Q3 2023 Evergy Inc Earnings Call

Speaker 1: Good day and thank you for standing by. Welcome to the third quarter, 2023, Evergie earnings conference call. At this time, all participants are in a list and only mode.

Good day and thank you for standing by welcome to the third quarter 2023 ever G earnings Conference call.

This time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need a press star one on your telephone.

Speaker 1: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised to the Ace Conference is being written.

We'll then hear an automated message advising you that your hand, just raised to withdraw your question. Please press star one again, please be advised today's conference is being recorded.

Speaker 1: I would now like to have the conference over to your speaker today, Peter Flynn. Please go ahead.

I'd now like to hand, the conference over to your Speaker today, Peter Flynn. Please go ahead.

Speaker 2: Thank you, Michelle. Good morning, everyone. Welcome to Evergie's third quarter, 2023, earnings conference call.

Thank you Michelle and good morning, everyone welcome to <unk> third quarter 2023 earnings Conference call.

Speaker 2: Our webcast slides and supplemental financial information are available on our investor relations website at investors.everg.com. Today's discussion will

Webcast slides and supplemental financial information are available on our Investor Relations website at investors <unk> Dot com.

Today's discussion will include forward looking information.

Speaker 2: Slide two in the Disclosures in our SEC Violins, contain a list of some of the factors that could cause future results to differ materially from our expectations.

Slide two and then.

And our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations.

Speaker 2: They also include additional information on our non- GAAP financial measure.

They also include additional information on our non-GAAP financial measures.

Speaker 2: Joining us on today's call are David Campbell, President and Chief Executive Officer, and Kirk Andrews, Executive Vice President and Chief Financial Officer.

Joining us on today's call are David Campbell, President and Chief Executive Officer, and Kirk Andrews, Executive Vice President and Chief Financial Officer.

Speaker 2: David will cover our third quarter highlights, providing update on our regulatory and legislative agenda, and discuss updates to our financial outlook.

David will cover our third quarter highlights provide an update on our regulatory and legislative agenda and discuss updates to our financial outlook.

Speaker 2: Curf will cover a more detail, the third quarter and year-to-date results, retail sales trends and our long-term guidance.

Kirk will cover in more detail the third quarter and year to date results retail sales trends and our long term guidance.

Speaker 2: Other members of management are with us and will be available during the question and answer portion of the call. I will now turn the call over to David.

Other members of management are with us and will be available during the question and answer portion of the call.

I will now turn the call over to David.

Speaker 3: Thanks Pete and good morning everyone. I'll begin on slide five.

Thanks, Pete and good morning, everyone I'll begin on slide five.

Speaker 3: I'm pleased to report that Evergie had a solid quarter as we delivered adjusted earnings of $1.88 per share compared to $2.00 per share years ago, a year ago.

I am pleased to report that <unk> had a solid quarter as we delivered adjusted earnings of $1 88 per share compared to $2 per share years ago, a year ago.

Speaker 3: The decrease was driven by milder weather and higher depreciation, amrization, and interest expense. Partially offset by low-ronum expenses.

The decrease was driven by milder weather and higher depreciation and amortization and interest expense.

Partially offset by lower O&M expenses.

Speaker 3: Higher, corporate-owned, life insurance proceeds are co-lead and tax item.

Higher corporate owned life insurance proceeds or Kobe and tax items.

Speaker 3: Results for the quarter were also impacted by over 9 million in excess owned and storm costs in July driven by a mid-month storm which brought straight line winds over 80 miles per hour over much of our service territory.

Results for the quarter were also impacted by over 9 million in excess O&M storm costs in July driven by a mid month storm, which brought straight line winds over 80 miles per hour over much of our service territory.

Speaker 3: Overall, I'm pleased to report that our reliability metrics helped strong for the quarter. Related to last year, average outage duration and frequency measured by Sadian Saefe have improved greater than 5% through September and remain favorable relative to our target.

Overall I am pleased to report that our reliability metrics held strong for the quarter relative to last year average outage duration and frequency measured by safety and safety have improved greater than 5% through September and remain favorable relative to our targets.

Speaker 3: This is a strong testament to the work of our distribution and transmission teams to restore power and keep the lights on, as well as investments that we have made in our system.

This is a strong testament to the work of our distribution and transmission teams to restore power and keep the lights on as well as the investments that we've made in our system.

Speaker 3: With these results year to date, we are narrowing our 2023 Adjusted DPS guidance range to $3.55 per share to $3.65 per

With these results year to date, we are narrowing our 2023 adjusted EPS guidance range to $3 55 per share to $3 65 per share.

Speaker 3: While we've offset the excess storm costs and delivered O&M savings, well beyond our initial guidance for the year, we have not been able to offset the full magnitude of headwinds elsewhere, most notably from higher interest expense, and the shift of persimmon creek from Missouri to Kansas.

While we've offset the excess storm costs and delivered O&M savings well beyond our initial guidance for the year, we have not been able to offset the full magnitude of headwinds elsewhere, most notably from higher interest expense and a shift of Persimmon Creek from Missouri to Kansas.

Speaker 3: Curve will discuss these drivers and net one time effects in more detail.

Kirk will discuss these drivers of net one time effects in more detail.

Speaker 3: Looking beyond 2023, we are establishing a new long-term adjusted EPS growth target of 4% to 6%. Off of the midpoint of our original 2023 adjusted EPS guidance range of $3.65.

Looking beyond 2023, we are establishing a new long term adjusted EPS growth target.

4% to 6% off of the midpoint of our original 2023, adjusted EPS guidance range.

A $3 65 per share.

Speaker 3: Since the completion of the Eversy Merger in 2018, we've delivered solid earnings growth, driven in large part by a highly successful own emirduction plan.

Since the completion of the energy merger in 2018, we've delivered solid earnings growth driven in large part by a highly successful O&M reduction plan.

Speaker 3: This program has enabled us to deliver significance costs saving to our customers, while at the same time increasing our pace of investment to modernize our grid and improve service to customers.

This program has enabled us to deliver significant cost savings to our customers while at the same time, increasing our pace of investment to modernize our grid and improve service to customers.

Speaker 3: Notwithstanding this progress, two factors in particular have negatively impacted our ability to meet the earnings growth target we previously laid out. First, challenging rate case outcomes in second, a higher interest rate environment. Video-change instances include information about the numbers misterinizza travel agency like

Notwithstanding this progress two factors in particular have negatively impacted our ability to meet the earnings growth target. We previously laid out first challenging rate case outcomes and second a higher interest rate environment.

Most significantly the Kansas rate cases fell short of expectations.

Speaker 3: In the context of a challenging position taken by the Kansas Corporation Commission staff on our proposed revenue requirement as well as a level of attention focused on our first rate cases since the merger that created Evergy, more than five years ago, we ultimately negotiated an anonymous settlement that is currently pending approval by the commission.

The context of a challenging position taken by the Kansas Corporation Commission staff on a proposed revenue requirement as well as the level of attention focused on our first rate cases since the merger that created averaging more than five years ago, we ultimately.

We negotiated a unanimous settlement that is currently pending approval by the commission however.

Speaker 3: However, the Kansas Ray case settlement negatively impacted our forward plan by approximately 15 cents a chair.

However, the Kansas rate case settlement negatively impacted our forward plan by approximately 15 cents per share.

Speaker 3: The dynamics in the rate case are a reflection of the singular focus that Kansas has had on improving regional rate competitors.

The dynamics in our rate case, a reflection of the singular focus.

Kansas has had on improving regional rate competitiveness and without question <unk> has delivered against that objective.

Speaker 3: And without question, Evergie has delivered against that object.

Speaker 3: Going forward, we know that state policy makers, state policy makers and stakeholders are excited by an unprecedented economic development pipeline.

Going forward, we know that state policymakers state policymakers and stakeholders are excited by an unprecedented economic development pipeline in Kansas.

Speaker 3: to help the state capitalize on this opportunity and enable beneficial investment. We have important work to do to ensure that Kansas offers a competitive cost of capital and the potential to earn a competitive return. Others.

To help the state capitalize on this opportunity and enable beneficial investment.

We have important work to do to ensure that Kansas offers a competitive cost of capital and the potential to earn a competitive return.

I will discuss that further in a moment.

Speaker 3: With respect to Missouri, the context is different. Following our successful motion for rehearing, the Missouri rate case outcomes in 2022 are more constructive with respect to the key economic.

With respect to Missouri. The context is different following our successful motion for rehearing, the Missouri rate case outcomes in 2022 or more constructive with respect to the key economic terms.

Speaker 3: The main challenges in the rate cases related to legacy issues that have now been resolved and put behind us, most notably relating to the 2018 Sibley Plan retirement. Higher interest.

Any challenges in the rate cases related to legacy issues that have now been resolved and put behind us most notably relating to the 2018 Sibley plant retirement.

Higher interest rates are also dragging our forward plan.

Speaker 3: Most significantly, they impact the refinancing that will occur in 2024 for 800 million of holding company debt. In addition, our plan includes some additional holding company debt by 2025, for which we are expecting to refinance our $500 million term.

Most significantly the impact of refinancing that will occur in 2024 for $800 million of holding company debt.

In addition, our plan includes some additional holding company debt by 2025 for which we are expecting to refinance our $500 million term loan.

Speaker 3: The revised long-term growth rate target of 4% to 6% extends through 2026.

The revised long term growth rate target of 4% to 6% extend through 2026 and reflects our trajectory. After the wave step function cost savings that we have delivered since the 2018 merger over.

Speaker 3: and reflects our trajectory as to the wave step function cost savings that we have delivered since the 2018 merger.

Speaker 3: Over the long term, our growth rate will reflect our rate-based growth and the related financing plan.

Over the long term our growth rate will reflect a rate base growth and the related financing plan.

