Wildfire Litigation Scorches PSCo's Q3 Net Income by 81%

TL;DR

**PSCo's Q3 net income got torched by wildfire litigation, making it a risky bet for now.**

AI Summary

Public Service Company of Colorado (PSCo) reported a significant decline in net income for the three and nine months ended September 30, 2025, primarily due to a substantial charge related to Marshall Wildfire litigation. Net income for the three months ended September 30, 2025, plummeted to $48 million from $256 million in the prior year, a decrease of 81.25%. For the nine-month period, net income fell to $462 million from $594 million, a 22.22% reduction. This decline was largely driven by a $287 million charge for Marshall Wildfire litigation expenses. Total operating revenues increased, with electric revenues rising to $1,209 million from $1,128 million for the three-month period, and natural gas revenues increasing to $183 million from $165 million. Operating expenses, excluding the wildfire litigation, also saw increases, with electric fuel and purchased power up to $378 million from $319 million. The company significantly increased its utility capital/construction expenditures to $3,349 million for the nine months ended September 30, 2025, compared to $2,121 million in the prior year, indicating substantial investment in infrastructure. Long-term debt increased to $10,374 million from $8,391 million at December 31, 2024, reflecting increased financing needs.

Why It Matters

PSCo's substantial net income drop, driven by the $287 million Marshall Wildfire litigation charge, signals significant financial risk for investors in utility companies operating in fire-prone regions. This could lead to increased scrutiny from regulators like the CPUC regarding wildfire mitigation plans and potentially higher insurance costs, impacting profitability and future rate cases. For customers, these costs could eventually translate into higher utility rates, while employees might face pressure to enhance operational safety. Competitively, this event highlights the growing financial burden of climate-related risks on the utility sector, potentially giving an edge to companies with more robust risk management or those in less exposed geographies.

Risk Assessment

Risk Level: high — The company reported a $287 million charge for Marshall Wildfire litigation, which directly caused an 81.25% decrease in net income for the three months ended September 30, 2025, from $256 million to $48 million. This significant, unexpected expense highlights substantial operational and legal risks, indicating a high potential for future financial volatility due to similar events.

Analyst Insight

Investors should exercise caution and thoroughly evaluate PSCo's exposure to wildfire risks and the adequacy of its mitigation strategies. Consider diversifying away from utilities in high-risk areas or those with pending litigation, and monitor regulatory responses closely for potential rate impacts.

Financial Highlights

revenue

$4,203M

operating Margin

14.37%

total Debt

$10,374M

net Income

$462M

cash Position

$594M

revenue Growth

+5.26%

Revenue Breakdown

Key Numbers

• $48M — Net Income (3 months) (Down 81.25% from $256M in 2024 due to wildfire litigation.)
• $287M — Marshall Wildfire Litigation Expense (Primary driver of net income decline in Q3 2025.)
• $462M — Net Income (9 months) (Down 22.22% from $594M in 2024.)
• $1,400M — Total Operating Revenues (3 months) (Up from $1,301M in 2024.)
• $3,349M — Utility Capital/Construction Expenditures (9 months) (Increased significantly from $2,121M in 2024.)
• $10,374M — Long-Term Debt (Increased from $8,391M at Dec. 31, 2024.)
• $1,209M — Electric Operating Revenues (3 months) (Increased from $1,128M in 2024.)
• $183M — Natural Gas Operating Revenues (3 months) (Increased from $165M in 2024.)
• $1,170M — Available Credit Facility (Increased borrowing limit to $1.2B, extended maturity to Dec 2029.)
• $594M — Cash and Cash Equivalents (Significantly increased from $26M at Dec. 31, 2024.)

