Q1 2024 Entergy Corp Earnings Call
Good morning, My name is Alex and I will be your conference operator today at this time I would like to welcome everyone to <unk> first quarter 'twenty 'twenty four earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remark 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. The pound key. Thank you I will now turn the call over to Bill Abler, Vice President of Investor Relations for Entergy Corporation.
Good morning, and thank you for joining US we will begin today with comments from introduced chair and CEO drew Marsh in the Kimberley <unk>. Our CFO will review results in an effort to accommodate everyone who has questions. We request that each person ask no more than two questions in today's call management will make certain forward looking statements.
Actual results could differ materially from these forward looking statements due to a number of factors, which are set forth in our earnings release, our slide presentation, and our SEC filings Entergy does not assume any obligation to update these forward looking statements manner.
Management will also discuss non-GAAP financial information reconciliations to the applicable GAAP measures are included in today's press release and slide presentation, both of which can be found on the Investor Relations section of our website and now I will turn the call over to drew.
Thank you Bill and good morning, everyone. We.
That includes continued progress towards our growth opportunity as well as important achievements in our risk reduction efforts that will benefit our key stakeholders.
Starting with our financial results for the quarter today, we are reporting adjusted earnings per share of $1 eight.
This result for the quarter was below our expectation yeah, we remain firmly on track to deliver on our annual commitments.
I'm confident because of actions we've already taken our team's track record on flexible spending and our demonstrated ability to deliver steady predictable results.
Kimberly will go will go over the details now.
Now I'll cover the business updates from the quarter.
Everything we do start to the customer because that is the key to create value for all our stakeholders customers employees communities and owners.
Our efforts on that front, we were recently recognized by <unk> outstanding National key accounts customer engagement Award.
Which is determined by customers valve.
Validating our customer centric progress hundreds of the nation's leading chain multi site businesses voted to recognize entergy for delivering exceptional service.
We still have more work to do but we are grateful for this milestone.
Additional evidence of progress counts from the execution of eight new electric service agreements with industrial customers signed in the quarter.
Including the data center in Mississippi the win.
Announced earlier this year.
These contracts represent approximately one one gigawatts of new load and more than $150 million of annual adjusted gross margin.
As a reminder, our conservative planning practices assumed that most rather than oil volumes will come to fruition.
Customer affordability remains a key focus area.
Last quarter I outlined our efforts to secure federal support for projects that would benefit our customers.
Our utilities received six letters of encouragement from the grip application submitted.
Late last year.
Full applications for all six projects will be submitted to the department of energy by the end of May.
We also continue to advance our $4 5 billion part two application for the D O loan program, which if successful will lower capital costs for our customers.
Our nuclear fleet continues to make progress in all our nuclear plants are now in column one of the NRC action matrix. However.
However, operational excellence must be earned everyday Waterford three is currently working to recover from a shutdown following a transformer failure.
At approximately 20 years old the transform was only halfway through its expected life and early indications point to equipment failures at cost.
We have an interim solution with spare transformer that can support it to 90% capacity until the replacement transformer arise.
We're working diligently to bring the plant back online in the coming weeks.
And Mississippi Grand Gulf wrapped up its 28 day refueling outage in March this.
This is the plants shortest refueling outage since 2007.
This outcome is the result of the team's intense focus on safety and operational excellence, we and most importantly, our customers appreciate the work they put in to achieve this outcome.
Stakeholder engagement remains.
Focus area, an important way to assess progress is through our regulatory outcomes.
Starting at the federal level system energy reached a $116 million agreement in principle with the New Orleans City Council to resolve all current CRE claims.
Several New Orleans City Council members sited near and long term benefits to customers through the settlement.
This agreement is consistent with theory settlements with Mississippi, and Arkansas, both of which were approved by FERC and determined to be fair and reasonable.
It is also consistent with the reserve recorded in 2022.
With the addition of New Orleans, CRE has resolved roughly 85% of its litigation risk.
Turning to the retail level.
