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XCEL ENERGY INC
8-K, EX-99.01, 2000-10-25
ELECTRIC & OTHER SERVICES COMBINED

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Exhibit 99.01

October 25, 2000

INVESTOR RELATIONS RELEASE

XCEL ENERGY INC. POSTS STRONG THIRD QUARTER EARNINGS

    MINNEAPOLIS—Xcel Energy's third quarter 2000 operating earnings rose 14 percent from a year ago. Xcel Energy, formed in August by the merger of Minneapolis-based Northern States Power Co. and Denver-based New Century Energies, reported operating earnings of 72 cents per share for the third quarter of 2000, excluding special charges and extraordinary items, compared with 63 cents per share in the same period of 1999.

    "We are off to a strong start with good quarterly results even though we were only merged for about one-half of the quarter," said Wayne Brunetti, Chief Executive Officer of Xcel Energy. "Xcel Energy is in the right place at the right time. We have established a top notch management team and we have established NRG as a successful public company with strong financial results."

    Regulated operating earnings for the third quarter were 55 cents per share, excluding special charges and extraordinary items, compared with 54 cents per share for the same period in 1999. Higher revenues from sales growth and favorable weather in some regions were partially offset by higher operating costs and revenue reductions accrued for regulatory mechanisms in Colorado and Texas.

    Xcel Energy's 82 percent stake in NRG Energy, a leading global energy company, contributed 23 cents per share in the third quarter of 2000, compared with 8 cents per share on a 100 percent ownership basis in 1999. Excluding special charges, total nonregulated earnings for the third quarter of 2000 were 17 cents per share, compared with 9 cents per share for the same period in 1999.

    Special charges and extraordinary items affecting third quarter 2000 earnings include 35 cents per share for costs related to completing the merger transaction and transition and integration activities incurred to date, including severance costs. In addition, special charges of 8 cents per share were recorded for asset impairments and other costs resulting from the post-merger strategic alignment of Xcel Energy's nonregulated businesses. An extraordinary charge of 2 cents per share is related to utility restructuring in Texas and New Mexico.

    Xcel Energy's earnings for third quarter of 2000, including the impact of special charges and extraordinary items, were 27 cents per share.

    "Excluding the extraordinary charges from Texas restructuring and special charges for merger-related costs, we are on track to achieve earnings of $2.10 per share for 2000 and $2.20 for 2001," added Brunetti.

    For the 12 months ended Sept. 30, Xcel Energy had earnings per share (excluding special charges and extraordinary items) of $2.13, compared with $1.86 per share for the comparable period in 1999. NRG Energy contributed 44 cents per share to Xcel Energy's earnings for the 12 months ended Sept. 30, 2000, compared with 25 cents per share for the comparable period in 1999. Earnings for the 12 months ended Sept. 30, 2000, were reduced by 43 cents per share for the special charges discussed above, by 6 cents for special charges recorded in the fourth quarter of 1999 and by 6 cents for extraordinary charges related to utility restructuring in Texas and New Mexico.

    Xcel Energy's earnings for the 12 months ended Sept. 30, 2000, including the impact of special charges and extraordinary items, were $1.58 per share.

    This release includes forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the

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words "anticipate," "estimate," "expect," "objective," "outlook," "possible," "potential" and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including their impact on capital expenditures; business conditions in the energy industry; competitive factors; unusual weather; changes in federal or state legislation; regulation; currency translation and transaction adjustments; the higher degree of risk associated with Xcel Energy's nonregulated businesses compared with Xcel Energy's regulated business; and the other risk factors listed from time to time by Xcel Energy in reports filed with the Securities and Exchange Commission (SEC), including Exhibit 99.04 to Xcel Energy's report on Form 8-K filed Aug. 21, 2000.

# # #

    Xcel Energy will host an earnings conference call beginning at 1:30 Central time on Oct. 25. The conference call will be broadcast on our Web site at the following location: http://www.xcelenergy.com, then click on: Investor Information. In addition the call can be accessed live at 1-800-230-1092. The call will be available in a replay mode from 5:00 p.m. on Oct. 25 through 11:59 p.m. on Oct. 30, Central Time. Replay numbers:

U.S. Dial-In: 800-475-6701
International Dial-In: 320-365-3844
Access Code: 542596

    For more information, contact:

E J McIntyre		Vice President & Chief Financial Officer		612/215-4515
R J Kolkmann		Managing Director, Investor Relations		612/215-4559
M D Pritchard		Director, Investor Relations		612/215-4535

For news media inquiries only, please call Xcel Energy media relations 612/215-5300

    Xcel Energy Internet Address: http://www.xcelenergy.com

This information is not given in connection with any
sale or offer for sale or offer to buy any security.

