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New Century Energies, Inc.
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<PAGE>
Slide 1
Cover page
Xcel Energy Logo
Creating Value...
Unlocking Opportunities for the New Millennium
NSP Logo NCE Logo
Slide 2
Safe Harbor Language
- - Some of the comments made today will be forward-looking statements that are
subject to certain risks, uncertainties and assumptions
- - Factors which could cause results to differ from our projections are
described in NCE and NSP's Annual Reports and 10K's as well as NRG's 10K's
- - We would be pleased to provide these items upon request
Slide 3
Financial Benefits
- Accretive immediately
- Provides superior pro forma total return
Enhanced EPS growth of 7% to 9%
Attractive dividend income
- Increased balance sheet strength and flexibility
- Enhanced trading liquidity
Slide 4
Strategic Rationale
- Combines complementary businesses
- Increases scale and scope
- Positions Xcel Energy for competition and restructuring
Slide 5
Complementary Businesses
Bar Graph stating each company's Customers and Generation and the combined
amounts.
Customers Generation
(Millions) (000's MWs)
NCE 5.0 8,231
NSP 2.0 15,818
Xcel 7.0 24,049
- NSP has built a sizable generation portfolio
- NCE has built a significant domestic and international customer base
- Xcel Energy is about taking advantage of these considerable strengths
<PAGE>
Slide 6
Complementary Businesses-
Regulated Electric Operations
Bar Graphs stating average electric rates in Cents/Kwh
PSCo 5.8 - NCE's retail electric rates are among the
SPS 4.6 lowest in the nation
NCE 5.3 - 2% customer growth
Region 6.4 - 1.6 million electric customers
Industry 7.0
Bar Graphs stating average electric rates in Cents/Kwh
NSP-MN 5.8 - NSP's retail electric rates are very
NSP-WI 5.6 competitive within a low cost region
NSP 5.7 - 1% customer growth
Region 5.9 - 1.5 million electric customers
Industry 7.0
Slide 7
Complementary Businesses
Regulated Gas Operations
Bar Graphs stating average gas rates in $/MMBtu
NCE $4.30 - NCE has the lowest gas rates in the region
Region $5.26 - 3% customer growth
- 1.0 million customers
Bar Graphs stating average gas rates in $/MMBtu
NSP $4.89 - NSP has the second lowest gas rates in the
Region $5.22 region
- 3% customer growth
- 500,000 customers
Slide 8
Significant Electric and Gas Customer Base
NCE Pie Chart stating total of 5.0 million
40% Yorkshire Power Group Electric
8% Yorkshire Power Group Gas
32% Electric
20% Gas
NSP Pie Chart stating total of 2.0 million
75% Electric
25% Gas
Xcel Energy Pie Chart stating total of 7.0 million
44% Electric
21% Gas
29% Yorkshire Power Group Electric
6% Yorkshire Power Group Gas
<PAGE>
Slide 9
Stable, International Distribution Business
Yorkshire Power Group
- NCE owns a 50% interest
- Consistent earnings contribution
15% of NCE's 1998 EPS Map of United Kingdom and
- 2.4 million gas and electric customers Yorkshire Power Group
400,000 gas customers acquired in primary service territory
previous eight months at low cost
- Provides competitive knowledge of
deregulated marketplace
- Low-cost provider versus competing RECs
Slide 10
Sizeable, Balanced Generation Portfolio
Pie chart of each company's Regulated and Non-Regulated Generation percentages
and the combined amounts.
Regulated Non-Regulated Total
--------- ------------- -----
NCE 97% 3% 8,231MW
NSP 45% 55% 15,818MW
Xcel 63% 37% 24,049MW
Slide 11
A Balanced Generation Mix
Pie chart of each company's generation mix by fuel source and the combined
amounts
Coal Nuclear Gas/Oil Other Total
---- ------- ------- ----- -----
NCE 59% - 38% 3% 8,231MW
NSP 47% 9% 39% 5% 15,818MW
Xcel 51% 6% 39% 4% 24,049MW
Slide 12
Non-Regulated Generation Growth
NRG Energy
- One of the world's leading independent power producers
- 33% annual earnings growth (1995-1998)
- Competitive, low cost regional positions
- Low risk portfolio
Combined line graph of EPS and bar chart of MWs.
