OGE Energy Corp. Q1 2023 Earnings Call
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Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Jason Bailey Director of Investor Relations. Please go ahead Jason.
Thank you hope and good morning, everyone and welcome to the call.
With me today, I have Sean <unk>, our chairman, President and CEO and Bryan Buckler, our CFO in terms of the call today, We will first hear from Sean followed by an explanation from Brian of financial results and finally as always we will answer your questions.
I would like to remind you that this conference is being webcast and you may follow along at <unk> Dot Com and.
In addition, the conference call and accompanying slides will be archived following the call on that same website.
Before we begin the presentation I'd like to direct your attention to the Safe Harbor statement regarding forward looking statements.
This is an SEC requirement for financial statements and simply states that we cannot guarantee forward looking financial results, but this is our best estimate to date.
I'll now turn the call over to Sean for his opening remarks, Sean. Thank you Jason Good morning, everyone. Thank you for joining us on today's call.
We're off to a really strong start for the year as you know the first quarter typically represents less than 10% of the electric companies earnings. However, this quarter does provide momentum for the year and I really like what I see earlier. This morning, we reported consolidated earnings for the quarter of <unk> 19 per share with <unk>.
Per share from O G&A and oil income and loss of a penny I am pleased with the overall performance is electric company with results up year over year, and Brian will discuss our financial results in more detail shortly.
Our plan for the future strong when you consider increased demand for electricity to support our growing communities business expansion is broad representing many sectors, including manufacturing defense tribal enterprises and healthcare in both Arkansas and Oklahoma.
Some of these expansions include significant job growth, including 900, new military personnel, who will be stationed at Ebbing Air National Guard base. Unfortunately, Arkansas.
Along with Pratt <unk> Whitney's announcement last month of the New Sustainment center associated with its operations near Tinker Air Force base in Oklahoma.
Our customer initiatives have gained steam, particularly in the digital experience one quarter after launching our new mobile app more than 10% of our customer base is downloaded the app more importantly, they are using it from bill payment to outage reporting, we're making making it easier for customers to self serve online enrolling.
Programs enrolling and services that help them manage their energy usage and monthly bill.
These efforts pay off in a multitude of ways from improving our customer experience driving costs out of our business.
Our grid and whether hardening investments are also paying off for customers and helping us achieve strong operational performance.
That's really important when you know that outflow, Oklahoma is a top five state for federally declared storms. These.
These investments are eliminating and reducing outages during severe weather.
Two weeks ago severe storms hit our service area with two communities highly impacted shiny and KOL, Oklahoma.
That night, there were 18 tornadoes and whats struck Shawnee left more than a mile wide path of destruction and people without power.
And yet within 48 hours, 75% of our customers were back online and by Monday that number was 95%.
The total customer impact to our system on the night of the storms was less than one half of 1% of our customer base. You just don't see those results following severe storms and other parts of the country. The folks in those towns have a long road ahead to rebuild and we'll be right there with them all along the way I am proud to work alongside our team every day.
Day, and as times like these that I am in all of the dedicated men and women, who understand our obligation to serve and don't stop until the work is done.
We continue to invest in the grid, improving distribution circuits, substations and structural resiliency to mitigate the impact of severe weather like the storms I mentioned earlier, we're excited about the opportunities through the <unk> to advance our reliability and resiliency work for our customers, while grounding our work and affordability with a 50% cost.
Share through the federal grant.
Supporting a growing customer base and thriving communities translates to a growing need for generation capacity. As you know we are actively working through multiple rfps to meet our capacity needs and we're making progress on finalizing agreements and plan to file for approval. This summer.
Not all of the RFP responses delivered the value we were looking for so we will be issuing a new IR Pea later this year with updated planning assumptions as well as exploring how opportunities in the <unk> and IRA to advance clean energy for the future might fit into the overall plan.
Our goal is to implement a generation plan that supports our customers and the business smoothing and investments in the steady incremental way without large spikes or bumps will deal with all of these factors in the most cost effective way, ensuring we lead with affordability.
And I've mentioned di J, a couple of times and we continue to pursue opportunities through the App with two full proposals under review one for good resiliency and one for storm protection plan.
Last month, we also submitted to concept papers under the energy improvements in rural or remote areas program with three quarters of our service area considered disadvantaged or tribal communities. We will relentlessly pursue every opportunity to improve reliability and resiliency for those customers.
