Xcel Energy's CEO Hosts Annual Shareholder Meeting Conference (Transcript)

| About: Xcel Energy (XEL)

Xcel Energy Inc. (NYSE:XEL)

Annual Shareholder Meeting Conference Call

May 16, 2012 12:00 pm ET


Benjamin G.S. Fowke III – Chairman, President and Chief Executive Officer

Cathy James Hart – Corporate Secretary and Vice President

C. Riley Hill – President, Chief Executive Officer, Director-SPS


Paul Harpole – Mayor, Amarillo

Carla J. Sonntag – New Mexico Utility Shareholders Alliance

Beth Duke – Center City-Amarillo, Inc.

Benjamin G.S. Fowke III

Good morning and welcome to the 2012 Xcel Energy Shareholder’s Annual Meeting. I’m Ben Fowke and I’d like to start off by saying, it’s great to be in Texas. It really is, this is my first meeting as Chairman, President and CEO, and one of my goals in my new role has been to get out and visit places and meet people that we typically don’t get to see. So again, it’s great to be in Texas. As you know, we’ve operated in this part of the country for many years and truly appreciate it’s growing economy, strong work ethic, and friendly people, and I’m honored to lead Xcel Energy and happy again to be here with you today.

And on stage with me are Cathy Hart, Vice President and Corporate Secretary; Scott Wilensky, Senior Vice President and General Counsel; and Teresa Madden, Senior Vice President and Chief Financial Officer. We appreciate your interest in Xcel Energy and your attendance today. We also like to welcome those of you listening to our webcast. The webcast will be available on our website for your future reference..

Under Xcel Energy’s bilo subjects for consideration of this meeting are limited to those set forth in the notice you received. We will not entertain any new items for addition to the agenda. Cathy Hart will conduct a formal portion of the meeting this morning. There are six items in our business agenda, which were listed in the proxy statement. The polls are opened for voting on these matters.

Following the business portion of the meeting, we will show a video that illustrates our most important commitments then I will make some brief remarks. After that you will have an opportunity to ask questions? For everybody’s benefit, we ask that you hold your questions until the Q&A that will follow my remarks. Our meeting will adjourned no later than 12 noon.

Before proceeding to the business meeting, I’d like to introduce the Xcel Energy Board of Directors. Would each director please stand and remain standing until all of them introduced and please hold your applause until I name the last director. Fritz W. Corrigan; retired President and CEO of Mosaic Company in Plymouth, Minnesota. Fritz served as Independent lead director in 2011; Gail Koziara Boudreaux, CEO, UnitedHealthcare and Executive Vice President of UnitedHealthcare Group in Minnetonka, Minnesota; Richard K. Davis, Chairman and CEO of U.S. Bancorp in Minneapolis, Minnesota; Albert F. Moreno, retired Senior Vice President and General Counsel of Levi Strauss & Co. in San Francisco, California.

Christopher J. Policinski, President and CEO of Land O’Lakes, Inc. in Arden Hills, Minnesota; A. Patricia Sampson, CEO, President and Owner of the Sampson Group, in Minneapolis, Minnesota; Joe Sheppard, Independent Consultant and former Senior Vice President and Chief Nuclear Officer of Southern California Edison; David A. Westerlund, retired Executive Vice President and Corporate Secretary of Ball Corporation in Broomfield, Colorado; Kim Williams, retried partner at Wellington Management Company in Boston, Massachusetts; and Timothy V. Wolf, President of Wolf Interests Inc. in Boulder, Colorado.

I’d also like to recognize one retired executive, one of Xcel Energy’s predecessor companies who is with us today Bill Helton, former Chairman and CEO of New Century Energies and SPS; Bill will you please stand. Also with us is a retired member of our Board of Directors, Coney Burgess, Chairman of the Board of Herring Bank; Coney will you please stand? We have a member of the International Brotherhood of Electrical Workers also in our audience; Joe Mihm is the IVE EW 602 Utility representative, Joe will you stand?

We also have several city and state officials joining us this morning, I’d like to introduce Amarillo Mayor, Paul Harpole, Amarillo Chamber of Commerce, President Gary Molberg; State Senator, Kel Seliger; and State Representatives, Four Price and John Smith, will you please stand? Also happy to welcome Carla Sonntag, from the New Mexico Utility Shareholders Alliance, Carla will you please stand? And finally from the (inaudible), the independent accounts engage and the audit of the 2012 financial statements of Xcel Energy; are Tom Kilkenny, Audit Engagement Partner and Adam Krasnoff, Audit partner. Will you please stand thank you.

So we’ll now proceed with our formal business and I’ll turn the meeting over to our Corporate Secretary, Cathy Hart. Cathy?

Cathy James Hart

Thank you Ben. Good morning, before we proceed with the voting. There are few procedural matters I need to discuss. The distribution of the notice of meeting, proxy statement and the 2011 Annual Report was completed on April 5, 2012, to each shareholder of record as of March 20, 2012.