1995 1996 1997 1998 1999E
---- ---- ---- ---- -----
EPS
contribution $0.12 $0.15 $0.16 $0.28
MWs 999 1,326 2,637 3,042 8,669
Pie Chart of NRG Portfolio 1999E
North America 76%
Australia 15%
Europe 7%
Latin America 2%
<PAGE>
Slide 13
Strategic Generation and Service Footprint
A map of the U.S. identifying the regulated service areas of NCE and NSP and
specific non-regulated generation sites.
Slide 14
Creating Value Unlocking Opportunities
NCE & NSP Making Xcel Energy
Energy Supply 24,049 MW
Energy Delivery $3.2 B Electric Net Plant
$1.1 B Gas Net Plant
Energy Transmission 17,079 Miles
Retail 7.0 Million Customers
Slide 15
Financial Benefits from Merger
Near-term Mid-term Long-term
(0-18 months) (18-36 months) (>3 years)
------------- -------------- ----------
Deliver stand-alone results X
Capture cost savings X X X
Earnings accretive upon close X X X
Rationalize Non-Regulated businesses X X X
Improve cash flow X X X
Utilize larger, high quality
balance sheet X X
Strengthen competitive position X X X
Attain large cap multiple X X X
Prepare for restructuring X
Slide 16
Merger Savings
- $1.1 billion of net operating expense savings over ten years
- 30% of merger savings captured in the first three years
Bar Chart Pie Chart
Annual Net Merger Savings Source of Merger Savings
(Millions)
Purchasing Economies 15%
2001 $ 75 Operations & Support 10%
2002 $110 Fuel Procurement/Joint
2003 $133 Dispatch 5%
Integration of
Corporate Functions 70%
<PAGE>
Slide 17
Enhanced EPS Growth of 7% to 9%
Line Graph showing ranges of estimated EPS Growth Rates.
7-9% Growth Rate
With Merger
EPS Index Year
- --------- ----
100 2000 Non-Regulated contribution 3-4%
Merger Savings Contribution 1%
107-109 2001 Regulated Contribution 3-4%
115-119 2002
123-130 2003
131-141 2004
Pie Chart showing combined percentages of EPS contributions
Non-Regulated Regulated
------------- ---------
1998 12% 88%
2003 20% 80%
Slide 18
Attractive Dividend Income
Bar Graph of Dividend Payout
1999E Future
----- -------
NCE 70%
NSP 72%
Xcel 60-65%
- Policy to provide financial flexibility and current income
- $1.50 dividend to Xcel Energy and NSP shareholders
- Effectively $2.32 to NCE shareholders
- Target payout ratio of 60-65%
Slide 19
Increased Market Capitalization
Chart of the Market Capitalization for Investor-Owned Utilities in the U.S.
showing the combined Market Capitalization of NCE and NSP to form Xcel is in
excess of $8 billion. Dated as of May 27, 1999.
Slide 20
Superior Total Return
Xcel Merrill Lynch
Energy Electric Average
------ ----------------
Dividend Yield 5%-6% 4%-5%
EPS Growth 7%-9% 4%-5%
---- ----
Total Return 12%-15% 8%-10%
<PAGE>
Slide 21
Management Commitment
- Depth and breadth of Xcel Energy management team
- Management aligned with shareholder interests
Xcel
Energy
------
Chairman/Vice Chairman 3 - 5X Salary
Executive and Senior VPs 2 - 4X Salary
All Other Officers 1.5 - 2X Salary
Slide 22
Timeline to Completion
Timeline identifying the following key dates:
- - March 25, 1999 Merger Announcement
- - June 28, 1999 Shareholder Vote
- - June-July State Filings & Federal Filings
- - Target Completion Date of 12-18 Months,
within March 2000-September 2000 timeframe
- - NSP and NCE have developed a proactive plan for State and Federal approvals
- - Shareholder vote scheduled for June 28, 1999 and requires a simple majority
of all eligible votes
Slide 23
State Merger Approvals
Map showing the 4 states where Approval is Not Required which are:
Oklahoma, South Dakota, Wisconsin and Michigan and
the 8 states where Approval is Required which are:
North Dakota, Minnesota, Wyoming, Colorado, Kansas, New Mexico, Texas
and Arizona
- Majority of utility revenues are derived from Colorado, Minnesota and Texas
Slide 24
Reasons to Merge
- Accretive immediately
