Xcel Energy Inc. (NYSE:XEL) Q4 2017 Earnings Conference Call - Final Transcript

Feb 07, 2018 • 10:00 am ET

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Xcel Energy Inc. (NYSE:XEL) Q4 2017 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] And for our first question, we go to Julien Dumoulin-Smith with Bank of America Merrill Lynch.

Executive
Robert C. Frenzel

Hey, Julien.

Analyst
Josephine Moore

Good morning. This is Josephine actually hopping in here for Julien. Congrats on the results.

Executive
Benjamin G. S. Fowke

Okay. Good morning.

Analyst
Josephine Moore

Good morning. I just have a quick question. I think you said that with tax reform, your new rate base growth that you're looking at is 6.5%, hitting the upper end of the 5% to 6% EPS growth rate. I was wondering, with the Colorado Clean Energy Plan, what is then the further CapEx upside from that translate into your new rate base growth?

Executive
Benjamin G. S. Fowke

So the question is if CEP, which is not in our base CapEx.

Analyst
Josephine Moore

Exactly.

Executive
Benjamin G. S. Fowke

If that's included, what will that do to rate base grow growth?

Analyst
Josephine Moore

Exactly. Like how much further up can it go?

Executive
Robert C. Frenzel

I think that really depends on what we see in ultimate and final bids from the process, which are still pending. I think a good estimate is probably 50 basis points higher in rate base CAGR.

Analyst
Josephine Moore

Got it. Great. And then, just on the equity issuance. You just said $300 million in additional to the $385 million that you had announced, I think, on the third quarter. Would that then still be as part of the DRIP? Are you just expanding the DRIP?

Executive
Robert C. Frenzel

No. I don't think -- I think the DRIP at $385 million, as we indicated in our third quarter call, was likely sort of the large size of the dividend reinvestment program. I think the $300 million we'd contemplate in a market issuance.

Analyst
Josephine Moore

Got it, great. And then, one last question. Just -- I think you had mentioned earlier in 8-K that you were thinking of trying to increase the equity ratio as part of the tax reform mitigation strategy. Have you had any conversations with the commissions on that subject and do you think that's a possibility?

Executive
Benjamin G. S. Fowke

Yeah, this is Ben. I think we've had obviously preliminary, but constructive dialogues with all of our regulators. And I think the importance of strong credit ratings is not lost on them, so higher equity ratio is a dialogue we're having at SPS. And I think there'll be other dialogues around higher equity ratios potentially, maybe increased amortization which also contributes to cash flow. And I think our regulators are going to look at tax reform. Everybody recognized the benefits to the consumer, but I think they're going to also make sure that balance sheet stay strong. So, we're encouraged by what we've heard so far.

Analyst
Josephine Moore

Got it. And that's not yet like the assumptions of a higher equity ratio are not yet reflected in that 5% to 6% EPS growth rate, right?

Executive
Benjamin G. S. Fowke

Well, I mean that's -- I think one of the things that we would hope for is that if the $400 million of revenues that we're going to stream ultimately back to the consumers if we get higher equity ratios, etc, that could help offset the tax yield difference that