Xcel Energy Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing, not a stand-alone fourth-quarter report. Xcel Energy is a regulated electric and natural gas utility serving approximately 3.7 million electric and 2.1 million gas customers across eight states.
Financial performance
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Operating revenue | $13.431 billion | $11.526 billion | +16.5% |
| Operating income | $2.203 billion | $2.116 billion | +4.1% |
| Net income | $1.597 billion | $1.473 billion | +8.4% |
| Diluted EPS | $2.96 | $2.79 | +6.1% |
| Electric margin | $6.472 billion | $6.290 billion | +$182 million |
| Natural gas margin | $1.051 billion | $947 million | +$104 million |
| Cash from operating activities | $2.189 billion | $2.848 billion | −$659 million |
| Capital/construction expenditures | $4.244 billion | $5.369 billion | −$1.125 billion |
Revenue rose substantially in part because of higher fuel and purchased-energy costs passed through regulatory mechanisms; these changes generally have limited earnings impact. Electric and gas margins increased, supported by rate and rider outcomes, while higher depreciation and lower allowance for funds used during construction (AFUDC) offset some gains. O&M expense was nearly flat at $2.321 billion.
Liquidity and debt: At year-end, cash and cash equivalents were $166 million; current assets were $4.239 billion and current liabilities $5.046 billion. Long-term debt, including current maturities, was approximately $22.380 billion, and short-term debt was $1.005 billion. Operating cash flow declined principally because of deferral of Winter Storm Uri energy costs and related regulatory balances. Committed credit facilities totaled $3.1 billion; $2.076 billion was available at December 31, before cash. Total contractual cash obligations were $45.187 billion, including $37.014 billion of scheduled long-term debt principal and interest.
Material changes and notable events
- GAAP and ongoing diluted EPS increased from $2.79 to $2.96; the filing reports no adjustments between GAAP and ongoing earnings for 2021 or 2020.
- Electric and natural gas revenues increased to $11.205 billion and $2.132 billion, respectively, from $9.802 billion and $1.636 billion. Higher commodity costs were reflected in both revenue and expense.
- Winter Storm Uri generated approximately $1 billion of incremental natural gas, fuel and purchased-energy costs, largely deferred as regulatory assets. Recovery is being sought through customer rates, with contested prudence proceedings and potential disallowances.
- Capital spending remains substantial: the company forecasts $26.0 billion of base capital expenditures for 2022–2026, with additional investment possible depending on regulatory approvals and resource plans.
- The company issued common stock through its at-the-market program, raising $347 million net from 5.33 million shares by year-end; shares outstanding increased to approximately 544 million from 537 million.
Outlook, strategy and risks
2022 guidance: GAAP and ongoing EPS guidance is $3.10–$3.20. Assumptions include normal weather, constructive regulatory outcomes, approximately 1% weather-normalized retail electric sales growth, 0%–1% firm natural gas sales growth, 1%–2% higher O&M, and higher depreciation, property taxes and interest expense.
Long-term objectives: Annual EPS growth of 5%–7% from a 2021 base of $2.96; annual dividend increases of 5%–7%; a 60%–70% dividend payout ratio; and senior secured debt ratings in the A range. In February 2022, the company announced a 6.6% increase in its annual dividend.
Xcel reported an estimated 50% reduction in generation-related carbon emissions through 2021 from 2005 levels, targeting an 80% reduction by 2030 and 100% carbon-free electricity by 2050. Plans include significant renewable additions, coal retirements, grid and transmission investment, and continued use of dispatchable resources for reliability. Delivery depends on regulatory approvals, affordability, reliability, technology and timely construction.
Key risks include regulatory cost-recovery decisions and rate-case timing; potential disallowance of Winter Storm Uri costs; fuel-price volatility and recovery delays; inflation, interest rates, labor and supply-chain constraints; severe weather, drought and wildfire exposure; cybersecurity and operational incidents; environmental compliance costs; and uncertainty around the energy transition. The cause of the December 2021 Marshall Fire remained under investigation at filing, and the company noted that wildfire damages, if liability were established, could exceed insurance coverage. Environmental operating costs were approximately $365 million in 2021; management estimated average annual similar costs of about $425 million for 2022–2026.
The independent auditor gave an unqualified opinion on the financial statements and internal control over financial reporting. Regulatory assets and liabilities were identified as a critical audit matter because their measurement depends on judgments about future commission decisions.
Investor verification priorities
- Track final regulatory decisions on Winter Storm Uri cost recovery, particularly the Minnesota proceeding, where intervenors sought disallowances of up to $179 million.
- Verify whether the 2022 EPS guidance assumptions—including rate-case outcomes, sales growth, cost inflation and normal weather—are being achieved.
- Monitor financing needs, debt growth, credit ratings and the pace and funding mix of the $26.0 billion 2022–2026 capital plan.
- Review approvals, costs and schedules for major resource and transmission projects, including Colorado’s Pathway project and proposed Minnesota solar and renewable additions.
- Follow the Marshall Fire investigation, insurance coverage and any related claims, as well as environmental remediation and coal-ash compliance developments.
- Assess whether cash generation and subsidiary dividends continue to support capital investment and the company’s dividend-growth objectives.