Paul Johnson – VP, IR Benjamin Fowke – Chairman, President and CEO Teresa Madden – SVP and CFO.

Michael Weinstein – UBS Travis Miller – Morningstar Inc. Michael Lapides – Goldman Sachs.

Good day, ladies and gentlemen, thank you for standing by and welcome to the Xcel Energy Second Quarter 2014 Earnings Conference Call. During today’s presentation all parties will be in listen-only mode. Following the presentation there will be a question-and-answer session and instructions will be given at that time. (Operator Instructions).

And as a reminder this call is being recorded today, July 31, 2014. I would now like to turn the conference over to Paul Johnson, VP of Investor Relations. Please go ahead..

Thank you. Good morning and welcome to Xcel Energy’s 2014 second quarter earnings conference call.

Joining me today are Ben Fowke, Chairman, President and Chief Executive Officer; Teresa Madden, Senior Vice President and Chief Financial Officer; Dave Sparby, Senior Vice President, Group President and President and CEO of NSP-Minnesota; Scott Wilensky, Senior Vice President and General Counsel; George Tyson, Senior Vice President and Treasurer; and Jeff Savage, Vice President and Controller.

This morning we will review our 2014 second quarter results, update you on recent business and regulatory developments and reiterate our 2014 guidance. Slides that accompany today’s conference call are available on our web page. In addition we will post a video on our website of Teresa Madden summarizing our financial results.

As a reminder some of the comments during today’s conference call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release in our filings with the SEC. I’ll now turn the call over to Ben..

Thank you, Paul and good morning. Let me start by highlighting some of the key takeaways from the quarter and Teresa will provide more detail on some of these items. Overall we had another solid quarter with earnings of $0.39 per share, compared with $0.40 per share last year.

It’s important to recognize that last year’s results included a positive weather benefit of $0.03 per share while this year’s weather was relatively normal for the quarter. On a year-to-date basis, we are $0.03 per share ahead of last year and expect to deliver ongoing earnings within our guidance range for the 10th consecutive year.

Our guidance range is based on several key assumptions as described in our earnings release including constructive outcomes in our regulatory proceedings. Our quarterly results benefited from better than expected sales growth for the quarter.

On a year-to-date basis weather just had electric sales increased 1.7% and weather adjusted for natural gas sales increased 5%. While we are hesitant to call this trend it is certainly positive as it is the third quarter in a row in which weather adjusted sales have exceeded expectations.

In the second quarter we completed our aftermarket equity program and we have now issued about $175 million of equity in 2014. I am very pleased to report that we no longer anticipate issuing any additional equity over the next five years beyond the normal issuances associated with our dividend reinvestment programs and benefit plans.

This change in assumption is driven by our strong balance sheet and better than projected cash flows. There are no material changes to our capital expenditure assumption over the five year period. As you know in December we announced our plans to form a Transco.

Our objective is to optimize our transmission investment as the FERC rules and market opportunities continue to involve. So this brings in preparation to participate in the MISO and SPP transmission competitive bidding processes we created two transmission subsidiaries.

We formed the Xcel Energy Transmission Development Company which will compete for the first set of transmission projects expected to be proposed in MISO South. We also created the Xcel Energy Southwest transmission company which will compete for transmission projects in SPP.

We expect SPP to release the first set of competitive transmission projects for bid in 2015. We are planning to make Federal and State Regulatory filings related to the Transcos in the third quarter of 2014 and we hope to have these regulatory proceedings resolved in 2015.

Strategically the formation of Transcos will complement our existing transmission business which is expected to spend $4.5 billion over the next five years.

While there may be some opportunities to transfer existing assets into our Transcos you should expect that the most of the plan in transmission spend over the next five years will be made at the operating company level.

We will continue to take advantage of the right of first refusal and incumbency status we have in many of our states while at the same time, expanding our incremental transmission investment opportunities through our Transco operations.

Bottom-line we have a great track record as a proven industry leader in transmission in terms of operation, development and construction and we are positioned to continue to have success as the market evolves. Finally I like to wrap-up my comments by discussing environmental policy.

The EPA recently issued its proposed Greenhouse Gas Rule which regulates – rather require states to develop plants to reduce Greenhouse emission from existing power plants by 30% by 2030. However the EPA has specific state reduction targets very significantly with certain state targets being very aggressive.