As of March 20, there were 486,926,611 shares of common stock outstanding. Each share of stock has one vote. As read across this morning, 410,900,547 votes were present by proxy, representing 84% of the total voting power. Therefore, the holders of the majority of the voting power of the company’s stock are present by proxy.

A forum is present in person and by proxy, so we will proceed with the business of the meeting. If you have already voted by proxy, your votes will be cast as you have instructed in the proxy. There is no need for you to vote by ballot today, unless you want to change your vote from the way you instructed in the proxy. If you’ve not voted by proxy or would like to change your vote, please raise your hand at this time, and the inspectors of election will give you a ballot.

This ballot can be used to vote on any or all matters that will be decided at this meeting. When you’re finished voting your ballot, please pass it to the end of your row. Nancy Rosengren from Wells Fargo will be our vote tabulator. Nancy, would you please stand and raise your hand so that shareholders can identify you?

I will now explain the voting procedures. There is six proposals to be voted upon today. Details of these proposals were provided in your proxy statement.

Proposal number one, is the election of Directors. 11 Directors will be elected to the Board with their one year terms expiring in 2012. The following individuals are the nominees to be elected to the Board to serve until the 2013 Annual Meeting, and then successors have been elected or appointed. Gail Koziara Boudreaux, Fredric W. Corrigan, Richard K. Davis, Benjamin G.S. Fowke III, Albert F. Moreno, Christopher J. Policinski, A. Patricia Sampson, James J. Sheppard, David A. Westerlund, Kim Williams and Timothy V. Wolf.

Proposal number two seeks approval for the ratification of the appointment of the Deloitte & Touche LLP as Xcel. Energy’s Independent Registered Public Accounting Firm for 2012. Deloitte & Touche LLP was originally selected as principal independent accountants for Xcel Energy effective March 27, 2002.

Proposal number three, seeks approval of an amendment to our restated articles of incorporation to eliminate cumulative voting on the election of Directors.

Proposal number four, seeks approval of other amendments to and the restatement of our restated articles of incorporation. Proposal number five, seeks approval on an advisory basis of our executive compensation.

We will now consider proposal number six, which is shareholder proposal that seeks approval of the separation of the role of the Chairman and Chief Executive Officer. Is the proponent for the Massachusetts Laborers' Pension Fund present? Okay, Mr. Reno, your proposal along with the company’s response was fully disclosed in the company’s proxy material. However, you may take up the three minutes for any additional discussion of about the resolution. I recognize you Mr. Hammond.

Unidentified Company Representative

Thank you. Good morning, Mr. Chairman, members of the Board of Directors of (inaudible) shareholders. My name is Reno Hammond, and I’m pleased to be presenting proposal number six on today’s ballot on behalf of the Massachusetts Laborers' Pension Fund.

The Laborers’ International Union of North America represents over 500,000 construction workers across the U.S. and Canada. These members belong to one of the Union’s 100 individual benefits funds. Collectively, these funds have over $34 billion in assets. We are long term shareholders of Xcel Energy stock, and we believe strongly as active investors, that we have a duty to ensure that the companies that we invest in have the best practices surrounding governance, sustainability and executive compensation.

It is the responsibility of the Board of Directors to protect shareholders’ long term investments by providing independent oversight of management, including the Chief Executive Officer, and directing the corporation’s business and affairs.

Currently, Mr. Benjamin Fowke is both Xcel Energy Chairman of the Board and CEO. We believe that the practice of combining the two positions may not adequately protect shareholders. We believe an independent Chairman who sets agendas; priorities and procedures for the Board can enhance Board oversight of management, and help ensure the objective functioning of an effective board.

We also believe that having an independent Chairman, can improve accountability to shareholders, and we view the alternative of having a lead outside Director as one with a best set of duties is not adequate to fulfill these functions.

A number of respected institutions recommend such separation. CalPERS Core Principles and Guideline states that the independence of a majority of the board is not enough. The leadership of the board must embrace independence, and it must ultimately change the way in which directors interact with management.

In 2009, (inaudible) for Yale School of Management issued a report endorsed by a number of investors and board members that recommended splitting the two positions as a default provision for U.S. Company.

We believe that the recent economic crisis demonstrates that no matter how many independent directors there are on the board, the board is less able to provide independent oversight of the officers if the Chairman of the Board is also the CEO of the company.

We therefore present the following proposal for shareholder consideration, resolved that the shareholders of Xcel Energy Inc. ask the Board of Directors to adopt a policy that whenever possible, the Board’s Chairman should be an independent director who has not previously served as an executive officer of Xcel. The policy should be implemented so as not to violate any contractual obligation. The policy should also specify, a) how to select a new independent chairman if the current chairman ceases to be independent during the time between annual meeting of shareholders; and b) that the compliance with the policy is excused. If no independent director is available to service Chairman. We therefore urge shareholders to vote for this proposal. Thank you for your attention to this important governance reform. Thank you for the time.

Cathy James Hart

Thank you, Mr. Hammond. The discussion of matters for shareholder consideration is now closed. Thanks. I would now like to announce the folder closed as well. We do have preliminary results showing that all management proposals were proved, and all of the director nominees were elected. This shareholder proposal on the separation of the role of the Chairman and Chief Executive Officer was not approved.