Last week, the Louisiana Public Service Commission approved the first phase of Entergy, Louisiana's resilience and grid hardening plan.
The plan includes 2100 projects totaling $1.9 billion of investment over five years.
The projects will provide important resilience benefits to customers and communities.
A more resilient grid, often serve as a catalyst for growth as it bolsters confidence for customers seeking to locate or expand in our service area.
The approval includes a forward looking recovery mechanism with semi annual true ups and should provide a solid foundation for our continued customer investment in Louisiana.
There are also reporting requirements to provide transparency to our stakeholders on our progress.
While the investments will take place over the next five years, we're getting underway immediately.
For those of you attending our analyst day in person, we will show you. Some examples of the future of our system through recently installed resilience projects.
Entergy, Louisiana is also in settlement discussions on two other proceedings.
The FRP renewal or alternatively, a base rate case and.
The streamline and enhance renewable RFP process to add up to 3000 megawatts of solar.
Given solid progress thus far the hearing dates for these dockets had been extended to allow time to reach settlement in these cases.
Entergy, Louisiana also filed for approval of Bayou power station, a $411 million or 112 megawatt quick start non base load natural gas power station.
It is an innovative solution to meet the power needs in a challenging area on the edge of the eastern interconnect.
To enhance local resilience and storm restoration speed the unit would be situated at top of barge in southern Louisiana.
And the area that is critical to our nation's energy security and Louisiana economy.
Entergy, New Orleans filed.
David resilience and grid hardening plan.
With request approval of phase one a series of investments totaling $168 million over three years.
This is in addition to the grip resilience project that was approved by the City Council earlier this year.
We are requesting to expedite the technical conference in May 1st.
We are seeking a decision around mid year. So we can get started on this important work for customers.
Our gas LDC sale continues to move along smoothly.
The stakeholder engagement process, it's been going well and we remain on track to close the transaction by the third quarter 2025.
And lastly, Entergy, Mississippi filed its annual FRP in March.
Mississippi sufficient mechanism enables continued customer centric investment, while providing appropriate credit support for entergy, Mississippi as it makes these investments.
Interim rates became effective on April one.
Finally, we're very excited about our upcoming analyst day in June.
We'll use that opportunity to show off New Orleans, if you look at our resilience investment provide a more detailed dive into our multi year strategy and outlook.
<unk>, a significant customer growth opportunities before us.
The plans to expand our clean energy portfolio and to advance the reliability and resilience.
And our efforts to help support customer affordability, while my maintaining our credit strength and earnings growth.
<unk> had a productive start to 2024 with solid progress and execution across key customer operational regulatory and financial fronts.
And by continuing to put our customers first.
Deliver premium value to each of our key stakeholders.
Thank you Gary Good morning, everyone. Today, we are reporting first quarter adjusted earnings per share of $1 eight.
Several items affected the quarter results, including mild weather the timing of operating expenses, including planned generator maintenance outages and the acceleration of education spending and where sales to power generation customers.
With the first quarter results under our belt, we remain firmly on track to achieve 2024 results in line with our guidance.
And we are well positioned to achieve our long term, 6% to 8% growth outlooks.
I'll review all of this in detail.
In the quarter, we had two items that were considered adjustments and excluded from adjusted earnings that I would like to mention.
First Entergy, Arkansas received a decision from the U S District court in a longstanding case around opportunity fails.
That decision resulted in Entergy, Arkansas recording its 46% impairment of a regulatory asset in the quarter.
Second Entergy, New Orleans recorded a 27 regulatory charge to share incremental income tax benefits from the 2016 2018 IRS audit resolution.
Our first quarter adjusted EPS drivers are laid out on slide four.
Our results reflect regulatory actions that include recovery of the investments that we're making to benefit our customers.
Depreciation expense is also higher as a result of those investments.
For retail sales as I noted earlier weather was mild this year, but not as mild in 2023.
Excluding weather sales volume was not a big driver for earnings as higher sales to residential was largely offset by lower sales to commercial.