For example, some of our states would be required to make reductions much greater than 30%. While incremental investment opportunities could arise from the more stringent EPA regulations we are concerned that the rule does not give sufficient credit to actions taken prior to 2012.

Over the last decade we have implemented significant clean energy programs that have reduced our emissions. Our proactive actions to add renewables, retiring inefficient coal plants add new natural gas generation and add DFM that allowed us to successfully reduce our carbon emissions nearly 20% since 2015.

Further we are on track to reduce carbon emissions by 30% by 2020. So what we need to do is make sure our customers receive full value for these initiatives and investments. The EPA will take public comment on the proposed rule and final rule is expected to be issued in 2015.

We plan to continue to work constructively with the EPA and state policy makers and shape and implement the best final rule and state plans for our customer and the company. With that I will turn it over to Teresa..

Thanks Ben and good morning. We are pleased to report another solid quarter with earnings of $0.39 per share compared with 2013 second quarter earnings of $0.40 per share. The biggest driver of the difference was weather.

2013 second quarter results included a positive weather impact of just over $0.03 per share compared with relatively normal weather in 2014. Other drivers included improved electric and gas margins resulting from rate filing in several jurisdictions and better than expected weather adjusted sales.

We also experienced higher O&M expenses, property taxes and depreciation expenses. These cost increases were expected and are consistent with our financial plan. Let me start by providing an update on sales in the economies in our service territories. Once again sales growth was stronger than expected for the quarter.

Normally, we discuss quarterly results. However I am going to focus on year-to-date sales as the longer time frame is more indicative of a potential trend. Our year-to-date weather adjusted retail electric sales increased 1.7% and firm natural gas sales increased 5%. While growth was favorable across the board it varied by operating company.

Beginning with SPS, year-to-date weather-adjusted retail electric sales increased 3.6% largely driven by growth in the C&I class although we also saw strong residential growth. We continue to experience a positive impact from oil and gas exploration and production expansion in the Southeastern New Mexico Permian Basin area.

Additional low growth in ethanol production and uranium enrichment also contributed to the higher sale. Year-to-date weather adjusted retail sales at NSC Wisconsin increased 3.2%.

Our C&I sales were strong primarily due to increased load from one of our larger customers who was operating their pipeline at reduced capacity in the first two quarters of 2013 but returned to full capacity in 2014. Customer growth combined with slightly increasing use per customer drove residential sales.

Year-to-date weather adjusted retail sales at PSCo increased 1.2% and were primarily attributable to customer growth in the residential sector and higher average use in the small C&I class. In addition, two new food manufacturing companies and improvement in the energy sector have fueled gain in the large C&I class.

Finally year-to-date weather adjusted retail sales at NSP-Minnesota increased eight-tenths of a percent. The higher sales were driven by growth in number of customers increased use for customer in both the residential and the small C&I classes and the absence of storms that cause customer outages in 2013.

Economic conditions are generally stronger across the Xcel Energy region compared with the nation as a whole. The consolidated unemployment rate in our service territory of 4.8% remains well below the national average of 6.3%. In addition, the number of the jobs in the Xcel Energy region grew 2.3% for the quarter, compared with 1.8% for the nation.

While we are encouraged by the better than expected sales it is still too early to declare this a trend. We continue to project weather adjusted sales growth of about 1% for 2014 which is below the 1.7% growth we have experienced year-to-date.

Turning more specifically to the second quarter earnings electric margin increased $48 million for the quarter. Key drivers included implementation of final and interim rate which increased margin by $38 million non-fuel riders increased margin by $17 million and stronger than anticipated weather adjusted sales increased margin by $7 million.

These positive factors were partially offset by an unfavorable quarterly weather comparison, the recognition of the reserve for a potential customer refunded PSCo as well as other items. The reserve for a customer refund highlights the success of the 2012 three year rate plan we implemented in Colorado.

Over the last three years we have earned or are projected to earn above our authorized return in our PSCo electric business. Clearly this demonstrates the advantages of a multi-year plan and supports our strategy of implementing multi-year rate plan in other jurisdictions.

Turning to the natural gas side of the business, margin increased by $6 million. This was largely due to rate increases and weather adjusted sales growth partially offset by unfavorable weather impacts. O&M expenses increased $23 million, or 4.1% primarily driven by higher nuclear cost.

