Participants

Roopesh Aggarwal; Vice President - Investor Relations; Xcel Energy Inc

Robert Frenzel; Chairman of the Board, President, Chief Executive Officer; Xcel Energy Inc

Brian Van Abel; Chief Financial Officer, Executive Vice President; Xcel Energy Inc

Nicholas Campanella; Analyst; Barclays

Julien Dumoulin-Smith; Analyst; Jefferies

Carly Davenport; Analyst; Goldman Sachs

Durgesh Chopra; Analyst; Evercore ISI

Jeremy Tonet; Analyst; J.P. Morgan

David Arcaro; Analyst; Morgan Stanley

Anthony Crowdell; Analyst; Mizuho Securities

Ryan Levine; Analyst; Citi

Travis Miller; Analyst; Morningstar

Presentation

Operator

Hello and welcome to Xcel Energy first quarter 2025 earnings conference call. My name is Melissa, and I will be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be on listen-only. (Operator Instructions)
I'll now turn the call over to Roopesh Aggarwal, Vice President, Investor Relations. Please go ahead.

Roopesh Aggarwal

Good morning and welcome to Xcel Energy's 2025 first quarter earnings call. Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer, and Brian Van Abel, Executive Vice President, and Chief Financial Officer. In addition, we have other members of the management team in the room to answer your questions if needed.
This morning we will review our 2025 first quarter results and highlights. Provide updated 2025 assumptions and share recent business and regulatory updates. Slides that accompany today's call are available on our website.
Some comments during today's call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and SEC filings. Today we will discuss certain metrics that are non-GAAP measures. Information on the comparable GAAP measures and reconciliations are included in our earnings release. I will now turn the call over to Bob.

Robert Frenzel

Thanks, Roopesh. Good morning, everybody. Xcel Energy, we know that economic growth and prosperity of our communities and country depends on our ability to deliver energy to our customers when and where they need it. While keeping their bills as low as possible. This commitment to our communities and customers is demonstrated in our results this morning.
In the first quarter of 2025, Xcel Energy delivered earnings of $0.84 per share. Invested $2.3 billion in resilient and reliable energy infrastructure for our customers. And accelerated our wildfire risk reduction efforts to enable safer and more resilient communities.
I'll provide more details in a minute, but based on our results for the first quarter, we remain confident in our ability to deliver on our earnings guidance for the 21 years in a row, one of the best track records in the industry.
As you can imagine over the past several months we've been engaging at the federal level with legislators and administration officials as executive orders, trade and tariff actions, and pending legislation will likely have impacts on future energy infrastructure. Not surprising to anyone on this call, we're in an unprecedented period of electric demand growth and believe that we need a broad scope of energy resources to meet those needs.
We see increased electric demand from the oil and gas sector. We see demand from residential customer growth, EV adoption, and beneficial electrification across our service territories. We see demand from data centres in Texas, Colorado, Wisconsin, and Minnesota.
In the medium term, we expect to see continued trends towards electrification as well as re onshoring as potential outcome of federal actions. The infrastructure to serve this demand growth needs to be thoughtfully planned as well.
We and many in our industry have been advocating in DC for policies that allow for cost effective and rapid adoption of new energy resources, that includes preservation of tech neutral tax credits, wind, solar storage, and nuclear. Their associated transferability provisions and various loan and grant programs. That includes advocating for sighting, permitting, and other federal actions that would allow for more rapid construction of the assets needed to serve this growing demand.
And that includes advocating for federal actions that can mitigate the potential for wildfires and their associated financial impacts. Additionally, we're paying close attention to ongoing tariffs and other recent federal actions.
As you are all aware, this remains a highly fluid situation. Potentially positively changing as recently as yesterday. On the front, we believe that our base capital plan remains intact, that the impacts are both modest and manageable.
While we're still evaluating, we estimate that roughly 40% to 45% of our capital expenditures are material based with the balance being labour permitting, and other items. And of this percentage, the majority is domestically sourced. There are some notable exceptions though, in particular, our industry has exposure to Chinese tariffs related to battery storage.
In our base capital plan, we only have one significant battery project, which we continue to work to mitigate any risks. But in our longer-term plans, we see a need for more battery and other related energy storage assets.
Based on these recent tariff actions, we expect a relatively rapid evolution of the battery supply chain similar to what we've experienced in solar panels over the last three to four years. We estimate that our total tariff exposure on our $45 billion base capital plan for 2025 to 2029 is approximately 2% to 3%.