Industrial sales were down 6% quarter over quarter, driven by lower sales to cogeneration customers.
We continually monitor fundamentally important to our industrial customers as you can see in the appendix of our presentation.
Metrics remain supported giving us confidence in our industrial growth outlook.
Utility other O&M was higher this quarter than first quarter last year due to several drivers some of which have variability throughout the year.
For example, health care claims were higher and we had more planned maintenance outages at non nuclear plants. We also accelerated vegetation management in advance of the storm season.
Compared to our guidance assumption other O&M in the quarter was higher than initially planned.
However, we fully expect O&M islands out over the year and ultimately be roughly in line with our original guidance assumption.
Moving to slide five operating cash flow for the quarter was $521 million, which was lower than last year.
The largest driver was customer receipts, which included significant deferred fuel collections in 2023.
Deferred fuel costs within operating cash flows declined approximately 350 million compared to last year.
Credit is summarized on slide six.
We maintained a strong ongoing focus on our credit as it is an important element in executing on investments for our customers.
For the quarter, our metrics were impacted by timing of debt issuances that will balance out over the course of the year.
Our underlying business continues to generate strong SSO and our outlooks support metrics in range or better in the rating agency expectations.
On Monday, S&P issued a credit update for CRE, improving its outlook to positive and affirming its rating followed the announced settlement with the city Council of New Orleans.
S&P further noted that they could raise series ratings by one notch if the settlement is approved by FERC.
As we have said settlement system energy litigation provides certainty for all stakeholders.
Consistent with this S&P noted these settlements reduced uncertainty of potential future claims and support the company's future cash flow stability and predictability.
Turning to slide seven our equity needs remain unchanged, we continue to make progress against our 2025 and 2026 equity needs.
As of the ended the quarter, we've locked in more than 30% of our equity need for those years utilizing ATM forwards.
As shown on slide eight we are affirming our guidance and longer term adjusted EPS outlooks.
Weather and lower sales to cogeneration customers had been a headwind to start the year.
For the full year, we are benefiting from sales to additional industrial customers. The impact of these sales offset this headwind.
We continue to be on track for our full year expectations.
Regarding utility O&M quarterly timing can vary significantly, especially when compared to our prior year were redeployed significant flex spending for the benefit of customers following a very hot summer.
As we look to second quarter of this year, we expect O&M to be higher than last year with the increase roughly inline with the first quarter variance.
Key drivers of the timing of our spending in 2024 include the following in.
In 2023, all of our flex spending increases were in the back end of the year. So we expect corresponding reductions in spending this year in that same timeframe.
In second quarter last year, we received significant prescription rebates covering multiple years, which we don't expect to recur at that level or in the same timeframe. This year.
I noted earlier that our first quarter guidance includes accelerated vegetation spending.
We expect that acceleration to continue in advance of storm season in 2024.
This acceleration reduces spending in the back half of 2024, assuming normal weather.
While we have variability in the quarters and spending I want to reiterate that we fully expect O&M to balance out over the year consistent with our outlooks and we are confident we will deliver on our financial commitments.
We continue to prioritize the needs of our customers to create value for our key stakeholders.
We're well positioned to execute and deliver successful customer operational and regulatory outcomes, along with steady predictable financial results.
As drew said, we're excited about our analyst day in June where we'll provide a long term in depth view of our plans for the future and now the entergy team is available to answer your question.
Yeah.
Okay.
Okay.
Okay.
Hello, everyone. We are allowing the floor for question and answers if you'd like to ask a question. Please press star and number one on your telephone keypad that story and number one on your telephone keypad.
We have our first question from sharp, who as you know from Guggenheim Partners. Your line is now open.
Hi, Good morning team, it's actually Constantine here for chart, thanks for taking the questions.
Hi, good morning.
Can we start on the updated thoughts around the Capex plan, given the data points around resiliency and additional industrial customers you had about $900 million in plan, but.
Bigger number now approved does that pushing capex higher in the near term and how should we think about the moving pieces there.
