Xcel Energy Q3 2026: ongoing EPS up 23% to $1.52; GAAP up 73% as a $287M wildfire charge fell away

Xcel Energy's third-quarter 2026 diluted EPS was $1.52, up 73% from $0.88 on a GAAP basis, and net income rose 83% to $960 million on revenue up 6.6% to $4.17 billion. Most of that GAAP jump is a comparison effect: a year ago Xcel booked a one-time $287 million charge to settle the 2021 Marshall Fire lawsuits in Colorado. On Xcel's own "ongoing" measure, which strips that out, EPS rose 23% to $1.52 from $1.24. The company says the gain came from "increased recovery of electric infrastructure investments, earnings on equity method investments and unseasonably warm weather, partially offset by higher financing costs." Xcel also narrowed its 2026 guidance to $4.10–$4.16 and set 2027 guidance at $4.48–$4.62. This report is based on the earnings release (Exhibit 99.01 to the October 29 8-K). The full 10-Q, with the cash flow statement, has not been filed yet.

Results

Xcel runs four regulated utilities: PSCo (Colorado), NSP-Minnesota (Minnesota and the Dakotas), SPS (Texas and New Mexico) and NSP-Wisconsin (Wisconsin and Michigan). On a GAAP basis, PSCo's contribution jumped to $0.57 from $0.08 per share. That is the Marshall Fire charge falling away; on an ongoing basis PSCo was up $0.13. SPS rose to $0.34 from $0.27 and NSP-Wisconsin to $0.08 from $0.07. NSP-Minnesota slipped to $0.51 from $0.53. The holding company's drag disappeared, to $0.00 from −$0.07, "largely due to unrealized gains on the investment funds' interests in energy technology companies."

What drove the quarter

For a regulated utility, revenue only matters to profit when it is not a pass-through of fuel costs. Xcel's bridge from $0.88 to $1.52 shows where the money came from:

Within electric revenue (+$250 million), the largest drivers were "non-fuel riders" (+$93 million) and rate case outcomes in Colorado, Minnesota, the Dakotas and Wisconsin (+$88 million). A rider is a surcharge that regulators approve between full rate cases, so a utility can start earning on a specific project, such as a transmission line or wind farm, soon after building it. Together those two lines are rate-base growth showing up in revenue. Weather added $50 million net of Minnesota's sales true-up, which hands back much of a weather windfall there. Sales and demand added $42 million. Production tax credits passed back to customers cut revenue by $55 million, but that is offset in the tax line.

Costs grew too. Operating and maintenance expense rose $67 million (+9.7%), "primarily due to increased generation, wildfire mitigation and gas system costs" (the release gives that explanation for the year to date). Interest charges rose $100 million on "higher debt levels."

