Q1 2024 CenterPoint Energy Inc Earnings Call

Operator: Good morning, and welcome to CenterPoint Energy's first quarter 2024 earnings conference call with senior management. During the company's prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management's remarks. To ask a question, press star 1 1 on your touch-tone keypad.

Good morning, and welcome to Centerpoint Energy's first quarter 2024 earnings conference call with senior management.

The company's prepared remarks.

Participants will be in a listen only mode. There will be a question and answer session. After managements remarks.

To ask a question press Star one one on your touch time key pad.

Jacqueline M. Richert: I will now turn the call over to Jacqueline Richert, Senior Vice President of Corporate Planning, Investor Relations, and Trustees. Record, you may begin. Good morning and welcome to CenterPoint Energy's first quarter 2024 earnings conference call. Jason Wells, our CEO, and Chris Foster, our CFO, will discuss the company's first quarter results. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are based on management's beliefs, assumptions, and information currently available to management.

I will now turn the call over to Jacky record senior Vice President of corporate planning Investor Relations and trustee Mis record you may begin.

Jacky Record: Good morning, and welcome to Centerpoint Energy's first quarter 'twenty 'twenty four earnings conference call Jason.

Unknown Executive: Jason Wells, our CEO and Chris Foster, our CFO, who will discuss the company's first quarter results.

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

Jacqueline M. Richert: These forward-looking statements are subject to risks or uncertainties. Actual results could differ materially based upon various factors, as noted in our Form 10-Q, other SEC filings, and our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statements. We will be discussing certain non-GAAP measures on today's call. When providing guidance, we use the non-GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis, referred to as non-GAAP EPS.

Unknown Executive: These forward looking statements are subject to risks or uncertainties.

Unknown Executive: Actual results could differ materially based upon various factors as noted in our Form 10-Q, other SEC filings and our earnings material. We undertake no obligation to revise or update publicly any forward looking statements.

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

Unknown Executive: When providing guidance we use the non-GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non-GAAP EPS.

Jacqueline M. Richert: For information on our guidance methodology and a reconciliation of the non-GAAP measures used in providing guidance, please refer to our news release and presentation on our website. We will use our website to announce material information. This call is being recorded.

Unknown Executive: For information on our guidance methodology and a reconciliation of the non-GAAP measures used in providing guidance. Please refer to our news release and presentation on our website.

Unknown Executive: We use our website to announce material information.

Unknown Executive: This call is being recorded infer.

Jacqueline M. Richert: Information on how to access the replay can be found on our website. Now, I'd like to turn the call over to Jason. Thank you, Jackie, and good morning, everyone. As many of you likely saw from this morning's earnings release, we are off to a strong start in 2024, despite the mild weather and the general trend of higher for longer interest rate environment our sector has experienced. This quarter is yet another illustration of why we believe we have one of the most tangible long-term growth plans in the industry, which we plan to consistently execute and thoughtfully enhance for the benefit of all of our stakeholders.

Information on how to access the replay can be found on our website now I'd like to turn the call over to Jason.

Jason P. Wells: Thank you Jackie and good morning, everyone.

Jason P. Wells: As many of you likely saw from this morning's earnings release, we're off to a strong start in 2024, despite the mild weather and the general trend of higher for longer interest rate environment, our sector has experienced.

Jason P. Wells: This quarter is yet another illustration of why we believe we have one of the most tangible long term growth plans in the industry, which we plan to consistently execute and thoughtfully enhance for the benefit of all of our stakeholders.

Jacqueline M. Richert: On this morning's call, I'd like to address three key areas of focus before handing the call over to Chris to discuss our financial results in more detail. First, I'll briefly summarize the strong first quarter financial results I just alluded to. Second, I'll touch on the details of our most recent filing at Houston Electric related to our resiliency investment, including the potential for incremental catbacks. And lastly, I'll provide an update on where we stand with respect to our regulatory calendar, including an overview of our pending rate cases and an important update on the settlement of our Texas gas rate case, where we are hopeful for an eventual constructive outcome for our stakeholders. First, turning to our financial results for the first quarter, this morning we announced non-GAAP EPS of 55 cents for the first quarter, which represents over a third of our full-year non-GAAP earnings guidance at the midpoint.

Jason P. Wells: On this morning's call I'd like to address three key areas of focus before handing the call over to Chris to discuss our financial results in more detail.

Speaker Change: First I'll briefly summarize the strong first quarter financial results I just alluded to.

Speaker Change: Second I will touch on the details of our most recent filings at Houston electric related to our resiliency investments, including the potential for incremental Capex and lastly, I'll provide an update on where we stand with respect to our regulatory calendar, including an overview of our pending rate cases, and an important update on the settlement of our Texas gas rate case, where.

