Public Service Company of Colorado

07/30/2026 | Press release | Distributed by Public on 07/30/2026 12:47

Quarterly Report for Quarter Ending 6/30/2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Discussion of financial condition and liquidity for PSCo is omitted per conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management's narrative analysis of the results of operations set forth in General Instruction H(2)(a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).
Non-GAAP Financial Measures
The following discussion includes financial information prepared in accordance with GAAP, as well as certain non-GAAP financial measures such as ongoing earnings. Generally, a non-GAAP financial measure is a measure of a company's financial performance, financial position or cash flows that adjusts measures calculated and presented in accordance with GAAP.
PSCo's management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors' understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies' similarly titled non-GAAP financial measures.
Earnings Adjusted for Certain Items (Ongoing Earnings)
Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items.
We use this non-GAAP financial measure to evaluate and provide details of PSCo's core earnings and underlying performance. For instance, to present ongoing earnings, we may adjust the related GAAP amounts for certain items that are non-recurring in nature. We believe this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of PSCo. This non-GAAP financial measure should not be considered as an alternative to measures calculated and reported in accordance with GAAP.
The following table provides a reconciliation of GAAP earnings (net income) to ongoing earnings:
Six Months Ended June 30
(Millions of Dollars) 2026 2025
GAAP net income $ 461 $ 414
Marshall Wildfire litigation (19) -
Less: tax effect of adjustment 5 -
Ongoing earnings $ 447 $ 414
Marshall Wildfire Litigation - In the six months ended June 30, 2026, PSCo recognized $19 million of net reductions to operating expenses due primarily to an increase in the estimated amount recoverable from insurance for non-recurring Marshall Wildfire costs.
Results of Operations
PSCo's GAAP net income was $461 million for the six months ended June 30, 2026 compared with $414 million for the prior year. Ongoing net income was $447 million for the six months ended June 30, 2026 compared with $414 million for the prior year. The change in ongoing earnings was driven by driven by higher recovery of electric infrastructure investments which was partially offset by unfavorable weather. The difference between GAAP and ongoing earnings was driven by an increase in the estimated amount recoverable from insurance for Marshall Wildfire costs.
Electric Revenues
Electric revenues are impacted by fluctuations in the price of natural gas and coal, regulatory outcomes, market prices and seasonality. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and income taxes.
(Millions of Dollars) Six Months Ended June 30, 2026 vs. 2025
Non-fuel riders $ 134
Sales and demand 15
Conservation and demand side management (offset in expense) 12
Wholesale transmission 12
Wholesale generation revenues (50)
PTCs flowed back to customers (offset by lower ETR) (35)
Estimated impact of weather (15)
Other, net (9)
Total increase $ 64
Natural Gas Revenues
Natural gas revenues vary with changing sales, the cost of natural gas and regulatory outcomes.
(Millions of Dollars) Six Months Ended June 30, 2026 vs. 2025
Recovery of lower cost of natural gas $ (73)
Estimated impact of weather (61)
Other, net 2
Total decrease $ (132)
Electric Fuel and Purchased Power - Expenses incurred for electric fuel and purchased power are impacted by fluctuations in market prices of natural gas and coal, as well as seasonality. These incurred expenses are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are largely offset in operating revenues and have minimal earnings impact.
Electric fuel and purchased power expenses decreased $35 million year-to-date. The decrease was driven by both lower commodity prices and lower volumes.
Cost of Natural Gas Sold and Transported - Expenses incurred for the cost of natural gas sold are impacted by market prices and seasonality. These costs are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are largely offset in operating revenues and have minimal earnings impact.
Natural gas sold and transported decreased $69 million year-to-date. The decrease was primarily due to decreased volumes.
Non-Fuel Operating Expenses and Other Items
Depreciation and Amortization - Depreciation and amortization expense increased $52 million year-to-date. The increase was primarily due to system investment.
