Northern States Power Co.

10/29/2026 | Press release | Distributed by Public on 10/29/2026 13:33

Quarterly Report for Quarter Ending Sept. 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Discussion of financial condition and liquidity for NSP-Minnesota 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.
NSP-Minnesota'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 NSP-Minnesota'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 NSP-Minnesota. 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:
Nine Months Ended Sept. 30
(Millions of Dollars) 2026 2025
GAAP net income $ 745 $ 686
Prairie Island outage refunds 38 -
Less: tax effect of adjustment (11) -
Ongoing earnings $ 772 $ 686
Prairie Island Outage Refunds - In a September 2024 decision, the MPUC ruled that NSP-Minnesota was imprudent in the operation of the Prairie Island nuclear plant based on an incident that resulted in an extended 2023-2024 outage. In May 2026, the MPUC ordered a disallowance of $41 million for estimated replacement power costs incurred during the outage. Total non-recurring charges of $38 million were recorded to electric revenues during the nine months ended Sept. 30, 2026 for incremental customer refunds, including interest.
Results of Operations
NSP-Minnesota's GAAP net income was $745 million for the nine months ended Sept. 30, 2026, compared with $686 million for the prior year. Ongoing net income was $772 million for the nine months ended Sept. 30, 2026, compared to $686 million for the prior year. The ongoing earnings increase was driven by higher recovery of electric and natural gas infrastructure investments, which was partially offset by increased interest charges. The difference between GAAP and ongoing earnings was driven by recognition of customer refunds related to the 2023-2024 Prairie Island nuclear facility outage.
Electric Revenue
Electric revenues are impacted by fluctuations in the price of natural gas, coal and uranium, 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) Nine Months Ended Sept. 30, 2026 vs. 2025
Non-fuel riders $ 69
Conservation and DSM (offset in expense) 50
Wholesale transmission 28
Sales and demand 26
PTCs flowed back to costumers (offset in ETR) (42)
Prairie Island outage refund (a)
(38)
Estimated impact of weather (net of decoupling/sales true-up) (23)
Other, net 12
Total increase $ 82
(a)See "Non-GAAP Financial Measures" section for additional information.
Natural Gas Revenues
Natural gas revenues vary with changing sales, the cost of natural gas and regulatory outcomes.
(Millions of Dollars) Nine Months Ended Sept. 30, 2026 vs. 2025
Regulatory rate outcomes (MN) $ 34
Recovery of higher cost of natural gas 29
Retail sales growth 7
Total increase $ 70
Electric Fuel and Purchased Power - Expenses incurred for electric fuel and purchased power are impacted by fluctuations in market prices of natural gas, coal and uranium, 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 increased $1 million year-to-date. The increase was primarily due to increased transmission expense, increased interchange billings and commodity price, partially offset by decreased capacity costs.
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 increased $26 million year-to-date. The increase was primarily due to increased commodity prices, partially offset by timing of fuel recovery mechanisms.
Non-Fuel Operating Expenses and Other Items
O&M Expenses - O&M expenses increased $38 million year-to-date, which was primarily due to increased generation and gas system costs.
Depreciation and Amortization - Depreciation and amortization expense decreased $105 million year-to-date, which was primarily due to the recognition of 2025 and 2026 depreciation reductions (nuclear life extensions) in the second quarter of 2026, partially offset by system expansion.
Interest Charges - Interest charges increased $84 million year-to-date, which was largely due to higher debt levels and interest associated with new finance lease PPAs for natural gas fueled generating facilities.
Public Utility Regulation and Other
The FERC and various state and local regulatory commissions regulate NSP-Minnesota. NSP-Minnesota 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 Minnesota, North Dakota and South Dakota.
Rates are designed to recover plant investment, operating costs and an allowed return on investment. NSP-Minnesota requests changes in utility rates through commission filings. Changes in operating costs can affect NSP-Minnesota'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 NSP-Minnesota's results of operations.
Except to the extent noted below, the circumstances set forth in Public Utility Regulation included in Item 7 of NSP-Minnesota'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
Minnesota Electric Rate Case Stay-Out Petition - On Oct. 9th, 2026, NSP-Minnesota filed an Electric Customer Rate Stability Plan with the MPUC, as an alternative to the planned upcoming rate case filing.
The terms of the proposed plan are as follows:
•Customer base rate freeze for calendar years 2027 and 2028.
•Accelerated recognition of federal Investment Tax Credit benefits related to five battery storage projects over two years. This acceleration will act as an offset to the incremental revenue requirement impact of ongoing necessary capital improvements.
•Continuation of other true-up and tracker mechanisms as approved in NSP-Minnesota's most recent Electric Rate Case.
A MPUC decision on the proposed Rate Stability Plan has been requested by January 2027. If not approved, NSP-Minnesota expects to file an electric rate case in early 2027.
