[XEL] Xcel Energy: Q3 2026 Earnings Preview, Can Rider Recovery Outrun Financing Costs?

Xcel Energy is a Minneapolis-based holding company for regulated electric and natural gas utilities, serving about 3.9 million electric customers and 2.2 million natural gas customers across eight US states through four utility subsidiaries[1]. Ahead of its Xcel Energy Q3 2026 earnings, the company is scheduled to report results on 2026-10-29 for Q3 2026 (three months ended September 30, 2026), according to the earnings calendar[2]. In the latest disclosed quarter, the second quarter of 2026, operating revenue fell to $3.119 billion from $3.287 billion a year earlier while net income rose to $586 million from $444 million[3]; the revenue decline came mainly from lower pass-through of fuel and purchased power costs[4]. Ongoing diluted EPS was $0.93 versus $0.75, bringing the first half to $1.84 versus $1.59[5]. The company reaffirmed 2026 ongoing EPS guidance of $4.04 to $4.16, with key assumptions that include roughly 3% growth in weather-normalized retail electric sales, a $480 million to $490 million increase in capital rider revenue, and a $240 million to $250 million increase in interest expense net of AFUDC-debt and interest income[6]. The analyst consensus compiled by the Drillr earnings calendar is third-quarter EPS of $1.39 on revenue of $4.254 billion, against actuals of $1.24 and $3.915 billion in the third quarter of 2025[2]; because revenue includes fuel-cost pass-through that moves with gas prices, the revenue estimate says little about earnings.

Three things matter most in this report. First, whether capital recovery keeps outrunning financing costs: in the second quarter, non-fuel riders added $114 million to electric revenue, but interest charges rose $94 million year over year and common equity financing diluted EPS by $0.06[4][7][8], while full-year guidance only requires second-half EPS of $2.20 to $2.32, close to the $2.21 earned in the second half of 2025[5][9]; the third quarter will show how much of the first half's 16% growth can persist, and it will be the first to include roughly one month of Colorado's new electric rates[10]. Second, whether sales growth can catch up with the assumption: weather-normalized retail electric sales grew only 2.1% in the first half and slowed to 1.5% in the second quarter, below the roughly 3% full-year assumption[11][6], so third-quarter sales and progress on state large-load tariffs will decide whether that assumption misses and when data-center demand shows up in volumes. Third, how much outside capital the new five-year plan needs: first-half capital spending rose 35% year over year and debt reached 62% of total capitalization[12][13], and the company said it will roll out its 2027-2031 plan in the third quarter[14]; the equity and debt that new investment requires will directly set how much future EPS is diluted and whether credit ratings hold.

Company Background and Business Structure

Xcel Energy is a regional utility group with more than a century of history, and both its scale and its assets are concentrated in regulated businesses. Incorporated in Minnesota in 1909, it serves parts of Minnesota, Colorado, Texas, New Mexico, Wisconsin, Michigan, North Dakota and South Dakota, and at the end of 2025 it had total assets of $81.4 billion and about 20,800 MW of owned generating capacity[1]. Its core strategy is "Steel for Fuel", replacing fuel spending with zero-fuel-cost wind and solar assets, which the company says has saved customers nearly $6 billion since 2017; it also says its five-year average residential electric and natural gas bills are 28% and 12% below the national average[15].

Earnings come from four regulated subsidiaries, with Colorado and Minnesota dominating. NSP-Minnesota runs electric and gas operations in Minnesota, North Dakota and South Dakota with an estimated rate base of $19.4 billion; PSCo runs Colorado electric and gas with a rate base of $23.8 billion; SPS runs electric operations in Texas and New Mexico with a rate base of $9.1 billion; and NSP-Wisconsin serves Wisconsin and Michigan with a rate base of $3.5 billion[16]. In 2025, EPS contributions were $1.53 from NSP-Minnesota, $1.15 from PSCo, $0.67 from SPS and $0.27 from NSP-Wisconsin, with the holding company and other at negative $0.23[17]; PSCo's figure includes a $0.38 drag from the Marshall Wildfire settlement, a one-time charge of $287 million recognized in the third quarter of 2025[17][18].

Electricity is the bulk of revenue, and commercial and industrial customers account for most of the volume. In 2025 the company sold 109.4 billion kWh of electricity for electric revenue of $12.16 billion; C&I customers made up 61% of sales volume and 49% of electric revenue, while residential customers made up 24% of volume and 32% of revenue[19]. On a revenue-from-contracts basis, 2025 retail electric revenue was $10.001 billion and retail natural gas revenue was $2.153 billion, and with wholesale, transmission and alternative revenue added, total operating revenue reached $14.669 billion[20].