Thanks Constantine.
Yes from a capital plan, we did get 1.9 approved we had 900 million through this outlook period.
One nine approved about one five of that is in that same three year period. So that's an increment of about $700 million for Louisiana, Louisiana portion of that $900 million $800 million. So that's an incremental 700 million how that rolls out through the capital plan, we will update all of that in at analyst day, along with.
What the effects of the rider and any other changes to our capital and our financing plan.
Yeah.
Okay perfect.
Maybe can you help us reconcile some of the charges taken in the quarter and how the refunds may impact cash and financing needs in the near term.
The debate any pull forward or equity issuance or are there offsetting factors that we should think about it.
We don't see any change in equity we had already reserved a substantial portion of the income tax.
As far as tax effect for New Orleans, we did increase that but it's.
The return period is a pretty long period, and so theres no effects in the outlook period, no material effects in the outlook period.
Perfect and then maybe just one last follow up on some of your commentary around regulatory outcomes.
Do you have any updated thoughts around the FRP process and rate case process in Louisiana in the period after the direct testimony.
The make it right for the kind of more of intense settlement discussion any kind of lessons learned that you can implement.
Hey, good morning, it's Rod I.
I think I can say look five weeks ago, we filed we suspended the procedural schedule to facilitate settlement.
Do you think about.
The date of May 21, when our staff and intervenor testimony is due.
And the next three weeks I think it's reasonable to assume that one of the three things will happen.
We're either announce the settlement.
We will mutually agree to extend.
Dates procedurally to facilitate settlement or pivot back to a procedural schedule with the resiliency.
<unk> addressed last week alright.
Alright. Thank the next three weeks, so we will be telling about the progress, we're making to where we are.
We're comfortable that.
The stakeholders in Louisiana are now focused on one settlement discussions.
Yeah.
Yes.
Perfect. Thanks, Brian I appreciate you taking the questions.
Best of luck.
Thank you.
Our next question comes from Jeremy Tonet from Jpmorgan. Your line is now open.
Hi, good morning.
Good morning, Jeremy.
I just wanted to dig.
Dig in a little bit more on plus 15 revised weather normal sales just a stronger industrial sales outlook as you put out there if you could kind of bucket whether that's more.
The pet chems benefiting from cheap ethane in the outlook, improving there or cheap methane benefiting ammonia other industries or whether that's data centers, just wondering which one of the industrial activities out there are you seeing I guess more upside.
Okay.
I think it's rod I can I can touch on that and certainly Kimberly can.
Can follow but beyond the the AWS transaction.
Mississippi, we're continuing to see significant interest in the data center sectors, both hyperscale as well as co location in Arkansas.
Xena in Mississippi, and but we continue to see strong interest from the metals sector.
As well, specifically aluminum and steel with projects in various stages of development you can add in there with the already.
Elements of showing up in Blue ammonia. In addition to the conversations around carbon carbon capture.
And that's not to exclude what we would consider to be our traditional.
Sectors of growth in the service territory around refining and petrochemicals.
We plan to give more more color of course.
The state, but I didn't want to suggest that there was one specific sector.
A fair amount of diversity.
And our backlog and growth outlooks and Jeremy just to add to that for the 15 cents for this year. You can think about that specifically is our historic industries, along the Gulf Coast and those industrial customers are online.
Taking power currently.
Okay.
Jeremy: Got it that makes sense, that's very helpful. There that kind of leads into my next question I was just wondering for the analyst day, obviously youre not going to give us all the details here, but just wondering any broad parameters of what we should expect on the day.
Jeremy: Well.
Jeremy: And I mentioned, a few of them in my in my remarks earlier around.
Some of the things that Roger discussed the opportunities that we see for growth from a sales perspective, and where that's coming from some more color and depth to that conversation.
Certainly more clarity around the kinds of investments that we plan to make.
That includes the generation side as well as.
Poland wire side, we're talking about reliability and resilience.
Some of the work that we're doing to drive productivity internally.