Speaker 3: Our current rate-based growth level is expected to be 6% annually.

Our current rate base growth level is expected to be 6% annually.

Speaker 3: In addition to the projects currently included in our capital plan, we see a significant backlog of additional projects that will benefit customers across the T&D system and in the ongoing transition of our generations.

In addition to the projects currently included in our capital plan, we see a significant backlog of additional projects that will benefit customers across the T&D system and in the ongoing transition of our generation fleet.

Speaker 3: However, in Kansas in particular, we will shape our capital plan to reflect the policy objectives of our key decision makers and stakeholders.

However in Kansas in particular, we will shape, our capital plan to reflect the policy objectives of our key decision makers and stakeholders.

Speaker 3: We will be actively pursuing mechanisms that we think align with those objectives, and that will enhance our ability to partner in support of state priorities and earn a competitive return with time we recover.

We will be actively pursuing mechanisms that we think align with those objectives and that will enhance our ability to partner and support of state priorities and are in a competitive return with timely recovery.

Speaker 3: While a long-term target has changed, our culture will not. We remain laser focused on operational and financial execution for the items within our control and achieving constructive regulatory outcomes in a more regular cadence of rate case.

While our long term target has changed our culture will not we remain laser focused on operational and finance financial execution for the items within our control and achieving constructive regulatory outcomes and a more regular cadence of rate cases. After the long stay outs that were agreed to as part of the 2018 merger.

Speaker 3: After the long stayouts, there were agreed to as part of the 2018 merch.

Speaker 3: In both of our states, we expect to file rate cases roughly every two years, similar to the cadence of our peer utility.

And both of our states, we expect to file rate cases, roughly every two years similar to the cadence of our peer utilities.

Speaker 3: We know the importance of consistent execution and we recognize that today's update falls short of that.

We know the importance of consistent execution and we recognize that today's update fall short of that.

Speaker 3: However, we are confident in our ability to execute our strategic plan going forward at the revised target.

However, we are confident in our ability to execute our strategic plan going forward at the revised target.

Speaker 3: In addition, we see opportunities to work with our stakeholders to advance constructive regulation in both states.

In addition, we see opportunities to work with our stakeholders to advance constructive regulation in both states.

Speaker 3: As part of today's update, we also announced a 5% increase in our quarterly dividend to 64 and a quarter cents per share, or $2.57 per share on an annualized basis.

As part of today's update today's update we also announced a 5% increase in our quarterly dividend to <unk> 64, and a quarter cents per share or $2 57 per share on an annualized basis.

Speaker 3: This increases consistent with our updated growth outlook, as well as our 60 to 70% payout ratio target.

This increase is consistent with our updated growth outlook as well as our 60% to 70% payout ratio target.

Speaker 3: Combination of our annual growth outlook and our dividend yield positions, average to deliver a competitive total annual return of 9 to 11%.

Combination of our annual growth outlook, and our dividend yield positions <unk> to deliver a competitive total annual return of 9% to 11%.

Speaker 3: Moving to slide six, as I mentioned, we reach the unannier settlement and the pending Kansas rate kit.

Moving to slide six as I mentioned, we reached a unanimous settlement independent Kansas rate cases, if approved the resulting rate increases are far below those of regional peers in inflation.

Speaker 3: If approved that resulting rate increases are far below, those are regional peers in inflation.

Speaker 3: The settlement calls for a net revenue increase of $41.1 million across our Kansas jurisdictions, reflecting a $74 million increase at Kansas Central and a $32.9 million decrease at Kansas Metro.

The settlement calls for a net revenue increase of $41 1 million across our Kansas jurisdictions, reflecting a $74 million increase in Kansas Central and a $32 $9 million decrease at Kansas Metro.

Speaker 3: The settlement includes the addition of the Persimmon Creek Wind Farm and our 8% interest in Jeffrey Energy Center into Kansas Central's rate bid.

The settlement includes the addition of the Persimmon Creek Wind farm, and our 8% interest and Jeffrey Energy Center into Kansas Central's rate base.

Speaker 3: These additions provide low cost generation solutions to meet our customers growing demand and energy.

These additions provide low cost generation solutions to meet our customers' growing demand and energy needs.

Speaker 3: The settlement also provides final resolution to the rate discounts that were provided to customers through the CULTY program, which was first put in place nearly 40 years ago when the Wolf Creek nuclear plant came online.

The settlement also provides final resolution to the rate discounts that were provided to customers through the coli program, which was first put in place nearly 40 years ago. When the Wolf Creek nuclear plant came online.

Speaker 3: The settlement sets a $96.5 million rate credit to be amortized over three years, after which the program is removed entirely from the regulatory construct.

The settlement sets of $96 $5 million rate credit to be amortized over three years after which the program has removed entirely from the regulatory construct.

Speaker 3: With this settlement, our Cully program has provided tremendous savings for customers, $750 million in total, since the mid-1980.

With this settlement our coli program has provided tremendous savings for customers $750 million in total since the mid 19 eighties.

Speaker 3: While the settlement is silent on return on equity and capital structure, it specifies a 9.4% return on equity to be utilized for purposes of the transmission delivery charge filings required by legislation passed last year. We've included more.

While the settlement is silent on return on equity and capital structure. It specifies a nine 4% return on equity to be utilized for purposes of the transmission delivery charge filings required by legislation passed last year.

We've included includes more details on this in the appendix.

Speaker 3: If the settlement is approved, we expect the Kansas Corporation Commission will issue an order implementing new rates by December 21st.

If the settlement is approved we expect the Kansas Corporation Commission will issue an order implementing new rates by December 21.

Speaker 3: As shown on slide seven, when factoring in the rate case file, every G has been able to limit cumulative rate increases in Kansas to 1% since 2017.

As shown on slide seven when factoring in the rate case settlements <unk> has been able to limit cumulative rate increases in Kansas to 1% since 2017.

Speaker 3: The contrast rates increased in our regional peer states by 12.7% of the same time period.

In contrast rates increased and our regional peer states by 12, 7% over the same time period.

Speaker 3: Many of our peer utilities have rate cases pending or planned, which will further widen the gap.

Many of our peer utilities have rate cases, pending or planned which will further widen the gap.

Speaker 3: Our rate increase is even further below the rate of inflation since the month.

Rate increases even further below the rate of inflation since the merger.

Speaker 3: Advancing and improving regional rate competitiveness has been top of mind for many of our stakeholders in Kansas and were primary drivers for the 2018 merger. And that's exactly what we've delivered.

Advancing an improving regional break competitiveness has been top of mind for many of our stakeholders in Kansas and were primary drivers for the 2018 merger.

Thats exactly what we delivered.

Speaker 3: So on slide 8 we highlight the outlook for economic development in Kansas, which is as promising as it has been in decades.

On slide eight we highlight the outlook for economic development in Kansas, which is as promising as it has been in decades.

Speaker 3: As the largest utility in Kansas, Evergy plays a vital role in enabling growth. Over the past five years, the state's economic development pipeline has grown to previously unseen levels.

As the largest utility in Kansas, everybody plays a vital role in enabling growth over the past five years, the state's economic development pipeline has grown to previously unseen levels.

Speaker 3: In 2022, the best year for economic development in Kansas and Evergie's history. We helped to land 13 major projects representing more than $5.2 billion in capital investment, 6,000 new jobs with a Panasonic Electric Vehicle Battery Plan, a leading example.

In 2022, the best year for economic development in Kansas in <unk> history.

We hope to land 13 major projects, representing more than $5 2 billion capital investment <unk>.

New jobs with the Panasonic electric vehicle battery plant are.

Speaker 3: The future looks even brighter with more than $10 billion of active economic development projects, evaluating our Kansas service territories, representing 650 megawatts of potential addition.

A leading example.

The future looks even brighter with more than $10 billion of active economic development projects evaluating our Kansas service territories, representing 650 megawatts of potential additional demand.

Speaker 3: The state's recent track record and large economic development pipeline in part reflect the success of our focus on ensuring affordability and regional rate competitors.

The state's recent track record in large economic development pipeline in part reflect the success of our focus on ensuring affordability and regional rate competitiveness.

Speaker 3: To a highly successful cost savings program following the merger, we have delivered over $360 million in operating efficiencies and customer

Through a highly successful cost savings program. Following the merger we have delivered over $360 million.

And operating efficiencies and customer Bill credits in Kansas.

Speaker 3: I would like to thank the dedication and focus of the entire energy team and making this happen. It has taken a.

I would like to thank the dedication and focus of the entire <unk> team in making this happen.

It has taken a tremendous amount of sustained effort.

Speaker 3: At the same time, the team achieved record safety results last year, along with strong generation commercial fleet availability and ongoing reliability improvements in 2022.

At the same time the team achieved record safety results last year, along with strong generation commercial fleet availability and ongoing reliability improvements in 2023.

Speaker 3: The results the team has achieved have directly supported an advanced state priority.

The results. The team has achieved have directly supported an advanced state priorities.

Speaker 3: Where this success to continue, the grid will require significant capital investment to ensure sufficient capacity, competitive levels of reliability and resiliency, and a modern grid that delivers the flexibility and benefits that the customers increasingly demand.

With this success to continue the grid will require significant capital investment to ensure sufficient capacity competitive levels of reliability and resiliency and a modern grid that delivers the flexibility and benefits that are customers increasingly demand.

Speaker 3: This cannot be done without a regulatory environment that enables a flow of competitively priced capital.

This cannot be done without a regulatory environment that enables a flow of competitively priced capital Kansas.

Speaker 3: Cost of capital parameters, regulatory capital structure, and timely recovery investment are of crucial importance. When utility investors make capital allocation to-

Cost of capital parameters regulatory capital structure, and timely recovery investment are crucial importance when utility investors make capital allocation decisions.

