The PUC better move quick and allow that rate increase;
DENVER, CO – Colorado provided 42 percent of Xcel Energy profits during the second quarter of 2011.
According to an earnings report posted Thursday, the rest came from seven other states where Xcel Energy operates. The other states include Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin.
The company reported a 14 percent earnings increase to $159 million in the second quarter of 2011, compared with the same quarter last year.
While those of you who defended their rate increase in SD are eating crow – This post is to remind you once again as to why they DON’T need one. While Xcel, their execs and shareholders enjoyed a 14% increase over last year the rest of us have watched no increase in our paychecks. I like how Xcel was quick to point out they made 42% of that money in Colorado.
Newly appointed chief executive Ben Frowke also predicted that Boulder’s plan to replace Xcel with a municipal utility will fail on the fall ballot. Boulder is considering replacing Xcel with a city-owned utility to boost renewable energy and stabilize rates.
Oh, I am sure Mr. Frowke thinks (hopes) the ballot initiative will fail, he is banking on it. And I am sure Xcel will throw millions at an opposition campaign.
“It will get ugly if we decide to go ahead,” said Matt Appelbaum, a Boulder city councilor. “Xcel will fight, and they have deep pockets.”
You ain’t seen nothin yet. Wait til the 4th quarter results come in. All the states covered by Xcel have had record breaking ongoing temperature-humidity index levels. Take your next Xcel bill, compare it to last year, and then you’ll realize the extent of the profits they are about to realize. Of course by the time the record breaking 4th quarter results are posted in January, our new rate increases will be in place. Suck up another one Joe SixPack.
My heart cries for them.
I hope the PUC saw the earnings report before they decide on the rate increase.
Nah, as I wrote earlier the PUC is captured – they work by and for the electric utilities and their shareholders. The name of the game is profit. Period. Not service. Not competition. Not lowering prices when volume increases – per the capitalistic business model.
The coal utilities have no interest in assisting the US with energy self-sufficiency or independence. They have a huge profit interest in shipping coal to China. Know your enemy – and its not just China.
Wow… you’re still doing this l3wis?
Ok let me try to break this down for you. A 14% increase seems like a ton I’ll grant you that, but energy is a volitile market so their profits rise and fall on a continual basis. You need to keep in mind Xcel is essentially a reseller, so their profit is often determined by the cost to obtain the energy from other sources, and since they cannot adjust their rates as quickly as they can at your local gas pump, it makes things a tad more difficult to manage in the long term.
If they reported a 14% decrease in profit would you then say they deserve a rate increase? I somehow doubt it.
Also keep in a mind a percentage is just that… a percentage. If a company made $100 last year but made $114 this year would you think that is excessive? Doubtful. In this case Xcel made $159M which is a huge truckload of money… and the quarter the year before they made “only” $140M so that seems to think they may be raping their customers right?
But wait a second – numbers without context are worthless as we all know. So what exactly is $159M? Where does that money go?
Well, since I asked a rhetorical question I may as well answer it… so that $159M works out to be approximately $0.33 per share (as you know Xcel is a publicly traded company). Now of course you have the right to complain that shareholders have no right to a return on their investment and that the company shouldn’t turn a profit, but that would make them a non-profit, and there would be no shareholders (or the investment those shareholders made) so let’s gloss over that little side issue since it isn’t realistic.
The important number here is the operating revenue for Xcel, which for the quarter in question is $2,438,222,000. Yea… they actually brought in almost $2.5B in one quarter alone. However their expenses were $2,078,780,000 so you need to factor that in. Pay another $85M in income taxes and after everything they are left with the $159M.
So now if we look at total revenue compared to actual profit we see that their profit equated to 6.5% of revenue. Yes – seriously…. they made 6.5%.
Now l3wis… I ask you. How long would your employer remain in business if they made 6.5% profit? Better yet – how long would your employer remain in business if the government said they had to keep charging the same amount for a sirloin and couldn’t raise their prices at all for several years, but the servers and cooks and hostesses and manager all expected raises and the cost of the raw beef coming in the back door could go up and the cost of everything from napkins to steak sauce to the toilet paper hanging in the restrooms continues to go up on a yearly basis?
Take a gander at the profit margins of most large companies and across most industries and then tell me that Xcel is actually out of line. I don’t know what the most recent numbers are, but last I checked some drug companies were bringing in about 15% and mining and oil production was in excess of 22%. Years ago when I worked retail the profit goal was 20%+. In the scope of thigns 6.5% is fairly low.