Official results will be disclosed in a Form 8-K filing and will also be posted on the Xcel Energy website. This concludes the business portion of our meeting. I’d like to wrap up by reminding you that we may be making some forward-looking statements during this meeting. You should refer to our SEC filings for the risk factors related to our business.

Now, I’d like to invite you to watch a video, and learn a little bit more about Xcel Energy. Our Chairman will be back right after that. Thank you.

[Video Playback]

I hope you enjoyed the video. I think you can tell we are in eight states by some of the accents on that video too. But I also think it does a great job of illustrating our priorities and our accomplishments. We are really proud of Xcel Energy and like you to lead this meeting knowing what an outstanding energy company Xcel Energy is. We work hard for our customers, we are strong operationally as any utility in the country, we are ahead of the environmental curve and we are investing in our core business to build value for you. So let us talk about building value.

I’m pleased to announce that the Board of Directors this morning increased our annual dividend by $0.04 effective with the July dividend that’s about a 3.8% increased. And based on yesterdays closing stock price it equals a dividend yield of 3.97% and our goal is to increase the dividend each year in the range of 2% to 4% and we have been able to meet that objective. In fact our dividend is growing by more than 3% annually over the past seven years and we feel good about the fact that we continue to offer attractive yield year after year.

Well looking back in 2011, it was a good year for us financially. We achieved earnings in the upper half of our earnings guidance range, we met our earnings goal for the seventh consecutive year, our stock price rose 17% hitting a 10 year high in January 2012. We delivered a total return of more than 22% and we raised your dividend by 3%. And we had strong momentum going into 2012 but it’s proving to be a challenging year beginning with the weather. After one of the warmest winters on record we reported first quarter earnings of $0.38 per share, compared with $0.42 per share in 2011.

We are not the only utility feeling the effects of a warm winter but fortunately we took steps to lessen the impact. We focused on reducing O&M expenses without compromising reliability or customer service. O&M expenses were flat for the quarter and we predict to stay that way for the remainder of the year. So assuming normal weather for the rest of the year we believe we will deliver earnings in the lower half of our guidance range of $1.75 to $1.85 per share.

On a positive note, we reached constructive outcomes with regulators across their service territories on various rate increase request. Most encouraging is the fact that regulators in Colorado agreed to a multiyear rate plan that will give customers more certainty to manage their energy bills in a tough economy. Our multiyear plan gives us more certainty too and we are going to pursue that across our other jurisdictions. Our goal is to maintain a regulatory compact that ensures fair recovery of our investments but also protects customers.

Let me tell you about our work with customers, over the past two decades we’ve helped them save the equivalent of 14 medium sized power plants. That makes us a national leader in energy conservation. Recently in fact ENERGY STAR recognized us with their highest honor customers appreciate having options to save money and to help the environment. Customers also benefit from a reliable energy system and we are making major investments to modernize our infrastructure.

In Texas and New Mexico we are investing about $1 billion over the next five years in transmission projects to ensure reliability and deliver wind power. On your chairs in fact is a reprint of an article that describes our Power for the Plains project and for those of you on the webcast the article is available on our website. Similar transmission efforts are underway in Minnesota and Colorado.

We are also investing in our generation site too as you saw in the video we just added a third unit to our Jones Station facility here in Texas. We brought it online a year ahead of schedule significantly under budget and in time to meet the record heat you experienced last summer. We are planning a fourth unit at Jones to meet electric demand in this part of the country, which as I said before is really thriving.

Planning ahead, meeting the day-to-day challenge and rising to the occasion to when disaster strikes illustrate operational excellence. I’m thinking in particular the wild fires that ravaged this part of the country last year, they did a lot of damage but we were able to restore our system quickly. Another example is last summers North Minneapolis tornado, which had a devastating impact on that part of the city but we had the power back in a very short amount of time, which is a tribute to the great work of our employees but also to the strength of our system. And frankly you don’t necessarily see that kind of recovery in other parts of the country.

Well customers have responded positively giving us a record satisfaction score of 93% in 2011 and we think that’s pretty hard to be.

Modernizing our system has environmental benefits too, because we’ve been proactive about reducing emissions and adding Renewable Energy, we’re ahead of the many Federal and State Environmental Regulations. In Minnesota, we replaced or upgraded three coal-fired plants to greatly reduce their emissions and increase their generating capacity. In Colorado, we have a similar plan to upgrade generating units and reduced emissions.

We’ve also made wise investments in Renewable Energy. Today Xcel Energy is the number one provider of wind power in the nation, and we’ve held that position for eight years. We’re fortunate to have excellent renewable resources across our service territory, and we took advantage of those resources early on. The steps we’ve taken put us in a stronger environmental position in many of our peers. Staying ahead of the game also provides real value to our customers and to our shareholders.