Interest Charges - Interest charges increased $63 million year-to-date, largely due to increased long-term debt levels and higher interest rates.
AFUDC, Equity and Debt - AFUDC increased $84 million year-to-date, largely due to system investment.
O&M Expenses - O&M expenses decreased $13 million year-to-date, largely due to generation outage timing.
Public Utility Regulation and Other
The FERC and state and local regulatory commissions regulate PSCo. PSCo is subject to rate regulation by state utility regulatory agencies, which have jurisdiction with respect to the rates of electric and natural gas distribution companies in Colorado.
Rates are designed to recover plant investment, operating costs and an allowed return on investment. PSCo requests changes in utility rates through commission filings. Changes in operating costs can affect PSCo's financial results, depending on the timing of rate cases and implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and demand side management efforts and the cost of capital.
In addition, the regulatory commissions authorize the ROE, capital structure and depreciation rates in rate proceedings. Decisions by these regulators can significantly impact PSCo's results of operations.
Except to the extent noted below, the circumstances set forth in Public Utility Regulation included in Item 7 of PSCo's Annual Report on Form 10-K for the year ended Dec. 31, 2025, appropriately represent, in all material respects, the current status of public utility regulation and are incorporated herein by reference.
Pending and Recently Concluded Regulatory Proceedings
2025 Colorado Electric Rate Case - In November 2025, PSCo filed an electric rate case with the CPUC seeking an increase in revenue of $356 million (9.9%) ($526 million inclusive of rider roll-ins). The request is based on a 9.8% ROE, an equity ratio of 55% and a 2025 test year with a projected rate base of $13 billion.
In June 2026, PSCo, CPUC Staff and various other parties filed a comprehensive non-unanimous settlement agreement. The AARP, City of Boulder and the UCA oppose the settlement. Other parties either support portions of the settlement or do not oppose it. Terms of the settlement include:
•Revenue increase (excluding rider roll-ins) of $225 million (6.3% total, or an annual average of 2.05% since the last rate case), based on a 2025 historic test year using year-end rate base with limited forward looking known and measurable adjustments.
•ROE of 9.3% and equity ratio of 54.5%.
•A performance framework applicable to the operation of Comanche Unit 3 coal facility from effective date of rates through 2029.
•Transfer of the previous Transmission Cost Adjustment investments into rate base.
•Continuation of previously authorized trackers and deferrals.
A CPUC decision and implementation of final rates is anticipated in the third quarter of 2026.
2025 Colorado Natural Gas Rate Case - In December 2025, PSCo filed a natural gas rate case with the CPUC seeking an increase in revenue of $190 million (11.6%). The request is based on a 10.75% ROE, an equity ratio of 55% and a 2025 test year with a projected rate base of $4.7 billion.
In July 2026, PSCo, CPUC Staff, the UCA, the Colorado Energy Office, Western Resource Advocates/Sierra Club, Energy Outreach Colorado and various other parties filed a comprehensive non-unanimous settlement agreement. Several parties either do not oppose or take no position on the settlement, and one transportation shipper opposes it.
Key terms of the settlement include:
•Revenue increase of $123 million (7.5% total, or an annual average of 3.7% since the last rate case), based on a 2025 historic test year using average rate base with forward looking known and measurable adjustments.
•ROE of 9.2% and equity ratio of 54.5%.
Hearings to discuss the settlement took place in July 2026. A CPUC decision and implementation of final rates is anticipated in the fourth quarter of 2026.
2024 Colorado Electric Resource Plan - In October 2024, PSCo filed its Phase I electric resource plan with the CPUC. In November 2025, the CPUC approved a load forecast that reflects 3% compound annual sales growth through 2031 and a generation capacity need of approximately 5,400 MW.
PSCo filed a request for reconsideration of various aspects of the decision which were approved in February 2026. The RFP for the Phase II competitive solicitation process is expected to be issued in the third quarter of 2026. This RFP will seek to acquire the balance of resource needs through 2031 (after consideration of 3,800 MW of approved acquisitions from the Near-Term Procurement RFP).
