Q3 2023 Xcel Energy Inc Earnings Call

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Hello, and welcome to the <unk> Energy third quarter 2023 earnings Conference call.

My name is George there'll be a coordinator for today's event.

Please note. This conference is being recorded after the duration of the call your lives will be on listen only.

A question answer session will follow the prepared remarks and questions will only be taken from institutional investors and analysts.

Reporters can contact media relations with inquiries and individual investors and others can reach out to Investor relations.

To register for a question. Please press star one on your telephone.

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Thank you for your questions at any point. Please press star Zero I, you will be connected to an operator.

I'd like to hand, the call over to your host today, Mr. Paul Johnson, Vice President Treasurer, and Investor Relations to begin today's conference.

Please go ahead Sir.

Thank you good morning, and welcome to Consol Energy's third quarter earnings call. Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer, and Brian Van Abel Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer your questions if needed.

Morning, We will review, our third quarter results and highlights share recent business and regulatory developments.

Update our capital and financing plans and provide 2020 for guidance.

Slides that accompany today's call are available on our website.

As a reminder, some of the comments during today's call may contain forward looking information significant factors that could cause results to differ from those anticipated are described in our earnings release and our SEC filings today will discuss certain measures that are non-GAAP measures.

Information on comparable GAAP measures and reconciliations are included in our earnings release.

Earlier this week the jury in Denver District Court found excel energy liable and its dispute with core cooperative.

Regarding prior years lost power damages at our Comanche power plan, we intend to appeal the decision for.

For the third quarter of 2023, we recorded GAAP earnings of $1 19 per share, which includes a onetime nonrecurring pre tax charge of $34 million related to the ongoing legal dispute.

As a result, we have taken a nonrecurring charge of five cents per share, which we don't consider part of ongoing earnings all further discussion on our earnings call will focus on earnings and ongoing earnings.

More information on this matter. Please see the disclosure in the earnings release I'll now turn the call over to Bob.

Thanks, Paul and good morning, everybody.

Start with the quarter.

We had solid results recording ongoing earnings of $1 23 per share for 2023 compared to $1 18 per share in 2022.

As a result, we're narrowing our 'twenty three our ongoing earnings guidance to $3 32 to $3 37 per share.

We're also initiating 2020 for ongoing earnings guidance of $3 50 to $3 60 per share, which is consistent with our 5% to 7% long term EPS growth rate.

Firstly with past practices, we have reviewed our customer and operational needs and have updated our infrastructure plan for 2024 to 2028. Its revised forecast reflects $34 billion of needed capital investment an increase of $4 5 billion from our previous plan.

This base infrastructure investment plan includes substantial resiliency investments in both transmission and distribution.

George: My name is George, I'll be a coordinator for today's event. Please note, this cop is being recorded and for the duration to call, your eyes will be on listen only. A quest out the session will follow the prepared remarks and questions will only be taken from institutional investors and analysts.

Including additional upgrades required to support the Colorado Energy plan.

However, it does not include clean energy generation investments that could result from the resource plans in Colorado.

Texas, and new Mexico or in the upper Midwest.

Operator: Reports can conduct media relations with inquiries and individual investors and others can reach out to investor relations. To register for a question, please press star one on your top on keypad. If you require assistance at any point, please press star zero and you will be connected to an operator.

If approved by our commission these cost effective clean energy generation investments could result in an additional capital needs totaling $10 billion from 2024 to 2028 and dramatically reduce carbon emissions in various states.

Paul Johnson: I'd like to have a call over to your host today, Mr. Paul Johnson, vice president, pleasure, investor relations, begin this conference. Please go ahead, sir. Thank you.

Excel energy resource plans also demonstrate the benefit of the inflation reduction Act.

Our states geographic advantages that enable high capacity renewable generation.

Paul Johnson: Good morning and welcome to Excel Energy 3rd quarter earnings call.

And our operational expertise and commercial acumen can bring to our customers.

Bob Frenzel: Joining you today are Bob Frenzel, chairman, president, chief executive officer in Brian Van Abel, executive vice president, chief financial officer. In addition, we have other members of the management team in the room to answer your questions if needed. This morning, we will review our 3rd quarter results and highlights, share recent business and regulatory developments, update our capital and financing plans and provide 2024 guidance slides that accompany today's call are available on our website.

In September we filed a recommended plan in Colorado. This plan seeks to double the amount of renewable energy in the state, making it the largest clean energy transition effort in Colorado history, and demonstrates our strong alignment with the state's environmental goals.

Our proposal contemplates the shutdown or conversion of our remaining coal units replaces them with approximately 6500 megawatts of renewable energy and battery storage and 600 megawatts of dispatch fuel gas resources to ensure system reliability in times of low wind or solar conditions.

Bob Frenzel: As a reminder, some of the comments during today's call may contain forward looking information, significant factors that could cause results to differ from those anticipated are described in our earnings release and our S&C fileings. Today, we'll discuss certain measures that are non-gap measures information on comparable gap measures and reconciliation are included in our earnings release. Earlier this week, the jury in Denver district court found Excel Energy Label and its dispute with core cooperative regret regarding prior years lost power damages at our command sheet power plant.

These amounts include 4800 megawatts is proposed to be owned and operated by <unk> for the benefit of our customers.

Including the approximately $3 billion and required transmission investment to ensure deliverability and reliability. This Colorado energy plan represents nearly an $11 billion total investment by XL energy.

Bob Frenzel: We intend to appeal the decision for the 3rd quarter of 2023 recorded gap earnings of $1.19 per share, which includes a one time non recurring free tax charge of $34 million related to the ongoing legal dispute. So we have taken a non recurring charge of $5 per share, which we don't consider part of ongoing earnings, all for the discussion that our earnings call will focus on earning and ongoing earnings.

In addition, this portfolio also includes 10 billion and IRA savings to customers. It creates local jobs promote economic development and provides over $2 billion in tax benefits to local communities in the coming decades.

At the same time, it will reduce carbon emissions by over 80% from 2005 levels in Colorado, while having expected annual rate impact of only two 3%.

Bob Frenzel: For more information, this matter, please do the disclosure and earnings release release.

This competitive portfolio provides our Colorado customers, an industry, leading opportunity for a cleaner economy at a fraction of the cost.

Bob Frenzel: I'll now turn the call over to Bob. Thanks, Paul.

Bob Frenzel: Good morning, everybody. Let's start with the quarter. We've solid results recording ongoing earnings of $23 per share for 2023 compared to $1.18 per share in 2022. As a result, we're narrowing our 23 are ongoing earnings guidance to $3.32 to $3.37 per share. We're also initiating 2024 ongoing earnings guidance to $3.50 to $3.60 per share, which is consistent with our 5% to 7% long term EPS growth rate. This is what past practices we reviewed our customer and operational needs and have updated our infrastructure plan for 2024 to 2028.

Other states would incur.

Moving to Minnesota in September The Commission approved 350 megawatts of new renewable generation, including an additional 250 megawatts at our Serco facility.

Brings the total amount of company built solar at Serco to over 700 megawatts, making it one of the largest solar facilities in the country.

In October we also issued an RFP seeking 200 megawatts of wind that will utilize our transmission interconnect at our retiring serco coal facility and we'll be issuing additional rfps to fulfill the remainder of the approved upper Midwest resource plan in 2024.

Bob Frenzel: This provides forecast reflects $34 billion of needed capital investment, an increase of 4.5 billion from our previous plan. This base infrastructure investment plan includes substantial resiliency investments in both transmission and distribution. Foundation, including additional upgrades required to support the Colorado Energy Plan. However, it does not include cleaning energy generation investments that could result from the resource plans in Colorado, Texas and the Mexico, or in the upper Midwest. If approved by our commission, these cost effective, clean energy generation investments could result in an additional capital needs, totaling $10 billion from 2024 to 2028, and dramatically reduced carbon emissions in various states.

Finally in October we filed a resource plan in new Mexico based.

Based on our filing Sps could required additional five to 10000 megawatts of new generation by the end of the decade to accommodate increasing demand plant retirements and ensure resiliency and reliability of the grid.

We've already proposed 418 megawatts of company owned solar and battery projects that are pending commission approval, we anticipate filing another RFP in 2024 for the additional generation resources.

Shifting to our clean energy innovation projects. The department of Energy recently announced nearly $1 5 billion in awards to support multiple XL energy affiliated projects.

Starting with the Heartland hydrogen hub. This estimated $5 billion initiative, which includes multiple projects from XL energy and others.

Bob Frenzel: Xcel Energy's resource plans also demonstrate the benefit that the Inflation Reduction Act, our state's geographic advantages that enable high capacity renewable generation, and our operational expertise and commercial acumen can bring to our customers. In September, we filed our recommended plan in Colorado. This plan seeks to double the amount of renewable energy in the state, making it the largest clean energy transition ever in Colorado history, and demonstrates our strong alignment with the state's environmental goals.

An award of up to $925 million by the Doa.

This game changing funding will serve as a catalyst for a clean hydrogen ecosystem in the upper Midwest and the foundation of our clean fuels efforts at XL energy.

Unfortunately, the western Interstate hydrogen hub in Colorado, New Mexico, Wyoming, Utah was not successful in this round of funding and that said, we remain committed to working with policymakers and federal offices with the hopes that our projects can progress to advance our shared clean energy goals.

Bob Frenzel: Our proposal contemplates the shutdown or conversion of our remaining coal units replaces them with approximately 6,500 megawatts of renewable energy and battery storage, and 600 megawatts of dispatchable gas resources to ensure system reliability in tons of low wind or solar conditions. These amounts include 4,800 megawatts that propose to be owned and operated by Xcel Energy for the benefit of our customers. Including the approximately $3 billion in required transmission investment to ensure deliverability and reliability, this Colorado energy plan represents nearly an $11 billion total investment by Xcel Energy.

The daily also awarded <unk> energy up to $70 million to support to 10 megawatt 100 hour battery pilots with form energy.

Combined with the grants from breakthrough Energy's catalyst fund, we secured up to $90 million to support these long duration energy storage pilots.

A critical asset class to ensure cost effective reliability and a high renewable grid.

With respect to <unk> grid resilience and innovation partnerships program ex LNG was selected as part of two different awards first the deal we awarded <unk>, a $100 million to support projects to mitigate the threat of wildfires and ensure resiliency of the grid through extreme weather.

Bob Frenzel: In addition, this portfolio also includes $10 billion in IRA savings to customers. It creates local jobs for both economic development and provides over $2 billion in tax benefits to local communities in the coming decades. At the same time, it will reduce carbon emissions by over 80 percent from 2005 levels in Colorado, while having an expected annual rate impact of only 2.3 percent. This competitive portfolio provides our Colorado customers an industry-leading opportunity for a cleaner economy at a fraction of the cost most other states would incur.

<unk> include vegetation management selective underground and advanced infrastructure technologies drones, and several additional resiliency projects.

<unk> was also a party to grips $464 million grant to expand transmission as part of the MISO and SPP seams program to fund high voltage transmission to improve inter regional transfer capability reliability and resolve grid constraints.