And that's before we work through any incremental vendor mitigation actions. We remain confident in our ability to navigate this evolving environment and keep delivering for our customers and investors. We see incredible energy and demand needs across the country.
In total, Xcel Energy anticipates that we will need to deliver between 15 megawatts and 29,000 megawatts of new generation by year end 2031 to serve our customers and communities. During the first quarter, we continue to make progress on --with our various commissions on these needs, which also helps give line of sight to our $10 billion plus incremental investment pipeline.
In February, the Minnesota PUC approved our integrated resource plan settlement for nearly 5,000 megawatts of generation. Included are 720 megawatts of company owned natural gas generation and battery storage and approximately 2,800 megawatts of wind generation which will reuse the transmission interconnect from our Sherco facility.
RFPs for resources that make up the balance of the IRP will work their way through regulatory processes in '25 and '26. Details of which are included in our disclosures and in the attached presentation.
In Texas and New Mexico, our teams continue to evaluate proposals for generation to meet growing demand. As a reminder, we're seeking 5000 megawatts to 10,000 megawatts through a competitive RFP process, including projects being proposed by the company. We're encouraged by the early results and plan to make a recommended filing in Q2.
And in Colorado, we continue to make progress with our energy resource plan filing that we made in October of last year. We're recommending the addition of 5,000 megawatts to 14,000 megawatts of new generation to meet projected sales growth of 3% to 7% per year. The commission decision is expected in the fall of this year.
As part of these resource planning processes, I've been asked to comment on the impacts of recent executive orders on coal plants. Our generation retirement strategy is the product of long-term planning process with state commissions and other stakeholders that seeks to balance energy demand with long-term assets that we need for our customers.
With access to some of the country's best wind and solar resources, as well as incremental natural gas generation, we've demonstrated that we can retire these inefficient and aging coal plants while ensuring reliability and keeping customer bills low. Continue to evaluate the executive orders and work with federal and state agencies as well as our communities and customers on any next steps.
Alongside our access to some of the country's lowest cost renewable resources, our thoughtful investments and focus on continuous improvement. Have helped keep our residential electric bill growth below the rate of inflation for the past decade and among the lowest in the country.
As we continue to grow, the tech neutral and nuclear PTCs have also proven a critical tool for customer affordability. Since 2018, Xcel Energy customers have saved over $5 billion in avoided fuel costs and PTCs from wind generation.
And this year our upper Midwest customers will see an additional benefit of nearly $250 million on their bills from nuclear production tax credits. Continue to actively engage with elected officials in the US House and Senate and key agencies such as DOE to reinforce the critical importance that these incentives play in keeping bills low for our residential and business customers.
We believe that policymakers are aligned in the belief that lowering energy costs for Americans is a key policy objective. We continue to remind them these incentives play an important role in helping us meet that objective.
Xcel Energy also continues to make significant progress to protect our customers and communities and systems from the threats of extreme weather. On the regulatory front in Colorado, we reached a constructive settlement on our updated $1.9 billion wildfire mitigation plan, including a securitization mechanism to manage customer bill impact.
In Texas, we also reached a constructive settlement on our $500 million system resiliency plan. We expect commission decisions in both proceedings by third quarter 2025 and we will continue to prioritize these investments to improve resiliency and reduce risk on our systems.
And on the policy front, we've seen progress with several pieces of constructive wildfire legislation. In Texas, legislation was introduced where material compliance with an approved wildfire mitigation plan provides an affirmative defence to civil liability related to wildfire damage.
In North Dakota, legislation that provides a utility similar protection was passed by both chambers and awaits the governor's signature. We believe these bills could also serve as frameworks in our other states for future legislation.
Looking forward, our focus for 2025 remains unchanged. Excel Energy is working to deliver on our earnings for the 21 year in a row to capture the unprecedented opportunities for growth we laid out in our capital plans, to deliver on our incremental capital opportunities backlog advance our clean energy leadership and raise the bar on delivering a compelling experience for our customers in order to make energy work better for them in the communities we serve. With that, let me turn over to Brian.