Other
Tariffs, Trade Complaints and Federal Actions
Several trade cases related to anti-dumping and countervailing duty investigations are ongoing and we continue to monitor the potential impacts of these cases.
Executive orders have been issued imposing new global and country-specific tariffs on many imports, which may impact our procurement and development activities. Additionally, executive orders and actions from government agencies may impact the permitting of wind and solar facilities and the retirement of coal facilities.
Xcel Energy continues to assess the impacts of these tariffs, executive orders, trade complaints and federal policies on its business, including company owned projects and PPAs. Xcel Energy may seek regulatory relief, if required, in its jurisdictions.
Continued and/or further policy actions or other restrictions, disruptions in imports from key suppliers, or any new trade complaint could impact viability, timelines and costs of various projects and PPAs.
Large Load/Data Center Tariffs
In Colorado, we have proposed a tariff applicable to large load customers, designed to allow us to serve these new customers and support local economic development while protecting existing customers from bearing the incremental costs to serve these loads.
The proposed tariff, filed in the second quarter of 2026, would be mandatory for new loads over 50 MW and requires the customer pay for generation and other infrastructure costs needed to serve the load. The proposed tariff also includes a minimum initial term of 15 years, minimum bill provisions, termination and exit fees, and credit requirements. A CPUC decision is expected in late 2026 or early 2027.
Environmental Regulation
Throughout 2025 and 2026, the EPA has announced various regulatory actions addressing a wide range of environmental regulations. PSCo will continue to monitor proposed rules as they move toward final action. Additionally, any other amendments and changes to rules will be evaluated as proposed by the EPA.
Clean Air Act
Power Plant Greenhouse Gas Regulations - In April 2024, the EPA published final rules addressing control of CO2 emissions from the power sector. The rules regulate new natural gas generating units and emission guidelines for existing coal and certain natural gas generation.
Based on current estimates and assumptions, PSCo has determined that due to scheduled plant retirements, there is minimal financial or operational impact associated with these requirements and believes that the cost of these initiatives or replacement generation would be recoverable through rates based on prior state commission practices.
In June 2025, the EPA proposed to repeal these and all other GHG emissions standards for the power sector. In the alternative, the EPA proposed to repeal a narrower subset of the 2024 regulations.
Endangerment Finding - In February 2026, the EPA issued a final rule repealing the 2009 Endangerment Finding and associated regulations addressing GHG emissions from new motor vehicles and engines under the Clean Air Act. PSCo will monitor any additional proposed rules and evaluate the impacts of any final rule on the utility sector.
Emerging Contaminants of Concern
PFAS are man-made chemicals that are widely used in consumer products and can persist and bio-accumulate in the environment. PSCo does not manufacture PFAS, but because PFAS are so ubiquitous in products and the environment, it may impact our operations.
In June 2024, the EPA finalized a rule that designated certain PFAS as hazardous substances under CERCLA. In July 2024, the EPA finalized another rule that set enforceable drinking water standards for certain PFAS.
Potential costs for these rules and any additional proposed regulations related to PFAS are uncertain and will be determined on a site specific basis where applicable. If costs are incurred, PSCo believes the costs would be recoverable through rates based on prior state commission practices.
Effluent Limitation Guidelines
In April 2024, the EPA published final rules under the Clean Water Act, setting Effluent Limitations Guidelines and Standards for steam generating coal plants. This rule establishes more stringent wastewater discharge standards for bottom ash transport water, flue-gas desulfurization wastewater and combustion residuals leachate from steam electric power plants, particularly coal-fired power plants. Based on current estimates and assumptions, PSCo has determined that there is minimal financial or operational impact associated with these requirements and that any costs would be recoverable through rates based on prior state commission practices.
Public Service Company of Colorado published this content on July 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on July 30, 2026 at 18:47 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]