What the headline numbers hide

• GAAP vs ongoing: the 73% is mostly a lapped charge. In Q3 2025 PSCo recorded a $287 million pre-tax ($0.36 per share) Marshall Fire settlement charge. Without it, Q3 2025 operating income would have been about $1,036 million, so operating income grew about 15%, not 59%. Pretax income grew about 26%, to $1,030 million from $819 million. GAAP and ongoing EPS are identical this quarter (a $1 million Marshall item is the only adjustment), so the ongoing figure carries no hidden add-backs this time.
• About half of the ongoing gain is not from the core business. Earnings from equity method investments rose to $77 million from $6 million (+$0.09 per share), "primarily due to unrealized gains on investment funds' interests in energy technology companies." That is a paper mark-up on venture-style stakes, it can reverse, and Xcel counts it in ongoing EPS. Weather added about $0.063 per share versus Q3 2025: a hot summer lifted actual retail electric sales 7.3%, against 3.0% weather-normalized. Take out those two items and ongoing EPS rose roughly 10%, not 23%.
• A growing slice of profit is non-cash. AFUDC (allowance for funds used during construction) is an accounting credit that lets a utility book a return on money tied up in projects still being built, which regulators let it collect later. AFUDC rose to $183 million from $115 million and was worth +$0.11 per share. Equity AFUDC alone ($131 million) was about 13% of pretax income. This is legitimate, regulator-approved income, but it brings in no cash today, and it grows as the construction backlog grows.
• Cash conversion can't be checked yet. The earnings release has no cash flow statement, and the 10-Q is not filed. Through June, operating cash flow had been inflated by insurance reimbursements for wildfire settlements, so watch whether that holds in the 10-Q.
• Dilution, not buybacks. Xcel bought back no stock; it is issuing it. Diluted shares rose 6.2% to 632 million. Ongoing earnings grew 30.4% while ongoing EPS grew 22.6%, and the gap is new equity (−$0.10 in the bridge). Xcel issued 10.5 million shares in Q3 for $819 million. Another 79.4 million shares, about 12.6% of today's count, are already sold forward for at least $5.8 billion.
• Tax was a headwind. The effective tax rate rose to 6.7% from 1.5%, as smaller production tax credits relative to pretax income lowered the benefit. The rate is so low because wind and solar credits are passed through to customers in lower revenue.
• Guidance assumptions shifted under a stable range. Compared with February's original 2026 guidance, capital rider revenue growth is now $370–$380 million (was $535–$545 million), O&M growth ~5% (was ~3%) and depreciation growth $100–$110 million (was $350–$360 million). AFUDC-equity growth is now $180–$190 million (was $140–$150 million). Xcel says the lower rider revenue is "primarily offset by depreciation and AFUDC impacts." In plain words, the same EPS is being reached with less cash revenue and more accounting income.

On balance, the quarter is flattered. GAAP EPS is up 73% mainly because last year's $287 million settlement charge did not repeat. Within the 23% ongoing gain, about $0.15 per share came from unrealized fund gains and hot weather.

Takeaway: Customers paying for new grid and rate-case increases are lifting Xcel's core earnings by roughly 10%, which fits its 6–8%+ long-term target. The 23% ongoing jump is padded by fund mark-ups and weather. Xcel's own narrowed guidance implies Q4 ongoing EPS of about $0.73–$0.79 against $0.96 a year ago, so 2026's growth is front-loaded, not accelerating.

The Q4 arithmetic

Ongoing EPS was $3.37 for nine months, up 18.7% from $2.84. The narrowed full-year range of $4.10–$4.16 (midpoint +8.7% on 2025's $3.80) leaves about $0.73–$0.79 for the fourth quarter. Quarterly figures don't add exactly, because the share count changes. Xcel's Q4 2025 ongoing EPS was $0.96. The release does not explain the expected decline. One visible piece is depreciation: guidance calls for full-year D&A growth of $100–$110 million, against only $21 million through nine months, which implies roughly $80–$90 million more D&A in Q4 alone. The nine-month figure is held down by Q2's one-time catch-up, which booked 2025's Minnesota nuclear life-extension savings in 2026; that benefit has no Q4 counterpart.

Wildfire exposure

• Marshall Fire (Colorado, 2021): settled in 2025. In 2026 to date, PSCo has recorded an $18 million net credit, mostly from higher expected insurance recovery.
• Smokehouse Creek Fire Complex (Texas, 2024): total estimated losses and legal costs now stand at $525 million, up from $503 million in our Q2 report. That is exactly the $525 million insurance cover for the annual policy period. Xcel has settled 358 complaints and claims for $410 million, of which $405 million has been paid. The estimate is the low end of the range and excludes penalties, exemplary damages, government claims and unsettled claims for oil and gas equipment. The Texas Attorney General's lawsuit is in discovery into 2027. Any further increase now lands above the insurance limit.
• Credit: Moody's has Xcel Energy Inc. at Baa1 with a negative outlook, and PSCo is on negative outlook at both Moody's and S&P.

