Xcel Energy 2012 Annual Report Download - page 59

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Obtain stakeholder alignment
Successful execution of our strategy begins with obtaining stakeholder support for long-term decisions and for large investment
initiatives, prior to taking action. To avoid excessive risk, it is critical that Xcel Energy reduce regulatory and legislative uncertainty
before making long-term critical decisions or large capital investments. We believe stakeholder alignment is achieved by:
• Delivering operational excellence related to reliability outage performance and customer satisfaction;
• Proactively taking actions to ensure public and employee safety related to our power plants, natural gas pipelines, and
our transmission and distribution system;
• Pursuing environmental leadership by reducing emissions, and expanding renewable energy in a cost-effective manner;
and
• Creating value for our customers by modernizing our infrastructure and reducing our environmental impact at a
reasonable cost, while providing customers with choices like DSM, conservation and renewable energy programs.
Invest in our utility business
After obtaining stakeholder support, the next phase of our strategy is to invest in our regulated utility businesses. Xcel Energy
projects that it will invest approximately $13 billion in its utility businesses from 2013 through 2017. Our capital investment plan
is intended to modernize our infrastructure, improve system reliability, reduce our impact on the environment, expand the amount
of renewable energy available to our customers and meet customer demand. We work hard to make sure these investments
provide value to our customers by selecting cost effective projects and striving to complete these projects on time, safely and
within established budgets. As a result of these investments, Xcel Energy projects that the rate base, or the amount on which Xcel
Energy earns a return, will grow at a compounded average annual rate of approximately 6 percent through 2014 and
approximately 4 to 5 percent through 2017.
Earn a fair return on our utility investment
The third phase of our strategy is to earn a fair return on our utility investments. Xcel Energy’s regulatory strategy is based on
filing reasonable base rate requests designed to provide recovery of costs necessary to operate our business and to earn a
reasonable return on investment, along with obtaining regulatory approval for rate riders and DSM programs. A rate rider is a
mechanism that allows for recovery of certain costs and returns on investments, without filing a rate case.
Xcel Energy believes that our public utility commissions will provide reasonable and timely recovery, and this is a key
assumption to achieving our financial objectives. We believe constructive regulatory outcomes over the last several years are
evidence of reasonable regulatory treatment and provide us confidence that we are pursuing the right strategy.
Provide an attractive total return
Successful execution of the corporate strategic plan should allow Xcel Energy to deliver an attractive total return to our shareholders.
Our value proposition is to deliver an attractive total return through a combination of earnings growth and dividend yield.
Since 2005, our financial objectives have been to:
• Deliver a long-term annual EPS growth rate of 5 percent to 7 percent;
• Deliver an annual dividend increases of 2 percent to 4 percent; and
• Maintain senior unsecured debt credit ratings in the BBB+ to A range.
We have successfully achieved these financial objectives. Our ongoing earnings have grown approximately 6.8 percent and our
dividend has grown approximately 3.3 percent annually since 2005. In addition, our current senior unsecured debt credit ratings
for Xcel Energy and it utility subsidiaries are in the BBB+ to A range.
We believe we are positioned to continue earnings growth of 5 percent to 7 percent and dividend growth of 2 percent to 4 percent
at least through 2013 or 2014. Beyond this timeframe, we anticipate that rate base and earnings growth could moderate. Should
this occur, we anticipate having flexibility to increase the dividend at a faster rate in the future, while ensuring a strong balance
sheet. Therefore, we believe we are positioned to continue to deliver an attractive total return.