We're appreciative of the support as well as many of our partners in these projects, including our states and our regional transmission organizations.

Bob Frenzel: Moving to Minnesota in September, the Commission approved 350 megawatts of renewable generation, including an additional 250 megawatts at our Shurco facility. This brings a total amount of company built solar at Shurco to over 700 megawatts, making it one of the largest solar facilities in the country. In October, we also issued an RFP seeking 1200 megawatts of wind that will utilize our transition interconnect at our retiring Shurco cold facility, and will be issuing additional RFPs to fulfill the remainder of the approved upper Midwest resource plan in 2024.

Funding support helps us accelerate critical carbon free technologies.

Enhanced safety and resiliency, while keeping costs low for customers.

Turning to our natural gas utility in August we thought our clean sheet program in Colorado. This first of a kind plan provides the framework to reduce greenhouse gas emissions consistent with state goals and our net zero emissions target.

The planned fast track solutions, such as electrification demand side management clean fuels and certified natural gas.

Bob Frenzel: Finally, in October, we filed a resource plan in Mexico. Based on our filing, SPS could require an additional 5 to 10,000 megawatts of new generation by the end of the decade to accommodate increasing demand, plant retirements, and ensure resilient team reliability of the grip. We've already proposed 418 megawatts of company owned solar and battery projects that are pending commission approval and we anticipate filing another RFP in 2024 for the additional generation resources.

The proposed clean heap plus portfolio reduces greenhouse gas emissions by 28% by 2030 ensures customer reliability and choice, while optimizing customer bill impact.

We plan to file our natural gas innovation plan, a corresponding framework for our Minnesota gas utility in the fourth quarter.

In September meta announced construction of a $700 million datacenter in Minnesota, which eventually could be one of our largest customers in the state.

Bob Frenzel: Shifting to our Clean Energy Innovation Project, the Department of Energy recently announced nearly $1.5 billion in awards to support multiple Xcel Energy Affiliated projects. Starting with the $1.5 billion initiative, which includes multiple projects from Xcel Energy and others, received an award of up to $925 million by the DOE. This game-changing funding will serve as a catalyst for a clean hydrogen ecosystem in the Upper Midwest and the foundation of our clean fuel efforts at Xcel Energy.

We continue to evaluate a number of additional data center and commercial opportunities will further support low growth and economic development in our communities.

Finally.

There are not many new material developments with the Marshal Wildfire litigation. We currently have 14 complaints was 675 plaintiffs which have been consolidated into a single case.

For the past four years Extel energy has been operating under a commission approved wildfire mitigation program in Colorado.

We intend to file an updated wildfire mitigation plan next year will include a wide range of options for stakeholder consideration, including new technologies underground in additional vegetation management composite poles selective use of covered conductor and preventative power systems shut offs.

Bob Frenzel: Unfortunately, the western interstate hydrogen hub in Colorado in New Mexico, Wyoming and Utah, was not successful in this round of DOE funding. And that said, we remain committed to working with policymakers and federal offices with the hopes that our projects can progress to advance our shared clean energy goals. The deal we also awarded at Xcel Energy at the $70 million to support two 10 megawatts 100-hour battery pilots with form energy. To bind with the grants from breakthrough energy's catalyst fund, we secure up to $90 million to support these long duration energy storage pilots.

Let me wrap up with just a few summary comments before I turn it over to Brian.

As we look forward across the next five years and beyond we see a future that is bright for our communities our customers and our investors.

<unk> energy is committed to providing clean energy economy in our region and it will require meaningful investments to accomplish.

Bob Frenzel: A critical asset class to ensure cost-effective reliability in a high renewable grid. With respect to DOE's grid resilience and innovation partnerships program, Xcel Energy was selected as part of two different awards. First, the DOE awarded Xcel Energy $100 million to support projects to mitigate the threat of wildfires and ensure resiliency of the grid through extreme weather. Projects include vegetation management, selective undergrounding, advanced infrastructure technologies, drones and several additional resiliency projects. Xcel Energy was also a party to grips $464 million grant to expand transmission as part of the MISO and SPPC's program to fund high voltage transmission to improve interregional transfer capability, reliability and resolve grid constraints.

For our customers, we have the potential to deploy 15 to 20000 megawatts of new clean generation on our systems by 2033.

Dramatically lowering our emissions profile affordably powering our customers' homes and businesses, while ensuring 90, 999% reliability that they've come to expect from excel energy.

And through leveraging the benefits of the eye array and the I J E. We are able to accelerate deployment of renewable resources and pairing them with affordable energy storage assets and other firm dispatch will clean fuel resources to provide reliability.

We continue to invest in and innovate our transmission and distribution systems to ensure reliability and resilience and provide for regional and interregional deliverability.

We're laying the framework to achieve net zero greenhouse gas emissions on our natural gas system.

Bob Frenzel: We appreciate it with the DOE support, as well as many of our partners in these projects including our states and regional transmission organizations. Funding support helps us accelerate critical carbon-free technologies and enhance safety and resiliency while keeping costs low for customers. Funding to our natural gas utility, in August, we thought our clean-heat program in Colorado, this first of a kind plan provided framework to reduce greenhouse gas emissions consistent with state goals in our net zero emissions target.

All the while our residential customer electric and natural gas bills are amongst the lowest in the country, 28% and 14% below the national average.

And given that the regions, where we serve customers are the most resource rich in wind and solar we.

We believe that we can lead the clean energy transition for our customers more cost effectively than any other company with that I'll turn it over Brian.

Thanks, Bob and good morning, everyone.

We had ongoing earnings of $1 23 per share for the third quarter of 2023 compared to $1 18 per share in 2022.

Bob Frenzel: The plan fast-track solutions, such as electrification, demand-side management, clean fuels and certified natural gas. The proposed cleaning-heat plus portfolio reduces greenhouse gas emissions by 28% by 2030, ensures customer reliability and choice while optimizing customer bill impact. We plan to file our natural gas innovation plan, a corresponding framework for our Minnesota filter gas utility in the forth. Corridor. In September, Metta announced construction of a $700 million data center in Minnesota which eventually could be one of our largest customers in the state. We continue to evaluate a number of additional data center and commercial opportunities that will further support load growth and economic development in our communities.

Most significant earnings drivers for the quarter included the following.

Lower O&M expenses increased earnings by <unk> <unk> per share, which reflects the impact of cost containment actions.

Lower effective tax rate in conservation and demand side management expenses, which increased earnings by <unk> <unk> per share.

Note that these items are primarily offsetting lower margins or earnings neutral.

In addition, other items combined to increase earnings by four cents per share.

Offsetting these positive drivers higher interest charges, which decreased earnings by <unk> <unk> per share driven by rising interest rates and increased debt levels to fund capital investment.

And higher depreciation and amortization expense.

Bob Frenzel: Finally, there are not many new material developments with the Marshall Wildfire litigation. We currently have 14 complaints with 675 plaintiffs which have been consolidated into a single case. For the past four years, Xcel Energy has been operating under a commission approved wildfire mitigation program in Colorado. We tend to file an updated wildfire mitigation plan next year which will include a wide range of options for stakeholder consideration including new technologies, undergrounding, additional vegetation management, composite poles, selective use of covered conductor and preventative power system shutoffs.

Decreased earnings by two cents per share, reflecting our capital investment program.

Turning to sales year to date weather adjusted electric sales increased by one 1% largely driven by strong CNI sales.

As a result, we now expect annual electric sales growth of 1% to 2% in 2023.

Shifting to expenses.

O&M decreased $25 million for the third quarter, reflecting management actions to lower costs, we now expect our aunt.

Annual O&M expenses to decline by 1% to 2%.

During the third quarter. We also made progress on several regulatory proceedings, and we are getting close to wrapping up a busy regulatory year 'twenty to 'twenty four it will be much lighter from a rate case perspective.

Bob Frenzel: We'll wrap up with just a few summary comments before I turn over to Brian. As we look forward across the next five years and beyond, we see a future that is bright for our communities, our customers and our investors. Xcel Energy is committed to providing clean energy economy in our region and it will require meaningful investment to accomplish. For our customers, we have the potential to deploy 15 to 20,000 megawatts of new clean generation on our system by 2030.

In our Colorado Electric rate case, the commission approved a settlement that reflects a $95 million rate increase.

Based on ROE of nine 3% and an equity ratio of 55, 7% rates were effective in September.

In October we.

The New Mexico Commission approved our electric rate case settlement.

Bob Frenzel: For radically lowering our emissions profile, affordably powering our customers' homes and businesses while ensuring 99.99% reliability that it comes to expect from Xcel Energy. And through leveraging the benefits of the IRA and the IIA, we are able to accelerate deployment of renewable resources, impairing them with affordable energy storage assets and other firm, dispatchable, clean fuel resources to provide reliability. We continue to invest in and innovate our transmission and distribution systems to ensure reliability and resilience and provide a regional and interregional deliverability.

That reflects a rate increase of $33 million.

Based on an ROE of nine 5% an equity ratio of 54, 7% a forward test year.

And the acceleration.

I've talked to appreciation of 24, new rates were effective in October.

From a pending Texas electric rate case.

We reached a settlement in principle on revenue requirements. We're hopeful the parties will reach agreement on class cross allocation and rate design. So that we can file the settlement this year.

We expect a decision in the implementation of rates in the first quarter of 2024.

And as a reminder, we have a relate back date to July 13th.

In Wisconsin, we continue to work through the regulatory process for electric and natural gas rate cases, and expect a commission decision by year end.

Bob Frenzel: We're laying the framework to achieve net zero greenhouse gas emissions on our natural gas system. All the while, our residential customer electric and natural gas builds are amongst the lowest in the country, 28 and 14% below the national average. Given that the regions where we serve customers are the most resource-rich and wind and solar, we believe that we can lead this clean energy transition for our customers more cross-effectively than almost any other company.

With regards to future rate cases.

We plan to file a natural gas rate case from Minnesota in the fourth quarter and a potential Colorado natural gas rate case in the first quarter of next year.

Updating our progress on production tax credit Transferability, we recently executed two contracts totaling $250 million.

We anticipate further PTC sales in the fourth quarter, consistent with our plan totaling $300 million to $400 million for the year.

Brian Van Abel: With that, turn over Brian. Thanks Bob and good morning everyone. We have ongoing earnings of $1.23 cents per share for the third quarter of 2023, compared to $1.18 cents per share in 2022.

Transferability lowers the cost of our renewable energy projects for our customers who were just as near term funding needs.

Moving to our updated capital forecast.

Brian Van Abel: The most significant earnings drivers for the quarter included the following. Lower O&M expenses increase earnings by 3 cents per share, which reflects the impact of cost-containment actions. Lower effective tax rate and conservation in demand side management expenses, which increase earnings by 3 cents per share. Note that these items are primarily offset and lower margins are earning new jobs, in addition, other items combined to increase earnings by 4 cents per share. Offsetting these positive drivers, higher interest charges, which decrease earnings by 3 cents per share, driven by rising interest rates and increased that levels of fund capital investment, and higher depreciation and amazation expense, which decrease earnings by 2 cents per share, reflecting our capital investment program.