Regulation, data centers and the capital plan

• Colorado electric: the CPUC's final decision in September set a $184 million increase (excluding rider roll-ins), with a 9.3% ROE and 54.5% equity ratio. ROE (return on equity) is the profit rate regulators allow on the shareholders' share of the asset base. The order adds a performance framework for the Comanche 3 coal unit, which was out from August 2025 to September 2026, and PSCo will file a prudence review of that outage in June 2027. Colorado gas: $123 million at a 9.2% ROE, with rates in effect from October 2026.
• Minnesota: instead of filing a new electric rate case, NSP-Minnesota proposed freezing base rates for 2027 and 2028, offsetting capital costs by recognizing battery-storage investment tax credits faster. A decision is requested by January 2027. The 2024 case's final rates (~$211 million over two years, 9.60% ROE) take effect in Q1 2027.
• New Mexico: hearing examiners recommended approving SPS's $90 million stipulation (9.5% ROE), with rates expected in December 2026.
• Data centers: the Google data center agreement in Minnesota (Google pays all costs of its new service; Xcel estimates ~$1.1 billion of benefits to other customers) awaits an MPUC decision in early 2027. 1,000 MW of the 1,900 MW Clean Energy Accelerator resources are already approved. Metered sales growth is picking up: weather-normalized retail electric sales rose 3.0% in Q3 and 2.5% year to date, led by SPS (+5.6% in Q3) and NSP-Minnesota (+3.4%). The release credits energy-sector and manufacturing activity, not data centers, for the year-to-date commercial and industrial growth.
• Capital plan: $70 billion of base spending for 2027–2031, led by SPS ($25.8 billion) and NSP-Minnesota ($24.8 billion). By function it is renewables $21.4 billion, transmission $18.6 billion, distribution $13.7 billion and generation $9.2 billion. The plan excludes any spending to serve future large-load customers and generation from current RFPs. Funding is $35.8 billion of operating cash (after dividends), $26.2 billion of new debt and $8.0 billion of equity. Total debt reached $40.6 billion (62% of capitalization), up from $33.9 billion in December.
• Other: NSP-Wisconsin agreed to sell about $150 million of Michigan electric and gas assets, with closing expected in 2027.

Did last time's read hold up?

Our Q2 report said to watch three things in Q3:

• The Colorado electric order. It arrived in September at the settled 9.3% ROE and 54.5% equity ratio. The release states the increase as $184 million excluding rider roll-ins; our Q2 report cited the settlement at $225 million, and the release doesn't reconcile the two figures.
• Weather-normalized sales moving toward ~3%. They did: Q3 was +3.0% and the year to date improved to 2.5% from 2.1%.
• Smokehouse Creek estimates. They rose $22 million and now sit at the insurance limit.

Our view that Q3 would carry the year also held. Q3 delivered $1.52, and the bottom of the guidance range moved up.

Outlook

Management narrowed 2026 ongoing EPS guidance to $4.10–$4.16 (from $4.04–$4.16) and introduced 2027 guidance of $4.48–$4.62. It reiterated long-term EPS growth of 6–8%+ and dividend growth of 4–6%. The quarterly dividend is $0.5925, up 3.9%. The 2027 midpoint ($4.55) is about 10% above the 2026 midpoint, above the long-term range. The assumptions behind it are weather-normalized electric sales growth of ~5%, capital rider revenue up $560–$570 million, depreciation up $460–$470 million, net interest up $320–$330 million and AFUDC-equity up a further $250–$260 million.

Our read: the core growth from rate base is real, and load growth is finally showing up in metered sales. The 2027 guide depends on three things: sales growth almost doubling from 2026's ~3% assumption, AFUDC keeping its rapid rise, and Minnesota accepting a base-rate freeze that relies on tax-credit timing. Watch next quarter:

• Q4 ongoing EPS against the ~$0.73–$0.79 the guidance implies.
• Operating cash flow in the 10-Q compared with net income, now that the insurance reimbursements are fading.
• The MPUC's response to the rate freeze, and any further Smokehouse Creek charge above the $525 million insurance limit.