What changed in this filing

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Item 1A. Risk Factors

2025-02-27 compared with 2024-02-21 · 56 added, 52 removed, 270 unchanged (29% of the section changed)

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Although the risks are organized by heading, and each risk is described separately, many of the risks are interrelated.

These risks should be carefully considered together with the other information set forth in this report and future reports that we file with the SEC.

These risks should be carefully considered together with the other information set forth in this report and future reports that Xcel Energy files with the SEC.

While we believe we have identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our business, financial condition, results of operations or cash flows in the future.

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Our electric generation, transmission and distribution activities include inherent hazards and operating risks such as contact, fire and outages.

These risks could result in loss of life, significant property damage, environmental pollution, impairment of our operations and substantial financial losses to employees, third-party contractors, customers or the public.

These risks could result in loss of life, significant property damage, environmental pollution, impairment of our operations and substantial financial losses to customers, the public, employees or third-party contractors.

We maintain insurance against most, but not all, of these risks and losses.

The occurrence of these events, if not fully covered by insurance, could have a material effect on our financial condition, results of operations and cash flows as well as potential loss of reputation.

Other uncertainties and risks inherent in operating and maintaining Xcel Energy's facilities include, but are not limited to:

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• Failures in the availability, acquisition or transportation of fuel or other supplies.

• Impact of adverse weather conditions and natural disasters, including, tornadoes, avalanches, icing events, floods, high winds and droughts.

• Impact of adverse weather conditions and natural disasters, including, wildfires, tornadoes, avalanches, icing events, floods, high winds, droughts and the availability or changes to wind patterns

• Performance below expected or contracted levels of output or efficiency.

• Availability of replacement equipment.

• Availability of replacement or new equipment.

• Availability of adequate water resources and ability to satisfy water intake and discharge requirements.

• Availability or changes to wind patterns.

• Inability to identify, manage properly or mitigate equipment defects.

• Use of new or unproven technology.

• Inability to use information effectively given the rapidly increasing volume of data.

• Risks associated with dependence on a specific type of fuel or fuel source, such as commodity price risk, availability of adequate fuel supply and transportation and lack of available alternative fuel sources.

• Increased competition due to, among other factors, new facilities, excess supply, shifting demand and regulatory changes.

• Increased costs due to aging infrastructure.

Additionally, compliance with existing and potential new regulations related to the operation and maintenance of our natural gas infrastructure could result in significant costs.

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New data centers and crypto mining facilities could generate significant increase in demand.

Higher electric demand may require us to adopt new technologies and make significant transmission and distribution investments including advanced grid infrastructure, which increases exposure to overall grid instability and technology obsolescence.

Higher electric demand may require us to adopt new technologies and make significant generation, transmission and distribution investments including advanced grid infrastructure, which increases exposure to overall grid instability and technology obsolescence.

Evolving stakeholder preference for lower emissions from generation sources and end-uses, like heating, may impact our resource mix and put pressure on our ability to recover capital investments in natural gas generation and delivery.

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Failure to adhere to project budgets and timelines could adversely impact our results of operations, financial condition or cash flows.

We are subject to physical and financial risks associated with climate change and other weather, natural disaster and resource depletion impacts.

Climate change can create physical and financial risk.

Physical risks include changes in weather conditions and extreme weather events.

Our customers’ energy needs vary with weather.

To the extent weather conditions are affected by climate change, customers’ energy use could increase or decrease.

Increased energy use due to weather changes over the long-term may require us to invest in generating assets, transmission and infrastructure.

Decreased energy use due to weather changes may result in decreased revenues.

Severe weather impacts our service territories, primarily when thunderstorms, flooding, tornadoes, wildfires, snow, ice storms or extreme temperatures (high heating/cooling days) occur.

Extreme weather conditions in general require system backup and can contribute to increased system stress, including service interruptions.

Extreme weather conditions creating high energy demand may raise electricity prices, increasing the cost of energy we provide to our customers.

To the extent the frequency of extreme weather events increases, this could increase our cost of providing service and result in more frequent service interruptions.

Periods of extreme temperatures could also impact our ability to meet demand.

Drought or water depletion could adversely impact our ability to provide electricity to customers, cause early retirement of power plants that require water or increase the cost for energy.

Adverse events may result in increased insurance costs and/or decreased insurance availability.

We may not recover all costs related to mitigating these physical and financial risks.

