Full Year 2023 DTE Energy Co Earnings Call

Thank you for standing by my name is Eric and I will be your conference operator today.

Operator: Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the DTE Energy fourth quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.

Eric: At this time I would like to welcome everyone to the DTE energy fourth quarter 2023 earnings Conference call.

Eric: All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Barbara Tuckfield, Director of Investor Release. Please go ahead.

After the Speakers' remarks, there will be a question and answer session.

Eric: So you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Eric: If you'd like to withdraw your question Press Star one again.

Speaker Change: Thank you.

Eric: I would now like to turn the call over to Barbara Tuck field director of Investor Relations. Please go ahead.

Barbara Tuckfield: Thank you, and good morning everyone. Before we get started, I would like to remind you to read the Safe Harbor Statement on page 2 of the presentation, including the reference to forward-looking statements. Our presentation also includes references to operating earnings, which is a non-GAAP financial measure. Please refer to the Reconciliation of GAAP Earnings to Operating Earnings provided in the appendix. With us this morning are Jerry Norcia, Chairman and CEO, and Dave Rude, Executive Vice President and CFO. Now, I'll turn it over to Jerry to start the call this morning. Thanks, Barb, and good morning, everyone, and thanks for joining us.

Barbara Tuckfield: Thank you and good morning, everyone before we get started I would like to remind you to read the safe Harbor statement on page two of the presentation, including the reference to forward looking statements. Our presentation. Also includes references to operating earnings which is a non-GAAP financial measure please refer to the.

Barbara Tuckfield: A reconciliation of GAAP earnings to operating earnings provided in the appendix with US. This morning are Jerry Norcia, Chairman and CEO, and Dave Ruud Executive Vice President and CFO and now I'll turn it over to Gerry to start the call. This morning.

Gerardo Norcia: Thanks, Barb and good morning, everyone and thanks for joining us I hope everyone is having a healthy and safe year so far.

Gerardo Norcia: I hope everyone is having a healthy and safe year. This morning, I'll give you a recap of the accomplishments we achieved in 2023 and provide highlights on how we are well-positioned for 2024 and beyond. They will provide a financial update and wrap things up before we take your questions. As you know, 2023 was a challenging year for DTE, as we faced significant headwinds from an unprecedented combination of weather and storm activity.

Gerardo Norcia: This morning, I will give you a recap of the accomplishments we achieved in 2023.

Dave Ruud: And provide highlights on how we are well positioned for 2024 and beyond they will provide a financial update and wrap things up before we take your questions.

Barbara Tuckfield: As you know 2023 was a challenging year for DTE.

Barbara Tuckfield: As we face significant headwinds from an unprecedented combination of weather and storm activity.

Gerardo Norcia: I am very proud that our company came together to face these headwinds and execute on a plan that offset the majority of the challenges, and achieved operating earnings per share of $5.73 in 2023. This was a result of overcoming $300 million of the approximately $400 million headwinds that we face. In the appendix, we included a summary of the headwinds and the one-time actions we took in 2023.

Barbara Tuckfield: I am very proud that our company came together to face these headwinds and execute on our plan that offset the majority of the challenges.

Barbara Tuckfield: We achieved operating earnings per share of $5 73 in 2023.

Barbara Tuckfield: This was a result of overcoming $300 million of.

Barbara Tuckfield: Of the approximately $400 million.

Barbara Tuckfield: Of headwinds that we faced.

Barbara Tuckfield: In the appendix we included a summary of the headwinds and the onetime actions we took in 2023.

Gerardo Norcia: As I said during the year, the fact that we were able to offset most of the challenges we faced while maintaining service is a clear indication of our highly engaged team and our commitment to operating. I couldn't be prouder of our team's effort in 2023, and our commitment to deliver for all of our stakeholders will continue into 2025 and beyond. This engagement of our team at DTE was recognized with our 11th consecutive Gallup Great Workplace Award. DTE was also recognized as one of Metro Detroit's best and brightest companies to work with, as well as one of Time Magazine's best companies, http://www.TheBusinessProfessor.com. We continue to address our customers' most vital needs by investing heavily in our utilities and rebuilding our aging infrastructure.

Eric: As I said during the year. The fact that we were able to offset most of the challenges we faced while maintaining service excellence.

Eric: A clear indication of our highly engaged team and our commitment to operating excellence.

Eric: I couldnt be prouder of our team's effort in 2023, and our commitment to deliver for all of our stakeholders will continue into 2024.

Eric: Beyond.

Eric: This engagement of our team at DTE was recognized with our 11th consecutive Gallup Great Workplace Award.

Eric: DTE was also recognized as one of Metro Detroit's best and brightest companies to work for.

Eric: As well as one of time magazine's best companies for future leaders.

Eric: We continue to address our customers' most vital needs by investing heavily in our utilities to rebuild our aging infrastructure improve reliability and support the transition to cleaner generation.

Gerardo Norcia: Improve reliability to support the transition to cleaner generation. There have been a number of developments that support our customer-focused investment agenda, including the filing of our distribution grid plan, which provides a roadmap to improve reliability and automation of our system, and our integrated resource plan that outlines our investment in Michigan's cleaner energy future while remaining very focused on customer affordability. In 2023, we made strides with our reliability improvement. I'll go over this in more detail in the next slide, but I can tell you that our efforts in this area are working. On the circuits where upgrades were completed in the first half of 2023, customers experienced 33% fewer outages during the second half of the year compared to the second half. In 2022,

Eric: There have been a number of developments that support our customer focused investment agenda, including the filing of our distribution grid plan that provides a roadmap to improve reliability and automation of our system and our integrated resource plan that outlines our investment in Michigan's cleaner energy future, while remaining very focused.

Eric: <unk> dot customer affordability and 2023, we made strides on our reliability improvement goals.

Eric: I'll go over this in more detail in next slide, but I can tell you that our efforts in this area are working.

Eric: And circuits were upgrades were completed in the first half of 2023 customers.

Eric: Experienced 33% fewer outages during the second half of the year compared to the second half of 2022.

Gerardo Norcia: Also supporting our investment agenda is the constructive electric rate case order we received in December. During the first half of this year, we expect to file our next electric rate case, which will underpin the continued investment in reliability, grid modernization, and cleaner generation.

Eric: Also supporting our investment agenda is the constructive electric rate case order we received in December.

Eric: During the first half of this year, we expect to file our next electric rate case, which will underpin the continued investments in system reliability grid modernization and cleaner generation.

Gerardo Norcia: We also recently filed a rate case at DTE Gas to support important investments necessary to continue to renew our gas infrastructure, which will minimize leaks and reduce costs. So you can see that we continue to invest heavily in our utilities in 2023. DTE Electric invested $3.1 billion, and continued improvements and reliability.

Eric: We also recently filed a rate case at DTE gas to support important investments necessary to continue to renew our gas infrastructure, which will minimize leaks and reduce costs. So you can see that we continue to invest heavily in our utilities in 2023.

Eric: DTE electric invested $3 $1 billion.

Eric: Improvements in reliability and cleaner energy generation for our customers, while DTE gas invested nearly $750 million on infrastructure and main renewal improvements reinvesting in utility infrastructure to drive reliability improvements far exceeds cash generated from operations.

Gerardo Norcia: Cleaner Energy Generation for our customers, while DTE Gas invested nearly $750 million in infrastructure and Maine Renewal. Reinvesting in utility infrastructure to drive reliability improvements far exceeds cash generated from operations, demonstrating our commitment to improving reliability for our customers. Another significant event in 2023 was the passing of new clean energy legislation in Michigan that the governor signed in November. This energy policy creates a very clear roadmap for the development of additional solar, wind, and storage assets that is generally consistent with the accelerated renewables build and cleaner generation path that we laid out in our IRP file. This investment is supported by the Inflation Reduction Act, which includes provisions that reduce the cost of investments in our system.

Eric: Demonstrating our commitment to improving reliability for our customers.

Eric: Another significant event in 2023 was the passing of new clean energy legislation in Michigan that the Governor signed in November the synergy policy creates a very clear roadmap for the development of additional solar wind and storage assets that is generally consistent with the accelerated renewables build ankle.

Eric: Our generation path that we laid out in our AARP filing.

Eric: This investment is supported by the inflation reduction act that includes provisions, which reduced the cost of investments in our system and we passed all of these benefits along to our customers.

Gerardo Norcia: And we pass all of these benefits along to our customers. Our effort to maintain affordability for our customers has been demonstrated over the last four years. Based on the outcome of our last rate order, the average annual growth for our residential electric bill is just over 1%.

Eric: Our effort to maintain affordability for our customers has been demonstrated over the last four years.

Eric: Based on the outcome of our last rate order the average annual growth of our residential electric Bill is just over 1% since 2020.

Gerardo Norcia: 2020, prepared for a national average annual increase of over. This is supported by a $300 million reduction in our fuel and purchase power costs that went into effect last December to lower customer bills. Through this significant reduction, along with our long history of cost savings through continuous improvement, we will continue to effectively manage affordability for our customers. On the community front, DTE was honored to be named to the Civic 50, 6.

Eric: Compared to a national average annual increase of over 6%.

Eric: This is supported by a $300 million reduction in our fuel and purchased power costs that went into effect last December the lower customer bills.

Eric: Through this significant reduction along with our long history of cost savings through continuous improvement.

Eric: We will continue to effectively manage affordability for our customers.

Eric: On the community front DTE was honored to be named to the civic 50 for.

Gerardo Norcia: This award is presented by the U.S. Department of, presented by Points of Light, recognizes the most community-minded companies in the nation. I am proud that our team continues to put the communities we serve at the forefront each and every day in our decisions. We have a robust investment agenda of $25 billion over the next five years. This is a $2 billion increase over the prior plan, and we have a 10-year capital plan of $50 billion.

Eric: For the sixth consecutive year.

Eric: This award.

Eric: Scented by points of light.

Eric: Recognized as the most community minded companies in the nation.

Eric: I am proud that our team continues to put the communities we serve at the forefront each and every day in our decision making.

Eric: We have a robust investment agenda of $25 billion over the next five years, which is at $2 billion increase over the prior plan and we have a 10 year capital plan of over $50 billion.

Gerardo Norcia: 95% of our capital will be invested in our two utilities. Investments in our nine utility businesses are strategically focused on our customers' needs and aligned with our clean energy initiatives. Our 2024 Operating EPS Guidance Midpoint provides 7% growth from our 2023 Original Guidance Midpoint. However, our long-term operating EPS growth remains at 6-8%. 2023 original guidance as the base of that growth, and our 2024 annualized dividend of $4.08 per share is consistent with our practice of growing dividends in line with our operating. Importantly, we will continue to have a strong balance sheet and investment grade credit ratings to support this customer-focused capital investment program. Now, let's turn to slide 5.