The difference is, most industries can adjust prices on the fly whenever they see fit whereas a utility like Xcel needs to jump through hoops and get their price increases approved. In some cases they go years between price increases but rest assured when they announce they are seeking a rate increase, everyone who misunderstands profit and margins will come out of the woodwork and complain about it.
I don’t work for Xcel, and as far as I know I don’t own any Xcel stock or have any financial ties to them, but I really don’t think they are out of line with their profits. If anything they seem a tad low when you consider they can’t adjust their rates on the fly to compensate.
Finally, think about the alternative – do you think the city or state would do a better job if they took over? Just look at our very own Sioux Falls light and power department and tell me they are efficient (how many managers do they have again at at what salary)? It seems very obvious that if Xcel was a municipal company there would be a lot more waste and that profit margin would need to be increased to compensate.
Say what you will about private enterprise, but Xcel is managed well to keep costs down – and that rarely if ever happens in government. If anything, a publicly owned utility would probably see rate increases on a yearly basis (wonder where we have witnessed that before).
Sorry about the length of this, but I felt the numbers being tossed around needed a little context – and I know you aren’t going to get it from Kelo or the Argus.
Before Excel took over most of municipal power’s clients I had a municipal power account. I remember moving from my apartment to another apartment that had Excel and being surprised how much higher Excel was. Municipal power isn’t concerned about profits, only self-sustaining, unless of course you are the city of SF’s water department.
Costner, how did I know this post would pull you outta the woodwork? BTW, hope you put in for PTO while writing that comment.
hope you put in for PTO while writing that comment.
Comment? Is that what that was? One thing for certain. Cos will always be the town crier for corporate America. His handlers have taught him well.
Hey…wait til the Xcel energy bill is in our mailboxs. Pay that one and feel for Xcel the same way cos does.
Cos = TOOL
Poly – I was thinking the same thing, but I think it just goes in one ear and gets ground up in his corporate jelloey mess and goes out the other year.
Look how much corporate America has helped regular Americans pull out of this economy?
So basically that means neither of you cares to comment on whether or not 6.5% profit is excessive?
Why am I not surprised. It is always easier to avoid any intelligent discussion which is based upon real numbers, math, and economics and instead just start the name calling.
In that case…. hey Poly you’re still an asshole. And a bitter ignorant one at that.
Yea… that actually was easier!
No. 6.5% is not excessive, but let’s put it in perspective. When the rest of us are not getting raises, actually some people are getting their wages and hours cut, it is excessive.
Well unfortunately the economy is not a vacuum. As you know energy prices continue to rise, and Xcel being a reseller means they are paying more for energy just like you and I are.
Fuel prices are also up, which means expenses for Xcel are up. Plus – it is quite possible Xcel has a contract with their labor which requires raises, or even if they don’t have a contract they might actually pay their people more every year based upon performance. Either way that means expenses going up.
So although it might be nice if they could adjust their profits to mirror the economy we need to be realisitic. They are a public company – not a government entity. They aren’t tied to specific economic indicators and because their rates are controlled by various regulators, they can’t adjust things on the fly like Walmart or HyVee can adjust their pricing.
I don’t know what Xcel’s quarterly profits normally are, but considering what it takes for them to raise rates I would expect their profits to fall over time until the point where they are backed into a corner and either have to raise rates or cut expenses. You can only cut expenses so far of course since a utility needs a certain number of employees to operate… so in most cases the option boils down to raising rates.
Now if Xcel was pulling in 30% I’d be the first in line to say they are out of control and I’d be drafting a letter to our PUC chairman, but as it sits they seem to be keeping expenses under control, they aren’t raping the consumer (their rates are competitive with Cooperatives and Municipal Power companies) and they are still investing in infrastructure to keep people employed and prevent us from experiencing grid failures that are so common in other areas.
It may not be perfect, but it isn’t reflective of massive greed either.
I don’t have a problem with profits, I also don’t have a problem with them giving their employees raises, and I don’t think they are raping anyone. BUT, your comment about a vacuum is an oxymoron. It seems Excel is living in a vacuum. While the rest of us are fucked and we have to pay Excel for electricity, because we don’t have a choice, they seem to think that making the same profit, in good times is just as justifiable in bad times. Why can’t they cut back? I’m not asking them to be a bunch of socialist hippies, all I am asking is, “If you can still make a profit, provide good service, and be good to your employees and shareholders w/o an increase, why not try it?”
We know why. Greed.