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XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Thousands of Dollars, Except per Share Data)

				Three months ended Sept 30
				2000			1999
Operating revenues:
	Electric utility			$	1,678,801		$	1,457,919
	Gas utility				193,540			145,466
	Nonregulated and other				594,383			181,186
	Equity earnings from investments in affiliates				95,763			32,357
		Total revenue			2,562,487			1,816,928
Operating expenses:
	Electric fuel and purchased power—utility				791,277			592,622
	Cost of gas sold and transported—utility				84,169			67,594
	Cost of sales—nonregulated and other				261,027			74,199
	Other operating and maintenance expenses—utility				323,642			321,416
	Other operating and maintenance expenses—nonregulated				241,907			86,885
	Depreciation and amortization				163,871			159,905
	Taxes (other than income taxes)				90,062			90,768
	Special charges (see Note 2)				201,482			—
		Total operating expenses			2,157,437			1,393,389
Operating income					405,050			423,539
Other income (deductions):
	Minority interest				(19,025	)		(564	)
	Other				(12,902	)		7,111
		Total other income (deductions)			(31,927	)		6,547
Interest charges and financing costs:
	Interest charges—net of amount capitalized				168,005			117,842
	Distributions on redeemable preferred securities of subsidiary trusts				9,700			9,700
		Total interest charges and financing costs			177,705			127,542
Income before income taxes and extraordinary item					195,418			302,544
Income taxes					97,502			93,280
Income before extraordinary item					97,916			209,264
Extraordinary item (See Note 3)					(5,302	)		—
Net income					92,614			209,264
Dividend requirements and redemption premiums on Xcel Energy preferred stock					(1,060	)		(1,060	)
Earnings available for common shareholders				$	91,554		$	208,204
Weighted average common shares outstanding:
	Basic				338,495			332,510
	Diluted				338,876			332,591
Earnings per share—basic and diluted before special charges and extraordinary item				$	0.72		$	0.63
Special charges (see Note 2)				$	(0.43	)	$	—
Extraordinary item (see Note 3)				$	(0.02	)	$	—
Earnings per share—basic and diluted				$	0.27		$	0.63

See Notes to the Consolidated Financial Statements

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XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Thousands of Dollars, Except per Share Data)

				Twelve months ended Sept 30
				2000			1999
Operating revenues:
	Electric utility			$	5,350,350		$	4,976,080
	Gas utility				1,276,107			1,200,936
	Nonregulated and other				1,721,466			450,758
	Equity earnings from investments in affiliates				218,263			113,458
		Total revenue			8,566,186			6,741,232
Operating expenses:
	Electric fuel and purchased power—utility				2,277,176			1,961,400
	Cost of gas sold and transported—utility				744,253			733,065
	Cost of sales—nonregulated and other				791,615			214,846
	Other operating and maintenance expenses—utility				1,336,857			1,338,277
	Other operating and maintenance expenses—nonregulated				671,135			243,145
	Depreciation and amortization				655,300			668,336
	Taxes (other than income taxes)				351,766			365,566
	Special charges (see Note 2)				230,122			3,412
		Total operating expenses			7,058,224			5,528,047
Operating income					1,507,962			1,213,185
Other income (deductions):
	Minority interest				(29,809	)		(2,136	)
	Gain on the sale of nonregulated projects				—			29,951
	Other				(3,920	)		8,450
		Total other income (deductions)			(33,729	)		36,265
Interest charges and financing costs:
	Interest charges—net of amount capitalized				612,332			378,139
	Distributions on redeemable preferred securities of subsidiary trusts				38,800			38,800
		Total interest charges and financing costs			651,132			416,939
Income before income taxes and extraordinary item					823,101			832,511
Income taxes					268,853			211,921
Income before extraordinary item					554,248			620,590
Extraordinary item (See Note 3)					(18,960	)		—
Net income					535,288			620,590
Dividend requirements and redemption premiums on Xcel Energy preferred stock					(3,181	)		(5,300	)
Earnings available for common shareholders				$	532,107		$	615,290
Weighted average common shares outstanding:
	Basic				336,381			330,439
	Diluted				336,508			330,634
Earnings per share—basic and diluted before special charges and extraordinary item				$	2.13		$	1.86
Special charges (see Note 2)				$	(0.49	)	$	—
Extraordinary item (see Note 3)				$	(0.06	)	$	—
Earnings per share—basic and diluted				$	1.58		$	1.86

See Notes to the Consolidated Financial Statements

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XCEL ENERGY INC.