Revenue swings with fuel prices, but earnings depend on rate base and allowed returns. Fuel, purchased power and natural gas costs pass through to customers under fuel clauses, so moves in natural gas, coal and uranium prices change revenue but largely leave earnings untouched[21]; what really drives earnings is whether the rates each state commission sets on test-year costs cover depreciation and a return on the assets[22]. Beyond the four subsidiaries, the company holds natural gas pipeline and storage assets through WYCO, a joint venture with CIG accounted for under the equity method, which contributed $0.03 of EPS in 2025[1][17].

Financial History and Current Position

Ongoing earnings grew steadily in fiscal 2025, but GAAP results were pulled down by the wildfire settlement. Operating revenue was $14.669 billion in 2025[20], and GAAP diluted EPS was $3.42, slightly below $3.44 in 2024; excluding the $0.38 Marshall Wildfire settlement, ongoing EPS was $3.80, up about 8.6% from $3.50 in 2024[17]. That $3.80 is also the base for the company's long-term target of 6% to 8%-plus annual EPS growth[9].

The 2025 cash flows show investment expanding much faster than operating cash flow. Operating cash flow was $4.083 billion for the year, $558 million below the $4.641 billion of 2024, which the company attributed to the Marshall settlement payment and the timing of regulatory recovery, including deferred fuel costs[23]; capital and construction spending jumped from $7.364 billion to $10.908 billion[24], raising investing cash outflow by $3.541 billion[25]. New debt and common share issuance covered the gap between operating cash flow and capital spending plus dividends, and total debt stood at $33.883 billion, or 59% of total capitalization, at the end of 2025[13].

Ongoing EPS rose year over year in both quarters of 2026 so far, but the drivers differed. First-quarter ongoing EPS was $0.91 versus $0.84, with GAAP EPS of $0.89[26]; Colorado had its warmest winter on record, which the company estimated cut EPS by about $0.09[27]. Second-quarter operating revenue was $3.119 billion versus $3.287 billion, and net income was $586 million versus $444 million[3]; ongoing EPS was $0.93, bringing the first half to $1.84, up about 16% from $1.59 in the first half of 2025[5].

As of June 30, 2026, cash flow had improved, but leverage kept rising. First-half operating cash flow was $2.797 billion versus $2.109 billion, and capital spending was $5.970 billion versus $4.415 billion[12]. At the end of the second quarter, total debt was $39.457 billion, or 62% of total capitalization, including $2.510 billion of short-term debt, against common equity of $24.057 billion[13]. The company reaffirmed full-year ongoing EPS guidance of $4.04 to $4.16 with its second-quarter results on July 30[5] and again on August 20 when it announced the Colorado electric rate decision[10].

Operating Model

Xcel's revenue splits into fuel pass-through and non-fuel components, and only the latter really moves earnings. Electric revenue is roughly sales volume by customer class times class rates, plus wholesale and transmission revenue; the fuel and purchased-power part of rates passes through at actual cost, while the non-fuel part consists of base rates set in rate cases and riders collected between rate cases. Electric revenue rose $1.013 billion in 2025, including $250 million from non-fuel riders, $214 million from fuel cost recovery, $116 million from regulatory rate outcomes and $97 million from sales and demand[28]; in the second quarter of 2026, fuel cost recovery fell $202 million and pulled electric revenue down $138 million, while non-fuel riders still added $114 million[4].

Ongoing earnings can be read as rate base times the equity ratio times the earned ROE, and the gap between earned and authorized ROE is regulatory lag. Between the time an asset goes into service and the time it enters rates, shareholders bear its depreciation and interest, and that lag is more pronounced in jurisdictions that set rates on historical test-year costs[22]. In 2025, subsidiary GAAP ROEs ranged from 5.66% at PSCo, including the wildfire settlement, to 9.19% at NSP-Minnesota, and PSCo's ongoing ROE was 7.55%[16]; recently approved or settled authorized ROEs fall between 9.2% and 9.6%, including 9.60% for Minnesota electric, 9.3% for Colorado electric, 9.2% for Colorado gas and 9.5% for New Mexico[29][30][31][32].

AFUDC partly offsets financing costs during the gap between construction and rate base. Projects under construction accrue AFUDC at the cost of construction funds, with the equity portion booked in other income and the debt portion reducing interest expense; second-quarter AFUDC-equity was $105 million versus $69 million a year earlier, while interest charges including other financing costs were $443 million versus $349 million[3]. The company's EPS bridge shows that higher AFUDC added $0.08 in the second quarter, while higher interest charges subtracted $0.12 and common equity financing subtracted $0.06[8]; full-year guidance assumes AFUDC-equity rises $150 million to $160 million[6]. Once a project enters service, AFUDC stops and the return shifts to riders or the next rate case, so earnings usually respond to capital spending with a lag of one to several quarters.