As we discussed last quarter this deviation does not represents our planned run rate for the year. The year-to-date deviation is fueled due to the timing of O&M expenses in 2013.

This was primarily due to the extended outage at our Monticello nuclear plant as part of the light extension and power upgrade project which was completed with the plant coming back online in the summer of 2013. As a reminder nuclear added cost are deferred during the outage and then amortized over the following 18 to 24 months.

In addition, our O&M cost were at their highest level in the third and fourth quarters of 2013. Following the positive 2013 summer weather earnings impact we decided to increase our investment in the system in the later part of the year which serves to increase O&M in the third and fourth quarters of 2013.

As a result, we continue to expect our 2014 O&M expenses will increase 2% to 3% consistent with our original guidance assumption. Finally, other taxes increased about $14 million or almost 14% largely driven by higher property taxes in Minnesota and Colorado.

Next, I’ll comment on several regulatory proceedings, additional details are included in our earnings release. We recently filed rebuttal testimony in our Minnesota electric case and lowered our request by approximately $23 million in 2014 and $3.5 million in 2015.

The revise request includes our updated sales forecast which reflects better than expected sales we have experienced in Minnesota. We also included a proposal to thru up sales based on weather adjusted results at the end of the year. In addition we also updated our property tax forecast and included a proposal to thru up to actual results at year end.

We think these proposals address two of the more significant adjustments recommend by Department of Commerce. Key dates include; their rebuttal testimony is due August 4th, the ALJ report is scheduled for December and a final decision in this case is expected in March of 2015.

In early July, the Department of Commerce filed their testimony in the modest Minnesota province review and recommended additional allowance of approximately $72 million on a Minnesota jurisdictional basis. This equates to a total amount of $91 million for NSP Minnesota.

We disagree with the Department’s assessment and continue to believe our investment was prudent. While completing the projects too longer and cost more than we initially projected similar projects at other new nuclear plants across the country demonstrate that our experience was not unique.

The project was in many way is more complicated and difficult than new construction. Regardless it was essential that this work be done right and we believe we made reasonable and prudent decisions over the five spent at the project.

We had largely rebuild nuclear power plant that will provide our customers with carbon free low cost power for the next 20 year. We look forward to the opportunity to provide additional support for the project and to address issues raised by the Department of Commerce and any other interveners in our rebuttal testimony on August 26.

Other key dates in the schedule include the Rebuttal testimony is due September 19, the ALJ report is scheduled for December and a final decision on the Monticello prudence review is expected in March of 2015. The results from the final decision will be implemented in the Minnesota] rate case decision.

We remain confident that we will reach a constructive outcome in both the Minnesota rate case and the Monticello prudence review. In June, we filled a Colorado electric rate case seeing an increase in annual revenue of approximately $138 million, or 4.9% and the initiation of a clean air, clean job investment rider that would cover 2016 and 2017.

Our objective is to establish on multi-year regulatory plan that provides certainty for PSCo and its customer. We believe this plan would accomplish that goal. It is early in the process so a procedure schedule hasn’t been established. However, we anticipate a commission decision and implementation of final rates in the first quarter of 2015.

In Texas we requested a net increase in electric rates of $48.1 million or 5.3%. We are in settlement discussion with various parties and hope to reach an agreement soon. During the quarter we also filed rate cases in Wisconsin and South Dakota. Similar to Colorado it is still fairly early in the processes so, there isn’t much to report.

Details on both these cases are included in the earnings release. It has been a busy regulatory schedule for us but these rate cases should be resolved by year-end or in the first quarter of next year and will provide us with regulatory certainty in 2015 and beyond.

This morning, we are reaffirming our 2014 ongoing earnings guidance of $1.90 to $2.05 per share. The guidance range based on several key assumptions as described in our earnings release including constructive outcomes in our regulatory proceeding.

With that I will wrap-up my comments; with six months completed we are $0.03 per share ahead of last year and on track to deliver earnings within our guidance range for the 10th consecutive year.

We continue to experience better than expected sales growth with year-to-date weather adjusted retail electric sales growth of 1.7% and weather adjusted firm natural gas sales growth of 5%.

We have completed our aftermarket equity program and we don’t anticipate issuing any incremental equity beyond our dividend reinvestment and to fund benefit program over the next five years. This is based on our current capital expenditure plan.