Notes to Financial Statements

    Due to the seasonality of Xcel Energy's operating results, quarterly financial results are not necessarily an appropriate base from which to project annual results.

    Except for the historical statements contained in this document, the matters discussed in this investor relations release, including the statements regarding revenue and earnings expectations, are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate," "estimate," "expect," "objective," "outlook," "possible," "potential" and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to:

•

general economic conditions, including their impact on capital expenditures;



•

business conditions in the energy industry;



•

competitive factors;



•

unusual weather;



•

changes in federal or state legislation;



•

regulation;



•

the higher risk associated with Xcel Energy's nonregulated businesses compared with Xcel Energy's regulated business;



•

currency translation and transaction adjustments; and



•

the other risk factors listed from time to time in Xcel Energy's Securities and Exchange Commission (SEC) reports, including Exhibit 99.04 to Xcel Energy's Supplemental Consolidated Financial Statements on Form 8-K dated Aug. 21, 2000.

Note 1.  Merger to Form Xcel Energy

    On Aug. 18, 2000, New Century Energies (NCE) and Northern States Power Company (NSP) merged and formed Xcel Energy Inc. Xcel Energy Inc., a Minnesota corporation, is a registered holding company under the Public Utility Holding Company Act of 1935. Each share of NCE common stock was exchanged for 1.55 shares of Xcel Energy common stock. NSP shares became Xcel Energy shares on a one-for-one basis. Also in connection with the merger, all of NSP's pre-merger utility assets and liabilities were transferred to a newly formed utility subsidiary. The merger was structured as a tax-free, stock-for-stock exchange for shareholders of both companies (except for fractional shares), and accounted for as a pooling of interests.

    Consistent with pooling accounting requirements, upon consummation of the merger in the third quarter of 2000, Xcel Energy recognized all merger-related costs as discussed in Note 2. An allocation of merger costs was made to utility operating companies consistent with prior regulatory filings.

    Xcel Energy owns the following direct subsidiaries, some of which are intermediate holding companies with additional subsidiaries:

•

Northern States Power Company Minnesota (NSP-Minnesota)



•

Northern States Power Company Wisconsin (NSP-Wisconsin)



•

Public Service Company of Colorado (PSCo)

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•

Southwestern Public Service Company (SPS)



•

Black Mountain Gas



•

Cheyenne Light, Fuel and Power Company



•

Viking Gas Transmission Company



•

WestGas InterState Inc.



•

Xcel Energy Wholesale Energy Group Inc.



•

Xcel Energy Markets Group Inc.



•

Xcel Energy International Group Inc.



•

Xcel Energy Ventures Inc.



•

Xcel Energy Retail Services Group Inc.



•

Xcel Energy Communications Group Inc.



•

Xcel Energy WYCO Inc.

    In addition, Xcel Energy, through the Xcel Wholesale Energy Group, owns 82 percent of the common stock of NRG Energy, Inc., a publicly traded independent power producer. Xcel Energy owned 100 percent of NRG until the second quarter 2000, when NRG completed its initial public offering. Xcel Energy and its subsidiaries collectively are referred to as Xcel Energy.

Note 2.  Special Charges

    During the third quarter of 2000, Xcel Energy recognized pretax special charges totaling $201 million. In the aggregate these special charges reduced Xcel Energy's third quarter 2000 earnings by 43 cents per common share.

    The pretax charges included $49 million related to one-time transaction-related costs incurred in connection with the merger of NSP and NCE. These transaction costs include investment banker fees, legal and regulatory approval costs, and expenses for support of and assistance with planning and completing the merger transaction.

    Also included were $110 million of pretax charges pertaining to incremental costs of transition and integration activities associated with merging NSP and NCE to begin operations as Xcel Energy. These transition costs include approximately $68 million for severance and related expenses associated with staff reductions of 656 employees, most of whom were released in September and October 2000. Other transition and integration costs include amounts incurred for facility consolidation, systems integration, regulatory transition, merger communications and operations integration assistance.