Along with these programs, we're excited to be part of the Halo hydrogen hub of three state partnership between Arkansas, Louisiana, and Oklahoma, which is applying for the regional clean hydrogen hubs program allocated through the IAA. The full application is for $1 5 billion in federal funding and we submitted just last month.
We were also pleased the Oklahoma Corporation Commission approved our 2021 field Prudency audit last month.
And given the robust growth of our communities and the capital investments required to ensure reliable and resilient electricity. We're evaluating the timing of our next rate review, which could file which could be filed during the second half of this year.
In March the Arkansas Public Service Commission approved a settlement and the annual Formula rate plan review and new rates went into effect April one we'll file the last ifr formula rate plan update later this year and as I close I want to share a few thoughts on where we are headed.
This is an exciting time to be part of this industry and market. This company, especially when you do business in the service area that is growing.
We're truly in an opportunity rich environment are significant investment opportunities correlate directly to our economic development engine that drives community growth and business expansion in our service area. This widens the competitive advantage, we have and adding customers to the cities and towns we serve as we ground our plans and affordability for our customer.
And maintaining our low rates the future of O. G. Energy is bright our investments are delivering results with a 90, 996% uptime are service areas driving our business our customer base is growing our business fundamentals are excellent and our team I think is very best in the business and are focused.
On delivering premium electric company results. So we are operating from a strong base and are confident in delivering our commitments to you and as well to our customers now I will turn the call over to Bryan Bryan.
Thank you Sean Thank you, Jason and good morning, everyone, let's start on slide five and discuss first quarter 2023 results on.
On a consolidated basis first quarter net income was $38 million or <unk> 19 per diluted share compared to $280 million or $1 39 per share in the same period 2022.
Earnings for the first quarter of last year included a $1 15 per share from natural gas midstream operations.
We fully exited in 2022 through the sale of our energy transfer units.
The electric company achieved net income of $40 million or <unk> 20 per diluted share in the first quarter compared to $39 million or <unk> 19 per share in the same period 2022.
The increase in electric company net income was primarily due to increased recoveries of capital investments and strong load growth, partially offset by higher O&M and unfavorable weather and increased depreciation on a growing asset base.
Other operations, including our holding company reported a loss of $1 $5 million or a penny loss per diluted share in the first quarter compared to net income of $10 million or <unk> <unk> per share in the same period 2020 to the.
The decrease in net income was primarily due to a consolidating interim tax benefit of $12 million in the first quarter 2022 related to <unk> investment in energy transfer that reverse over the course of the year.
Turning to customer growth and load results on slide six.
Our customers grew at a rate of approximately 1%.
And weather normalized load grew at a rate of three 9% compared to first quarter 2022.
This trend of strong growth in customers and load is a testament to the vibrancy of the economies in Oklahoma, and Arkansas, and our sustainable business model of economic and business development enabled by <unk> lower customer rates.
While while residential load was lower as more and more of our customers' returns at office oilfield and public authority had very solid growth in the commercial sector turned in its third straight quarter of double digit year over year increases in weather normal load.
As Sean alluded to the pipeline of prospective business expansions.
<unk> continues to be as robust as the company has seen in many years coming from data mining manufacturing defense health care and travel enterprises among others.
The economic situation in Oklahoma, and Arkansas is outstanding and for the full year, we continue to forecast total weather normal load growth of 4% to 5% compared to 2022.
Now, let's move to slide seven for an update on our 2023 financing plan as you know <unk> energy is fortified by one of the strongest balance sheets in the industry with no need to issue equity for our current capital forecast. Furthermore, our projection of <unk> to debt metrics of 17, 5% to 18% throughout the five year forecast period as one of the bed.
First in the industry.
At the electric company, we issued $350 million of five 6% notes in April and have now completed our planned long term debt issuances for the year.
This month, we will pay off the $500 million of senior notes at the electric company and $500 million of senior notes at the holding company that were issued in 2021 after winters formulary with these repayments we will be in a short term debt position at the holding company and expect to end the year with a balance of approximately $300 million.
Now, let's move to slide seven for an update on our 2023 financing plan as you know <unk> energy is fortified by one of the strongest balance sheets in the industry with no need to issue equity for our current capital forecast.
Accordingly, our relative holding company debt position will be one of the lowest in the industry at well less than 10% of consolidated debt. As a reminder, we have no additional fixed rate maturities through 2026.