From a data perspective will be giving a more robust outlook that goes out to five years that will include capital and earnings and we will make clear as Kimberly just mentioned about our expectations from a financing perspective.
And also since we'll be in New Orleans, and we'll have a number of our leaders here with us.
Youll get the ability to access a broader segments of our management and leadership team than you normally do when you just see.
Yeah, Rod and Kimberly in Belabored myself out on the road.
So you'll get.
To see what what we are seeing in our various jurisdictions.
And get it more boots on the ground view.
Of how things are progressing.
Got it sounds sounds great there and if I could just wanted to finish with CRE real quick seems like a lot of meaningful.
Progress over the past year, or so and just wondering your thoughts on I guess the prospects for continued positive momentum here in settlement given all the ground thats been covered so far.
Yeah I think.
Youre right.
Being in a position, where we can stay comfortably that roughly 85% of the CRE risk.
Has has been addressed through through settlement.
It does lend itself to.
Two what I would think would be a compelling case to resolve the rest with this new <unk>, we can't speak.
Don't speak around.
The nuances of negotiations in any period, but we do believe that the fact that the New Orleans is now off the table.
It gives us a shot to to pursue settlement with Louisiana near term.
Got it that's helpful. Thank you.
Okay.
Our next question comes from Michael <unk> from Evercore ISI. Your line is now open.
Hi, Thanks for taking my question.
I was wondering if you could provide a preview of your planned resiliency filing in Texas you laid out.
Our cadence of spending for Texas at the EI Conference and I was just wondering if the Texas Resiliency Act.
Since then has changed how youre thinking about it in terms of the amount and timing of planned investments.
Yes, its rod again, we're going to make that filing in the second quarter and.
Some of the considerations around the amount will be influenced by how we think about the contribution.
Two the resilient spend from the state Grant program not to mention to you or to your earlier point, how the capital would flow through the recovery mechanisms affecting both affordability.
And credit, but we'll make that filing before the end of second quarter.
I'll add that as you probably recall the Texas as part of the resilience investment was pushed back a little bit because we have a lot of growth upfront.
And so we so you probably won't see as much and that's where the grant piece comes in.
Jeremy: And also the mechanism as we've talked about before since.
Because we have all of this growth in our service territory mechanism doesn't work as well from a credit perspective for us.
So we're working on that we have another legislative session coming up but youll see all of that reflected in our ultimate resilience filings.
Speaker Change: Great. Thank you and then secondly for me.
On the Bayou power station is.
The $411 million of investment included in your base capital plan.
Also given that it would be floating off the Louisiana Coast I was just wondering if you could talk about the protections in place when the plant from severe weather.
With work crews and equipment.
Potentially being impacted I know, sometimes you see that with oil rigs off the coast.
Yes, as far as the $411 million that is included in our capital plan from a protection is it's a technology that's been used elsewhere.
It's certainly just not.
Not necessarily the CRE Apple on the East coast.
And yes.
It certainly is expected to be resilient in heavy in heavy winds and stores.
Just to be clear, it's not out in the middle of the Ocean.
On land, but it's it's and it can now so that it can float with with the storm surge and so that's that's really what we're talking about here not not an oil rig out in the middle of the Gulf.
Yeah, Yeah of course, okay, well, thank you very much.
Our next question comes from Nick Campanella from Barclays. Your line is now open.
Yes.
Hey, good morning, Thanks for taking my questions.
Good morning.
Good morning, good morning, going back to the data Center discussion just you gave a stat on one gigawatt one one gigawatts of new load is going to be about $150 million of new gross margin.
And this relates to the Mississippi Center, but just.
Looking about how that drops to the bottom line when you kind of taken the financing costs or other items. There can you kind of help us understand how it translates the EPS just I'm thinking about.
There is clearly more opportunity like this on the horizon and trying to keep it doesn't work. Thanks.
Yes. Thanks for the question, Nick when you think about the Mississippi data Center.
Ramps up over time, so you're not going to see a lot of that in.