Speaker 3: Investors have a choice where they direct capital and for averaging in Kansas to compete for that capital. Investors require debt and equity returns, commensurate with current market conditions, and competitive with peers, a clear and stable framework around regulatory capital structure to guide how we

Investors have a choice, where they direct capital and for averaging in Kansas to compete for that capital investors require debt and equity returns commensurate with current market conditions and competitive with peers are clear and stable framework around regulatory capital structure.

To guide, how we capitalize our utilities.

Speaker 3: an opportunity to earn the returns we are authorized and timely recovery of invested capital. Both now and in the future.

An opportunity to earn the returns we are authorized and timely recovery of invested capital.

Now and in the future.

Speaker 3: Without these elements, our investment proposition loses a track in this relative to our peer utility.

Without these elements our investment proposition loses attractiveness relative to our peer utilities.

Speaker 3: who benefit from more robust capital programs, more attractive authorized and realized returns, as well as more predictable and balanced regulatory.

The benefit from more robust capital programs more attractive authorized and realized returns as well as more predictable and balanced regulatory mechanisms.

Speaker 3: An imbalanced investment proposition challenges our ability to put the infrastructure in place to effectively partner and compete for economic development.

An imbalanced investment proposition challenges, our ability to put the infrastructure in place to effectively partner and compete for economic development.

Speaker 3: and by extension challenges the shared goal of Kansas stakeholders to attract new businesses and their jobs and investments.

And by extension challenges, a shared goal of Kansas stakeholders to attract new businesses and their jobs and investment.

Speaker 3: We see a bright future for Kansas and we are honored by the privilege to play a key role in that future.

We see a bright future for Kansas and we are honored by the privilege to play a key role in that future.

Speaker 3: To capitalize on the state's economic development potential, we believe that the focus must include constructive regulatory mechanisms for the investment necessary to enable that growth.

To capitalize on the state's economic development potential we believe that the focus must include constructive regulatory mechanisms for the investment necessary to enable that growth.

Speaker 3: This is a priority for average and going forward we will work with regulators and policy makers to ensure that Kansas is competitive with peer states and seizes on the unprecedented opportunity.

This is a priority for <unk> and going forward, we will work with regulators and policymakers to ensure that canvas is competitive with peer states and seasons on the unprecedented opportunities that are before us.

Speaker 3: Moving to slide nine, I'll provide an update on our regulatory and legislative priorities in both Kansas.

Moving to slide nine I'll provide an update on our regulatory and legislative priorities in both Kansas and Missouri.

Speaker 3: As I mentioned, we expect a final order on the settlement agreement filed in our Kansas rate cases by December 21st.

As I mentioned, we expect a final order on the settlement agreement filed in our Kansas rate cases by December 21.

Speaker 3: On September 1st, the commission conditionally approved a settlement.

On September one the commission conditionally approved a settlement.

Speaker 3: in our energy efficiency document, otherwise known as QIA.

In our energy efficiency docket, otherwise known as Kia.

Speaker 3: KEA was established to support the state's goal of promoting the implementation of cost-effective demand-side programs such as home energy assessments and rebates for energy-saving appliances.

<unk> was established to support the state's goal of promoting the implementation of cost effective demand side programs.

Such as home energy assessments and rebates for energy saving appliances.

We expect the first year programs will begin in 2024.

Speaker 3: On the policy front, our efforts will focus on cost of capital and capital structure, as well as recovery mechanisms supporting our grid and generation investment.

On the policy front, our efforts will focus on cost of capital and capital structure as well as recovery mechanisms supporting our grid and generation investments.

Speaker 3: One area of focus will be provisions applying to new dispatchable generators.

One area of focus will be provisions applying to new dispatch of generation.

Speaker 3: Pivoting to Missouri, the commission order approving our request to securitize extraordinary costs from winter storm Yuri was affirmed in the Missouri Court of Appeals in late September .

Hitting the Missouri Commission order approving our request to securitize extraordinary costs from Winter Storm Youri was affirmed in the Missouri Court of Appeals in late September.

Speaker 3: Missouri Office of Public Counselor OPC filed a motion for rehearing which was denied on October 24th. Is possible that OPC will further...

The Missouri office of public Counsel OTC filed.

<unk> filed a motion for rehearing, which was denied on October 24th.

It's possible that LTC will further appeal to the Missouri Supreme Court.

Speaker 3: Consistent with the appellate court's decision, we believe the Missouri Commission's decision in support of securitization is well supported by the record, and we anticipate resolution by the end of the year.

Assistant with the appellate Court's decision, we believe the Missouri Commission decision and support a securitization is well supported by the record and we anticipate resolution by the end of the year.

Speaker 3: As a reminder, we will complete the securitization financing after the appeal plays out, but incremental carrying costs incurred prior to approval will ultimately be recovered when we issue the debt.

As a reminder, we will complete the securitization financing after the appeal plays out but incremental carrying costs incurred prior to approval will ultimately be recovered when we issued the debt.

Speaker 3: Similar efforts in Kansas will to engage with our Missouri stakeholders regarding constructive regulatory mechanisms to support timely recovery and new dispatchable generation investments as these have been identified as important.

Similar to our efforts in Kansas work to engage with our Missouri stakeholders regarding constructive regulatory mechanisms to support timely recovery of new dispatch will generation investments.

As these have been identified as important new resources.

In our integrated resource plan.

Speaker 3: Last, we've begun the planning process from Missouri West Raid case, which we expect to file in February , 2024.

Last we began the planning process for Missouri West rate case, which we expect to file in February 2024.

Speaker 3: I'll conclude my remarks with slide 10, which highlights the core tenets of our strategy. Fortibility Relive-

I'll conclude my remarks, with slide 10, which highlights the core tenants of our strategy affordability reliability and sustainability.

Speaker 3: Keeping rates affordable for our customers has been and will continue to be at the forefront of our

Keeping rates affordable for our customers has been and will continue to be at the forefront of our thinking.

Speaker 3: Nailed by the merger ever he has now stayed more than $1 billion in operating costs over the past five years.

Nailed by the merger average is now saved more than $1 billion in operating costs over the past five years.

Speaker 3: These savings allow the company to offset steep inflationary pressures while also helping to attract and bolster economic development in our region.

These savings allow the company to offset steep inflationary pressures, while also helping to attract and bolster economic development in our region.

Speaker 3: We're pleased by our progress in improving regional rate competitiveness and keeping our rate trajectory well below the rate of inflation.

We're pleased by our progress in improving regional rate competitiveness, and keeping a rig trajectory well below the rate of inflation.

Speaker 3: affordability is and will always be an area of focus.

Affordability is and will always be an area of focus.

Speaker 3: ensuring reliability is also a core element of our strategy along with safety, grid resiliency and public safety. This includes a focus on metrics relating to customer service, the commercial availability of our fleet, safety, and all elements of our operations including infrastructure and rest.

Ensuring reliability is also a core element of our strategy along with safety safety grid resiliency and public safety. This includes a focus on metrics relating to customer service the commercial availability of our fleet safety and all elements of our operations, including infrastructure investment.

Speaker 3: With respect to sustainability, we continue to advance the responsible transition for our generation fleet with investments such as the Persimmon Creek Wind Farm.

With respect to sustainability, we continue to advance the responsible transition of our generation fleet with investments such as the Persimmon Creek Wind farm.

Speaker 3: We expect to add over 3 gigawatts of renewable resources through 2032 and 1.5 gigawatts of new hydrogen capable gas generation.

We expect to add over three gigawatts of renewable resources through 2032, and one five gigawatts of new hydrogen capable gas generation <unk>.

Speaker 3: advancing our decarbonization goals, ensuring day-to-day grid demands and customer needs are met.

Advancing our de carbonization goals Onshoring day to day grid demands and customer needs are met.

Speaker 3: Our mission is to empower better future, and our vision is to lead the responsible energy transition in our region, always with an eye on affordability and reliability as well as sustainability. I will-

Our mission is to empower better future and our vision is to lead the responsible energy transition in our region.

He is with an eye on affordability and reliability as well as sustainability.

I will now turn the call over to Kirk.

Speaker 4: Thanks, David and good morning everyone turning to slide 12. I'll start with a review of our results for the.

Thanks, David and good morning, everyone.

Turning to slide 12, I'll start with a review of our results for the quarter.

Speaker 4: For the third quarter of 2023, I would deliver adjusted earnings of $432.3 million or $1.88 per share compared to $460.8 million or $2 per share in the third quarter of 2022.

For the third quarter of 2023 average you delivered adjusted earnings of $432 $3 million or $1 88 per share compared to $468 million or $2 per share in the third quarter of 2022.

Speaker 4: As shown on the slide from left to right, the year-over-year decrease in third quarter earnings was driven by the following.

As shown on this slide from left to right the year over year decrease in third quarter earnings was driven by the following <unk>.

Speaker 4: First, a 5% decrease in cooling degree days as compared to last year drove a $0.07 decrease in EPS.

1st% to 5% decrease in cooling degree days as compared to last year drove a <unk> <unk> decrease in EPS.

Speaker 4: Compared to normal, whether for the third quarter was favorable by approximately 8 cents per

Compared to normal weather for the third quarter was favorable by approximately eight per share.

Speaker 4: Weather normalized demand declined by 0.8 percent, driven by lower industrial demand contributing to a one cent per share negative variance.

Weather normalized demand declined by 8% driven by lower industrial demand contributing to a <unk> <unk> per share negative variance.

Speaker 4: $11 million increase in adjusted O&M, or decrease rather, excuse me, in adjusted O&M reflecting continued execution on driving cost efficiencies drove a positive two-cent variance year over year.

$11 million increase in adjusted O&M or decrease rather excuse me, an adjusted O&M, reflecting continued execution on driving cost efficiencies drove a positive <unk> variance year over year.

