Xcel Energy 2015 Annual Report Download - page 66
Download and view the complete annual report
Please find page 66 of the 2015 Xcel Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.48
Improving customer experience
The utility landscape is changing, and we must continue to thoughtfully anticipate and address the future needs of our stakeholders,
including our customers, policymakers, employees and shareholders. Adapting to this changing environment is critical to our long-
term success. Our customers expect to have choices, and we are committed to providing options and solutions that they want and
value at a competitive price. Our continued investments in clean energy is an example of this commitment to our customers.
Environmental stewardship remains foundational to Xcel Energy and is designed to meet customer and policy maker expectations
while creating shareholder value. We will continue to offer and expand our production of renewable energy, including wind and solar
alternatives, and further develop and promote DSM, conservation and renewable programs.
Investing for the future
Sound investments today are necessary for tomorrow’s success. Our base capital expenditures are projected to be approximately $15.2
billion from 2016 through 2020. This capital forecast will grow rate base at a compounded average annual rate of approximately 3.7
percent, after reflecting the impact of the five year extension of bonus depreciation. Our capital investment plan includes continuing
investments in transmission, adding new generation, reducing emissions in our power plants, refreshing our infrastructure, improving
reliability, replacing natural gas pipelines and increasing the levels of renewable energy on our system. In addition, Xcel Energy has
potential incremental capital investments opportunities that could increase the base capital forecast by an additional $2.5 billion over
the 2016-2020 timeframe. The potential incremental investment opportunities include renewables from the NSP System resource
plan, renewables in Colorado as part of the “Our Energy Future” Plan, distribution grid modernization, natural gas reserves in
Colorado and other investments. This would result in a total capital forecast of $17.7 billion for 2016-2020 and a rate base growth rate
of 5.5 percent, after reflecting the impact of the five year extension of bonus depreciation.
Xcel Energy has a proven track record of making sound investments. We proactively made the decision to balance our generation
portfolio and expand our alternative energy production. Our customers, stakeholders and the environment are currently benefiting
from these decisions and will continue to do so in the future.
Providing an attractive total return
Successful execution of our strategic objectives should allow Xcel Energy to continue to deliver an attractive total return for our
shareholders. Through a combination of earnings growth and dividend yield, we plan to:
• Deliver long-term annual EPS growth of four percent to six percent, based on ongoing 2015 EPS of $2.10, which was the
mid-point of Xcel Energy’s 2015 ongoing guidance range;
• Deliver annual dividend increases of five percent to seven percent (prior objective was two to four percent annually);
• Target a dividend payout ratio of 60 to 70 percent of annual ongoing EPS; and
• Maintain senior unsecured debt credit ratings in the BBB+ to A range.
We have successfully achieved our prior financial objectives, meeting or exceeding our earnings guidance range for eleven
consecutive years and believe we are positioned to continue to deliver on our value proposition. Our ongoing earnings have grown
approximately 6.2 percent and our dividend has grown approximately 4.1 percent annually from 2005 through 2015. In addition, our
current senior unsecured debt credit ratings for Xcel Energy and its utility subsidiaries are in the BBB+ to A range.
Financial Review
The following discussion and analysis by management focuses on those factors that had a material effect on Xcel Energy’s financial
condition, results of operations and cash flows during the periods presented, or are expected to have a material impact in the future. It
should be read in conjunction with the accompanying consolidated financial statements and the related notes to consolidated financial
statements.