To Our Stakeholders:
Never before has energy been so important to society. From homes and businesses to hospitals and airports, communities run on energy. And while it’s largely invisible, energy supports nearly every aspect of people’s lives — from food production to education, health care and even our ability to connect with friends and family. Energy helps us achieve our goals.
Most people take energy for granted because it’s so reliable. The devastating hurricanes last year in Texas, Florida and Puerto Rico, however, reminded us of the challenges to live without power for a significant period of time. Energy not only powers our lives every day, but it’s the engine that drives our economy and progress across America and around the world.
As an energy provider, Xcel Energy drives progress for the communities and customers we serve. And just as they rely on us, we depend on them.
As the theme for this year’s report describes, we have a vision for where we’re going, Leading the Energy Future. We have set a path that provides our customers and communities with a more sustainable, prosperous energy future — one that ensures our mutual progress.
At a very basic level, local economies depend on us for reliable, affordable energy. Last year we delivered our best-ever performance in system reliability, but running our system well and keeping the lights on are table stakes in our business.
One of our major challenges is balancing the need to keep investing in our systems while managing the cost of energy for customers. That’s why keeping bills low is one of Xcel Energy’s three strategic priorities. By focusing on all aspects of the customer bill, we’ve kept it in check. Our average residential monthly customer bill for electricity has declined 3 percent since 2013 while natural gas bills have declined 14 percent, for the same period. Some of that decline can be attributed to our suite of 150 energy efficiency programs, falling energy prices and investing in new technologies that help our employees do their work more efficiently and effectively.
If we achieve our goal to keep bills at or below the level of inflation going forward, we can help free up a portion of our customers’ budgets to spend or invest in other ways that benefit the economy. As a local business, we’re mindful of local spending. Last year 70 percent of our spending was with businesses located in our service territory and 10 percent of our spending was with businesses owned by women, minorities or veterans. In addition, some of the projects we invest in, such as transmission lines and wind farms, create hundreds of local construction jobs and significant tax base.
Finally, by providing valuable products and services, we help drive economic development. For example, our renewable choice programs, like Renewable*Connect, can make our cities more attractive to companies with sustainable energy goals.
This past year, we worked side-by-side with local economic development authorities to attract and retain business, something that supports all of our bottom lines. Together, we identified or supported more than 140 business development opportunities that generated nearly 700 jobs and $72.2 million in investment for the communities we serve.
For more than a decade, we’ve embraced the tremendous responsibility entrusted to us to reduce our environmental footprint while balancing our customers’ need for safe, reliable, affordable energy. We also recognize that for many of our stakeholders addressing climate change is an urgent and pressing issue. We’re among the industry leaders in carbon reduction and are happy to deliver energy today that is greener than ever before.
It’s the catalyst for efforts that have reduced our carbon emissions 35 percent since 2005 from the electricity serving our customers, as we work toward our target to reduce carbon 60 percent or more by 2030. Through cleaner energy, we’re delivering other environmental benefits too — we’ve reduced water consumption by more than 40 percent, sulfur dioxide emissions by 72 percent and nitrogen oxide emissions by 76 percent since 2005.
These are outstanding results, but we have aspirations to do even more. Through our strategic priority to lead the clean energy future, we continue to change the way we produce and deliver energy — retiring aging coal plants and replacing them with a combination of wind and solar power and more carbon-friendly natural gas for backup. By 2030, we expect that half of our energy will come from renewable sources. Our plans are contingent on the ability to run our nuclear power plants through their licensing period in the early 2030s — nuclear energy is currently the only 24/7 carbon-free baseload energy source available.
Our Steel for Fuel growth strategy — building wind farms that deliver both environmental and economic benefits — is at the core of this transition. It’s a win-win scenario that appeals to stakeholders across the political spectrum. Last year, we announced the largest multi-state wind investment in the country — we have 12 new wind farms in various stages of development across seven states. When they are completed by 2022, we expect to be the first energy provider in the country to surpass 10,000 megawatts of wind capacity on our systems.
As a clean energy leader, we see the opportunity to reduce carbon beyond the energy sector. For instance, we can reduce reliance on fossil fuels by electrifying the transportation sector. Today an electric vehicle charged on our systems operates with 70 percent fewer carbon emissions compared to a typical car running on gasoline, and the results will get even better as we continue to transition away from fossil fuels.
Serving people is at the heart of what we do. We power their lives, providing comfort and convenience and always strive to do better, which is fundamental to another strategic priority, enhancing the customer experience. More than ever, we are looking at our processes through the lens of customers to give them the products and services they want and value and to make it easier to do business with us.
Last year we stepped up our outage notification efforts. We understand the inconvenience that rare power outages cause and know the best thing we can do is provide timely and accurate information about when power restoration is expected. To this end, we launched a new online storm center that features improved outage maps, developed an award-winning mobile app and enrolled millions of customers to receive outage notifications by email, text or voicemail.
Just as we are focused on individual customers, we are enhancing the experience of our communities too. We recently forged proactive partnerships with two Colorado communities — Denver and Breckenridge — to not only deliver energy but to help them achieve their clean energy and sustainability goals, as well as other priorities. It’s a model we want to replicate and are discussing with other communities.
Part of serving our customers and local communities is working to keep them safe. Throughout the year, we promote public service campaigns that raise awareness around the hazards associated with natural gas and electricity. Last year we had our best-ever public safety performance as we surpassed our goal for reducing accidental dig-ins to underground equipment by contractors and others. Another, less-visible aspect of protecting the public is enhancing the grid and protecting it from physical attacks and cyber criminals. In October, we opened our state-of-the-art Cyber Defense Center to protect our customers from the growing sophistication of cyberattacks.
Employee safety is equally important. While we finished 2017 strong with fewer injuries, several employees unfortunately suffered serious injuries during the year. In response, we took action and doubled down on our Journey to Zero safety commitment. Creating a safe workplace and developing our workforce are among the most important investments we make. As we bring in the next generation of workers and seek employees with the right skills and talents to serve our customers, we continue to build a workforce that reflects our communities and provides opportunities for everyone. Last year 23 percent of newly hired employees were ethnically diverse and 10 percent were veterans — who bring outstanding leadership, teamwork and technical skills to the job.
Beyond these customer and workforce commitments, we recognize that our responsibilities go much deeper. Giving back to our communities is part of our DNA. Last year we provided nearly $60 million to programs and agencies that support families and individuals in need — our largest single area of community support. On top of this, through the Xcel Energy Foundation, our employee United Way campaign and other giving, we contributed $11.7 million to support programs that help our communities thrive.
We’ve enjoyed the privilege of serving customers for more than 100 years, helping to shape and contribute to the significant progress that they’ve achieved over that time. As you read our Corporate Responsibility Report, you will learn more about how we are leading the energy future and the many ways we are fulfilling our economic, environmental and community responsibilities — ways we are supporting the ongoing progress of those we serve.
Never before has our energy been safer, cleaner and more resilient and reliable than it is today, and we anticipate that with emerging technologies, evolving customer preferences and a commitment to doing business responsibly for our communities, it will be even better in the future.
Chairman, President and CEO
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