Xcel Energy expects that a trove of tax subsidies in recently passed federal energy legislation will save the company and its customers about $500 million over the next five years.
Xcel says federal energy legislation will lead to $500M in savings for company
The Minneapolis-based company said third-quarter profits rose more than 4 %.
October 27, 2022 at 2:52PM
That update came Thursday with Xcel's announcement that its third-quarter profits rose 4.4%. Still, its earnings fell short of Wall Street estimates.
President Joe Biden's energy package — dubbed the Inflation Reduction Act — will provide billions of dollars in new tax credits for solar and wind farms and a host of other energy projects, including nuclear power plants.
Minneapolis-based Xcel expects the tax credits, which are based on power production, will lead to savings of $500 million for company-owned renewable projects over several years.
The company says $209 million of that will go to the massive Sherco solar project, which would be one of the largest solar farms in the Midwest.
Sherco Solar will be four times as large as the state's biggest existing solar array, also owned by Xcel. It will be located in Becker, where Xcel hosts three coal-fired power plants slated to close by 2030.
The PUC approved Sherco Solar in September despite concerns about its price tag.
Originally slated to cost about $575 million, Xcel this month publicly disclosed that due to inflationary pressures, the price is now expected to be $690 million. The new tax subsidies created by the Biden legislation will effectively help cover cost increases for the project.
Sherco Solar is expected to come online in two stages in 2024 and 2025. In addition, Xcel has plans for several other new solar farms over the next five years.
The Biden energy package also creates a new tax credit — which would run from 2024 through 2031 — for existing nuclear plants. Xcel's Minnesota nuclear power plants at Prairie Island and Monticello may receive those credits.
Xcel posted third-quarter earnings of $649 million, or $1.18 per share, up from $609 million, or $1.13 per share, a year earlier. Analysts polled by Zacks Research had a consensus forecast of $1.20 per share.
The company recorded third-quarter revenue of $4.08 billion, up from $3.5 billion a year ago.
Xcel revised its full-year per-share earnings guidance to $3.14 to $3.19, from a range of $3.10 to $3.20,.
"Xcel Energy had a strong third quarter — both operationally and financially — which has allowed us to narrow our 2022 earnings," Xcel CEO Bob Frenzel said in a statement. The company set its 2023 earnings-per-guidance at $3.30 to $3.40.
Xcel's stock closed Thursday at $63.25, up 68 cents.
Also on Thursday, Xcel demolished its Minnesota Valley Generating Plant in Granite Falls, a major electricity source in western Minnesota for more than 60 years. The coal-fired plant was retired in 2009.
Xcel is Minnesota's largest electricity provider and its second-biggest natural gas supplier.
The company's largest markets are Colorado and Minnesota. It also operates in Texas, New Mexico, Wisconsin, the Dakotas and in a small slice of Michigan's Upper Peninsula.
The Birds Eye plant recruited workers without providing all the job details Minnesota law requires.