Before transitioning to our final slide let me provide an update on our fuel under recovery status at the end of March our fuel under recovery balance was approximately $370 million a reduction of $145 million since year end.
We still have several months before we before we will catch up on the recovery of last year's fuel cost. We are hopeful these fuel price trends continue and ultimately lead to lower bills for our customers.
Let's wrap up on slide eight in summary, our first quarter EPS came in as expected and I have great confidence in our employees ability to execute on our plan for the full year 2023 and to deliver financial results consistent with our earnings guidance.
Simply said I really like where we stand for 2023 and that allows us to focus on achieving our longer term commitments to customers communities employees and shareholders.
As Sean mentioned, the fundamentals of <unk> business are encouraging, including strong economics infrastructure and load growth with a foundation of a solid balance sheet, all of which underpin our confidence in the 5% to 7% long term earnings per share growth rate at the electric company.
We believe this projected earnings trajectory, coupled with an expected stable and growing dividend.
Offers our investors an attractive total return proposition.
With that we will open the line for your questions.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced can.
To withdraw your question. Please press star one one again, please standby, while we compile the Q&A roster.
Our first question comes from the line of Shar.
<unk> with Guggenheim partners your.
Your line is now open.
Hi, good morning, Sean and team congrats on a great quarter, it's actually Constantine here for Shar.
Hey, good morning constant team good morning.
Hi, guys.
Starting off on the quarter, obviously weather was unfavorable it can you talk about some of the offsets that you are embedding in your reiterated guidance I think the slides are showing some strong normalized load growth.
How much is that contributing to the expectations for the remainder of the year or any other offsetting factors.
Sure Constantine and Youre right.
The quarter had about a one to two set negative impact compared to normal.
When it comes to margins.
The mild weather.
Constantine I would just point you to the fact, we have so many tailwind for.
<unk> discuss any this year.
Sprinkled all throughout I guess the revenue areas. When you think about load growth sales mix.
And various items so.
Really bullish on 2023, and we're in a position where we can.
Pardon upon but whether the mild weather. So we're in really good shape for 2023.
Excellent thanks for that and on.
On the financing side as I mentioned and you have a very strong balance sheet and balance sheet and financing for this year that that can be done.
So for the near term, maybe some thoughts around kind of using cash convertible debt that some peers have been using for some near term benefits and kind of locking in against Euro five year funding needs and maybe if you will.
Prospectively as interest rates have come down a bit this year, so, especially on the tail end of the curve is that giving you some headroom versus our long term guidance.
<unk> This is Brian I'll take that one as well.
You are correct, we are completed with our debt issuance plans for this year.
We definitely are monitoring what other utilities and holding companies have issued.
I think the latest term maybe for this hybrid entry instrument, you're mentioning is cash convertible debt.
That's something we will study we don't have a holding company debt issuance need in the near term and it will continue to evaluate it.
As far as interest rates.
We do.
Land conservatively as we look out to future years on interest rates and we're certainly optimistic that.
Rates short term rates, especially will trend down in years ahead, which will just be <unk>.
We're all benefit beneficial to our to our company.
So that was that is.
Is that something that's already embedded in the kind of five to seven.
No no.
Using.
That 5% plus expectation on short term rates this year into the future. So that's not embedded yet.
Excellent thanks for that.
Ill jump back in queue.
Thank you.
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Standby for our next question.
Our next question comes from Julien Dumoulin Smith with Bank of America. Your line is now open.
Hi, Good morning. This is Heidi help on for Julien. Thank you for taking my question. Good morning, Hi, Good morning.
Good morning.
So just first question is can you provide more details on your.
Your commentary on the latest round of solar Rfps and why.
The RFP itself.
Yes expectation they are watermark can employed there and then also what changes or developments, while you need to see.
The move toward more meaningfully.
You tell your scale, so I'll I'll take care of man.
Yeah. Thank you great question and so as you know we had a number of different Rfps, we had three out there three distinct RFP processes going on.
And so we're in the middle of.
A lot of negotiations.
And.
It's active it's very fluid right now and so we're rounding those out I would think we didn't say that.
We do not have <unk>.
Bids that are out of a particular RFP.
We're going to continue to.
Add generation to our fleet, we do want to make sure. It's smoothed those out and make sure. We don't have the big Blips I've said previously that I would expect.
We feel this.
Capacity need in the future is can be a combination of gas and solar maybe batteries get more economic we'll we'll look at those as well.
