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Xcel reports $1.7B in income, customers' bills don't benefit

Xcel made more in 2022 than in 2021.

DENVER — Since we're all suffering from higher energy bills, it is safe to reason that Xcel Energy as a company is hurting a little too, right?

The company held an investor call on Thursday morning, which revealed just how much Xcel made in 2022.

"We had another very successful year at Xcel Energy," Xcel Chief Executive Officer Bob Frenzel said on the call.

The 2022 net income was $1.736 billion. That's an increase over the 2021 net income of $1.597 billion.

Multiple Next with Kyle Clark viewers have emailed wanting to know about Xcel executive salaries, suggesting they could be lowered to give customers a break on rising bills.

Executive compensation is a public record as part of the proxy statement Xcel files with the Securities and Exchange Commission. The most recent proxy statement was filed in April, showing compensation from 2021 and earlier.

Frenzel took over as CEO in August 2021. He received $8.3 million in total compensation in 2021, with a base salary of $931,424.

The executive vice president and chief financial officer earned $2.9 million total and $650,000 from salary in 2021.

The previous CEO, Ben Fowke, who retired in 2021, earned $12.7 million with $1.35 million from salary.

Salary is where viewers could argue, "Hey, take less money and give us relief on our bills."

"It's the same argument you could make to people at Walmart. You could say, instead of passing on these higher costs that you're incurring because the goods that you're selling at Walmart are going up in cost, instead of increasing those prices to me, why don't you just keep the price to me the same and reduce the CEO's compensation or executive compensation?" said University of Denver Finance Professor Mac Clouse.

"It could be done in Xcel's case as well, but Xcel has a little bit of a different case because they're allowed to earn a rate of return because of the regulation, as opposed to Walmart, which is in a competitive industry. And the return they earn is whatever they earn as a result of their performance."

Part of the charges on an Xcel customer bill include built in profit for the company.

For example, Xcel is seeking an electric rate increase to start in September. That rate increase request includes a 10.25% ROE, or return on equity.

What is return on equity?

"It's profit divided by the shareholder equity investment," Clouse said. "Let's suppose you have invested in an opportunity, and you invested $100, and you say, 'I'd really like to earn 10%  on my investment.' Well, if the firm, then, earned $10 on your $1 investment, then they've earned a 10% return for you on your investment."

Based on the Xcel year-end earnings report presentation, Xcel earned an ROE of 10.76% companywide, but only 8.23% in Colorado.

"Xcel does need equity investors. Like any other organization, you can finance with debt or equity, and to attract equity investors, you need to be able to provide them a rate of return, otherwise equity investors will disappear and the financing for Xcel disappears."

The presentation also revealed that Xcel wants to convert the Comanche 3 Coal Plant in Pueblo into an energy storage facility. That conversion would likely be at the expense of ratepayers, built into a rate increase request from Xcel.

In the meantime, Xcel is seeking a rate reduction for ratepayers because the company paid less for natural gas than it expected. Xcel is requesting the rate to be decreased for bills from Feb. 1 through Mar. 31.

The GCA (gas cost adjustment) on an average residential bill will be reduced $17.79 from what it would have otherwise been.

The Public Utilities Commission has not yet approved this request, but could do so next week.

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