Xcel Energy (XEL) risk factors, FY2024 10-K

Other

1. 01Oversight of Risk and Related Processes
2. 02The Audit Committee is responsible for reviewing the adequacy of the committees’ risk oversight and affirming appropriate aggregate oversight occurs. Committees regularly report on their oversight activities and certain risk issues may be brought to the full Board of Directors for consideration when deemed appropriate

Operational Risks

1. 03Our natural gas and electric generation/transmission and distribution operations involve numerous risks that may result in accidents and other operating risks and costs
2. 04The occurrence of these events, if not fully covered by insurance, could have a material effect on our financial condition, results of operations and cash flows as well as potential reputational impact
3. 05Our utility operations are subject to long-term planning and project risks
4. 06Our utilities are highly dependent on suppliers to deliver components in accordance with short and long-term project schedules
5. 07We are subject to physical and financial risks associated with climate change and other weather, natural disaster and resource depletion impacts
6. 08Our utilities have physical and financial risks associated with wildfires
7. 09We are subject to commodity risks and other risks associated with energy markets and energy production
8. 10Due to the uncertainty involved in price movements and potential deviation from historical pricing, Xcel Energy is unable to fully assure that its risk management programs and procedures would be effective to protect against all significant adverse market deviations
9. 11Failure to attract and retain a qualified workforce could have an adverse effect on operations
10. 12Our operations use third-party contractors in addition to employees to perform periodic and ongoing work
11. 13Our employees, directors, third-party contractors, or suppliers may violate or be perceived to violate our Codes of Conduct, which could have an adverse effect on our reputation
12. 14Our subsidiary, NSP-Minnesota, is subject to the risks of nuclear generation

Financial Risks

1. 15Our profitability depends on the ability of our utility subsidiaries to recover their costs, and changes in regulation may impair the ability of our utility subsidiaries to recover costs from their customers
2. 16We are subject to comprehensive regulation by federal and state utility regulatory agencies, including siting and construction of facilities, customer service and the rates that we can charge customers
3. 17There can also be no assurance that our regulatory commissions will judge all the costs of our utility subsidiaries to be prudent, which could result in disallowances, or that the regulatory process will always result in rates that will produce full recovery
4. 18Changes in the long-term cost-effectiveness or to the operating conditions of our assets may result in early retirements of utility facilities. While regulation typically provides cost recovery for these types of changes, there is no assurance that regulators would allow full recovery of all remaining costs
5. 19Any reductions in our credit ratings could increase our financing costs and the cost of maintaining certain contractual relationships
6. 20We are subject to capital market and interest rate risks
7. 21Credit risk includes the risk that our customers will not pay their bills, which may lead to a reduction in our cash flows and liquidity and an increase in bad debt expense. Credit risk is comprised of numerous factors including the price of products and services provided, the overall economy and unemployment rates
8. 22Increasing costs of our defined benefit retirement plans and employee benefits may adversely affect our results of operations, financial condition or cash flows
9. 23Increasing costs associated with health care plans may adversely affect our results of operations
10. 24We must rely on cash from our subsidiaries to make dividend payments
11. 25Federal tax law may significantly impact our business

Macroeconomic Risks

1. 26Economic conditions impact our business
2. 27We face risks related to health epidemics and other outbreaks, which may have a material effect on our financial condition, results of operations and cash flows
3. 28Operations could be impacted by war, terrorism or other events
4. 29A cybersecurity incident or security breach could have a material effect on our business
5. 30We maintain security measures to protect our information technology and control systems, network infrastructure and other assets. However, these assets and the information they process may be vulnerable to cybersecurity incidents, including asset failure or unauthorized access to assets or information
6. 31Our operating results may fluctuate on a seasonal and quarterly basis and can be adversely affected by milder weather
7. 32Increased risks of regulatory penalties could negatively impact our business
8. 33Legislative and regulatory responses related to climate change may create financial risk as our facilities may be subject to additional regulation at either the state or federal level in the future. International agreements could additionally lead to future federal or state regulations
9. 34The steps Xcel Energy has taken to date to reduce GHG emissions, including energy efficiency measures, adding renewable generation and retiring or converting coal plants to natural gas, occurred under state-endorsed resource plans, renewable energy standards and other state policies
10. 35We are subject to environmental laws and regulations, with which compliance could be difficult and costly
11. 36Changes in environmental policies and regulations or regulatory decisions may result in early retirements of our generation facilities. While regulation typically provides relief for these types of changes, there is no assurance that regulators would allow full recovery of all remaining costs