We continue to make program on the regulatory front and expect to reach constructive outcome in our major jurisdictions. We continue to expect 2014 O&M expenses to grow 2% to 3% from last year consistent with our original guidance assumption.

And finally, we are well positioned to deliver on our 2014 earnings guidance and long-term financial objective of growing earnings and our dividend 4% to 6% annually. Operator we’ll now take questions..

Thank you very much (Operator Instructions). And our first question does come from the line of Michael Weinstein with UBS..

Hi, I was wondering if you could expand more that the independent Transco plant.

Which regions do you think you know the most opportunities and also like what kind of competitive advantage you might have outside of your own footprint?.

The regions, this is, thanks for the question, this is Ben. The regions we would compete in would MISO and SPP. I think both regions offer great opportunities for us. We have got a history of delivering large projects and what comes to my mind when I say that is CapEx 2020, when you think about that, that’s a project where we have multiple partners.

We collaborated with those partners and put together what turned out be an extremely transmission build in the upper Midwest. So we have got that advantage I think of being able to collaborate, we have a track record of delivering transmission projects at a price point that is – I haven’t seen anybody else match. And we are executing on time.

So we have got a lot of experience. In fact I believe we are the largest builder of 345 lines in the nation. So I think you put all that together and we are positioned well to win in a competitive environment.

Did I get your question answered right?.

Yes, yes, thanks. And one of the questions and this is more related to the Colorado rate case.

Just curious about given economic conditions and your view of the future I realize that you are in discussions right now – I don’t know what you can say, what what’s more important? A multi-year settlement that keeps things steady for many years or trackers?.

There is amount – difference spokes all go to the center of the wheel, the important thing is the result. You probably could with either, to be quite honest with you..

Okay, thank you very much..

And our next question does from line of Travis Miller with Morningstar..

Good morning..

Hey, Travis..

Good morning..

Hi, thanks. I am going to stay on the Transco subject here, I was wondering what your thoughts are in terms of long-term investment projects and potential growth, even the viability of a Transco if FERC comes back with the rate cuts perhaps they have targeted or suggest in the Northeast and then obviously the complaints in MISO.

What are your thoughts on if we get a 100 basis points -150 basis points cuts in FERC ROEs in terms of the viability and growth opportunities in Transco..

Well I think Travis clearly the lower the allowed ROE is the more of a damper it puts on the enthusiasm to build transmission. That said it doesn’t surprise us that we are starting to see those ROEs do down and I think in a competitive environment they might go down for other reasons.

But the advantage I think of having a Transco is it allows you to look at larger footprint that allows you to more efficiently collaborate with other partners and it gives you much more financial flexibility.

So I think you are going to see that trend perhaps continue hopefully not as severe as you mentioned but don’t I think that dampens desire you want have a Transco..

Okay, that is great. And then on that competition side that you mentioned, how much competition do you expect here, I’ve heard a couple of companies mentioned this and especially in that MISO SPP region.

Are you thinking this is three person, a horse race is three horse race or this five or seven?.

I think it’s going to be 0- everybody has a Transco and everybody wants to build transmission so, I think it will be very competitive much – many more parties than three..

Okay, great. I appreciate the thoughts..

Thank you..

(Operator Instructions). And our next question does come from line of Michael Lapides with Goldman Sachs..

Hey, guys congrats on a good quarter. A couple of questions, first of all, you commented about the potential for moving some of the existing assets into a Transco.

Just curious if you can put some number around that in terms or size or scale existing rate base that you move out of the state jurisdiction and in to a FERC jurisdiction or subsidiary?.

Well Michael we are really in early days thinking about those kinds of opportunities and let’s make it clear that they would require state regulatory approval and as we know that can be difficult to achieve, it’s not impossible particularly you if can demonstrate customer value to regulators, which I think in some circumstances we can.

I can’t really give you a number. I would – the guidance that we have said on the call and I would continue to stick with that, as you should think the $4.5 billion that we are going to spend, most of it would be at the operating company level.

I think we have some incremental opportunities to the Transco that would probably be in the later part of our five year forecast and that would be on top of the $4.5 billion and then of course in the five years that follows I think Transco would play a more predominant role..

Okay.