Key Players & Entities

• PUBLIC SERVICE CO OF COLORADO (company) — Registrant and wholly owned subsidiary of Xcel Energy Inc.
• Xcel Energy Inc. (company) — Parent company of Public Service Company of Colorado
• Marshall Wildfire (event) — Source of $287 million litigation expense
• FASB (regulator) — Issued accounting standards updates
• SEC (regulator) — Securities and Exchange Commission
• $287 million (dollar_amount) — Marshall Wildfire litigation expense
• $48 million (dollar_amount) — Net income for three months ended Sept. 30, 2025
• $256 million (dollar_amount) — Net income for three months ended Sept. 30, 2024
• $3,349 million (dollar_amount) — Utility capital/construction expenditures for nine months ended Sept. 30, 2025
• $10,374 million (dollar_amount) — Long-term debt as of Sept. 30, 2025

FAQ

Risk Factors

• Marshall Wildfire Litigation [high — legal]: The company incurred a significant $287 million charge for Marshall Wildfire litigation expenses in the nine months ended September 30, 2025. This charge directly impacted net income, causing a substantial decrease compared to the prior year.
• Increased Debt Levels [medium — financial]: Long-term debt increased to $10,374 million from $8,391 million at December 31, 2024. This increase reflects higher financing needs, potentially due to increased capital expenditures and litigation expenses.
• Rising Operating Expenses [medium — operational]: Operating expenses, excluding the wildfire litigation, also saw increases. Electric fuel and purchased power rose to $378 million from $319 million for the three-month period, indicating higher input costs.
• Significant Capital Expenditures [medium — financial]: Utility capital/construction expenditures increased substantially to $3,349 million for the nine months ended September 30, 2025, from $2,121 million in the prior year. While this signals investment in infrastructure, it also requires significant capital and may impact future cash flows.

Industry Context

The utility sector, particularly for companies like PSCo, is characterized by significant capital investment in infrastructure, regulatory oversight, and a growing focus on renewable energy and grid modernization. Companies face challenges in balancing cost recovery with consumer affordability, while also managing environmental and climate-related risks.

Regulatory Implications

PSCo operates under strict regulatory frameworks that govern rates, service quality, and environmental compliance. Significant charges like the Marshall Wildfire litigation can lead to increased scrutiny from regulators and potential impacts on future rate-setting decisions, affecting the company's ability to recover costs.

What Investors Should Do

1. Monitor litigation developments
2. Analyze capital expenditure impact
3. Evaluate operating expense trends
4. Assess debt management strategy

Key Dates

• 2025-09-30: End of Third Quarter 2025 — Reporting period for the 10-Q, showing significant net income decline due to wildfire litigation and increased capital expenditures.
• 2024-12-31: End of Fiscal Year 2024 — Baseline for comparison of long-term debt, which has since increased.
• 2025-02-27: Filing of 2024 Annual Report on Form 10-K — Provides audited financial statements and notes for the year ended December 31, 2024, referenced in the current 10-Q.

Glossary

Marshall Wildfire litigation

Legal expenses and potential liabilities arising from the Marshall Wildfire. (A significant charge of $287 million in the current period directly impacted net income, representing a major operational and financial risk.)

Allowance for funds used during construction (AFUDC)

A non-cash accounting concept that allows utilities to capitalize interest costs and the cost of equity capital incurred during the construction of new facilities. (The equity portion increased significantly ($97M in 2025 vs $50M in 2024), while the debt portion also increased, impacting reported income and cash flow from operations.)

Utility capital/construction expenditures

Investments made by the utility company in building, maintaining, and upgrading its infrastructure, such as power plants, transmission lines, and distribution networks. (A substantial increase to $3,349 million indicates significant investment in infrastructure, which is a key driver of future revenue but also requires substantial financing.)

Total operating revenues

The total amount of money generated by the company from its primary business activities, including the sale of electricity and natural gas. (Showed an increase to $4,203 million for the nine months ended September 30, 2025, indicating growth in core business despite other financial pressures.)