We've issued a robust $34 billion five year base capital plan with annual rate base growth of seven 6%.

Our base plan reflects commission approved renewable projects, including over 700 megawatts of new solar at Serco.

The baseline also reflect significant grit and resiliency investments, including our Colorado power pathway.

Transmission to support our Colorado preferred plan MISO transform investments as well as other system investments to maintain asset health and reliability.

In addition, we have additional capital investment opportunities for renewables and firm capacity associated with the Colorado preferred plan 418 megawatts of proposed self build solar and storage and Sps and further rfps in MSP and Sps.

Brian Van Abel: Turning to sales, you today whether adjusted electric sales increased by 1.1 per cent, largely driven by strong CNI sales. As a result, we now expect annual electric sales growth of 1 to 2 per cent in 2023. Shifting to expenses, ONM decreased $25 million for the third quarter, was like the management actions the lower cost. We now expect our annual ONM expenses to decline by 1 to 2 per cent. During the third quarter, we also made progress in several regulatory proceedings, and we were getting closer wrapping up a busy regulatory year.

We will update our base capital plan after our various commissions complete their review and finalize our decisions regarding our proposals.

These opportunities if approved could translate to $10 billion of additional investments through 2020 eight resulting in annual rate base growth of 10, 7%.

We've updated our base financing plan, which reflects $15 billion of debt and $2 $5 billion of equity.

We anticipate that any incremental capital investment will be funded by approximately 40% equity and 60% debt.

It is important to recognize that we've always maintained a balanced financing strategy, which includes a mix of debt and equity to fund accretive growth, while maintaining a strong balance sheet and credit metrics.

Brian Van Abel: 2020-24 will be much lighter from a rate case perspective. In our Colorado electric rate case, the commission approved a settlement that reflects a $95 million rate increase, based on an ROE of 9.3 per cent in an equity ratio of 55.7 per cent, rates were effective in September. In October, the New Mexico commission approved our electric rate case settlement. That reflects a rate increase of $33 million, based on an ROE of 9.5 per cent, an equity ratio of 54.7 per cent, a forward test year, an acceleration of total depreciation to 2028, rates were effective in October.

Maintaining solid credit ratings and favorable access to capital markets are critical to fund our clean energy transition.

Deliver strong shareholder returns and keep customer bills low.

Specially with rising interest rates.

Shifting to our earnings.

We've updated our 'twenty to 'twenty three guidance assumptions to reflect the latest information.

We're also narrowing our 'twenty to 'twenty three ongoing earnings guidance range to $3 32 to.

The $3 37.

Sure.

We have a long history of delivering on our financial objectives and expect to continue that trend in 'twenty to 'twenty three.

Brian Van Abel: In our pending Texas electric rate case, we reached a settlement in principle on revenue requirements. We're hopeful the parties will reach agreement on class cost allocation rate design, so that we can file the settlement this year. We expected decision and implementation rates in the first quarter of 2024. As a reminder, we have a relate back date to July 13th. And then Wisconsin, we continue to work through the regulatory process for our electric and natural gas rate cases and expect a commission decision by year end.

As a result, we anticipate strong earnings in the fourth quarter that will result in achieving our earnings guidance.

Key drivers include incremental revenue from Colorado, New Mexico electric rate cases.

Deferral of certain O&M depreciation and interest expenses as part of the Texas electric rate case.

Strong O&M cost management and better than expected sales growth.

Finally, we are initiating our 'twenty to 'twenty four ongoing earnings guidance range of $3 50 to $3 60 per share, which is consistent with our long term EPS growth objective of 5% to 7%.

Brian Van Abel: With regards to future rate cases, we plan to file a natural gas rate case from Minnesota in the fourth quarter, and the potential Colorado natural gas rate case in the first quarter of next year. Updating our progress on production tax credit transferability, we recently executed two contracts for $255 million. We anticipate further PTC sales in the fourth quarter consistent with our plan, totaling $300 to $400 million for the year. Transferability lowers the cost of our renewable energy project for our customers, and reduces near term funding needs.

Key assumptions are detailed in our earnings release.

With that I'll wrap up with a quick summary.

We continue to execute on our clean energy plants, leveraging the benefits of the IRA to reduce cost for our customers.

We closed a game changing preferred plan in Colorado, which results in one of the most aggressive renewable build outs in the country.

We secured doughy grants for our Heartland hydrogen hub wildfire mitigation plans 400 pilots and transmission expansion, which will accelerate breakthrough technology in the ruth's risk at a lower cost for our customers.

Brian Van Abel: Moving to our updated capital forecast, we issued a robust $34 billion, five-year base capital plan with annual rate base growth of 7.6 per cent. The base plan reflects commission approved renewable projects, including over 700 megawatts of new solar at Chirco. The base plan also reflects significant rate and resiliency investments, including our Colorado power pathway, transmission to support our Colorado preferred plan, and ISO control and investments, as well as other system investments to maintain asset health and reliability.

We resolved rate cases in Colorado, and new Mexico, while reaching a settlement in principle in Texas.

We're narrowing our 2023 ongoing earnings guidance and continue to expect to deliver within our guidance range as we have for the past 18 years.

We announced a robust updated capital investment program and initiated 2024 guidance that provides strong transparent rate base growth and customer value.

And finally, we remain confident we can continue to deliver long term earnings and dividend growth within the upper half of our 5% to 7% objective range as we lead the clean energy transition and continue to keep bills low for our customers.

Brian Van Abel: In addition, we have additional capital investments for renewables and firm capacity associated with the Colorado preferred plan, 418 megawatts of proposed self-built solar and solar and SPS, and for the RFPs and NSP and SPS. We'll update our base capital plan after our various commissions completely review and finalize our decisions regarding our proposals. These opportunities, if approved, to translate to $10 billion of additional investment through 2028 resulting in annual rate-based growth of 10.7%.

This concludes our prepared remarks operator.

I will take questions.

Thank you very much Sir Lady.

Ladies and gentlemen, once again for analysts to register for a question. Please press star one that you're a couple key pad.

First question today is coming from Julien Dumoulin Smith of Bank of America. Please go ahead. Your line is open.

Hey, good morning team nicely done got to say what or what.

Brian Van Abel: We've update our base financing plan, which reflects $15 billion of bet in $2.5 billion of equity. We anticipate that any incremental capital investment would be funded by approximately 4% equity and 60% debt. It is important to recognize that we've always maintained a balanced financing strategy, which includes a mix of debt and equity to fund a creative growth while maintaining a strong balance sheet and credit metrics. Intaining solid credit ratings and favorable access to capital markets are critical to fund our clean energy transition, deliver strong shareholder returns, and keep customer bills low, especially with rising interest rates.

What does that have updates quarter over quarter here.

Hey, Joe Good morning.

Hey, good morning, Thank you.

Quite well really appreciate it.

So what I'm hearing.

Sure.

Still warm in Houston I'll leave it at that.

Maybe just two.

Pick things up here real quickly on the credit side I mean I. Appreciate the commentary about 60 40 can you comment a little bit about the latest modernization policies for the credit rating agencies and thoughts about monetizing in terms of flowing tax credits through <unk> to what extent does that change your impact your financing plan at all just to come back to.

Brian Van Abel: 15th earnings. We've updated our 2023 guidance assumptions to reflect the latest information. We're also narrowing our 2023 ongoing earnings guidance range to $3.32 to $3.37 per share. We have a long history of delivering on our financial objectives and expect to continue that trend in 2023. As a result, we anticipate strong earnings in the fourth quarter that will result in achieving our earnings guidance. Keep drivers include incremental revenue from Colorado and New Mexico electric rate cases. The federal of certain O&M depreciation interest expenses is part of the Texas electric rate case. Strong O&M cost management in better than expected sales growth.

That a bit.

Hey, Julien good morning, Yeah. So we met with the credit rating agencies in September.

And as we're sitting right now that we've included tax credit transfer ability in our financing plan and we expected that they will include it in the way they look at our credit metrics and the broad sweep income tax election method total flow through our cash from operations in our financial statements. So all of that is included.

In a baseline as we think about it.

Excellent alright. Thank you and then separately just as you think about the.

The upside plan here.

Incredible.

Incredible numbers here I mean, I know, there's a lot of fixation here in Colorado can you walk through a little bit of just the timing here and some of the other jurisdictions in terms of coming to fruition, especially.

Brian Van Abel: Finally, we're initiating our 2024 ongoing earnings guidance range of $3.50 to $3.60 per share, which is consistent with our long-term EPS growth objective of five to seven percent. Key assumptions are detailed in our earnings release.

Through 2020, it's practically around the corner do you want to talk a little bit about the specific timelines to getting some of that that full 10 reflected in the plan here just as it goes to aligning against a full update with <unk> or beyond.

Brian Van Abel: With that, I'll wrap up with a quick summary. We continue to execute our clean energy plans, leveraging the benefits of the high rate of reduced cost for our customers. We proposed a game-changing preferred plan in Colorado, which results in one of the most aggressive renewable bill notes in the country. We secured DOE grants for our heartland hydrogen hub, wildfire mitigation plants, full-memory pilots, and transmission expansion, which will accelerate breakthrough technology and reduce risk at a lower cost for our customers.

Yeah, Hey, Julien it's Bob.

Really excited about the Colorado energy plan.

It's great to see it sort of nearing.

Conclusion and approval milestones we've been working on this for two years and we've actually been working with the Counterparties on the bids for over six months I recognize that it might be.

Quick timing for for the external world, but we've been working with these people for a while and we're really excited about what we've done here.

You know, we've been working with stakeholders very collaboratively and the PUC over the past two years to bring this plan to life for our Colorado customers.

Brian Van Abel: We resolved rate cases in Colorado and New Mexico while reaching a settlement in Prince 1, Texas. We're narrowing our 2023 ongoing earnings guidance and continue to expect to deliver within our guidance range the half of the past 18 years. We announced a robust updated capital investment program and initiated 2024 guidance that provides strong, transparent rate-based growth and customer value. And finally, we remain confident we can continue to deliver long-term earnings and growth within the upper half of our five to seven-cent objective range. As we lead the clean energy transition and continue to keep bills low for our customers.

Obviously, a great wrinkle right in the middle of it with the IRS right and so we basically been able to double the renewable portfolio have the fossil portfolio and increase our storage component dramatically.

So we think the plan meets the policy guidelines the process from here is relatively quick in the Grand scheme of things. So we received the independent engineer support that validated our proposal last week actually Monday of this week I think we get comments external comments to early November we were applied to those comments late.

Operator: This concludes our prepared remarks, Operators, and I'll take questions.

November and then we turn it over to the commission for deliberations, we think that happens.

Operator: Thank you very much, sir. Ladies and gentlemen, once again, for analysts who are ready for question, please press star one and you've doubled keypad.