Our utilities have physical and financial risks associated with wildfires.

In recent years, wildfires have impacted the utility industry.

More frequent and severe drought conditions, extreme swings in amount and timing of precipitation, changes in vegetation, unseasonably warm temperatures, very low humidity, stronger winds and other factors have increased the duration of the wildfire season and the potential impact of an event.

Also, the expansion of the wildland urban interface increases the wildfire risk to surrounding communities and Xcel Energy's electric and natural gas infrastructure.

Wildfires could jeopardize Xcel Energy’s electric and gas infrastructure and third-party property and result in temporary power outages or shortages in our service territories.

We have programs in place to mitigate the physical and financial risks associated with wildfires;

however, Xcel Energy’s wildfire mitigation initiatives may not be successful or effective in preventing or reducing wildfire-related losses.

Wildfires can occur even when Xcel Energy follows its procedures and implements its wildfire mitigation initiatives.

Other potential risks associated with wildfires and other climate events include the inability to secure sufficient insurance coverage, increased costs of insurance, or ability for insurers to meet their obligations, regulatory recovery risk, and the potential for a credit downgrade and subsequent additional costs to access capital markets.

While we carry liability insurance, given an extreme event, if Xcel Energy was found to be liable for wildfire damages, amounts could potentially exceed our coverage and negatively impact our results of operations, financial condition or cash flows.

We are subject to commodity risks and other risks associated with energy markets and energy production.

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Our contractual arrangements with these contractors typically include performance and safety standards, progress payments, insurance requirements and security for performance.

Poor vendor performance or contractor unavailability could impact ongoing operations, restoration operations, regulatory recovery, our reputation and could introduce financial risk or risks of fines.

Poor vendor performance or contractor unavailability could impact ongoing operations, restoration operations, regulatory recovery and our reputation and could introduce financial risk or risks of fines.

Our employees, directors, third-party contractors, or suppliers may violate or be perceived to violate our Codes of Conduct, which could have an adverse effect on our reputation.

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Our subsidiary, NSP-Minnesota, is subject to the risks of nuclear generation.

NSP-Minnesota has two nuclear generation plants, PI and Monticello.

NSP-Minnesota has two nuclear generation plants, Prairie Island and Monticello.

Risks of nuclear generation include:

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While regulation typically provides cost recovery for these types of changes, there is no assurance that regulators would allow full recovery of all remaining costs.

Higher than expected inflation or tariffs may increase costs of construction and operations.

Also, rising fuel costs could increase the risk that our utility subsidiaries will not be able to fully recover their fuel costs from their customers.

Adverse regulatory rulings (including changes in recovery mechanisms) or the imposition of additional regulations could have an adverse impact on our results of operations and materially affect our ability to meet our financial obligations, including debt payments and the payment of dividends on common stock.

Higher than expected inflation, shortages of skilled labor, tariffs or federal policies may increase costs of construction and operations.

Also, rising fuel costs could increase prices to consumers, all of which could increase the risk that our utility subsidiaries will not be able to fully recover their costs from their customers.

Adverse regulatory rulings (including changes in recovery mechanisms) or the imposition of additional regulations could negatively impact our results of operations, financial condition or cash flows.

Any reductions in our credit ratings could increase our financing costs and the cost of maintaining certain contractual relationships.

Our credit ratings are subject to change, and our credit ratings may be lowered or withdrawn by a rating agency.

Significant events including disallowance of costs, use of historic test years, elimination of riders or interim rates, increasing depreciation lives, lower returns on equity, changes to equity ratios and impacts of tax policy may impact our cash flows and credit metrics, potentially resulting in a change in our credit ratings.

Significant events including disallowance of costs, use of historic test years, elimination of riders or interim rates, increasing depreciation lives, lower returns on equity, changes to equity ratios, impacts of tax policy and unfavorable litigation outcomes may impact our cash flows and credit metrics, potentially resulting in a change in our credit ratings.

In addition, our credit ratings may change as a result of the differing methodologies or change in the methodologies used by the various rating agencies.

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Also, our utility subsidiaries may enter into contracts that require posting of collateral or settlement if credit ratings fall below investment grade.

The credit rating agencies may change their assessment or our regulatory or business risk, such as with the increase of climate events, which could negatively impact our credit ratings.

We are subject to capital market and interest rate risks.

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We are subject to credit risks.

Credit risk includes the risk that our customers will not pay their bills, which may lead to a reduction in our cash flow and liquidity and an increase in bad debt expense.