We keep our nuclear fleet strong for the same reason. Our Prairie Island and Monticello are clean, safe and reliable, and offer tremendous value. We’re making wise investments to keep them strong well into the future. Xcel Energy is just as communities we serve as we are to our customers and to the environment. We support our communities with grants from the Xcel Energy Foundation, with employee volunteerism, and with United Way funding.

United Way is a wonderful example of employee involvement. Last year, employees and retires pledged $2.76 million to United Way, which was a new record for us. The Company then match that dollar-for-dollar with $5.52 million going back into our local communities. That kind of commitment doesn’t go on recognize, part of the reason that Xcel Energy is once again on the Dow Jones Sustainability Index. Companies on the lists are considered to be best-in-class in economic environmental and social performance. I’m also extremely proud that Xcel Energy took the number two spot on a list of the 10 most trusted companies in America. That recognition came from Trust Across America an organization dedicated to understanding trustworthy business behavior. I think it’s attributed to our leadership and to our employees.

I’m going to wrap up my remarks with the few words about Xcel Energy’s employees. When I was CFO, I used to say our greatest asset wasn’t on balance sheet, because our employees were and it continued to be our greatest assets. After nine months of my new role, I believe that more than ever. I had the chance to meet many employees and see them in action whether they’re bringing the system back after a storm, or just focused on the day-to-day complexities of the day-to-day assignments.

They really are a impressive group and right now many of our employees are focused on finding productivity improvements, especially through technology, so promising effort and just one more example of a caliber people that work at Xcel Energy. So that’s the percent transition for introducing my leadership team. I did some reorganizing after becoming CEO to better reflect our priorities and I choose these folks to take a leadership role in our new organization. I like my team to stand as I introduce them and remain standing, and please hold your applause until everyone has been introduced.

In addition to Cathy Hart, Scott Wilensky, Teresa Madden, we have Mike Connelly, Senior Vice President, Strategy and Planning; Dennis Koehl, Senior Vice President and Chief Nuclear Officer; Kent Larson, Senior Vice President, Operations; Marvin McDaniel, Senior Vice President and Chief Administrative Officer; Roy Palmer, Senior Vice President, Public Policy and External Affairs; Jeff Savage, Vice President and Controller; Dave Sparby, Senior Vice President, Revenue Group; and George Tyson, Vice President and Treasurer.

I’d also like to introduce the four leaders of our operating companies. David Eves, President and CEO of Public Service Company of Colorado; Riley Hill, President and CEO of Southwestern Public Service; Judy Poferl, President and CEO of Northern States Power Company, Minnesota; Mark Stoering, President and CEO of Northern States Power Company, Wisconsin. Rest assured that all of us are working hard for years. Let’s give them a random applause.

I’d now like to open the meeting up for your questions. Before I do that, let me briefly review the procedure. Microphones are provided in the aisles. Please mute to one of them, so that everyone can hear your question. We’ll take one question per shareholder at a time. Please limit your question or your comments to three minutes.

Before we activate the microphones, let me ask that if you have any custom related questions, please see Michael Gersack, Vice President, Customer Care after the meeting; Darla Figoli, Vice President, Human Resources can answer any employee questions you have after the meeting. Frank Prager, Vice President, Environmental Policy and Services can answer any questions you have regarding environmental concerns after the meeting, and I see that they’ve already stood, so you know where they are. Also individual CD at the shareholder table or in the lobby and I can handle any additional shareholder services questions you have after the meeting. Please wait to be recognized. Let us know your name and whether you’re shareholder before you begin.

So with that, let’s get started and let’s get started with the shareholder of microphone one, yeah.

Question-and-Answer Session

Paul Harpole – Mayor, Amarillo

Hi, my name is Paul Harpole, I’m Mayor in Amarillo. I wish to first begin by welcoming the shareholders here today; the officers, the Board members to our City. We know you operator in eight states. But we’d ask you to come back here every year. We appreciate your participation and recognition of the value of our area to your company. And I would tell you that I have a question and it relates to community commitment and public commitment, and economic growth.

When I took obviously year-ago, I spent the first five days in office, I’ve spent three days in the Emergency Operations Center of the City, and stood next to people employed by Xcel as we thought backfire that surrounded our town, and we dealt with hardest, driest, windiest year on record in the City, forever and ever. Xcel stood by us and took care of our needs, adapted to the fires, follow the fire department throughout the City, made sure that we had service and needed it.

We were in critical points several times, where we’re going to loss water pressure because of pumping stations, because of electrical service being cut by fires. They responded every time. They gave us expertise, they gave yourself and they responded. They stood shoulder-to-shoulder with us as we dealt with those severe tragedies to people in this area.

And we really in the end, at last very little lights in the City of Amarillo property, we lost one house, we lost many outbuildings. But I would like to complement Xcel on the work they did in that. And then as we moved through that I was invited to go to Rodeo Roundup out at the training center, witness the safety commitment to the people that are employed by Xcel and was gratified to see that that was a top proprietary and was amazed to see the skill level of the people that were there.

