Xcel Energy posts Q1 profit beat despite mounting wildfire liabilities
New throughout, adds details about wildfire liabilities
April 25 (Reuters) -Xcel Energy XEL.O posted a better-than-expected first-quarter profit on Thursday, even asthe electric and natural gas utility faced growing liabilities tied to the largest wildfire in Texas history.
Xcel faces 15 lawsuits in connection with theTexas Smokehouse Creek blaze, which burned more than 1 million acres in the Lone Star state this year, with at least two of the complaints claimingthe utility was negligent in maintaining electrical infrastructure that led to the fire.
Anticipating losses from the Smokehouse Creek Fire, Xcel recorded a pre-tax charge during the quarter of $215 million, which it called the low-end of a range. Xcel said last month that its distribution poles likelystarted the fire, but it disputes claims of negligence.
Xcel also faces large potential damages from the Marshall Fire, which erupted in Colorado in 2021 and is the most costly blaze recorded by the state. The company says its power lines were not to blame for the fire.
The company said it was investing in hardening its infrastructure, moving power lines underground, and taking other measures to reduce fire risks.
"We are navigating changes in weather and climate-induced impacts on our operations. Wildfire mitigation and system resiliency will continue to be priorities going forward," CEO Bob Frenzel said.
Despite fire risks, the firm, which has 3.7 million customers across eight U.S. states, reported an adjusted quarterly profit of 88 cents, above Wall Street expectations of 78 cents, according to LSEG data.
Its operating expenses were $2.97 billion, 15.3% lower than the prior year as the cost of natural gas sold and transported shrunk by 44% year over year.
The company said lower operation and maintenance costs were primarily due to decreased labor and benefit expenses.
Xcel cut over 4% of its workforce in 2023 and had eliminated 159 roles as well as offered buyouts to 400 employees last quarter amid inflationary pressures.
Reporting by Kabir Dweit in Bengaluru and Laila Kearney in New York; Editing by Savio D'Souza and Franklin Paul
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