Speaker 4: The net impact of higher depreciation and amortization was $0.07 for the quarter, which includes the offsetting impact of new retail rates.

The net impact of higher depreciation and amortization was seven for the quarter, which includes the offsetting impact of new retail rates.

Speaker 4: The combination of higher interest expense and lower AFUDC drove a $0.14 decrease with higher interest expense representing $0.12 of the variance.

The combination of higher interest expense and lower <unk> drove a 14% decrease with higher interest expense representing 12 the variance.

Speaker 4: Higher COLE proceeds drove a positive 7 cent variance year over year. And finally, other items, both positive and negative. Drove a net increase of 8 cents, primarily driven by tax items.

Higher coli proceeds drove a positive <unk> variance year over year, and finally other items, both positive and negative.

Drove a net increase of eight.

Primarily driven by tax items.

Speaker 4: I'll turn next to year-to-date results, which will find on slide 13.

I'll turn next to year to date results, which you'll find on slide 13.

Speaker 4: Through the nine months ended September 30th, adjusted earnings were $754.5 million or $3.27 per share, compared to $785.2 million or $3.41 per share for the same period last year.

Through the nine months ended September 30, adjusted earnings were $754 5 million or $3 27 per share compared to $785 2 million or $3 41 per share for the same period last year.

Speaker 4: Again, moving from left to right, our year over year, year to date EPS drivers include versus 2022 include the following.

Again, moving from left to right our euro year over year year to date EPS drivers include versus 2022 include the following when.

Speaker 4: When combined with mild weather in the first half of this year, our year-to-date results reflect an approximate 7% decrease in cooling degree days and a 13% decrease in heating degree days, driving a 23% decrease in DPS versus 2022.

When combined with mild weather in the first half of this year our year to date results reflect an approximate 7% decrease in cooling degree days and a 13% decrease in heating degree days driving a 20 <unk> decrease in EPS versus 2022.

Speaker 4: When compared to normal, whether it was approximately 4 cents favorable through the third quarter.

When compared to normal weather was approximately <unk> favorable through the third quarter.

Speaker 4: Weather normalized demand growth of 0.7% driven by the residential and commercial sectors contributed $0.08 per share.

Weather normalized demand growth of 7% driven by the residential and commercial sectors contributed <unk> <unk> per share.

Speaker 4: Higher transmission margin, resulting from our ongoing investments to enhance our transmission infrastructure, drove a 4 cent increase.

Higher transmission margins, resulting from our ongoing investments to enhance our transmission infrastructure <unk> increase.

Speaker 4: Decreased O&M drove a positive 31 cent variance year over year driven by continued execution on achieving cost efficiencies, which we have a further accelerated in 2023.

Decreased O&M drove a positive 31 variance year over year, driven by continued execution on achieving cost efficiencies, which we have a further accelerated in 2023.

Speaker 4: A 19 cent decrease from higher depreciation expense to the increased infrastructure investment, which is net of the offsetting impact of new retail rates.

A 19% decrease from higher depreciation expense due to increased infrastructure investment.

Which is net of the offsetting impact of new retail rates.

Speaker 4: $0.11 of year-to-date proceeds from company-owned life insurance or Koli.

<unk> <unk> of year to date proceeds from company owned life insurance or coli.

Speaker 4: Higher interest expense and lower AFEDC equity drove a $0.39 decrease with interest expense representing $0.34 of that variance. The increase in interest expense was driven by a number of factors, including rising rates.

Higher interest expense and lower AFDC equity drove a 39% decrease.

Interest expense.

<unk>, representing 34 of that variance the increase in interest expense was driven by a number of factors, including rising rates sure.

Speaker 4: a shift in Persimmon Creek to Kansas, a delay in securitization proceeds, and higher capital investment.

And <unk> Creek to Kansas, a delay in securitization proceeds and higher capital investment.

Speaker 4: We have accelerated our cost management initiatives as reflected in the year to date uplift and O&M savings. Combined with other actions to help offset the higher interest cost and associated lower AOQDC equity earnings. I'll discuss all of these items in further detail shortly.

We have accelerated our cost management initiatives as reflected in the year to date uplift in O&M savings combined with other actions to help offset the higher interest cost and associated lower <unk> equity earnings I will discuss all of these items in further detail shortly.

Speaker 4: Finally, other items with positive and negative drove a net increase of $0.13.

Finally, other items with positive and negative drove a net increase of 13.

Speaker 4: and was primarily driven by other income and income tax items.

And it was primarily driven by other income and income tax items.

Speaker 4: Turning to slide 14, I'll provide some further detail on the headwinds and tailwinds driving our year to date and expected full year 2023 results.

Turning to slide 14, I'll provide some further detail on the headwinds and tailwind driving our year to date and expected full year 2023 results.

Speaker 4: On the left side of the slide, as I mentioned previously, higher interest costs combined with lower AFUDC equity earnings is a primary driver of our year-to-date variance to plan.

Okay.

On the left side of the slide as I mentioned previously higher interest costs combined with lower <unk> equity earnings as a primary driver of our year to date variance to plan.

Speaker 4: Through the third quarter, we've seen a 39 cent impact from higher interest costs in lower AFUDC equity earnings versus 2022. And that's compared to a 21 cent increase in these costs for the full year reflected in our original guidance.

Through the third quarter.

<unk> 39 impact from higher interest costs and lower <unk> equity earnings.

<unk> 2022.

That's compared to a 21% increase in these costs for the full year reflected in our original guidance.

Speaker 4: This higher-than-expected variance is driven by a number of items. First, rising rates impacted the cost of our short-term borrowings, as well as our long-term debt issuances to date.

This higher than expected variance is driven by a number of items first rising rates impacted the cost of our short term borrowings as well as our long term debt issuances to date.

Speaker 4: Short term barons were only partially offset by AFUD.

Short term borrowings were only partially offset by AFDC due to the regulatory timing lag in short term interest cost recovery, which was exacerbated by the sharp increase in realized short term rates.

Speaker 4: due to the regulatory timing lag in short-term interest cost recovery, which was exacerbated by the sharp increase in realized short-term rates.

Speaker 4: Second, due to delay in the securitization of 2021 storm cost at Missouri West, we continue to carry 300 million in additional short-term debt through all of 2023.

Second due to the delay in the securitization of 2021 storm cost at Missouri, West We continue to carry $300 million in additional short term debt through all of 2023.

Speaker 4: Third, the decision to shift the Persimmon Creek wind farm from Missouri to Kansas required us to forego the offsetting benefits of PISA interest deferral available in Missouri and reflected in our original plan for 2023.

Third the decision to shift the Persimmon Creek wind farm from Missouri, Kansas required us to forgo the offsetting benefits of piece of interest deferral available in Missouri and reflected in our original plan for 2023.

Speaker 4: This also resulted in lower than forecasted AFUDC rates applied to our other Kansas Central investments, as we funded Persimmon Creek with short-term debt, while it was pending review during the Kansas rate cut.

This also resulted in lower than forecasted AFDC rates applied to our other Kansas Central investments as we funded Persimmon Creek with short term debt.

While it was pending review during the Kansas rate case.

Speaker 4: Finally, we expect to exceed our original capital investment plan for 2023 by approximately $200 million, leading to higher borrowing costs prior to recovery in our Missouri case, planned for 2024.

Finally, we expect to exceed our original capital investment plan for 2023 by approximately $200 million.

Leading to higher borrowing costs prior to recovery in our Missouri rate case plan for 2024.

Speaker 4: All of these factors also led to bouncy changes versus plan which drove lower AFUDC equity earnings.

All of these factors also led to balance sheet changes versus plan, which drove lower AFDC equity earnings. Our plan beyond 2020, <unk> has consistently anticipated this shift to lower AFDC equity earnings and higher AFDC debt recovery, which manifested earlier than expected into 2023.

Speaker 4: Our plan beyond 2023 has consistently anticipated this shift to lower AFUDC equity earnings and higher AFUDC debt recovery, which manifested earlier than expected into 2023.

Speaker 4: To offset this impact this year, as shown on the right side of the slide, we've successfully accelerated our cost management efforts across the business, leading to a 31 cent EPS benefit year to date, as compared to our original expectation of 20 cents, full year improvement in the original plan.

To offset this impact this year as shown on the right side of the slide we have successfully accelerated our cost management efforts across the business leading to a 31 EPS benefit year to date as compared to our original expectation of 'twenty full year improvement in the original plan.

Speaker 4: In addition, we've supplemented the impact of these O&M savings by capturing higher than expected margins on our 8% stake in the Jeffrey Energy Center coal plant, driven by a proactive hedging program put in place to optimize financial performance prior to transitioning this 8% stake in Jeffrey to rate base, beginning in 2024, as a result of the unanimous settlement in Kansas.

In addition, we supplemented the impact of these O&M savings by capturing higher than expected margins on our 8% stake in the Jeffrey Energy Center coal plan driven by our proactive hedging program put in place to optimize financial performance prior to transitioning this 8% stake in Jeffrey to rate base beginning in 2024.

As a result of the unanimous settlement in Kansas.

Speaker 4: Finally, we've realized approximately two cents of higher coal-eprocedede year-to-date versus our full plan for 2023.

Finally, we have realized approximately <unk> <unk> of higher coli proceeds year to date versus our full plan for 2023.

Speaker 4: Overall, while we expect to offset higher interest costs with higher O&M savings, improved performance at Jeffrey and higher Cully proceeds, the one time item which remains and this is a net driver of the five cent reduction our midpoint 2023 guidance is the Persemin Creek Wind Project.

Overall, while we expect to offset higher interest costs with higher O&M savings improved performance at Jeffrey and higher coli proceeds the onetime item, which remains and this is a net driver of the five set reduction or a midpoint of 2023 guidance is the Persimmon Creek wind project. Our original plan reflected the benefits of Pisa in Missouri.