But that's where we see it going.
Obviously these negotiations obviously cost is a big factor.
<unk> also got timing and deliverability availability is a big factor and then you've just got the normal terms around risk risk transfer and.
What you.
What you are accepting this in terms of our risk and.
And what youre not willing to accept as a risk and so.
It is.
It is taking a little longer than than I anticipated, but we do intend to file this summer our results and then we will.
As I said, we're going to go through another <unk>.
Integrated resource planning process really to make sure we incorporate the benefits of the IHA and IR IRR.
Opportunities and.
Hopefully, we see a little more.
Relief from some of the inflationary pressures in the time frames that are out there.
Okay, Great. That's very helpful. Thank you and then just a quick follow up.
So.
Given that kind of summer timeframe.
For filing the new RF piece I believe you mentioned can you confirm what solar Capex is included or embedded in the near term plan if any.
That would be that would be yes, yes, we do not have any stoller.
Specific planned capex in our plants.
Or gas okay.
Got it okay, great. Thank you and then.
Secondly, the latest 4% to 5% load growth forecast very strong how do you perceive the sustainability of that 4% to 5% load growth trajectory into 2024 and beyond yes, I think thats a great question and obviously four to five is robust and we have been.
Talking about this for a while and that's on top of what we did the prior year.
The challenge is.
It's very difficult to.
Really pinpoint whether growth is in the subsequent years again be four 5% three 9% six months, it's very difficult once you get beyond 12 months.
Because it depends a lot on what happens in the current year and then the timing of in service dates for some of those developments. So we will lay that out as we move forward, but we are very bullish and I think you've heard it from Brian you've heard it for me that we've built something here that this engine is.
Is really moving down the track and we intend to keep it going for many many years and it's really the foundation of our company that where we.
We're going to continue to see load growth and customers come to us we're going to continue to incur.
<unk> increased the capital to support them, we are going to spread that over more customers and thereby widening that competitive advantage. We have in economic development. So again, we think this engine.
Is it going to go for many many years.
Great Great totally understood that one and then and then kind of lastly here can you just provide an update on your efforts in terms of.
With the latest iteration of good neighbor will end and maybe just an update overall on how the policy should impact your portfolio respectively.
Yes, I think.
Between the good neighbor rule, and we've seen that and we certainly expect that.
The GHT rules to be out here shortly.
We've been through this before right and this will go through many iterations and it'll probably get litigated.
I think thats always been factored into our longer term planning and how we think about our generation mix and.
None of that is in our plans today, because the rules arent are necessarily funnel and so but we will evaluate those and.
And make the right decision for our customers.
Great. Thank you very much for all your guidance.
Thank you have a nice day.
Thank you please standby for our next question.
We've been through this before right and this will go through many iterations and it'll probably get litigated.
Our next question comes from Alex <unk> with Mizuho. Your line is open.
I think thats always been factored into our longer term planning and how we think about our generation mix and.
Hi, good morning.
Good morning, good morning.
None of that is in our plans today, because the rules arent necessarily.
I was hoping can you provide any color on if there's any timeline or internal thought on when we may get.
And so, but we will evaluate those and.
The EPS CAGR on a consolidated basis and not just at the utility.
And make the right decision for our customers.
Yes, I think it's our intention to do that in February .
Great. Thank you very much for all your guidance.
<unk>.
<unk>.
Thank you have a nice day.
The logic there was we are very bullish on our utility and.
Thank you please standby for our next question.
As we were exiting the midstream business and Brian mentioned, the retirement of some debt there from winter storm Yuri.
Our next question comes from Alex <unk> with Mizuho. Your line is open.
Letting all of that work itself out.
And then we're going to provide a consolidated growth rate when we get to February .
Hi, good morning.
Good morning.
I was hoping can you provide any color on if there's any timeline or internal thoughts on when we may get the EPS CAGR on a consolidated basis and not just at the utility.
Okay understood and then I know you are obviously very bullish on load growth, but a lot of it is tied to commercial as well as it looks like some oilfield.
With oil prices kind of declining in recent weeks potential economic slowdown people are predicting second half of this year. How do you think of your exposure to kind of both of these factors.
Yes, I think it's our intention to do that in February .
The logic there was.
We are very bullish on our utility and.
Yes.
As we were exiting the midstream business and Brian mentioned, the retirement of some debt there from winter storm Yuri.