Changing topics a little bit and thinking longer-term, not necessarily next two to three years, but maybe next five to ten, when you look across your system and across your states which of your jurisdictions will have the greatest need for potential new or incremental renewable asests in order to meet the statement the state renewable standards and which one have less of a need?.

Well we are actually in very good shape to meet the state renewable standards. We are ahead of the game, significantly ahead of the game but maybe what you are referring to is what the EPA rules, where we have to do more.

I mean is that what you are kind of driving at?.

No, I’m really kind of thinking about, it’s funny everybody really thinks about the numerator when they are thinking about renewable megawatt hour. They forget that a lot these are set on a percent of sales.

So if you are seeing sales recovery a little bit greater than what is the in forecast the dominator changes and then it may impact what’s actually needed going forward.

Just I’m kind of thinking about the bigger picture and really trying to think five and ten years down that road of where you could see or where the state you are in could see a need for incremental renewable RFPs?.

Well I think we are in the – let me just give you my take on it, clearly the states could increase the renewable standards but where we stand today even with sales picking, I don’t see that moving the needle very much. I think that continues to put us in the position where we can add renewable without the pressure to do it now.

So that means we can be more choosy and we can bring them on a better price points for our customers and that’s what we have been doing over the last decade and it’s really worked well for us. We’d like to see it continue but I don’t think we are going to be forced into it because of the state renewable standard..

And finally once more in the industry question but also specifically for your assets.

How do you think about the long-term growth rate in O&M for nuclear power plants relative to kind of your total long-term O&M growth rate targets for the consolidated entity?.

That’s a really good question. I mean I obviously it’s been pretty significant over the last five years. We like to think it’s going to flatten now. I think a lot of that will depend you know additional regulations that might come out.

If I were to – we were are going to give you a rough estimate I would say that it’s the nuclear O&M is going to hard pressed to be as flat as we anticipate the rest of our business. The degree of which I couldn’t really give you any particular insight at this point..

Okay, and any update on kind of your long-term O&M targets?.

Yeah, I mean we are going to continue to push the O&M down. You know what our targets for the next five years and I think ultimately you have to have O&M growth match your sales growth and we continue to think that’s going to be despite the pick-up you know relatively flat and that’s where we want to see our O&M growth go.

I back to nuclear side too I mean I think it’s important to recognize that in a carbon constrained world these nuclear plants are extremely valuable and so, if they require a bit more O&M in the rest of our business I still think they are very good value propositions for our customers..

Got it, thank you much appreciated. Appreciate you taking my call..

Thank you..

And our next question does come from line of [David Hess] with Wolfe Research..

Hi, David..

Hey, good morning.

How are you?.

Good..

Now that you do not need the $700 million of external equity over the five year, how does the mix in your financing plan change? That is like what the rough percentage were from CSO from new debt and from DRIP?.

Well we anticipate I mean in terms of we have previously said you know from the DRIP and the benefit plan that was $350 million. It’s a slight increase to 370 and the remainder would be to spend it through holding company debt. So you can just do that translation.

I would say though that the remaining piece that we were talking about you said $700 million and we frankly completed a $175 million of that in the first-part of this year. We just finished up our ATM program so, it’s more in the $500 million range..

Understood, okay..

And David about a $130 million of incremental cash from operations too, to offset that..

Got it, okay. And I think you said in your prepared remarks that your current five year capital plan is unchanged or at least not materially changed.

Is that correct? If so, when do you expect to update your capital plan?.

Yes, that’s I mean that’s correct we are basically the five year around $14 billion. It will be later this year. Generally we do it in our third quarter call but we will continue to monitor that but that would be the earliest that we would expect..

And given the discussion early on Transco, is it fair to say that when you grow forward one year that you probably can maintain that $14 billion or at least around that?.

Yeah, I mean it’s going to be in that area code..

Great, thank you so much..

Thank you..

(Operator Instructions)..

Thank you for all participating in our earnings call this morning. Please contact us, Paul Johnson and the IR team, with any following questions..

Thank you..

Ladies and gentlemen, that will conclude the conference call for today. If you would like to listen to replay of this conference you may do so by dialing either 303-590-3030 or 1800-406-7325. You will need to enter the access code of 4687079. Those telephone numbers once again are 303-590-3030 or 1800-406-7325 with the access of 4687079.

And we do thank you for your participation on today’s call. You may now disconnect your lines at this time..