Speaker 4: Our original plan reflected the benefits of peace and Missouri and shifting this asset to Kansas from a five cent reduction in earnings versus plan this year. However, as a result of the unanimous settlement for Simeon Creek will be part of the Kansas Central rates beginning in 2024 and the five cent impact the plan is limited to 2020.

And shifting this asset to Kansas drove a 5% reduction in earnings versus plan. This year. However, as a result of the unanimous settlement Persimmon Creek will be part of the Kansas Central rates beginning in 2024, and the <unk> impact of plan is limited to 2023.

Speaker 4: Turning to slide 15, I'll provide a brief update on our recent sales trend.

Turning to slide 15, I'll provide a brief update on our recent sales trends.

Speaker 4: whether normalized demand increase 0.7% year to date is compared to last year, driven by strong residential and commercial growth.

Weather normalized demand increase.

7% year to date as compared to last year, driven by strong residential and commercial growth.

Speaker 4: For the third quarter, we experienced a decline of 0.8%, which was primarily due to lower industrial demand, driven by two refining costs.

For the third quarter, we experienced a decline of <unk>, 8%, which was primarily due to lower industrial demand driven by to refining customers.

Speaker 4: Demand growth continues to be supported by a strong local labor market with Kansas and Kansas City Metro area unemployment rate of 2.8%, which continue to remain below the national average of 3.8%. And we expect to see industrial demand recovery as we move into 2024.

Demand growth continues to be supported by strong local labor market with Kansas, and Kansas City Metro area unemployment rates of two 8%.

Which continue to remain below the national average of three 8%.

And we expect to see industrial demand recovery as we move into 2024.

Speaker 4: Finally, on slide 16, I'll wrap up with an overview of our long-term financial

Finally on slide 16, I'll wrap up with an overview of our long term financial expectations.

Speaker 4: For 2023, we're narrowing our adjusted EPS guidance range to 355 to 365, as although we are delivering additional O&M savings beyond our initial guidance, we do not expect to fully offset the headwinds of higher interest and the impact of Persimmon Creek's shift from Missouri to Kansas.

For 2023 were narrowing our adjusted EPS guidance range to $3 55 to 365 as although we are delivering additional O&M savings beyond our initial guidance, we do not expect to fully offset the headwinds of higher interest and the impact of persimmon creek's shift from Missouri to Kansas.

Speaker 4: As David mentioned earlier, we revised our new long-term adjusted EPS growth target of 4 to 6% through 2026, using a baseline of the original 2023 adjusted EPS guidance midpoint of $3.65.

As David mentioned earlier, we've revised our new long term adjusted EPS growth target of 4% to 6% through 2026, using a baseline of the original 2023, adjusted EPS guidance midpoint of $3 65.

Speaker 4: Reflecting the impacts of higher interest rate environment regulatory outcomes and are expected rate-based growth of 6%.

Reflecting the impact of higher interest rate environment regulatory outcomes, and our expected rate base growth of 6%.

Speaker 4: We'll provide a 2024 adjusted EPS guidance on our fourth quarter call.

We will provide a 2024 adjusted EPS guidance on our fourth quarter call.

Speaker 4: Today we've also announced a 5% increase in our dividend, consistent with the midpoint of our revised growth update, and in line with our target 60 to 70% dividend payout ratio.

Today, We've also announced a 5% increase in our dividend consistent with the midpoint of our revised growth update and in line with our target, 60% to 70% dividend payout ratio.

Speaker 4: We also expect to provide an updated capital plan for 2024 through to 2028 on our 4th quarter earnings call, which will continue to be driven by new infrastructure investment, improve customer service and enhance reliability and resiliency as we transition our generation fleet while continuing to advance regional rate competitiveness and meet the evolving needs of our customers and our communities. And with that.

We also expect to provide an updated capital plan for 2024 through 2028 on.

On our fourth quarter earnings call, which will continue to be driven by new infrastructure investment to improve customer service and enhance reliability and resiliency as we transition our generation fleet, while continuing to advance regional rate competitiveness and meet the evolving needs of our customers and our communities.

That will open the call up for questions.

Speaker 1: Thank you. As a reminder to ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile our Q&A roster.

Thank you and as a reminder to ask a question at this time. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile our Q&A roster.

Speaker 1: and our first question is going to come from the line of Char Poriza with Guggenheim Partners. Your line is open, please go ahead.

Okay.

And our first question is going to come from the line of sharp <unk> with Guggenheim Partners. Your line is open. Please go ahead.

Hey, guys good morning.

Speaker 5: Morning, Charles. Morning, morning. Can we just maybe unpack the components of the growth rate guide? Obviously, you know, interest expense is a component of that. What are you now assuming there as we think about the twenty three, twenty six CAGR and that five percent mid.

Morning.

Good morning morning.

Can we just maybe unpack the components of the growth rate guide obviously interest expense is a component of that what are you now assuming there as we think about the $23 2006, CAGR in that 5% midpoint and overall I guess, what are you assuming for lag or any of the remaining levers like O&M just trying to get a sense on how.

Speaker 5: And overall, I guess, what are you assuming for lag or any of the remaining levers like ONM? Just trying to get a sense on how much contingencies you've built in there at this point. Thanks. Jordan centiel. Yeah.

Contingencies, you've built in there at this point.

Alright, thanks for the question.

Speaker 3: As we set the revised growth rate target, we did factor in

So.

As we set the revised growth rate target, we did factor in.

Speaker 3: Our view of where the current macro conditions are, so certainly the interest rate environment reflects the current forward curve, and it reflects the current regulatory mechanisms that are in place in our state.

Our view of where the current macro conditions are so certainly the interest rate environment reflects the current forward curve.

And it reflects the current regulatory mechanisms that are in place in our states.

Speaker 3: and it reflects our current rate-based outlook and it reflects the ONM reduction plan that we previously described to investors.

It reflects our current rate base outlook and it reflects the O&M reduction plan that we previously described to investors.

Speaker 3: We're, I'm very pleased with the work of all of our employees in accelerating some of those cost savings to offset some of the headwinds in 2023. But you'll recall that we've announced an ongoing O&M savings trajectory through 2025. I would characterize our actions this year as really an acceleration. And where we're tracking is not all the way to where we expect to be. We've gotten a long way towards it. So we, basically holding to the prior O&M targets that we outlined separately, you'll see in our, going back to our investor day, I think we teed up 900.

I'm very pleased with the work of all of our employees and accelerating some of those cost savings to offset some headwinds in 2023, but you'll recall that we've announced.

Ongoing O&M savings trajectory through 2025, I would characterize our actions. This year is really an acceleration.

And what we're tracking is not all the way to where we expect to be we've gone a long way towards that so we basically holding to that prior O&M targets that we outlined separately youll see in our going back to our Investor Day, I think we teed up $960 million.

Speaker 3: of run rate O&M in 2025. Last year was more like a billion 70. Obviously we reduced that significantly already year today. So I would describe our go for plan as reflecting the disappointing results of the Kansas rate case, the macro environment that we see and the headwinds on interest rates, but then the ongoing execution of our plan. So I was disappointed.

Run rate O&M in 2025 last year was more like 1 billion 70, obviously, we've reduced that significantly already year to date.

So I would describe our go forward plan is reflecting.

Disappointing results at the Kansas rate case.

The macro environment that we see in the headwinds on interest rates, but then the ongoing execution of our plan. So.

We're obviously disappointed.

Speaker 6: in not having execution paths that matched, excuse me, our prior targets, but we feel good about the new plan that we've outlined. And obviously, as we emphasize, we do see opportunities to work with our regulators for ongoing changes to the regulatory mechanisms that we think will be in support of the objectives of our policymakers and stakeholders in our states. Got it. And still no equity through.

And not having execution path that matched excuse me our prior targets.

While we feel good about the new plan that we've outlined and obviously as we emphasize we do see opportunities to work with our regulators for ongoing changes to the regulatory mechanisms that we think will be in support of the objectives.

Of our policymakers and stakeholders in our states.

Got it and still no equity through 'twenty six correct.

Speaker 6: Yeah, we're describing charters at our current capital plan. We don't anticipate need for equity through 2026, as Kirk described, will update our capital plan on the year end call while we see significant additional opportunities for beneficial investments, investments that will benefit our customers and our grid. We'll shape the capital plan based on the, you know, to reflect the...

Yes, I would describe it charged at the at our current capital plan, we don't anticipate need for equity through 2026 as Kirt described.

We will update our capital plan on the year end call, while we see significant additional opportunities for beneficial investments investments that will benefit our customers and our grid.

We will shape the capital plan based on the.

Speaker 6: objectives of our policy makers and if we stick with the current capital plan we don't have to pay the weed seed equity to 2026 if we change it then obviously we'll update the financing plan.

To reflect the.

Objectives of our policymakers and if we stick with the current capital plan, we don't anticipate that we'd see equity into 2026, if we change it and obviously, we will update the financing climate the same time.

Speaker 5: got it and then just like the other you mentioned your prepare in the slides that you are you know quote unquote working with can't just regulators and policy makers on mechanisms can you just unpack that a little more what does that mean is it relates to capital flows for instance between the two jurisdictions and spent thanks guys

Got it and then just lastly, Dave I know you mentioned in your prepared in the slides that you are quote unquote, working with Kansas regulators and policymakers on mechanisms can you just unpack that a little more what does that mean as it relates to capital flows for instance between the two jurisdictions and spend thanks guys.

Speaker 6: Sure, so I described it at two levels, Char. First on what it means in terms of what we're pursuing. So I do think that the

Sure. So I would describe it at two levels.

First on what it means in terms of what we're pursuing so I do think that the.

Speaker 6: There are several items coming out of the Rake case so we've identified as priorities and we think align with the opportunities that are in front of us in both Kansas and Missouri to support economic development.