As we’ve build through economic development in our town, they’ve supported us, and I’ve seen as work demographers are projecting, this city of grow 25,000 to 30,000 people in the next decade. Xcel’s, they are planning with our city to help, have services provided. Of course that means, we’ve got provided about 8,000 more jobs, and Xcel is there to help us with that too.

People involvement with Xcel is extraordinary. If I see the number of people involved with United Way boy scouts, girl scouts, all of the various search agencies and other things. It’s a credit to the Xcel leadership, which promote that. And I would hope that you’ll continue that kind of support for our area. While I know you’re a very, very large company, we feel you’re a home-grown company. We feel very personal with you and we’d like to continue that relationship.

So I hope you will continue that, and know that our city [very much] support to your effort and appreciates the partnerships that we’ve had, and we also as elected officials, understand our fiduciary responsibility and feel that you are looking at your side of that very carefully for your shareholders, and we’re looking at it for our customers, and we couldn’t have a better relationship. I complement you. I’ll ask you back next year or any time you like to come, and we appreciate and I would like to know about your further commitment to that economic development and commitment to growth in our area. Thank you

Benjamin G.S. Fowke III

Thanks for those comments, a very nice and with hospitality and like this I would not to want to come (inaudible) I can tell you that. But you’re absolutely right. We recognized that we are only a strong as the communities we serve and Amarillo was a wonderful community and you’re right, it’s growing as whole part of the countries growing that means as opportunities and the challenges are that we have to develop the infrastructure that goes with it. And we’re working with you to do just that.

As far as commitment to the communities, we’ve ramp that up. The example I would give with the community reps where we went and (inaudible) from eight to 13, and we’ll increase that as the need continues. And we talked about United Way. Well, a few years ago, we were contributing about $800,000 into the community. I think last year is about $2.3 million. So we’re here to stay. These assets aren’t going anywhere and you’ve got a dedicated workforce and I appreciate you support there. It’s very nice to have the support of local officials. Thank you.

Why don’t we move on to the shareholder at microphone two?

Unidentified Analyst

Thank you, Mr. Chairman. My name is [Bialla Keller], I’m a shareholder, I’m a customer. And I’ve been retired from SPS for 20 years. As a retiree, last month, I received an annual funding notice that the SPS pension plan. In it, I noticed that as of December 31, 2011, the plan was underfunded by $34,856,000, in regards to that, I have a three-part question. First of all, since December 31, 2011, has the plans been funded to the required level? Secondly, are all of the Xcel pension plans public services Colorado Northern States Power all underfunded or was it only the SPS pension plan? And lastly, I noticed in the annual notice it said that the plan, target, asset allocation is divided into certain percentages of four different categories, yet on the next page, it showed that the SPS pension plan was invested 100% in one category, to me, that’s like putting all your eggs in one basket, is that possibly the reason besides the bad economy that our pension plan was underfunded? I would appreciate your answering these three concerns.

Benjamin G.S. Fowke III

Let me see if I can remember that. First of all, we did make some additional contributions, very first of the year in January. And that brought the SPS plan up to a funding level of 96%. That’s under the Pension Protection Act calculation and I will tell you that if you look around that is probably represents one of the best well funded plans in the nation. It’s also one of the best-funded plans within the Xcel family of pension plans that you ask about. And we have been making contributions, and it’s built into our forecast to continue to make contributions to the pension plans in the tune of about $150 million to $200 million a year, that’s a commitment that we’re making. We’ll continue to do that the plans while they have suffered in the economic downturns, really all of our plans are well funded and above the minimum guidelines by quite a lot, and compare if you look at the funding levels compared to other plans in the industry, you should feel very comfortable and secure.

I think your last question maybe just a bit of a misunderstanding, we do greatly diversify the plans and SPS, because it’s one of the better-funded plans, we diversify that in the least risky, more into bonds and annuities and that sort of thing, because we’re already funded. All of the plans role up under a master trust, and I think that’s what you are maybe confused with we don’t put all our eggs in one basket and we stress tested and are very, very careful about what we invest in. Thank you.

Unidentified Analyst

Thank you very much.

Benjamin G.S. Fowke III

Very good question. Let’s recognize the shareholder at microphone three.

Unidentified Analyst

Thank you very much, Mr. Chairman. My name Leslie (inaudible) and I’m an Xcel shareholder and Xcel is indeed a really fine company, I work with a lot of the Xcel folks in Colorado, I’ve watched the progress there. And there is a huge amount to recommend in terms of what the company has done and the people you hire, but I’m interested in sort of the long-term view, I’m thinking about all those people working for you. What’s their retirement portfolio going to look like in 2030 and 2040 and 2050? And while I really want to honor everything that the company is done with respect to efficiency in renewable energy, leading the way in many ways for the utility industry. Sometimes I think a little bit about it like it’s kind of like a dieter who eats salad during the day but then before they go to bed, it’s like oops, there goes half a pan of brownies. So in the mean – while you’re also doing some really fabulous things, you’re also making very large investments in coal plants in Colorado about 900 million in the command sheet three.