Brian Van Abel

Thanks, Bob. Good morning, everyone. Starting with our financial results, Xcel Energy had earnings of $0.84 per share for the first quarter of 2025 compared to earnings of $0.88 per share in the first quarter of 2024. The most significant earnings drivers of the quarter include the following.
Electric and natural gas sales growth and regulatory outcomes increased earnings by $0.21 per share. Other items combined to increase earnings by $0.01 per share. Offsetting these positive drivers.
Higher O&M expenses decrease earnings by $0.11 per share, higher depreciation, and amortization, reflecting our capital investment programs, decreased earnings by $0.09 per share. And higher interest expense decrease earnings by $0.06 per share.
Now let me comment quick in more detail on O&M expenses for the first quarter, which totalled $686 million or $81 million higher than in 2024. We expected O&M expenses to be front loaded this year with the increase due to known items such as higher nuclear outage amortization costs, increased insurance premiums, benefit costs, and the impact of a 2024 gain on land sale.
Some of the increased wildfire related expenses are subject to regulatory decisions later this year. These results are in line with our year-to-date O&M expense budget, and we reaffirm our full year guidance of a 3% increase in O&M expenses relative to 2024.
Turning into sales, first quarter weather and leap year adjusted electric sales increased 2%, driven by growth across most operating companies and customer segments. For 2025, we continue to expect full year weather adjusted electric sales to increase 3%.
As the current tariff and economic outlook evolves, we will continue to monitor any potential impacts to our sales outlook. Shifting to rate case activity. In Wisconsin we filed our 2026 to 2027 electric and natural gas ray cases requesting a total revenue increase of $151 million and $24 million respectively over two years.
That's based on a forward test here, a 10% ROE and an equity ratio of 53.5%. We're evaluating filing electric and natural gas ray cases in Colorado and an electric ray case in New Mexico later this year. Moving to data centres, we're making solid progress on our high probability pipeline and remain on track to meet our goal of contracting our total base plan by this fall.
Excel Energy continues to receive requests for new data centres in its service territories. We are managing a robust pipeline and remain committed to our data centre contract principles, ensuring new contracts maximize benefits to all customers and protect Xcel Energy from stranded asset risk.
We also continue to make strong progress in the Smokehouse Creek Wildfire claims process. We've resolved 151 of the 225 submitted claims, which we continue to view as constructive. We have committed $113 million in settlement agreements, of which $79 million have been paid through Q1.
Based on current information and settlement activity, we have updated the low end of our estimated liability to $290 million which remains well below our insurance of $500 million as we described in our earnings disclosure.
As part of the increase, we have reached settlements related to some previously excluded categories such as compensation for railroad claims and settled claims related to tree damage. We've also updated our disclosures in Marshall, in particular, as it relates to two new causation theories introduced by plaintiffs and expert reports that were submitted in the first quarter of 2025. We remain an expert discovery until mid-July and are preparing for a trial in late September.
Moving to guidance, we remain confident and reaffirm our ability to deliver earnings within our $3.75 to $3.85 guidance range for the year. Updates to key assumptions are included in our slides and earnings release. With that, I'll wrap up with a quick summary.
Xcel Energy Pulse at first quarter 2025 earnings of $0.84 per share. We continue to lead the clean energy transition while ensuring safe, clean, and reliable service and keeping customer bills as low as possible. We're focused on reducing operating risk in our system from extreme weather, resettlements of our Texas and Colorado resiliency and wildfire mitigation plans, to see progress on constructive legislation in Texas and North Dakota.
We have a strong line of sight with our 10 plus billion dollars investment pipeline with approval for at least 5,000 megawatts of generation resources in Minnesota and awards for $3 billion to $4 billion of transmission in MISO and SPP.
We continue to maintain a strong balance sheet and credit metrics using a balance of debt and equity to fund the creative growth. And finally we reaffirm our 2025 EPS guidance of $3.75 to $3.85. This concludes our prepared remarks, operator, we will now take questions.

Question and Answer Session

Operator

Thank you. (Operator Instructions) Nicholas Campanella, Barclays. Please go ahead.

Nicholas Campanella

Hey, thanks so much for taking the questions.

Robert Frenzel

Good morning, Nick.

Nicholas Campanella

Morning, morning. I wanted to ask, I appreciate all your comments and the prepared remarks. You are kind of a big transferability beneficiary. We're going through budget reconciliations right now, if there's any kind of outcome where the tax credits get sunsetted sooner within your five-year plan, how do you kind of think about the offsets to cash flow considering, there might be a. A positive attribution to rate base as well. Do you still see like some type of true cash impact and maybe you can kind of walk through how the plan could absorb that.

Robert Frenzel

Hey Nick, it's Bob, and I'll start and then I'll give Brian some time to get to some of the details. But there's been a lot of conversation around transferability in general, at least in the investor community, not actually a lot in DC and I've spent a lot of time there.
Transferability was architected as part of the IRA. We think it's --explicably linked to the credit program themselves. We know there's a lot of support, as evidenced by letters that Congress and the Senate have written to their respective finance and ways and means committees around support for continuation of the credits in some fashion and form.
And by that measure, we think the transferability continues along with those credits. So as I see here today, I think very positively about the credits that come from our legacy projects that are in service, projects that we've safe harboured, and then depending on where the credits go in general, I think the transferability stays aligned with those credit profiles over time. But may I'll let Brian comment a little bit on some of the details you asked on. Rate base and or cash flow implications.

Brian Van Abel

Yeah, Nick, and maybe I'll talk about it in two different avenues and feel free to ask further questions if I don't hit on exactly what you're thinking about. No, I think about it one is there's been a lot of discussion around the bill introduced by Representative Fedorczuk in terms of, but when you actually look at what that bill does, it doesn't impact transferability on any projects and service. And it doesn't impact transferability on projects that would have been safe harbour last year under the old regime of tax credits.
So when we think about it in terms of what we safe harbour last year for projects, we're in a really good spot basically through 2028 when you look at the four-year safe harbour with projects last year. And so we would expect those to have credits and transferability associated with them.
So really the door check bill would be a 2029. Impact, but how it steps down, it's a 20% credit in 2029. Now, certainly we're not advocating for that bill because there's significant long term customer impacts, but from a transferability perspective in our cash flow perspective, we are very comfortable with that in terms of how it deals with prior wind farms and what would have been safe harbour last year in the old regime.
Now your question I get is a little bit more what happened if transfer really went away for all projects, even in service or future projects. We do not believe, as Bob said, that will happen. Congress generally does not disturb decisions that have been made by businesses.
They recognize the need for business certainty. But if that did happen, pick a point. You hit it on the head right rate base goes up because you're less tax efficient. We have an impact to our cash flow, so you would look at, issuing some equity to manage some of those credit impacts. But longer term it just becomes a timing issue where you're pushing those cash flows out in the future.
But there's also alternative ways you could look at tax equity in the re regulated environment, but one of the more interesting concepts, and we do this in one of our jurisdictions, is you can flow PGCs back in an alternative method.
Now everyone thinks about PGCs being flowed back over the 10-year period as they generated. In one of our jurisdictions we've flown back over the life of the project. So pick a wind farm 30 years, flown back over 30 years. That improves your cash flow in the near term, reduces the tax and efficiency and also provides a pretty stable customer profile from bill impacts.
So there's absolutely things that we think of internally that that may not be understood externally and we think about how do we manage if that scenario, like I said, we don't expect will happen, but how we'd manage if it did happen.