Certainly we've seen a tailwind from oilfield, but.
If you go back a year ago, it wasn't a tailwind and load growth was still robust.
Our letting all of that work itself out.
Bryan alluded to this and I referenced it in my remarks, the growth is pretty diverse and.
And then we're going to provide a consolidated growth rate when we get to February .
Not just in oilfield, but if you look at a lot of what we're seeing around the defense industry.
Okay understood and then I know you are obviously very bullish on load growth, but a lot of it is tied to commercial as well as it looks like some oilfield.
It's really growing and what which sneaks up on you really quickly there are the residential numbers.
With oil prices kind of declining in recent weeks potential economic slowdown people are predicting second half of this year. How do you think of your exposure to kind of both of these factors.
Theres, just a lot of residential customers, but as you see these new industries come in and Youre, adding 9100 people at a time that edge residential accounts too. So I think theres a lot of solid base. There for that continued growth and we're not necessarily tied to a particular industry.
Yes.
Certainly we've seen a tailwind from oilfield, but.
If you go back a year ago, it wasn't a tailwind and load growth was still robust.
Bryan alluded to this and I referenced it in my remarks, the growth is pretty diverse and not.
Okay understood and to just round out load growth is there any good way that you quantify your impact of load growth on earnings for like for example, every 10 basis points of load growth is worth a cent of EPS or sort of something along those lines that we should be thinking about.
Not just in oilfield, but if you look at a lot of what we're seeing around the defense industry.
It's really growing and what which sneaks up on you really quickly there are the residential numbers.
I think we're all smiling here, because we'd love to be able to do that.
Theres, just a lot of residential customers, but as you see these new industries come in and Youre, adding 9100 people at a time that edge residential accounts too. So I think theres a lot of solid base. There for that continued growth and we're not necessarily tied to a particular industry.
It has a lawsuit.
No. It really has a lot to do with.
The segment itself.
They have a margin contribution that is different based on the segment. The other thing thats important to us when those when those new load serving entities come on.
Okay understood and then to just round out load growth is there any good way that you quantify your impact of load growth on earnings for like for example, every 10 basis points of load growth is worth a sense of EPS or something along those lines that we should be thinking about.
Come on the system.
So whether it's at the end of the year in the middle of the year the began the year and so.
That has a different impact from year to year as well so.
We're.
We're keenly focused on on the sensitivity there, but we haven't come up with a good 10 10 basis points sensitivity that we could really crisply give ya.
Yes, I think we're all smiling here, because we'd love to be able to do that.
It has a lawsuit.
No it really adds a lot to do with.
Okay understood. Thanks, so much that's all from me congrats on the quarter.
The segment itself.
They have a margin contribution that is different based on the segment. The other thing that's.
Thanks, Alex.
Please standby for our next question.
And two is when those when those new load serving entities come on.
Come on the system.
As a reminder, if you'd like to ask a question. Please click star one on your telephone.
So whether it's at the end of the year and middle of the year that began the year and so.
That has a different impact from year to year as well so.
Our next question comes from <unk> Gandhi with Wolfe Research Your line is open.
We're.
We're keenly focused on on the sensitivity there, but we haven't come up with a good 10 10 basis points sensitivity that we could really crisply gave you.
Good morning, Sean and Bryan can you hear me, yes, we can good morning, good morning.
Good morning.
My first question just on the outstanding Rfps could you just clarify the timeline, so youre going to file for approval sometime in the summer and then after you do that.
Okay understood. Thanks, so much softer me congrats on the quarter.
Thank you thanks, Alex.
Please standby for our next question.
Milestones should we be watching or looking at.
J D.
That you can address can you.
As a reminder, if you would like to ask a question. Please click star one one on your telephone.
Give us some sense of what percentage of your generation needs would be full sales from from this Gordon Brown deforest fees versus sort of like your next IRB rfps.
Our next question comes from a detailed Gandhi with Wolfe Research. Your line is open.
Yes.
Yes so.
Good morning, Sean and Bryan can you hear me, yes, we can good morning, good morning.
We're going to file this summer.
And.
In both states and in Oklahoma under the provisions you have up to 240 days.
Perfect Good morning.
My first question just on the outstanding Rfps could you just clarify the timeline, so youre going to file for approval.
To receive approval for that so that would be one milestone.
I'm in the summer and then after you do without what milestones should we be watching we're looking at.
I also mentioned that we are going to.