The heart of the cash model is that capital spending and dividends far exceed operating cash flow, and outside financing must fill the gap. Operating cash flow is roughly net income plus depreciation, amortization and deferred taxes, adjusted for working-capital items such as deferred fuel recovery; when fuel costs rise, the company pays first and recovers later under its clauses, temporarily depressing operating cash flow, and the 2025 decline came partly from that timing[23]. The company's 2026-2030 base investment plan is $60 billion[33], with an equity requirement of $7 billion[34], and the rest funded by operating cash flow after dividends and new debt; wildfire payments are another nonrecurring cash outflow.

Industry and Competitive Position

Xcel's competitive position rests first on franchise rights and resource endowment rather than price competition. Each subsidiary is the sole regulated distributor in its service territory, and state utility commissions set rates on a cost-plus-reasonable-return basis[22]; wind resources in the Upper Midwest and Texas-New Mexico let the company expand renewables at low fuel cost. The company describes itself as the largest builder of new high-voltage transmission in the US and one of the largest renewable generation providers for utility customers[35].

The new variable on the demand side is power for data centers and oil and gas basins, which brings both investment opportunity and new regulatory arrangements. First-half C&I sales growth came partly from energy-sector activity in SPS territory and from manufacturing across all jurisdictions[21]; in the first quarter of 2026, NSP-Minnesota signed an agreement to power a new Google data center in Minnesota and asked the MPUC to approve a charge tied to 1,900 MW of clean energy resources[36]. Minnesota's large-load tariff was approved in June 2026, and similar tariffs have been filed in Colorado and Wisconsin[37]; the company has also agreed with NextEra to co-develop generation and has formed supply-chain alliances with GE Vernova and tier-1 EPC firms[33].

Compared with peers, Xcel's constraints lie in regulatory lag, wildfire liability and financing pressure. Colorado rates use a historical test year, and the CPUC's latest decision shifted to a 13-month average, lowering the revenue increase[10]; the Marshall Wildfire in Colorado and the Smokehouse Creek fire in Texas have both produced actual payouts[18][38]; and Moody's outlook on Xcel Energy Inc. unsecured debt and on PSCo secured debt is negative[39]. The available material covers only the company's own disclosures, with no peer data on authorized returns, load growth or financing structure, so the comparison here can only be qualitative and cannot establish where Xcel ranks against peers.

Core Debates

Xcel's ongoing EPS rose 16% in the first half, yet its unchanged full-year guidance only asks the second half to be roughly flat to slightly up. Can rider recovery keep outrunning interest costs and share dilution in the third quarter?

This debate decides whether Xcel can turn record capital spending into EPS growth rather than having it absorbed by financing costs. Utility earnings growth comes from turning capital spending into rate base that earns an authorized return, and Xcel is at a historic high in both capital spending and financing; second-quarter interest charges rose $94 million year over year[7], and common equity financing diluted EPS by $0.06[8]. If recovery falls behind financing costs, EPS growth gives way to interest and dilution, and because part of the strong first half came from one-time timing items, the third quarter is the best window to test the underlying growth rate.

The second-quarter EPS bridge shows that growth came from several forces pulling in opposite directions. Ongoing EPS rose from $0.75 to $0.93[5]: lower fuel and purchased power added $0.30, mostly offset by lower revenue, higher AFUDC added $0.08 and lower depreciation and amortization added $0.08, while lower electric revenue subtracted $0.18, higher interest charges $0.12 and common equity financing $0.06[8]. In the electric revenue bridge, non-fuel riders added $114 million, but interim rate refunds recognized in the Minnesota rate case cut "regulatory rate outcomes" by $36 million, which the company said was offset by lower depreciation from nuclear life extensions[4], with the depreciation reductions for both 2025 and 2026 recognized in the second quarter; over the same period, earnings from equity method investments rose $84 million, mainly from unrealized gains on investment funds' interests in energy technology companies[7].

The testable baselines cover four lines: EPS, riders, interest and AFUDC. For ongoing EPS, the baselines are $1.84 in the first half of 2026, $0.93 in the second quarter, $0.91 in the first quarter ($0.84 a year earlier) and $3.80 for full-year 2025[5][26][17]; the electric revenue increase from non-fuel riders was $114 million in the second quarter and $203 million in the first half[4], versus $250 million for full-year 2025[28], and full-year guidance assumes capital rider revenue rises $480 million to $490 million[6]; interest charges including other financing costs were $855 million in the first half ($681 million a year earlier), and AFUDC-equity was $197 million ($117 million)[3]. The financial transmission runs like this: once capital projects enter service, non-fuel riders and rate-case revenue lift electric revenue; new debt and shares at the same time raise interest expense and dilute the share count; AFUDC accrued on construction work partly offsets financing costs, and the net result lands in ongoing net income and EPS. An alternative reading is that part of the first-half growth came from the concentrated depreciation adjustment and unrealized investment-fund gains rather than a sustainable pace of recovery; on top of the $1.84 first half, full-year guidance only requires $2.20 to $2.32 in the second half, close to the $2.21 of the second half of 2025[5][9], which shows the company has not extrapolated first-half growth to the full year.