Nicholas Campanella

That's really helpful call. I appreciate that. Thank you. Just one quick question just the broader kind of tariff outlook and how it's affecting economic development in your service territory, your CNI sales that you guys put up on a weather adjusted basis still seems strong. I know that's at the end of March, maybe you can kind of comment on how activity has changed in the service territory at all in real time and clearly, you're kind of reaffirming your load outlook here. So it seems like you're comfortable, but yeah, maybe just a few more details there.

Robert Frenzel

Thanks. Yeah, hey, Nick, let me start. Look, definitely the sentiment meter has changed over the last, 45 days. I don't think we've seen a lot of change in actual activity yet, either on the consumer or the CNI side, but what you see in here in this earnings season from a lot of people who've already announced, whether it's banks or industrial manufacturers, there's a thoughtfulness around deploying capital right now, a thoughtfulness about the certainty of the regime that we sit in.
And there is a lot of conversation and maybe sparked over the last couple two or three days around, how quickly could this environment change as well. We saw it hit very quickly. We've seen some peel back already. You've seen the market respond to that already and so, we use the word in our prepared remarks of dynamic or fluid, and I continue to believe that, we don't see a lot of impacts right now in the customer, but we're cautiously optimistic that we work through this through the balance of the year and obviously we've reiterated our guidance and sales forecasts accordingly.

Brian Van Abel

Yeah, Nick, I can just try a little bit of extra colour on it too. Obviously one of the areas when you think about where the price of oil has gone, and we serve the Delaware Basin, the most prolific basin, so but we've been in contact with our large oil and gas customers in terms of expectations there, and they haven't changed.
Well, a little bit of feedback we got though as they're watching tariffs and how that could impact their business, but so far we haven't seen that impact on us, our sales to that mining and transportation sector we're up 9% quarter year over year, so sly down on SBS. We're still seeing it there.
One area we saw a little bit of weakness in March was just in Colorado on the small CNI sales, but again, one month doesn't make a trend. So just something that we're watching. But overall right now we sit here feeling comfortable with reaffirming our 3% sales growth for the year.

Nicholas Campanella

Thank you.

Operator

Thank you. Julien Dumoulin-Smith, Jefferies. Please go ahead.

Julien Dumoulin-Smith

Hey, good morning team. Thank you, guys, very much. I appreciate it. But look, if I could follow up on Nick's question, it's really been a focus from a lot of folks on this transferability stuff just to go back to the, should we say, alternative that you were talking to a second ago about the 30-year flowback.
I mean, would that suffice in most of your case I get everything is discrete and specific, but do you see that sort of meaningfully offsetting the equity risk scenario here that could emerge, from going back to shall we say the prior regime. I just want to make sure I understand kind of the total impact of what you're contemplating there as well as just to clarify your specific [doc]. I know there's several different credits here and you know the eligibility for various credits to qualify for transability it could be bifurcated it seems like you can speak to that a little bit too.

Brian Van Abel

Yeah, Julien, let me first, let me again reiterate that we don't expect transferability to go away, particularly for projects that are in service and for the stuff that have already been safe harboured, particularly under the old regime as we think about it when the credits change from old regime to tech neutral this year. But yeah, that an alternative mechanism significantly reduces our equity impacts.
We also have to remember that or how we think about financing it. We also have to remember this drives rate base goes up too when you're have tax inefficiency. So, but as we think about this alternative fallback mechanism, obviously we'd work with our regulators on approval of it, but it is what we think about a very good solution in terms of how to manage some of the credit impacts and another I'd say we have a strong balance sheet.
We maintain a strong balance sheet for a reason, if you have to manage through any of these impacts, it's a timing issue when you think about this in terms of when you can monetize it. So overall I wanted to find some colour on scenario that probably most of our investors don't understand that there are alternatives out there in terms of how you can pull back these, and there are benefits to customers and to the company and how we do it, so.
And then your question was around bifurcating different treatment of credits. Certainly, the Fedora check bill was just focused on wind and solar. It didn't impact the storage credits or the nuclear credits, but also, we think that is just a marker out there, as Bob's comments provided.
There was a lot of support across Republican states, if you think about the House letter that had 21 Republicans signed on to it, the Senate letter that had four senators signed on to it, four Republican senators, so I think there's an understanding of the importance to the economy of these credits and what they do. There's a couple of good studies out there about the economic impacts and the 14 million plus jobs that the IRA will create over the next 10 years. So that's how I think about it in terms of overall and transferability being a key part of it.

Julien Dumoulin-Smith

Actually guys, hey, thank you for the details. Just following up here, nicely done, but can you provide some further, elaboration on what's in this Colorado Wildfire mitigation plan, settlement agreement? It seems like there's some good stuff in there. We just want to speak to that a little bit more if you can elaborate on what exactly is, in that total plan.