- Provides superior pro forma total return
- Increased balance sheet strength and flexibility
- Enhanced trading liquidity
- Combines complementary businesses
- Increases scale and scope
- Positions for competition and restructuring
Slide 25
Appendix
<PAGE>
Slide 26
Xcel Energy Profile
NSP NCE Xcel Energy
--- --- -----------
Customer Accounts (Mil):
Electric 1.5 3.6 5.1
Gas 0.5 1.4 1.9
Total (Domestic and Int'l) 2.0 5.0 7.0
Generation (MW):
Regulated 7,149 7,984 15,133
Non-Regulated 8,669 247 8,916
Total 15,818 8,231 24,049
Transmission (Miles):
Electric 6,843 10,236 17,079
Gas (T&D) 15,730 18,041 33,771
Gas (FERC regulated) 500 - 500
Thermal Supply 1,000Mwt 170Mwt 1,170Mwt
Refuse Derived Fuel 675,000T/Yr - 675,000T/Yr
Slide 27
Historical Contribution Analysis
Stacked Bar Chart of NSP Stacked Bar Chart of NCE
1996 1997 1998 1996 1997 1998
---- ---- ---- ---- ---- ----
Total EPS $1.91 $1.73 $1.84 $2.64 $2.50 $3.06
NRG & Other $0.12 $0.11 $0.26
Yorkshire & Other - $0.18 $0.30
Regulated Utility $1.79 $1.62 $1.58 $2.64 $2.32 $2.76
Slide 28
Non-Regulated Complementary Businesses
NSP NCE Combined
--- --- --------
Non-Regulated NRG Quixx
Generation 8,669MW 247MW 8,916MW
Energy Services EMI Planergy/
Cadence
$54 Million $9 Million $63 Million
Sales Sales Sales
Energy Marketing NSP e prime
and Trading $121 Million $255 Million $376 Million
Sales Sales Sales
Other Seren Eloigne Utility
Ultra-Power Engineering
Thermal Natural Fuels
$54 Million $114 Million $168 Million
Sales Sales Sales
<PAGE>
Slide 29
New Century Energies
Profile
NCE Bar Chart of Customer Growth (customers in 000)
Electric Gas - $7.7 billion in assets
19 1997 27 - 1.6 million electric customers
34 1998 32 - 82% residential
23 1999-Annually 25 - 1.0 million gas customers
- 91% residential
- 2.4 million international
Pie Chart of 1998 Contribution to Earnings customers
81% Electric - 2% electric customer growth
9% Gas - 3% gas customer growth
10% Non-Regulated - 7,984 MW regulated generation
Slide 30
New Century Energies -
International Operations
Yorkshire Energy Group Profile
- - NCE's wholly-owned subsidiary, New Century International, owns a 50% interest
in Yorkshire Power Group
- Yorkshire distributes and supplies electricity to two million customers
- Actively pursuing recently deregulated gas supply business
- Yorkshire has acquired approximately 400,000 natural gas customers
- - Contributed 15% of NCE 1998 EPS
- - Capture of new gas customers key to additional EPS growth
- - Distribution price control review likely to have zero net impact
Slide 31
New Century Energies -
Non-Regulated Operations
Additional Business Profiles
- - Utility Engineering Corporation - Provides engineering, design, construction,
management and other services to utilities
- - Quixx Corporation - Develops IPP and co-generation projects
- - The Planergy Group - A leading provider of energy consulting, for commercial
& industrial customers
- - e prime, inc. - A non-regulated electricity and gas marketing and trading
affiliate
- - New Century Cadence - An internet based commercial energy services company
focused on energy efficiency/cost reduction
- - Natural Fuels - Sells compressed natural gas as a transportation fuel and
invests in companies that own natural gas fueling stations
<PAGE>
Slide 32
New Century Energies -
Economic Outlook
- - Employment growth in 1998:
- 4.3% in northern NCE counties
- 1.7% in southern NCE panhandle counties
- 1.5% nationally
- - 3.4% unemployment rate vs. 4.5% nationally
New Century Energies -
Industry Restructuring
- - Colorado:
- 18-month study bill passed May 1998
- Natural gas customer choice
- - Texas: Senate Bill 7
- Electric restructuring bill approved by House and Senate
- Currently with Governor Bush for signature
- - New Mexico: Customer choice bill passed in April 1999 to begin in 2001
