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Message from the CEO

To our stakeholders:

Every day, all day, the people of Xcel Energy work hard to earn the trust of our customers, communities and neighbors. For us, that means not only delivering on our promises to provide clean, reliable energy services at an affordable price but going above and beyond. What differentiates us is our ability to get the fundamentals right, to anticipate and embrace change and to give it our all for customers. Collectively, these things allow us to earn the right to be our customers’ trusted energy provider, and they form our mission at Xcel Energy.

Xcel Energy’s fundamentals are strong. Financially, our balance sheet and credit metrics are solid. Operationally, we run our businesses well. We strive to meet all environmental standards and have been a steadfast presence in the community for decades. If any of those accomplishments sound simple, they are not. You can be assured that they take enormous focus and effort. Fortunately, we have employees with the expertise to excel and the heart to care.

Beyond the fundamentals, we shine. Financially, we’ve met or exceeded our earnings guidance for nine consecutive years and been at the top of our guidance range for four. We’ve raised the dividend for 10 years running.

Operationally, we’ve developed the resources and expertise to complete complex projects on time and on budget—from refurbishing power plants to rebuilding natural gas lines to constructing new transmission lines. Here’s a great example: When we benchmark the cost of our 345-kilovolt transmission construction projects, our cost is $1.7 million per mile, compared with a national average of $2.1 million.

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Sound operations, however, mean nothing if they cannot be achieved safely. Safety is our highest priority, for both customers and employees. A renewed focus on public safety outreach is helping keep customers safe and reducing dig-ins to underground pipes and wires. Through our Journey to Zero employee safety program, we have set high standards that are paying off with a safer workplace. Employee safety has improved by 40 percent over the past five years. While this is significant progress, we still have work to do. Losing one of our own in New Mexico last year was a tragic reminder that we must continue to do better.

On the environmental front, we embraced renewable energy earlier than any other utility and today are the No. 1 provider of wind power in the nation, a position we’ve held for ten consecutive years. In fact, the American Wind Energy Association in 2013 named us their Utility of the Year—an honor we have received twice in the past five years.

Most important, we are able to deliver renewable energy at a price our customers can afford. In 2013, we announced the addition of 1,900 megawatts of wind energy across our service territory and 170 megawatts of solar energy, all at prices below fossil alternatives. These projects will save our customers money while expanding our clean energy profile.

To help ensure that we continue to have low-priced renewable alternatives in the future, we are actively engaging in development of improved clean energy policy. Whether in the area of solar energy, federal tax incentives or carbon regulation, we are promoting fair, transparent and effective public policy that will ensure that our customers continue to have access to affordable clean energy options.

We are engaged in clean energy policy debates because we understand how to make clean energy work for customers. Over the last decade, we have been proactive in reducing emissions from our power plants and today are well ahead of our goal to reduce carbon emissions 20 percent by 2020 over 2005 levels. In fact, we should achieve a 31 percent reduction—almost double the goal of President Obama’s climate action plan.

Of course, communities benefit from our operational expertise and environmental leadership. Beyond that, we support them through the Xcel Energy Foundation, United Way contributions and the volunteer efforts of employees and retirees. To meet the challenges that face our industry, it is critical today that we participate in our communities, engage with local stakeholders and communicate what we are doing. As proof of our impact, we have been included for seven years in the Dow Jones Sustainability Index for North America, a leading financial index of companies considered best in class for corporate economic, environmental and social performance.

More than anything, the growing and changing needs of our customers drive our quest for excellence. Today, customers want to choose the energy services they truly value, and they want more and better ways to conserve energy and save money. Fortunately, they look to us for solutions and we are determined to offer answers.

Customers also depend on us when the going gets tough—and this is where we truly live up to our name and excel. We had every kind of bad weather in our service territory in 2013—ice, snow, heat, floods and severe thunderstorms—all of which disrupted service and caused extensive damage. But our employees immediately rose to the challenge, working around the clock to get customers back in service in record time with the least amount of inconvenience. And even before bad weather hit, we made significant investments to keep the system strong and resilient and we actively prepared our storm response. The Edison Electric Institute recognized that work with an Emergency Response Award.

Our story is about commitment, expertise and excellence. It speaks to sustainability, and it starts with trust. Earning the trust of our customers and communities is a guiding principle of our company, and we work hard at it every day. As CEO, I couldn’t be prouder of this company and its employees. Spend some time with this report and you’ll see why.

Sincerely,

Ben Fowke

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Chairman, President & CEO