Brian Van Abel

Yeah, thanks, July. I can handle that. Yeah, overall, a very constructive settlement with a unanimous settlement with all the parties in that wildfire mitigation plan. Again, if you remember, that's a three-year plan, $1.9 billion split between $1.6 billion of capital and $300 million of O&M. And how we think about it's a win-win from all sides is we get constructive cost recovery here in the near term.
We also get an extension of our insurance deferral that we had a one-year extension that expired in October. So we have an extension of that excess liability insurance deferral, but we also agreed to securitize approximately one or seek to securitize $1.2 billion of spend by 2029.
And that's really a helpful way to manage overall customer affordability. So when we look at this total package, we think it's a really good outcome to reach a unanimous settlement with a number of parties in that proceeding was again a good outcome, and we look forward to having the hearing in front of the commission here, I think, within a month.

Julien Dumoulin-Smith

Excellent thank you guys. See you soon.

Operator

Thank you. Carly Davenport, Goldman Sachs.

Carly Davenport

Hey, good morning. Thanks for taking the questions. Maybe just to start on your comments on the tariff exposure, that 2% to 3% on the capital plan, could you just talk a little bit about the process or the timeline over what you'd expect to have those discussions with vendors and any sense of where you think that exposure could potentially go post having those discussions?

Brian Van Abel

Yeah, hey, Carly, good morning. I didn't take that one. Some of these discussions have already happened when you think about certain project specific, contracts that that we're working on, whether it's renewable projects, storage projects, I think about that 2% to 3% being as absolutely manageable when you think about that's a five-year time period, so.
It's the conversations have started working through specific ones, but also, working with various suppliers in terms of, how much do they absorb, what happens there, but we also are already looking at, how do you diversify from a supply base.
So I'll give you a recent example. We recently signed an agreement for substation power transformers. This is, I believe, last week that we signed it. This is where scale and scope comes in. So, we signed an agreement with nine different suppliers, five US domestic manufacturers, four global manufacturers to give us that kind of ability to source where we think it is most effective for our customers.
So I would say these discussions have been going on and not only just recently, but there's an expectation that tariffs were coming when the election happened back in November, we expected tariffs. We included tariff impacts into the bids we made in our RFP and down in SPS in January.
So, I wouldn't view it as conversations that have just started, but it's now, as we understand where they are, then it's how do you navigate.

Carly Davenport

Got it. I appreciate that. That's helpful. And then maybe just a quick follow up on the liability related to Smokehouse Creek going up to $290 million. I think you had highlighted in the prepared remarks, inclusion of some previously excluded verticals, but just curious if there's anything else, that you see at this point that could pose a risk to that number continuing to move higher, or you guys still feel good, about wherever that number goes relative to the insurance coverage.

Brian Van Abel

Yeah, and I'll give you a little bit more colour. The way I think about it is we're making really good progress on the overall claims. If you look at the details, we've settled 151 of the claims that's come through our process, so we've settled more than we took in in Q1.
So, we're making progress in terms of closing that from our internal claims process. We also have 25 lawsuits filed against us. What I didn't say in the opening remarks is we've settled or dismissed five of those already, so we've turned to settling the represented claims.
And as you said in your question and as I said in my opening remarks, we've now had settled with the railroad entities, which was not in our low-end accrual before. We settled with the utility entity that was not in our low-end accrual, and we have made some settlements for tree damages. And so we've included the settlement payments in our $290 million accrual.
There's also one other called large claim that we've gone through the discovery process and included in our accrual. So from that perspective again it is following accounting guidance. It's a low end accrual and you can see what we've excluded in our disclosures, but overall, now I always point to people that we have five approximately $500 million of insurance coverage and we are well under that policy limit as we sit here today and we'll continue to make progress over the balance of the year on these claims.

Carly Davenport

Great to see the progress there thanks so much for all the colour.

Operator

Thank you. Our next question is from Durgash Chopra with Evercore ISI. Please go ahead.

Durgesh Chopra

Hey team, good morning. Thank you for taking my questions. I actually just have one all of the questions I've been asked. Just, any updated thoughts on, the Marshall fire, any conversations with stakeholders as we're approaching trial here this this fall, anything new there? Thank you.

Brian Van Abel

Hey Durgesh and, yeah, I think just as I noted, in my prepared remarks that, in the plaintiffs expert reports we received two new causation theories, one related to a partially unattached piece of telecom equipment making contact with our line and the other one that being an unidentified flying object making contact with our lines.
So four theories in total when you look at the sheriff's report, the Boulder sheriff's report, which had the Ignition being our first line and then the underground coal seam. So that's where we are, I think a little bit of discussions just from a process perspective. We have mediation process in this case that's standard for trials such as this deadline for mediation is May 29, so we'll work through that process. But as we sit here today and as we said before, we're diligently preparing ourselves for trial, which starts September 26.

Durgesh Chopra

Awesome. Thanks, Brian. Yeah, well,

Robert Frenzel

Hey, Durgesh. Just what they got to add on there that I think, is important is the, that we believe that our indemnity agreements on our pole attachments are strong, as we think about the causation theories that have been proposed, that's just an important one to think through.

Durgesh Chopra

Got it. Thank you.

Operator

Thank you. Jeremy Tonet, JP Morgan.

Jeremy Tonet

Hi, good morning.