In December and early next year and probably early Q1 of next year, we would expect a decision from the commission so pretty quick given the long time frame of the process in total.

Julien Dumoulin: Our first question today is coming from Julien Dumoulin Smith of Bank of America. Please go ahead, your line is open. Good morning. Thank you quite well. Really appreciate it. Still warm here and still warm in Houston now. I'll leave it at that.

Julien a couple of the other pieces in that steel for field to that old plan is the Sps solar plus storage and wish you. Good day decision in Q2 of next year and then we just launched in Minnesota 200 megawatt wind RFP bids are due in December should get a short list in Q2 of next year on that.

Julien Dumoulin: So maybe I just to to pick things up here real quickly on the credit side. I mean, I appreciate the commentary about 50 40. Can you comment a little bit about the latest modernization policies for the credit rating agencies and thoughts about monetizing in terms of flowing tax credits through FFO? To what extent does that? Change your impact your your financing clinic at all. Just to come back a bit. Hey, Julien.

And then not in anyone of our steel for fuel to point elbow room looking forward to working with our stakeholders and Sps Bob mentioned this in his opening remarks about our new Mexico resource plan will launch an RFP in mid.

Mid next year, and Thats 5000 to 10000 megawatts of potential generation resources, and Sugar project selection and call. It early to mid 2025 for that so nowhere in the $10 billion with great opportunities, we look forward to transitioning Sps's generation fleet too.

Julien Dumoulin: Good morning. Yeah, so we met with the credit rating agencies in September. And as we're sitting right now, we've included tax credit transfer ability in our finance and plan and we expect it to that they will include it in the way they look at our credit metrics. And for us, we impact election methods or flow for cash from operations in our financial statements. So all of that is included in our in our baseline, as we think about it. Excellent. All right. Thank you.

Yeah, It's incredible again update with that said, though and then given the timing early <unk> for at least a good chunk of that I mean, <unk> could we see an update to your.

Earnings CAGR outlook <unk> any other related metrics as you get that clarity affirmed here at least on the preponderance of it.

Yeah, Julian I mean, certainly we'll wait until we get through the commission approvals.

Julien Dumoulin: And then separately, just as you think about the the upside plan here, I mean, it's just incredible incredible numbers here. I mean, I and I know there's a lot of fixation here in Colorado. Can you walk through a little bit of just the timing here and some of the other jurisdictions in terms of coming information, especially through 2020, it's practically around the corner. If you want to talk a little bit about the specific timelines to getting some of that that full 10 reflected in the plan here just as it goes to a lining against the full update with four fewer beyond.

But if that timing aligns then yes, then yes, it would be fair to think through that.

Alright, guys I will leave it there good luck.

Thank you.

Thank you very much sir.

Apples to Nicholas Campanella, calling from Barclays. Please go ahead.

Hey, good morning, Happy Friday, Thanks for taking the question Nick how are you good morning, Hey.

So a couple a couple from me I guess on Colorado as you kind of layer in that to the next financing plan.

Julien Dumoulin: Yeah, hey, Julian, it's Bob. Look, we're really excited about the Colorado energy plan. It's great to see it sort of nearing conclusion in approval milestones. You know, we've been working on this for two years. We've actually been working with the counter parties on the bids for over six months. You know, I recognize that it might be quick timing for the external world, but we've been working with these people for a while and we're really excited about what we've done here.

And obviously you have the 40% rule.

Is equity continuing to be programmatic across the five years or does that drive a more a larger need in the near years of the plan.

Hey, Good morning, you know the way we look at it the biggest capital plan regular pretty programmatic because as we think about it most likely an ATM or at the base capital plan. When you look at the the not just in Colorado, but the $10 billion of the steel for fuel to point opportunities, there's really kind of 'twenty five 'twenty six.

Julien Dumoulin: You know, we've been working with stakeholders very collaboratively in the PUC over the past two years to bring this plan to life for our Colorado customers. Obviously, a great wrinkle right in the middle of it with the IRA, right? And so we've basically been able to double the renewable portfolio, have the fossil portfolio and increase our storage component dramatically. So we think the plan meets the policy guidelines, the process from here is relatively quick in the grand scheme of things.

Seven timeframe or the heavy spend so I.

I wouldn't look at it is that's kind of a timeframe that would align with the spend for that incremental and additional opportunities.

Got it and then one more on the Colorado plan I just.

The commission is and.

And exploring some type of risk sharing mechanism for the renewable assets, but can you just help us understand at that type of proposal is something that would tweak the plan in any way is it something that youre working with the commission actively on and how could that kind of transpire through the remaining course of the year here.

Julien Dumoulin: So we received the independent engineer support that validated our proposal last week. Actually, Monday of this week, I think we get comments external comments to early November. We replied to those comments late November and then we turn it over to the commission for deliberations. We think that happens in December and early next year and probably early key one of next year, we'd expect a decision from the commission. So pretty quick, given the long time frame of the process and total in June and a couple of other pieces in that steal for field 2.0 plan is the SPS solar plus storage.

Yes.

As with past practice, Nick we would we would expect some forms of customer protections capital costs or energy cost providers, which submitted some proposals to the commission for.

Although our per view it'll go along with their overall decision and on the portfolio side.

Of course, there is always a chance to look at it but we've looked at this.

No.

Sideways back ways front ways I think we've put together a great plan that complement the geographic diversity in the state where the wind and solar physically come into the into the grid to provide a high resiliency and reliability from the renewable resources and so on.

Julien Dumoulin: We should get the decision in Q2 of next year and then we just launched a Minnesota 1200 megawatt wind RFP bid their due in December should get a short list in Q2 of next year on that. And then not in anywhere in our steel for field 2.0, but rules are comportable with our stakeholders and SPS Bob mentioned this in the opening marks about our new Mexico resource plan will launch an RFP in mid next year and that's 5000 to 10,000 megawatts of potential generation resources and should get a project selection in call it early to mid 2025 for that.

I'll always chance to move it around a little bit, but we don't think the substantial changes coming from the plan.

That's great and if I could just squeeze one more in.

You talked about the data centers in your prepared remarks, you're.

Weather normalized load for for 'twenty, four is 2% to 3% and thats higher than last year by 100 basis points to just what are you seeing a change in the demand profile. How are you thinking about the longer term forecast and whether thats pressure higher than your five to seven thank you.

Julien Dumoulin: So nowhere in the 10 billion dollars, but a great opportunity to look for the transition SPS generation fleet. Yeah, it's incredible, again, update. With that said, though, and given the timing, early one queue for at least a good chunk of that, I mean, four queue, could we see an update to your earnings cager outlook and or any other related metrics, as you get that clarity affirmed here, at least on the proponents of it. Yeah, Julien, I mean, certainly won't wait until we get through the commission approvals. So, but if that timing aligns, then yeah, then yes, it'd be fair to think through that.

Thanks, Nick I'll take that one the way I think about it is yes, we're starting to see a number of things in our long term sales sales forecast, we updated our sales forecast for 2020 for 2% to 3%, but we think over the five years, we expect that 2% to 3% CAGR to hold if not call. It conservative given what we.

We're seeing on the potential load from data centers data centers represent less than 1% of our sales right now we see some potential where that could grow to 5% over this next five years.

Julien Dumoulin: All right, guys, I will leave it there. Good luck. Thank you. Thank you very much, sir.

As I think about just next year significant electrification happening in the oil and gas region in the Permian Basin and the Delaware Basin, we're working very closely with our large customers down there around it's not just it's not really about even more drilling as well as electrification of their pumps compressors as they hit their net zero goals in the Permian Basin.

Nicholas Campanella: When I move to Nicholas Campanella, calling for Barclays, please go ahead. Hey, good morning, happy Friday. Thanks for taking the question, big. How are you? Good morning. Hey, so a couple couple for me, I guess on Colorado, as you kind of layer in that to the next financing plan. And obviously, you have the 40% rule is equity continuing to be programmatic across the five years, or does that drive a more a larger need in the near years, the plan.

And achieve the goals that the state of new Mexico has for them.

And then also we're starting to see an uptick in residential demand.

Turning to see penetration from the <unk> perspective, so overall really great trend as we look out not only next year, but longer term with kind of electrification and data central potential and Nick just to add onto that as Bob.

Nicholas Campanella: Hey, good morning. The way we look at it, the base capital plan, regular, pretty programmatic, as we, as we think about it, most likely in ATM with the base capital plan, when you look at the, the, not just the Colorado, but the $10 billion of the steel for fuel. Two point opportunities. This really kind of 25, 26, 27 timeframe or the heavy spend. So I would look at it is that's kind of the timeframe that would align with the spend for that incremental and additional opportunities.

When I think about some of the comments I made in the opening remarks.

About the ability to deliver clean energy more cost effectively in all regions of the country than other parts I think over the long term that should absolutely accrue to our state's benefits in terms of economic development energy and energy intensive resources are going to come back and onshore in the U.

Nicholas Campanella: Got it. And then one more on the Colorado plan. I just, I know the commission is exploring some type of risk sharing mechanism for the renewable assets. But can you just help us understand if that type of proposal is something that would tweak the plan in any way. Is it something that you're working with the commission actively on? And how could that kind of transpire through the remaining course of the year here?

I'd states.

We should be a very attractive destination for them as we can deliver renewable energy and clean energy much more cost effectively.

We serve customers, where the wind blows in the Sunshine and that translates to high capacity factors and lower energy costs to our customers, which should lead to long term economic development in our states.

Nicholas Campanella: Yeah, you know, consistent with past practice, Nick, we would, we would expect some forms of customer protections capital costs or energy cost providers. We've submitted some proposals to the commission that they, for their purview. It'll go along with their overall decision. And on the portfolio side, you know, of course, there's always chance to look at it. But, you know, we've looked at this, you know, sideways, back ways, front ways, I think we've put together a great plan that they complement the geographic diversity in the state where the wind and solar physically come into the, into the grid to provide high resiliency and reliability from the renewable resources.

Alright, thanks, so much see in a few weeks here.

Thank you very much sir.

We'll now move to <unk> Chopra from Evercore ISI. Please go ahead.

Okay.

Hey, good morning team. Thanks for taking my questions Hey, good morning.

Good morning, you guys have been sort of the leader in transferability.

Kind of one of the first ones to introduce the concept and start working on it it seems like you're making great strides here the target for the year. If I recall. This if I have this correctly was increased from 200 to $300 million to $400 million I just wanted to see if I'm thinking about that correctly and then what does that do to the prior plan had one.

Nicholas Campanella: And so, you know, always chance to move it around a little bit, but we don't think this substantial change is coming from the plan. That's great. And if I could just squeeze one more in, you know, you talked about the data centers in your prepared remarks, your, your weather normalize load for, for 24 is 2 to 3% and that's higher than last year by 100 basis points to just, what are you seeing that's changing the demand profile, how are you thinking about the longer term forecast and whether that's pressure higher.