Speaker Change: Three year outlook period, we could talk more about what that means over over the five year that drew referenced at analyst day, but you are right. When you when you think about AGM on that sort of <unk>.
Customer you are also.
Putting in infrastructure to support it. So there is you saw a shift in spending in the fourth quarter update where we added incremental renewables for example in Mississippi.
Because of those investments and the associated cost associated with those investments will offset some of that from a bottom line perspective, and then financing cost for those type things as well.
Again, youll see most of that effect on outside the three year outlook period.
It's the investment is the thing that will ultimately go to the bottom line. The AGM is there to support that incremental investment. So we think it's really important that demonstrates the growth opportunity that's out in front of us and the demand from our customers.
<unk> help them meet what they wanted to do.
Great. That's really helpful. Appreciate it and then.
I guess you mentioned in your remarks, and you have it on slides here you've been above the 14% episode of that target.
I'm just thinking about Moody's continue to be on negative outlook.
Do you think that there is a window to kind of address that ahead of summer.
What's your latest conversations been there.
Yes, we certainly have regular conversations with the rating agencies and they are constructive conversations about what's happening in the business. If you look at our underlying calculation. The episode trailing 12 months for the quarter was similarly strong to what it was at the end of the year and then we issued more debt in this quarter.
Mentioned in my comments that will balance out over the course of the year, putting us strongly.
In the rating agencies expectation that 14% or better so strong discussion certainly the rating agencies.
We have to do their evaluation to make those decisions by hitting that threshold for 2023, which we did and then continuing to execute on that and as we work to build towards 15%.
Are important to us.
Speaker Change: Okay.
Alright, thank you so much.
Thank you.
Our next question comes from Anthony <unk> from Mizuho. Your line is now open.
Hey, good morning team hope all is well.
I guess just quickly.
If I can get rod busy here just on CRE rod.
I know there is youre working with the Louisiana Public Service Commission on maybe settling their separately. There is the formula rate plan issue is there anything that prevents both of those being settled together, meaning once FERC issue and what may be more of a state issue.
Short answer is no.
We are pursuing.
Our efforts with stakeholders on our shuttling books.
And the interest being avoiding any litigation associated with either so short answer is no. There is nothing preventing us from pursuing settlement on both district, regardless of federal versus state jurisdiction.
Great and then just an easy one I guess.
On the gas shell update I know, it's a very long window for approval just any update on timing or procedural schedule you can provide us.
The gas LDC as I mentioned is on schedule.
We have.
There is more details in the appendix and so I think that the P&C, it's moving on quite quickly the timelines are longer in New Orleans, but.
But at this point, we don't see anything Thats impeding the progress and the ultimate completion of the transaction. So we are we're firmly confident there is the possibility that it could move up a little bit but at this point, we're sticking with our and by third quarter of 2025 timeline.
Great. Thanks for taking my questions. Thank.
Thank you.
Our next question comes from the line of Steve <unk> from Wolfe Research. Your line is now open.
Yes.
Yes, hi, good morning. Thanks.
My questions were answered just wanted to get a little more information on this Waterford.
Steve: Trip the Navy.
Do you expect that you will have the new transformer bye.
Summertime.
Probably not.
That's a new transformer and as you as I know Youre aware theres a backlog for large transformers like that.
We don't have one of that size.
So we do have.
Interim transformer ready to go and it should be ready by summer time that gets us back to about 90%.
And so the plant should be online this summer.
But we won't have full deliverability out of the plant that we get a new transformer in place.
Okay, Okay, alright, but you can run 90% just with the spare.
Steve: So it's kind of most of the way.
Okay correct.
Speaker Change: Okay and then.
Maybe just on MISO transmission when are we going to get.
I know, they're going through their different tranches like when are we going to get to the Entergy zone area for MISO transmission.
I believe that they are expecting to put something out late this year.
Speaker Change: But the timelines have moved around a little bit for them, but.
That was the previous expectation.
Youre talking just to be clear you are talking about.