    In addition, the pretax charges include $42 million of asset impairments and other costs resulting from the post-merger strategic alignment of Xcel Energy's nonregulated businesses. These special charges include: $22 million of write-offs of goodwill and project development costs for Planergy and Energy Masters International (EMI) energy services operations that will change their business focus and direction after the merger; $9 million of contractual obligations and other costs associated with post-merger changes in the strategic operations and related revaluations of e prime's energy marketing business; and $10 million in asset write-downs and losses resulting from various other nonregulated business ventures that will no longer be pursued after the merger.

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    The pretax special charges recognized for merger transaction, transition and integration activities include approximately $66 million in costs incurred prior to third quarter 2000, which had been deferred prior to merger consummation. Of the special charges recorded in third quarter 2000, approximately $57 million relates to accruals of severance and other employee costs, and various integration obligations, that will be paid out in future periods. These accruals are reported in Xcel Energy's balance sheet in other accrued current liabilities.

    In addition to the special charges recorded in third quarter 2000, Xcel Energy anticipates approximately $30 million to be incurred in the fourth quarter of 2000 for additional merger transition, integration and severance activities that are expected to occur prior to year-end. Management expects the majority of its merger-related transition and integration activities to be completed by early 2001 so that Xcel Energy can fully realize in 2001 and future years the operating synergies anticipated from the merger of NSP and NCE.

Note 3.  Significant Factors Affecting Operating Results

    The following table summarizes the earnings per share contributions of Xcel Energy's businesses.

Extraordinary Item—Electric Utility Restructuring

    With the issuance of a final written order by the Public Utilities Commission of Texas (PUCT) on May 31, 2000, addressing the implementation of electric utility restructuring, SPS discontinued regulatory accounting under SFAS 71 for the generation portion of its business during the second quarter of 2000. Consistent with current accounting rules, this resulted in extraordinary charges in the second and third quarters of 2000.

    During the second quarter of 2000, SPS wrote off its generation-related regulatory assets and other deferred costs totaling approximately $19 million. This resulted in an after-tax extraordinary charge of approximately $13.7 million against the earnings of Xcel Energy and SPS. During the third quarter of 2000, SPS recorded a charge of $8.2 million before tax, or $5.3 million after tax, related to the defeasance of approximately $275 million of First Mortgage bonds. These extraordinary charges reduced Xcel Energy's earnings by 4 cents per share for the second quarter of 2000 and 2 cents per share for the third quarter of 2000.

    While the PUCT rate order only addresses Texas operations, SPS plans to pursue a similar strategy to implement the restructuring legislation enacted in New Mexico and believes that all of its generation will ultimately be deregulated. Accordingly, SPS has discontinued regulatory accounting under SFAS 71

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in all jurisdictions of its generation business. SPS's transmission and distribution business continues to meet the requirements of SFAS 71, as that business is expected to remain regulated.

    The total impacts of deregulation may be affected by the results of future state and federal regulatory proceedings prior to actual implementation of full competition, currently anticipated to begin on Jan. 1, 2002.

Special Charges

    During the third quarter of 2000, Xcel Energy recorded a pretax charge of $201 million, or 43 cents per share, for special charges related to the merger between NSP and NCE. See Note 2 for more information on these charges.

    During the fourth quarter of 1999, Xcel Energy recorded special charges that reduced earnings by 6 cents per share, as discussed under Nonregulated Operations.

Regulated Operations

Conservation Incentive Recovery

    Earnings for the 12 months ended Sept. 30, 1999, were reduced by 6 cents per share due to the disallowance of 1998 conservation incentives. During the second quarter of 1999, the Minnesota Public Utilities Commission (MPUC) denied Xcel Energy recovery of 1998 lost margins, load management discounts and incentives associated with state-mandated programs for electric energy conservation. Xcel Energy recorded a $35 million charge based on this action.

    In addition, electric revenues have also declined in both the third quarter of 2000 and the 12 months ended Sept. 30, 2000, due to lower accruals of conservation incentives for the current year. Lower conservation incentive accruals have reduced regulated earnings by an estimated 2 cents per share for the third quarter of 2000 and 9 cents per share for the 12 months ended Sept. 30, 2000, compared with the same periods in 1999.