There are several items coming out of the rate case that we've identified as priorities when we think align with.

The opportunities that are in front of us in both Kansas and Missouri to support economic development.

Speaker 6: On that list include a clear and stable framework for capital structure. It is common for our peer utilities for utility holding companies to have responsible levels of hotel debt. We think that the dialogue through testimony in the Kansas rate case will give us the opportunity to advance that discussion on going forward. So capital structure is an important piece.

On that list include a clear and stable framework for capital structure.

It is common.

For our peer utilities for utility holding companies to have responsible levels of holdco debt, we think that the dialogue through testimony in the Kansas rate case will give us the opportunity to advance that discussion going forward. So capital structure is an important piece.

Speaker 6: A second piece is the opportunity to earn returns that are competitive with and comment, commenture it with marking additions and competitive of peers. And the third is around the timely recovery of capital. So those will be areas that will be focused on. Specific things we'll likely look at include, we have,

Second piece is the opportunity to earn our returns that are.

Competitive with and commit commensurate with market conditions and competitive with peers.

And the third is around the timely recovery of capital. So those will be areas that we'll be focused on specific things will likely look at include.

We have.

Speaker 6: Plans to build natural gas generation for reliable hydrogen, capable dispatchable generation in both states. So mechanisms for that build out will be an area of focus.

Plans to build natural gas generation to a reliable hydrogen capable dispatch will generation in both states mechanisms to support that build out will be an area of focus.

Speaker 6: And then on your question about allocation to capital, obviously we will shape our capital plan always to meet the requirements of our jurisdictions for reliability and to meet our customer needs, but the incremental opportunities to invest will benefit customers, it will position us to capitalize on economic development opportunities. You know, we'll shape that capital plan based on the mechanisms and policies that we see in the respective states.

And then on your question about allocation of capital, obviously, we will shape, our capital plan always to meet the requirements of our jurisdictions for reliability and to meet our customer needs, but the incremental opportunities to invest but I think will benefit customers that will position us to capitalize on economic development opportunities will shape that capital plan based on that.

Mechanisms and policies that we see in the respective states.

Speaker 5: Okay, perfect. Thank you guys. See you in a couple days. Appreciate it.

Perfect. Thank you guys <unk> seen a couple of days I appreciate it thank.

Speaker 1: Thank you and one moment as we move on to our next question.

Thanks Chuck.

Thank you and one moment as we move on to our next question.

Speaker 1: And our next question is going to come from the line of Nicholas Campanella with Barclays. Your line is open, please go ahead.

And our next question is going to come from the line of Nicholas Campanella with Barclays. Your line is open. Please go ahead.

Speaker 7: Hey, good morning. Thanks for thanks for taking my questions. I guess, just to follow up on on some questions, like, I think, as you kind of.

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

I guess just to follow up on <unk> question, I think as you kind of.

Speaker 8: Look at the glide path through 2026 that implies something linear, but just how should we think about 2024? Can you kind of grow within this 4 to 6% range into 2024 as we kind of handicap what your earnings would be there? And is this Kager linear or is it more lumpy? Thank you.

Look at the glide path through 2026, it implies something linear, but just how should we think about 2024.

Can you kind of grow.

Within this 4% to 6% range into 2024, as we kind of handicap.

When your earnings would be there and is this CAGR linear or is it more lumpy.

Speaker 6: Next, so obviously we'll give our 2024 guidance on the year end call, so we're not giving any guidance at this time, but with the, what we've described previously and with the mechanisms we have now, we don't, we'll have the impact of the Kansas rate case, of course, in fact in 2024.

So obviously, we'll give our 2020 for guidance.

On the year end call. So we're not giving annual guidance at this time, but with the <unk>.

What we've described previously and with the mechanisms we have now we don't.

Yes, we'll have the impacts of the Kansas rate case of course impacting 2024.

Speaker 6: We mentioned that we're planning to file a rate case next year in Missouri West. That will be the rate case over pursue that will impact rates in 2025. So you can expect in the cadence that I described roughly over two years or active regulatory calendar in calendar year 2025 and in fact 2026.

We mentioned that we're planning to file a rate case next year in Missouri West that will be the rate case, we will pursue that will impact rates in 2025. So.

You can expect in a cadence that I described roughly over two years or active regulatory calendar in calendar year 2025, <unk> <unk> thousand 26.

Speaker 3: So if the lumpier outcomes are often related to rate case outcomes, you know, we only have one of our jurisdictions.

So if the lumpier outcomes are often.

Related to rate case outcomes are we only have one of our jurisdictions.

Going through a rate case next year.

Speaker 6: So we obviously know the importance of stable execution within the growth rate range and we'll give more details in that 2024 guy in the year.

So we obviously know the importance of stable execution within the growth rate range and we'll give more details on that in 2024 guide on the year end call.

Speaker 8: Okay, great. And then, you know, I acknowledge that you're kind of taking down the growth rate today, and you have had some headwinds in Kansas. You know, the mechanisms obviously are as constructive to deploy capital, but...

Okay, Great and then.

I acknowledge that you are kind of taken down the growth rate today and you have had some headwinds.

In Kansas.

The mechanisms, obviously arent as constructive to deploy capital but.

Speaker 8: on this new plan, can you still do 6% rate-based growth like prior plans, or is that subject to change as well? I'm just acknowledging the comments. I think Kirk said there's been a little bit of an acceleration even in 23, and you continue to highlight a lot of economic development. Thank you.

On this new plan can you still do 6% rate base growth.

Mike prior plans or is that subject to change as well I'm just acknowledging the comments I think Mark said, there's been a little bit of an acceleration even in 'twenty three.

You continue to highlight a lot of economic development. Thank you.

Speaker 6: And it's a good question. I, I do think that we, you know, our target grocery range as we described for rate base, we expect it will be in the 6% annual range that is reflected in the capital plan. That we published last year, and we always update that on the year end call. It's part of a process. We actually established in our jurisdictions following the merger. So we'll stick to that timeline.

Hey, Thanks. Good question I do think that we our target growth rate range that we described for rate base. We expect it will be in the 6% annual range that is reflected in the capital plan.

That we published last year, and we always update that of a year end call. It's part of our process, we actually established in our jurisdictions. Following the merger so I'll stick to that timeline.

Speaker 6: We see significant incremental potential investment opportunities.

We see significant incremental potential investment opportunities.

Speaker 6: That will evaluate, but we will evaluate those in the context of what makes the most sense in terms of the policies and mechanisms that are in place in our states and will allocate capital.

That we'll evaluate but we will evaluate those in the context of what makes the most sense in terms of the policies and mechanisms that are in place in our states and we will allocate capital accordingly.

Speaker 6: So we anticipate and we've shaped our plan to reflect.

So are we anticipate and we have shaped our plan to reflect that estimated rate base growth range, but whether we see I know a lot of our peer utilities have announcing incremental investment of capital while we see similar opportunity set we're going to save our capital plan based on the returns that we see as of now the mechanisms are a little more concern.

Speaker 6: that estimated rate-based growth range, but whether we see, I know a lot of our periodilities have been announcing incremental investment in capital, but we see...

Speaker 6: Similar opportunity set, we're going to shape our capital plan based on the returns of weeks.

Speaker 6: As of now, the mechanisms are a little more constructive in Missouri in terms of reducing regulatory lag, so helping you earn your realized return. But we're gonna be working on Kansas to see if they're...

<unk> in Missouri in terms of.

Reducing regulatory lag so helping you earn your realized return, but we're going to be working hard in Kansas to see if there.

Speaker 6: Policy that reflect the objectives of our stakeholders as well as ours that we can move forward on and I think can help to inform the capital plan. So, Net, we'll evaluate the capital plan by a year and we feel good about that 6% annual rate base growth with incremental opportunities possible, but we'll be looking pretty hard at capital allocation in light of what we have heard and what we've seen in our jurisdictions around what they want to have and what they'd like for us to deliver.

Policy that reflect.

The objectives of our stakeholders as well as ours that we can move forward on that I think can help to inform our capital plan. So net.

We will evaluate the capital planning by year end, we feel good about that 6% annual rate base growth with incremental opportunities possible, but we will be looking pretty hard at capital allocation in light of what we have heard and what we've seen in our in our jurisdictions around what they want to have and what they would like for us to deliver for them.

Speaker 8: One one more follow up for me just to triple check this outlook of basically assumes the settlement. And just if anything gets tweaked on December 20 and how should we think about that.

One more follow up for me just to Triple check this outlook.

<unk> assumed the settlement.

And if anything it tweak on December 20th how should we think about that.

Speaker 6: Well, we'll have to update you in the year in college. You need an Animus settlement so you can never predict.

Well have to update you on the year end call was a unanimous settlement.

So you can never predict.

Speaker 6: We certainly it's dependent on approval by the commission, but we're confident in the process. Given the, in the hearing around the settlement was all the constructed dialogue, but with the United settlement, this.

We certainly it's dependent on approval by the commission, but we're confident in the process given the hearing around the settlement involved a constructive dialogue with the United settlement.

Speaker 6: this plan does reflect an anticipation that it will be approved. If it changes, then we'll obviously have to adjust accordingly if it does.

This plan does reflect an anticipation that it will be approved if it changes then we'll obviously have to adjust accordingly, if it does.

Speaker 6: But we think that the fact it was unanimous settlement and is really delivering on the improvements of regional rate competitiveness that has been such a focus in Kansas, we think that it's.

But we think that the.

In fact, it was unanimous settlement and is really delivering on improvements of regional rate competitiveness that had been such a focus in Kansas, We think that it's.

On a good trajectory for approval.

Thank you.

Speaker 1: Thank you. Thank you and one moment if we move on to our next question.

Thank you.