2024 Minnesota Electric Rate Case - In November 2024, NSP-Minnesota filed an electric rate case in Minnesota based on an ROE of 10.3%, a 52.5% equity ratio and rate base of $13.2 billion in 2025 and $14 billion in 2026. In December 2024, the MPUC approved interim rates of $192 million, effective Jan. 1, 2025. In October 2025, NSP-Minnesota filed rebuttal testimony, updating its total revenue request to $365 million.
In July 2026, the MPUC issued a written order. Terms of the order include:
•Rate increase of approximately $211 million over two years (annual average increase of 2.9%).
•ROE of 9.60% and equity ratio of 52.5%.
•Continuation of existing true-up mechanisms inclusive of the sales true-up, coupled with authorization of new tracker mechanisms.
Final rates will take effect in the first quarter of 2027.
2025 Minnesota Natural Gas Rate Case - In October 2025, NSP-Minnesota filed a natural gas rate case in Minnesota, seeking a total revenue increase of $62 million (8.2%) as updated in April 2026. The filing is based on a 2026 forecast test year and includes an ROE of 10.65%, a 52.5% equity ratio and rate base of $1.5 billion. NSP-Minnesota requested interim rates of $51 million effective January 1, 2026, which were approved by the MPUC.
In May 2026, NSP-Minnesota and certain intervenors reached a non-unanimous settlement, based on a total revenue increase of $38 million (4.9%) and a weighted average cost of capital of 7.21% (an increase from the previously authorized 7.16%).
In August 2026, the ALJ issued their report. A MPUC decision is expected in the fourth quarter of 2026.
2026 North Dakota Natural Gas Rate Case - In January 2026, NSP-Minnesota filed a natural gas rate case in North Dakota, for an annual rate increase of $14 million (11.9%). The filing is based on a 2026 forecast test year and includes an ROE of 10.85%, a 52.5% equity ratio and rate base of $235 million. In March 2026, the NDPSC approved interim rates of $12 million effective April 1, 2026. The procedural schedule is yet to be determined.
NSP System
Pending and Recently Concluded Regulatory Proceedings
NSP-Minnesota and NSP-Wisconsin are actively engaged in multiple processes and proceedings to acquire resources to meet their identified generation resource needs.
•In October 2023, NSP-Minnesota issued an RFP seeking 1,200 MW of wind assets to replace capacity and reutilize interconnection rights associated with the retiring Sherco coal facilities. NSP-Minnesota filed for approval of recommended projects in March 2026, which were approved by the MPUC in September 2026.
•In December 2025, NSP-Minnesota and NSP-Wisconsin jointly issued an RFP seeking up to 3,500 MW of wind, solar, hydro, standalone storage, or hybrid capacity that will achieve commercial operation by December 31, 2030. Short-listed projects were announced in June 2026, and filing for requisite regulatory approval is expected by the end of 2026.
•NSP-Minnesota and NSP-Wisconsin may continue to file additional RFPs throughout 2026 and 2027 for resource needs as part of their Upper Midwest resource planning efforts.
Large Load Agreement - Pine Island Data Center - In the first quarter of 2026, NSP-Minnesota entered into an ESA to power a new Google data center in Minnesota. Under the agreement, Google will pay all costs for its new service for the duration of the contract, in accordance with Minnesota's regulatory and legislative requirements for large loads. If approved, the agreement is expected to result in approximately $1.1 billion of benefits to NSP-Minnesota's customers. A request for approval of the ESA, including a proposed Clean Energy Accelerator Charge for 1,900 MW of clean energy resources, was filed with the MPUC in April 2026. A decision is expected in early 2027.
Approvals for 1,000 MW of resources for the Clean Energy Accelerator program have been received as part of existing resource acquisition processes. The remaining resources are expected to be requested in those processes by the second quarter of 2027.
Large Load/Data Center Tariff - In Minnesota, we have 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 tariff, which was approved by the MPUC in June 2026, is mandatory for new loads over 100 MW and includes an incremental cost test, minimum initial term of 15 years, minimum bill provisions, termination and exit fees, and credit requirements.
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.
NSP-Minnesota continues to assess the impacts of these tariffs, executive orders, trade complaints and federal policies on its business, including company owned projects and PPAs. NSP-Minnesota 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.
Environmental Regulation
Throughout 2025 and 2026, the EPA has announced various regulatory actions addressing a wide range of environmental regulations. NSP-Minnesota 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 greenhouse gas emissions from the power sector. The rules establish requirements for new natural gas-fired generating units and emission guidelines for existing coal and certain natural gas generation. In September 2026, the EPA issued a final rule repealing portions of the 2024 rules, including carbon capture and storage (CCS) standards. The EPA simultaneously proposed to rescind the remaining power plant GHG 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. NSP-Minnesota will monitor any additional actions and evaluate the impacts.
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. NSP-Minnesota 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, NSP-Minnesota 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, NSP-Minnesota 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.
Northern States Power Co. published this content on October 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 29, 2026 at 19:33 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]