One 8 billion in total amount raised from transferability, what does that number look like in the current plan.

Yeah, so you're absolutely thinking about it.

Correctly you know we went we went into this year before the market even fully so that we're a little conservative at the same at around $200 million, we've already executed two contracts for $250 million and working on another so we feel very good about our $3 million to $400 million.

Nicholas Campanella: In your 5 to 7. Thank you. Thanks, Nick. I'll take that one. The way I think about it is, yes, we're starting to see a number of things in our long term sales sales forecast. You know, we updated our sales forecast for 2024 to 3% but we think over the five years we expect that 2 to 3% if not call a conservative, given what we're seeing on the potential load from data centers, data centers represent less than 1% of our sales right now.

In total for the balance of the year.

And when we think about our baseline we've layered in the circle solar projects now that they've been approved so we have a little bit over five think about we were about $500 million.

Run rate annual transfer of PTC credits. So it's about a total of $2 $7 billion over our five year forecast from 2024 to 28.

Okay.

Thank you.

Nicholas Campanella: We see some potential where that could grow to 5% over this next 5 years as I think about just next year, significant electrification happening in the oil and gas region in the Permian Basin, Delaware Basin, we're working very closely with our large customers down there around, it's not just not really, but even more. Drilling is on electrification of their pumps compressors as they hit their net zero goals in the Permian Basin and achieve the goals that the state of New Mexico has for them and then also we're starting to see an uptake in residential demand, you know, we're starting to see penetration from the EV perspective.

Very helpful. And then maybe just I didn't see this in your prepared remarks on slide decks than maybe I missed it but just any update on the gas.

<unk> risk management plan that you have to file in Colorado I believe that's due next month.

Yes, so we will file it by November 1st absolutely right. So do next week working with the stakeholders working on the plan, we think about it in a couple of different.

<unk> one is this idea of the smoothing mechanism, where we can reduce volatility volatility by using our balance sheet and so if if commodity prices spiked to a certain level you would take that on our balance sheet and spread over 1234 years and get a carrying cost on it really reduce that volatility that our customers experience.

Nicholas Campanella: So overall, really great trend is a look out not only next year, but longer term with kind of electrification and data center potential and make just just add on to that. When I think about the comments I made in the opening remarks about the ability to deliver clean energy more cost effectively in our regions of the country than other parts, I think over the long term that should absolutely accrue to our state's benefits in terms of economic development energy and energy intensive resources are going to come back and on shore the United States.

<unk> last year. So that's important because we need to maintain a good balance sheet strong credit quality to be able to use our balance sheet to help our customers on the second part is really focus on what are the proposals that we can make to reduce volatility and thats, whether there's additional physical storage potential for.

Fixed physical contracts or additional financial hedging. So you see all of that are a part of our proposal here coming up next week and look forward to working with the commission and stakeholders and helping reduce volatility for our customers in Colorado.

Nicholas Campanella: We should be a very attractive destination for them. As we can deliver renewable energy and clean energy much more cost effectively, you know, we serve customers where the wind blows and the sun shines and that translate to high capacity factors and lower energy cost to our customers, which should lead to long term economic development in our state.

<unk> just to add onto that one of the best things we've done for our customers is our renewables portfolio, we have lowered our reliability on fossil fuels dramatically over the past five years and the customers of crude over $4 billion of fuel savings and tax benefits benefits from that since 2017.

Nicholas Campanella: All right, thanks so much. See you in a few weeks here.

So as we continue to look forward, obviously, the Colorado energy plan, our upper Midwest Energy plans, certainly de risked our customers.

Operator: Thank you very much, sir.

Durgesh Chopra: We'll now move to Durgesh Chopra, according to every core ISI. Please go ahead. Hey, good morning, team. Thanks for taking my questions. Hey, good morning. Good morning. You guys have been sort of the leader in transfer ability. I mean, you were kind of one of the first ones to introduce the concept. And start working on it. It seems like you're making great strides here, the target for the year, if I recall this, if I have this correctly, was increased from 200 million to 300 to 400 million.

From a commodity volatility on the electric side and as we lean into clean fuels, you're starting to see that on the gas LDC side as well Andrew.

And just to clarify we meant that we've reduced our reliance on fossil fuels not the reliability of our firm.

Yep Yep. Thanks.

Thanks for that color really appreciate it.

Thank you, Sir we'll now move to Carly Davenport of Goldman Sachs. Please go ahead.

Durgesh Chopra: I just wanted to see if I'm thinking about that correctly, and then what does that do to the power plant had 1.8 billion in total amount raised from transfer ability? What does that number look like in the current plan? Yeah, so you have to think about it correctly. You know, we wouldn't we wouldn't we went into this year before the market even fully set up. We're a little bit conservative of saying around 200 million.

Hey, good morning, Thanks for taking the questions and all the updates maybe.

Maybe just a quick follow up on your comments, just then on tax credit transferability.

The color that you've done already kind of $250 million of contracts can you just talk a bit about kind of how the market's been evolving relative to your initial expectations and how you kind of think about that competitiveness of that space.

Yeah, Hey, Hey, Carly.

Durgesh Chopra: We've already executed two contracts for 250 million dollars and working on another. So we feel very good about our 3 to 400 million dollars for in total for balance of the year. In the living of our baseline, we've layered in the circle solar projects now that they've been approved. So we have a little bit over five think about it was about 500 million dollars, one rate annual transfer of PTC credits. So it's about a total of $2.7 billion over our five year forecast from 24 to 28.

Thanks for the question so it's.

Evolves pretty close to how we expected it to this year bilateral transaction trends at bilateral transactions in kind of the pricing we anticipated.

Durgesh Chopra: Thank you. That's really helpful.

There has been significant amount of demand the demand is much much greater than our supply of ptc's.

No we're still waiting for a little for the charter to stand up their portal and additional administrative requirements. What we feel comfortable executing contracts I think also what we found and this is the strength of losses. We are a major player in this market, we have a great tax department and with our balance sheet strengthened our credit quality and we have no issue with identifying these credits.

Durgesh Chopra: And then maybe just I didn't see this in your prepared remarks on slide decks, maybe I missed a bit just any update on the gas price risk management plan that you have to file in Colorado. I believe that's due next month. Yeah, so we'll file it by November 1st. Absolutely right. So do next week working with the stakeholders working on the plan. We think about it in a couple of different veins.

Which makes it really easy to do business with us.

And as a certain evolve we're getting in the longer term discussions is not just a 2023 or 2024 transaction about hey, let's look at a longer term multiple year signing up with a single counterparty. So we're very pleased with how it's developed and the amount of interest from their counterparties, there and for US it's great. We have almost 2004.

Durgesh Chopra: One is this idea of this smoothing mechanism where we can reduce volatility, that volatility by using our balance sheet. And so if commodity prices, despite it to a certain level, you would take that on a balance sheet and spread over 1, 2, 3, 4 years and get a carrying cost on it, really reduce that volatility that a customer experience last year. So that's important because we need to maintain a good balance sheet strong credit quality to be able to use a balance sheet help our customers out.

500 companies in our backyard in Minneapolis in Minnesota. So it is great to have those relationships at the C suite level to drive some of these.

Got it that's super helpful. Thank you and then maybe the follow up just on the hydrogen hub process. How does that that's been awarded I guess, how should we be thinking about timeline, there and is there any dependence on that investment cadence going forward on kind of how the tax credit structure looks for hydrogen once they get that from the <unk>.

Durgesh Chopra: The second part is really focused on, you know, what are the proposals we can make to reduce volatility and that's whether it's additional physical storage potential for Fixed Physical Contracts, or additional financial hedging. So you see all that on part of our proposal here coming up next week and look forward to working with the commission and the stakeholders in helping reduce the volatility for our customers in Colorado. You know, digress just to add on to that one of the best things we've done for our customers is our renewables portfolio.

<unk>.

Sure. So currently it's Bob.

We were really excited about our clean fuels program, but it is fairly long dated.

We are at a place where we are invited to negotiate with the Doe on this upper Midwest hydrogen of the Heartland hub.

Negotiations final engineering.

Those processes are going to take probably two years I wouldn't say, we'd start capital deployment till probably the end of our five year plan and runs through the end of the decade.

Durgesh Chopra: We have lowered our reliability on fossil fuels dramatically over the past five years. And the customers have crude over four billion dollars of fuel savings and tax benefits from that since 2017. So as we continue to look forward, obviously, the Colorado Energy Plan, our upper bid west energy plan, certainly de-risk our customers from a commodity volatility on the electric side. And as we lean into clean fuels, you start to see that on the gas LDC side as well. And just to clarify, we've meant that we've reduced our reliance on fossil fuels, not the reliability of our fossil fuels. Yep.

I would think that parts of the hub could be activated by 2029, 22008 and 2029, so it's long dated investment cycle.

It's a $5 billion project about half of that was attributable to projects that we proposed.

About $2 billion of company capital paired with half a billion dollars of federal money.

Sort of how I think about it and none of that's in our financial plan and that's about the time line, it's going to go on.

So.

We will still work on that does not include any investments also that we would look at some of the projects in Colorado were really attractive as part of our hub application. There were still want to work with the federal offices in our state partners to see if we can advance some of those projects as well again, none of that's in our base case or in our steel for fuel ports.

Durgesh Chopra: Thanks, Steve, for that color. Really appreciate it. Thank you, sir.

Carly Davenport: We're now to Cardi Davenport of Goldman Sachs. Please go ahead. Hey, good morning. Thanks for taking my questions and all the updates. Maybe just a quick follow up on your comments just sent on on tax credit transfer ability. You know, the color that you've done already, kind of 250 million of contracts, you can just talk a bit about kind of how the market's been evolving relative to your initial expectations and how you kind of think about the competitiveness of that space.

Palio.

And Karla is weak in the second part of your question you asked about kind of the guidance around that obviously, we're still waiting for the guidance from treasury on unless we provided our comments industry's broader comments one of the things important losses around the nuclear <unk>.

Carly Davenport: Yeah. Hey, Carly. Thanks for the question. So it's evolved pretty close to how we expected it to this year by lateral transactions, transit by lateral transactions in kind of the pricing we anticipated. There has been significant amount of demand. The demand is much, much greater than our supply of PTCs. Now, we're still waiting for a little for the charity to stand up the portal and additional administrative requirements, but we feel comfortable executing contracts.

Qualify qualify qualifying for hydrogen PTC so.

Hopeful that we get guidance here.

Rumours sometime in November, but because it could push a little bit.

Thanks for the color.

Thank you is that there are imports.

We'll now move to Jeremy <unk>, calling from Jpmorgan. Please go ahead.

Hi, good morning.

Hey, Jeremy how are you.

Carly Davenport: I think also what we found, and this is a strength of us. We are a major player in this market. We have a great tax department and we with our balance sheet strength and our credit quality. We have no issue with identifying these credits, which makes it really easy to do business with us. And as a certain evolve, we're getting in the longer term discussions is not just a 2023 or 2024 transaction, but hey, let's look at longer term multiple years signing up a single counter party.