The long term planning piece of it right.
That's right that's right that's right yeah, Yeah, I think there as you know they've been in the north.
While working on stuff and I do believe that they plan to put out some expectations later this year.
Okay. Okay. Okay.
Okay.
Okay, and then I guess just on the co Gen sales just as this.
You still expect I expect industrial growth for the year co. Gen sales, if I recall are pretty low margin.
That's yes, that's absolutely correct, Steve and.
The cogent sales were for the quarter, but.
That's really a volume difference.
Speaker Change: Slight slight EPS difference, but as we discussed incremental industrial sales.
Certainly support that.
Helping us achieve our objectives for the year.
Okay. Thank you. Thank you.
Thank you.
Our next question comes from the line of Andrew History.
Andrew Marsh: From Seaport Research partners. Your line is now open.
Hi, Thank you so two questions first.
As you see this.
Data center load materializing in your service territory is there any discussion about.
Potential changes like T&D, Paris that Steve.
<unk> users would be paying I'm, mostly trying to see if there is any way to shield.
Residential customers from payments for any set of T&D upgrades that it will be needed to accommodate this mode.
Good morning, Angie, Yes, when you think about data centers they certainly.
Are requiring the infrastructure to support them and so we are ensuring that the pricing of those customers priced in a way that support those customer coming that also support the rest of our customers in the infrastructure build that's needed.
You referenced Mississippi, specifically, we worked closely with the legislature to ensure that we had.
The ability to add the infrastructure that we needed that I'll say that we protected all of our other customers through the contract and so it was a benefit both to add the customer ecosystem that offset to the state of Mississippi and all of our other customers and I think I would think about it the same way for future data centers to add to our service territory.
And speaking of Mississippi, and I'm, just thinking about CRE all of these issues that are related to the Grand Gulf Macaire plans I mean as you are basically.
Trying to finish all of the the litigations associated with that plant.
I mean would you for example consider.
Signing Mike.
A long term contract with a datacenter instead of having those sort of disputes with the regulated level that just to make this asset dedicated to an industrial or commercial user as opposed to having it again.
It seems to have led to a number of regulatory disputes in the past.
Yes.
It's a good question.
Angie, we arent thinking about various potential solutions there right now the output of those facilities are contracted for.
For the life of the unit to each of the operating companies that participate. So I don't think that there is any room for.
Data center.
Pieces, but we are looking at all other alternatives in order to try to mitigate that future potential litigation risk. So that is definitely on our radar screen.
Speaker Change: Although we don't have anything to discuss about that right now.
Very good thank you.
Thank you.
Our next question comes from the line of Ryan Levine from Citi. Your line is now open.
Good morning.
I was hoping you could touch on how you may approach, attracting datacenters outside of Mississippi, You mentioned, Arkansas and some other locations can you just provide some context or some color around the regulatory attractiveness of those states on a comparison basis.
Yes. This is rod again.
Hey, Kimberly alluded to it the example in Mississippi.
<unk> serves as a mix of.
Blueprint for other states when you think about how how we shaped.
Both the legislation from the actual state.
Contractual guarantees if you will drum AWS and the regulatory the regulatory outcomes.
<unk> our ability.
To meet.
Aws's needs I think plays well.
It would certainly focus around job creation and economic development from the stakeholder engagement standpoint, similar to the way that we did in Mississippi, I see that being very relevant.
Louisiana.
In Arkansas.
Certainly theres going to be an expectation regardless of where these.
These incentives are excited that theres rate right.
<unk> four <unk>.
The other customers in the service territory.
Notwithstanding any conversation around there.
The green clean dynamics, we're going to surge.
Yes.
That customers' needs and the attributes that are important to them, but here's the abuse. The piece that I think becomes really important as we're engaging on.
Speaker Change: Our regulators and.
Our customers stakeholders.
What Mississippi was able to do was to expedite the CCN approval process to help us build the infrastructure.
Owned transmission and generation to serve.
Speaker Change: To serve that load.
