Xcel Energy Leverages Data‑Center Deals and $3 B Q1 Capex to Keep Earnings on Track, Guidance Unchanged

Xcel Energy (NYSE:XEL) posted first‑quarter ongoing earnings of **$0.91 per share**, up from **$0.84 a year ago**, while GAAP earnings came in at **$0.89** after a **$37 million** charge tied to the Prairie Island outage case and a **$22 million** insurance‑proceed uplift from the Marshall Wildfire litigation. Management excluded those items, calling the $0.91 figure “ongoing earnings” and emphasizing that “our earnings guidance for the twenty‑second year in a row remains intact.”

Revenue growth was anchored by higher electric sales, driven largely by rate‑case outcomes and non‑fuel riders that lifted earnings by **23 cents per share**. The utility also noted a **10‑cent** boost from the Alternative Performance Delivery Charge (APDC).

Offsetting the upside were higher interest expense and common‑equity financing, which ate **18 cents** per share, and a **5‑cent** hit from depreciation and amortization reflecting the $3 billion capex rollout. Natural‑gas sales slipped, trimming earnings by **3 cents** after a warm Colorado winter reduced heating demand.

The quarter’s most distinctive storyline was Xcel’s aggressive push into “large‑load” development, epitomized by a **15‑year, 1,900‑MW wind‑solar‑plus‑long‑duration storage contract with Google**. Under the agreement, Google will cover the full cost of its Upper‑Midwest data center, while Xcel supplies the renewable power and a **100‑hour iron‑air battery** from Form Energy.

Management estimates the deal will shave **$1 billion to $1.5 billion** off customer bills over its term, a benefit that “translates to about 1%‑2% residential electric customer net benefit,” according to CEO Bob Frenzel.

That partnership is the flagship of a broader “large‑load” strategy. Xcel has filed a **large‑load tariff in Colorado** and is preparing similar filings in Texas, New Mexico and Wisconsin, each designed to lock in minimum bills, termination fees and credit safeguards that protect existing ratepayers.

The utility sees **6 GW of data‑center load** by the end of 2027, with **3 GW** expected to be contracted this year and another **3 GW** in 2028. The incremental capital required to serve each gigawatt is pegged at **$6‑$8 billion**, a range that will feed into Xcel’s **$10‑$12 billion incremental investment pipeline** beyond its $60 billion base five‑year plan.

Regulatory progress also bolstered the quarter’s tone. Xcel reported settlements that add **$27 million** in North Dakota and **$26 million** in South Dakota revenue, while a Minnesota ALJ recommendation of a **9.8% ROE** and a **52.5% equity ratio** is expected to be finalized by July. Colorado’s intervenor testimony, filed this week, sets the stage for a settlement deadline of **May 28**, with management confident it can replicate the “near‑unanimous settlement” achieved in the state’s prior cases.

Financing the massive capex agenda remains a priority. The utility issued **$1 billion of forward equity** through its ATM program and placed an **$800 million junior subordinated note** that receives a 50% equity credit from rating agencies.

Those actions, combined with existing forward contracts, cover **over half of the $7 billion equity need** embedded in the five‑year plan. CFO Brian Van Abel reiterated that Xcel will continue to fund growth “with equity, and maintain that strong balance sheet because it is really important as you go through this cycle of long‑term extended growth.”

Analysts pressed on the timing and scope of the data‑center pipeline, the durability of the equity‑financing assumption and the impact of regional capacity markets. In response, management stressed that the **$6‑$8 billion** incremental spend is a “rule of thumb” tied to each gigawatt of large‑load service, and that the **40% equity‑financing** target is a “rule of thumb” that will be revisited when the next five‑year plan is drawn.

On credit quality, Xcel’s CFO highlighted a **17% cash‑flow‑to‑debt** metric and signaled confidence in maintaining its **Baa1** outlook with Moody’s despite a temporarily higher leverage profile during the build‑out phase.

The utility also addressed wildfire risk in Colorado, noting a “low snowpack and drier conditions” but emphasizing upgrades in situational awareness, public‑safety power shutoffs and hardened assets that should mitigate summer fire exposure. The company’s **$525 million of insurance coverage** and a **$460 million low‑end liability estimate** for the Smokehouse Creek settlement were also highlighted as part of its broader risk‑management framework.

Xcel’s stock slipped **0.83%** in morning trade, trading at **$78.82**, still up **6.72% YTD** and within **6.4%** of its 52‑week high. The modest price dip reflects a market that is digesting the blend of solid earnings, hefty capex commitments and the near‑term regulatory uncertainty that still looms in several states.

Overall, Xcel’s first‑quarter narrative is less about a single earnings surprise and more about the strategic scaffolding it is erecting for the next decade: a $3 billion capex surge, a data‑center partnership that promises both revenue growth and bill‑saving benefits, and a disciplined financing approach that aims to keep the utility’s credit profile intact while it chases a **6%‑8%+ long‑term earnings CAGR**.