Regulatory Adjustments

    Earnings for the third quarter of 2000 and the 12 months ended Sept. 30, 2000, were reduced by approximately 5 cents per share due to revenue adjustments recorded for estimated impacts of regulatory mechanisms in place in Colorado and Texas. In Colorado, approximately $16 million of adjustments were recorded for estimated future rate reductions related to recovery of energy costs, allowed return levels and system reliability and availability. In Texas, approximately $12 million of adjustments were recorded for allowed return levels. The majority of these adjustments relate to regulatory filings (projected and made) for the 12-month period ended June 30, 2000.

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Estimated Impact of Temperature Changes on Regulated Earnings

    Xcel Energy analyzes the approximate effect of variations from historical average temperatures on actual sales levels. The following summarizes the estimated impact of temperature variations on actual utility operating results (in relation to sales under normal weather conditions).

Sales Growth

    The following table summarizes Xcel Energy's regulated growth in actual electric and gas sales for the three-month and 12-month periods ended Sept. 30, 2000, compared with the same periods in 1999.

Nonregulated Operations

    The following table summarizes the earnings-per-share contributions of Xcel Energy's nonregulated businesses.

*

Earnings for the third quarter of 2000 have been reduced by special charges of 4 cents per share related to Planergy, 2 cents per share related to e prime and 2 cents per share related to other operations. Earnings for the 12 months ended Sept. 30, 2000, have been reduced by special charges of 4 cents per share related to EMI and 2 cents per share related to Cellnet.

NRG Initial Public Offering

    During the second quarter of 2000, NRG completed an initial public offering of 32,395,500 shares priced at $15 per share. Upon completion of the initial public offering, Xcel Energy owns

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approximately 147,600,000 Class A shares of NRG common stock, or 82 percent of NRG's outstanding shares. Management has concluded that this offering of NRG stock will not affect Xcel Energy's ability to use the pooling of interests method of accounting for the merger of NSP and NCE. The offering's net proceeds of approximately $454 million were used for general corporate purposes, including funding a portion of NRG Energy's project investments and other capital requirements for 2000. No proceeds of this offering were received by Xcel Energy. A portion of the proceeds was accounted for as a gain on the sale of 18 percent of Xcel Energy's ownership in NRG. This gain of $216 million was not recorded in earnings, but consistent with Xcel Energy's accounting policy was recorded as an increase in the common stock premium component of stockholders' equity.

    The NRG earnings for the third quarter of 2000 in this report exclude earnings of approximately $15.9 million, or 5 cents per share, related to minority shareholder interests. The NRG earnings for the 12 months ended Sept. 30, 2000, in this report exclude earnings of approximately $21.6 million, or 6 cents per share, related to minority shareholder interests.

NRG Results

    NRG's earnings for the third quarter 2000 and the 12 months ended Sept. 30, 2000, continue to benefit from increased generation capacity due to a number of recently acquired generation assets. From September 1999 to September 2000, NRG has increased its megawatt (MW) ownership interest in generating facilities in operation from 6,719 megawatts to 14,216 megawatts. NRG's earnings for the third quarter 2000 and the 12 months ended Sept. 30, 2000, were also influenced by favorable weather conditions that increased demand for electricity in the northeast and western United States, strong performance from existing assets and increases in fuel prices, primarily natural gas and oil, which contributed to higher market prices for electricity.

Yorkshire Power

    Equity earnings from Yorkshire Power increased for both the third quarter of 2000 and the 12 months ended Sept. 30, 2000, due to a stronger performance in the supply business from lower electricity supply prices and lower operating costs due to an aggressive cost reduction program and a change in its accounting for depreciation effective Jan. 1, 2000.

Seren Results

    As expected, Seren's expansion of its broadband communications network in St. Cloud, Minn., and construction in California resulted in losses for the third quarter and the 12 months ended Sept. 30, 2000.

Planergy International Results

    During the third quarter of 2000, Planergy and EMI, both wholly owned subsidiaries of Xcel Energy, were merged to form Planergy International. As a result of this merger, Planergy International reassessed its business model and made a strategic realignment, which resulted in the write-off of goodwill and project development costs.

    Planergy International's results for the third quarter of 2000 and the 12 months ended Sept. 30, 2000, include $22 million (before tax) of write-offs of goodwill and project development costs for Planergy, which reduced earnings by 4 cents per share.