- - Anticipated implementation timetable
- Colorado and Texas: 2002
- New Mexico: 2001
Slide 33
New Century Energies -
Regulatory Activities
- - Colorado: Gas rate case
- NCE: $23.4 million, 12% ROE
- CPUC oral decision (5/20/99): $14.8 million, 11.25% ROE
- New rates effective 7/1/99
- - Voluntary emissions reduction plan
- - Texas: Fuel reconciliation
Slide 34
New Century Energies
Net Income (in Millions)
1998 1997 1996
---- ---- ----
Electric Utility $279 $216 $239
Gas Utility 30 27 17
International 52 36 --
Other 9 2 14
Corporate (28) (19) 2
--- --- -
Consolidated (Total) $342 $262 $272
Earnings Per Share $3.06 $2.50 $2.64
<PAGE>
Slide 35
Northern States Power
Profile
NSP Bar Chart Customer Growth (Customers in 000)
Electric Gas - $7.4 billion in assets
24 1997 14 - 1.5 million electric customers
20 1998 22 - 88% residential
18 1999-Annually 14 - .5 million gas customers
- 91% residential
- 1.0% electric customer growth
Pie Chart of 1998 Contribution to Earnings - 3.0% gas customer growth
80% Electric - 7,149 MW regulated generation
6% Gas - 8,669 MW non-regulated generation
14% Non-Regulated (1999E)
Slide 36
Northern States Power -
Pipeline Operations
Viking Transmission Profile
Map of the North Central U.S. identifying the location of the Viking
Transmission Pipeline
- 1999 Expansion $21.4 Million FERC Approved
- Continue to Sell Future Expansion
- Capacity of 460 Mcf/Day
- Average Daily Capacity Factor of 98%
and the planned Guardian Pipeline.
- 2002 in-service
- 87% Contracted
- - In the five years since NSP's acquisition, throughput has increased by 22%
- - Guardian will have an initial capacity of 750 Mcf/Day and can be expanded to
1.1Bcf/day
Slide 37
Northern States Power -
Non-Regulated Operations
NRG Energy Profile
- - NRG Energy maintains a 8,669 MW domestic and international portfolio of
competitive independent power facilities
- Recently acquired 4,745 MW of strategic generation assets in NEPOOL
- NRG increased contribution to NSP EPS from 11% to 15% from 1997 to 1998
- 20% contribution to NSP EPS expected in 1999
- - District heating and cooling operations among the largest
in the U.S.
<PAGE>
Slide 38
Northern States Power -
Non-Regulated Operations
Additional Business Profiles
- - Seren Innovations - Delivers high-speed internet access, telephone service,
cable TV and video-on-demand
- - Energy Masters International - Offers energy services focused on upgrading
facilities for greater energy efficiency
- - Eloigne Company - Invests in affordable housing developments principally
within NSP service territories through the Federal Housing Tax Credit Program
- - UltraPower - Provides non-destructive testing of underground power cables
Slide 39
Northern States Power -
Economic Outlook
- - Employment growth in 1998:
- 3.0% in Minneapolis/St. Paul SMSA
- 1.5% nationally
- - 2.0% unemployment rate vs. 4.5% nationally
Slide 40
Northern States Power -
Industry Restructuring
- - Minnesota:
- Commission has directed the Dept. of Public Service to develop a
comprehensive plan for gas and electric unbundling/retail choice/
restructuring by Jan. 1, 2001
- - North Dakota and South Dakota:
- No legislative or utility commission directives currently in place
- - Wisconsin:
- Public utilities must transfer control of transmission facilities to an
ISO or ITO by June 30, 2000
- - Michigan:
- Full retail customer choice on January 1, 2000
Slide 41
Northern States Power
Net Income (in Millions)
1998 1997 1996
---- ---- ----
Electric Utility $226 $200 $231
Gas Utility 17 22 28
NRG 42 22 20
EMI (8) (11) (9)
Other 5 4 5
--- --- -
Consolidated (Total) $282 $237 $275
Earnings Per Share $1.84 $1.73 $1.91
Operating Matters
- - Prairie Island and Monticello nuclear power plants maintain top tier INPO
ratings