What remains unresolved is how large the net gap between recovery and financing really is once those timing items are stripped out. In the third quarter, watch whether ongoing EPS grows year over year and the $4.04 to $4.16 full-year guidance holds, whether the non-fuel rider increase is at least the second quarter's $114 million, whether the year-over-year increase in interest charges stays within $94 million, and whether AFUDC-equity keeps rising year over year. NSP-Minnesota's October proposal to freeze base rates in 2027 and 2028 would also change how new Minnesota capital is recovered[40]. If full-year guidance is cut, or the third-quarter increase in interest charges exceeds the rider increase, recovery is no longer keeping pace with financing costs and the current view that capital recovery is ahead would be falsified.

Xcel assumes weather-normalized retail electric sales grow about 3% this year, but the first half delivered only 2.1%. Can third-quarter sales re-accelerate, and are data-center contracts and large-load tariffs advancing on schedule?

Sales growth affects current revenue and is also the premise for the company's entire capital and resource plan. Colorado's approved load forecast assumes 3% compound annual sales growth through 2031[41], and the company's full-year guidance likewise assumes about 3% growth in weather-normalized retail electric sales[6]. If sales keep falling short, the cost of new assets is spread across fewer kilowatt-hours, pushing up customer rates and weakening the regulatory case for large-scale investment.

First-half sales growth fell short of the assumption, and it slowed noticeably in the second quarter. Weather-normalized retail electric sales rose 2.1% in the first half, with C&I up 3.0%, residential up 0.1% and SPS C&I up 6.2%; in the second quarter, consolidated growth slowed to 1.5%, SPS C&I to 2.1% and PSCo retail sales to 0.3%[11]. The company attributed first-half C&I growth to a 6.0% rise in use per customer at SPS and to energy-sector activity in SPS and manufacturing across jurisdictions[21]; in the electric revenue bridge, "sales and demand" contributed $69 million in the first half but only $25 million in the second quarter[4].

The baselines show that 2026 sales have not yet moved beyond 2025 levels. Consolidated weather-normalized retail electric sales growth was 1.5% in the second quarter, 2.1% in the first half and 2.8% in the first quarter[11][27], versus 2.0% for full-year 2025, when SPS C&I grew 6.1%[42]; the electric revenue increase from "sales and demand" was $97 million for full-year 2025[28], and management kept its 3% full-year sales growth target on the second-quarter call[43]. On data centers, Minnesota's large-load tariff was approved in June 2026 with a 100 MW threshold and a minimum 15-year term[37]; the Google service agreement and its request for 1,900 MW of clean energy resources have been filed with the MPUC, with a decision expected in early 2027[36]; the company keeps its targets of 1 GW of new data-center load in 2026 and 3 GW in 2027[44], and has said it is confident of securing 6 GW of data-center load by year-end 2027[33]. The financial transmission runs from manufacturing, oil and gas production and data-center demand to weather-normalized retail sales, then to "sales and demand" electric revenue and subsidiary earnings, with Minnesota's sales true-up offsetting part of the volatility; data-center contracts in turn drive generation and transmission capital spending that becomes future rate base and revenue. An alternative reading is that data-center growth will show up mainly in capital spending and rate base after 2027 rather than in 2026 sales volumes; in that case the roughly 3% full-year sales assumption could miss without directly undermining the investment plan.

What remains unresolved is whether the slowdown is a temporary industrial swing or a real gap before data-center load arrives. In the third quarter, watch whether weather-normalized retail electric sales recover above 2.5%, whether SPS C&I sales keep growing above 5%, whether the "sales and demand" revenue increase is at least $25 million, and whether the company announces new large-load agreements or progress on the Colorado large-load tariff. The 10-K also warns that a small number of large customers raises credit risk and infrastructure needs, and that weaker-than-expected load growth could hurt results and cash flow[45]. If sales growth stays below 1.5%, or the data-center load targets are cut, the view that demand supports the investment program would weaken.

PSCo is Xcel's largest subsidiary by rate base, yet its ongoing ROE was only 7.55% in 2025. Can the new electric rates effective in late August and the fourth-quarter gas decision move its returns toward the authorized 9.3%?

PSCo's return recovery is one of the largest potential sources of improvement in Xcel's EPS. PSCo's rate base is $23.8 billion, about 43% of the four subsidiaries combined, and its 2025 ongoing ROE was 7.55%[16], more than 1.7 percentage points below the 9.3% authorized ROE in Colorado's new electric rates[10]. Colorado is also the jurisdiction with the most concentrated wildfire risk and regulatory scrutiny, and both Moody's and S&P have negative outlooks on PSCo's secured debt[39].