Eric: 95% of our capital will be invested at our two utilities.

Eric: Investments in our non utility businesses are strategically focused on our customers' needs and aligned with our clean energy initiatives.

Eric: Our 2020 for operating EPS guidance midpoint provides 7% growth from our 2023 original guidance midpoint.

Eric: Our long term operating EPS growth remains at 6% to 8%.

Eric: With 2023 original guidance as the base of that growth.

Eric: And our 2024 annualized dividend of $4 eight per share is consistent with our practice of growing dividends in line with our operating EPS importantly.

Eric: Importantly, we will continue to have a strong balance sheet and investment grade credit ratings to support this customer focused capital investment plan now lets turn to slide five.

Gerardo Norcia: At DTE Electric, our significant capital investment plan is focused on building the grid of the future and supporting the transition to cleaner generation. Our recently filed distribution grid plan outlines our path to build the grid of the future. This plan includes the transition to a smart grid.

Eric: At DTE electric or a significant capital investment plan is focused on building the grid of the future for our customers.

Eric: And supporting the transition to cleaner generation.

Eric: Our recently filed distribution grid plan outlines our path to build the greater the future.

Eric: This plan includes the transition to a smart grid with full automation within five years, resulting in less frequent and shorter outages for our customers.

Gerardo Norcia: Full automation within five years, resulting in less frequent and shorter outages for our customers. We are also investing $9 billion in distribution infrastructure over the next five years, targeting reliability improvements of more than 60%. During 2023, DTE Electric focused on improving the reliability of over 400 of our most challenging services, including trimming more than 5,000 miles of trees, installing more than 200 automated reclosers, and maintaining our extensive network of electric power distribution systems, including replacing pull-top equipment in over 3,500 utility buildings. We are continuing to accelerate our tree trimming program.

Eric: We are also investing $9 billion on distribution infrastructure over the next five years.

Eric: Targeting reliability improvements of more than 60%.

Eric: During 2023, DTE electric focused on improving the reliability of over 400 of our most challenging circuits <unk>.

Eric: Including terming more than 5000 miles of trees installing more than 200 automated re closers.

Eric: And maintaining our extensive network of electric infrastructure.

Eric: Including replacing Pull-top equipment and over 3500 utility Poles.

Eric: We are continuing to accelerate our tree trimming program.

Gerardo Norcia: We are also continuing our accelerated preventative maintenance by upgrading more than 10,000 miles of infrastructure, with over 1,300 miles upgraded in 2023. Finally, we are accelerating the rebuild of our 4.8 kV system, and Pursuing Under. We did experience a large storm in January, and our team came together to achieve one of the fastest restorations for a storm of this magnitude. The $2 billion increase in our DTElectric 5-year plan is driven by investment in cleaner generation that is supported by the IRP, which recently passed energy legislation, and our voluntary renewables program. Accelerating this investment provides more affordable energy for customers over the long term. Our Voluntary Renewables Program is still exceeding our high expectations. As I mentioned last year, the National Renewable Energy Laboratory recognized DTE as having the largest green tariff program in the country, fulfilling more load under contracted subscription and any others. Now, let's turn to slide six.

Eric: We are also continuing our accelerated preventative maintenance by upgrading more than 10000 miles of infrastructure.

Eric: With over 1300 miles upgraded in 2023.

Eric: Finally, we are accelerating the rebuild of our 4.8 kv system and pursuing underground at <unk>.

Eric: We did experience a large storm in January and our team came together to achieve one of the fastest restorations for a storm of this size.

Eric: The $2 billion increase in our DTE electric five year plan is driven by investment in cleaner generation that is supported by the ERP.

Eric: The recently passed energy legislation and our voluntary renewables program.

Eric: Accelerating this investment provides more affordable energy for customers over the long term.

Eric: Our voluntary renewables program is still exceeding our high expectations.

Eric: As I mentioned last year, the national renewable energy Laboratory recognized ETE is having the largest green tariff program in the country fulfilling more load under contracted subscriptions than any other program.

Eric: Now, let's turn to slide six.

Eric: At DTE gas, we are planning to invest $3 7 billion.

Gerardo Norcia: At DTE Gas, we are planning to invest $3.7 billion over the next five years to upgrade and replace our aging facilities. Over the years, we have made significant progress and recovered investment through our infrastructure. Since the program began, we have renewed over 1,700 miles of main, and plan to complete over 200 more miles in 2024. Our natural gas balance program also continues to grow, with over 13,000 customers currently subscribed. The program offers ways for customers to manage their carbon footprint.

Eric: Over the next five years to upgrade and replace our aging infrastructure.

Eric: Over the years, we have made significant progress and recovered investment through our infrastructure recovery mechanism.

Eric: Since the program began we have renewed over 1700 main miles and plan to complete over 200 more miles in 2024.

Eric: Our natural gas balanced program also continues to grow with over 13000 customers. Currently subscribed the program offers ways for customers to manage their carbon footprint.

Gerardo Norcia: Carbon Offsets, with our forestry partners in Northern Michigan, as well as Renewable Natural Gas. Now, let's discuss the opportunities at DTE Vantage on slide seven. At DTE Vantage, we are planning to invest between one and one and a half billion dollars over the next five years. We continue to advance custom energy solutions, R&D, and carbon capture and sequestration projects. One project that we'll highlight is the expansion of a long-term, fixed-fee, custom energy solutions agreement with Ford Motor Company to build, own, and operate and maintain the central utility plant and distribution infrastructure serving its facility in Tennessee. In addition to the utility generation infrastructure, we will also provide distribution of hot and chilled water, steam, natural gas, and electricity. Domestic and sanitary water, along with HVAC equipment and wastewater treatment, are projects that are organic expansions like this. R-TRAC.

Eric: Through carbon offsets with our forestry partners in northern Michigan, as well as renewable natural gas.

Eric: Now, let's discuss the opportunities at DTE vantage on slide seven.

Eric: At DTE vantage, we are planning to invest between one to $1 5 billion.

Eric: Over the next five years.

Eric: We continue to advance custom energy solutions, R&D and carbon capture and sequestration projects.

Eric: One project that will highlight is the expansion of our long term fixed fee custom energy solutions agreement with Ford Motor company to build own and operate and maintain the central utility plant and distribution infrastructure.

Eric: Serving its facility in Tennessee.

Eric: In addition to the utility generation infrastructure, we will also provide distribution of hot and chilled water steam natural gas and electricity domestic insanitary water, along with HVAC equipment and a wastewater treatment facility.

Eric: Projects that are organic expansions like this one are attractive to us.

Gerardo Norcia: Given the long-term relationships, strong sites, and the utility-like structure, this project, combined with other projects, helps position us for future growth. Our development pipeline advantage remains strong. The IRA improves decarbonization opportunities, as enhanced tax credits allow our projects to be more economical, including Carbon Capture, RNG, and Combined Heat and Power Projects.

Eric: Given the long term relationships strong sites and the utility like structure.

Eric: This project combined with other projects helps position us for future growth.

Eric: Our development pipeline advantage remains strong.

Eric: Our Eva improves decarbonization opportunities as enhanced tax credits allow our projects to be more economic including carbon capture RMG and combined heat and power projects.

Dave Rude: The R&G market growth continues and is supported by the Federal Renewable Fuel Standard and California's Low Carbon Fuel Standard. With that, I'll turn it over to Dave to give you a financial Dave, over to you. Thanks, Jerry. Good morning, everyone. Let me start on slide eight to review our 2023. Operating earnings for the year were $1.2 billion.

Eric: The LNG market growth continues and is supported by the federal renewable fuel standard and California's low carbon fuel standard.

Eric: With that I'll turn it over to Dave to give you a financial update Dave over to you. Thanks.

Dave Ruud: Thanks, Jerry Good morning, everyone. Let me start on slide eight to review our 2023 financial results.

Dave Ruud: Operating earnings for the year were $1 2 billion.

Dave Rude: As Jerry mentioned, we achieved operating earnings per share of $5.73 in 2020. This was achieved after experiencing and overcoming additional headwinds, with December being one of the warmest. You can find a detailed breakdown of EPS by segment, including our Reconciliation to Gap reported earnings in the, I'll start the review at the top of the page with our YouTube. DTE Electric earnings were $791 million for the year, which is $170 million lower than 2020. The main drivers of the earnings variance were warmer winter weather, cooler summer weather, and higher storm rates.

Dave Ruud: As Jerry mentioned, we achieved operating earnings per share of $5 73 in 2023.

Dave Ruud: This was achieved after experiencing and overcoming additional headwinds with December being one of the warmest on record.

Eric: You can find a detailed breakdown of EPS by segment, including a reconciliation to GAAP reported earnings in the appendix.

Speaker Change: I'll start the review at the top of the page with our utilities.

Speaker Change: DTE electric earnings were $791 million for the year. This is $170 million lower than 2022.

Eric: The main drivers of the earnings variance was warmer winter weather cooler summer weather and higher storm expenses there.

Dave Rude: There are also higher rate-based costs, lower residential sales relative to 22 with the continuation of people returning to work, and Accelerated Deferred Tax Amortization in 2020. However, this was all offset by the one-time O&M cost reductions that we implemented. Moving on to DTE Gas, operating earnings were $22 million higher than in 2022. The earnings variance was driven by one-time O&M cost reductions and IRM revenue in 2020, which was offset by warmer weather and higher. Let's move to DTE Vantage on the third. Operating earnings were $153 million for 2020.

Eric: They are also higher rate based cost lower residential sales relative to 'twenty two with the continuation of people returning to work.

Eric: And accelerated deferred tax amortization in 2022.

Eric: This was all offset by the onetime O&M cost reductions that we implemented in 2023.

Eric: Moving onto DTE gas operating earnings were $22 million higher than 2022.

Eric: The earnings variance was driven by onetime O&M cost reductions and <unk> revenue in 2023.

Eric: Which was offset by warmer weather and higher rate based costs.

Eric: Let's move to DTE vantage on the third row.

Eric: Operating earnings were $153 million for 2023.

Dave Rude: This is a $60 million increase from 2020, primarily due to new R&G projects and steel-related earnings that were mainly a result of opportunity. On the next row, you can see Energy Trading finished the year with earnings of $105 million. As I discussed throughout the year, we experienced favorability in 2023 due to the robust contracted premium, physical power, a portion of this favorability from these contracted positions, is expected to continue into 2020. Finally, Corporate Another was unfavorable by $15 million year over year, primarily due to: Again, I'm extremely proud of our team. We overcame the majority of the unprecedented headwinds that we faced in 2023, and we did this without sacrificing reliability. Deep Commitment to Customers. Overall, DTE earned $5.73 per share in 2020.