Now about a third of a billion in the neighborhood $340 million, $350 million in pollution controls Ponni and Hadin, and as we lookout, there’s every good reason to believe that these investments are frankly going to become quite sower, coal cost going up 5% to 10% a year, coal plants going bankrupt in New York, coal plants being marked bald around the East Coast, because they just don’t really function anymore, coal plants are to the utility industry what typewriters are to every other industry, which is the technology of the last century.

So my question is, what is your structure, and I'm not really interested in sort of platitudes because as you know, I know a lot about your company I know a lot about your coal cost, I know a about the buoyed study on coal. If the directors if the management starts to talk about the buoyed coal study, please read our comments in the Colorado resource plan, there’s a lot of hand waving and a lot of magical thinking, if you allow the hand waving and the magical thinking, then the buoyed study says you will have coal supply for 30 years. Problem is of course, that command sheet is almost a 50 year, we got 58 years left on it and that hand waving and magical thinking is very, very serious.

And I encourage you to ask some very strong questions from the board, really those coal investments that are likely even given that coal is (inaudible) at this point, when you look at the heat wave and the fires earnings out that happened in Texas, it's uncontainable to continue and invest, because we know this is precisely what we’re doing to the planet. We’re warming it. We’re increasing summer temperatures. We’re increasing winter temperatures. We’re increasing extreme weather. So my question is what’s your structure for assessing long-term risks and particularly, those large investments in coal plants even likely to become underwater in coal plants, you’re going to owe much more than they are worse, I encourage the Board of Directors, Mr. Corrigan, Ms. Boudreaux, Mr. Davis, Mr. Moreno, on and on Mr. Westerlund, Mr. Wolf look into AEIC’s journey and then please ask some really hard questions, because you have a lot of employees and a lot of shareholders that are depending on you, thinking not just about the next quarter or the next year or even the next decade, but where you’re going to be in 2030 and 2040 and what’s going to happen to those coal investments that you’re supposed to be paying off at that time?

Benjamin G.S. Fowke III

I’m going to answer your question I think we have a very robust risk management and assessment process. We do it internally, continuously. And then in our August strategic retreat, risk is one of the topics we talk about. Then I think you have to recognize that there’s a lot of different factors that go into a risk assessment and as you know, the custom that we are moving away from coal as our predominant energy source, I think when we are by 2020, it will be about 42% of our energy mix versus 50% today, versus 58% just a few years ago. So we are making strides, but they’re going to be measured strides, and coal will be with us as part of our resource planning for a while, because we have other risks that we have to assess to, rising cost of customers, fuel diversity balance, reliability issues and we have to put all that together and I think we do a pretty job of it.

I do appreciate your comments, and I appreciate you acknowledging that we have made some pretty good environmental calls and I can tell you that the coal plants that we do have will be more efficient that we modernize and they will emit less particularly it matters in any other things that we’re seeing in EPA regulations coming up. And I am very proud of the fact that we did these things before environmental regulations came into place, we did in a volunteer base in Minnesota that’s given us a lot of cushion in reserve margin now that we can, we don’t have to shutter coal plants immediately and worry about reliability consequences later. I think we’ve been proactive and it’s a good strategy. And I give credit to the board for participating very actively in those discussions. Thanks for your comment. Let's move to shareholder in microphone one.

Carla J. Sonntag – New Mexico Utility Shareholders Alliance

Good morning. My name is Carla Sonntag, I am a shareholder, I am also the Executive Director of the New Mexico Utility Shareholders Alliance. I really don’t have a question for you; I just want to hear the perspective of our group in the Mexico. I want to tell you that we are very happy with Xcel Energy, we appreciate your environmental stewardship, reliable service and shareholder value, the balance that you find between those three as you managed the company. I’d also like to share with you, I work a lot with the public regulatory commission and the state legislature, your staff into Mexico is very well respected. And those that come from Texas as well. Your company in general, but your staff is looked upon as one with high integrity, always honest and very hardworking.

In New Mexico, we find them have a very pro business governor. We see the potential for growth more in your service areas than any others and we hope that means that we will have even a greater presence of Xcel Energy through Southwestern Public Service in New Mexico? Thank you.

Benjamin G.S. Fowke III

Well, thanks. It’s great to hear that you think we’re trustworthy source of information, because in this era of misinformation that’s extremely important and parts of New Mexico are just growing incredibly fast so we’ll be there and we appreciate your support. Thank you. So I recognize the shareholder at microphone two.

Unidentified Analyst

Hi, my name is [Diana Best] I’m not a shareholder at least not yet. I’m a guest here, and I’m really pleased to be here so thanks for having me. I have another question about risk but right now there are six different proposals under consideration in the Pacific Northwest to start shipping up to 157 million tons of Powder River Basin coal through the Pacific Northwest oversees, two markets that are currently, and showing that they are willing to pay higher prices for coal than we are here.

So I’m just curious, has Xcel done any analysis on what the economic impacts will be, what the increased cost of coal could be in this country, and any coal supply constraints that Xcel might say, if those proposals go through?