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    In addition, Planergy International's results for the 12 months ended Sept. 30, 2000, were reduced by a special charge of 4 cents per share to write off goodwill that was recorded for its acquisitions of Energy Masters Corp. in 1995 and Energy Solutions International in 1997. EMI wrote off approximately $17 million of goodwill (before tax) during the fourth quarter of 1999.

Other

    The Other Nonregulated results for the third quarter of 2000 and the 12 months ended Sept. 30, 2000, include $9 million of contractual obligations and other costs associated with post-merger changes in the strategic operations and related revaluations of e prime's energy marketing business, and $10 million in asset write-downs and losses resulting from various other nonregulated business ventures that will no longer be pursued after the merger. These special charges reduced earnings by 4 cents per share.

    In addition, Other Nonregulated results for the 12 months ended Sept. 30, 2000, were also reduced by a special charge of 2 cents per share for a valuation write-down of Xcel Energy's investment in the publicly traded common stock of CellNet Data Systems, Inc.

Note 4.  NRG Acquisitions

    In January 2000, NRG reached agreement to purchase 1,875 megawatts of fossil-fueled electric generation assets in the mid-Atlantic region of the United States from Conectiv. The purchase price is approximately $800 million. NRG will sell 500 megawatts of energy around the clock to Delmarva Power and Light Company under a five-year agreement. The remaining energy and capacity will be sold into markets in the mid-Atlantic region. NRG will own a 100-percent interest in the project and expects to close on the project in the first quarter of 2001.

    During June 2000, the Estonian Cabinet approved the terms under which NRG may proceed to purchase a 49-percent interest in Narva Power, which owns approximately 3,000 megawatts of oil shale-fired generation plants and a 51-percent interest in state-owned oil shale mines, Eesti Polevkivi. NRG's purchase of a 49-percent interest in Narva Power remains subject to successful negotiation of definitive agreements. State-owned Eesti-Energia will retain 51-percent ownership of Narva Power. The terms include a commitment by Narva Power to invest approximately $361 million for reconstructing and refurbishing the generation plants and making environmental improvements. NRG Energy will make an initial $65 million to $70 million equity commitment. Narva Power's two stations, Balti and Eesti, currently supply more than 90 percent of Estonia's electricity. Narva Power will enter into a 15-year power purchase agreement with Eesti-Energia.

    During September 2000, NRG acquired a 100-year lease of the Flinders Power assets in South Australia for approximately AUD $314 million (approximately $170 million U.S. at time of purchase). Flinders Power includes two power stations totaling 760 megawatts, the Leigh Creek coal mine 175 miles north of the power stations and a dedicated rail line between the two and Leigh Creek township. Flinders Power is required to purchase the electricity generated by the Osborne Cogeneration Station for the next 18 years and is also obligated to supply the natural gas that will be burned by the Osborne Cogeneration Station for the next 13 years.

    In October 2000, NRG agreed to purchase a 50-percent interest in the Sierra Pacific Resources' 522-megawatt coal-fired North Valmy Generating Station and a 100-percent interest in 25 megawatts of peaking units near Valmy Station. The Valmy assets are currently owned by Sierra Pacific Resources' subsidiary, Sierra Pacific Power Company. Idaho Power, the other 50-percent owner of the Station, has

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a 180-day right of first refusal on purchasing Sierra Pacific Resources' 50-percent interest. The agreement includes a transitional power purchase agreement (TPPA) for Sierra Pacific Power to purchase energy and ancillary services through March 1, 2003, under a contract that will provide price certainty for Sierra's customers. The asset purchase price was approximately $273 million, net of the TPPA, subject to tax and other adjustments. The project is expected to close in first quarter of 2001.

    The following table highlights NRG's recent and planned acquisitions.

Note 5.  Other Business Developments

    Xcel Energy's affiliate, Nuclear Management Company (NMC), and Consumers Energy (CE) are developing plans for NMC to operate CE's Palisades nuclear plant in Covert, Mich. The two companies have reached a tentative agreement, subject to the approval of the CE Board of Directors, for NMC to operate the 789-megawatt plant south of Kalamazoo, Mich. NMC provides an experienced senior management team focused on sustaining long-term safety and enhancing reliability and performance of its plants. NMC operates five other plants in Iowa, Minnesota and Wisconsin, including NSP-Minnesota's Monticello and Prairie Island nuclear plants. The addition of Palisades would give NMC 4,500 megawatts of generation, making it the sixth largest operator of nuclear plants in the United States.