Robert Frenzel

Hey, Jeremy, how are you?

Jeremy Tonet

Good, thanks. Just want to, I guess to start off, could you elaborate on the potential regulatory treatment of wildfire related O&M expense, and are you expecting to recover some of these costs and what type of, what kind of assumptions underpin your guidance at this point?

Brian Van Abel

Hey Jeremy, I think, underpinning our guidance assumptions is always constructive regulatory treatment, and I'll kind of hit on a couple one. We talked about the Colorado Wildfire mitigation plan. Now that's a unanimous settlement still awaiting commission, a commission hearing and approval, but that includes concurrent recovery for our O&M expenses related to our wildfire investments. And so that what I said is a very good constructive outcome in awaiting the decision by the commission there.
We have filed re regulatory deferral. For regulatory referrals around our insurance premiums, we've made a filing in Wisconsin, Texas, and New Mexico, and so we expect decisions there for Q2, Q3 time frame on those three filings.
And then in Minnesota that would just be part of our Ray case. We've included our wildfire O&M expenses of investments in the rate case which has a forest year for 2025 and that decision will play out that proceedings a little bit longer dated, but overall, we do assume constructive regulatory outcomes overall just as part of general guidance assumptions year in and year out.

Jeremy Tonet

Got it. Thank you. And then maybe pivoting towards back towards data centres here, it seems like a lot of the pipeline has been in Minnesota, but just wanted to see, I guess, how you see things developing across other service territories, especially Colorado. Could they be kind of a broadening of this?

Brian Van Abel

Yeah, I think, as we've spoken about this, the last few calls, we talked about, you're absolutely right, you've heard us talk about the opportunities in Minnesota and the interests we've seen there, we've seen it expand beyond Minnesota, as you allude to.
One we already have a data centre in construction in Colorado and that was one of our signed contracts and the 33 contracts we're working on right now is what I talked about in my opening remarks that we expect to have signed by this fall. One is in Colorado. We're also, we also worked on what we call a large load cluster study in Colorado, and you look at looking at called this co-location area near the Denver airport in Aurora which was not only some data centre customers but also a large industrial customer and a large distribution centre.
So gaining interest in Colorado, but we also have a lot of interest in Wisconsin too. So as we think about it, we have signed agreements in three different states today and then we also have the three agreements that we're working on one in Wisconsin, one in Minnesota, one in Colorado.
So it's helpful to kind of see that interest across our states and we're also seeing. In interest in the Dakotas. There was a land sale last year in South Dakota to a data centre, so I would continue to receive inbound inquiries and have a strong pipeline.
So our goal is to execute on fulfilling that kind of what we call high probability pipeline by this fall for our investors and really for our customers when we look at the benefit it creates for our customers and maintaining affordability.

Robert Frenzel

In the Southwest as well, we filed AQ studies with the Southwest Power pool for thousands of megawatts of data centre inquiries down there, a little bit further back in our probability pipeline for data centres, but we're still seeing lots of interest down there, if you think about it, our SPSC and I tariff is one of the lowest in the country and has attracted some attention as well.

Jeremy Tonet

Got it. That's helpful there. And just want to go back to Colorado if I could, one last one. How do you think about pacing a high Colorado investment against, high sales growth as you've outlined there? Do you see any periods of relatively elevated bill inflation as investments come in ahead of low? Just wondering, stakeholder feedback on bill inflation in Colorado.

Brian Van Abel

Yeah, I mean, we have a significant investment plan in Colorado, and I think, we are very focused on affordability. Maybe I started from a little bit higher level is if we look at our customer bills in Colorado on the electric perspective, they're the second lowest in the nation from an affordability perspective as share of wallet. And then when you looked at the combined electric and gas that's lowest in the nation from an affordability perspective.
So we're in a really good place in Colorado from an affordability perspective, significant investments certainly working with the commission, that's a, that's an avenue of additional. Requests we made in our current resource plan in terms of providing the longer term affordability look, so working closely with our commission and stakeholders on that.
And that was also part of the wildfire mitigation plan that we just settled here in terms of looking at securitization, some of these unique investments we're making to protect our customers and communities. So certainly, top of mind like you said, it could be a little bit elevated customer bills here in the near term as we work to get that load online later, call it in the five years, but certainly something we'll work with our commission and stakeholders on managing that affordability.

Robert Frenzel

The other lens of this is, we talked in our prepared remarks about $5 billion across all of Xcel Energy on savings from wind energy and tax credits. Colorado sits in one of the windiest and sunniest parts of the country. We have the ability to make an energy transition there very cost effectively, our forecast for Colorado is to be more than 80% carbon reduced by the end of this decade, tapping into those great resources, we think that that footprint allows us to be very attractive in economic development as well.
When you think about low cost energy and the attraction to bring economic development, whether it's data centres, whether it's the oil and gas load in the DJ Basin, or whether it's new onshoring and reshoring, we think Colorado's a great home for economic development and as we all know, more sales is beneficial to the broad customer base.
So our continued focus on, bringing businesses to Colorado, minimizing the bill impacts from an energy transition and from a growth perspective is a real focus for the company.

Jeremy Tonet

Got it. That's very helpful. Thank you.

Operator

Thank you. David Arcaro, Morgan Stanley.