Start the integrated resource plan, and we're going to reissue that again.
Could you extend that you can address can you give.
To incorporate the IHA and IRR opportunities, but also Brian spent a lot of time talking about the load growth. So our load growth projections are changing as well and.
Give us some sense of what percentage of your generation needs would be full sales from from this current round of rfps versus sort of like your next.
Our rfps.
In terms of.
Yes so.
What percentages and what we're going to file for a.
We're going to file this summer.
While we're still in negotiations.
And.
In both states and in Oklahoma under the provisions that you have up to 240 days.
We're probably not in a position to kind of comment on that right now.
Okay.
To receive approval for that so that would be one milestone.
I understand that.
And then.
Just moving onto <unk>.
I also mentioned that we are going to.
Good timing for your.
The timing for your next rate review you mentioned it.
Start the integrated resource plan, we're going to reissue that again.
It could potentially be filed in the in the latter half of the SCR.
To incorporate the IHA and IRR opportunities, but also Brian spent a lot of time talking about the load growth. So our load growth projections are changing as well.
But just thinking about when we're thinking about the level of the rate increase just given.
The high fuel cost loss share how are you thinking about how are you thinking about the level of the rate increase.
In terms of.
What percentages and what we're going to file for a.
Then.
Could you also comment on what are the next tranche of you could potentially.
While we're still in negotiations.
We're probably not in a position to kind of comment on that right now.
Includes recovery for the generation investments or is that going to be through a separate process.
Okay.
I understand that.
Yes, so we're going to file in Oklahoma through a separate process for approval mechanism. We have in statute here, we're going to go through that for the generation and then in terms of the rate review.
And then.
Moving onto the good timing for your.
The timing for your next rate review, you mentioned that it could potentially be filed in the in the latter half of the SCR.
But just thinking about when we're thinking about the level of the rate increase just given.
Your point is spot on I mean, we are focused on affordability and thats. The key pillar of our of our growth and we've got to keep our rates.
The high fuel cost loss share how are you thinking about how are you thinking about the level of the rate increase.
Attractive. So we can continue this growth story.
And then.
Could you also comment on <unk>.
So we our sense that this is not a.
And the next tranche of your.
<unk>.
A large.
Includes recovery for the generation investments or is that going to be through choice FX cost us yes.
Rate.
The rate case.
We have a goal of staying current and making sure that everything is timely our customers have communicated to us they like the smoothing effect that we're trying to ensure and no one wants to see any big spikes and we don't intend to see that going forward.
So we're going to file in Oklahoma through a separate process.
The approval mechanism, we have in statute here, we're going to go through that for the generation and then in terms of the rate review.
Your point is spot on I mean, we are focused on affordability and thats. The key pillar of our of our growth and we've got to keep our rates.
Perfect. Thank you and just one last question if I may.
Brian just I just wanted to clarify so after you. After after you pay off the $1 billion of Huey related debt 501, the nature of the lithium the holdco.
Attractive. So we can continue this growth story.
So we our sense that this is not a.
Mentioned that that would be a short term debt at the holdco and that will be sort of around.
A large.
Rate case.
On the 300 million dollar range by the end of that.
We have a goal of staying current and making sure that everything is timely our customers have communicated to us they like the smoothing effect that we're trying to ensure and no one wants to see any big spikes and we don't intend to see that going forward.
That's consistent with your messaging from prior quarter.
Yes, that's right.
To reiterate.
When you think about our company.
Totality as John mentioned in the fourth quarter call and we both have discussed today and we're really bullish on the utilities' growth prospects.
Perfect. Thank you and just one last question if I may.
Ryan just I just wanted to clarify so after you. After after you pay off the $1 billion of related debt 500 million in Egypt.
With a lot of tailwind from load growth.
Emerging investments in the grid and generation.
We feel really really good about the utility over the next five years.
Lithium the holdco.
And that that would be a short term debt at the holdco and that would be sort of.
And as utility grows.
That means the holding company has to pay less and less of the dividend going forward. So.
Around 300 million dollar range by the end of.
That's consistent with your messaging from prior quarter.
When you think about that that should give you some comfort that are holding.
Yes, that's right.
Holding company interest costs as that grows each year will grow less than glass.
I just want to reiterate.
When you think about our company.
And so just to add a little more color to my comments from our last call.
In totality.
As John mentioned in the fourth quarter call and we both have discussed today.