Credit risk is comprised of numerous factors including the price of products and services provided, the economy and unemployment rates.

Credit risk includes the risk that our customers will not pay their bills, which may lead to a reduction in our cash flows and liquidity and an increase in bad debt expense.

Credit risk is comprised of numerous factors including the price of products and services provided, the overall economy and unemployment rates.

Credit risk also includes the risk that counterparties that owe us money or product will become insolvent and may breach their obligations.

Should the counterparties fail to perform, we may be forced to enter into alternative arrangements.

In that event, our financial results could be adversely affected and incur losses.

In that event, our financial results could be adversely affected and we may incur losses.

This could be particularly impactful for long-lead time equipment contracts that require significant deposits and milestone payments, for items that may be difficult to procure elsewhere in the event of non-performance.

Xcel Energy may have direct credit exposure in our short-term wholesale and commodity trading activity to financial institutions trading for their own accounts or issuing collateral support on behalf of other counterparties.

We may also have some indirect credit exposure due to participation in organized markets, (e.g., MISO, SPP, ERCOT and California Independent System Operator), in which any credit losses are socialized to all market participants.

We may also have some indirect credit exposure due to participation in organized markets, (e.g., MISO, SPP, ERCOT and California ISO), in which any credit losses are socialized to all market participants.

We have additional indirect credit exposure to financial institutions from letters of credit provided as security by power suppliers under various purchased power contracts.

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Substantially all our operations are conducted by our subsidiaries.

Consequently, our operating cash flow and ability to service our debt and pay dividends depends upon the operating cash flows of our subsidiaries and their payment of dividends.

Consequently, our operating cash flows and ability to service our debt and pay dividends depends upon the operating cash flows of our subsidiaries and their payment of dividends.

Our subsidiaries are separate legal entities that have no obligation to pay any amounts due pursuant to our obligations or to make any funds available for dividends on our common stock.

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In addition, certain IRS tax policies, such as tax normalization, may impact our ability to economically deliver certain types of resources relative to market prices.

Changes to the availability of tax credit transferability could impact our cash flows and the cost of certain types of resources.

Macroeconomic Risks

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Xcel Energy’s operations are affected by economic conditions, which correlates to customers/sales growth (decline).

Economic conditions may be impacted by recessionary factors, rising interest rates and insufficient financial sector liquidity leading to potential increased unemployment, which may impact customers’ ability to pay their bills, which could lead to additional bad debt expense.

Economic conditions may be impacted by recessionary factors, rising interest rates, inflation, the impacts of federal policy and insufficient financial sector liquidity leading to potential increased unemployment, which may impact customers’ ability to pay their bills, which could lead to additional bad debt expense.

Our utility subsidiaries face competitive factors, which could have an adverse impact on our financial condition , results of operations and cash flows.

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There may be delays before these additional material costs can be recovered in rates.

The oil and gas industry represents our largest commercial and industrial customer base.

The oil and gas industry represents our largest C&I customer base.

Oil and natural gas prices are sensitive to market risk factors which may impact demand.

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Because our facilities are part of an interconnected system, we face the risk of possible loss of business due to a disruption caused by the actions of a neighboring utility.

We also face the risks of possible loss of business due to significant events such as severe storms, temperature extremes, wildfires (particularly in Colorado), widespread pandemic, generator or transmission facility outage, pipeline rupture, railroad disruption, operator error, sudden and significant increase or decrease in wind generation or a workforce disruption.

We also face the risks of possible loss of business due to significant events such as severe storms, temperature extremes, wildfires, widespread pandemic, generator or transmission facility outage, pipeline rupture, railroad disruption, operator error, sudden and significant increase or decrease in wind generation or a workforce disruption.

In addition, major catastrophic events throughout the world may disrupt our business.

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We expect to continue to experience attempts to compromise our information technology and control systems, network infrastructure and other assets.

To date, no cybersecurity incident or attack has had a material impact on our business or results of operations.

To date, no cybersecurity incident or attack affecting us or our vendors has had a material impact on our business or results of operations.

Cybersecurity incidents could harm our businesses by limiting our generation, transmission and distribution capabilities, delaying our development and construction of new facilities or capital improvement projects to existing facilities, disrupting our customer operations or causing the release of customer information, all of which would likely receive state and federal regulatory scrutiny and could expose us to liability.