Colorado's new electric rates are largely settled, but the revenue increase is smaller than the earlier settlement proposed. On August 19 the CPUC gave a verbal decision approving most settlement terms but switching to a 13-month average historical test year, which cut the revenue increase to $157 million while leaving the 9.3% ROE and 54.5% equity ratio unchanged, with new rates expected to take effect on August 29[10]; the June settlement had proposed a $225 million revenue increase[30]. The natural gas case reached a settlement in July for a $123 million revenue increase and a 9.2% ROE, with a CPUC decision expected in the fourth quarter[31].

PSCo's quarterly earnings are volatile, and weather is the main source of noise. PSCo contributed $0.32 of EPS in the second quarter versus $0.26 a year earlier and $0.74 in the first half versus $0.71, which implies $0.42 in the first quarter, below $0.45 a year earlier[46]. The company attributed first-half growth to recovery of electric infrastructure investment, partly offset by unfavorable weather[47], and estimated that Colorado's warmest winter on record cut company-wide EPS by $0.09 in the first quarter[27]; PSCo contributed $1.15 for full-year 2025, including the $0.38 Marshall settlement drag[17][18]. PSCo's weather-normalized retail electric sales rose 0.3% in the second quarter and fell 0.1% in the first half[11], after rising 1.3% in 2025[42]. The financial transmission runs from the CPUC-approved new rates, an annualized $157 million revenue increase, into PSCo electric revenue on a per-day basis after they take effect, lifting PSCo net income and its EPS contribution; gas rates, expected to take effect in the fourth quarter, flow into gas revenue; and weather and wildfire-related costs create quarterly swings. An alternative reading is that the CPUC's shift to an average test year itself shows regulators leaning toward smaller revenue increases, so even after the new rates take effect, PSCo's earned ROE could still trail the authorized level because of continued heavy investment.

What remains unresolved is how far the new rates can lift PSCo's returns and whether continued investment will widen the lag again. In the third quarter, watch whether PSCo's EPS contribution grows year over year and how the company describes the new rates' contribution, whether the new rates took effect in late August as the verbal decision indicated, whether PSCo's weather-normalized sales return to growth, and whether gas rates are approved on settlement terms. The company has been carrying out wildfire mitigation plans in Colorado, including cameras, weather stations and public safety power shutoffs[48]. If PSCo's EPS contribution falls year over year, or the gas decision comes in clearly below settlement terms, the current view that returns are recovering toward the authorized level would be falsified.

Xcel spent $1.56 billion more on capital in the first half than a year earlier, and debt has risen to 62% of total capitalization. When it rolls out the 2027-2031 plan on the third-quarter call, how much new equity and debt will the added investment require?

Xcel's long-term growth target rests on rapid rate-base expansion, and that expansion needs large amounts of outside capital. The company's long-term objective is annual EPS growth of 6% to 8%-plus from the 2025 base of $3.80[9], and it maintains a target of 9%-plus average annual EPS growth through 2030[43]; the current five-year plan carries a $7 billion equity requirement[34]. The financing mix determines how much EPS is diluted, how much interest rises and whether credit ratings can be maintained, and Moody's outlook on Xcel Energy Inc. unsecured debt is already negative[39].

First-half data show capital spending growing faster than operating cash flow, with leverage rising as a result. Capital spending was $5.970 billion in the first half of 2026, up 35% from $4.415 billion a year earlier, while operating cash flow was $2.797 billion, up $688 million[12]. On the second-quarter call, management said the company invested $3 billion in the quarter, bringing year-to-date investment to more than $6 billion[35]. At the end of the second quarter, total debt was $39.457 billion, or 62% of total capitalization versus 59% at the start of the year, with short-term debt of $2.510 billion[13].

Equity financing has already locked in most of the original plan's needs, but the new plan could reopen a gap. In the first half, the company entered forward sale agreements for 42.5 million shares with minimum expected proceeds of $3.2 billion; at the end of June, 69.7 million shares remained unsettled, with minimum expected proceeds of $5.2 billion[49], and the company said about 85%, or $6 billion, of the $7 billion five-year equity requirement has been addressed[34]. The current 2026-2030 base plan is $60 billion[33]; on the second-quarter call, management cited more than $10 billion of incremental opportunity beyond the base plan[43], including about $6 billion of new investment tied to 2,600 MW of company-owned generation selected in the SPS resource plan[35], and said it will update full five-year projections when it rolls out the 2027-2031 plan in the third quarter[14]. For comparison, full-year 2025 capital spending was $10.908 billion[24] and operating cash flow was $4.083 billion[23]. The financial transmission runs from capital spending into construction work in progress that accrues AFUDC, then into rate base after in-service, recovered through riders or rate cases; capital spending plus dividends minus operating cash flow equals the outside financing need, which turns into interest on new debt and dilution from new shares, and then feeds back into financing costs through the capital structure and credit ratings. An alternative reading is that more incremental investment means more new equity: the existing 85% completion applies only to the original plan, and the added portion, if financed in similar proportions, would itself require additional equity.