Also providing credit accretive upwards as in Mississippi, allowing for KFC with.
During the construction of those facilities, allowing us to to to finance.
Those projects and lower the overall cost for for customers. If you think about those dimensions. The rest of the states are taking notice of of the success in Mississippian from purely a competitive standpoint or trying to figure out how to replicate that.
Those types of frameworks.
Our jurisdictions, but we think it's a blueprint that debt.
They are really projects well.
For our other states.
And I'll, just add that given what Ron just outlined our regulators and our communities are excited about these potential investments.
They are large investments that you guys throw off a bunch of tax dollars and provide some really good jobs.
Yes.
Areas in central and northern Mississippi, Northern Louisiana, and Arkansas, Theres, a lot of rural space out there in the data centers can go to.
Those jobs are meaningful.
As areas. So they are really excited about the opportunity for those investments and the economic activity that comes along with them. That's why yes.
As Rod said, they're competing to figure out how they can sell.
These these potential customers.
Great to hear and then on one other topic just in terms of the Texas region. You can see filing is giving your service territory is there any opportunity to add.
Fire mitigation or co wildfire mitigation risk management is the plant.
A lot of the resilience investments and the wildfire investment is going to be very similar and overlapping.
So yes that is going to be part of that I'm sure that wildfire.
It's going to be a part of the conversation in the legislature.
Coming up early next year.
So we do anticipate that there will be some overlap there.
I'll just mention.
Yes.
Further away from the coast in Mississippi, Northern Louisiana, Arkansas, We are also thinking about.
Speaker Change: Fire mitigation investment there to complement all the things that we've already done.
To monitor.
And and prepare and respond to potential wildfires and all the community work that we're doing but we realize that the next piece of that is investment to mitigate or eliminate wildfire risk and so that conversation is ongoing with our stakeholders and so we'll be looking to.
Create opportunities to manage those risks for all of our stakeholders.
Near future.
Thanks for taking my questions questions. Thank you.
Okay.
Again, if you'd like to ask a question. Please press star and number one on your telephone keypad. Our next question comes from Chad Miller from Morningstar. Your line is now open.
Thank you Hello, everyone.
Yeah.
One.
Travis Miller: New industrial customers, including both data centers and the other.
Industrial customers, what's the general split in terms of the Capex between Kandi and generation that Youre anticipating.
Okay.
There are some folks they are Travis.
The transmission certainly generally is less than the generation, but some of it is timing when you think about we have long term supply plans.
Where we may have had generation in our plan and perhaps there are some.
Travis Miller: Earlier execution of it in order to meet that.
Demand and as you know we're in Knight as the transmission is planned through MISO as well until we also have long range, claiming on the transmission side.
Travis Miller: I don't have the exact split and then now you can get with Vale and get that specifically, but generally when you think about the data centers, probably heavier weighted to generation and transmission.
Okay, and then do you anticipate on that generation piece doing an RFP or would you have first rights to any kind of new generation build.
In Mississippi, the legislation enabled us to you.
Travis Miller: It's effectively gave us CCN authority to build what was needed for that data center can meet their timeline. So that doesn't require an RFP process. Some of our jurisdictions have rfps and others don't I think it comes down to a customer timeline and how you work with all your stakeholders to bring the customer on the timeline Theyre looking for and then what that require.
To ensure that we are building.
Appropriate assets in order to support the customers overall.
Okay, and then general commentary you just made in general for any industrial customer or more for data versus.
Other chemical producers are factories et cetera.
Yes, I mean that really generators.
Sorry, the data center is unique and then its a larger customer coming in at one time on a faster timeline, but I would think about the planning principles. The same for all of our consumers.
Okay, great. Thanks, so much appreciate it.
Absolutely. Thank you.
There are no further questions as of right now I'd like to hand back the call over to Mr. April. Thank you.
Travis Miller: Okay.
Yes.
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Speaker Change: Any information and this concludes our call. Thank you very much.
This concludes today's conference call you may now disconnect.
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