David Arcaro

Hey, thanks so much good morning.

Robert Frenzel

Morning David.

David Arcaro

I wanted to clarify, is the, I think you called out 2% to 3% total tariff impact on your investment plans. Does that consider all of the renewables investment as well and like specifically the [AD CVD] ruling that we had just recently in the potential increased cost in the solar supply chain.

Brian Van Abel

Hey David, good morning. Yeah, we're that 2% to 3% is really just focused on our base $45 billion capital plan, and we think about that, in over a five year time period, very modest and manageable in terms of AD CBD. We do not.
Expect any impacts from that recent AD CVD ruling that came up from the Commerce Department on Monday. So we're comfortable that was well communicated with that investigation, and we took steps with our suppliers to ensure that we would not get impacted by it. So, as we in from, so I think longer term on the wind side in terms of our agreements with our OEMs we feel good about in terms of managing the tariff impacts on the wind side and the solar side.

David Arcaro

Got it perfect. And then just curious on the data centre side of things, I think your longer-term kind of data centre target, or the pipeline level didn't change versus the prior quarter. It sounds like there's been activity though maybe in the earlier stage pipeline. Is that the right way to think about it where you've seen, I guess, additional gigawatts coming in the earlier stages, but, what and I guess what's the cadence of how you would update that that more from pipeline forecast.

Brian Van Abel

David, yeah, I don't think it's, I don't think we've seen much of a timing in terms of pulling things earlier. What we've made really good progress, I would say with the three that we're working on to sign, and like I said, there's one in each of our states, Colorado, sorry, yeah. Colorado, Minnesota, and Wisconsin.
But I don't think the timing of it has changed necessarily when I look at it. No, we're signing contracts for those three customers today, they're going to be a little bit backdated in our five-year forecast.
So yeah, overall we haven't changed our kind of pipeline. Don't expect us to update that 8,900 until Q3. We'll just do it with our normal kind of five-year sales cycle, but the timing I would call it is intact with kind of within the next five years and what we expect to bring on.

David Arcaro

Yeah, got it. Okay great I appreciate it thanks so much.

Operator

Thank you. Anthony Crowdell, Mizuho.

Anthony Crowdell

Hey, good morning team. It's, just, it's really nice calling Investor Relations and not hearing into sound in the background.

Robert Frenzel

Just he's probably listening, Anthony.

Anthony Crowdell

I know. So I had to make fun of him. Just, I, one clarification, one question. I think it was to Dugesh's question earlier on a new cause related to the Marshall fire. I just apologize if I heard correctly. Is a plaintiff claiming the cause of the fire was a UFO hit your wire and the wire fell and caused the fire?

Brian Van Abel

The cause, so what I said was there are two theories introduced by the plaintiffs' experts in their reports that they submitted and that was their language that an unidentified flying object or something hit our lines and act and our lines again our lines did not fall to the ground.
We had one line that came off the insulator, but we had no down power lines, but that was the theory that they put forth and the other theory was that a piece of partially unattached telecom equipment hit our line. So those are the two theories, but you're correct in terms of how I phrased it in that first part.

Anthony Crowdell

Got it. Okay. And just if I could circle back, I think Bob you talked on it earlier on coal plant retirements, you highlighted just years of planning. I think you maybe have scheduled maybe one or two plant retirements this year, maybe Comanche. Just thoughts if you go, I assume they're still on schedule, just any clarity you could provide to that.

Robert Frenzel

Yeah, so the way I think about it is we probably have a coal plant a year through the balance of the decade. This year is the second unit at Comanche. I think the unit, Anthony, is probably 60 years old, 50, 60 years old, and so our expectation is at the end of the year that that unit shuts down along with its sister unit which shut down two years ago. And that's the plan, and we're working towards that.
And when you think about the renewable buildout in the Colorado power pathway that is underway in the state right now, that's the reliability replacement for that unit that is retiring at the end of this year. So we work with our states for years, including sometimes almost decades on the transition plans.
We've been incredibly successful in maintaining reliabilities. Brian commented on in particular in Colorado, one of the lowest electric bills in the country, while we've done a significant transition away from coal in that state, and we expect that to continue.

Anthony Crowdell

Great thanks so much I appreciate you taking my question.

Operator

Thank you. Ryan Levine, Citi. Please go ahead.

Ryan Levine

Good morning. What impact do you see from the potential new Texas legislation related to wildfires in terms of its impact to your mitigation plans in the future in Texas?

Brian Van Abel

Ryan, can you be a little bit more specific which piece of legislation that you're talking about because there's several pieces of legislation that are out there.

Ryan Levine

Yeah, so there's a few there's a few bills being proposed by a congressman from your service territory around, different ways to reduce risk to your service territory, related to both, private EMP land in terms of whose jurisdiction it would be under and then a few others around mitigation plans. I didn't know if that had any implications for CapEx or risk reduction for the company.