Clearly an incredible update in Colorado here, and just wanted to dive in a little bit more if I could.

Just given the rate base growth as you outlined there and how should we think about I guess the EPS growth.

Relative to the rate base growth given the higher interest rate environment here.

Thinking about potentially greater than 10% rate base growth.

The gap.

No kind of widening at that point or how should we think about that at a high level.

Carly Davenport: So we're very pleased with how it's developed in the amount of interest from our counter parties there. And for us, it's great. We have almost 20 folks and 500 companies in our backyard and Minneapolis in Minnesota. So it is great to have those relationships at the C-suite level to drive some of these.

Hey.

Jeremy Good question, obviously, we are in a.

Carly Davenport: Got it. That's super helpful. Thank you.

Higher interest rate environment higher financing market and also have some.

Issue equity equity to fund accretive growth, which we're very comfortable with its important to maintain a strong balance sheet and we've been very consistent about how we will fund incremental growth. So as you go through that you do see a little bit of a divergence from rate base growth and EPS growth, but certainly not hard to do the math and I'm sure. All of you have done that math already.

Carly Davenport: And then maybe the follow up just on the hydrogen hub process now that that's been awarded. I guess how should we be thinking about timeline there? And is there any dependence on on that investment cadence going forward on kind of how the tax credit structure looks for hydrogen once we get that from the treasury? Sure. So Carly's bomb. We were really excited about our clean fuel program, but it is fairly long dated.

Got it yes, no good math to do there.

That makes sense.

<unk>.

Just wanted to kind of come in on.

The O&M side for the guidance, there and I think usually it's been kind of flat to down if I recall correctly, but targeting a little bit of an uplift in 'twenty four here and just wondering if you could provide a bit more color on the increase here and how this O&M.

Carly Davenport: We are at a place where we are invited to negotiate with the DOE on this Upper Midwest Hydrogen Hub, the Heartland Hub. Negotiations, final engineering, those processes are going to take probably two years. I wouldn't say we'd start capital deployment till probably the end of our five-year plan and run through the end of the decade. You know, I would think that parts of the hub could be activated by 2029, 2028, 2029.

O&M I guess impacts how 'twenty.

24 guidance could fall out, particularly given minnesota being a bit lighter than expected.

Yes, we take everything that happened in this year from a regulatory perspective rate case respective taken into account as we give 2024 guidance. What do you think about O&M, though were down for this year our guidance for this year down 1% to 2%. So as we think about next year up 1% to 2% with Dick's and management actions.

Carly Davenport: So it's a long-dated investment cycle. It's a $5 billion project about half of that was a tribute over projects that we proposed. So about $2 billion of company capital paired with half a billion dollars of federal money. It's sort of how I think about it. None of that's in our financial plan. And that's about the timeline it's going to go on. You know, so we'll still work on that does not include any investment also that we would look at.

And this year and so really when I put the two years together, it's about essentially maintaining flat O&M, it's our big focus from a long term perspective.

Is investing in technology to improve processes and take cost out of the business, we have innovation and transformation arm focus on eliminating waste and improving processes. We've got one accelerating the way that we've deployed that sort of this year and also as you go longer term, we start to see tailwind from coal plant shutdowns as we start to shut down.

Carly Davenport: Some of the projects in Colorado are really attractive as part of our hub application there. We still want to work with, you know, the federal offices and our state partners to see if we can't advance some of those projects as well. Again, none of that's in our case or in our steal for fuel portfolio. In Carly as we can second part of your question. Yes, so I'll kind of the guidance around that.

You ended the year almost so so next year, it's just a little bit of a balancing this year next year, but over a flat is how I'd look at it overall.

Got it that makes sense on the other side of the coin as.

As it relates to the sales outlook you talk about the data center opportunity.

Carly Davenport: Obviously we're so waiting for the guidance from Trigger on this. We provided our comments, industries rather comments. One thing the port does is around on the the nuclear qualify qualifying for hydrogen PTC. So I'm hopeful that we get guidance here. Rumors sometime in November, but could could push a little bit. Thanks for the color.

Supporting this 2% to 3% growth.

Is that kind of like the rate base to think about beyond 'twenty for you.

Do you anticipate some further acceleration with five year plan just trying to you know.

Calibrate if like the environment is just different now given some of the tailwind as you talked about and clearly as well oil and gas at Delaware Basin really click on all cylinders here a lot of activity that we see on the pipeline side. So just I guess curious for those drivers and how that could carry out over time.

Carly Davenport: Thank you, Ms. Davenport.

Jeremy Tonet: When I move to Jeremy Tonnet, calling from JP Morgan, please go ahead. Hi, good morning. Hey Jeremy, how are you? Good, good, clearly an incredible update in Colorado here and just wanted to dive in a little bit more if I could. You know, just given the rate base growth that as you outline there. And how should we think about, I guess, the EPS growth, you know, relative to the rate base growth given the higher industry environment here, you know, thinking about potentially greater than 10% rate base growth.

Yeah, and I think really next year as you mentioned in the Permian basin significant growth down in Sps as we're supporting electrification and working closely with our large customers there.

From a data center perspective, and thinking about the longer term growth I do think right now our five year sales growth as we're projecting 2% to 3% over the five years. So kind of think about 'twenty 'twenty four and that will continue over the next five years and I think there's even opportunity beyond that as you start to look at what generally the AI means from from others.

Jeremy Tonet: Do you see the gap, you know, kind of widening at that point, or how should we think about that at a high level? Hey, Jeremy, you know, good question. Obviously we are in a higher interest rate and environment higher financing market and also have some issue equity to fund the creative goals, which was very comfortable with. It's important to maintain a strong balance sheet. And we've been very consistent about how we'll fund incremental growth.

Load perspective in a data center perspective, so pretty excited we think about obviously, there's investment opportunity when we think about loan growth, helping us keeping customer bills low and affordable and that's really important as we look to invest significantly into our system.

Got it that's all.

Helpful. Thanks, Real quick last one if I could just kind of rounding things out here any updates on the ongoing Marshall wildfire litigation any updates on whether total liabilities.

Jeremy Tonet: So as you go through it, you do see a little bit of divergence from way base growth and EPS growth. But it's certainly not hard to do the math and for all of you have done that math already. Got it. Yep, no, good math to do there. Oh, that makes sense.

The 560 insurance coverage or any color you can provide there.

Yeah, Hey, it's Bob I don't think we've seen a lot of material updates and Marshall I think in our disclosures in our Q and in our earnings release are up to date.

Jeremy Tonet: And, you know, just wanted to kind of come in on, you know, the ONM side for the guidance there. And I think you've just been kind of flat to down if I recall correctly, but targeting a little bit of an uplift in 24 here and just wondering if you could provide a bit more color on the increase here and how this. Oh, and I guess, you know, impacts how, you know, 24 guidance could fall out, you know, particularly given Minnesota being a bit lighter, and expected.

We've seen.

675 plaintiffs.

To put in perspective, we think there are about 1100 structures that had some amount of physical damage.

And estimated by the by the state of Colorado at about $2 billion worth of damage, none of Thats changed or been updated the cases into 14 complaints in the bank consolidated into a single case right now.

Jeremy Tonet: Yeah, and we take everything that happened in this year came from a regulatory perspective, a case perspective taken into account as we give 2024 guidance. We think about O&M, and we're down for this year, our guidance for this year is down one to two percent. So as we think about next year, up one to two percent, we've taken management actions in this year. And so really when I put the two years together, it's about essentially maintaining flat O&M.

The statute of limitation ends at the end of this year. So we think it will be pretty quiet until then maybe a couple of other places trickle in through the process and then we'd expect to get a litigation calendar sometime in early next year.

Got it very helpful. Thank you for the time I'll leave it there.

Thank you Mr tonnage.

We'll now move to Anthony <unk>.

Jeremy Tonet: It's our big focus from a long-term perspective is investing in technology to improve processes and take costs out of the business. We have innovation and transformation arm focused on limiting waste and improving processes you call one Xcel Energy Way that we've deployed that started this year. And also as we go longer term, we start to see tailwinds from coal plant shutdowns, as we start to shut down the unit of your almost.

Please go ahead.

Hey, good morning, Good morning, Bob just hopefully easy one everything has been answered.

Great News on Colorado, but just following up on Jeremy's question, you talked about I think the company is going to file a wildfire mitigation plan I believe in 2024 in Colorado is there a potential for even additional capex associated with wildfire mitigation and magnitude is that similar to what we've seen in the notes.

Jeremy Tonet: So next year is just a little bit of a bounce ring this year next year, but over flat as I would look at it overall. Got it. That makes sense on the other side of the coin, as it relates to the sales outlook, you talk about the data center opportunity in supporting this two to three percent growth. Is that kind of like the right base to think about beyond 24? If you anticipate some further acceleration over the five-year plan, just trying to, you know, calibrate if like the environment is just different now given some of the tailwinds as you talked about and clearly, you know, as well oil and gas, a Delaware basin, really click on all cylinders here.

For fuel to point out.

Thank you Anthony good morning.

We've been operating under a W. M P in Colorado for the past four years I think that plan was around $400 million. In total we are looking at more capital investments as we roll forward I think a lot of that is going to be built into the base plan already I do.

Don't think it has anything of the magnitude of steel for fuel to point.

Obviously, the big needle and there would be if we did something very dramatic on under grounding I don't see a proposal that will move the needle necessarily in capital expenditures going forward, but something worth looking at.

Jeremy Tonet: A lot of activity that we see on the pipeline side. So just I guess curious for, you know, those drivers and how that could carry out over time. Yeah, and I think really next year, as you mentioned in the Permian Basin, significant growth down in SPS as we're supporting electrication and working closely with our large customers there. From the data center perspective and thinking about the longer-term growth, I do think right now, our five-year sales growth is we're projecting two to three percent over the five-year.

Great. Thanks, again, great quarter.

You bet. Thanks Anthony.

Thank you Sir.

Well now go to.

David Arcaro, calling from Morgan Stanley. Please go ahead Sir.

Hey, good morning, Thanks, so much for taking my question.

I was wondering this is a it's clearly a step change in the renewables aspirations and opportunity for Colorado could this also a part of Minnesota in terms of potentially seeing an acceleration and a step change in renewables there as you fully realize the benefits of IRA going forward.

Jeremy Tonet: So kind of think about 2024 and that will continue over the next five years. And I think there's even opportunity beyond that as you start to look at what generally the AI means from from the load perspective and the data center perspective. So pretty excited. We think about, you know, obviously there's an investment opportunity. But we think about low growth, helping us keeping customers low and affordable. And that's really important as we look to invest significantly into our system. Got it. That's very helpful. Thanks.

Yeah, maybe hey, David It's Bob and good morning, and thanks for the question.

When I when I think about my prepared remarks, I made the comment around 15 to 20000 Gigawatts of Gen or 15000 megawatts of generation by the end of the decade. If you think seven of that is in Colorado and then the balance eight to 13 as a combination of Sps and NSP.

