Xcel Energy Ups Merger Savings to $1.4 B

Xcel Energy reported that it is expecting sizeable earnings growth through the next two years while realizing increased savings from the merger that formed the company in August 2000, when Minneapolis-based Northern States Power and Denver-based New Century Energies united (see NGI, Jan. 17, 2000). Xcel Energy CEO Wayne Brunetti reiterated previous statements that the company is growing rapidly due in part to the independent electricity generating company, NRG Energy, in which Xcel holds nearly a 75% stake.

Speaking at Deutsche Banc Alex. Brown's Electric Power Conference last Tuesday, Brunetti told investors that the company expected about a 20-25% stock appreciation to $38 by the end of the year. "Our goal is that Xcel will provide a total return between 25-30% for 2001," Brunetti said.

"Last year when we announced this merger we said our earnings growth would be somewhere between 7-9%," Brunetti stated. "For 2001 and 2002 our earnings growth target is at least 10% a year. This increase is primarily due to the strong growth of our trading and marketing businesses, supplemented by our continued strong growth from NRG."

Brunetti said during 2000 NRG Energy constituted about 20% of Xcel Energy's earnings. This year and next year he forcasted that NRG would contribute about 25%. He also said the expected savings from merger synergies has been increased from the previous level of $1.1 billion to $1.4 billion.

In a conference call with analysts in early April, James J. Howard, Xcel's chairman, said many of the same things about Xcel's current position and its near future ( see NGI, April 9).

Last year alone, Brunetti said, Xcel added over 100,000 new customers, including 44,000 gas and 56,000 electric customers. "That is kinda like adding a small utility every year," Brunetti said. Xcel Energy is the fourth largest combination electric and natural gas company in the nation.

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