Robert Frenzel

Yeah, let me start, and then Brian opined, but first of all, we feel really good about where our system resiliency plan conversations went with stakeholders in Texas and a unanimous settlement on that program is going to allow us to make hardening investments into the state that we think are important.
The legislation that's gone, there's probably two that I talked about. One is around poll inspection programs and having more of a state law around that, I think we're generally supportive of, poll inspections and poll inspection programs and reporting compliance with those programs, that, poll inspections are generally operating expenses go through regular rate cases, and I don't think it's material impact on the capital side for the business.
And the second is more around, wildfire liability and the opportunity to submit a wildfire management program and then having it done so in compliance with that program, you'd have an affirmative defence against civil lawsuits on liability side.
So we think both pieces of legislation could be valuable. I don't think they lead to significant investment. I think that's largely being done through our SRP, which again is under a unanimous settlement and looking for commission approval later this year.

Brian Van Abel

Yeah, and right now there's two more pieces I can touch on. Yeah, there is some legislation that is really directed at the oil and gas lines, and then there's other legislation that we certainly support is more around kind of Texas improving the state firefighting capabilities. That's around, funding for firefighting aircraft, funding for rural volunteer firefighting departments, new emergency management facilities, things like that which we certainly support.
But overall, if I think about our system resiliency plan and the investments we're making, whether it's in Texas, New Mexico, Colorado, Minnesota, it's all about protecting our customers and communities, and that's how we think about the plans that we put forth is really protecting them and this legislation we don't see it having an impact on how we think about the risk and how we protect our customers in terms of the investments we're making.

Ryan Levine

Thanks. And then in terms of tax credit transferability, have you discussed or previewed the credit implications for different transferability iterations with the rating agencies and how they may view the implications as it's more of an industry-wide issue, any car you could share around how different decisions may be interpreted from your credit metrics.

Brian Van Abel

Ryan, we, our annual meetings with the agencies are in September. Again, we think anything happening to transferability or having tax credits without transferability is a very low likelihood. So if certain, if something happened, we certainly would have a conversation with them. But again, overall our conversations back in September were good conversations but didn't focus on this, which we think is a low probability outcome.

Ryan Levine

Okay. Appreciate the time.

Operator

Thank you. Travis Miller, Morningstar.

Travis Miller

Thank you. Good morning, everyone.

Brian Van Abel

Hey Travis.

Travis Miller

And Ryan there teed up a little bit on Texas. That was my question. And but on a little different perspective here, obviously a lot of headlines, a lot of talk about the power generation side and given your different regulatory framework, I say outside of [UROT].
What's your take in terms of, as there's more uncertainty around the rest of the state, does that either impact you, does it give you an advantage, attracting demands any kind of implications there is there's more and more uncertainty on the power generation side, demand forecasting outside of your area in Texas, if that makes sense.

Brian Van Abel

Yeah, hey, Travis the way I think about it, and Bob kind of alluded to this with the AQ studies, we have a significant amount of demand already and that's a little bit a kind of point towards the RFP we have in flight right now. We've that RFP we have in flight is between 5,000 megawatts and 10,000 megawatts of new generation. In that upper end, that 10,000 megawatts is really to serve our oil and gas customers with the demand we're seeing there.
And again, I mean, that's so from our perspective, we have a significant amount of dam demand without even considering what's happening in the other parts of Texas. So you know our focus is on ensuring we can serve our current customers and potential data centre load that we're seeing from it. So I would say we already have robust demand there even before any impacts from all the other parts of Texas and if any entities want to locate in SPP territory.

Robert Frenzel

And just take Travis, I don't know if your question was aimed at the risk side. I mean, the interconnectivity between UROT and the Southwest Power pool is relatively de minimis and it's through DC ties. So there's no contagion risk, I would say, operationally between those two systems.

Brian Van Abel

Okay, yeah, that's helpful. Anything in the state legislation that's going on again outside of what you're discussing earlier with system resilience and Wi-Fi, anything in other there's other bills out there that would impact you directly at all again, kind of the power generation focus stuff.

Robert Frenzel

Yeah, so, I did talk about wildfire legislation in Texas. We also had similar legislation in North Dakota as well, which we are, we're buoyed by. I think the only thing I'd comment on really that that's broad on the generation side is really the continued trend and support for nuclear more broadly across the country and in our states.
We've gotten a nuclear siding legislation in both Wisconsin and North Dakota and then in Colorado they changed the law to recognize that nuclear counts as a clean energy resource under their calculations for carbon-free generation.
So not surprising there's been a national trend towards nuclear as a preferred form of generation. We think it's years out into the next decade before nuclear becomes certainly SMR has become likely across the country, but with data centre loads and other large load growth across the country, you could see, folks looking at even large scale nuclear facilities again to serve some of this big load.

Travis Miller

Okay, great. Well send you part up real quick. The Texas policy in terms of nuclear, do you have a stance either way?

Robert Frenzel

Well, so look, Texas has been broadly supportive of nuclear. I mean, I think they want a big piece of the nuclear supply chain and whether it's from R&D or manufacturing of large components to wholesale manufacturing of SMRs to the implementation onto the grid. So as a state, Texas has been, pro-nuclear for a host of reasons, and of course we would support that as well.

Travis Miller

Okay, great. Thanks so much for your time.

Robert Frenzel

Thanks, Travis.

Operator

Thank you. As we have no further questions, I would like to turn the call back over to CFO Brian Van Abel for any closing remarks.

Brian Van Abel

Yeah, thank you all for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions.

Operator

Thank you very much. That does conclude today's conference. You may now disconnect.