What remains unresolved is how the new plan will balance its larger scale against its equity needs. In the third quarter, watch whether capital spending through the first three quarters reaches about $10 billion, whether operating cash flow keeps growing year over year, the size of the new plan's base capital spending and its added equity needs, and whether rating agencies adjust ratings or outlooks for Xcel Energy Inc. and PSCo. Rate outcomes in New Mexico and other jurisdictions will also affect how fast new assets are recovered: SPS requested a $168 million increase in New Mexico, and the stipulation calls for $90 million[32]. If the new plan sharply raises equity needs, or a downgrade raises financing costs, the view that capital expansion converts efficiently into EPS would weaken.

Risks and Falsifiers

Damages from the Smokehouse Creek wildfire in Texas could exceed insurance coverage, which is the most direct tail risk for SPS and consolidated earnings. As of June 30, 2026, the company had recorded a total estimated loss of $460 million for the matter, plus about $43 million of legal costs, for a combined $503 million; after settlements and legal costs, only about $80 million remains of the $525 million policy for the period, and the estimate excludes government penalties, punitive damages, government agency claims and claims for oil and gas equipment[38]. The exposure falls on SPS and consolidated net income, operating cash flow and any uninsured payouts; if the third-quarter report keeps the total estimated loss near $460 million with no material new uninsurable accrual, the concern would be falsified.

State rate decisions have generally come in below requests, and regulatory outcomes and affordability pressure can slow recovery of capital spending. Minnesota's electric rate decision provides about $211 million over two years with a 9.60% ROE[29]; the New Mexico stipulation provides $90 million, below the $168 million requested[32]; and Colorado electric's final increase is $157 million against a $356 million request[10]. The exposure falls on each subsidiary's authorized ROE, revenue increases and ongoing EPS; if New Mexico rates take effect on stipulated terms in December 2026 and later decisions keep authorized ROEs no lower than the recent 9.2% to 9.6% range, the concern would be falsified.

Minnesota's proposed rate freeze would change how the company's largest earnings source recovers its capital. On October 9, NSP-Minnesota proposed freezing base rates in 2027 and 2028 and accelerating federal investment tax credit benefits from five battery storage projects to offset the revenue requirement of new capital; it asked the MPUC to decide by January 2027 and said it would file a new rate case in early 2027 if the plan is not approved[40]. If approved, new Minnesota capital would rely mainly on riders and tax credits for two years, and if that arrangement falls short of covering new capital, regulatory lag would widen; the exposure is NSP-Minnesota's revenue and EPS contribution, whose $1.53 in 2025 was about 42% of the regulated utility total of $3.65[17]. If the MPUC approves the plan before January 2027 and the company keeps its 6% to 8%-plus long-term growth target, the concern would be falsified.

Concentration of data-center load raises credit risk and cost-allocation risk. The 10-K warns that a few large customers can raise customer concentration, capital needs and revenue variability, and that if load growth disappoints or regulatory cost-allocation rules change, results and cash flow could suffer[45]; state large-load tariffs therefore generally include protections such as minimum bills, termination fees and credit requirements[37]. The exposure falls on recovery of related generation and transmission capital spending and on electric revenue; if large-load tariffs are approved in Colorado and Wisconsin with minimum-bill and termination-fee terms, and the company keeps its 6 GW contracting target[33], the concern would be falsified.

Colorado wildfire risk is elevated in 2026 and could again create contingent liabilities for PSCo. On the second-quarter call, management said low winter snowpack and ongoing drought have raised Colorado wildfire risk in 2026, and described measures including AI-enabled fire detection cameras, expanded weather monitoring, targeted public safety power shutoffs and system hardening[50]; PSCo already recognized a one-time $287 million charge for the Marshall Wildfire settlement in 2025[18]. The exposure falls on PSCo's contingent liabilities and insurance costs and on the credit ratings of PSCo and Xcel Energy Inc.; if the third-quarter report discloses no new major wildfire linked to company equipment and PSCo's outlook is not cut further, the concern would be falsified.

Credit rating pressure would directly raise financing costs and could force more equity issuance. As of July 28, 2026, Moody's outlook on Xcel Energy Inc. unsecured debt (Baa1) and PSCo secured debt (A1) was negative, as was S&P's outlook on PSCo (A)[39], while one of the company's long-term objectives is to keep senior secured debt ratings in the "A" range[9]. The exposure falls on interest expense, financing costs and the scale of equity financing; if rating agencies keep current ratings after the new five-year plan is released and the company keeps its A-range secured rating objective, the concern would be falsified.

