Xcel Profit Climbs as Energy Costs Fall
Operating margin widened to about 22.6% even as quarterly revenue declined.
Xcel Energy (XEL), the regulated utility, reported a 24% increase in second-quarter earnings to $0.93 a share as lower energy costs and infrastructure investment outweighed higher financing expenses. Net income rose 32% to $586 million.
Earnings growth accelerated from the first quarter, when GAAP earnings rose 6% and ongoing earnings increased 8% from a year earlier. On a sequential basis, GAAP earnings increased from $0.89 a share and ongoing earnings rose from $0.91 a share.
Revenue fell 5% to $3.12 billion, with electric revenue declining $138 million and natural-gas revenue dropping $31 million. Operating income nevertheless increased 22% to $706 million as total operating expenses fell to $2.41 billion from $2.71 billion.
Lower pass-through energy costs accounted for much of the contraction on both sides of the income statement. Electric fuel and purchased-power expense decreased $240 million, while the cost of natural gas sold and transported fell $41 million. Depreciation and amortization declined $60 million following nuclear-life-extension adjustments, offsetting increases in operations and maintenance and conservation expenses.
Electric demand continued to grow beneath the lower reported revenue. Weather-normalized retail electric sales increased 1.5%, led by 1.7% growth from commercial and industrial customers, while actual retail sales rose 2.1%. Growth ranged from 3.0% at NSP-Wisconsin to 0.3% at Public Service Co. of Colorado, and weather-normalized firm natural-gas sales declined 6.9%.
Regulated-utility earnings increased to $0.95 a share from $0.81, with gains across Xcel’s four operating territories. Higher allowance for funds used during construction contributed $0.08 a share, while interest charges increased $94 million and reduced earnings by $0.12 a share. Equity-method investments swung to a $76 million profit from an $8 million loss, driven by unrealized gains in energy-technology investment funds.
Xcel reaffirmed its 2026 ongoing earnings guidance of $4.04 to $4.16 a share, unchanged from its April and February outlooks.
The outlook held as regulators approved increases below the company’s requests. Minnesota’s electric-rate decision indicated an estimated $211 million increase over two years, compared with an updated $365 million request, while South Dakota approved a $26 million annual increase against a $44 million request. Debt reached $39.46 billion at June 30, lifting its share of capitalization to 62% and leaving financing costs as a continuing counterweight to infrastructure-driven earnings.