Net income

The company's profit after all expenses, taxes, and interest have been deducted from total revenues. (Experienced a significant decline to $462 million for the nine months ended September 30, 2025, primarily due to the wildfire litigation charge.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, Public Service Co. of Colorado reported a decrease in net income from $594 million to $462 million, a 22.22% reduction, largely driven by a $287 million charge for Marshall Wildfire litigation. Total operating revenues saw a modest increase from $3,993 million to $4,203 million, a 5.26% rise. However, operating expenses increased significantly due to the litigation charge and higher fuel costs. Long-term debt also rose considerably from $8,391 million at the end of the previous fiscal year to $10,374 million, reflecting increased financing needs, while capital expenditures saw a substantial jump.

Key Financial Figures

• $0.01 — tanding at Oct. 30, 2025 Common Stock, $0.01 par value 100 shares Public Service C

Filing Documents

• psco-20250930.htm (10-Q) — 1398KB
• pscoex3101q32025.htm (EX-31.01) — 10KB
• pscoex3102q32025.htm (EX-31.02) — 10KB
• pscoex3201q32025.htm (EX-32.01) — 8KB
• 0000081018-25-000016.txt ( ) — 7982KB
• psco-20250930.xsd (EX-101.SCH) — 44KB
• psco-20250930_cal.xml (EX-101.CAL) — 73KB
• psco-20250930_def.xml (EX-101.DEF) — 224KB
• psco-20250930_lab.xml (EX-101.LAB) — 599KB
• psco-20250930_pre.xml (EX-101.PRE) — 393KB
• psco-20250930_htm.xml (XML) — 1645KB

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

— Financial Statements (unaudited)

Item 1 — Financial Statements (unaudited) 4 Consolidated Statements of Income 4 Consolidated Statements of Comprehensive Income 5 Consolidated Statements of Cash Flows 6 Consolidated Balance Sheets 7 Consolidated Statements of Common Stockholder's Equity 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

— Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations 17

— Controls and Procedures

Item 4 — Controls and Procedures 20

— OTHER INFORMATION

PART II — OTHER INFORMATION

— Legal Proceedings

Item 1 — Legal Proceedings 21

— Risk Factors

Item 1A — Risk Factors 21

— Other Information

Item 5 — Other Information 21

— Exhibits

Item 6 — Exhibits 21

SIGNATURES

SIGNATURES 22 This Form 10-Q is filed by PSCo, a Colorado corporation. PSCo is a wholly owned subsidiary of Xcel Energy Inc. Additional information on Xcel Energy is available in various filings with the SEC. This report should be read in its entirety. Definitions of Abbreviations Xcel Energy Inc.'s Subsidiaries and Affiliates (current and former) e prime e prime inc. NSP-Minnesota Northern States Power Company, a Minnesota corporation NSP-Wisconsin Northern States Power Company, a Wisconsin corporation PSCo Public Service Company of Colorado SPS Southwestern Public Service Company Utility subsidiaries NSP-Minnesota, NSP-Wisconsin, PSCo and SPS Xcel Energy Xcel Energy Inc. and its subsidiaries Federal and State Regulatory Agencies CPUC Colorado Public Utilities Commission EPA United States Environmental Protection Agency FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission IRS Internal Revenue Service SEC Securities and Exchange Commission Other ARO Asset retirement obligation ASU Accounting standards update ARRR Application for rehearing, reargument or reconsideration C&I Commercial and Industrial CCR Coal combustion residuals CCR Rule Final rule (40 CFR 257.50 - 257.107) published by the EPA regulating the management, storage and disposal of CCRs as a nonhazardous waste CEO Chief executive officer CERCLA Comprehensive Environmental Response, Compensation, and Liability Act CFO Chief financial officer COD Commercial Operation Date CPCN Certificate of public convenience and necessity DSM Demand side management ETR Effective Tax Rate GAAP United States generally accepted accounting principles GHG Greenhouse gas IPP Independent power producing entity MGP Manufactured gas plant MMbtu Million British Thermal Units O&M Operating and maintenance OBBB One Big Beautiful Bill Act PFAS Per- and Polyfluoroalkyl Substances PIM Performance incentive mechanism PPA Power purchase agreement PT