Benjamin G.S. Fowke III

Thank you for your question, and we do look at that, and we do study the availability of coal, and coal is abundant in the United States. You’re seeing prices starting to fall after they did rise, as [delinquent] to transportation over the last few years. But as the demand for coal goes down, I mean that has an impact on pricing.

So I don't know all the particulars of what drives coal producers to ship over to Asia, but I can tell you it’s probably because all energy over in Asia tends to be more expensive. And that cost of transport probably overcomes the higher water content that Powder River Basin has.

So I’d say, the cure for high prices is high prices, the cure for low prices is low prices. And things move around, but you can’t get away from the fact that the supply is abundant, and I really think it's been a stable resource, and not very volatile compared to fuel sources.

So again I think the shareholder upset, we learned everything we need to know, sometimes, by the time we were in first grade, and don't put all your eggs in one basket, that’s not what Xcel Energy does, either when it plans its energy mix, thank you. Shareholder at microphone three, please?

Unidentified Analyst

Hi, I’m Geno Hardin, and I'm a shareholder and a rate payer. I hail from Texas and live in Colorado. So in this meeting, I have heard from Mr. Fowke about wildfires, tornadoes, record warm winter from the mayor, I heard the hottest, driest, windiest year in this city ever. I heard severe tragedy, I‘ve driven 16 hours in 24 hours because I’m very concerned about Xcel’s continued investments in coal plants. And while, yes you have been making some of these investments to minimize the particular matter.

Those investments and pollution control have no impact whatsoever on climate change, global warming gases. I have family in Texas who are farmers in West Texas, they’ve been farming for the last 100 years.

Here, last year despite the fact that their – the (inaudible) went down by like 6 feet in irrigation, attempting to overcome the drought and hot weather, they made no cotton crop. Then in Houston where I also farm, they’ve lost huge numbers of trees because of the drought and the heat.

In South Texas where my family ranches they and the rest of their neighbors and for 100s of miles around had to sell cattle storage because they couldn't afford to feed them with the drought, and the rise in the rising cost of grain, and the lack of rain that the cattle could feed on their own grass.

In Colorado, I just – where I’ve just come from, we have the ski areas opened late, they closed by three weeks early, we have the lowest snow quantity, I don’t know in many years very, very…

Benjamin G.S. Fowke III

Last year it was pretty good, I enjoyed some of that snow last year.

Unidentified Analyst

That's right, and that’s the thing about climate changes. It’s very variable but the variabilities are greater and greater. There is more record, as the mayor said …

Benjamin G.S. Fowke III

We are starting to run short of time, do you have a question or can we…

Unidentified Analyst

No, I’m making a comment, I thought this was questions and comments. And so…

Benjamin G.S. Fowke III

Your three minutes is up, so just try to wrap it up please?

Unidentified Analyst

Okay. Given that you have now, your shareholders are getting a 22% return on their investment, perhaps it's a great time to indeed be leaders. I was involved in the Colorado Energy efficient cases, and as yes you have done things, well but you have been pushed, kicking and screaming into those position, so thank you very much.

Benjamin G.S. Fowke III

I appreciate your comments, thank you. The shareholder with microphone one, please?

Unidentified Analyst

Thank you. Good morning and welcome to Amarillo, my name is [Wendy Philp] and I am an Xcel shareholder. We know that low natural gas prices coupled with congress’s inaction to extend the production tax credit could hamper new wind development in the region here. And I’d like to know your position on adding new wind to your resource mix, and if you think that wind will remain a viable resource option?

Benjamin G.S. Fowke III

That’s a great question, and the economic – well first of all, let me just tell you, we have 700 megawatts of wind under contract here in Amarillo. And about 4100 megawatts of wind throughout all our states, we talked a little bit about it, low natural gas prices really crowd out all technologies from an economic standpoint.

And that includes frankly wind, which is basically been a very good economic resource for us competing, I think on equal terms with natural gas. But with natural gas at $2 and below, I can tell you if it stays that way, and if we don't have a production tax credit, wind technologies will be significantly out of the money. And I think would be hard-pressed to add wind in the next couple of years with natural gas prices like that now.

That said, we all know that things go up and things go down; and so a good diverse fuel mix is always a good way to look at it. And that's really the approach we’ve been taking. But all things equal, it does make it hard to justify economically. Thank you, that's a great question. Shareholder with microphone two, please?

Unidentified Analyst

Thank you, Mr. Chairman. My name is [Ross Buzard], and I’m here on behalf of Mr. Gerald Armstrong, a shareholder. And he had a few questions that he’d like to…

Benjamin G.S. Fowke III

Let’s just start with one if you could, because we’re bad out of time.

Unidentified Analyst

Okay. I’ll put one forth, and then I’ll let someone else have it (inaudible). That question is, after Mr. Armstrong heard you state in last year's meeting that there was no money in the budget to retire shares of stock, the Board of Directors decided to retire preferred shares at a time when the dividend of the common shares was significantly more than the preferred shares, granted the preferred share owners voted against the amendment to repeal cumulative voting, but from a governance point of view how this is this justified?

