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Friday, 06/06/2003

Kinetic Energy
By Nich Sheldon
XEL - Xcel Energy Inc.

Company Description

Xcel Energy is a major U.S. electricity and natural gas energy company with regulated operations in 12 Western and Midwestern states. Formed by the merger of Denver-based New Century Energies and Minneapolis-based Northern States Power Co., Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth-largest combination natural gas and electricity company in the nation. Company headquarters are located in Minneapolis.

[Source: Company Website]

Reasons to Invest:

Strong Utility Results in First Quarter

Xcel Energy's preliminary earnings for first quarter of 2003 were $192 million, or $0.48 per share, including results of subsidiary NRG Energy, compared with $102 million, or $0.29 per share, for the same period in 2002. Xcel Energy's pro-forma earnings from continuing operations, excluding NRG's operating results and a gain on the sale of subsidiary Viking Gas Transmission Company, were $131 million, or $0.33 per share, in the first quarter of 2003, compared with $122 million, or $0.35 per share, for the same period in 2002.

Total earnings increased due to discontinued operations gains related to NRG's disposal of its Killingholme project and to Xcel Energy's sale of Viking Gas. Earnings also increased for the first quarter of 2003, compared with the same period in 2002, due to sales growth at all four of Xcel Energy's largest operating utilities. These increases were partially offset by significantly increased operating losses at NRG.

Xcel Energy considers its results and NRG's results to be preliminary until we determine the impact of an alternative rate structure for certain NRG facilities in Connecticut that the Federal Energy Regulatory Commission issued on April 28, 2003.

We continue to produce strong results at our utilities. Electric utility sales growth to our retail customers and higher short- term wholesale margins were the drivers of the increase in electric utility margin in the first quarter of 2003. Our favorable utility results reinforce our belief in our business plan, and our ability to deliver on our financial commitments to you.

Xcel Energy's preliminary earnings for the first quarter of 2003 consisted of the following components:

Utility earnings from continuing operations of $146 million, or $0.37 per share, compared with $136 million, or $0.38 cents per share, for the first quarter of 2002;

Gain on sale of Viking Gas of $21 million (net of tax), or $0.05 per share, in 2003;

NRG earnings of $40 million, or $0.10 per share (including discontinued operations, largely due to a $191-million gain, or about $0.48 per share, related to an asset disposal), compared with a net NRG loss of $20 million, or $0.06 per share, in the first quarter of 2002; and

Other subsidiary losses and holding company costs of $0.04 per share, compared with a loss of $0.03 per share for the first quarter of 2002.

Xcel Energy customers in Minnesota now can choose some or all of their electricity from renewable wind generation, as the highly acclaimed Windsource program is extended from Colorado to Minnesota.

Currently, more than 25,000 Xcel Energy customers in Colorado and New Mexico pay a slight monthly premium to purchase blocks of wind-generated power. Now the same program is available in Minnesota.

With Windsource, customers can order renewable energy and Xcel Energy will build or purchase energy from as many new wind turbines as needed to generate the equivalent amount of electricity purchased through the program.

In terms of customers participating, the U.S. Department of Energy's Renewable Energy Laboratory recently ranked Windsource as the second-largest renewable energy program in the nation. With participation in Minnesota, Xcel Energy may end up number one.

The Minnesota Public Utilities Commission approved a price premium of $2 for each 100-kilowatt-hour block of electricity purchased monthly through the program.

Customers can choose as many blocks as they'd like, with an average residential customer paying up to $14 extra per month for switching over completely to wind-generated power.

[Source: Company Shareholders Report, First Quarter 2003]

DRIP Information:

Shares to Qualify = 1
Auto-reinvestment = yes
Min/Max = $50 to $100,000/year

Reinvestment Fees -

Dividend investment fees: $0.05/share
Cash investment fees: $0.05/share
Auto reinvestment fees: $0.05/share

To Transfer Units: 
Transfer Agent Wells Fargo Bank Minnesota, N.A. 
Shareholder Services Department 
P.O. Box 64854 
St. Paul, MN 55164-0854 USA 
Phone 1-877-778-6786 

Corporate Headquarters
800 Nicollet Mall
Minneapolis, MN 55402 
Phone: (612) 330-5500
Fax: (612) 330-5878


Copyright 2003

Do not duplicate or redistribute in any form.
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