Forward-Looking Statements

Forward-Looking Statements Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases or refunds to customers, expectations and intentions regarding regulatory proceedings, expected pension contributions, and expected impact on our results of operations, financial condition and cash flows of legal proceeding outcomes, as well as assumptions and other statements are intended to be identified in this document by the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "objective," "outlook," "plan," "project," "possible," "potential," "should," "will," "would" and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in PSCo's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2024 and subsequent filings with the SEC, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: operational safety; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee workforce and third-party contractor factors; violations of our Codes of Conduct; our ability to recover costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, incl

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

— FINANCIAL STATEMENTS

ITEM 1 — FINANCIAL STATEMENTS PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (amounts in millions) Three Months Ended Sept. 30 Nine Months Ended Sept. 30 2025 2024 2025 2024 Operating revenues Electric $ 1,209 $ 1,128 $ 3,105 $ 2,942 Natural gas 183 165 1,070 1,022 Other 8 8 28 29 Total operating revenues 1,400 1,301 4,203 3,993 Operating expenses Electric fuel and purchased power 378 319 1,007 963 Cost of natural gas sold and transported 36 45 380 453 Cost of sales — other 1 2 4 7 Operating and maintenance expenses 234 229 714 702 Demand side management expenses 62 56 174 132 Depreciation and amortization 276 248 819 740 Taxes (other than income taxes) 73 70 214 208 Marshall Wildfire litigation 287 — 287 — Total operating expenses 1,347 969 3,599 3,205 Operating income 53 332 604 788 Other income, net 12 14 28 42 Allowance for funds used during construction — equity 45 19 97 50 Interest charges and financing costs Interest charges and other financing costs 113 96 314 279 Allowance for funds used during construction — debt ( 18 ) ( 9 ) ( 40 ) ( 21 ) Total interest charges and financing costs 95 87 274 258 Income before income taxes 15 278 455 622 Income tax (benefit) expense ( 33 ) 22 ( 7 ) 28 Net income $ 48 $ 256 $ 462 $ 594 See Notes to Consolidated Financial Statements 4 Table of Contents PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (amounts in millions) Three Months Ended Sept. 30 Nine Months Ended Sept. 30 2025 2024 2025 2024 Net income $ 48 $ 256 $ 462 $ 594 Other comprehensive income Derivative instruments: Reclassification of losses to net income, net of tax — — 1 1 Total other comprehensive income — — 1 1 Total comprehensive income $ 48 $ 256 $ 463 $ 595 See Notes to Consolidated Financial Statements 5 Table of Contents PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES CONSOLIDATED STA

Notes to Consolidated Financial Statements (UNAUDITED)

Notes to Consolidated Financial Statements (UNAUDITED) In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly, in accordance with GAAP, the financial position of PSCo as of Sept. 30, 2025 and Dec. 31, 2024; the results of PSCo's operations, including the components of net income, comprehensive income and changes in stockholder's equity for the three and nine months ended Sept. 30, 2025 and 2024; and PSCo's cash flows for the nine months ended Sept. 30, 2025 and 2024. All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after Sept. 30, 2025, up to the date of issuance of these consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 2024 balance sheet information has been derived from the audited 2024 consolidated financial statements included in the PSCo Annual Report on Form 10-K for the year ended Dec. 31, 2024. Notes to the consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the consolidated financial statements and notes thereto included in the PSCo Annual Report on Form 10-K fo r the year ended Dec. 31, 2024, filed with the SEC on Feb. 27, 2025. Due to the seasonality of PSCo's electric and natural gas sales, interim results are not necessarily an appropriate base from which to project annual results. 1. Summary of Significant Accounting Policies The significant accounting policies set forth in Note 1 to the consolidated financial statements in the PSCo Annual Report on F

View Full Filing

View this 10-Q filing on SEC EDGAR