Perfect perfect. Thanks for clarifying that.
Really bullish on the utilities' growth prospects.
Yes.
A lot of tailwind from load growth.
Thank you.
Please standby for our last question.
Emerging investments into Grad and generation.
Fulfilled.
Really really good about the utility over the next five years.
Our last question comes from Shar <unk> with Guggenheim Partners. Your line is open.
And as the utility grows.
That means the holding company has to pay less and less of the dividend going forward. So.
Hi, Tim. It's me again, just had a couple of quick follow ups, just kind of confirm on the rfps.
When you think about that that should give you some comfort that our.
Mentioned that there is no near term Capex, that's affected by just thinking about it.
The holding company interest costs as that grows each year will grow less than glass.
And so just to add more color to my comments from our last call.
If there is some delays in kind of the magnitude versus your original thinking.
Perfect perfect. Thanks for clarifying that.
Are you planning for <unk>.
The offset or flex somewhere else on the Capex plan.
Yes.
Thank you.
Please standby for our last question.
Yes.
Thanks.
Is your question is.
As your question make sure I understand it correctly, but is your question.
Our last question comes from Shar <unk> with Guggenheim Partners. Your line is open.
There, whereas the capital expenditures associated with these rfps.
Hi, Tim. It's me again, just had a couple of quick follow ups, just kind of confirm on the rfps.
Yes, and if the delays in the re filing of the ERP would impact the existing capital plan at all.
Mentioned that there is no near term Capex, that's affected by just thinking about it.
No.
If there is some delays in kind of the magnitude versus your original thinking.
I think what.
What we said is we have a lot of opportunities is opportunity rich and we're allocating capital.
Are you planning to kind of offset or flex somewhere else on the Capex plan.
And just really fueling this growth engine we have.
Yes.
And so.
Thanks.
So at the <unk>.
Is your question is.
Timing of this.
As your question make sure I understand it correctly, but is your question.
As these rfps in the results and that sort of thing doesn't doesn't really impact or change our plans because we are.
There, whereas the capital expenditures associated with these rfps.
Tremendous opportunities to invest and continuing to grow our company.
Yes, and as the delays and the re filing of the ERP would impact the existing capital plan at all.
Icon and you mentioned that some of the outcomes and the economics that you've seen werent necessarily palatable to PR around that original request.
No.
I think what.
Just curious if you can share how has the commodity volatility in both directions, especially on the on the.
What we've said is we have a lot of opportunities is opportunity rich and we're allocating capital.
On the positive side this year impacted your thinking on the preferred mix.
And just really fueling this growth engine we have.
Yes, so we're certainly pleased that we've seen.
And.
So the timing of this.
Pullback in natural gas prices that certainly helped and relieve some of the pressure from fuel cost to our customers. So we like that.
These rfps in the results and that sort of thing doesn't doesn't really impact or change our plans because we are.
Tremendous opportunities to invest and continuing to grow our company.
When were evaluating this and look making our decisions.
Icon and you mentioned that some of the outcomes and the economics that you've seen werent necessarily.
Now, while we're cognizant of the current commodity price environment, we're taking a long term view.
Notable to PR event of original request.
And we're factoring in a long term view of.
Curious if you can share how has the commodity volatility in both directions, especially on the on the.
Prices.
<unk> taken a long term view of what we think potential regulations could be as well.
The positive side this year impacted your thinking on preferred mix.
From the EPA.
It's a very thorough analysis.
Yes, so we're certainly pleased that we've seen.
Excellent. Thank you for the follow up.
A pullback in natural gas prices that certainly helped and relieve some of the pressure from fuel cost to our customers. So we like that.
I think concert contained have a great day.
No.
Thank you at this time I would now like to turn it back to Sean for closing remarks.
And we are evaluating this and look making our decisions while while we're cognizant of the current commodity price environment, We're taking a long term view and we're factoring in a long term view.
Thank you hope and thank everybody for joining us. This morning. Thank you for your interest in the company and I Hope everyone has a wonderful day.
Okay.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Prices and taken a long term view of what we think potential regulations could be as well from the EPA.
<unk>.
It's a very thorough analysis.
Excellent. Thank you for the follow up.
Alright, Thank concert contained have a great day.
Thank you at this time I would now like to turn it back to Sean for closing remarks.
Thank you hope and thank everybody for joining us. This morning. Thank you for your interest in the company and I Hope everyone has a wonderful day.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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