What to Watch Next

• Rider recovery versus financing costs: watch whether ongoing EPS grows year over year from the first half's $1.84 (up 16%) and whether the $4.04 to $4.16 guidance holds; a guidance cut would signal recovery falling behind financing costs.
• Rider recovery versus financing costs: watch whether the non-fuel rider increase stays at or above the second quarter's $114 million and the interest increase stays within $94 million; an interest increase larger than the rider increase would falsify the current view.
• Rider recovery versus financing costs: watch whether AFUDC-equity keeps rising from $105 million in the second quarter ($69 million a year earlier); a decline would mean a weaker offset from construction work.
• Sales and data-center load: watch whether weather-normalized retail electric sales recover above 2.5% from 1.5% in the second quarter and 2.1% in the first half; growth below 1.5% again would weaken the case.
• Sales and data-center load: watch whether SPS C&I sales grow at least 5% (2.1% in the second quarter) and "sales and demand" revenue adds at least $25 million; a cut to the data-center load targets would falsify the current view.
• Sales and data-center load: watch for new large-load agreements or Colorado tariff progress, with Minnesota approved and Colorado and Wisconsin pending; stalled approvals or a lower contracting target would weaken the case.
• PSCo return recovery: watch whether PSCo's EPS contribution grows from $0.32 in the second quarter ($0.26 a year earlier) and how the new rates contribute; a year-over-year decline would falsify the recovery view.
• PSCo return recovery: watch whether the $157 million electric increase took effect in late August and the $123 million gas settlement is approved; a gas decision clearly below settlement terms would weaken the case.
• Capital spending and funding: watch whether capital spending reaches about $10 billion through three quarters against first-half spending of $5.970 billion and operating cash flow of $2.797 billion, and whether operating cash flow keeps growing.
• Capital spending and funding: watch the size of the 2027-2031 plan versus the current $60 billion base plan, its added equity needs beyond the roughly 85% already addressed, and any rating outlook changes; sharply higher equity needs or a downgrade would falsify the current view.

Conclusion

Xcel Energy's earnings are driven by rate-base expansion and authorized returns, while fuel-cost pass-through changes the size of revenue but not earnings. Ongoing EPS was $1.84 in the first half of 2026, up about 16%[5], but capital spending over the same period reached $5.970 billion[12], debt rose to 62% of total capitalization[13], and interest charges and share dilution are absorbing part of the gain from riders[8]. The central unresolved relationship is whether recovery from riders, Colorado's new rates and data-center load can keep outrunning the interest and share issuance that record investment requires, while keeping the financing needs of the 2027-2031 plan from overwhelming the credit ratings.

Since the latest results on July 30, 2026, the only coverage available consists of company spokesperson comments on data-center cost allocation and local media reports on wildfire mitigation, and the broker research found predates these results; not one independent, attributed and verifiable assessment offers a substantive judgment on the four debates above. No outside interpretation is therefore summarized here, judgments on these debates must rest on the company's own disclosures, and the third-quarter report itself will be the first-hand evidence that tests them.

If the third-quarter report shows ongoing EPS growing year over year with full-year guidance intact, a non-fuel rider increase of at least $114 million against an interest increase of no more than $94 million, weather-normalized sales back above 2.5%, a year-over-year rise in PSCo's EPS contribution from the new rates, and a new five-year plan without a sharp increase in equity needs, the view that capital recovery is ahead of financing costs would be materially strengthened. Conversely, if full-year guidance is cut, sales growth stays below 1.5%, PSCo's EPS contribution falls year over year, or the new plan sharply raises equity needs and triggers a downgrade, it would indicate that first-half growth came more from timing items such as the depreciation adjustment and investment gains, and that financing costs have begun to arrive ahead of recovery.

Sources

[1] XEL 10-K filed 2026-02-25 · company overview · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[2] Drillr earnings calendar (updated 2026-10-22) · XEL 2026-10-29 Q3 2026 estimates · 2026-10-22 · Drillr earnings calendar · https://gateway.drillr.ai/mcp/private

[3] XEL 8-K filed 2026-07-30 (2Q26 results) · consolidated income statement · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[4] XEL 8-K filed 2026-07-30 (2Q26 results) · electric revenue bridge · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[5] XEL 8-K filed 2026-07-30 (2Q26 results) · results highlights · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[6] XEL 8-K filed 2026-07-30 (2Q26 results) · 2026 guidance assumptions · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[7] XEL 8-K filed 2026-07-30 (2Q26 results) · expense commentary · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[8] XEL 8-K filed 2026-07-30 (2Q26 results) · EPS change components · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[9] XEL 8-K filed 2026-07-30 (2Q26 results) · long-term objectives · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[10] XEL 8-K filed 2026-08-20 (Colorado electric rate decision) · terms approved · 2026-08-20 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000160/xel-20260819.htm