Eric: This is a $60 million increase from 2022 <unk>.

Eric: Primarily due to new R&D projects and steel related earnings that were mainly a result of opportunistic byproduct sales.

Eric: On the next row, you can see energy trading finished the year with earnings of $105 million.

Eric: As I discussed through the year, we experienced favorability in 2023 due to the robust contracted premiums and our physical power portfolio.

Eric: A portion of this favorability from these contracted positions is expected to continue into 2024.

Eric: <unk> corporate and other was unfavorable by $15 million year over year, primarily due to interest expense.

Eric: Again, I'm extremely proud of our team we overcame the majority of the unprecedented headwinds that we faced in 2023.

Eric: And we did this without sacrificing reliability and our deep commitment to customer service.

Eric: Overall, DTE earned $5 73 per share in 2023.

Eric: Let's turn to slide nine.

Dave Rude: Our 2024 Operating EPS Guidance Midpoint is $6.69 per share, which provides 7% growth over our 2023 Original Guidance Midpoint, and we continue to target 6% to 8% long-term growth from our 2023 original. In 2024, DTE's electric growth will be driven by investments in grid reliability and cleaner generation.

Eric: Our 2020 for operating EPS guidance midpoint is $6 69 per share, which provides 7% growth over our 2023 original guidance midpoint.

Eric: And we continue to target, 6% to 8% long term growth from our 2023 original guidance.

Eric: In 2020 for DTE electric growth will be driven by the investments in grid reliability and cleaner generation.

Dave Rude: DTE Gas will see continued customer-focused investments in main renewal and other infrastructure improvements that enhance the performance of our transmission, compression, distribution, and storage assets and support decarbonization. At DTE Vantage, the 2020 foreign rings are largely driven by R&G projects and new custom energy solutions projects that serve as a base for growth going forward. Energy Trading You can see we are guiding to an earnings level that is slightly higher than the original 2023 guidance. This is due to the sustained, robust margins that we have contracted and hedged in our structured physical power portfolio that are continuing into 2021, and Corporate and Other, the changes driven by higher interest expense and one-time. Our long-term EPS growth rate of 6% to 8% from the original 2023 midpoint of guidance demonstrates our confidence in maintaining the growth trajectory we have achieved over many Let's move to slide 10 to highlight our strong balance sheet and credit. The majority of this investment is funded by our strong cash from operations, shown on our cash and capital guidance slide. Due to these strong cash flows, DTE has minimal equity issuances in its plan, targeting annual issuances of $0 to $100 million through 2022.

Eric: DTE gas, we'll see continued customer focus investments in main renewal and other infrastructure improvements that enhance the performance of our transmission compression distribution and storage assets and support decarbonization.

Eric: At DTE vantage 'twenty 'twenty four earnings are largely driven by R&D projects and new custom energy solutions projects that serve as a base for growth going forward.

Eric: At energy trading you can see we're guiding to an earnings level that is slightly higher than the 2023 original guidance.

Eric: This is due to the sustained robust margins that we have contracted and hedged in our structured physical power portfolio that are continuing into 2024.

Eric: Our corporate and other the change is driven by higher interest expense and one time tax items.

Eric: Our long term EPS growth rate of six 8% from the original 2023 midpoint of guidance demonstrates our confidence in maintaining the growth trajectory, we have achieved over many years.

Eric: Let's move to slide 10 to highlight our strong balance sheet and credit profile.

Eric: Going forward, we will continue to invest heavily into our utilities.

Eric: The majority of this investment is funded by our strong cash from operations, which is shown on our cash and capital guidance slide in the appendix.

Eric: Due to the strong cash flows dts minimal equity issuances and our plan targeting annual issuances of zero to $100 million through 2026.

Dave Rude: The 6-8% Long-Term Growth Plan includes debt refinancings and new issues, and we continue to manage these future issuances through hedging and other. In 2023, we also extended our revolving credit facility with all 21 banks out to 2021.

Eric: Our 6% to 8% long term growth plan includes debt refinancings, and new issuances and we continue to manage these future issuances through hedging and other opportunities.

Eric: In 2023, we also extended our revolving credit facility with all 21 banks out to 2020 eight.

Dave Rude: We continue to focus on maintaining our strong investment grade credit rating and strong balance sheet. We target an FFO to debt ratio of 15. Let me wrap up on slide 11, and then we open the line. Our team continues our commitment to deliver for all of our customers. Our robust capital plan supports our customers as we execute on the critical investments that we need to make to improve reliability and transition to cleaner generations, focusing on customer. 2024 Operating EPS Midpoint provides 7% growth over the 2023 original guidance. And we continue to target long-term operating EPS growth of six. Dividend growth remains strong, as we continue to target dividend increases in line with operating EPS. DTE continues to be well positioned to deliver the premium total shareholder returns that our investors have come to expect, and a strong balance sheet that supports our future capital. With that, I thank you for joining us today, and we can open the line for questions. Thank you. At this time, I would like to remind everyone that in order to ask a question, press star then the number one on your telephone keypad.

Eric: We continue to focus on maintaining our strong investment grade credit rating and strong balance sheet metrics, we targeted <unk> to debt ratio of 15, 16%.

Eric: Let me wrap up on slide 11, and then we open the line for questions.

Eric: Our team continues our commitment to deliver for all of our stakeholders.

Eric: Our robust capital plan supports our customers as we execute on the critical investments that we need to make to improve reliability and transition to cleaner generation, while focusing on customer affordability.

Eric: The 'twenty 'twenty four operating EPS midpoint provides 7% growth over the 2023 original guidance midpoint and.

Eric: We continue to target long term operating EPS growth of 6% to 8%.

Eric: Our dividend growth remains strong as we continue to target dividend increases in line with operating EPS growth.

Eric: DTE continues to be well positioned to deliver the premium total shareholder returns that our investors have come to expect with a strong balance sheet that supports our future capital investment plan.

Speaker Change: With that I. Thank you for joining us today, and we can open the line for questions.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we will pause for just a moment to compile the Q&A roster.

Operator: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Shar Pourreza with Guggenheim Partners; please go ahead. Hey guys, good morning. Morning, Shahriar. Hey, Shahriar.

Eric: Your first question comes from the line of Shar.

Shar: <unk> with.

Shar: With Guggenheim Partners. Please go ahead.

Shar: Hey, guys good morning.

Shar: Sure sure.

Shar Pourreza: Good morning. Obviously, just real quick, CapEx is moving higher, and the credit metrics are strong. And obviously, you're highlighting that you have minimum equity needs in the current plan. I guess, Dick, can you just touch on funding sort of incremental spending opportunities, maybe using some rule of thumb, as we think about the percentage of equity needed to fund every new dollar of CapEx above this base plan? Maybe the answer is zero.

Shar: Good morning, obviously, just real quick Capex is moving higher and the credit metrics are strong and obviously youre highlighting that you have minimal equity needs in the current plan I guess can you just touch on funding sort of incremental spending opportunities may be using some rule of thumb as we think about the percentage of equity needed to fund every new dollar of Capex.

Shar: Above this base plan, maybe the answer is zero in and Theres been obviously some mentions of an R&D sale and the media just given sort of the cash versus earnings attributes of that business.

Dave Rude: And there's been obviously some mentions of an RNG sale in the media, just given sort of the cash versus earnings attributes of that business. Is that an accretive recycling opportunity? Yeah, hi Shahriar. This is Dave.

Shar: Creative recycling opportunity. Thanks.

Speaker Change: Yeah, Hi this.

Shar: This is Dave I'll take the first part of that.

Dave Rude: I'll take the first part of that. Yeah, as you saw in our plan, we have really strong cash flow generation that allows us to maintain our FFOTA debt at the right 15 to 16% while issuing minimal equity. And it does give us some headroom for the downgrade thresholds too. So we haven't given a rule of thumb for how much new equity we would have to use for any new CapEx.

Dave Ruud: As you saw in our plan, we have really strong cash flow generation.

Dave Ruud: It allows us to.

Dave Ruud: Allows us to maintain our <unk> to debt at 15% to 16% while issuing minimal equity.

Speaker Change: And it does give us some headroom to the downgrade thresholds to so we haven't given a rule of thumb for how much new equity we would have to use for any new capex, but we still have some flexibility within our plan that would allow us to.

Dave Rude: But we still have some flexibility within our plan that would allow us to kind of work around any new equity that we'd have to do. But our plan, as you saw, has $2 billion of new capital in it, which we were able to bring in really due to the cash flow generation and then some of the favorability that we're seeing from the IRA tax credit as well. Yeah, and Char, I'll take the not utility assets.

Speaker Change: Work at work around any any new equity that we would have to do.

Speaker Change: But our plan as you saw is $2 billion of new capital in it which we were able to bring in.

Speaker Change: Really due to the cash flow generation and then some of the favorability that we're seeing from the IRA IRA tax credit as well.

Speaker Change: Yes, sure I'll take the.

Speaker Change: Non utility assets, certainly we're happy with all our assets there, but we're always looking for opportunities too.

Gerardo Norcia: Certainly, we're happy with all our assets there, but we're always looking for opportunities to, if there was an opportunity to create incremental value for our investors, we would take that opportunity in terms of optimizing the portfolio. But I would say at this moment that, certainly, we don't have any incremental cash needs in our plan.

Speaker Change: As an opportunity to create incremental value for our investors.

Speaker Change: We would take that opportunity in terms of optimizing the portfolio.

Speaker Change: But I would say at this moment.

Speaker Change: Certainly, we don't have any incremental cash needs and our plan.

Gerardo Norcia: And so there really isn't anything imminent at this time. Perfect. And then just lastly, on just the regulatory, maybe just expectations for 24, you have a notice of a potential filing with the MPSC for March 1. I guess, can you just elaborate on that filing? I guess, what do you see different from the prior case, which wasn't easy to get through, especially as we're kind of thinking about, you know, the IRM, sales forecast, rate design, etc.? Thanks, here.

Speaker Change: And so there really isn't anything imminent at this time.

Speaker Change: Perfect and then just lastly on just the regulatory maybe just expectations for 'twenty for you have been noticed.

Speaker Change: <unk> filing with the MPC for March 1st I guess can you just elaborate on that filing I guess, what do you see different from the prior case, which wasn't easy to get through especially as we're kind of thinking about the IRS sales forecast rate design et cetera. Thanks.

Speaker Change: Sure so.

