Q3 2023 Exelon Corp Earnings Call
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Thank you Gigi and good morning, everyone. We're pleased to have you with us for our 2023 third quarter earnings call, leading the call today are Calvin Butler Excellence, President and Chief Executive Officer, and Jim Jones excellent Chief Financial Officer. Other members of the Exelon Senior management team are also with US today and they will be available to answer your questions. Following our prepared.
Paired remarks, today's presentation, along with our earnings release and other financial information can be found on the Investor Relations section of Exelon website.
We would also like to remind you that today's presentation and the associated earnings release materials contain forward looking statements, which are subject to risks and uncertainties. You can find the cautionary statements on these risks on slide two of today's presentation or in our SEC filings.
In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures.
Reconciliations between these measures and the nearest equivalent GAAP measures can be found in the appendix of our presentation and in our earnings release.
It is now my pleasure to turn the call over to Calvin Butler, Exxon's, President and CEO. Thank.
Thank you Andrew and good morning, everyone.
We appreciate your listening to our third quarter earnings call. Despite the historically mild first nine months of the year and pressures from storms in August and September we delivered earnings right in line with the expectations laid out in our last earnings call.
For the quarter as you can see on slide four we earned 70 cents per share on a GAAP basis, and 67 per share on a non-GAAP basis with the critical summer season behind US we have narrowed our guidance range to 2032.
$2 40 per share for 2023.
Jim will talk more about our results for the quarter and expected financial performance for the balance of the year.
Operational performance across the platform, we made very strong in the third quarter with storms that brought 110 mph wind gas and 29 major event days that impacted almost one 3 million customers, we not only kept our financial plan on track, but we also continued our track record of top core.
Reliability performance and we continued to make progress in safety and customer satisfaction.
Third quarter also brought continued execution of key milestones in our six active base rate cases underway.
Hawaii, Maryland, Delaware, New Jersey, and the district of Columbia.
Beginning with comments, we received a proposed order from the ALJ on its multi year rate and grid plant on October 23.
We're encouraged that the proposed order recognizes that meeting the ambitious electrification and decarbonization goals set by Illinois groundbreaking climate and equitable jobs Act will require comment to make significant investments and it largely follows an investment plan that has alignment across a broad group of stakeholders.
But the order does not recognize a fair cost of financing that investment.
Provides a return on equity that is well below the national average it does not recognize the significant investment we have made in our pension which supports comments employees and has saved customers almost $1 billion to date with its returns and continues to generate savings for our customers.
And it does not allow for prudent capitalization of the business as it caps equity ratios below an appropriate level.
So we are disappointed with elements of the proposed order, but we expect the commission will consider the full record developed when writing its final order and we continue to make our case with stakeholders. As a reminder, we expect to receive the final order in mid December.
As it pertains to BJ all parties have filed their briefs and we now await a final order from the Maryland Public Service Commission expected on December 14th.
We have put forward a strong investment plan to address the needs of our customers that is aligned with the state's ambitious goals to advance the energy transformation.
We remain optimistic that the commission will reach a constructive outcome that appropriately supports our customers and the state's goals laid out in the climate solutions Now Act as.
As you will hear from gene. We also made progress in the Atlantic City electric rate case, where a stipulation of settlement await final approval.
The Delmarva power and light electric rate case is progressing as well along with the Pepco D C and Pepco, Maryland multiyear rate plans.
On a longer term outlook, we continue to reaffirm our existing guidance, we expect to be at the midpoint or better of our 6% to 8% annualized earnings growth ranges and to grow the dividend in line with those earnings.
The capital we are investing across our jurisdictions to support the needs of our customers and their energy transformation is what drives that growth.
On Tuesday, PJM selected project proposals submitted for the competitive transmission proposal window <unk> III.
<unk> proposed transmission projects were among a set of solutions to maintain reliability, and the Maryland, Pennsylvania, and Virginia areas driven by significant load increases in northern Virginia spin.
Specifically PJM has recommended a suite of solutions that include a scope of work for Exelon that is estimated to cost approximately $850 million with portions assigned to BJ Pico Pepco and Delmarva power.
As this spend is weighted towards the backend of the decade with expected completion dates of 2029 and 2030 that extend beyond the current guidance range. It provides another good indication of the trends in place and degree of work that the grid will require well into the future.
I'll also note.
Two additional exciting developments this quarter that support our jurisdictions energy goals.
Con Ed Pico and Pepco were part of two coalitions receiving hydrogen hub awards in our service territories. These projects will go a long way toward accelerating access to clean and affordable hydrogen to meet the nation's ambitious carbon reduction goals and creating thousands of clean energy.
<unk> and Exelon service territories.
In the U S Department of energy recommended two of Exelon submissions and the grid resiliency and innovation partnership program for negotiation of a final award totaling $150 million across our comment and Pico utilities.
<unk> will direct it is $50 million award to enable customers and partners to deploy next generation technologies for growing solar installations in electric vehicles, and Pico is leveraging its $100 million award to enhance resiliency and vulnerable areas of <unk> service territory that is acceptable to us.
Severe weather events.
When combined with the middle mile grants the BG Ian comment were awarded by the National Telecom and information administration Exelon utilities are approaching $200 million in total a federally funded Iga a grant awards this year not to mention the amounts directed towards its jurisdictions through.
<unk> like the Epa's Clean School bus program.
The federal support is critical to supporting an affordable and equitable transition.
The need for transfer transmission expansion, the investment in new energy supply and the ever increasing need for a more resilient grid all highlight the impact that an economy that is increasingly dependent on electricity will have on our investment plan.
The energy transformation with last decades, not years, which is why we are confident that investment opportunities will continue to strengthen and lengthen our rate base growth. We look forward to incorporating these updates into our annual financial update on the fourth quarter earnings call next February.
I'll now speak to our operating performance in the third quarter on slide five.
Reliability remains outstanding.
All four utility operating companies had top quartile performance in both reduce outage frequency and shortened average duration.
<unk> operated in the top decile for both metrics in fact com net and ph again achieved best on record outage frequency and duration performance, which makes for the third quarter in a row for those two operating companies.
Performance like this is particularly impressive when you consider the level of storm activity, we experienced this quarter, which is a testament to the investments we're making in the system and the talented dedicated employees working this system.
As an example, and just one damaging storm BJ cruise replace 32 miles of wire and 82 Transformers and they did it 36 hours faster than historical models predicted was possible.
That commitment to operational excellence across the Epsilon franchise is a key part of what makes US who we are.
And our gas operations are keeping pace all three gas utility operating companies again continued to perform at top decile levels for gas odor response.
And as it pertains to customer satisfaction, while three of our utility operating companies continue to benchmark and the second quartile Pico has progressed to the first quartile.
Our improved benchmark your performance at Pico reflects the benefits of those efforts.
And all utility operating companies did see increases in their scores.
But as we have mentioned overall satisfaction has been infected by inflation and sunsetting pandemic are really relevant to the benchmark year.
The headwinds facing our customers a real which is why we are focused on ensuring customers are aware of their options to manage their energy use and reduce their bills.
We look to build on increasing satisfaction levels into 2024.
Last we saw improvement in our safety performance benchmark <unk> versus the second quarter. We continue to focus on the areas of underperformance and implement utility specific action plans to address the higher <unk> rates and you can see that with PHA scores, where our efforts to reinforce procedures.
<unk> awareness and crew communication has yielded results.
And we are also continuing in partnership with the industry to drive a more sophisticated discussion and set of tools around safety to focus employees on which behaviors will most impact will be improved safety and ensure we do our most important job, making sure each employee returns home safely after every shift.
<unk>.
I assure you that we will continue to push for excellence across all areas of our operations as we close out 2023, I will now turn it to Jean to review, our financial performance and regulatory updates.
Thank you Kelvin and good morning, everyone. Today, I will cover our third quarter financial update along with the outlook for the balance of 2023, and our progress on the 2023 rate case schedule.
I'll also highlight a recently completed transmission rebuilt project by Delmarva power and light designed to further improve reliability for our customers in eastern Maryland.
Starting on slide six we show our quarter over quarter adjusted operating earnings.
Calvin mentioned Exxon earned <unk> 67 per share in the third quarter of 2023 versus <unk> 75 in the third quarter of 2022, reflecting lower results of <unk> <unk> per share for the same period.
The results of 67% in the third quarter represent 28% of our expected full year earnings which is right in line with the expectations provided on the prior earnings call.
Earnings are lower in the third quarter relative to the same period last year, driven primarily by seven <unk> from the impact of weather and storms.
And summer activity, returning to normal and 23 <unk> of higher interest expense due to the rise in interest rates and higher levels of debt at the holding company and at some of our utilities and <unk> of O&M tax and distribution formula rate timing expected to reverse in the fourth quarter.
This was partially offset by <unk> <unk> of higher distribution and transmission rates associated with incremental investments net of depreciation as long as the penny of carrying costs related to the cargo litigation credit bonds Echo Matt.
Despite the summer storms and mild weather impacting our non decoupled jurisdictions.
We have delivered year to date earnings each quarter in line with indication and we continue to offset the weather headwinds with the combination of O&M levers across the platform higher treasury rates impacting comments distributional row.
Favorable depreciation at Pico and the full year earnings impact of the carrying costs associated with the CMC regulatory asset balance.
With one quarter remaining in the year, we are narrowing our 2023 EPS guidance range to $2 32 to $2 40 per share from $2 30 to 242 per share.
Our full year guidance accounts for the absence of proactive de risking that occurred in the fourth quarter of 2000, and the reversal of year to date, O&M tax and distribution formula rate timing and the anticipated one time impact in December of Bg's reconciliation for the 2021 and 2022 under recovery.
Through continued increase in rate base as we deploy capital for the benefit of our customers along with managing our plans across the platform. We remain on track to deliver earnings within expectation.
Our goal is always to achieve the midpoint or better of the guidance range.
Lastly, we are reaffirming the fully regulated operating EPS compounded annual growth target of six 8% from 2021, and 2022 guidance mid point through 2025, and 2026, respectively again, our expectation is to be at the midpoint or better of background range.
Turning to slide seven as Calvin mentioned, we continued to execute in all six open distribution rate case proceedings. This quarter in line with the established procedural schedule.
Each rate case remains on track and we are approaching the final key milestones in December for Commerce, and BJ is multiyear rate plan rate cases.
Let me begin with key developments since the last call.
First GPL, Delaware received intermediate testimony and filed a rebuttal supporting the key elements of the company's proposed electric distribution revenue requirement increase of $39 3 million.
Detailed Delaware will continue to establish that the proposed plan as necessary to continue providing safe and reliable service meet customer expectations and support Delaware its clean energy goals, while balancing customer affordability.
Final order is expected in the second quarter of 2024.
Second we are pleased with the progress in Atlantic City Electric distribution rate case with the stipulation of settlement in place to procedural schedule was suspended in early September and October 'twenty, one <unk> filed a stipulation of settlement with the New Jersey Board of public utilities and on October 24, the administrative law judge presiding over the case recommended the settlement with <unk>.
<unk> be approved.
Say its final approval of the settlement from the Btu and the fourth quarter.
Next the procedural schedule and Pepco D. C multiyear rate plan filing has been adjusted to accommodate the commission's request for supplemental testimony from Pepco.
So I'm wondering if the commission's request from its first multiyear plan. This directive provides <unk> the opportunity to demonstrate the benefits afforded by multiyear rate plans relative to traditional rate making.
Pepco now expects to receive intermittent intervenor testimony on December 11th and evidentiary hearings will take place in March 2024, with the final order expected from the public Service Commission of the district of Columbia by mid 2024.
While still in the discovery phase of its second multiyear rate plan filing Pepco, Maryland continues to detail for interested stakeholders is proposed investment plan designed to advance is based climate and clean energy goals.
Coming milestones include intervenor testimony expected to be filed by the Maryland Public Service Commission staff on December 15th and the evidentiary hearings set to begin in March 2024 brief will be filed in April of 24, and we expect a final order by June of 2024 <unk>.
Additionally, in Maryland, Evidentiary hearings were conducted and brief filed in September and October respectively. As part of BJ is pending multiyear electric and gas rate case.
The hearings allowed parties to share perspectives on the proposed investment their alignment with the goals of the state and how best to balance the state's goals around the energy transformation affordability and customers' interests.
As expected the Maryland Commission continues to prioritize safety reliability and affordability and it is also focused on addressing the goals of the climate solutions Now Act.
We continue to believe <unk> proposed investment plans are well suited for Maryland to meet its aggressive clean energy goals in an affordable manner.
The proceeding is expected to run its full course with the final order expected from the commission by December 14th.
Moving onto comment multiyear rate plan proceeding as you heard from Calvin the administrative law judges presiding over the case issued a proposed order on October 23rd well. The ALJ proposed order recognizes that comment must undertake significant infrastructure investments to meet the state's clean energy goals. It does not fairly recognized.
Cost of financing to do so, especially in the current interest rate environment. We continue to believe the evidence on record supports comments requests on ROE capital structure and a return on its pension asset among other factors to provide a clear path in achieving a cleaner energy future for our customers and communities in Illinois.
But while we are disappointed in the proposal that we.
I'll remind you that this is just another data point in the process and is non binding on the commission give.
Given the number of variables at play in the transition to a multi year plan. Our current plan contemplates a range of fair and reasonable scenarios in the final order to achieve the state's aggressive de carbonization and electrification goals.
We look forward to the remaining steps in the process, including filing briefs on exception by November 8th reply briefs on exception by November 20th and participating in oral arguments, which we anticipate will occur in late November.
Each of these avenues will provide comments the opportunity to demonstrate the facts on key elements that are supported on the record and advocate for our position, which we continue to believe are in the best interest of customers and aligned with the state's energy policy goals.
A final order is expected at the last scheduled ICC meeting of the year on December 14th but no later than December 20th.
Relationships across our jurisdictions remain constructive and we remain steadfast in our engagement with key stakeholders across the regulatory bodies, the state legislators and the communities to support our shared interests and the energy transformation as.
As a reminder, by next year, we expect to have resolution on all four of the ongoing multiyear rate plans in Illinois, Maryland, and DC, which will support their respective clean energy and climate goals, while balancing customer affordability and equity more details on the rate cases can be found on slides 20 to 26 of the appendix.
Moving to slide eight during the third quarter, we continued to deploy capital for the benefit of our customers and are on track to invest $7 2 billion expected for 2023.
These investments are designed to deliver answers to an expanding set of needs for tomorrow's grid enhanced customer value adapt to climate change meet heightened resilience and reliability channel challenges.
And modernize outmoded systems and equipment just to mention a few.
These investments also support our communities today I, specifically would like to highlight held Delmarva power. Its recently completed east new market to Cambridge transmission upgrade project in Maryland is meeting those needs.
Construction to rebuild the transmission equipment began in late fall of 2021.
This $40 million project included upgrading more than 11 miles of existing transmission line with new wire and installing 189 galvanized steel calls.
Replacing wood poles with new longer lasting still utility poles strengthens the local energy grid and reduces the number of transmission Poles along the route.
These more reliable structures are also designed to withstand severe weather conditions are vital design element as climate change has contributed to the increase in intensity of coastal storms.
For perspective.
Steel Poles can withstand a 120 mph hurricane force winds and blizzard conditions and increase of up to 20% compared to what Paul.
Together these important upgrades, which were placed in service in May 2023 are expected to help prevent outages and enhance overall reliability for more than 13000 residents of Dorchester County, Maryland.
<unk> such as this transmission rebuild contributed to the nearly 30% decrease in electric outage frequency are detailed Maryland customers have experienced over the last five years.
These new market to Cambridge project is just one example of our broader strategic effort to strengthen and modernize the energy grid across all of our service areas. We continue to see significant need for transmission investments to support state and customer goals on renewable energy and electrification.
Demand supplements more traditional transmission expansion needs, including congestion relief operational performance requirements infrastructure resilience equipment material condition and customer service as Kelvin mentioned, we look forward to providing our annual financial update inclusive of the newly awarded transmission upgrade spend from PJM as well as the final rate.
Orders in Illinois, and Maryland on the fourth quarter earnings call in February 2024.
I will conclude with a review of our balance sheet activity on slide nine.
As a reminder, we continue to project a 100 to 200 basis points of cushion on average over our guidance period for our consolidated corporate credit metrics above S&P and Moody's downgrade thresholds of 12% demonstrating our commitment to maintaining a strong balance sheet.
If the corporate alternative minimum taxes, not mitigated through an inclusion of repairs in this calculation, we anticipate being at a 100 basis points or at the lower end of that range.
Our plan incorporates the assumption that the corporate alternative minimum tax will not allow for repairs. We remain optimistic that it will be implemented in a way that mitigates the cash impact.
Continue to anticipate the treasury will issue more guidance on the corporate alternative minimum tax before year end.
From a financing perspective, I'll remind you that we completed all our planned debt financing needs for 2023 as of the second quarter call.
Reducing earnings volatility in the second half of the year.
And managing the interest rate volatility we continue the pre issuance hedging in floating rate cap programs that were initiated last year.
In addition, we continuously monitor the capital markets and regularly assess our plans for future issuance timing sizing tenor and trenching strategy to ensure we always achieve optimal outcomes additional detail on our earnings sensitivities reflective of our hedging activity to date as provided on slide 18 in the appendix.
Lastly, there have been no changes in our guidance to issue $425 million of equity at the holding company by 2025.
As we work with our jurisdictions and identify needs for further investment at the utilities, including those assigned by PJM, while continuing to ensure that we maintain a strong balance sheet consistent with the expectations of our premium T&D company, while supporting our six 8% annualized earnings growth rate.
Thank you I'll now turn the call back to Calvin for his closing remarks. Thank.
Thank you gene.
With just a couple of months left to go in 2023, I'll conclude with reminder of our goals and priorities for the year first our foundation is operational excellence, which benefits our customers and communities as I mentioned, our employees rose to the challenge as they always do for our summer storms, but we're ready to close out the year strong to prove.
We have the best operators in the business.
Deed PAA consulting just awarded comment with its 2022 reliability, one national reliability Award one of the most prestigious honors in the electric utility industry recognizing it for sustained leadership.
<unk> and achievements in the area of electric reliability. This award highlights the value of our committed operating team executing on our sophisticated operating plan and investment strategy provided to customers the grid that they deserve.
And now I want to take a moment to just recognize Terry Donnelly.
Oh, a comment here will be retiring at the end of this year after almost 12 years in that position.
Terry just thank you for its continued steadfast leadership and also the selection between him and gilkey owners of David Perez, who is stepping in as a longtime senior VP into the role of Chief operating officer, we have high expectations of the date that they will continue to deliver on the operational performance that Illinois customers have come to expect.
We are also focused on completing a number of the rate cases, we have underway, including <unk> multi year plan for its gas and electric systems as well as comments multiyear rate in grid investment plans.
We continue to believe that parties in both cases have a shared interest in reaching outcomes that align with the state's energy policy in the equity goals, while ensuring we have the certainty and confidence to make the investments needed to serve our customers reliably.
Climate Inequitable jobs Act was passed in 2021 with the promise of making Illinois, a leader in the energy transformation.
The approval of these first electric multiyear plans are a key moment for the state to advance its clean energy goals and have followed the thoughtful ambitious plan in process. The state laid out in the climate Inequable jobs Act.
We are optimistic that the state of Illinois will seize the opportunity.
Third we will finish out the year meeting our financial guidance narrowing our guidance range to $2 32 to 2040 <unk> per share demonstrates the confidence we have in executing despite the historically mild weather this year and we remain on track to invest $7 $2 billion of capital.
<unk> earned consolidated ROE.
In the 9% to 10% range.
Lastly, we never want to lose sight of our responsibility to our customers and communities as the premier transmission distribution utility <unk>.
Just this past quarter Comed and Peco were two of only six utilities to partner with local governments and community based groups to win support from its clean energy to communities program.
Through this program <unk> will help explore low carbon trash quotation technologies for Chicago like freight traveled electrification, while Pico will assist in creating a regional hub to streamline procurement of the most impactful clean energy technologies for the Delaware Valley region.
BJ awarded grants to 41 nonprofit organizations in Maryland to support environmental stewardship programs and Pepco energized. The first of three Substations as part of its capital grid project, which is Pep goes forward looking plan to upgrade or add substation to underground transmission.
Mission cable to modernize and strengthen our nation capitals grid and.
In doing so pepco.
Pepco was able to provide $29 million to local suppliers and $30 million to diverse suppliers as part of the work to complete that substation.
And those examples show whether it is providing direct support to our customers our community organizations facilitating access to support from federal our national organizations are ensuring our work on the grid benefits our jurisdictions into and the <unk> team is focused on ensuring all of its actions are intentional and serving them.
Greater purpose of leading the energy transformation.
These goals are what make for premier T&D utility one that embraces the opportunity to lead the energy transformation partners with its jurisdictions to achieve their goals uplift its communities and meets the expectations laid out for the investment community offering a total shareholder return of 9% to 11%.
Thank you as always for your interest I'll now turn it to <unk> for your questions.
Thank you if you would like to ask a question simply press Star one one on your telephone keypad.
Your first question comes from the line of James Kennedy from Guggenheim Partners.
Hey, guys good morning, or good morning, Jason.
Good morning.
So starting off I guess with the ALJ order in Illinois.
Calvin you mentioned your expectations.
Commission will consider the full record I guess is the draft the final order.
I realize you've been in a formula construct for a while but is there any prior precedent for the ICC to make those kind of departures from the ALJ just trying to understand the prospects here for revision and your confidence level.
Yes first off James Thank you for your question and there is precedent.
The record is going to be considered by the full commission, but the commission definitely has leeway to look at the record separately, taking an advisement what the ALJ has said, but also keep in mind. This is the first time that this commission has come together under multiyear rate plan in grid plan.
To consider how.
Con meds.
<unk> meet the state's goals. So I do they do note. There's a difference in opinion on how to approach this and I think they will take that all in consideration because we have three new commissioners Gil.
And they will lean into this discussion and look at what they need to do to achieve the state's goals, which are very specific and I have <unk> CEO comment with me Gil anything you'd like to add yes. I think it's also important to note that this is really.
It's a key milestone in the process, but there are four other key milestones coming up as both Calvin and gene mentioned, the briefs to the commission and exceptions replies to those briefs and oral arguments.
Before the final order.
As Calvin said, we feel strong conviction that the evidence on record supports comments request.
And based on what the commissioners have done in the past, we anticipate that they will make adjustments and corrections before they issue a final order.
We expect the commission will not only consider the proposed order, but the entirety of the record in the case and the policies of the state.
It is at an historic once in a lifetime opportunity and we believe the commission will meet the moment and advancing the ambitious goals of the climate Equitable jobs Act and the state's economic development aspirations.
Thank you Jill.
Does that answer your question James.
Thank you.
And then maybe one for Jim just.
On the remaining equity need and the current plan I guess, if you don't get the minimum tax clarity youre looking for from the IRS would you need to accelerate the need into 24 or 25 25, just any additional color on Thailand.
Yeah, no everything we've given you assumes that we pay the corporate alternative minimum tax and so regardless of how that turns out our commitment is to do the 425 between now and 2025, so that doesn't change regardless of the outcome there.
Okay. Thanks, and then just real quickly.
Transmission spend today that is purely incremental to the 870.
You gave us on the last call related to branded Schwartz.
Yeah. There are two similar numbers, but two different projects, yes, perfect. Thank you.
Thank you.
Thank you one moment far next question.
Yeah.
Our next question comes from the line of David Arcaro from Morgan Stanley.
Good morning, David Good morning.
Hey, Kevin Hey, Jim Thanks, So much for taking my question.
Maybe on that same topic.
The transmission projects that PJM has selected you.
Elaborate a bit on which year the capex would start to flow into the spending plan and also just as you think about PJM and potential competitive opportunities going forward either.
Future opportunities that you plan to bid into also.
Yes, David I'll start, but then I'll turn it over to David Velasquez, who is here with me that has our transmission strategy group reporting up to him and working with all the <unk> as I mentioned I believe our transmission group.
Build out has tremendous opportunity to not only strengthen what we're doing but also lengthen our earnings growth and doing it doing it in a way that ensures that unreliability, but the ability to connect renewables to the grid and David and his team have put together a robust plan and I'll, let him take a moment to walk you through.
So David the state Velasquez, so on the transmission projects like to give you a sense.
Brand insurers, which was the project we talked about last quarter.
Which has an in service date in at the end of 2028. So when you think about cash flows there and again you have to recognize we're in preliminary engineering yet. So this is liable to move a little bit.
But I figure typically like in the last couple of years 2728, you spent somewhere around 40% to 50% of that.
Expenditure and then leading up to it starting next year you'd slowly ramp into it in the first three years you'd you'd spend somewhere between 50 and 60% of the project.
And the <unk>.
Dominion, which has an in service date part of it in 2009 part of it and 30, I think you'd see a similar profile where in the last couple of years, you'd probably see around 40% to 50% of the expenditures in three or four years, leading up to that so so some of this.
We'll.
Within the current period and some of it will be after the current period.
But I think.
On the broader question, it's Calvin had said Theres a lot of opportunities out there.
Look at every single competitive window that PJM puts out there and make decisions, whether we think we can add value for our customers buy.
Presenting proposals and we will continue to do that.
I think also.
There is other opportunities out there offshore wind is one in Maryland. The commission has to issue a solicitation to help bring on some of the additional megawatts by July of next year.
We continue to see a lot of load growth in our regions around data centers Theres also some hydrogen hubs that have been awarded grants from the federal government in our territories.
We also continue to see some generation retirements PJM recently announced.
Retirement of a Wagner unit large Wagner and Bg's territory. So theres a lot of different opportunities that we're looking at out there to continue to again for our customers and for public policy goals continue to invest in transmission.
Excellent that's really helpful. Thank you for that color.
<unk>.
I guess as you as you think about some of this incremental upside capex. It sounds like some of which would hit the current plan. But then also looking ahead to the next five year Capex plan, how do you think about financing.
The next year is kind of higher capex growth and rate base growth, specifically thinking about how you're thinking about equity needs from here.
Yeah, Hey, it's Jim I think it is how we've always thought about it when we rolled out the 31 billion.
On our last call, we talked about financing it in a balanced approach with internal cash flows and a mix of debt and equity and so I think you know to the extent, we continue to see more and more work with which we know there will be we'll finance it in a way that maintains that question on the balance sheet that we target, but also ensures that we meet our 6% to 8% earnings growth.
Got it thanks, so much I appreciate it.
David.
Thank you one moment far next question.
Our next question comes from the line of Paul Zimbardo from Bank of America.
Good morning, Paul.
Hi, good morning team.
And thank you for laying out all of those transmission opportunities just as we think about the.
The roll forward so not the current plan you've been very clear, but the roll forward with these incremental opportunities is there a good way to think about financing those incremental capex is kind of like a 50 50 mix or should we be thinking of something different.
Yeah, I think as I as I mentioned with David's earlier question, we will do it in a balanced way I think we've got a lot that we're pulling together here, we've got a really exciting incremental transmission opportunities we have incremental investments from the new rate cases that we've been filing so we're going to pull all that together as we always do on the fourth quarter.
And give you a full update when all of that is final we should have some more information again at the end of the year by the corporate alternative minimum tax.
On that any additional cost savings that we're that we're finding as we continue to get further out of separation so well.
Well as I mentioned will fund any new incremental capital with a mix of internal cash flows reinvesting back into the business that and to the extent.
Necessary do what we need to do to make sure we maintain that cushion on the balance sheet, but always also hit our earnings target of six 8% and so we'll do it in that balanced top of life.
Okay understood.
And then shifting.
Shifting topics a little bit given estimate for what the Illinois Commerce customer Bill CAGR is like the next five years for for your rate case, and then I know there is the carbon mitigation credit that rolls off so just curious how the bill trajectory is.
Yeah on the ask I believe it was just somewhere between four and 5% on the Bell CAGR that was on the ask Paul.
And then the second part of your question was what was the second part.
Of the CMC is roll off.
Yes, just overall like I know you are only part of the bill like with an overall combat customer bill trajectory looks like over the next five years.
Over the next cycle again on that on the rate case ask it was or I can go on for five 5%.
But it's important to know Paul that comp med starts below the national average in terms of overall rates. So as I like to think of the head room within that a utility to invest and move the state board exist one b cost of the carbon mitigation credits, but also.
Because they start from a position of strength and having some of the lowest rates in the country.
I think it's roughly 23% below large city national average, that's where comments and perspective.
Great Great. Thank you both and thank you Tim.
Thank you.
Thank you.
Last question.
One moment for our next question.
Our last question comes from the line of Jeremy Tonet from Jpmorgan Securities LLC.
Hey, good morning.
This is actually even Kelly on for Jeremy just one quick question going back to comment I am curious how do you reconcile the differences between the ALJ is nine point to 8% RV and SaaS, 891% ROE as well as the proposed equity ratio and then could you just talk more about where the ultimate return on pension assets debate stance.
Yeah, I would tell you that as we talked about.
I'll first start with <unk>.
One step and this is just another step in the process as guild laid out.
Coming off the World series I think we're in the sixth many great. We're in the sixth inning of a long game.
And that's just it's one step staff was one and you saw they came in at eight 9% talking about the formula rate and then we get the ALJ. We were able to respond then we get the Alj's ruling up nine point to wait. So we will continue to respond to the evidence is presented at present additional data for this commission to work with.
And that includes not only are we that includes return on pension assets as I talked about in my statement.
It warrants.
Our return and we have even come to an agreement with the attorney General of Illinois, where at minimal getting a debt return and so we continue to move forward and present, the why and I think that's the powerful part of this Jeremy is that when we can articulate the Y and frame, how it's beneficial for all customers and moving having a.
Productive and efficient company, that's moving the state's goals, we'll get there so to get into the details with this or any other pieces. This early in the process I think we'd be and.
Inserting ourselves deeper before the full commission has a chance to hear the evidence as Gil has laid out we have Windsor.
Boeing deal that were presenting to them.
Briefs on exceptions will be on November 8th November eight and we'll lay it out all fully then Jeremy on November eight at two to one in Hawaii.
I appreciate the color there and then just one quick question unrelated on the $425 million equity.
Would you consider ATM or follow on there.
We have a $1 billion ATM in place and so we can always just leverage that and kind of dollar cost average and as needed.
Got it thanks I'll leave it there.
Thank you Jeremy.
I would now like to turn the conference back to Calvin Butler, President and CEO for closing remarks.
<unk> as always thank you very much and thank you to everyone for joining US today, we look forward to seeing many of you at the EI financial conference in a week, Jean and the team and I were looking forward to just engaging with you in a more robust and deep matter at that conference and with that that concludes our call. Thank you very much have a great day.
Thanks to all our participants for joining US today. This concludes our presentation. You may now disconnect have a good day.
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Thank you.