And one moment as we move on to our next question.

Speaker 1: And our next question is going to come from the line of Julianne Domond-Smith with Bank of America. Your line is open, please go ahead.

And our next question is going to come from the line of Julien Dumoulin Smith with Bank of America. Your line is open. Please go ahead.

Speaker 8: Hey guys, good morning. This is Darius on for Julian. Thank you for taking the question. Maybe just starting with the updated EPS growth target. Can you comment a little bit about when you roll forward your capital plan in February , that'll be out through 28 and then

Hey, guys. Good morning. This is various on for Julien. Thank you for taking the question.

Maybe just starting with the updated <unk>.

Growth target can you comment a little bit about when you roll forward. Your capital plan in February that'll be out through 28, and then the EPS target is through 2006, so there seems a little bit of a mismatch there can you comment on.

Speaker 6: The EPS target is through 26 so there seems a little bit of a mismatch there. Can you comment on maybe do you have somewhat limited visibility into what it looks like beyond 2026 or perhaps why that to your gap there.

Maybe do you have somewhat limited visibility into what it looks like beyond 2026, or perhaps why that two year gap there.

Speaker 6: Your seats been our historical practice as well. We typically have a three year forward outlook. I don't know, there's any magic to it. I think you can, you know, based on where we are today, our long-term growth rate target is four to six percent. We've extended through 26, but...

Yes, so its been our historical practice as well, we typically have a three year forward outlook.

I don't know, there's any magic to it maybe you can based on where we are today, our long term growth rate target is 4% to 6% believe extended through 'twenty six but.

Speaker 6: We certainly, that's really just a matter of practice, we typically have that three-year outlook.

We certainly that's really just a matter of practice, we typically have that three year outlook.

Speaker 9: Appreciate that. Next one is you made comments about advancing the discussion on some of the mechanisms in Kansas, including the capital structure. Just curious if you could maybe speak about that in a little bit more detail. What might be the venue perhaps for advancing that discussion prospectively? Would that be in a future rate case filing or perhaps another forum?

Okay I appreciate that.

Next one is.

<unk> made comments about advancing the discussion on some of the mechanisms in Kansas, including the capital structure. Just curious if you could maybe speak about that in a little bit more detail what might be the venue, perhaps for advancing that discussion prospectively would that be in our future.

Our rate case filing or perhaps another forum.

Speaker 6: Yeah, there's several different paths that we can go down on that. So it'll be an especially once the right case is approved, we'll give more visibility into it, but there's being worked that directly with regulators. You can work that with other stakeholders. What I really emphasize is that

Yes, there are several different paths that we can go down on that so it'll be an especially once the rate cases approval.

Youll get more visibility into it but theres.

You can work that directly with regulators you can work out with other.

Stakeholders, what I really emphasizes that.

Speaker 6: I think the rate case and the testimony that was included on the capital structure topic and there was voluminous testimony on it.

I think the rate case and the <unk>.

Testimony that was included on our capital structure topic, and there was a aluminous testimony on it.

Speaker 6: Sets the stage for a good discussion, particularly if you look at staff direct testimony and our rebuttal testimony.

Sets the stage for a good discussion.

Particularly if you look at staff direct testimony in our rebuttal testimony.

Speaker 6: We've communicated the importance of competitive equity returns. We've communicated good evidence to show how it is common and almost universal for utility holding companies to have responsible levels of holdco leverage.

We've communicated the importance of competitive equity returns.

We've communicated them good evidence to show how it is common in almost universal for utility holding companies to have.

Responsible levels of Holdco leverage.

Speaker 6: And it's also common at the same time to have utility-only capital structures used in regulated rate making. So, that's the dialogue that we're going to advance and, you know, a couple different mechanisms that we'll evaluate as we advance that discussion. As I mentioned, we've got a rate case in Missouri West next year. We have a little time before our next planned Kansas rate case. You know, that would be a little bit dynamic in the final decisions around that, but that will give us some time to advance the dialogue.

And it's also common at the same time have you.

Have utility only capital structures used in regulated ratemaking. So that's the dialogue that we're going to advance and a couple of different mechanisms that.

We will evaluate as we.

As we've advanced that discussion as I mentioned, we've got a rate case.

Missouri West next year.

Have a little time before our next planned Kansas rate case.

It would be a little bit dynamic in the final decisions around that but that.

That will give us some time to advance the dollar.

Speaker 9: Okay, great. Thank you. And if I could sneak in one more just quickly, your prior Missouri rate cycle you filed both at Metro and Missouri West seems like it's just Missouri West this time around. Any, any reason for for changing that this time?

Okay, great. Thank you and if I could sneak in one more just quickly.

Prior Missouri.

Rate cycle, you've filed both at Metro in Missouri West.

It seems like it's just Missouri West this time around any.

Any reason for changing that at this time.

Speaker 6: It was timely for Missouri West to file a rate case that we're planning to do it for next year. We'll certainly for all of our jurisdictions. We'll look at the right cadence to do it. We had the long stay outs coming out of the merger. I don't think you're going to see those in the four to five year stay outs, but it's timely for Missouri West rate case. So we're filing one next year and not currently not planned for Missouri Metro.

It was timely for Missouri West to file a rate case that we're planning to do it for next year will certainly for all of our jurisdictions. We will look at the right cadence to do it we had the long stay outs coming out of the merger I don't think youre going to see dose.

And in that four to five year stay out, but it's timely firm at very worst rate case or filing next year.

Not currently not planned for Missouri Metro at this time.

Next year.

Speaker 9: Okay, thank you very much. Looking forward to catching up at the EI. See you.

Okay. Thank you very much I'm looking forward to catching up at <unk>.

Thanks Darius.

Speaker 1: Thank you and one moment as we move on to our next question.

Thank you and one moment as we move on to our next question.

Speaker 10: And our next question will come from the line of Steve Fleschman with Wolf Research. Your line is open. Please go ahead. Yeah, good morning. Thanks.

And our next question will come from the line of Steve Fleishman with Wolfe Research. Your line is open. Please go ahead.

Yes, hi, good morning. Thanks.

So just on the.

I guess first on the.

Speaker 10: the kind of interest rate impacts. So you're basically in the new plan assuming kind of the current forward curves as they are.

The kind of interest rate impacts so you're basically in the new plan, assuming kind of the current forward curves as they are.

Speaker 10: Yes, that is correct. That is correct. We have marked our expectations for ongoing interest expense to where the curves are to that. That's right. Okay. And you mentioned the Kansas rate case being kind of a 15 cent difference versus the prior plan. Is most of the other difference, just the

Yes, Steve It's Kirk is that fair that is correct.

Expectations for ongoing interest expense to where the curves are today that's right.

And you mentioned, the Kansas rate case, being kind of a 15 cent difference versus the prior plan as most of the other.

Difference the just the interest rate move.

Speaker 4: Yeah, in terms of the impact of the adjusted outlook on EPS informed by that growth rate, that's right, yes.

Yes in terms of the impact to the adjusted outlook on EPS informed by that growth rate that's right yes.

Speaker 10: Could you just talk to kind of how your credit metrics look in the new plan with the Kansas settlement FFO to debt metrics range?

Okay.

Could you just talk to kind of how your credit metrics look.

The new plan with the Kansas settlement.

<unk> to debt metrics range.

Speaker 4: Sure, absolutely. I mean, I think we came out of 2022, you know, about 80 basis points above the threshold of Moody's, which is 15% of a vote of debt. And we are managing that plan going forward to make sure that we are at or above those thresholds throughout the plan. And that means through 2026. And that objective obviously informed our comfort with extending our expectation as a vow based on the current capital plan of no new equity to release 2026. So we're focused on hearing to the...

Sure absolutely I think we came out of 2022 Bureau about 80 basis points above the threshold of Moody's switch, 15% have voted yet and we are managing that plan going forward to make sure that we are at or above those thresholds throughout the planning that means through 2026 and.

And that objective, obviously informed our comfort.

With extending our expectation as of now based on the current capital plan of no new equity through at least 2026.

So our focus on comparing to those thresholds in those targets.

Speaker 10: Okay. And your threshold again is, what is it again? Is it 14 or 15? 15. 15%.

Okay and your threshold again is what is it again is it 14 or 15.

15%.

Speaker 10: And just one more, I get a sorry on the capital plan. So...

Okay.

And just just one more I guess, sorry on the capital plan. So.

Speaker 10: You know, I think you're going to update the capital plan on the year-end call that you seem to be talking about.

I think youre going to update the capital plan on the year end call and you seem to be talking about.

Speaker 10: you know, maybe making updates by them, but like, that's it. I mean, that's pretty soon some of these processes in the state you're talking about, you wouldn't

Maybe making updates.

But I like.

Thats I mean thats pretty soon some of these processes.

And the state Youre talking about you wouldn't necessarily think would be.

Speaker 10: kind of really started or done by the year-end call, are these things that might get added like later on?

Kind of really started are done by the year end call and these things that might get added like later on.

Yes, Steve Thats a good question I think it is.

Speaker 6: We announced the updated long-term growth rate outlook, and that's informed by our current rate-based growth trajectory. Obviously, we'll add 2028. We don't yet have that in the capital plan, so that'll be new either way. But our anticipation is that there, we will, in conjunction with the Finance Committee, look at allocation of capital across jurisdictions.

We announced the updated long term growth rate outlook and that's informed by our current rate base growth trajectory. Obviously will add 2028, we don't yet have that in our capital plans, so that will be new either way.

But our anticipation is that there we will in conjunction with the finance when you look at the allocation of capital across jurisdictions.

Speaker 6: will reflect the, we had a revised integrated resource plan since we put out that capital plan at year end, but the overall parameters and overall growth rate levels, I suspect you're right. That'll be in line with what we're seeing here, but with some tweaks and without evaluation of capital allocation.