Benjamin G.S. Fowke III

Okay. Let me answer that question, I think Mr. Armstrong misheard, there is three reasons why we retired the preferred. The first is that, we could replace the preferred with lower cost debt, and save shareholders and customers’ money about 100 basis points.

Now the second reason, and this is very important is that, in discussion with the credit rating agencies that transaction, the retirement of those preferred shares would be credit neutral. That's really important, that's what I’ve talked to Mr. Armstrong about in the past, if we went on a major stock buyback program, raise debt to buyback shares. Our investment credit ratings for our debt would be in severe jeopardy.

And when you look at our spending about $13.5 million over the next five years, investment grade rating is very important; I think we all found out how important that is with the credit crisis of a few years ago.

So that's why you could do the preferred stock, we’ve always had good access to capital, but you can’t use that capital to erode credit quality, and that’s – I think that’s the point that Mr. Armstrong misses.

And the final thing is, is frankly the common shareholders last year voted to eliminate cumulative voting. I know Mr. Armstrong doesn't like that, but the 70% of the common shareholders were supportive of it as they are this year.

So you had a very small class of security that blocked that from having it, I don't think that's very good governance, so when you can do it credit neutral and you can do it and save customers’ money and shareholders’ money, that’s a slam-dunk the way I see it. Thank you. Go ahead?

Unidentified Analyst

Excuse me, just a follow up on that, I think his concern was that the dividend prices or dividend pay out of common stock was higher at the time than the preferred shares, so his question would be why preferred stock, not common stock when that would save more money?

Benjamin G.S. Fowke III

Again it’s a second point, the credit neutrality of it. So thank you for your question. We probably only have time for one more question, let me go to the shareholder microphone three?

Beth Duke – Center City-Amarillo, Inc.

Thank you so much. My name is Beth Duke, I’m not a shareholder, but I'm Executive Director of Center City of Amarillo. I want join (inaudible) on welcoming you to Amarillo, and particularly it’s a Center City, I wanted to thank you for all the commitment your employees and Xcel team, nothing good in Amarillo happens without you, I want to say I have…

Benjamin G.S. Fowke III

It’s a great city…

Beth Duke – Center City-Amarillo, Inc.

It is a great city. I got to say, I believe with the first, he can correct me of course. The thing is that first week David was here, he was out praising, judging the Electric Light Parade that you sponsor. Riley is behind every good thing we do. You can look around it, our Block Party and that we cannot do it, Tony Milam serves on our board, David. I could go on and on, Wes Reeves, a leader in our historic preservations. I want to thank you so much for what you do because you’re behind our quality of life, more than you know. I guess, you could say you empower it, but I’d like to ask you, as far the question what do you see as a future of Xcel’s efforts. I’m not going to ask about economic development in particular, but particularly for me in the revitalization of our inner cities in our down town that are so historic.

Benjamin G.S. Fowke III

Well, I mean again, supporting the community as you mentioned. It’s really a hallmark of who we are and that’s what we like to do. I mean I am so impressed with the voluntarism of our employees. I mean it’s easy to write a check, but it’s and that’s a great thing. I am not knocking, and our employees do that, but then to volunteer, that’s amazing. And you saw some of that in the video. I mean we’re going to focus on that, but then I think the big picture is, I said it before. We have to make sure that when you put the snap the light switch, and those lights stay on and take it for granted. Because I can tell you we don’t take it for granted. There is a lot of work that we have to do to meet this growing economy here in and we’re positioned to do it and with your help we’ll get it done and reward shareholders, and take care of customers at the same time. So really appreciate the support and I really appreciate the hospitality that Amarillo has granted us, and we thank you. Thank you. And I do…

Unidentified Analyst

Real quick again, real quick question. I’m [Bill Kenyan] long-term shareholder from Clovis, New Mexico. We’re glad you’re here. The question is as the cost of solar technologies comes down, do you see more development of solar resources in New Mexico. We have got a lot of sun over there. Thank you.

C. Riley Hill

They do. And in fact I think last year as we contracted for 50 megawatts of solar in Eddy and Lea County, if I’m not mistaken. And solar tech costs, solar has come down. Again as I said before, natural gas is making every other technology tough to compete with right now. But thank you.

So with that, I am just going to conclude, we probably need to get going. I am going to conclude just thanking you for your support, it’s great to be here. I want to remind you that on your seats we have a corporate responsibility report that I am really proud of. It’s really shows I think the true commitment that we have to multiple interests, the environment, community, and customers and the shareholders. So I encourage you to take that and please have a safe trip home. Thank you.

Unidentified Company Representative

Question, but I do have a statement that I would like to make. And as a retired director, I want all of you to know that Ben has not asked me to make this statement. But we’ve heard some great success stories today and we know that those success stories did not happen just because of luck. They happened because of Ben Fowke and his management team and the board. They executed their strategy and they make good decisions. And Ben you have taken this company and made it a gold standard for the utility world. And on behalf of the all the shareholders, I think we need to show our appreciation to you with a round of applause.

Benjamin G.S. Fowke III

Well, thank you [Tony]. It takes a village and I have a great team. Thank you. Thanks.

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