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In 2015, the United Nations Framework Convention on Climate Change reached consensus among 190 nations on an agreement (the Paris Agreement) that establishes a framework for GHG mitigation actions by all countries, with a goal of holding the increase in global average temperature to below 2º Celsius above pre-industrial levels and an aspiration to limit the increase to 1.5º Celsius.

International commitments and agreements could result in future additional GHG reductions in the United States.

In addition, in 2023 the EPA intends to publish draft regulations for GHG emissions from the power sector consistent with the agency’s Clean Air Act authorities.

Many states and localities continue to pursue their own climate policies.

Although the United States has withdrawn from the Paris Agreement, many states and localities continue to pursue their own climate policies which could result in future additional GHG reductions.

The steps Xcel Energy has taken to date to reduce GHG emissions, including energy efficiency measures, adding renewable generation and retiring or converting coal plants to natural gas, occurred under state-endorsed resource plans, renewable energy standards and other state policies.

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It could have a material effect on our results of operations, financial condition or cash flows if our regulators do not allow us to recover the cost of capital investment or O&M costs incurred to comply with the requirements.

In addition, existing environmental laws or regulations may be revised and new laws or regulations may be adopted.

We may also incur additional unanticipated obligations or liabilities under existing environmental laws and regulations.

We are subject to physical and financial risks associated with climate change and other weather, natural disaster and resource depletion impacts.

Climate change can create physical and financial risk.

Physical risks include changes in weather conditions and extreme weather events.

Our customers’ energy needs vary with weather.

To the extent weather conditions are affected by climate change, customers’ energy use could increase or decrease.

Increased energy use due to weather changes may require us to invest in generating assets, transmission and infrastructure.

Decreased energy use due to weather changes may result in decreased revenues.

Climate change may impact the economy, which could impact our sales and revenues.

The price of energy has an impact on the economic health of our communities.

The cost of additional regulatory requirements, such as regulation of GHG, could impact the availability of goods and prices charged by our suppliers which would normally be borne by consumers through higher prices for energy and purchased goods.

To the extent financial markets view climate change and emissions of GHGs as a financial risk, this could negatively affect our ability to access capital markets or cause us to receive less than ideal terms and conditions.

We establish strategies and expectations related to climate change and other environmental matters.

Our ability to achieve any such strategies or expectations is subject to numerous factors and conditions, many of which are outside of our control.

Additionally, the impact of environmental laws and regulations may impact the economic health of consumers through higher prices of energy and purchased goods.

While we establish strategies and expectations related to climate change and other environmental matters, our ability to achieve any such strategies or expectations is subject to numerous factors and conditions, many of which are outside of our control.

Examples of such factors include, but are not limited to, evolving legal, regulatory, and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets.

Failures or delays (whether actual or perceived) in achieving our strategies or expectations related to climate change and other environmental matters could adversely affect our business, operations, and reputation, and increase risk of litigation.

Severe weather impacts our service territories, primarily when thunderstorms, flooding, tornadoes, wildfires and snow or ice storms or extreme temperatures (high heating/cooling days) occur.

Extreme weather conditions in general require system backup and can contribute to increased system stress, including service interruptions.

Extreme weather conditions creating high energy demand may raise electricity prices, increasing the cost of energy we provide to our customers.

To the extent the frequency of extreme weather events increases, this could increase our cost of providing service and result in more frequent service interruptions.

Periods of extreme temperatures could also impact our ability to meet demand.

Also, the expansion of the wildland urban interface increases the wildfire risk to surrounding communities and Xcel Energy's electric and natural gas infrastructure.

Other potential risks associated with wildfires and other climate events include the inability to secure sufficient insurance coverage, or increased costs of insurance, regulatory recovery risk, and the potential for a credit downgrade and subsequent additional costs to access capital markets.

While we carry liability insurance, given an extreme event, if Xcel Energy was found to be liable for wildfire damages, amounts that potentially exceed our coverage could negatively impact our results of operations, financial condition or cash flows.

Drought or water depletion could adversely impact our ability to provide electricity to customers, cause early retirement of power plants and increase the cost for energy.

Adverse events may result in increased insurance costs and/or decreased insurance availability.

We may not recover all costs related to mitigating these physical and financial risks.

In addition, existing environmental laws or regulations may be revised and new laws or regulations may be adopted.

We may also incur additional unanticipated obligations or liabilities under existing environmental laws and regulations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors