Q3 2023 CenterPoint Energy Inc Earnings Call

Good morning, and welcome to Centerpoint Energy's third quarter 2023 earnings conference call with senior management.

During the Companys prepared remarks, all purchase attendance will be in a listen only mode. There will be a question and answer session. After managements remarks.

To ask a question press Star one one on your Touchtone keypad.

I will now turn the call over to Jackie Richert, Vice President of corporate planning Investor Relations and Treasurer Richard Beckert. Please go ahead.

Good morning, and welcome to Centerpoint <unk> third quarter 2023 earnings Conference call.

Management will discuss certain topics that will contain projections and other forward looking information and statements that are based on management's beliefs assumptions and information currently available to management.

These forward looking statements are subject to risks or uncertainties.

Our results could differ materially based on various factors as noted in our Form 10-Q.

Our SEC filings and our earnings materials, we undertake no obligation to revise or update publicly any forward looking statement.

We will be discussing certain non-GAAP measures on today's call when providing.

The guidance, we use the non-GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non-GAAP EPS for.

For information on our guidance methodology and reconciliation of the non-GAAP measures used in providing guidance. Please refer to our earnings news release and presentation on our website, we use our website to announce material information.

This call is being recorded information on how to access the replay can be found on our website now I'd like to turn it over to Dave.

Thank you Jackie and good morning, everyone.

Before we review our third quarter results I'd like to touch on the leadership transition announcement, we made earlier today.

As you've seen effective January 2020 for Jason Wells will succeed me as CEO and a member of the board.

It has been a great personal and professional experience to work alongside him and our very talented executive team.

I am incredibly proud of all that we have accomplished together in the past three and a half years as we worked hard to position the company to achieve that premium market valuation we have today.

We could not have done it without the support and buy in of our management team and all of our great employees.

I have full confidence that Jason is the right person to take the helm and given how far we've come now is the right time to advance this transition.

Our very strong third quarter results demonstrate we have great momentum and a solid foundation in place making.

Making this change at the beginning of 'twenty 'twenty four allows Jason and the team to hit the ground Ronnie and as you will hear shortly.

This move has no impact on our financial plans.

Capital growth plans and our impacts the great opportunities ahead for Centerpoint.

I have no doubt about center points ability to continue to outperform.

I'm looking forward to working closely with Jason and the rest of the management team to support.

Seamless transition.

With that I'll.

I'll turn the call over to Jason for a few comments.

Thank you, Dave I am honored and excited for the opportunity to lead and serve Centerpoint and all of its stakeholders into this next chapter.

For my first day at the company I've worked with Dave and our board of directors to reshape and launch our utility focused strategy.

I've also been fortunate to have worked alongside Dave in our pursuit of a track record of consistent execution to unlock value I. Appreciate the board's confidence in me and I'm thrilled with the opportunity to work alongside the talented team. We have here at Centerpoint to continue enhancing and executing on one of the most tangible long term growth plans in the industry.

I am confident that with our team who puts our customers at the heart of all we do the opportunities ahead are boundless.

Unknown Executive: Good morning and welcome to CenterPoint Energy's third quarter, 2023 earnings conference call with senior management. During the company's prepaid remarks, all participants will be in a listen only mode. There will be a question in the answer session after management's remarks. To ask a question, press star 11 on your touch tone key pay it.

I look forward to spending the next few months continuing to engage with our stakeholders and sharing my vision for the company's great future.

As we continue to be laser focused on providing outstanding service to our customers and communities and executing consistently to deliver enhanced stakeholder value.

Now before I turn it back over to Dave to kick off the discussion of our strong third quarter results I want to personally thank him for his tireless leadership Mentorship and friendship.

Jackie: I will now turn the call over to Jackie. Good morning and welcome to CenterPoint's third quarter, 2023 earnings conference call. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are based on management's beliefs, assumptions, and information currently available to management. These forward-looking statements are subject to risks or uncertainties. Actual results could differ materially based on various factors as noted in our form 10Q, other SEC filings, and our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statement.

He is a force for change and I look forward to building off the momentum he has created.

Thanks, Jason now, let's turn to what was a great quarter.

I'm excited to announce that despite the continued headwinds the industry faces.

Our Q3, 2023 represents our 14th consecutive quarter of meeting or exceeding expectations here at Centerpoint.

And as you probably saw from the results published this morning. This quarter can squarely be put in the not only meets but exceeds column.

And as I did last quarter I will share the quarter's headlines.

Headline one strong financial results, even with ongoing macro headwinds despite the persistent inflation across the economy and increasing interest rate headwinds, we were able to deliver 40 cents of non-GAAP EPS in the third quarter of 2023.

Jackie: We will be discussing certain non-gap measures on today's call. When providing guidance, we use the non-gap EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non-gap EPS. For information on our guidance methodology and reconciliation of the non-gap measures used in providing guidance, please refer to our earnings news release and presentation on our website. We use our website to announce material information.

This represents a 25% increase over the comparable quarter of 2022.

Headline too.

Strong Q3 results give us visibility and confidence to increase full year 2023, non-GAAP EPS guidance range from $1.48 to $1 50 to $1 49 to $1 51 per share.

Unknown Executive: This call is being recorded. Information on how to access the replay can be found on our website.

Dave: Now, I'd like to turn it over to Dave. Thank you, Jackie, in good morning, everyone.

Dave: Before we review our third quarter results, I'd like to touch on the leadership transition announcement we made earlier today. As you've seen, effective January 5, 2024, Jason Wells will succeed me as CEO and a member of the board. It has been a great personal and professional experience to work alongside him and our very talented executive team. I am incredibly proud of all that we have accomplished together in the past three and a half years as we worked hard to position the company to achieve the premium market valuation we have today.

At the new and higher midpoint. This projected increase would represent a 9% growth over 2022.

This would also be our third consecutive year of 9% growth and our third consecutive year with a compounding beaten raise reflecting our ongoing strong execution.

In addition, we yet again increased our dividend this quarter from 19 to 20 cents, which.

Presents a 10% increase over the last 12 months.

One of the highest increases in the sector.

These are just outstanding results.

Dave: We could not have done it without the support and buy-in of our management team and all of our great employees. I have full confidence that Jason is the right person to take the helm in given how far we've come now is the right time to advance this transition. As our very strong third quarter results demonstrate, we have great momentum and a solid foundation in place. Making this change at the beginning of 2024 allows Jason and the team to hit the ground running.

Headline three initiating 'twenty 'twenty, four and non-GAAP EPS guidance of $1 61 to $1 63 per share.

Our new 2024, non-GAAP EPS guidance range represents an 8% growth over the midpoint of our new and now higher 2023 guidance range of $1 49 to $1 51.

This continues to reflect the compounding effects of our three years of expected beaten raise results was due to excellent execution over the past several years.

Dave: And as you will hear shortly, this move has no impact on our financial plans, capital growth plans, or impacts the great opportunities ahead for center point. I have no doubt about center point stability to continue to outperform. I'm looking forward to working closely with Jason and the rest of the management team to support a seamless transition.

As we've said previously we continue to target year over year growth to deliver value to our customers and investors each and every year.

We are also demonstrating that we continue to have upside to our previously stated annual growth targets.

Headline for another upward revision to our capital plan.

Jason Wells: With that, I'll turn the call over to Jason for a few comments. Thank you, Dave.

We continue to be prudent and formally incorporating incremental capital into our plan.

Jason Wells: I am honored and excited for the opportunity to lead and serve CenterPoint and all of its stakeholders into this next chapter. From my first day at the company, I've worked with Dave and our Board of Directors to reshape and launch our utility focus strategy. I've also been fortunate to have worked alongside Dave in our pursuit of a track record of consistent execution to unlock value. I appreciate the Board's confidence in me and I am thrilled with the opportunity to work alongside this talented team we have here at CenterPoint to continue enhancing and executing on one of the most tangible long-term growth plans in the industry.

We will not deviate from our practice.

Of only adding an incremental investments when we believe we can operationally execute them efficiently fund them and effectively recover them.

I am delighted to say today that we now have line of sight to increase our capital plan.

An additional $500 million.

This brings our total 10 year capital plan through 2030 to nearly $44 billion supporting a 10% rate base CAGR due out that same period.

Jason Wells: I am confident that with our team who puts our customers at the heart of all we do, the opportunities ahead are boundless. I look forward to spending the next few months continuing to engage with our stakeholders in sharing my vision for the company's great future as we continue to be laser focused on providing outstanding service to our customers and communities and executing consistently to deliver enhanced stakeholder value.

Better yet this amount also includes an increase to our 2023 plan from 4 billion to $4 2 billion.

This represents a nearly 17% increase since our beginning of the year target of $3.6 billion.

Jason Wells: Now, before I turn it back over to Dave to kick off the discussion of our strong third quarter results, I want to personally thank him for his tireless leadership, mentorship and friendship. He is a force for change and I look forward to building off the momentum he has created.

The remaining incremental $300 million will be deployed in 'twenty 'twenty, four and 'twenty 'twenty five.

These additional capital investments will continue to support safety reliability and resiliency for the benefit of customers, while balancing the impact on their bills.

Dave: Thanks Jason, now let's turn to what was a great quarter. I'm excited to announce that despite the continued headwinds, the industry faces, our Q3 2023 represents our 14th consecutive quarter of meeting or exceeding expectations here at CenterPoint. And as you probably saw from the results published this morning, this quarter can squarely be put in the not only meets but exceeds column.

Chris will discuss the funding of this incremental capital a little later in his remarks.

Headline five O&M discipline continues to help results and benefit customers.

We continue on our path of reducing O&M costs by 1% to 2% per year on average over our current 10 year plan.

Dave: And as I did last quarter, I will share the quarter's headlines. Headline one, strong financial results, even with ongoing macro headwinds. Despite the persistent inflation across the economy and increasing interest rate headwinds, we were able to deliver 40 cents of non-gap EPS in the third quarter of 2023. This represents a 25% increase over the comparable quarter of 2022. Headline two, strong Q3 results give us visibility and confidence to increase full year 2023 non-gap EPS guidance range, from $1.48 to $1.50 to $1.49 to $1.51 per share.

We have successfully been able to reduce overall O&M on an annual basis, even in years, when we have pulled forward O&M.

This benefits all of our stakeholders.

This year's strong results will allow us to pull approximately three cents of O&M into twenty-three from 'twenty to 'twenty four.

Now over time, we've discussed a lot of pluses.

Ministers and pull forwards to our O&M and our earnings calls over the past three years and sometimes it's easy to get lost in the weeds on our great progress and we do see no in EM and.

In fact that happens to me at times.

But here's the bottom line that you should focus on each.

Even with higher inflation, we are now on track to have reduced total controllable O&M from $1.46 billion to 1.28 billion since the beginning of 2021 a reduction of over 12%.

Dave: At the new and higher midpoint, this projected increase would represent a 9% growth over 2022. This would also be our third consecutive year of 9% growth in our third consecutive year with a compounding beaten raise reflecting our ongoing strong execution. In addition, we yet again increased our dividend in this quarter from 19 cents to 20 cents, which represents a 10% increase over the last 12 months. One of the highest increases in the sector.

Headline six are for upcoming rate case filings remain on track with a slight modification to the timing of our Houston electric rate case.

With the support of key stakeholders, we are requesting a shift to the timing of our CE rate case with PUC approval, we will seek to file a couple of months later to allow the use of a calendar year test year, which should simplify the filing for all parties.

Dave: These are just outstanding results. Headline 3, initiating 2024 non-gap EPS guidance of $1.61 to $1.63 per share. Our new 2024 non-gap EPS guidance range represents an 8% growth over the midpoint of our new and now higher 2023 guidance range of $1.49 to $1.51. This continues to reflect the compounding effects of our three years of expected beaten-raised results and is due to excellent execution over the past several years. As we've said previously, we continue to target year-over-year growth to deliver value to our customers and investors each and every year. We are also demonstrating that we continue to have upside to our previously stated annual growth targets.

Jason will get into that in a few minutes.

Headline seven.

Houston growth continues at a blistering pace.

The Houston area has seen a nearly 15% increase in housing starts through the first three quarters of 2023.

This activity continues to support our annual 1% to 2% organic customer growth that benefits customer charges.

In fact 10 years ago, our average monthly customer charges were approximately $49 today, even after historic inflation are monthly charges still that same $49.

This is a testament to benefits of the decades long, 2% organic customer growth here in the Houston area.

Headline eight still.

Dave: Headline 4, another upward revision to our capital plan. We continue to be prudent and formally incorporating incremental capital into our plan. We will not deviate from our practice of only adding in incremental investments when we believe we can operationally execute them, efficiently fund them, and effectively recover them. I am delighted to say today that we now have line of sight to increase our capital plan by an additional $500 million. This brings our total 10-year capital plan through 2030 to nearly $44 billion, supporting a 10% rate-based cager throughout that same period.

Still targeting Houston electric customer charges at or below the 2% historical rate of inflation.

While continuing to heavily invest in the fundamentals of safety resiliency and reliability. Our goal is to keep Houston electric customer charge increases at or below the 2% historical level of inflation over the longer term.

In summary, balancing the economic headwinds such as higher interest rates and inflationary pressures with the tailwind of unseasonably warm weather, especially in our Houston service territory, we continue to deliver for both our customers and investors.

The third quarter of 2023 highlights this management team's commitment and ability to execute even through adverse macro conditions weakened.

Dave: Better yet, this amount also includes an increase to our 2023 plan from $4 billion to $4.2 billion. This represents a nearly 17% increase since our beginning of the year target of $3.6 billion. The remaining incremental $300 million will be deployed in 2024 and 2025. These additional capital investments will continue to support safety, reliability, and resiliency for the benefit of customers while balancing the impact on their bills. Chris will discuss the funding of this incremental capital a little later in his remarks.

We continue to believe that we have one of the most tangible long term growth plans in the industry and we believe we have the right team in place to extend our track record of execution.

Before I hand, it over to Jason and Chris I want to express my sincere appreciation to all employees here at Centerpoint that endured extreme weather conditions. This summer to keep the power on for our customers when it mattered most now.

Now, let me turn the call over to Jason.

Thank you Dave.

Before I get into my updates for the quarter I also want to extend my gratitude to all of our employees, who work through the challenging weather and economic conditions. This summer to provide exceptional service to our customers.

Dave: Headline 5, ONM Discipline continues to help results and benefit customers. We continue on a path of reducing ONM costs by 1-2% per year on average over our current 10-year plan. We have successfully been able to reduce overall ONM on an annual basis even in years when we have pulled forward ONM. This benefits all of our stakeholders. This year's strong results will allow us to pull approximately 3 cents of ONM into 23 from 2024.

Now looking at the regulatory calendar in slide five.

I want to provide an update regarding the timing of our four upcoming rate case filings beginning with the first one or two that will be filed next week that is our Texas gas rate case for.

For the benefit of our customers and to reduce administrative burden on all of our stakeholders for the first time, we will be combining our four Texas gas jurisdictions into a single rate case filing.

We expect that as combined filing will result in reduced monthly bills for certain customers specifically to those in our smaller rural Texas gas areas of our service territory as well as our large commercial and industrial users.

Dave: Now, over time, we've discussed a lot of pluses, minuses, and pull-fords to our O&M in our earnings calls over the past three years. And sometimes it's easy to get lost in the weeds on our great progress and reducing O&M. In fact, that happens to me at times.

Those residential customers in more urban areas are anticipated to see a moderate overall monthly bill increase.

Additionally, this single filing will simplify future consolidated annual grip filings from four to one per year.

Dave: But here's the bottom line that you should focus on. Even with higher inflation, we are now on track to have reduced total controllable O&M from $1.46 billion to $1.28 billion since the beginning of 2021, a reduction of over 12%.

Moving onto our other Texas business Houston Electric we are now targeting the second quarter of 2024 to file our rate cases.

We had previously guided to the first quarter of 2024, however to simplify the case for all stakeholders.

Dave: Headline six are four upcoming rate case filings remain on track with a slight modification to the timing of our Houston electric rate case. With the support of key stakeholders, we are requesting a shift to the timing of our CE rate case. With PUCP approval, we will seek to file a couple of months later to allow the use of a calendar year test year, which should simplify the filing for all parties.

We now anticipate using a calendar test year, ending December 31, 2023, rather than the previously contemplated test year end of September 32023.

The shift to a calendar test year reduces the administrative burden for all parties.

Given the anticipated new test period end date, we wanted to ensure that we had enough time to compile our filing.

While were still developing the parameters we are still anticipating a rate case to have a relatively flat revenue requirement and look forward to highlighting the large O&M reductions, we've been able to achieve which will be a key contributor to the expected revenue requirement.

Jason Wells: Jason will get into that in a few minutes.

Dave: Headline seven, Houston growth continues at a blistering pace. The Houston area has seen a nearly 15% increase in housing starts through the first three quarters of 2023. This activity continues to support our annual one to two percent organic customer growth that benefits customer charges. In fact, 10 years ago, our average monthly customer charges were approximately $49. Today, even after historic inflation, our monthly charge is still that same $49. This is a testament to benefits of the decades-long 2% organic customer growth here in the Houston area.

And our Minnesota gas in Indiana Electric businesses, we don't anticipate any changes to the timing of our filings as we continue to target early November December of this year, respectively for.

Those filings.

Although we don't expect the timing of the Minnesota rate case to change the structure of our filing will we are planning to file a two year forward looking rate case, instead of a one year rate case, which we've historically filed.

This change will allow us to file for a revenue increase for the second year and maintain those rates to the next rate case, putting us on unexpected path to smooth the revenue increases for the benefit of our customers.

Additionally, given you're filing will cover a longer period. It will naturally result in fewer rate case filings lessening the administrative burden for all stakeholders.

Moving to the regulatory updates shown on slide six.

Dave: Headline eight, still targeting Houston electric customer charges at or below the 2% historical rate of inflation. While continuing to heavily invest in the fundamentals of safety, resiliency, and reliability, our goal is to keep Houston electric customer charge increases at or below the 2% historical level of inflation over the longer term.

Outside of our rate cases during the quarter, we began to recover on our interim mechanisms at Houston electric.

The first interim mechanism related to our distribution investments known as the D. C RF, which went into rates on September 1st with an annual revenue requirement increase of $70 million.

The $70 million increase relates to our distribution investments made during calendar year 2022.

Dave: In summary, balancing the economic headwinds such as higher interest rates and inflationary pressures, with the tailwinds of unseasonably warm weather, especially in our Houston service territory, we continue to deliver for both our customers and investors. The third quarter of 2023 highlights this management team's commitment and ability to execute even through adverse macro conditions. We continue to believe that we have one of the most tangible long-term growth plans in the industry, and we believe we have the right team in place to extend our track record of execution.

As many of you are aware recently enacted legislation now enables Texas utilities to make two such filings per year instead of the one we were previously allowed.

This should allow for the reduction of regulatory lag associated with our future distribution capital spent at Houston electric as we continue to make customer driven investments.

The second interim mechanism that also went into rates relates to a recently settled emergency generation or T filing, which like the DCF was included in customer rates beginning on September one.

This is a tremendously constructive outcome for our customers. These emergency generation assets can be deployed during some of the most critical times like extended outages caused by severe weather events that occur in the Houston area.

Dave: Before I hand it over to Jason and Chris, I want to express my sincere appreciation to all employees here at CenterPoint that endured extreme weather conditions this summer to keep the power on for our customers when it mattered most.

As power resiliency and reliability remain a key focus of ours and the communities. We serve we will continue to advocate for these customer focused outcomes.

I want to take a moment and highlight that although we continue to make these customer driven investments in resiliency and reliability, which in aggregate equate to over $300 million in incremental revenue, we are still mindful of the impacts to customer charges.

Jason Wells: Now let me turn the call over to Jason. Thank you, Dave.

Jason Wells: Before I get into my updates for the quarter, I also want to extend my gratitude to all of our employees who work through the challenging weather and economic conditions this summer to provide exceptional service to our customers. Now, looking at the regulatory calendar in 5.5, I want to provide an update regarding the timing of our four upcoming rate case filings beginning with the first one of two that will be filed next week.

As Dave said 10 years ago, our average monthly delivery customer charges were approximately $49 a month today, even after historic inflation, our average monthly delivery charges still that same $49. This is a testament to benefits of the tremendous organic customer growth here in the Houston area as well as our disciplined focus on managing.

O&M.

Jason Wells: That is our Texas gas rate case for the benefit of our customers and to reduce administrative burden on all of our stakeholders. For the first time, we will be combining our four Texas gas jurisdictions into a single rate case filing. We expect that this combined filing will result in reduced monthly bills for certain customers, specifically to those in our smaller rural Texas gas areas of our service territory, as well as our large commercial and industrial users. Those residential customers in more urban areas are anticipated to see a moderate overall monthly bill increase. Additionally, this single filing will simplify future consolidated annual grip filings from four to one per year.

Lastly, I'd like to provide an update regarding the generation transition in Indiana.

We have filed for cost increases associated primarily with the increased cost in solar panels and MISO interconnection costs.

This quarter, we have received reapproval for Posey solar which is one of our 200 megawatt utility owned solar projects.

We are also revising the placed in service dates for two of our renewable generation projects that are now expected to be operational in 2026, which were previously anticipated to go into service in 2025.

These delays common with these types of projects are due to increased pricing and a long queue for MISO interconnects among other factors.

As we've said before in instances of delayed projects, we will work to sequence or other capital deployment opportunities to eliminate any earnings impact to our plan.

Jason Wells: Moving on to our other Texas business, Houston Electric. We are now targeting the second quarter of 2024 to file our rate cases. We had previously guided to the first quarter of 2024, however, to simplify the case for all stakeholders. We now anticipate using a calendar test year ending December 31, 2023 rather than the previously contemplated test year end of September 30, 2023. The shift to a calendar test year reduces the administrative burden for all parties.

We want to recognize the Indiana Commission, who continues to work to balance all stakeholder input of our ongoing energy transition as we work towards moving away from more costly coal generation to cleaner lower cost generation investments in wind solar and natural gas.

Those are my updates for the quarter I am proud of our operational execution, especially in light of the extreme weather some of our jurisdictions and during the quarter.

Jason Wells: Given the anticipated new test period end date, we wanted to ensure that we had enough time to compile our filing. While we're still developing the parameters, we are still anticipating the rate case to have a relatively flat revenue requirement and look forward to highlighting the large ONM reductions we've been able to achieve, which will be a key contributor to the expected revenue requirement.

Our Houston Electric service territory experienced 12, new record demand peaks.

Our crews restore transmission lines to mitigate generation congestion provided relief through voltage reduction and organizationally took a leading role in socializing the need for customer energy conservation.

Through these efforts, we were able to not only keep the power on for our customers, but also manage our O&M, while doing so benefiting future customer rates.

Jason Wells: In our Minnesota gas and Indian electric businesses, we don't anticipate any changes to the timing of our filings as we continue to target early November or December of this year respectively for those filings. Although we don't expect the timing of the Minnesota rate case to change, the structure of our filing will. We are planning to file a two-year forward looking rate case instead of a one-year rate case, which we've historically filed.

Although our sector continues to face headwinds I am still firmly in the belief that our tailwind such as efficient capital deployment strong organic growth in O&M reduction opportunities exceed our headwinds.

With that I'll now turn it over to Chris to provide his financial update for the quarter.

Before I get started on our financial results Dave. Thank you for your support of me as I start to hit the ground running and Jason Congratulations to you.

Jason Wells: This change will allow us to file for a revenue increase for the second year and maintain those rates to the next rate case, putting us on an expected path to smooth revenue increases for the benefit of our customers. Additionally, giving the filing will cover a longer period, it will naturally result in fewer rate case filings, lessening the administrative burden for all stakeholders.

Today I'll cover three areas of focus.

First our Q3 results, including our positive revision to 2023, non-GAAP EPS guidance.

And the initiation of 2024, non-GAAP EPS guidance.

Second our positively revised capital plan and corresponding financing plan and third I'll look at where we stand today with respect to our balance sheet.

Jason Wells: Moving to the regulatory updates shown on slide six. Outside of our rate cases during the quarter, we began to recover on our interim mechanisms at Houston, LA. District. The first interim mechanism related to our distribution investments known as the DCRF, which went into rates on September 1st, with an annual revenue requirement increase of $70 million. This $70 million increase relates to our distribution investments made during calendar year 2022. As many of you are aware, recently enacted legislation now enables Texas utilities to make two such filings per year, instead of the one we were previously allowed.

Now, let's start with the financial results on slide seven.

As Dave mentioned in his headlines with three quarters of 2023 behind US we now have the visibility and confidence to provide an upward revision to our full year 2023, non-GAAP EPS guidance range from $1 48 to $1 50 per share to $1 49 to $1 51 per share.

This increased guidance range reflects projected 9% growth over full year 2022, actual non-GAAP EPS of $1 38, when using the midpoint.

This would represent our third consecutive year of 9% growth.

Jason Wells: This should allow for the reduction of regulatory lag associated with our future distribution capital spend at Houston Electric as we continue to make customer driven investments. The second interim mechanism that also went into rates relates to our recently settled emergency generation, or T filing, which, like the DCRF, was included in customer rates beginning on September 1st. This is a tremendously constructive outcome for our customers. These emergency generation assets can be to pool during some of the most critical times, like extended outages caused by severe weather events that occur in the Houston area. As power of resiliency and reliability remain a key focus of hours in the communities we serve, we will continue to advocate for these customer focused outcomes.

On a GAAP EPS basis, we reported <unk> 40 for the third quarter of 2023.

Our non-GAAP EPS results for the third quarter remove the results of our now divested nonregulated business energy systems group.

On a non-GAAP basis, we also reported 40 for the third quarter of 2023 compared to 32 cents in the third quarter of 2022.

Growth and rate recovery contributed nine.

Which was driven by the ongoing recovery of various interim mechanisms for which customer rates were updated earlier in the year, such as the transmission tracker or T costs at Houston Electric and the Texas grips.

Also contributing and as Jason noted earlier during the quarter, we began recovery of two separate mechanisms at Houston Electric D. C. R F and teeth.

Jason Wells: I want to take a moment and highlight that although we continue to make these customer driven investments in resiliency and reliability, which in aggregate equate to over $300 million in incremental revenue, we are still mindful of the impacts to customer charges. As Dave said, 10 years ago, our average monthly delivery customer charges were approximately $49 a month. Today, even after historic inflation, our average monthly delivery charges still that same $49. This is a testament to benefits of the tremendous organic customer growth here in the Houston area, as well as our discipline focus on managing O&M.

In addition, we continue to see strong organic growth in the Houston area, extending the long term trend of 1% to 2% average annual customer growth, which continues to benefit both customers and investors.

Weather and usage, where five cents favorable when compared to the same quarter of 2022, primarily driven by the historic summer heat in our Houston Electric service territory.

This Q3 warmer weather impact, partially offset the unfavorable cooler weather impact of <unk>, we experienced in Q1 and Q2 of this year.

Jason Wells: Lastly, I'd like to provide an update regarding the generation transition in Indiana. We had filed for cost increases associated primarily with the increased cost in solar panels and myso inter-connection costs. This quarter we have received re-approval for Posey Solar, which is one of our 200 megawatt utility-owned solar projects. We are also revising the place and service dates for two of our renewable generation projects that are now expected to be operational in 2026, which were previously anticipated to go into service in 2025.

O&M was flat for the third quarter and <unk> favorable year to date when comparing to the first three quarters of 2022.

And we remain laser focused on reducing O&M by 1% to 2% per year on average while executing our core word plan to meet our customers' needs.

In fact due to the favorable impact from the weather, we were able to increase Q3 spending uncertain O&M items for the benefit of our customers.

These O&M activities included accelerated vegetation management, which we see as prudent given the heightened recent drought conditions and other targeted projects that should help us improve safety and reliability for our customers.

Jason Wells: These delays, common with these types of projects, are due to increased pricing and the long queue for myso inter-connects among other factors. As we've said before, in instances of delayed projects, we will work to sequence our other capital deployment opportunities to eliminate any earnings impact to our plan. We want to recognize the Indiana commission who continues to work to balance all stakeholder input of our ongoing energy transition as we work towards moving away from more costly coal generation to cleaner, lower cost generation investments in wind, solar, and natural gas.

Our consistent progress on O&M is clear over the last couple of years, we have been able to use hotter summers to increase our spend on O&M for the benefit of our customers.

However, when looking at our current O&M trajectory, even with this increased spend we are anticipating reducing controllable O&M by over 12% since 2021.

These are excellent results for customers and investors alike.

We continue to look for and execute on additional opportunities each year.

Jason Wells: These are my updates for the quarter. I am proud of our operational execution, especially in light of the extreme weather some of our jurisdictions endured during the quarter. Our Houston Electric Service Territory experienced 12 new record demand peaks. Our cruise restore transmission lines to mitigate generation congestion provided a relief through voltage reduction and organizationally took a leading role in socializing the need for customer energy conservation. Through these efforts, we were able to not only keep the power on for our customers, but also manage our O&M while doing so, that is sending future customer rates.

Closing out the earnings drivers for the quarter favorability from rate recovery and weather were partially offset by an 8% increase in interest expense.

The continued rising interest rate expense on short term borrowings with the primary driver for this unfavorable <unk> when compared to the third quarter of last year.

However, we continue to be opportunistic in reducing short term floating rate debt exposure.

I'll discuss this in greater detail in just a moment.

Let me now focus a bit on our 2023 capital plan, which you can see here on slide eight.

Jason Wells: Although our sector continues to face headwinds, I am still firmly in the belief that our tailwinds, such as efficient capital deployment, strong organic growth, and O&M reduction opportunities, exceed our headwinds.

The third quarter of 2023 represents yet another quarter of sound capital deployment execution, as we invested $1 1 billion for the benefit of our customers and communities.

Chris: With that, I'll now turn it over to Chris to provide his financial update for the quarter.

This brings our year to date total investments to $3 $4 billion year to date across our various service territories.

Chris: Before I get started on the financial results, Dave, thank you for your support of me as I sought to hit the ground running, and Jason, congratulations to you. Today I'll cover three areas of focus. First are Q3 results, including our positive revision to 2023 non-GAP EPS guidance, and the initiation of 2024 non-GAP EPS guidance. Second, our positively revised capital plan and corresponding financing plan, and third, a look at where we stand today with respect to our balance sheet.

We're over 80% of 2023 capital plan.

Additionally, as Dave mentioned in his headlines we are now able to incorporate an additional $200 million of customer focused investments in 2023, which increases our full year 2023 capital plan from $4 billion.

To $4 2 billion.

Let me provide a little context around this update.

This year saw a couple of operational factors beyond the second DC RF law the benefited us.

Chris: Now let's start with the financial results on slide 7. As Dave mentioned in his headlines, with three quarters of 2023 behind us, we now have the visibility and confidence to provide an upward revision to our full year 2023 non-GAP EPS guidance range, from $1.48 to $1.50 per share, to $1.49 to $1.51 per share. This increased guidance range reflects projected 9% growth over full year 2022 actual non-GAP EPS of $1.38 when using the midpoint.

First we did not experience the temporary loss of our great frontline crews to mutual aid requests as they were not major weather events that activated that need.

With those crews at the ready to execute more work, we were able to support our continued customer growth of over 2% and our Texas electric business as well as advanced some of our pipeline modernization work at our Texas gas business as opposed to waiting until next year.

I'm proud of the team's ability to be nimble in this way as we continue to invest in safety reliability and resiliency for our customers.

Chris: This would represent our third consecutive year of 9% growth. On a GAP EPS basis, we reported $0.40 for the third quarter of 2023. Our non-GAP EPS results for the third quarter remove the results of our now divested non-regulated business energy systems group. On a non-GAP basis, we also reported $0.40 for the third quarter of 2023, compared to $0.32 in the third quarter of 2022. Growth and rate recovery contributed $0.9, which was driven by the ongoing recovery of various interim mechanisms for which customer rates were updated earlier in the year, such as the transmission tracker or T-COS at Houston Electric and the Texas grips.

Now turning to our 2024 non-GAAP earnings guidance.

As we enter the final quarter of 2023 with confidence in our ability to deliver strong full year results. We are already looking to next year.

And going forward, we would intend for our traditional rhythm to be to provide subsequent year non-GAAP EPS guidance for you in the third quarter of the prior year.

As a result today, we are initiating our 2024 non-GAAP EPS guidance range of $1 61 to $1 63 per share.

Chris: Also contributing, and as Jason noted earlier during the quarter, we began recovery of two separate mechanisms at Houston Electric, DCRS and Tease. In addition, we continue to see strong organic growth in the Houston area, extending the long-term trend of 1-2% average annual customer growth, which continues to benefit both customers and investors. Weather and usage were 5 cents favorable when compared to the same quarter of 2022, primarily driven by the historic summer heat in our Houston's Electric Service Territory.

This would represent an 8% earnings growth over our now higher expected 2023 earnings midpoint.

Beyond 2024, we continue to target the mid to high end of 6% to 8% non-GAAP EPS growth through 2030.

We also target growing dividends in line with earnings and as some of you may have noticed we took the step to increase our dividend this quarter from 19 to 20.

Which represents a 10% increase over the last 12 months.

The highest increases in this sector.

Supporting this 2020 for growth is our now revised capital plan.

For 2024, we are targeting to deploy $3 $7 billion of customer driven capital to support the growth resiliency and safety of our system for our customers.

Chris: This Q3 warmer weather impact partially offset the unfavorable cooler weather impact of six cents we experienced in Q1 and Q2 of this year. O&M was flat for the third quarter and two cents favorable year to date when comparing to the first three quarters of 2022. And we remain laser focused on reducing O&M by 1-2% per year on average, while executing our core work plan to meet our customers needs. In fact, due to the favorable impact from the weather, we were able to increase Q3 spending on certain O&M items for the benefit of our customers, customers.

On top of the incremental $200 million added to the 2023 capital plan.

We will add approximately $300 million of incremental capital to the existing $43 $4 billion 10 year capital plan through 2030.

This brings our new total amount to $43 $9 billion.

This $300 million is anticipated to be deployed in 2024 and 2025.

Allow me a minute to step back and give all of you a feel for our thinking here on this upward revision.

Chris: These ONM activities included accelerated vegetation management, which we see as prudent given the heightened recent drought conditions and other targeted projects that should help us improve safety and reliability for our customers. Our consistent progress on ONM is clear. Over the last couple years, we have been able to use hotter summers to increase our spend on ONM for the benefit of our customers. However, when looking at our current ONM trajectory, even with this increased spend, we are anticipating reducing controllable ONM by over 12 percent since 2021.

It's much like we've said before we need to be able to efficiently execute.

Fund and recover our costs as we think about including more capital for customers.

This additional capital represents our move to take advantage of a few factors.

First we have the opportunity to provided by the recent resiliency legislation that passed in the Texas legislature or we can start to pull some of that work into play soon.

And the team has come a long way on better capital execution in recent years.

I want to take a moment and put in perspective, just how far we've progressed in our capital plan since our last analyst day in 2021.

Chris: These are excellent results for customers and investors alike. We continue to look for and execute on additional opportunities each year. Closing out the earnings drivers for the quarter, favorability from rate recovery and weather were partially offset by an 8-cent increase in interest expense. The continued rising interest rate expense on short-term borrowings was the primary driver for this unfavorability when compared to the third quarter of last year. However, we continue to be opportunistic in reducing short-term floating rate debt exposure. I'll discuss this in greater detail in just a moment.

The new $43 9 billion capital plan through 2030 is nearly 10% higher than the $40 billion plus plan, we outlined when we hosted that analyst day, and with a revised 2023 capital target.

We will have deployed over $12 $5 billion in capital since the beginning of 2021.

Over $1 billion more than our than market capitalization.

Additionally, the five year capital target of $18 billion, plus communicated back in 2021, and which now stands at over $21 billion.

Chris: Let me now focus a bit on our 2023 Capital Plan, which you can see here on Flight 8. The third quarter of 2023 represents yet another quarter of sound capital deployment execution as we invested $1.1 billion for the benefit of our customers and communities. This brings our year-to-date total investments to $3.4 billion a year-to-date across our various service territories, or over 80 percent of 2023 Capital Plan. Additionally, as Dave mentioned in his headlines, we are now able to incorporate an additional $200 million of customer-focused investments in 2023, which increases our full-year 2023 Capital Plan from $4 billion to $4.2 billion.

<unk> represents over a 16% increase in capital.

At that same prior analyst day, we also announced that we do not need any equity to fund our $40 billion plus capital plan.

Or do we need equity to fund the previous increases to $43 4 billion.

And that was still the case when we referenced our most recent revision to $43 $4 billion.

In part due to the financing lift from the noncore ESG transaction, we announced in the last quarter.

However, as we have previously said is our capital plan growth.

And as we began to spend incremental capital beyond the $43 4 billion dollar plan equity or equity like funding would be required.

And the reason for this is simple.

Chris: Let me provide a little context around this update. This year saw a couple of operational factors beyond the second DCRF law that benefited us. First, we did not experience the temporary loss of our great frontline crews to mutual aid requests as there were not major weather events that activated that need. With those crews at the ready to execute more work, we were able to support our continued customer growth of over 2 percent in our Texas Electric Business, as well as advance some of our pipeline modernization work in our Texas Gas Business, as opposed to waiting until next year. I'm proud of the team's ability to be nimble in this way as we continue to invest in safety, reliability, and resiliency for our customers.

While we are committed to making customer focused investments for safety reliability and resiliency.

We're equally committed to preserving a strong balance sheet.

As we go forward and evaluate acceleration of incremental growth capital additions to our plan.

You should assume that we will fund in line with our consolidated capital structure.

So it follows today that in order to efficiently fund the $500 million of incremental capital opportunities I discussed a moment ago.

We anticipate initiating a modest ATM program in 2024 of approximately $250 million.

Ultimately, we see this capital we highlighted today, along with the ATM introducing additional flexibility for our future plans.

Chris: Now turning to our 2024 non-gap earnings guidance. As we enter the final quarter of 2023, with confidence in our ability to deliver strong, fully-results, we are already looking to next year. And, going forward, we would intend for our traditional rhythm to be to provide subsequent year non-gap EPS guidance for you in the third quarter of the prior year. As a result, today we are initiating our 2024 non-gap EPS guidance range of $1.61 to $1.63 per share.

And as we've said before we.

We will continue to evaluate efficient funding for future incremental capital that we formerly fold into the plan.

To be clear.

Any ATM program proceeds are dedicated to enhance growth and incremental capital investments.

The equity issued under this program will in no way reduce our earnings growth targets through 2030.

As discussed we continue to reaffirm our target 8% next year in the mid to high end of 6% to 8% thereafter through 2030.

Chris: This would represent an 8 percent earnings growth over our now higher expected 2023 earnings midpoint. Beyond 2024, we continue to target the mid to high end of 6 to 8 percent non-gap EPS growth through 2030. We also target growing dividends in line with earnings, and as some of you may have noticed, we took the step to increase our dividend this quarter from 19 cents to 20 cents, which represents a 10% increase over the last 12 months, one of the highest increases in the sector.

With our revised capital plan, we are still intently focused on delivering work affordably.

We continue to target our customer delivery charges at Houston electric to be equal to or less than historic inflation rate of 2%.

We have confidence in our ability to achieve this through houston's tremendous organic growth.

<unk> charges rolling off the Bill later next year.

And our plan to reduce O&M, 1% to 2% per year on average.

Chris: Supporting this 2024 growth is our now revised capital plan. For 2024 we are targeting to deploy $3.7 billion of customer-driven capital to support the growth, resiliency and safety of our system for our customers. On top of the incremental $200 million added to the 2023 capital plan, we will add approximately $300 million of incremental capital to the existing $43.4 billion tenured capital plan through 2030. This brings our new total amount to $43.9 billion.

A great example of our ability to keep customer charges manageable, even as we make our system more resilient and can be found in Q3.

Even with the recovery of more than $700 million and investments in our temporary emergency generation now being included in customer rates.

Customer charges have increased at less than an annual average of 1%.

We have a strong track record on bringing focus to affordability and smoothing of rates for our customers.

Like Dave mentioned earlier, our average charge was $49 10 years ago.

Chris: This $300 million is anticipated to be deployed in 2024 and 2025. Allow me a minute to step back and give all of you a feel for our thinking here on this upward revision. It's much like we said before, we need to be able to efficiently execute, fund and recover our costs as we think about including more capital for customers. This additional capital represents our move to take advantage of a few factors.

And its averaging $49 today.

Finally, I will cover some of our financing and credit related topics on slide nine.

As of the end of the third quarter, our calculated F O to debt was 14, 3%.

This represents an expected increase from Q2 as the recovery of our investments accelerates going into the back half of the year.

We anticipate this acceleration to continue through Q4 of this year as we will have a full quarter of recovery on our D. C RF and chief investments they've indicated began on September one.

Chris: First, we have the opportunity to provide by the recent resiliency legislation that passed in the Texas legislature, where we can start to pull some of that work into place soon, and the team has come a long way on better capital execution in recent years. I want to take a moment and put in perspective just how far we've progressed in our capital plan since our last analyst day in 2021. The new $43.9 billion capital plan through 2030 is nearly 10% higher than the $40 billion plus plan we outlined when we hosted that analyst day and with our revised 2023 capital target, we will have deployed over $12.5 billion in capital since the beginning of 2021, over $1 billion more than our then market capitalization.

We continue to target <unk> to debt of 14% to 15%, which runs through 2030, and importantly provides at least 100 basis points of cushion to our downgrade threshold of 13%.

Chris: Additionally, the five-year capital target of $18 billion plus communicated back in 2021 and which now stands at over $21 billion represents over a 16% increase in capital. At that same prior analyst day, we also announced that we did not need any equity to fund our $40 billion plus capital plan, nor did we need equity to fund the previous increases to $43.4 billion. In that was still the case when we referenced our most recent revision to $43.4 billion in part due to the financing lift from the non-core ESG transaction we announced in the last quarter.

As a reminder, we are carrying approximately $400 million of debt at the parent which was issued to fund our higher equity layer at Houston Electric in Texas gas, which we believe is the proper capitalization of these businesses.

Another area in which we've seen improvement is the continued reduction of our exposure to floating rate debt.

Through the third quarter, we reduced floating rate debt to approximately $1 8 billion, which represents a 60% reduction from the beginning of 2023.

We continue to be opportunistic in reducing this balance further and the convertible bond issuance. During this quarter is a great example of capitalizing on opportunities.

Our $1 billion convertible issuance allowed us to redeem our $800 million series a preferred shares that were set to go floating during the quarter on September 1st of the year at nearly 9%.

So some good opportunistic savings were achieved there.

The remaining approximately $200 million of convertible bond proceeds allowed us to pay down commercial paper contributing to the net reduction of floating rate debt exposure.

Chris: However, as we have previously said is our capital plan grows and as we began to spend incremental capital beyond the $43.4 billion plan, equity or equity-like funding would be required. And the reason for this is simple, while we are committed to making customer focus investments for safety, reliability and resiliency, we are equally committed to preserving a strong balance sheet. As we go forward and evaluate acceleration of incremental growth capital additions to our plan, you should assume that we will fund in line with our consolidated capital structure.

Lastly, after quarter closed we issued $450 million of private placement notes at <unk>.

As we've noted in prior quarters.

This was an opportunity to fund the entity on a standalone basis, rather than relying on intercompany borrowings from the parent.

On a go forward basis, this should translate to a lower relative cost of borrowing versus the parent.

And as a result.

This reduced parent level debt to total borrowing by another 2%.

This is a milestone as our final step of the Vectren financing integration.

Chris: So, it follows today that in order to efficiently fund the $500 million of incremental capital opportunities I discussed a moment ago, we anticipate initiating a modest ATM program in 2024 of approximately $250 million. Ultimately, we see this capital we highlighted today, along with the ATM introducing additional flexibility for our future plans. And, as we've said before, we will continue to evaluate efficient funding for future incremental capital that we formally fold into the plan.

We remain intensely focused on maintaining a strong balance sheet, especially in what appears to be a higher for longer interest rate environment.

We have worked hard to build in additional conservatism in our long term plan.

And today shows another step of progressing that plan for our customers and investors.

This shared focus on good planning is what we believe will allow us to continue to execute even in the face of continued headwinds.

With that I'll now turn the call back over to Dave.

As you've heard from US today, we now have 14 straight quarters of meeting or exceeding expectations.

Chris: To be clear, any ATM program proceeds are dedicated to enhanced growth and incremental capital investments. The equity issued under this program will, in no way, reduce our earnings growth targets through 2030. As discussed, we continue to reaffirm our target, 8% next year, and the mid to high end is 6% to 8% thereafter through 2030. With our revised capital plan, we are still intently focused on delivering work affordably. We continue to target our customer delivery charges at Houston Electric to be equal to or less than historic inflation rate of 2%.

We are a pure play.

Regulated premium utility and on a course to continue execution of our current plan with incremental growth opportunities to support our customers well beyond that.

Thank you for listening to me tell our story for the past three and a half years.

This has been a great ride and I look forward to finding my next opportunity.

We also look forward to celebrating Jason's promotion with all of you at EI.

Chris: We have confidence in our ability to achieve this through Houston's tremendous organic growth, scaredization charges rolling off the bill later next year, and our plan to reduce O&M one to 2% per year on average. A great example of our ability to keep customer charges manageable even as we make our system more resilient can be found in Q3. Even with the recovery of more than $700 million in investments in our temporary emergency generation now being included in customer rates, customer charges have increased at less than an annual average of 1%. We have a strong track record on bringing focus to affordability and smoothing of rates for our customers. Like Dave mentioned earlier, our average charge was $49 10 years ago, and it's averaging $49 today.

Thank you.

I will now turn it back to you for Q&A.

At this time, we will begin taking questions. If you wish to ask a question. Please press star one on your Touchtone keypad.

Any requests that when asking a question.

<unk> pick up their telephone handsets and also.

To one question and one follow up question.

Thank you.

And please standby for the first question.

The first question will come from Shar <unk> with Guggenheim. Your line is open.

Chris: Finally, I will cover some of our financing and credit related topics on slide 9. As of the end of the third quarter, our calculated FFO to debt was 14.3%. This represents an expected increase from Q2 as the recovery of our investments accelerates going into the back half of the year. We anticipate this acceleration to continue through Q4 of this year, as we will have a full quarter of recovery on our DCRF and teeth investments that we indicated began on September 1.

Hey, guys good morning.

Morning.

Hey, good morning, So just on I wanted to just touch on the confidence going into 'twenty, four and obviously growing at the top end of the raised guidance I guess.

How are you kind of maybe addressing the headwinds like interest rate pressures on about $1 billion worth of maturities and you do have Jason you've been talking about this you have rate cases right in Texas.

In Minnesota that you have to get through which can also create some lag. So a lot of moving pieces. So I guess, where the levers and just talk about your confidence level in these cases as well.

Chris: We continue to target FFO to debt of 14 to 15%, which runs through 2030, and importantly provides at least 100 basis points of cushion to our carrying approximately $400 million of debt at the parent, which was issued to fund our higher equity layer at Houston Electric and Texas Gas, which we believe is the proper capitalization of these businesses. Another area in which we've seen improvement is the continued reduction of our exposure to floating rate debt.

'twenty one.

Sure sure. Thanks for the question I think there's probably three things I would focus on I'll make sure to hit the rate case piece to in fact, Jason maybe give you. Some color there I think there's probably three things that give us the confidence.

First is the thoughtful capital planning, where we're now seeing some of the benefit with improved regulatory mechanisms second O&M discipline that we're starting really continuing to improve on.

Chris: Through the third quarter, we reduced floating rate debt to approximately $1.8 billion, which represents a 60% reduction from the beginning of 2023. We continue to be opportunistic in reducing this balance further, and the convertible bond issuance during this quarter is a great example of capitalizing on opportunities. Our $1 billion convertible issuance, a lot of three deem our $800 million Series A preferred shares that were set to go floating during the quarter on September 1 of the year at nearly 9%.

<unk> would be just really looking across the plan for incremental opportunities as we go to unpack each of those on.

On the capital side.

Chris: So some good opportunistic savings were achieved there. The remaining approximately $200 million of convertible bond proceeds allowed us to pay down commercial paper contributing to the net reduction of floating rate debt exposure. Lastly, after quarter close, we issued $450 million of private placement notes at Ziggyco. As we've noted in prior quarters, this was an opportunity to fund the entity on a standalone basis rather than relying on inter-company borrowings from the parent.

We're now experiencing some of the benefits they are layering in over the increases that we've put in over the last 18 months and on top of that we've got the Texas legislation passed earlier this year, that's going to help reduce the regulatory lag and we will start to see some of the benefit of those investments and 24% and 25 and so we think that ability to file two DCF per year.

In particular and that incremental recovery of incentive comp can help us reduce regulatory lag by about half.

O&M side.

As David in particular, we continue to be focused on reducing O&M, 1% to 2% on average and you heard that now that we were looking back in really 2021 forward. We're now looking at a 12% reduction which is pretty substantial.

And then lastly, I was getting at looking really across the plan and so there although not really O&M specific we're looking at.

Exploring some savings opportunities with respect to income tax and since we divested all of those nonregulated entities within the company that were of any material size. We've been looking to ensure that there is an efficient state income tax structure that existed on that so we're looking at here in the near term for some potential tax savings as well, maybe I'll just kick it to Jason for more.

Chris: On a go-forward basis, this should translate to a lower relative cost of borrowing versus the parent. And as a result, this reduced parent level debt to total borrowing by another 2%. This is a milestone as our final step of the veteran financing integration. We remain intensely focused on maintaining a strong balance sheet, especially in what appears to be a higher for longer interest rate environment. We have worked hard to build an additional conservatism in our long-term plan, and today shows another step of progressing that plan for our customers and investors. This shared focus on good planning is what we believe will allow us to continue to execute even in the face of continued headwinds.

All around the <unk>.

Regulatory cases, yes, thanks, Chris.

Sure I would say that.

The extension of the filing date for Houston Electric will not create any additional regulatory lag want to be clear about that.

A quick reminder, we have access to the capital recovery mechanisms.

We make that rate case filings. So we don't see this extension in the filing date, creating any additional regulatory lag.

Dave: With that, I'll now turn the call back over to Dave. As you've heard from us today, we now have 14 straight quarters of meeting or exceeding expectations. We are a pure play, regulated, premium utility, and on a course to continue execution of our current plan with incremental growth opportunities to support our customers well beyond that.

Got it okay perfect and then just lastly, obviously appreciate the Capex increase.

A modest step up in equity.

What's left in the upside Capex, you've highlighted in the past versus what you put into plan and is there I guess is there any reason even track that anymore, given the incremental opportunity. That's obviously not something you guys highlighted in the deck.

Yes, Thanks Shar.

Dave: Thank you for listening to me tell our story for the past three and a half years.

Got it.

And to your question there candidly I don't think that there is a reason to continue to track what we had originally or last quarter articulated is at $2 6 billion.

Dave: This has been a great ride, and I look forward to finding my next opportunity.

Dave: We also look forward to celebrating Jason's promotion with all of you at EEI. Thank you, Dave.

Set of capital opportunities outside of the plan candidly as we've gone through our planning process for 'twenty, four and looking at our long term plans and the.

Unknown Executive: Operator will now turn it back to you for Q&A. At this time, we will begin taking questions. If you wish to ask a question, please press star 11 on your touchtone key pay ad.

The pipeline of additional Capex opportunities above are now $43 9 billion Capex plan remains significant well in excess of that $2 6 billion and so I think it just becomes a confusing factor to reconcile that I think we've.

Unknown Executive: The company requests that when asking a question, callers pick up their telephone, handsets, and also limit to one question and one follow-up question. Thank you. Please stand by for the first question.

Earned the confidence and track record that.

Pipeline of opportunities as deep and as we see the opportunity to efficiently execute them efficiently fund and efficiently recover then we will continue to fall and then for the benefit of our customers.

Okay perfect Jason Congrats to you on phase two and obviously not a surprise to anyone.

Shar Porezza: The first question will come from Shar Porezza with Guggenheim. Your line has been. Hey guys, good morning.

Dave Congrats to you on your next phase and cannot borda, the utility sector I'm sure. There's other utilities that may need your help this year.

Thanks.

Shar Porezza: Good morning. I want to touch on the confidence that's going into 24 and obviously going at the top end of the race guidance. How are you addressing the headwind interest rate pressures on about a billion dollars of maturity? You have ray cases in Texas, Indiana, and soda that you have to get through, which can also create some lag. It's a lot of moving pieces, so I guess we're the levers and just talk about your confidence level in these cases, as well, because it will dictate 24 beyond.

Yes.

As part of a utility thanks sure.

Yeah.

Please standby for the next question.

The next question comes from Steve Fleishman with Wolfe Research Your line is open.

Yes, hi, good morning, Thanks, first my condolences on the Astros, but.

More importantly, congrats.

Congrats to Dave on a great job and very happy for you Jason Thank you Steve.

Steve.

So.

Thank you for the asset.

Shar Porezza: Sure, Shar, thanks for the question. I think there's probably three things I would focus on. I'll make sure to hit the Ray case piece to, in fact, love Jason maybe give you some color there. I think there's probably three things to give us the confidence. First is the thoughtful capital planning where we're now seeing some of the benefit with improved regulatory mechanisms. Second is O&M Discipline that we're starting really continuing to improve on.

Yes.

Dave you can win every year in the utility business, but you can in baseball so.

Got it.

[laughter].

So.

I guess just.

Could you give a little color on the $250 million of equity of just kind of should we expect that to be kind of largely done.

Shar Porezza: Third would be just really looking across the plan for incremental opportunities as we go. So I'm packed each of those on the capital side. We're now experiencing some of the benefits that are layering in over the increases that we've put in over the last 18 months. And on top of that, we've got the technical legislation that passed earlier this year that's going to help reduce the regulatory lag. And we'll start to see some of the benefit of those investments in 24 and 25.

During the year next year.

And then is there anything to just read into it about.

In the past you talked about.

End of asset sale potential and things like that is that just less likely now given the market environment.

Shar Porezza: And so we think that ability to file two DCRFs per year in particular and that incremental recovery of incentive comp can help us reduce regulatory lag by about half. On the O&M side, really as David in particular, we continue to be focused on reducing O&M one is 2% on average. And you heard that now that we're looking back in really 2021 for we're now looking at a 12% reduction, which is pretty substantial.

Or is it maybe just the needs are not enough to consider asset sale.

As you are kind of feathering this end.

The incremental capex.

Yes.

Sure Steve Happy to hit it I think if you just look at what we updated today, we took the plan from $43 4 billion.

To $43 nine it really.

Fairly relatively small amount of the capex increase but one that we thought was reasonably funded with the modest movement in the ATM of introducing a 250 stepping back going forward. If you look at kind of how we've articulated previously we'd probably be putting ourselves in a position to talk about the longer term capex plan and the associated.

Shar Porezza: Then lastly, I was getting at looking really across the plan. And so there, although not really O&M specific, we're looking at exploring some savings opportunities with respect to income tax. And since we've invested all those non-regulated entities within the company that were of any real material size, we've been looking to ensure that there's an efficient state income tax structure to exist beyond that. So we're looking here in the near term for some potential tax savings as well.

Refresh really once we get through the key rate cases that are in front of us at this stage.

Pointing you to kind of the last factor that you mentioned, we're going to consistently looking at look at the most efficient way to fund our equity going forward, but I just wanted to be clear that we are talking about at this stage any future considerations on an ATM would be incremental to the $43 $9 billion right. So they would be really be growth centric beyond the $43 9 billion that we are.

Shar Porezza: Maybe I'll just take it to Jason for more color on the regulatory cases. Yeah, thanks, Chris. Sure, I would say that the extension of the filing date for Houston Electric will not create any additional regulatory lag. I want to be clear about that as a quick reminder, you know, we have access to the DCRF and decals, the capital recovery mechanisms up to the date that we make that rate case filing. So we don't see this extension in the filing date creating any additional regulatory lag.

Talking about today and again, we're looking to do that larger catheter refreshed once we can work our way through these cases.

Yeah.

Okay, great. Thanks, So I'll leave it to others for questions. Thank you.

Thanks, Steve.

Please standby for the next question.

The next question comes from Julien Dumoulin.

Linda Smith with Bank of America. Your line is open.

Shar Porezza: Got it. Okay, perfect. And then just lastly, obviously, appreciate the CAPEX increase in the modus step up inequity. What's left in the upside CAPEX you've highlighted in the past versus what you put into plan? And is there, I guess, is there any reason to even track that any more given the incremental opportunity that's obviously not something you guys highlighted in the deck. Yeah, thanks, Shar. And I think you hit it at the end of your question there.

Hey, good morning, and congratulations guys well done.

Hey, good morning.

Yeah, absolutely alright.

Alrighty, just wanted to pivot back to that last question, a little bit I mean incremental resiliency spending.

These filings in Texas seems like a pretty clear opportunity.

I know, it's preliminary can you elaborate a little bit more about that upside relative to the $2. Six you guys had articulated earlier I get that there's kind of a quote big opportunity, but just a sense of what you guys are seeing out there and there are some out there are really putting some big numbers and then related if you can how does that timeline square.

Shar Porezza: Candidately, I don't think that there's a reason to continue to track. You know, what we hit originally for our last quarter articulated is a 2.6 billion dollar. So at a capital opportunities that were outside of the plan, you know, candidly as we've gone through our planning process for 24 and looking at our long term plans. The pipeline of additional CAPEX opportunities above are now 43.9 billion dollar CAPEX plan remains significant well in excess of that 2.6 billion.

With the Texas Electric case here, if at all to the extent to which that drove some of that timeline consideration.

And then maybe lastly, I'll throw in this census related how do you think about the merits of further LDC asset sales versus ATM, considering this upside in the plan tied to resiliency or what have you again I get that.

Shar Porezza: And so I think it just becomes a confusing factor to reconcile that. Earned a confidence and track record that pipeline of opportunities is deep and as we see the opportunity to efficiently execute them efficiently, fund them and efficiently recover them, we will continue to fold them in for the benefit of our customers.

The modest size of the ATM is sort of tied to the modest capex increase but as you think about these bigger chunkier increases is that still on the table or is it a little bit in the back burner, considering the backdrop today.

Unknown Executive: Okay, perfect Jason, congrats to you on page two and obviously not a surprise to anyone and Dave, congrats to you on your next phase and if you're not bored of the utility sector I'm sure there's other utilities and they need your help this year. Thanks. Yeah, I'm not bored of the utility sector. Thanks. Please stand by for the next question.

Yeah, Thanks, Joe a lot to unpack there.

Capex side of things.

Let me just say that last quarter, we had talked about Pi.

Pipeline of opportunities of $2 $6 billion outside of the plan as we've gone through our planning process is well well in excess of that.

I think those opportunities.

Our and all kind of aspects of our business I mean, you hit on them I think the resiliency opportunity here at Houston Electric remains significant I think it's a real question around the pace of work and we're in the middle of preparing that filing that I'll come back to in a minute.

Steve Fleishman: The next question comes from Steve Fleishman with Wolf Research. Your line is open. Yeah, hi. Good morning. Thanks.

Steve Fleishman: First, my condolences on the Ashgross, but I'm more importantly, congrats to Dave on a great job and very happy for you Jason. Thank you. So I thank you for the Ashgross. You can win every year in the utility business, but you can't in baseball. So I've got to give. So the I guess just could you give a little color on the 250 million of equity of just kind of should we expect that to be kind of largely done kind of during the year next year.

<unk> is clearly a key driver, but I equally see an incredible amount of opportunities on our gas side as well.

Particularly given all of the growth that we've seen here in <unk>.

Texas for our Texas gas business. So I would say they are equally weighted to well in excess of that.

$2 $6 billion, we used to track, we're just moving away from tracking that because it becomes confusing what's in the plan was out of it like how.

How does it adjust quarter by quarter, but so.

Suffice it to say it.

A deep pipeline of opportunities.

With respect to the filing timing.

We are waiting for the final set of rules to be voted out by the ECB likely in December here.

We will then.

Steve Fleishman: And then is there anything to just read into it about in the past you talked about, you know, kind of asset sale potential and things like that. Is that just less likely now given that the market environment or is it maybe just the needs are not enough to consider asset sale as you're kind of feathering this in the incremental caps. Thanks. Sure Steve happy to hit it. I think if you just look at what we updated today, we took the plan from 43.4 billion to 43.9 and really, you know, fairly, you know, relatively small amount of a CapEx increase, but one that we thought was reasonably funded with the modest movement and the ATM of introducing it to 150 stepping back going forward.

We are now currently preparing our filing which will likely be sometime late in the first quarter for that that resiliency filing.

I think this is a incredible.

Incredible piece of legislation and we're excited about proposing plans to really enhance continue to enhance the resiliency of our Houston electric business and.

So more to come there I think as it relates to the timing of the <unk>.

It will likely come in maybe a month or two or so before we file the Houston electric rate case, so it'll be a busy regulatory calendar for the Houston electric business next year, but roughly kind of the same timing as I said end of first quarter for their resilient to filing a little bit after that.

Houston Electric filing and then sort of more broadly on asset sales look we love the businesses we run.

Steve Fleishman: If you look at kind of how we articulated it previously, we've probably putting ourselves in the position to talk about the longer term CapEx plan and the associated refresh really once we get through the key rate cases are in front of us at the stage. Pointing to kind of the last factor that you mentioned, we're going to consistently looking at look at the most efficient way to find our equity going forward.

It's a privilege to serve all of our communities, we constantly receive inbound interest on all of our assets and as we think about additional movements.

Increases in our Capex plan.

Sure.

Steve Fleishman: But I just want to be clear that we are talking about at this stage, you know, any future considerations on an ATM would be incremental to the 43.9 billion, right. So there'd be really be growth centric beyond the 43.9 billion that we're talking about today. And again, we're looking to do that larger capital refresh once we can work our way through these cases. Okay. Great. Thanks. I'll leave it to others for questions. Thank you. Please stand by for the next question. Ben.

Confidence that we will find the most efficient way to finance that incremental growth.

I would say, we will make the right decision to maximize value for all of our stakeholders as we look to funding incremental incremental capital pipeline that I articulated.

Got it excellent.

Mislead.

And just a quick clarification here you made an allusion to some capex timing shifts in Indiana based on the renewable projects.

What's the backfill plan, if you can elaborate a little bit more.

While some of it's already.

Julien Dumoulin Smith: The next question comes from Julien Dumoulin Smith with Bank of America. Your line is open. Hey, good morning and congratulations guys. Well done. Jason, good morning. Yeah, absolutely. All righty. Just wanted to pivot back to that last question a little bit. I mean, you know, incremental resiliency spending through somebody's filing in Texas seems like a pretty clear opportunity. I know it's preliminary. Can you elaborate a little bit more about that upside relative to the two six you guys that are situated earlier.

Underway I mean, I think some of the capital that we announced today.

Executing that capital putting that capital into service that will allow US then to begin to seek recovery of it next year and fully earn on it in 'twenty five and so.

This pattern of looking out in the plan.

Sequencing capital has been something that I think we've built a track record for originally when the department of Commerce open up its original investigation that move the timing on a handful of our original solar projects, we seamlessly accelerated some capital, particularly here in Houston electric to offset that.

Julien Dumoulin Smith: I get that there's kind of a big opportunity, but just the sense of what you guys are seeing out there and the sum out there are really putting some big numbers. And then related if you can, how does that timeline square up with the Texas electric case here, if at all, for the extent that that drove some of that timeline consideration. And then maybe lastly, I'll throw in this since it's related.

And effectively that's what we're doing today with this.

Capex increase so yes, I think the important part about these renewable generation projects up in Indiana.

It is important to reemphasize.

It represents less than 10% of our total capex for the company and so it gives us a great deal of flexibility as we see the potential slowdown in.

Julien Dumoulin Smith: How do you think about the merits of further LDC asset sales versus ATM considering this upside and the plan, you know tied to resiliency or what have you again, I get that, you know, that the the modest size ATM is sort of tied to the modest cat backs increase, but do you think about these bigger chunkier increases, if that's still on the table or a little bit in the background or considering the backdrop today. Yeah, thanks, Julian.

Operational dates for those plants, we can accelerate either.

Other electric or gas portions of our business.

Congrats again, guys <unk> alright, thanks Julien.

Please standby for the next question.

The next question comes from Jeremy Tonet with Jpmorgan Securities. Your line is open.

Julien Dumoulin Smith: There's a lot to unpack there. You know, on the on the cat backside of things. Look, let me just say you know last quarter, we had talked about pipeline of opportunities of 2.6 billion dollars outside of the plan, you know, as we've gone through our planning process, it is well, well, an excess of that. I think those opportunities are in all kind of aspects of our business. I mean, you hit on them.

Hi, good morning.

Hey, Jeremy good morning.

Congratulations again to Dave and Jason here.

Great to see and maybe just kind of picking up.

At this point, obviously, Dave is a big figure.

The city of Houston, very ingrained in the culture. There I was just wondering Jason if you could.

Julien Dumoulin Smith: I think the resiliency opportunity here at Houston Electric remains significant. I think it's a real question around the pace of work and we're in the middle of preparing that filing that'll come back to in a minute, but resiliency is clearly a key driver, but I equally see an incredible amount of opportunities on our gas side as well, particularly given all the growth that we've seen here in Texas for Texas gas business.

Maybe speak a bit I guess.

<unk> moved to Texas, how you feel your relationships with.

Local community stakeholders.

<unk> has evolved over time.

<unk> somewhat newer to the city.

Yes, thanks for the question Jeremy I appreciate it.

Obviously incredibly.

Excuse to Phil.

From the standpoint of days.

Status.

Julien Dumoulin Smith: So I would say they're equally weighted. They're well in excess of the 2.6 billion leads to track. We're just moving away from tracking that because it becomes confusing what's in the plan, what's out of the plan, how does it adjust quarter, like quarter, but suffice it to say it remains a deep pipeline of opportunities. With respect to the filing timing, you know, we are waiting for the final set of rules to be voted out by the PCT likely in December here.

The community here, but I have been working since I hit the ground here with a variety of organizations outside of.

Houston Electric.

Electric and obviously, our greater Centerpoint family.

And deeply involved in the community serving a number of different interests I would say that <unk> is a very welcoming and transitory community with a strong civic.

<unk> I've been able to tap into that to build a broad network. My focus isn't just on Houston alone. It's incredibly important and I think the activities outside of my my day job here at Centerpoint reflect my commitment to the community, but even this week, we were up in Minnesota and meeting with the Governor and other elected officials.

Julien Dumoulin Smith: We will then, and we are now currently preparing our filing, which will likely be sometime kind of late in the first quarter for that resiliency filing. I think this is an incredible piece of legislation and we're excited about proposing plans to really enhance, continue to enhance the resiliency of our regional electric business. And so more to come there, I think it relates to the timing of the filing. It will likely come in maybe a month or two or so before we file the Houston Electric rate case.

Around.

Priorities for our Minnesota gas business I continue to make my way around our full service territory.

I think and hopefully you have seen I understand the importance of being involved in our communities Houston being obviously, our own base, but we have been privileged to serve six states want to be active in all of them. Yes, Let me just add a little something to that as hard as you know Jason to Humber.

Julien Dumoulin Smith: Gates, so it'll be a busy regulatory calendar for the Houston Electric business next year. But roughly, kind of the same time, as I said, end of first quarter for the Resilient Two filing, a little bit after that for the Houston Electric filing. And then sort of more broadly on assets, I'll just look, we love the businesses we run. It's a privilege to serve all of our communities. We constantly receive inbound interest on all of our assets.

Guy and he finds it hard.

Pat himself on the back, but I think he's done a great job in three plus years. He has been here in the Houston community and the broader places that Centerpoint serves.

Julien Dumoulin Smith: And as we think about additional movements, increases in our CAPX plan, I think we've earned the confidence that we will find the most efficient way to finance that incremental growth. So, I would say we will make the right decision to maximize value for all of our stakeholders as we look to funding this incremental capital pipeline that are articulated. Got it. Excellent. Nicely done. And just quick clarification here, you made an illusion to some CAPX timing shifts in Indiana based on the renewal project.

And I think he's doing a great job there he is embedding themselves in the community I'm not going anywhere.

And.

I think it's going to be all easily handled with I don't think there should be any concern at all about it.

Got it.

That's great to hear thank you for that and then maybe just pivoting over towards Minnesota, If I could I think you touched on the potential to change the structure of the filing to two year forward looking rate case, instead of one years, one year and just I was wondering.

Would that raised.

Earn return expectations in the jurisdiction. If this does come to fruition and is this a benefit that centerpoint outlook, if the commission approves for that.

Julien Dumoulin Smith: Just a, what's the backfill plan if you can elaborate a little bit more? Well, some of it's already underway. I mean, I think some of the capital that we announced today, we're executing that capital, putting that capital into service that'll allow us then to begin to seek recovery of it next year and fully earn on it in 25. And so, you know, this pattern of looking out in the plan and sequencing capital has been something that I think we built the track record for, you know, originally when the Department of Commerce opened up its original investigation, that moved the timing on a handful of our original solar projects.

Two year test.

Look there.

I think just overall sort of smoothing rate increases for customers.

And sort of.

With a common theme around a lot of our regulatory update today sort of simplifying our rate case schedule I wouldn't really look at it as much as an art return, Minnesota is the one state that we operate in it is a forward looking test year historically, what I used to say was that in even years, we would see a revenue.

Julien Dumoulin Smith: We seamlessly accelerated some capital, particularly here in Houston Electric to offset that. And effectively, that's what we're doing today with this CAPX increase. So, yeah, I think the important part about these renewable generation projects up in Indiana and I think it's important to re-emphasize, it represents less than 10% of our total CAPX for the company. And so, it gives us a great deal of flexibility as we see the potential slowdown and, you know, operational dates for those plans, we can accelerate either in the other electric or gas portions of our business. Oh, congrats again, guys. See you soon, all right? Thanks, Juan. Please stand by for the next question.

Increase in an odd years.

Wouldn't see any increase until we would have to overcome that regulatory lag on odd years. This filing for a two year forward test year begins to address that.

Profile, and so again starts to reduce a little bit of regulatory lag.

Luiz rate increases for our customers and overall reduces the administrative burden. So we're excited about making that filing next week.

Got it that's very helpful I'll leave it there thanks.

Operator, we have time for one more question.

The last question.

Will come from.

David.

Arcaro with Morgan Stanley David Your line is open.

Jeremy Tonnet: The next question comes from Jeremy Tonnet with JP Morgan Securities. Your line is open. Hi, good morning. Hey, Jeremy. Good morning. Congratulations, again, to Dave and Jason here. Great to see. And maybe just kind of picking up with this point. Obviously, Dave is a big figure in the city of Houston, very ingrained in the culture there.

Hey, good morning. Thanks, so much for taking my question and congrats to both Dave and Jason as well.

Thank you. Thank you.

<unk>.

I was wondering just on the Houston electric rate case filing I appreciate the color there.

I'm just wondering if you could dig a little more into have there been any changes in your expectations.

The expectations in terms of the size of the revenue requirement ask does it gives you an opportunity to capture any kind of chunkier capital projects that might have been.

Jason Wells: I was just wondering, Jason, if you could maybe speak a bit, I guess, you know, having moved to Texas, how you feel, your relationships with the, you know, local community stakeholders, you know, have evolved over time, you know, being somewhat newer to the city. Yeah, thanks for the question, Jeremy. I appreciate it. Obviously, incredibly big shoes to fill, from the standpoint of Dave's status in the community here. But, you know, I've been working since I hit the ground here with a variety of organizations outside of Houston, electric and novice aerograder, CenterPoint family.

<unk> in the fourth quarter, this year or any O&M savings things like that as you head into that second quarter timing.

Yes, David I appreciate the question and the short answer is no I don't think.

Extension was for that reason really with the fact that we have now.

Two the opportunity for our <unk> costs a year.

The rate case.

Houston electric largely because of the rate case that centers around cost of capital around depreciation rates.

At any deferred regulatory assets and liabilities as I mentioned, we have the opportunity to seek recovery of capital that we're spending now and through the fourth quarter up until the time, we file that rate case through the DJ our F&D cost mechanisms and so I wouldn't really look at this extension is.

Jason Wells: So, deeply involved in the community serving a number of different interests, I would say that Houston is a very welcoming and transitory community with a strong civic focus, and I've been able to tap into that to build a broad network. My focus is just on Houston alone. It's incredibly important and I think the activities, you know, outside of my day job here at CenterPoint reflect my commitment to the community, but, you know, even this week we were up in Minnesota meeting with the governor and other elected officials around priorities for our Minnesota gas business.

The opportunity for us too.

Address any capital it really is going to be a case that involves revolves around cost of capital O&M and regulatory assets and back to sort of the first part of your question. No. There is no fundamental change I think we're looking at the potential for a small revenue decline.

Jason Wells: I continue to make my way around our full service territory. And so, I think and hopefully you have seen I understand the importance of being involved in our communities, Houston being obviously our home base, but we have the privilege to serve six states and want to be active in all of them.

Essentially flat revenue increase when we.

I've been clear that we're going to advocate for a higher cost of capital.

But we.

As we forecast what that in calendar year test here is going to look like we have reduced O&M.

More than the increases that we were competitors from a cost of capital. So I think that should put us in that standpoint.

Dave: Yeah, let me just add a little something to that. It's hard. As you know, Jason's a humble guy and finds it hard to pat himself on the back, but I think he's done a great job in three plus years. He's been here in the Houston community and in the broader places that CenterPoint serves. And I think he's doing a great job there. He's embedding himself in the community. I'm not going anywhere. And I think it's going to be all easily handled and I don't think there should be any concern at all about it. Got it. That's great to hear. Thank you for that.

Filing for a revenue requirement again relatively flat essentially modest decrease as we've communicated in the past.

Okay, great. Thanks, that's helpful.

And maybe just on the floating rate debt the $1 8 billion, you've still got out there do you plan to continue to reduce that and term it out going forward or is it just.

The level its at now the comfortable balance overall as you think about our capitalization.

Sure Hey, Dave I think first of all I've got to give some credit to the team for working down even when we walked into this year was 27% floating rate debt as a percent of the total were now at about 10%. So really good progress there.

Jason Wells: And then maybe just pivoting over towards Minnesota, if I could. I think it touched on the potential to change the structure of the filing to two-year forward looking, in case instead of one year and just that was wondering, would that raise your earned return expectations in the jurisdiction if this does come to fruition? Is this a benefit that CenterPoints Outlook, if the commission approves for the two-year test look there? I think just an overall sort of smoothing rate increases for customers and sort of consistent with a common theme around a lot of our regulatory updates today, sort of simplifying our rate case schedule.

We look at near term financing even looking into earlier next year just as an example for what we're thinking on how we think this is manageable we're looking at roughly $700 million at CMP and just to give you a feel for that that that component of our outstanding floating rate already sits at five 8% and so as you can imagine.

And given where things are right now we think it's pretty manageable in fact, we might be opportunistic in going after that relatively soon so just give you. An example of we're already looking here and have laid out kind of the next couple.

For years for you in terms of what's in front of US and think it's manageable at this stage, even with the longer for higher kind of macro theme is going on right now.

Jason Wells: I wouldn't really look at it as much as the earned return. Minnesota is the one state that we operate in that has a forward looking test year. Historically what I used to say was that in even years we would see a revenue increase in in odd years. We wouldn't see any increase until we'd have to overcome that regulatory lag on odd years. This filing for a two-year forward test year begins to address that profile.

Okay before we.

Go off the call I would just wanted to thank all of our shareholders.

Analysts that are on the call that have believed in me and our story and <unk>.

Stick with us as the best is yet to come thank you.

I would now.

Yes.

Yeah.

This concludes Centerpoint Energy's third coding.

Jason Wells: And so again starts to reduce a little bit of regulatory lag, smooth rate increases for our customers and overall reduces the administrative burden. So we're excited about making that filing next week. Got it. That's very helpful.

Earnings Conference call. Thank you for your participation.

Unknown Executive: I'll leave it there. Thanks.

Okay.

Unknown Executive: Operator, we have time for one more question.

[music].

David Arcaro: The last question will come from David Arcaro with Morgan Stanley. David, your line is open. Okay, good morning. Thanks so much for taking my question and congrats to both David and Jason as well. Thank you. You know, I was wondering just on the Houston Electric rate case filing appreciate the color there and just wondering if you could dig a little more into it. Have there been any changes in your expectations in terms of the size of the revenue requirement asked does it give you an opportunity to capture any kind of chunkier capital project that might have been, you know, completed in the fourth quarter this year or any O&M saving things like that as you head into that second quarter timing.

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David Arcaro: Yeah, David, I appreciate the question and the short answer is no, I don't think the extension was for that reason really with the fact that we have now to the opportunity for 2D to your F to 2T cost a year. The rate case Houston Electric largely becomes a rate case that centers around cost of capital around appreciation rates and any deferred regulatory assets and liabilities. You know, as I mentioned, we have the opportunity to seek recovery of capital that we're spending now and through the fourth quarter up until the time we file that rate case through the DCRF and T cost mechanisms.

Okay.

David Arcaro: And so I wouldn't really look at this extension as an opportunity for us to address any capital. It really is going to be a case that involves revolves around cost of capital, O&M and regulatory assets. And back to sort of the first part of your question. No, there's no fundamental change. I think we're looking at the potential for a small revenue decline, you know, potential if flat revenue increase. When we, you know, we have been clear that we're going to advocate for a higher cost of capital.

Okay.

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David Arcaro: But we, as we forecast what that calendar year test year is going to look like, we have reduced O&M more than the increases that we would propose from a cost of capital. So I think that should put us in a standpoint of filing for a revenue requirement, again, relatively flat, potentially modest decrease as we've communicated in the past. Okay. Great. Thanks. That's helpful. And maybe just on the floating rate debt that the 1.8 billion you still get out there, do you plan to continue to reduce that and turn it out going forward or is the level at that now the comfortable balance overall as you think about capitalization?

David Arcaro: Sure. Hey, Dave. I think, first of all, I got to get some credit to the team for working down even what we walked into this year was 27% floating rate debt as a percent of the total. We're now at about 10%. So really good progress there. As we look at near term financing, even looking into earlier next year, just as an example for what we think, you know, how we think this is manageable.

David Arcaro: We're looking at roughly $700 million at CMP and just to give you a feel for that, that component of our outstanding floating rate already sits at 5.8, and a few percent. And so, as you can imagine, given where things are right now, we think it's pretty manageable. In fact, you know, we might be opportunistic in going after that relatively soon. So, just give you an example of where are you looking here and have laid out kind of the next couple of years for you in terms of what's in front of us and think it's manageable at the stage, even with the longer for higher kind of macro, seeing what's going on right now.

Dave: Okay, before we go off the call, I would just want to thank all of our shareholders and analysts that are on the call. They have believed in me in our story and just stick with us because the best is yet to come. Thank you. I would now.

Yes.

[music].

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Unknown Executive: This concludes CenterPoint Energy, Third Cording, earnings conference call. Thank you for your participation. Thank you very much. Thank you. [inaudible] you very much, thank you very much,[inaudible] David[inaudible] James Thalacker, James Thalacker, James Thalacker James Thalacker, James Thalacker, James Thalacker, James Thalacker, James Thalacker, James Thalacker, James Thalacker, James Thalacker, James Thalacker, James Thalacker, James Thalacker, James Thalacker,

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[music].

Yes.

Okay.

Yes.

Yes.

Okay.

[music].

Yes.

[music].

Okay.

Yes.

Yes.

[music].

Okay.

Yes.

Yes.

Okay.

Yes.

Yes.

[music].