Gerardo Norcia: So if you're referring to a potential electric rate case, we're looking to make a filing late in the first quarter or early second quarter. I would say that most of that filing will be about the capital investments we're making to upgrade the grid and transition to cleaner energy. So again, it'll be a capex-driven filing is what we expect at this point. Fantastic. Appreciate it, guys. See you real soon.

Speaker Change: If you're referring to.

Speaker Change: So electric rate case, we're looking to make a filing late in the first quarter early second quarter I would say it up.

Speaker Change: Most of that filing will be about the capital investments, we're making to upgrade the grid.

Speaker Change: And transition to cleaner energy, so again, it'll be a capex driven filings.

Speaker Change: What we expect at this point.

Speaker Change: Fantastic I appreciate it guys.

Shar Pourreza: Thanks. Thanks, Shar. Your next question comes from the line of Nick Campanella with Barclays; please go ahead. Hey, good morning.

Speaker Change: We'll soon thanks, thanks, Sir.

Speaker Change: Your next question comes from the line of Nick Campanella with Barclays.

Nick Campanella: Please go ahead.

Nick Campanella: Hey, good morning, Thanks for taking my question.

Nick Campanella: Thanks for taking my question. Good morning. I guess just to follow up on the vantage portfolio optimization comments, just if you don't have cash needs in the current plan, and there is an opportunity to do something, just how do we think about the use of the proceeds? If we did pursue some form of optimization, obviously, the cash proceeds would go to offsetting debt issuances and even potentially the repurchase of some equity. But as I said, there's really nothing imminent at this point in time. I appreciate that. Okay. And then I guess just as you kind of wrap the Michigan legislation around your outlook, you know, you're probably looking at changes to the supply portfolio. Can you just remind us what your philosophy is in terms of owning these assets versus doing PPAs? Are you going to target to do a mix?

Nick Campanella: Morning, Nick.

Nick Campanella: I guess, just a follow up on the vantage portfolio optimization comments just.

Nick Campanella: If you don't have cash needs in the current plan and there is an opportunity to do something just how do we think about those use of proceeds.

Nick Campanella: If we did pursue some form of optimization.

Nick Campanella: Obviously, the cash proceeds would go to offsetting debt issuances.

Nick Campanella: Potentially the repurchase of some equity, but as I said, there's really nothing eminent at this point in time.

Speaker Change: I appreciate that okay.

Nick Campanella: And then I guess, just as you kind of wrap in the Michigan legislation to your outlook Youre, probably looking at changes in the supply portfolio can you just remind us what your philosophy is in terms of owning these assets first doing ppas.

Nick Campanella: Are you going to target to do a mix or do you want to do all renewable ownership that'd be helpful.

Gerardo Norcia: Or do you want to do all renewable ownership? That would be helpful. So we certainly like to own assets, because we think it's much more creative, both for our customers in terms of providing lower costs. I think we've been able to show over and over that ownership provides lower costs to our customers.

Nick Campanella: So we certainly like the old assets, because we think it's much more accretive both for our customers in terms of providing lower cost I think we've been able to show over and over is that ownership provides lower cost to our customers.

Gerardo Norcia: And also, it provides greater benefit to our investors in terms of EPS growth. So we prefer to own. I think you'll see in the IRP, we in the IRP settlement, we did agree to share some ownership. And it breaks out somewhere between two-thirds and one-third ownership between us owning two-thirds and others owning one-third in the IRP piece. I think the legislation also did not talk about ownership, which we and were neutral on that point.

Nick Campanella: Also it provides a greater benefit to our investors in terms of EPS growth.

Nick Campanella: So we prefer to own I think you'll see any AARP.

Nick Campanella: <unk> settlement, we did agree.

Nick Campanella: To share some ownership.

Nick Campanella: And it breaks out.

Nick Campanella: Somewhere between.

Nick Campanella: Two thirds, one third ownership between us selling two thirds and others only one third in ERP.

Nick Campanella: Piece I think the legislation.

Nick Campanella: Also did not talk about ownership, which we and was neutral on that point.

Gerardo Norcia: So we are pleased with that. And in addition to that, it also provided for, you know, a compensation mechanism for PPAs that will give us some upside as we sign PPAs. All right, thanks so much for the time today.

Nick Campanella: We are pleased with that and in addition to that it also.

Nick Campanella: <unk> four.

Nick Campanella: Our compensation mechanism for Ppas.

Nick Campanella: <unk> will give us some upside as we signed Ppas.

Speaker Change: Alright, thanks, so much for the time today.

Speaker Change: Thanks, Nick.

Nick Campanella: The next question comes from the line of Jeremy Tonet with J P. Morgan.

Nick Campanella: Thanks, thanks. Your next question comes from the line of Jeremy Tonet with J.P. Morgan. Please go ahead. Hi, good morning. Good morning, Jeremy.

Jeremy Bryan Tonet: Please go ahead.

Jeremy Bryan Tonet: Hi, good morning.

Jeremy Bryan Tonet: Hey, Jeremy.

Jeremy Bryan Tonet: Hi, Jeff.

Jeremy Bryan Tonet: Just wanted to dive into the capital program, a little bit more because looking at the 25 billion.

Jeremy Bryan Tonet: Good morning. Good morning. I just wanted to dive into the capital program a little bit more, if we could, looking at the $25 billion five-year plan you laid out there, just wondering if you could peel back the onion a little bit more on the $2 billion increase. Cleaner Generation at DTE Electric.

Speaker Change: <unk> five year plan you laid out there just wondering if you could peel back the onion, a little bit more on the $2 billion increase in cleaner generation at DTE Electric just wondering what.

Speaker Change: Project opportunities, how do you think about that new capital.

Speaker Change: Yes, Jeremy if youll recall, when we update it.

Speaker Change: We didn't provide an update on <unk>, we are waiting the outcome of a rate case to make sure that our capital plans.

Gerardo Norcia: Just wondering what project opportunities you think about that. Yeah, Jeremy, if you'll recall, when we updated, you know, we didn't provide an update at EI because we were waiting for the outcome of a rate case to make sure that our capital plans, of those two events, significant events, created incremental opportunities in our clean generation space. It accelerated our journey in terms of building out renewable energy as well as a battery system. So that's really what drove the increase. I got it.

Speaker Change: We're supported.

Speaker Change: That happened.

Speaker Change: So while we updated in December.

Speaker Change: It really reflected that.

Speaker Change: The <unk> settlement and the new legislation, where both in flight and so I would say the combination.

Speaker Change: Of those two events significant events created incremental opportunity at our clean generation space. It accelerated our journey in terms of billing out renewables.

Speaker Change: As well as a battery system. So that's really what drove the drove the increase.

Jeremy Bryan Tonet: That's helpful. And then just thinking about the capital program, I guess, broader, and think about Vantage, the non-regulated side, just wondering, you know, what do you think about, I guess, run rate expectations for CapEx there? Did some capital move from Vantage into regulated?

Speaker Change: Got it that's helpful. And then just thinking about the capital program I guess broader thinking.

Speaker Change: Think about the vantage the nonregulated side just wondering.

Speaker Change: What do you think about I guess run rate expectations for Capex there.

Speaker Change: Some capital move from vantage into regulated just trying to get a sense for.

Dave Rude: Just trying to get a sense for how much capital could go there over time, how that, you know, could potentially shift depending on what regulator. Yeah, right now, we're showing a one to one and a half billion dollar investment over the next five years, which is pretty consistent with our prior five-year forecast. So we really haven't made any significant change there just yet. And we will see that can be a little lumpy depending on the projects that come in too. So the project that Jerry was talking about in the prepared remarks, that one will have a little more capital associated with it in 24. So the one and a half can be a little bit lumpy as it comes in.

Speaker Change: How much capital could go to over time, how that could potentially shift depending on what regulate opportunities we see in front of you.

Speaker Change: Yeah right now, we're showing I wanted to one 5 billion investment over the next five years.

Speaker Change: Which is pretty consistent with our prior five year forecast so.

Speaker Change: So we really haven't made any significant change there just yet.

Speaker Change: Yes, we will see that can be a little lumpy depending on the projects that come into so the project that Jerry was talking about on the prepared remarks that one will have a little more capital associated with it with 24. So I wouldn't want to have can be a little bit lumpy as it comes in.

Speaker Change: Got it.

Speaker Change: Very helpful.

Dave Rude: And then just wanted to see, I guess, you know, as it relates to CCS, if you could dive in a little bit more on, I guess, how you think about the timeline for when that could become more real, I guess, as far as, you know, capitals moving in there and as far as... I guess the regulatory environment being supportive enough where you feel comfortable to kind of move forward. You know, I would say that in terms of carbon capture and storage, we're well advanced on three projects, and we're finalizing our arrangements with counterparties and some conditions precedent there to make sure that, you know, we have a viable transaction. But I would say it's, you know, it feels better than 50-50 that we're going to start executing on some capital there in that new business line. So pretty exciting. They're small projects, each of them is anywhere between 50 to $100 million. Pretty simple projects that don't require a lot of pipeline, pretty short pipelines, most of the pipelines are right on the property of the customer.

Speaker Change: And then just wanted to see I guess.

Speaker Change: As it relates to Cts, if we could dive in a little bit more I guess, how do you think about timeline for when that could become more more real I guess as far as that capital is moving in there and as far as.

Speaker Change: I guess the regulatory environment.

Speaker Change: A enough where you feel comfortable to kind of move forward there.

Speaker Change: I would say that.

Speaker Change: In terms of carbon capture and storage, we are well advanced on all three projects and we're finalizing our arrangements with counterparties in some conditions precedent there to make sure that.

Speaker Change: We got a viable transaction, but I would say it's.

Speaker Change: It's feeling better than 50, 50 that we're gonna start executing.

Speaker Change: Some capital there.

Speaker Change: New business line, so pretty exciting with their small projects each of them are each of the three are anywhere between $50 million to $100 million pretty simple projects that doesn't require.

Speaker Change: A lot of pipeline pretty short pipelines are also the pipelines are right on the on the property or the customer.

Speaker Change: So as the well so.

Gerardo Norcia: So is the well, so we're deep into it. And we'll continue to give you updates on that. But it's, it's a nice synergy with our utility, the electric utility, because as we think about future power plants and using natural gas, we're going to need to capture the carbon and store it. So I think tying our toes into this new business line creates value for investors, but also creates value for future utility investments that we'll need to make. I got it.

Gerardo Norcia: We're deep into it and we'll continue to give you updates on that but it's a nice synergy with our utility electric utility because were as we think about future power plants and using natural gas.

Gerardo Norcia: We're going to need to capture the carbon and store it so I think.

Speaker Change: Dipping our toes into this new business line creates value for investors, but also creates value for future utility investments that we'll need to make.

Speaker Change: Got it very helpful. One last quick one if I could just as far as refinancing your bonds how much of the I guess the opioid exposure on refinancings has been hedged at this point.

Dave Rude: Very helpful. One last quick question, if I could, just as far as refinancing new bonds. How much of the, I guess, open rate exposure on refinancing has been hedged at this point?

Dave Rude: Yeah, so as you saw, we have about 2 billion in refinancings coming up at the end of the year this year, and the majority of that is hedged. It's 1.7 billion has been hedged of that at rates that are, you know, a little bit better than what we're seeing out there in the market now. So we just continue to like our overall debt portfolio, like the end of with the rates we're getting, that's all included within our five-year plan and consistent with our strong investment grade credit rating and our 15 to 16% FFO to debt, that allows us to issue minimal equity within I know it's a little more of an answer than you were asking, but we're in a good place with that. That's all very, very helpful, all those details. Thank you very much for taking my call. You're next.

Speaker Change: Yes.

Speaker Change: Yes. So as you as you saw we have about $2 billion of refinancings coming up at the end of the year this year and the.

Speaker Change: The majority of that is hedged at $1 $7 billion has been hedged of that at rates that are a little bit better than what we're seeing out there in the market now. So we just we continue to.

Dave Rude: Like our overall debt portfolio.

Dave Rude: With the rates, where we're getting now thats all included within our five year plan and consistent with our.

Speaker Change: Strong investment grade credit rating, and our 15% to 16% <unk> to debt.

Speaker Change: It allows us to issue minimal equity within our plan.

Speaker Change: I know, it's a little more of an answer than you were asking but.

Speaker Change: We're in a good place with that.

That's all very very helpful. All those details. Thank you very much for taking my questions.

Speaker Change: Thank you Phoenix.

Jeremy Bryan Tonet: Your next question comes from the line of Durgesh Chopra with Evercore ISI. Please go ahead. Hey, team.

Dave Rude: Your next question comes from the line of gas copra with Evercore ISI.

Speaker Change: Please go ahead.

Durgesh Chopra: Good morning. Thank you for giving me this morning. Good morning. Good morning.

Durgesh Chopra: Good morning, Thank you for giving me.

Durgesh Chopra: Hey, good morning, good morning, Karen.

Gerardo Norcia: Just maybe, can you comment on the financial implications of the January storm? That's part one. And then, part two, as we think about the rest of the year, you know, what level of contingency you have in the plan as it relates to worse-than-expected storms, bad weather, similar to what we had last year.

Durgesh Chopra: Maybe can you comment on the financial implications of the January storm.

Gerardo Norcia: That's part one and then part two as we think about the rest of the year what level of contingency.

Gerardo Norcia: Having the plan as it relates to worst unexpected storms.

Gerardo Norcia: Bad weather similar to what we had.

Gerardo Norcia: So those two things. Thank you. Yeah, we've just let me take the storm. We certainly have increased our storm expenses in our planning process, as we've seen storms increase over time and the cost that that brings. So we feel pretty comfortable about the plan that we're carrying right now. And as you know, we also carry one standard deviation of weather. You know, for example, in the winter warmer than normal weather and, or in the summer, one standard deviation cooler than normal weather.

Gerardo Norcia: Last year, so those two things thank you.

Speaker Change: Yes, we have.

Gerardo Norcia: Let me take the storm.

Gerardo Norcia: Expense, we've certainly increased our storm expense in our planning process as we've seen in storms increase overtime in the.

Gerardo Norcia: The cost that that brings so we feel pretty comfortable about the plan that we're carrying right now and as you know we also carry one standard deviation of.

Gerardo Norcia: Of weather.

Speaker Change: For example, in the winter warmer than normal weather and or in the summer one standard deviation of cooler than normal weather. So that's how we're planning and are at this point in time, we feel pretty good or better to plan, but.

Gerardo Norcia: So that's how we're planning. And at this point in time, we feel pretty good about our plan. We're right, you know; we're moving along and right on track. I think the storm that came in January consumed some of the storm expense budget.

Gerardo Norcia: We're moving along.

Gerardo Norcia: Right on track I think to start with that game at January <unk>.

Gerardo Norcia: Consumed some of the storm expense budget, but of course as you would expect.

Gerardo Norcia: But of course, as you would expect, we're working to replenish some of that so that we can carry a full summer storm budget. So that's really where we're at with that. Perfect. Awesome. That's really all I had. Thank you very much.

Gerardo Norcia: We are working to replenish some of that so that we can carry a full summer storm budget. So that's really where we're at with that.

Speaker Change: Okay perfect.

Gerardo Norcia: Awesome Thats really all I had thank you very much.

Durgesh Chopra: Thanks, you guys. The next question comes from the line of David Arcaro with Morgan Stanley. Please go ahead. Oh, hey, thanks. Good morning.

Speaker Change: Thanks Rakesh.

Durgesh Chopra: Next question comes from the line of David Arcaro with Morgan Stanley.

David Arcaro: Please go ahead.

David Arcaro: Oh, Hey, thanks, good morning.

David Arcaro: Good morning morning.

David Arcaro: Morning. Good morning. Let's see, you've got a renewable energy plan filing coming later this year, I think. I'm wondering if that could be an opportunity to reassess again and potentially increase the renewables in your outlet. Well, certainly, you know, our voluntary renewable plan is progressing really well, David. I'll just tell you that we've got 2500 megawatts described in our voluntary program and 2600 in our five-year plan. So we're, You know, it's likely that over time, it will increase. We'll have obviously, our next filing will address the next couple of years of in-service requirements for our large industrial customers that we signed up So it could potentially be an upside to our plan in the future as we continue to update our plan. So hopefully that helps. I got it.

David Arcaro: Let's say you've got a renewable energy plan filing coming later this year I think I'm wondering if that could be an opportunity to reassess again and potentially increase in renewables in your outlook.

David Arcaro: Well certainly.

David Arcaro: Our voluntary renewable plan is progressing really well David.

David Arcaro: I'll just tell you that we've got 2500 megawatts described in our voluntary program.

David Arcaro: Yeah.

Dave Rude: 2006 hundred and our five year plan. So we're.

David Arcaro: It's likely that over time it will increase.

Gerardo Norcia: Obviously, our next filing will address the next couple of years have been service requirements.

David Arcaro: For our large industrial customers that we signed up and commercial customers.

David Arcaro: It could potentially.

David Arcaro: The upside to our plan in the future as we continue to update our plan.

David Arcaro: So hopefully that helps.

David Arcaro: Got it that's helpful and I was wondering does your current plan kind of fully embed the opportunities arising from the legislation as youre thinking about.

Gerardo Norcia: Yep, that's helpful. And I was wondering, does your current plan kind of fully embed the opportunities arising from the legislation, as you're thinking about maybe beyond the renewable energy targets but also considering energy efficiency? and the FCM and the potential upside on PPX. I would say that our current plan does anticipate incremental buildouts for the IRP and legislation. So I told you our five-year plan for voluntary is 2,600 megawatts. We have an additional 1,800 megawatts that come in as part of the IRP in that five-year plan.

Gerardo Norcia: Maybe bill.

Gerardo Norcia: On the renewable energy targets, but also considering energy efficiency and the MCM and the potential upside on PPA contracts.

Gerardo Norcia: I would say that our current plan does anticipate incremental build outs for the AARP legislation. So I told you our five year plan for.

Gerardo Norcia: Voluntary has 2600 megawatts, we have an additional 1800 megawatts that comes in as part of the AARP.

Gerardo Norcia: Five year plan. So that's all built in to the $7 billion clean generation number that you see on our slides.

Gerardo Norcia: So that's all built in to the $7 billion clean generation number that you see on our slides. In terms of PPAs, we're going to have to continue to assess what incremental value that will bring as we go along here, but it could bring incremental value. Yeah, and then as we look out past that, we're going to have to file a new IRP that will take into account this legislation even more. And so that'll give us an opportunity to bring some more capital in, maybe near the end of the five-year plan, but really probably a little bit past that, just more opportunity to do so through this clean energy generation. Okay, great. Thanks for the call.

Gerardo Norcia: In terms of Ppas.

Gerardo Norcia: We're going to have to continue to assess what what value of the incremental value that will bring us as we go along here.

Gerardo Norcia: It could bring incremental value and then as we look out past that we're going to have to file a new ERP that will take into account.

Gerardo Norcia: This legislation, even more and so that will give us an opportunity to bring more capital in.

Gerardo Norcia: There may be near the end of the five year plan, but really probably a little bit past that just more opportunity.

Gerardo Norcia: To this clean energy generation.

Speaker Change: Okay, great. Thanks for the color I appreciate it.

Andrew Weisel: I appreciate it. Thank you. Your next question comes from the line of Andrew Weisel with Social Bank. Please go ahead. Hi, thanks. Good morning, everybody. Morning, Andrew.

Andrew Weisel: Thank you. Thank you.

Andrew Weisel: Your next question comes from the line of Andrew Weisel with Scotiabank.

Andrew Weisel: Please go ahead.

Andrew Weisel: Hi, Thanks, good morning, everybody.

Andrew Weisel: Good morning, Andrew.

Andrew Weisel: Hi, first question is on the $300 million of lower fuel cost savings.

Andrew Weisel: My first question is on the $300 million of lower fuel cost savings, a very impressive number. Can you just give a little more detail? First of all, is that a year-over-year reduction, and how much of that relates to the fuel cost itself, the natural gas prices being lower than 2022 levels? And as a follow-up, just quickly, do you have an early read on 2024 in terms of forward curves? Yeah, the $300 million reduction in 23, that was really the recovery of the overcollection that was in 2022. So, you know, in 2023, we were kind of on our plan and just recovering what we needed to recover from 22 and 2023, and then it comes off our books for 2024. You know, so far for this year, there's a little bit of under-recovery left, but we're forecasting things to be pretty flat with our plan for this year, and then the gas business. We're fully, fully, fully recovered there.

Andrew Weisel: Very impressive number can you just get a little more detail first of all is that a year over year reduction and how much of that relates to the fuel cost itself in natural gas prices being lower than 2022 levels.

Andrew Weisel: Follow up just quickly do you have an early read in 2024 in terms of forward curves.

Andrew Weisel: Yes.

Andrew Weisel: The $300 million reduction in 'twenty, three that was really the recovery of the over collection that was in 2022 years. So.

Andrew Weisel: 'twenty three we were kind of on our plan and just recovering what we needed to recover into.

Andrew Weisel: Recovering from 22% in 2023, and then comes off our books for 2024.

Andrew Weisel: So far for this year, there's a little bit under under recovery left but we're forecasting things to be pretty flat with our plan for this year.

Andrew Weisel: And then the gas business, we're fully fully fully recovered there we're in a good position there.

Dave Rude: We're in a good position there. Great. Then one more, if I could just sort of ask you to elaborate on the non-utility CapEx. So, I'm going to ask similar questions in a different way. Last year, the CapEx was $167 million. That was well below guidance of $300 to $400.

Dave Rude: Great and then one more if I could just sort of ask you to elaborate on the non utility capex. So.

Dave Rude: Similar question in a different way last year.

Dave Rude: Capex was $167 million that was well below guidance of 300 to 400, and now youre guiding to a $5 $50 million to $650 million for 2024 can you just walk us through that a little bit I heard you mentioned there is some lumpiness maybe certain investments were deferred I'm guessing some of the high spending this year is related to that Ford announcements.

Andrew Weisel: And now you're guiding to $550 to $650 million for 2024. Can you just walk us through that a little bit? I heard you mention there's some lumpiness; maybe certain investments were deferred. I'm guessing some of the high spending this year is related to that Ford announcement. I guess just overall, how confident are you in that 2024 number, given how high it is? Yeah, good question, Andrew. Yeah, it's, you know, the capital investment really follows the development projects that we do within that business. And, you know, last year, we did three RNG projects and one custom energy solutions project, but a smaller one. And that, you know, allows us to continue with the growth we need in that business and meet our targets.

Andrew Weisel: Just overall, how confident are you in that 2024 number given how high it is.

Speaker Change: Yeah. Good question Andrew.

Andrew Weisel: Yes, the capital investment really follows the development projects that we do within that business.

Andrew Weisel: And last year, we did three R&D projects and one customer energy solutions projects, but a smaller one than that yes.

Andrew Weisel: Allows us to continue with the growth we need in that business and that meet our targets. This year Youre right. The Ford project that were doing that we talked about in the prepared remarks is it makes us confident that we're going to invest this we talked about this a year or so ago, we had about $200 million of investment planned for this year.

Andrew Weisel: This year, right, the Ford project that we're doing that we talked about in the prepared remarks makes us confident that we're going to invest this. We talked about this a year or so ago, you know; we had about 200 million in an investment plan for this year from that, we've expanded that deal with them. And that's going to make up a good portion of the capital investment or non-utility this year. We are still working on other projects as well. But, you know, it's really that custom energy solutions project with Ford that's going to take up a big chunk of that capital investment. Okay, thank you very much. Your next question comes from the line of Michael Sullivan with Wolf Research. Please go ahead. Hey everyone. Good morning.

Michael P. Sullivan: That we've expanded that deal with them and that's going to make up a good portion of the capital investment our non utility this year still working other projects as well, but it's really that custom energy solutions project with four that's going to take up a big chunk of that capital investment in 2004.

Andrew Weisel: Okay.

Michael P. Sullivan: Okay. Thank you very much.

Andrew Weisel: Yep.

Andrew Weisel: Your next question comes from the line of Michael Sullivan with Wolfe Research. Please go ahead.

Michael P. Sullivan: Hey, everyone. Good morning.

Dave Rude: I'll show you. Hey, hey guys, um, if you just wanted to ask about the trading business. That did really well in 23.

Andrew Weisel: Alright.

Michael P. Sullivan: Hey, guys.

Michael P. Sullivan: Just wanted to ask on the trading business.

Michael P. Sullivan: That did really well in 'twenty, three and I think Dave you mentioned some of that flows through into 'twenty four but just.

Michael P. Sullivan: And I think Dave, you mentioned some of that flows through into 24. But just, how conservative do you feel that range is for 24 and is this like a new normal that could extend even beyond 24 based on what you're seeing? Yeah, Michael, you're right. We did have some really nice favorability in 2023.

Michael P. Sullivan: How how conservative do you feel that range is for 24.

Michael P. Sullivan: Is this like a new normal that could extend even beyond 24 based on what Youre seeing.

Dave Rude: Yeah, Michael Youre right. We did have some really nice favorability in 2023 and again. This is due to the premiums we get on the structured physical power portfolio is all contracted and hedged just had really nice nice premiums in 'twenty three.

Dave Rude: And again, this is due to the premiums we get on the structured physical power portfolio. So it's all contract and hedged, just had really nice, nice premiums in 2023. Yeah, as we said, we expect some of that to continue into 24, probably not to the same extent as 23. But some of those contracts, you know, they're one and two years.

Dave Rude: As we've said we expect some of that to continue on into 'twenty, four probably not to the same extent as 'twenty three but some of those contracts. The other one in two years. So we see some of them coming into.

Dave Rude: So we see some of them coming into 24 as well, going forward, you know, we'll have to see what happens. We're not guiding to anything higher than that, you know, we get the same level of contracts as a business we've been in for a long time. We get the same level of contracts; we've just seen really good premiums in 23. And we're seeing those come back down, so it's probably not something we're going to guide to going forward. But it is good favorability and the exact same risk profile that we've always had to. Okay, great. Appreciate the call.

Dave Rude: And the 24 as well.

Dave Rude: So going forward, we'll have to see what happens, we're not guiding to anything higher than that.

Dave Rude: We hit the same level of contracts as a business we've been in for a long time, we get the same level of contracts. We've just seen really good premiums in 'twenty three and we're seeing those come back down so it's probably not something we're going to guide to.

Dave Rude: Going forward, but it is good favorability in exact same risk profile that we've always had to.

Speaker Change: Okay. Great appreciate the color and then I just wanted to pivot to the.

Michael P. Sullivan: And then I just wanted to pivot to the PBR proceeding at the Michigan PSG and just what are your guys' thoughts on kind of where that stands and how that ultimately plays out. Michael, it's moving in the right direction in terms of, you know, sort of narrowing the variables that we'd be looking at for PBR. So we felt that that was quite constructive in the latest release from the commission on that process. We still feel it'll be symmetrical, of Benefit and Incentive to Perform, so we feel good about that. That's still holding together, and we expect that there's really no timeline stipulated for the conclusion of the process, so we're thinking sometime between the middle of the year and early next year is when this process will conclude. But we feel that it'll be a productive process and a well-balanced process. Okay, that's super helpful.

Michael P. Sullivan: The PBR proceeding at the Michigan PSC and just what are your guys thoughts on kind of where that stands and how that ultimately plays out.

Michael P. Sullivan: Mike.

Michael P. Sullivan: Moving into right direction in terms of.

Michael P. Sullivan: Sort of narrowing the variables that we'd be looking at for PBR. So we felt that that was quite constructive and the latest release.

Michael P. Sullivan: From the commission on that process.

Michael P. Sullivan: We still feel that it'll be a symmetrical.

Michael P. Sullivan: Sort of benefit.

Michael P. Sullivan: Incentive to perform.

Michael P. Sullivan: So we feel good about that that's still holding together and we expect that Theres really no timeline stipulated for the conclusion of the process. So we're thinking sometime.

Michael P. Sullivan: Between the middle of the year to early next year is when this process will conclude but we're feeling that it'll it'll be.

Michael P. Sullivan: Reductive processed in a well balanced process.

Speaker Change: Okay. That's super helpful. Thanks, guys.

Gerardo Norcia: Thanks, guys. Your next question comes from the line of Sophie Karp with KeyBank. Please go ahead. Hi, good morning.

Sophie Karp: Hey, guys.

Gerardo Norcia: Okay.

Gerardo Norcia: Your next question comes from the line of Sophie Karp with Keybanc.

Sophie Karp: Please go ahead.

Sophie Karp: Hi, Good morning. Thank you good morning, My questions Hi, Good morning, good morning.

Sophie Karp: Thank you for taking my question. Good morning. Good morning.

Sophie Karp: A couple of questions here. Um, I guess, staying on the energy trading business topic, right? Could you elaborate a little more on what markets are enabling this relative strength and what should we watch for, in terms of this potentially reversing in the future or continuing for longer?

Sophie Karp: Alright.

Sophie Karp: I guess staying on that with your trading business.

Sophie Karp: Could you elaborate a little more on what market conditions.

Sophie Karp: Enabling this relative.

Sophie Karp: Strang <unk>.

Sophie Karp: Watch for in terms of potentially reversing in the future or continuing for prolonged growth you will.

Speaker Change: Yes, these are markets, where we bid into.

Dave Rude: Yeah, these are markets where we bid in to serve their load. And as we bid in, we get contracts, and those contracts will have premiums associated with them. We just saw really nice premiums in 23, some of which carry on into 24. So we'll be able to, as we go through 24, let you know more about what we see for future years on those premiums. And then, you know, the rest of that business is really gas physical business, which again, is contracted and hedged. So it's, um, it's really just the success of our trading group and setting up these structured physical and hedge positions that is making it have these successful years. Got it, got it. And how much visibility do you have in it?

Dave Rude: Two utilities within PJM, and new England, mainly.

Dave Rude: And to serve their load and as well as as we bid and we get contracts and those contracts will have premiums associated with them. We just saw a really nice premiums in 23, some of which carry on into 'twenty. Four so we'll be able to as we go through 'twenty four it will be able to let you know more about what we see for future years.

Dave Rude: On those premiums.

Dave Rude: And then the rest of that business is really gas physical business, which again is contracted and hedged so it's.

Dave Rude: It's really just.

Dave Rude: The success of our of our trading group and setting up these structured physical hedge positions that is making to have these successful years.

Speaker Change: Got it got it and how much visibility do you have in that it sounds like maybe less than 12 months out would be updated.

Dave Rude: It sounds like maybe less than 12 months out, if you would be updating us as you go. That's right, it is. Most of these contracts are one year, some are some go a little longer, but most of them are for like, for one year, and then kind of see where they come in again the next year.

Dave Rude: Yeah.

Speaker Change: That's right it is.

Dave Rude: Most of these contracts are one year somewhere some go a little longer but most of them are for like for one year, and then kind of see where they come in again the next year.

Gerardo Norcia: That's why we continue to guide, you know, usually the 25 million. We went to 35 because we saw that, but we're, you know, we're not pushing for something higher than that in the future. www.plastics-car.com. And I just want to be clear on what you're saying about your capital plan, how much of the new energy law opportunities is reflected in it. It sounds like what you're saying is that you have reflected opportunities that would be presented by the new energy law in Michigan in your plan already. So the incremental opportunities stemming from this legislation should be fairly limited. Am I hearing this correctly?

Dave Rude: That's why we continue to guide to usually a $25 million. We went to 35, because we see that but where we're not pushing to something higher that in the future years.

Speaker Change: Got it got it and then.

Gerardo Norcia: And I just wanted to be clear on what you're saying about your capital plan, how much of the new energy.

Gerardo Norcia: And our GMO opportunities it sounds like what you're saying is that you have selected opportunities to that would be presented by the new energy law.

Gerardo Norcia: Michigan in your plan already so the incremental.

Gerardo Norcia: Opportunities stemming from this legislation.

Gerardo Norcia: Legislation should be fairly limited.

Speaker Change: This correctly.

Speaker Change: I would say in the first five years Thats correct Sophie.

Gerardo Norcia: I would say in the first five years, that's correct, Sophie, we have the IRP and the legislation is reflected in the five-year plan. And, you know, we'll continue to update that as we go forward, not beyond the five-year plan. There is some further acceleration that we can see, but we'll continue to update that each and every year and, hopefully, in November, between November and the end of the year. Thank you so much.

Gerardo Norcia: The ERP and the legislation is reflected in the five year plan.

Gerardo Norcia: And.

Gerardo Norcia: We'll continue to update that as we as we go forward now beyond the five year plan. There is some further acceleration, although we could see.

Gerardo Norcia: But we'll continue to update that each and every year and hopefully in November.

Gerardo Norcia: Between November and the end of the year.

Speaker Change: Thank you very much I appreciate it thanks.

Sophie Karp: Appreciate it. Your next question comes from the line of Julian Dumoulin Smith with Bank of America. Please go ahead. Excellent. And just good morning, guys. Thank you very much. Good morning, Julio.

Speaker Change: Your next question comes from the line of Julien Dumoulin Smith with Bank of America.

Speaker Change: Go ahead.

Speaker Change: Excellent and just good morning, guys. Thank you very much.

Julien Dumoulin: Maybe you can pick up on the last question. Hey morning. Just with respect to the last question there on what's reflected in the plan, I just want to clarify on the PPA ownership piece or the PPA earnings piece, the compensation mechanism there, that is reflected for the one-third piece in the IRP settlement and therefore in your outlook rate. And again, as you talk about this, you know, the substantive upside from the legislation really moves beyond the five-year period itself, just on the compensation specifically. So, yeah, so again, the ownership component is reflected in our capital plan, you know, the seven billion dollars. The Financial Compensation Mechanism will have to see at what levels we sign the PPAs at. Obviously, as you know, it's a... dynamic.

Speaker Change: Last question was hey, good morning.

Julien Dumoulin: With respect to the last question there on the what's reflected in the plan.

Julien Dumoulin: I just wanted to clarify on the PPA ownership piece or the PPA earnings piece the compensation mechanism. There that is reflected for the one third piece in the ERP settlement and therefore it in your outlook right. So again as you talk about this the <unk>.

Julien Dumoulin: Pieces.

Julien Dumoulin: Absent of upside from the legislation really moves beyond the five year period at this point.

Julien Dumoulin: Just on the compensation, specifically, so yeah. So again.

Julien Dumoulin: Ownership component.

Julien Dumoulin: As reflected in our capital plan the $7 billion.

Julien Dumoulin: Component of clean energy generation.

Julien Dumoulin: That's in our plan.

Julien Dumoulin: Financial compensation mechanism, we'll have to see.

Julien Dumoulin: You know what levels, we signed the Ppas as obviously as you know I would say.

Julien Dumoulin: Dynamic.

Dave Rude: It's tied to the price that we signed the PPAs for. So as we sign those, we'll continue to update our plan, but it will provide some incremental value in our plan as we go forward, if that's what you're asking. Yeah, right. So the FCM is included at least preliminarily to the extent to which that might need to be updated later. Yeah, there are thoughts.

Julien Dumoulin: Price the price that we signed the Ppas for so as we sign those will continue to update our plan, but it will provide some incremental value in our plan as we go forward if thats what youre asking.

Dave Rude: Yeah right. So the FCC is included at least preliminarily do the extent to which that that might need to be updated later.

Dave Rude: Yes, there is thoughts we have something and therefore, it now but as we as we signed Ppas there should be some some upside in the plan to that what we have in there now.

Dave Rude: We have something in there for now, but as we as we sign PPAs, there should be some some upside in the plan to that what we have now. Got it. All right. Thank you for clarifying. I know it was back and forth here a little bit.

Dave Rude: Got it alright. Thank you for clarifying I know I know it was the back and forth here, a little bit alright, excellent and then just coming back to the top of the roster on the Q&A real quickly on the R&D conversation briefly it sounds like that was noncommittal and frankly, it seems like opportunistic diseases, which you might see something of it.

Julien Dumoulin: All right. Excellent. And then just coming back to the top of the roster on the Q&A, real quickly on the R&G conversation, sounds like that was noncommittal and, frankly, it seems opportunistic to the extent to which you might see something of interest to you, given where your balance sheet sits. Is there something about resolution and IRS regs on R&G and how that's treated under IRA that's driving some decision trees here for I just want to make sure I heard that right, that it doesn't seem like that's a particularly pressing subject for you guys. Yeah, I would say that it's not imminent.

Julien Dumoulin: Interest to you given where your balance sheet sits is there something about like resolution and IRS.

Julien Dumoulin: Rags on R&D and how that's treated under IRA that's driving some decision tree here for you guys or.

Julien Dumoulin: Just wanted to make sure I heard that right, but it doesn't seem like that's particularly pressing subject for you guys.

Julien Dumoulin: I would say that it's not imminent.

Julien Dumoulin: Some sort of optimization of our rich portfolio, we like the returns we like the cash flows from it and actually the IR array inflation reduction act has been quite beneficial for that business from an ITC.

Gerardo Norcia: You know, some sort of optimization of our ranch portfolio; we like the returns, we like the cash flows from it. And actually, the IRA, the Inflation Reduction Act, has been quite beneficial to that business from an ITC, investment tax credit perspective. It's made projects more attractive and has given higher returns. And we're also seeing positive movement in some of the markets, like the federal market, which moved in a very positive direction. And a renewable fuel standard that is, and in California, the CARB, the California Air Resources Board, is looking to tighten up the carbon intensity targets.

Gerardo Norcia: Tax credit perspective.

Gerardo Norcia: It's made projects more attractive and higher return.

Gerardo Norcia: And we're also seeing positive movement.

Gerardo Norcia: And some of the markets like the federal market moved at a very positive direction.

Gerardo Norcia: Our renewable fuel standard that is in California or the curve.

Gerardo Norcia: California Air Resources Board is looking to tighten up the carbon intensity targets. So I think as that plays out that will provide even more upside in those markets as we see them today.

Speaker Change: Alright excellent right. So it doesn't sound like you're too worried about the way that the IRS regs.

Gerardo Norcia: No came out of late in terms of being able to move.

Gerardo Norcia: So I think as that plays out, that will provide even more upside in those markets as we see them today. All right. Excellent. Right. See, it doesn't sound like you're too worried about the way the IRS strikes. No, we're we are monitoring that we're commenting, but you know, we're not overly concerned. We don't think that it's really consistent with what the congressional intent was there either.

Gerardo Norcia: We are monitoring that.

Gerardo Norcia: Minting, but we're not not overly concerned we don't think that.

Gerardo Norcia: Really consistent with what the congressional intent was there either so we're just continuing that we're continuing to watch or monitor and comment but not overly concerned.

Speaker Change: Okay wonderful excellent. Thank you guys very much take care. Thank.

Gerardo Norcia: So we're just continuing that we're continuing to watch and monitor and comment, but not overly concerned. Okay. wonderful. excellent. Thank you guys very much. Take care.

Gerardo Norcia: Thank you Julien Thanks Julien.

Gerardo Norcia: The next question comes from the line of Gregg <unk> with UBS.

Speaker Change: Please go ahead.

Gerardo Norcia: Uh huh.

Speaker Change: Yes, thanks for the question.

Julien Dumoulin: Thank you, Julia. Your next question comes from the line of Gregg Orrill with UBS. Please go ahead. Yeah, thanks for the question, just maybe.

Gregg Orrill: Gregg maybe for Gregg Hey.

Gregg Orrill: Just following up on the R&D.

Gregg Orrill: Hey, just following up on the RNG. Are you able to provide how much that contributed in 2023 and also the steel business? Yeah, you know, we did see some good upside from the RNG because we brought in three new projects in 22 and in 23. And, you know, associated with some of that, there are some tax credits that come with that that helped out in 23. The steel business was the other part that gave us the favorability that we saw in 2023. You know, probably a little over half of what we saw there.

Gregg Orrill: Are you able to provide how much that contributed.

Gregg Orrill: Contributed in.

Gregg Orrill: 2023.

Gregg Orrill: And also the steel business.

Gregg Orrill: Yes, we saw we did see some good upside from the RMG because we brought in three new projects in 'twenty, two and in 'twenty, three and associated with some of that there is.

Gregg Orrill: Some tax credits that come with that that helped out in 'twenty three.

Gregg Orrill: The steel business was the other part that gave us the favorability that we saw in 2023.

Gregg Orrill: Probably well over half of what we saw there was due to.

Gregg Orrill: Some opportunistic sales of some of our byproducts some of the other products, we're making within that business and some other kind of onetime things that we've done there.

Dave Rude: And that was due to opportunistic sales of some of our byproducts, some of the other products we're making within that business, and some other one-time things that we've done there. So it was, yeah, some good one-time opportunities that we saw in the steel business and the RNG development. And how are you thinking about the returns in the RNG business, just how they're trending? That's we have noticed it gets it's gotten a little more competitive as more people have come in. You know, we used to say we got high double-digit, unlevered after tax returns. We're still seeing good returns, particularly where we see it is in our conversion projects. We have projects that now make power that we can convert to make RNG. And so in those, we continue to see what we would say are very strong returns. And then there's a good development pipeline that has strong returns as well. Yeah, we're still seeing unlevered returns, and I would say north of 10% unlevered after tax. So in the teens, you know, low teens.

Dave Rude: Yes, some good one time opportunity that we saw in the steel business in the R&D development.

Dave Rude: And how are you thinking about the returns in the R&D business, just how they're trending.

Dave Rude: Yes.

Dave Rude: We have noticed it gets it's gotten a little more competitive as more people have come in we used we used to say, we got high double digit.

Dave Rude: Unlevered after tax returns were still seeing good returns, particularly where we see it as an art conversion projects. We have projects that now make power that we can convert to make in R&D and so in those in those projects. We continue to see what we would say a very strong returns and then there is a still a good development pipeline that has.

Dave Rude: Has strong returns as well.

Dave Rude: Yes, we're still seeing Unlevered returns and I would say.

Dave Rude: North of 10% Unlevered after tax so in the teens low teens.

Speaker Change: Okay. Thank you.

Dave Rude: The next question comes from the line of Anthony Codell with Mizuho.

Dave Rude: Okay, thank you. Your next question comes from the line of Anthony Crowdell with Mizuho. Please go ahead. Morning, Jerry. Good morning, Dave. Morning, Anthony. Hey, Anthony. Hey, just two quick ones. Most of them have already been answered.

Dave Rude: Please go ahead.

Anthony Crowdell: Good morning, Jerry Good morning, Dave Good morning, Anthony Hey, Anthony.

Anthony Crowdell: Hey, just two quick ones most of them have been.

Anthony Crowdell: I already answered my questions, but just.

Anthony Crowdell: I think you talked about a potential rate filing.

Anthony Crowdell: But just I think you talked about a potential rate filing late first quarter, early second quarter electric filing. Just do you expand the undergrounding program in that filing? Or do you only want to disclose thoughts on expanding the undergrounding in the filing?

Anthony Crowdell: First quarter early second quarter electric filing.

Anthony Crowdell: <unk> do you expand the underground program in that filing where as much as you'd like to disclose thoughts on expanding the grounding in the filing.

Anthony Crowdell: Anthony we put five miles underground and.

Anthony Crowdell: Yeah.

Gerardo Norcia: You know, Anthony, we put five miles underground last year in 2023, and it went really well. And what we're doing is proposing that we continue to do more. This is going to take a few years to ramp up, Anthony, as we kind of work with our commission. We actually had the commission staff out looking at some of the undergrounding that we did in the last few days. And so they, I think there's, you know, a process here to make sure that we're working together with our commission to come up with a reasonable plan. I would say the key part of it is that, on an NPV basis, undergrounding is going to be at least equivalent or better than putting it up in the air. You know, we've got 19,000 miles of infrastructure to replace that is very old. It's a 4.8 kV system.

Anthony Crowdell: Last year in 2023, and it went really well.

Gerardo Norcia: What we're doing is proposing that we continue to do more of this going to take a few years to ramp.

Gerardo Norcia: Anthony as we kind of work with our.

Gerardo Norcia: Commission, we actually had the commission staff out looking at.

Gerardo Norcia: Some of the underground that we did in the last few days and so.

Gerardo Norcia: I think there is a process here to make sure that we're working together with our commission.

Gerardo Norcia: Come up with a reasonable plan I would say the key.

Gerardo Norcia: Part of it is we need to ensure that on an MPV basis underground thing is going to be.

Gerardo Norcia: At least the equivalent or better than putting it up in the air.

Gerardo Norcia: We've got 19000 miles of infrastructure to replace Thats very old its a $4 eight kv system saw a huge opportunity from it from a customer perspective to improve infrastructure for the future.

Gerardo Norcia: So a huge opportunity from a customer perspective to improve infrastructure for the future. And we'd like to put as much of that underground as we can, but we're going to have to prove out the concept. So we're in the early stages of proving it out and to ourselves, and then secondly, to our commission. So that's where we are with it. I think it's going to take a few years before we can ramp it up, but we feel pretty good about how smoothly the first five miles went. It's all directional bore through very highly congested urban areas.

Gerardo Norcia: But we'd like to put as much of that underground as we can but we're going to have to prove out the concept. So we're in the.

Gerardo Norcia: Early stages of proving it out.

Gerardo Norcia: To ourselves and then secondly to our to our commission. So that's where we're at with it I think it's going to take a few years before we can wrap it but we feel pretty good about how smoothly. The first five miles what so all directional bore.

Gerardo Norcia: Through very highly congested urban areas, so very cool project more to come on that.

Speaker Change: Okay, Great and then just a quick follow up I guess.

Gerardo Norcia: Hello to you Dave.

Gerardo Norcia: So, very cool project. More to come on that. Great. And then just a quick follow-up, I guess, I'll throw it to you, Dave, or Jerry, if you want to take this, it's fine. Just, I guess, on a credit metric basis, where did you end 2023? And I think your target range is 15 to 16%. When do you believe you'll hit that target range?

Gerardo Norcia: Gary if you want to take this it's Mike.

Speaker Change: Just I guess on a credit metric basis, where did you end.

Speaker Change: 2023, and I think your target range is 15% to 16% when do you believe you'll hit that targeted range.

Dave Rude: Yes, we did and 23 right around 15% Anthony and so as we look through the five year plan, we stay within that range throughout the throughout the five year plan that we talked about even with the minimal equity that we are that we're issuing.

Dave Rude: Yeah, we did end up at 23 right around 15%, Anthony. And as we look through the five-year plan, we stay within that range throughout the five-year plan that we talked about, even with the minimal equity that we're issuing. Great. Thanks for taking my questions and congrats on a good quarter. Thank you, Anthony. The next question comes from the line of Ryan Levine with Citi. Please go ahead. Excuse me, Mr. Ryan Levine. Your line is open. Please go ahead with your question. I apologize.

Ryan Levine: Great. Thanks for taking my questions and congrats on a good quarter.

Ryan Levine: Thank you Anthony.

Dave Rude: The next question comes from the line of Ryan Levine with Citi. Please go ahead.

Dave Rude: Okay.

Dave Rude: Okay.

Dave Rude: Excuse me Mr. Ryan Levine. Your line is open. Please go ahead with questions.

Ryan Levine: Hi, guys.

Ryan Levine: Yes, so good morning, hoping to follow up on rate.

Ryan Levine: Utility ownership various PPA as some of the generation assets is there a plan largely solidified at that point or is there opportunity to convert some of the owned asset armed assets into Ppas given the incentives at the Lotte provides.

Ryan Levine: Yeah, so, good morning. I'm hoping to follow up on the utility ownership versus PPA and some of the generation assets. Is your plan largely solidified at that point, or is there opportunity to convert some of the owned assets into PPAs given the incentives that the law provides? I'll let Brian, thanks for the question. I'll let Dave sort of elaborate.

Ryan Levine: I'll, let Bryan thanks for the question I'll, let Dave.

Dave Rude: Sort of elaborate but I'll start by saying that we prefer to own the assets for really two reasons. One is if you look at the value to our customers.

Gerardo Norcia: But I'll start by saying that, you know, we prefer only assets for, you know, really two reasons. One is, if you look at the value to our customers, it's much more affordable for our customers for us to own the assets. And then secondly, for our investors, it provides a much greater significant EPS growth opportunity if we own it, so we don't see converting any current ownership to PPAs. Dave, did you want to add to that? Oh, that's that's exactly right.

Dave Rude: Much more.

Dave Rude: Affordable for our customers for us to own the assets.

Dave Rude: And then secondly for our investors that provides a much greater significant EPS growth opportunity if we own so we don't see.

Dave Rude: Converting any current ownership to ppas.

Dave Rude: Did you want to add to that.

Dave Rude: That's exactly right, it's better better for our customers, where we've gotten really good at developing these projects and we are the leading renewable developer in the state.

Dave Rude: It's better, better for our customers. We've gotten really good at developing these projects. And you know, we're the leading renewable developer in the state and will continue to do so. And what we see is the lowest price, which is kind of borne out through the auctions that we're in. So we think it's better for our customers, and then on an EPS basis, investing in capital is better for our shareholders as well. So I don't know that we'll be converting any; we'll do what we need to do. But the FCM is great.

Dave Rude: And continue to do it at what we see is the lowest price, which is kind of borne out through the actions that we're in so we think it's better for our customers and then on an EPS basis investing the capital is better for our shareholders as well so I.

Dave Rude: I don't know there will be converting any will do what we need to do but.

Dave Rude: And the FCA, it's great. It's Great addition for the Ppas that we do do.

Dave Rude: It's a great addition to the PPAs that we do do, but it's still much better for our customers and much better value if we continue to develop these. Okay, and are you still pursuing opportunities to build dedicated pipelines to chemical plants in your near your service territory, but that you may have pursued in the last few quarters?

Dave Rude: But it's still much better for our customers and much better value if we can.

Dave Rude: We continue to develop these.

Dave Rude: Okay and are you still pursuing opportunities to build dedicated pipeline stay chemical plants.

Dave Rude: And you're near your service territory.

Dave Rude: That you may be pursuing in the last few quarters.

Gerardo Norcia: Um, are you referring to carbon capture and storage, Brian, when you say Yeah, more carbon, carbon dedicated pipes? Yes, we are. We've got three transactions that are well advanced with, you know, large carbon dioxide producers, and we're looking to capture that CO2 source and store it underground, essentially on their property. These are very short pipelines, a couple thousand feet each, less than a mile.

Gerardo Norcia: Are you, referring to carbon capture and storage, Brian when you when youre more carbon carbon dedicated pipes correct.

Gerardo Norcia: Yes, we are we've got three transactions that are well advanced with.

Gerardo Norcia: Large carbon dioxide producers and we're.

Gerardo Norcia: We're looking to capture though thats cotr source and stored underground essentially under property. These are very short pipelines couple thousand feet each less than a mile. So we're.

Gerardo Norcia: So we're looking to finalize those arrangements and also satisfy some of the, you know, technical conditions precedent that we want to accomplish before we get too far into that business. Okay, great. Thanks for the questions. Thanks for the answers.

Gerardo Norcia: We're we're looking to finalize those arrangements and also satisfy some of that.

Gerardo Norcia: Technical conditions precedent that we.

Gerardo Norcia: We want to accomplish before we get too far into that business.

Gerardo Norcia: Okay, great. Thanks for the question Thanks for an answer.

Gerardo Norcia: Thanks, Fred. I would now like to turn the call back over to Jerry Norcia for closing remarks. Please go ahead. Well, thank you everyone for joining us today. I'll just close by saying we're feeling great about 2024 and also our long-term plan, as well as our position for future years. Have a great morning, and stay healthy and safe.

Speaker Change: Thanks, Rob.

Gerardo Norcia: I would now like to turn the call back over to Jerry Norcia for closing remarks. Please go ahead.

Gerardo Norcia: Thank you everyone for joining us today I'll, just close by saying, we're feeling great about 2024, and also our long term plan as well as our position for future years have a great morning, and you stay healthy and safe.

Gerardo Norcia: Ladies and gentlemen, that concludes today's call. Thank you all for joining us, and you may now disconnect your lines. Please wait. The conference will begin shortly. Please wait. The conference will begin shortly. Please wait. The conference will begin shortly.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect your lines.

Gerardo Norcia: Please wait.

Gerardo Norcia: France will begin shortly.

Gerardo Norcia: [music].

Speaker Change: Thank you.

Gerardo Norcia: [music].

Gerardo Norcia: Yes.

Gerardo Norcia: [music].

Gerardo Norcia: Sure.