[11] XEL 8-K filed 2026-07-30 (2Q26 results) · retail sales growth · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[12] XEL 10-Q filed 2026-07-30 · cash flow statement · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/72903/000007290326000154/xel-20260630.htm

[13] XEL 8-K filed 2026-07-30 (2Q26 results) · capital structure · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[14] XEL earnings call 2026-07-30 (2Q26) · capital plan update timing · 2026-07-30 · earnings-call · https://gateway.drillr.ai/mcp/private

[15] XEL 10-K filed 2026-02-25 · affordability and load growth · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[16] XEL 10-K filed 2026-02-25 · utility subsidiary rate base and ROE · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[17] XEL 10-K filed 2026-02-25 · 2025 diluted EPS by subsidiary · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[18] XEL 10-K filed 2026-02-25 · Marshall Wildfire charge · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[19] XEL 10-K filed 2026-02-25 · electric operations and retail pricing · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[20] XEL 10-K filed 2026-02-25 · 2025 revenue by customer class · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[21] XEL 8-K filed 2026-07-30 (2Q26 results) · weather-normalized sales drivers · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[22] XEL 10-K filed 2026-02-25 · rate regulation and cost recovery risk · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[23] XEL 10-K filed 2026-02-25 · 2025 operating cash flow · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[24] XEL 10-K filed 2026-02-25 · consolidated cash flow statement · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[25] XEL 10-K filed 2026-02-25 · 2025 investing cash flow · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[26] XEL 8-K filed 2026-04-30 (1Q26 results) · results highlights · 2026-04-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000070/xcelearningsreleaseq12026.htm

[27] XEL earnings call 2026-04-30 (1Q26) · earnings drivers · 2026-04-30 · earnings-call · https://gateway.drillr.ai/mcp/private

[28] XEL 10-K filed 2026-02-25 · 2025 electric revenue bridge · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[29] XEL 8-K filed 2026-07-30 (2Q26 results) · Minnesota electric rate case · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[30] XEL 8-K filed 2026-07-30 (2Q26 results) · Colorado electric rate case · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[31] XEL 8-K filed 2026-07-30 (2Q26 results) · Colorado natural gas rate case · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[32] XEL 8-K filed 2026-07-30 (2Q26 results) · New Mexico electric rate case · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[33] XEL earnings call 2026-04-30 (1Q26) · data center and investment plan · 2026-04-30 · earnings-call · https://gateway.drillr.ai/mcp/private

[34] XEL earnings call 2026-07-30 (2Q26) · equity financing progress · 2026-07-30 · earnings-call · https://gateway.drillr.ai/mcp/private

[35] XEL earnings call 2026-07-30 (2Q26) · capital investment and projects · 2026-07-30 · earnings-call · https://gateway.drillr.ai/mcp/private

[36] XEL 8-K filed 2026-07-30 (2Q26 results) · Google large load agreement · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[37] XEL 10-Q filed 2026-07-30 · large load tariffs · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/72903/000007290326000154/xel-20260630.htm

[38] XEL 8-K filed 2026-07-30 (2Q26 results) · Smokehouse Creek wildfire · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[39] XEL 8-K filed 2026-07-30 (2Q26 results) · credit ratings · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[40] XEL 8-K filed 2026-10-09 (Minnesota rate stability plan) · plan terms · 2026-10-09 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000175/xel-20261009.htm

[41] XEL 8-K filed 2026-07-30 (2Q26 results) · Colorado resource plan · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[42] XEL 10-K filed 2026-02-25 · 2025 weather-normalized retail sales · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[43] XEL earnings call 2026-07-30 (2Q26) · guidance · 2026-07-30 · earnings-call · https://gateway.drillr.ai/mcp/private

[44] XEL earnings call 2026-07-30 (2Q26) · data center load targets · 2026-07-30 · earnings-call · https://gateway.drillr.ai/mcp/private

[45] XEL 10-K filed 2026-02-25 · large load customer risk · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[46] XEL 8-K filed 2026-07-30 (2Q26 results) · EPS by subsidiary · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[47] XEL 8-K filed 2026-07-30 (2Q26 results) · subsidiary earnings commentary · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[48] XEL 10-K filed 2026-02-25 · wildfire mitigation · 2026-02-25 · 10-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000009/xel-20251231.htm

[49] XEL 8-K filed 2026-07-30 (2Q26 results) · equity forward sales · 2026-07-30 · 8-K · https://www.sec.gov/Archives/edgar/data/72903/000007290326000149/xcelearningsreleaseq22026.htm

[50] XEL earnings call 2026-07-30 (2Q26) · management-stated risks · 2026-07-30 · earnings-call · https://gateway.drillr.ai/mcp/private