We will reflect the we had to revise the integrated resource plan since we put out that.

Capital plan at year end, but the overall parameters and overall growth rate levels I suspect youre right that will be in line with what we're seeing here, but with some tweaks and adapt evaluation of capital allocation.

Speaker 6: across different areas. When I was speaking to the additional incremental opportunities, you're on track. I think those opportunities will particularly be informed as we look at mechanisms and ability to, you know, are we aligned with key policy makers and regulators on positioning the state to take advantage of some of the economic development opportunities, which will take some.

Across different areas.

When I was speaking to the additional incremental opportunities.

Your Youre on track I think those opportunities.

We will particularly be informed as we look at mechanisms and.

The ability to realign with Keith.

Key policymakers and regulators on positioning the states take advantage of some of the economic development opportunities, which will take some.

Speaker 6: Incremental investment and think some real opportunities there. Now, again, things differ a little bit and Missouri side. The regulation is more constructive in terms of mitigating lag.

Incremental investment I think some real opportunities there now again things differ a little bit and Missouri side to regulation is more constructive in terms of mitigating lag.

Speaker 6: and we're lined with other utilities in that state. So a lot of this comes down to working on mecha's in the Kansas and that will inform how we shape our capital plan, particularly over time.

Sure.

And we're aligned with other utilities in that state. So a lot of this comes down to.

Working on mechanisms of Kansas and that will inform how we shape our capital plan, particularly over time.

Speaker 10: Okay. And then, yeah, maybe just one last thing on just that last point of Kansas, because obviously...

Okay.

And then maybe just one last thing on just that last point of Kansas because obviously.

Speaker 10: This would have been a relevant thing to be aware of in the current rate case too in terms of perceived.

This would have been a relevant thing to be aware of kind of in the current rate case too in terms of perceived.

Speaker 10: ability to for future you know kind of growth and all this stuff just like is there any

Ability to for future.

Kind of growth in all of this stuff just like is there any.

Speaker 10: Olive branches or things that have been shared that should give us any hope.

All our branches or things that have been shared that should give us.

Any hope that.

Speaker 10: the other folks are going to engage in a a lot more lines of what you want uh... as opposed to kind of what happened in this case

The other folks are going to engage in.

Along the lines of what you want.

As opposed to kind of what happened in this rate case.

Speaker 6: We'll have to demonstrate those results on the Kansas side, so it's not the show-me side of our two jurisdictions, but I know it'll be an element of seeing that happen. What I think is the groundwork

Yes, I think.

Steve will have to we'll have to demonstrate those results. So it's on the Kansas side. So its not the xiaomi side of our two jurisdictions, but I know it will be an element of seeing that happen what I think is the groundwork.

Speaker 6: that creates a positive context about discussion is the sheer amount of economic development potential that we see in campus. We know that it's...

That creates a positive context that discussion is the sheer amount of economic development potential that we see in Kansas, We know that it's.

Speaker 6: important for many stakeholders in the state to be positioned to take advantage of that because they see those opportunities and they know that.

And important for many stakeholders in the state to be positioned to take advantage of that because they.

See those opportunities and I know that.

Speaker 6: for us to be in a position to meet, for example, I've mentioned, over 600 megawatts of potential incremental capacity needs.

For us to be in a position to meet for example, I've mentioned or 600 megawatts of potential incremental capacity needs.

If we're in a wait.

Speaker 6: If we always are waiting until it's already there to build things and it's harder to be in a position of attracted and meet in the time when this has required. So I think that backdrop...

If we always are waiting until it's already there to build things and it's harder to be in a position to attracted in media and the timeliness is required so I think that backdrop.

Speaker 6: of economic development potential is a positive one to help advance the discussions but there's no question we've got work to do on the capital structure front and on the ensuring that we have competitive the opportunity for competitive return. So work in front of us we do think that backdrop of a lot of economic potential and potential opportunity in Kansas.

The economic development potential.

Is a positive one to help advance the discussions but there's no question, we've got work to do.

On the capital structure front.

On the in China, and we are competitive.

For competitive returns so work in front of US, we do think that backdrop of a lot of economic potential and potential opportunity in Kansas.

Speaker 6: Right way to do it. We also think it's the right frame to pursue that discussion outside the context of.

One way to do it. We also think it's the right frame to pursue that discussion outside the context of that.

Speaker 6: the biggest, such a big rate case, the first one in five years since we formed the company with unique level of attention. So we think the time is now to work on and address that issue.

The biggest such a big rate case, the first one in five years since we formed the company with unique level attention. So we think the time is now to.

Work on and address that issue.

Speaker 10: Okay. All right, but you're saying you think it is, are you getting a sense that other people kind of get that too?

Okay, Alright, but youre, saying you think it is are you getting a sense that other.

People kind of get that too.

Speaker 3: I think we've got the opportunity for some constructive discussions. We've obviously got work to do to get it done.

I think we've got the opportunity first and constructive discussions we've obviously got work to do to get it done.

Okay.

Great. Thanks.

Speaker 1: Thank you, Steve. Thank you. And one moment as we move on to our next question.

Thank you Steve.

Thank you Anne one moment as we move on to our next question.

Speaker 1: And our next question is going to come from the line of Paul Patterson with Glenrock Associates. Your line is open. Please go ahead. Hey, good morning.

And our next question is going to come from the line of Paul Patterson with Glenn <unk>.

Your line is open. Please go ahead.

Hey, good morning.

Morning, Paul.

Just wanted to.

Speaker 11: I apologize for not completely following the capital structure issue that's been asked a couple of times.

Just I apologize for not completely.

Following the capital structure.

Issue.

That's been asked a couple of times.

<unk>.

Speaker 11: I guess if I'm understanding it and tell me where I'm wrong, you guys are planning on having discussions with them about getting to the ability to sort of have a

I guess.

If im understanding it and tell me, where I'm wrong, you guys are planning on having discussions with them about getting too.

The ability to sort of.

Speaker 11: It's basically that the utility capital structure would be looked at and the holding company in the context of how it's treated in other jurisdictions like FERC and what have you. Is that the way to sort of think about it?

Sure.

Basically that the utility capital structure will be looked at.

And the holding company in the context of how it's created other jurisdictions like FERC and what have you is that the way to sort of think about it.

Yes, Paul I think you've got it right.

Speaker 11: And then I did notice, as I did I think on the first quarter, that there was a benefit from capitalized interest.

Okay.

And then.

I did notice.

And I think on the first quarter that there was.

Our benefit from capitalized interest.

Speaker 11: Um, how should we think about that going forward? Um, was this, uh, I think it was a benefit this this quarter. Um, how should we think about the potential benefit or or what have you going going into 2023 or 2024? excuse me.

How should we think about that going forward.

Was this.

I think it was a benefit this quarter.

Should we think about.

The potential benefit or what have you going going into 2023 24, excuse me I apologize.

Speaker 11: Well, it's correct. I think you're thinking about capitalized interest. You may be referring to the fact that we're, you know, we're able to defer, you know, some of the interest costs in Missouri. I apologize. I apologize. I apologize.

That's correct.

As youre thinking about capitalized interest you may be referring to the fact that we are.

We were able to defer some of the interest cost.

Sorry go ahead.

O&M I apologize.

Our capitalized O&M.

Speaker 4: I'll watch it. All right. All I would say is that our, you know, that are

I apologize.

All I would tell you is that R. R.

Speaker 4: Our capitalization of certain portions of O&M is informed by the activities that either directly or indirectly support our capital investment program and is consistent and well-researched from a benchmarking standpoint, time studies and the like. So it's basically in line with industry policy and certainly reflects the initiatives that are underway in terms of improving our infrastructure and investing in things like new generation. So it's really informed by that and I expect it to be pretty consistent going forward.

Our capitalization of certain portions of O&M is informed by the activities that either directly or indirectly support our capital investment program that is consistently well researched from a benchmarking standpoint in time studies and the like so it's basically in line with industry policy and certainly reflects.

The initiatives that are underway in terms of improving our infrastructure and investing in things like new generation. So it's really informed by that and I expect it to be pretty consistent going forward.

Speaker 11: okay so it's it's it's just a general there wasn't anything because it looked like it was a benefit of quarter what there isn't any particular project or anything that's causing that that's just sort of uh there isn't expected to be much of a deviation in that i guess it's the way to think about it going forward is that correct

Yes.

It's just a general there wasn't anything because it looked like it was a benefit this quarter.

There isn't any particular project or anything that's causing that that's just sort of there isn't expected to be much of a deviation in that I guess is the way to think about it going forward is that correct.

Speaker 4: No, nothing significant changes going forward.

No.

Nothing nothing significant change going forward.

Speaker 6: And the benefit in the quarter and year to date was an overall reduction in O&M costs, which obviously is a much broader reflection of our overall O&M cost reduction.

In the quarter and year to year to date was an overall reductions in O&M costs, which.

Obviously, there's a much broader reflection of our overall O&M cost trajectory.

Speaker 11: Right. Okay. Thank you so much. The rest of my questions were answered. Thank you so much.

Right. Okay. Thanks, so much rest of my questions were answered. Thank you so much.

Speaker 1: Thank you. Thank you. And I would now like to hand the conference back over to David Campbell for any closing remarks.

Thank you.

Thank you and I would now like to hand, the conference back over to David Campbell for any closing remarks.

Speaker 6: Thank you, everyone, for your participation in the call today. We look forward to seeing you at EEI. That wraps it up.

Thank you everyone for your participation in our call today, we look forward to seeing you at EI and reps.

Is it up.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now disconnect.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

[music].

Okay.

Okay.

Okay.

Okay.

Okay.

Okay.

Okay.

Okay.

Okay.

[music].

Yes.

Yeah.

Sure.

Okay.

Thank you.

Yes.

Okay.