    During the third quarter of 2000, Utility Engineering, a wholly owned subsidiary of Xcel Energy, acquired Proto-Power, an engineering services consulting firm in Groton, Conn. Utility Engineering's primary business is power plant design and construction. The acquisition moves Utility Engineering into the ranks of the top dozen power engineering companies in the U.S. Proto-Power employs approximately 150 employees.

Note 6.  Financing Activities

    During the third quarter of 2000, Xcel Energy filed a $1 billion universal debt shelf registration with the SEC. Standard & Poors has assigned the shelf a rating of BBB+.

Note 7.  Commitments and Contingencies

    In April 1997, a fire damaged several buildings in downtown Grand Forks, N. D., during a flood in the city. On July 23, 1998, the St. Paul Mercury Insurance Co. commenced a lawsuit against NSP-Minnesota for damages in excess of $15 million. The suit was filed in the District Court in Grand Forks County in North Dakota. The insurance company alleges the fire was electrical in origin and that NSP-Minnesota was legally responsible for the fire because it failed to shut off electrical power to downtown Grand Forks during the flood and prior to the fire. Seven additional lawsuits were filed against NSP-Minnesota by insurance companies that insured businesses damaged by the fire. One

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additional lawsuit filed by the First National Bank of Grand Forks is venued in Federal Court. The total of damages being sought by all these lawsuits is in excess of $30 million. NSP-Minnesota denied any liability, asserting that it was not legally responsible for this unforeseeable event. Trial concerning the state court lawsuits commenced on Aug. 1, 2000, and concluded on Sept. 7, 2000. On Sept. 8, 2000, after deliberating for only one hour, a jury returned a defense verdict in favor of NSP-Minnesota. It is unknown whether the plaintiffs will appeal. NSP-Minnesota has a self-insured retention deductible of $2 million, with general liability insurance coverage limits of $150 million. The ultimate cost to NSP-Minnesota, if any, is unknown at this time.

XCEL ENERGY INC.
UNAUDITED EARNINGS RELEASE SUMMARY
All dollars in thousands, except earnings per share

3 months ended Sept. 30				2000			1999
Operating revenue				$	2,562,487		$	1,816,928
Net income				$	92,614		$	209,264
Earnings available for common				$	91,554		$	208,204
Average shares—common and potentially dilutive					338,876			332,591
Earnings per share—diluted:
	Earnings before special charges & extraordinary item			$	0.72		$	0.63
	Special charges			$	(0.43	)	$	0.00
	Extraordinary item			$	(0.02	)	$	0.00
		Total Earnings Per Share		$	0.27		$	0.63

9 months ended Sept. 30				2000			1999
Operating revenue				$	6,606,253		$	5,043,773
Net income				$	389,027		$	423,244
Earnings available for common				$	385,846		$	419,013
Average shares—common and potentially dilutive					337,450			331,505
Earnings per share—diluted:
	Earnings before special charges & extraordinary item			$	1.57		$	1.26
	Special charges			$	(0.43	)	$	0.00
	Extraordinary item			$	(0.06	)	$	0.00
		Total Earnings Per Share		$	1.14		$	1.26

12 months ended Sept. 30				2000			1999
Operating revenue				$	8,530,981		$	6,776,437
Net income				$	535,288		$	620,590
Earnings available for common				$	532,107		$	615,290
Average shares—common and potentially dilutive					336,508			330,634
Earnings per share—diluted:
	Earnings before special charges & extraordinary item			$	2.13		$	1.86
	Special charges			$	(0.49	)	$	0.00
	Extraordinary item			$	(0.06	)	$	0.00
		Total Earnings Per Share		$	1.58		$	1.86

14

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INVESTOR RELATIONS RELEASE
XCEL ENERGY INC. POSTS STRONG THIRD QUARTER EARNINGS

Note 1. Merger to Form Xcel Energy
Note 2. Special Charges
Note 3. Significant Factors Affecting Operating Results
Regulated Operations
Nonregulated Operations
Note 4. NRG Acquisitions
Note 5. Other Business Developments
Note 6. Financing Activities
Note 7. Commitments and Contingencies

XCEL ENERGY INC. UNAUDITED EARNINGS RELEASE SUMMARY All dollars in thousands, except earnings per share

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