Jeremy Tonet: Real quick last one if I could. Just kind of rounding things out here. Any updates on the ongoing Marshall, wildfire, litigation, any updates on whether or total liabilities are likely to breach the 560 insurance coverage or any color you could provide there. Yeah, hey, Bob. I don't think we've seen a lot of material updates in Marshall, I think in our disclosures and our Q and in our earnings where we serve up to date.

Jeremy Tonet: We've seen 675 plaintiffs, you know, to put it perspective. We think there are about 1100 structures that had some amount of physical damage and estimated by the by the state of Colorado about $2 billion worth of damage. None of that's changed or been updated. The cases into 14 complaints and it's been consolidated in a single case right now. The statute of limitation ends at the end of this year. So we think it'll be pretty quiet until then.

There's very little in our capital plan, our steel for fuel plan that's included.

For those two regions in our capital plan or in our steel for fuel to point out that Brian laid out. So we have real generation upside investment opportunities. They are a little longer dated so think 28% to 30, maybe outside of the plan period, some might creep into this five years, but I think it's really more back Dave.

But that's a substantial amount of generation and each of those two.

Two of those jurisdictions, we did go through a resource plan in Minnesota, the 1200 megawatts that we referenced in terms of our RFP.

For next year is part of that program.

But there's probably 4000 to 5000 megawatts of that is in the upper Midwest.

Jeremy Tonet: Maybe a couple other plaintiffs trickle in through the process. And then we'd expect to get a litigation calendar sometime in early next year. I got it. Very helpful. Thank you for the time. I'll leave it there. Thank you, Mr. Tonet.

Largely approved as part of our last resource plan that we need to go execute upon.

Yes.

We have as we mentioned we have the 200 megawatts of wind RFP in flight, we exited Wisconsin RFP solar RFP in flight that we're working on now and we think oil will fall. Another resource plan, but also have significant opportunities in Minnesota longer data is around our wind repowering and the assets that we put in service in the 18% to 21 time frame.

Anthony Cowdell: When I move to Anthony Cowdell of Mizuho, please go ahead.

Anthony Cowdell: Good morning, Bob. Just hopefully easy one, everything's been answered. Great news on Colorado, but just follow up on Jeremy's question. You talked about, I think, a company is going to file a wildfire mitigation plan I believe in 2024 and Colorado. Is there potential for even additional cat-backs associated with wildfire mitigation? And it's like magnitude is that similar to what we've seen in the, you know, steel for fuel 2.0?

Repowering a couple all the ones that we brought boardroom Commission and it's a great way to increase output and save our customers money and so we'll look at those as we get closer to the time period is another opportunity.

In terms of being able to drive savings for our customers invest in steel in the ground.

Got it that all makes sense, it's helpful to frame it up and.

Anthony Cowdell: Hey, Anthony. Good morning. Look, we've been operating under a WMP in Colorado for the past four years. I think that plan was around $400 million in total. We are looking at more capital investments as we roll forward. I think a lot of that's going to be built into the base plan already. I don't think it has anything of the magnitude of steel for fuel 2.0. Obviously, the big needle in there would be if we did something very dramatic on undergrounding. I don't see a proposal that'll move the needle necessarily in capital expenditures going forward, but something worth looking at.

I was curious what's the latest that you're seeing in renewables economics in terms of <unk> in your service territories have been.

Market concerns about rising PPA prices inflationary pressures in the renewable supply chain, but just curious what your experience has been in terms of latest data points, how attractive have renewables projects looked.

Yeah, David Hey, look so the great benefit of the last couple of years is obviously the inflation reduction act, we've definitively seen higher capital costs in wind and in solar, but the IRA and the tax benefits of 100% Ptc's.

Anthony Cowdell: Great. Thanks again. Great quarter. You got thanks, Anthony. Thank you, sir.

<unk> been able to offset that at least in our jurisdictions on an <unk> basis. So probably I'll give you some data points I'd say, we've seen probably $30 from our last approved wind project, which would have been our Dakota Ridge project.

David Arcaro: When I move to David Arcaro, call him from William Stanley. Hey, good morning. Thanks so much for taking my question.

David Arcaro: I was wondering, you know, this is, it's clearly a step change in the renewable aspirations and opportunity for Colorado. Could this also apply to Minnesota in terms of potentially seeing an acceleration and its step change in renewable there as you fully realize the benefits of IRA going forward? Yeah, maybe hey, David. It's Bob and good morning. Thanks for the question. When I think about my prepared remarks, I made the comment around 15 to 20,000 gigawatts of 15,000 megawatts of generation by the end of the decade.

We built that for around $212 50, a kw, we probably seen capital cost increases on wind or 30% to 40% on top of that but the IRA has offset all of the capital cost improvements as well as MTF improvements from the better technology in the bigger turbines.

Two combinations have put our <unk> on those projects in line with what we put wind into service for 2018 in 2019, So we're really favorable.

Participants are customers are great beneficiaries of the inflation reduction act to keep the level of <unk> cost of energy.

David Arcaro: If you think seven of that's in Colorado, then the balance eight to 13 is a combination of SPS and an SP. There's very little in our capital plan, our seal for fuel plan that's included for those two regions in our capital plan or in our seal for fuel two-pointer that Brian laid out. So we have real generation upside investment opportunities. They're a little longer dated, so think 28 to 30 maybe outside of the plan period.

Very very affordable for our customers and when I think about I made the comment earlier around sort of economic development opportunities, we're putting wind in let's say, we're putting wind in around $2022 a megawatt hour.

Pair that offshore wind on the east coast at North of 100 and.

And we think over time lower cost energy will accrue and economic benefits to our regions of the country.

Excellent Okay, that's great to hear thanks, so much for the update.

David Arcaro: Some might creep into this five years, but I think it's really more backdated. But that's a substantial amount of generation in each of those two to those jurisdictions. We did go through a resource plan in Minnesota of the 1200 megawatts that we referenced in terms of a RFP for next year is part of that program. But this probably 4,000 to 5,000 megawatts of that is the upper Midwest largely approved as part of our last resource plan that we need to go execute upon.

Thank you Sir.

Well now move to Travis Miller of Morningstar. Please go ahead.

Good morning, Thank you.

Just a couple of quick follow up Travis good morning.

Hi.

Just a couple of quick follow ups to suddenly earlier questions and comments.

1% to 2% moving the sales number just 2% to 3%, what's the approximate earnings impact of our incremental all else equal.

Yeah on just easiest easier just rule of thumb.

David Arcaro: Yeah, and we have, as we mentioned, we have the 1200 megawatts of wind RFP and flight, we actually have a Wisconsin RFP, solar RFP and flight that we're working on. Now, we think we'll follow another resource plan, but also a significant opportunity in Minnesota. Our longer date is around our wind repowering. In the assets that we put in service in the 18 to 21 time frame, you know, we're repowering a couple of all the ones that we brought forward to the commission and it's a great way to increase output and save our customers money.

Call it 1% change in sales it was about a $25 million change in the revenue from from our energy sales. So that's a good good rule of thumb, probably drive US Okay. After tax that's earnings right.

Now that was revenue sorry, that's revenue and that takes into account our true up and decoupling mechanisms.

Okay, so pretax okay.

Got it.

Then.

David Arcaro: And so we'll look at those as we get closer to the time period as another opportunity in terms of being able to drive savings for our customers and invest in steel on the ground. Got it. That all makes sense. It's helpful to frame it up.

On the Heartland and some of the other projects you've mentioned in terms of new technology of their hydrogen projects.

Is your thought process to put that through some of those things through the regulatory traditional regulatory process or do you foresee potentially coming up with another financing structure or another corporate structure something that would house some of those projects that are safe.

David Arcaro: And I was curious what's the latest that you're seeing in Renewable's economics in terms of LCOE in your service territories. You know, there's been market concerns about rising PPA prices and inflationary pressures in the renewable supply chain. But just curious what your experience has been in terms of, you know, the latest data point, how attractive have Renewable's projects looked. Yeah, David, hey, look, so the great benefit of the last couple of years is obviously the inflation reduction act.

Unusual in a positive way obviously.

Hey, Travis it's Bob good morning.

Our proposed plan would.

Certainly put the assets into regulatory rate base here.

Here in the upper Midwest, If you think about our proposals at the Doe, We've got green hydrogen off of wind and solar we've got paint hydrogen off of nuclear plants. In the end uses are we're going to help partners create green fertilizers, So green ammonia to Green Korea to fertilizer as.

David Arcaro: We've definitively seen higher capital costs in wind and in solar. But the IRA and the tax benefits of 100% PTCs have been able to offset that at least in our jurisdictions on an LCOE basis. So probably I give you some data points. I'd say we've seen probably 30 to from our last approved wind project, which would have been our Dakota Ridge project. We built that for around 1200 1250 KW. We probably seen capital cost increases on wind or 30 to 40% on top of that.

David Arcaro: But the IRA has offset all of the capital cost improvements as well as NTF improvements from the better technology and the bigger turbines. Those two combinations have put our LCOE on those projects in line with what we put wind and service forward 2018 and 2019. So we're really favorable participants. Our customers are great beneficiaries of the inflation reduction act to keep the levelized cost of energy. Very, very affordable for our customers.

As well as.

Some amount of blending into our gas plants and into our LDC with some of the output. So the expectation is as they would go through a regular state process around that capital investments and those ultimate uses for the fuel.

Okay, Perfect and then a real quick Minnesota any update on the timing of your appeal process.

Selling a rate case, yes, sorry, thanks, Steve.

We went through.

Reconsideration process in mid September.

Our appeal plan would be early November.

Okay, and then about how long does that take.

What do you think.

Sometime into next year.

Okay, Okay very good I appreciate it.

David Arcaro: And when I think about I made the comment earlier around sort of economic development opportunities, we're putting wind in, let's say we're putting wind in around $20, $22 a megawatt hour. You compare that to offshore wind on the east coast at north of 100. And we think over time lower cost energy will crew and economic benefits to our regions of the country. Yeah, excellent.

Thank you. Thank you and sorry for that thank you Mr. Taylor.

Now go to Ross <unk>, calling from UBS. Please go ahead. Your line is open Sir.

Good morning, Good morning, Brian how are you.

Good morning Ross.

So Brian maybe one for you.

You guys are sort of on the leading edge of elevens transferability.

Feel free to take this offline if he can.

David Arcaro: Okay, that's great to hear. Thanks so much for the update.

Can't do it in seven minutes, but.

I'm just thinking through like how do you think about the accounting do you record a non monetary asset at fair value and then book sort.

Operator: Thank you, sir.

Travis Miller: Well, then move to Travis Miller of Morningstar. Please go ahead. Morning. Thank you. Just a couple of quick follow up. Good morning. Hi. Just a couple of quick follow up to some of the earlier questions in your comments that 1 to 2% moving the sales number to 2 to 3% what's the approximate earnings impact? They're incremental. All else equal. Yeah, I'm just easier sort of the easiest rule of thumb is a call that 1% change in sales is about a $25 million change in the revenue from our energy sales.

