kind of just talk about that as far as what your perception is on what may or may not happen? And then there's been 1 or 2 sales side reports that have talked about fairly, not large numbers, but as much as $0.10 of possible earnings effect from that, which we can't come up with anywhere close to that. So I don't know if there's a way that you can walk us through kind of looking at the rate base and how that would be affected if there was a 1% or 2% change in the debt/equity ratio. And if there was, I don't know how you would get there, would you buy back stock? How would that work?

Okay. Well, Andy, let me take a stab at it and I'll ask for help if we're not completing your question. I mean, the first thing, I think, you noted is our capital structure study was approved. And that has, I believe, the 52-point-something equity ratio in it. So -- and I think the questions were raised were how do we take advantage of this historically low interest rate environment, which of course we are. And we're doing that now because we can issue debt with good credit ratings which results in these great rates. So obviously, if you were to dilute that credit rating through a poor equity structure, you wouldn't be able to take advantage of that. So having the capital structure approved, I think, was a good signal. The other question, I think you asked was on an analyst's report that said if the ROE, I think, fell 500 basis points, it would have a $0.10 impact. I mean, we struggle a little bit to get that number too, and that's a pretty big fall. I think that also doesn't assume, Andy, that we would take any reaction to it, which I think is the latter part of your question. Certainly, if we had a major adjustment to our credit ratio, we'd have to adjust our financing plan. And I mean, there would be a number of ways you could do that. You would reduce equity injections from the whole co, et cetera, and you'd get the equity ratio to where the Commission wanted it to be. I don't think that would be a good result ultimately for our customers. And I do think that there has been more emphasis placed on it than perhaps it warrants. Again, we've got, I think, a thoughtful Commission and we've got a constructive regulatory compact. It's never easy to file rate cases. We take it very seriously. But all you have to look at is what are we trying to accomplish? Relicensing our nuclear plants for another 20 years, keeping our infrastructure reliable and resilient and being on the forefront of getting ready for these environmental challenges, which I think really are starting to pay dividend for our customers as we look at mats, rules and other things like that, that we've been very well prepared for. So I do think there's any question we're spending our money in the right place. And I don't think there's any question that a strong balance sheet is necessary to complete these capital programs. So, biggest risk we face every year is public policy risk, and we've been facing it for years and managing it. And I'm cautiously optimistic we'll have a good year managing those rate cases this year as well.

And then the other question I had is based on the refinancings that you did in 2012, and then I guess we saw in the fourth quarter, and I understand that you'll be issuing more debt. But just on the refinancing, how much is the annual savings do you think on that?

The annual savings was about $30 million to $35 million from the refinancing.

Okay. And how much of that was realized in 2012?

Well, some of our midyear -- I mean, I would say about half potentially.

And at this, time I'm showing no further questions. I'd like to turn the conference back over to the management team for any closing remarks.

Sure. Thank you for all participating in our year-end earnings call this morning. Please contact Paul Johnson and the IR team if you have any follow-up questions.

Thank you, ma'am. Ladies and gentlemen, if you'd like to listen to a replay of today's conference, please dial 1 (800) 406-7325 or (303) 590-3030, using the access code of 4577479 followed by the pound key. This does conclude the Xcel Energy Fourth Quarter 2012 Earnings Conference Call. I'd like to thank you very much for your participation and you may now disconnect.