Sure.

Gain on loss against that when you get to cash or no fast guideline here right. If I've got it right. So.

Are you walking through the accounting of these two large ones that youre doing and can we get clarification from class b or the IRS at some point about how the accounting shouldn't work.

Certainly we were there so we work closely with our audit.

Firm on this in the audit firm is working with the Big four is all working together the way we look at it as an income tax model election for us and we'll do so at that meeting dessert and run it through the gains and losses through income tax expense on our income statement.

Travis Miller: So that's a good good rule of thumb for Travis. Okay, after tax attorneys, right? That's right. Sorry, that's right. And that that takes into account our true up into coupling mechanisms. Okay, so pre-tax. Okay. Got it.

And so any discounts on the sales will run through that and then from a regulatory approval of regulatory mechanisms for that discount.

We will be able to have deferral treatment of the discount with a regulatory approval. So.

Travis Miller: The and then on the heartland and some of the other projects you've mentioned in terms of new technology, other hydrogen projects, is your thought process to put that through those things through the regulatory traditional regulatory process? Or you foresee potentially coming up with another financing structure, another corporate structure, something that would house some of those projects that are say unusual in a positive way. Obviously.

Because this is a benefit for our benefit of our customers.

To have that regulatory deferral mechanism is helpful. And then it will run through our cash from operations. So think income tax expense line item and then cash from operations.

Got it got it okay. Thank you very much.

Yeah.

Thank you Sir.

We'll now take questions from Paul Patterson, calling from Glen Roth Associates. Please go ahead.

Hey, good morning.

Travis Miller: Travis and Bob, good morning. Our proposed plan would certainly put the assets into regulatory rate base here in the upper Midwest. If you think about our proposals at the DOE, we've got green hydrogen off of wind and solar. We've got pink hydrogen off a nuclear plants. And the end uses are we're going to help partners create green fertilizer. So green ammonia to green Maria to first fertilizer, as well as some amount of blending into our gas plants and into our LDCs with some of the output. So the expectation is is they would go through a regular state process around that capital investments and those ultimate uses for the fuel. Okay, perfect.

Good morning, Paul.

So.

All of my questions have been answered except for.

Congratulations.

Just on Comanche.

So I'll be quick.

Can you hear me.

Yes.

<unk>.

Yeah.

Alright.

The Comanche litigation I'm, just was wondering with the jury award and everything.

Where we stand with that is that pretty much over and just if you could elaborate a little bit more on that.

Yes.

We will appeal, we feel that we have a strong legal challenge against Theres two items that they awarded it was related to lost power I mean, the jewelry upon no liability and all the other allegations, including no award for the diminishing or planned value. So now as Paul mentioned in the opening comments, we view it as a one time charge.

Travis Miller: And then real quick, Minnesota, any update on the timing of your peel process. And so in the right case, yeah, so sorry, thanks. We went through a reconsideration process in mid September. I think our peel plan would be early November. Okay, and then about how long does that take? What do you think sometime in the next year? Okay. Okay, very good. Appreciate it. Thank you. Thank you for that.

And we have a strong legal basis for challenging that.

$26 million of award.

Okay. So that was what that charge. That's reward was what was reflected in the third quarter results is that right. That's correct. Yeah, yeah. Okay. Okay, great. Thanks, so much.

Yep.

Thank you Ms Patterson.

Well now go to Ryan Levine from Citi. Please go ahead.

Good morning, Thanks for taking my questions.

Just a quick one what's your current thought on PTA zions in light of some of the tax transferability dynamics.

Travis Miller: Thank you, Mr. Miller.

Ross Fowler: We'll now go to Ross Fowler, colleague from UBS. Please go ahead. Your line is open, sir. Morning, Bob. Morning, Brian. How are you? Morning, Ross. So Brian, maybe one for you. Since you guys are sort of on the leading edge of a lot of this transfer ability. And feel free to take us offline.

And so you are having.

Hey, Ryan it's something we have nothing in our capital plans for our PPA buying the PPA buyouts as we think about it it's something that can come through the RFP processes.

As we think about it and we work closely with our developers to see if theres an opportunity the way I think about the opportunity that may come in if you can buy at a wind farm in Repower, that's where we've been successful with our PPA buyouts, but we think of it as incremental op very opportunistic.

Ross Fowler: It's not if you can't do it in seven minutes, but I'm just thinking through like, how do you think about the accounting? Do you record the non-month carry-outs at a fair value and then book a sort of gain a loss against that when you get the cash or there's no FASB guideline here, right? If I've got it right. So how are you walking through the accounting of these first ones that you're doing?

<unk>.

Call it opportunistic hard to predict opportunities and that's why we don't put anything in our capital plans, but we do work closely with our developers to see if there's opportunities from time to time.

Ross Fowler: And can we get clarification from FASB or the IRS? At some point about how the accounting should work? Certainly, you know, we were this would work closely with our audit firm on this and they ought to firm is working with the, you know, the big four is all working together. The way we look at it added it's an income tax model election for us. And so what that means is we're going to run it through the gains and losses through income tax expense on our income statement.

Okay, and then regarding the it looks like a $100 million yearly grant or wildfire mitigation.

Rewarded more recently.

As we go into allow fire mitigation plan and looked at more spending is there opportunities to receive additional grants are you assuming any federal capital to automate your plan.

Ross Fowler: And so any discounts on the sales will run through that. And then from a regulatory approval of regulatory mechanisms for that discount, where we'll be able to have the full treatment of the discount with our regulatory approval. So really, because this is a benefit for our customers, we'll have that regulatory, deferral mechanism is helpful. And then it will run through our cash from operations. So I think income tax expense line item and then cash from operations. Got it. Okay. Thank you very much. Thank you, sir.

Yeah, Hey, Brian It's Bob I don't know if theres more dollars in the <unk> bucket in the grid resiliency program.

Obviously, we're going to take these dollars and continued to do additional work those were discrete projects that were approved with the Dod and are earmarked across our various states.

Some of which is for wildfires some of it is in technology development.

So we're excited about partnering with to do.

About Ah.

Paul Patterson: We'll now take questions from Paul Patterson, calling from Glen Roster. Please go ahead. Hey, good morning. Morning, Paul. So all my questions have been answered except for congratulations, but just on Comanche, I saw that he was a, can you hear me? The Comanche litigation, just was wondering with the jury ward and everything where we stand with that, is that pretty much over and just if you could elaborate a little bit more on that.

60, 40 split in terms of their funding versus our capital and our pieces embedded within our forecast. So it's not going to be a big upside in terms of capital investment opportunities, but as we look to the long term on wildfire mitigation plan, we're going to work with all of our stakeholders and our various states, but the wildfire mitigation.

Some plant in Colorado should get filed.

Paul Patterson: Yeah, I mean, it's, we, we will appeal, we feel that we have a strong legal challenge against the, there's two items in a word of a related to loft power. I mean, the jury upon no liability and all the other allegations, including no award for diminishing the plan value. So now, as Paul mentioned in the opening comments, as a one time charge, and we have a strong legal basis for challenging that 26 million dollars of award. Okay, so that was what that charge with that jury ward was what was reflected in the third quarter result. Is that right? That's correct. Yeah. Okay. Okay, great. Thanks so much. Yep. Thank you, Mr. Patterson.

Late this year early next.

And look to be very proactive in how we handle system hardening, new technology to bring to bear to minimize the risk of ignition for our customers in the state obviously protecting their assets and their health is our priority.

Was hoping just taking a step back.

Of the four granted we've received really focusing on how can we help lower the cost of our customers, whether it's for new technology around specifically around the form form form long duration battery and not only do we get to $70 million in view refunding for that but we also got $20 million from our breakthrough energy ventures, so $90 million for those two pilots.

Really a great story.

And looking forward to working with our commissions on all the Doa funding that we received so far and certainly we will look for other opportunities out there.

I appreciate it thank you.

Thank you. Thank you Mr <unk>.

As we have no further audio questions I tuned for closing remarks to the call back over to CFO, Brian Van Abel.

Ryan Levine: When I go to Ryan Levine, calling from city, please go ahead. Good morning. I need to take them to questions. What's your current thought on PTA, by and in light of some of the texture and stability dynamics and some of the developments that you're having? Hey, Ryan, it's something we have nothing in our capital plans for a PPA by and the PPA by outs as we think about it. It's something that can come through the RFP processes as we think about it, and we work closely with our developers to see if there's an opportunity.

Thank you all for participating in our earnings call. This morning, please contact our Investor relations team with any follow up questions.

Thank you Sir.

Ladies and gentlemen that concludes today.

This conference we wish you a very good day and you may now disconnect.

Ryan Levine: The way I think about the opportunities may come in, if you can buy out a wind farm and repower it. That's where we've been successful with our PPA by outs. But we think it as an incremental, very opportunistic call an opportunistic hard to predict opportunities. And that's where we don't put anything in our capital plans. We do call it work closely as a developer to see if there's opportunities from time to time.

Ryan Levine: Okay, and then regarding the $100 million DOE grant for wildfire mitigation, it's been rewarded more recently. As you go into a lot of fire mitigation plan and look at more spending, is there opportunities to receive digital grants or assuming any federal capital to automate your plan? Yeah, Ryan, it's Bob. I don't know if there's more dollars in the DOE bucket in the grid resiliency program. You know, obviously we're going to take these dollars and continue to do additional work.

Ryan Levine: Those were discrete projects that were approved with the DOE and are earmarked across our various states, some of which is for wildfire, some of it is in technology development. So we're excited about partnering with the DOE about a 6040 split in terms of their funding versus our capital and our piece is embedded within our forecast. So it's not going to be a big upside in terms of capital investment opportunities, but as we look to the long term on wildfire mitigation plan, you know, we're going to work with all of our stakeholders in our various states, but the wildfire mitigation plan in Colorado should get filed.

Ryan Levine: I laid this year early next and looked to be very proactive in how we handle system hardening new technology to bring to pair to to minimize the risk of ignition for our customers in the state, obviously protecting their assets and their health as our priority. Yeah, I was having just, you know, taking a step back, you know, we're proud of the four grants that we've received really folks, you know, how can we help lower the cost of our customers, others for new technology around specifically on the form form.

Ryan Levine: Form-long duration battery and not only do we get $70 million in daily funding for that, but we also got $20 million from break through energy ventures, so $90 million for those two pilots. So really a great story and looking forward to working with our commissions on all the daily funding that we've received. So far, and certainly we will look for other opportunities out there. Appreciate it. Thank you.

Ryan Levine: Thank you, Mr. Living.

Brian Van Abel: As we have no further audio questions, I turn for close remarks to call back over to CFO Brian Van Nebel.

Operator: Thank you all for participating in our earnings call this morning. Please contact our investor relations team with any follow-up questions.

Operator: Thank you, what's your name? Ladies and gentlemen, back to today's conference. We will show you a very good day, and you may not discuss it.