Speaker Change: We are hopeful for an eventual constructive outcome for our stakeholders.

Speaker Change: First turning to our financial results for the first quarter. This morning, we announced non-GAAP EPS of <unk> 55 for the first quarter, which represents over a third of our full year non-GAAP earnings guidance at the midpoint.

Jason P. Wells: As a reminder, our full year 2024 non-GAAP EPS guidance range of $1.61 to $1.63 represents 8% growth at the midpoint from our 2023 actual results of $1.50 per share and reflects our continued focus on delivering value for our investors each and every year. Beyond 2024, we are reaffirming our guidance, where we expect to grow non-gap EPS at the mid to high end of our 6% to 8% range annually through 2030, as well as targeting dividend per share growth in line with earnings per share growth over that same period of time.

Speaker Change: As a reminder, our full year 2024, non-GAAP EPS guidance range of $1 61 to $1 63 represents 8% growth at the midpoint from our 2023 actual results of $1 50 per share and reflects our continued focus of delivering value for our investors each and every year.

Speaker Change: Beyond 2024, we are reaffirming our guidance, where we expect to grow non-GAAP EPS at the mid to high end of our 6% to 8% range annually through 2030, as well as targeting dividend per share growth in line with earnings per share growth over that same period of time.

Jason P. Wells: Chris will provide additional details regarding our financial results and earnings guidance shortly. Now, I'll turn to the recent announcement we made regarding Houston Electric's resiliency plan filing. There has been a tremendous amount of collaboration by the public and private sectors to align our focus on greater resiliency across the state of Texas.

Speaker Change: Chris will provide additional details regarding our financial results and earnings guidance shortly.

Now I'll turn to the recent announcement, we made regarding Houston Electric's resiliency plan filing.

Speaker Change: There's been a tremendous amount of collaboration by the public and private sector to align our focus on greater resiliency across the state of Texas.

Jason P. Wells: I want to applaud the state for its continued support of providing additional tools to help improve the resiliency of the electric grid, all of which serves to support the continued economic growth here in Texas. This legislation is a recognition of investments needed to strengthen the resiliency of the grid for the increasing risk of disruptive, extreme weather-related, or security-related events, while at the same time accommodating load growth across Texas. Through these filings, we anticipate achieving a faster pace of investments to support higher levels of resiliency for our customers, while also utilizing a recovery mechanism that is expected to enable smoother and more efficient recovery of certain distribution-related costs for the benefit of our customers and our investors.

Christopher A. Foster: I want to applaud the state for its continued support for providing additional tools to help improve resiliency of the electric grid all of which serves to support the continued economic growth here in Texas.

Christopher A. Foster: This legislation is a recognition of investments needed to strengthen the resiliency of the grid for the increasing the risk of disruptive extreme weather related or security related events, while at the same time accommodating load growth across Texas.

Christopher A. Foster: Through these filings, we anticipate achieving a faster pace of investments to support higher levels of resiliency for our customers.

Christopher A. Foster: I'll also utilizing a recovery mechanism that is expected to enable smoother and more efficient recovery of certain distribution related costs for the benefit of our customers and our investors.

Christopher A. Foster: Our focus on delivering a more resilient grid that serves approximately $2 8 million metered customers across the greater Houston area has been underway for some time.

Jason P. Wells: Our focus on delivering a more resilient grid that serves approximately 2.8 million metered customers across the greater Houston area has been underway for some time. The sequence of our work portfolio began with enhancing our electric transmission system and related substations, which comprise the backbone of our electric grid.

The sequence of our work portfolio began with enhancing our electric transmission system and related substation, which comprised the backbone of our electric grid.

Christopher A. Foster: This work included upgrading our transmission structures to better withstand extreme wins.

Christopher A. Foster: Elevating our substations to mitigate flood risk and converting our older 69 kv transmission lines to a more robust 138 kv standard.

Jason P. Wells: This work included upgrading our transmission structures to better withstand extreme winds, elevating our substations to mitigate flood risk, and converting our older 69 kV transmission lines to a more robust 138 kV standard. We will continue this work on the backbone of our system, and when the first three-year cycle proposed in this filing is complete in 2027, we believe we will have finished the vast majority of work associated with these programs. With that series of measures well underway, we're now complementing these program elements by expanding our targeted investments to improve outcomes closer to the customer.

Christopher A. Foster: We will continue this work on the backbone of our system and when the first three year cycle proposing. This filing is complete in 2027. We believe we will have finished the vast majority of work associated with these programs.

Christopher A. Foster: With that series of measures well underway. We're now complementing these program elements by expanding our targeted investments to improve outcomes closer to the customer.

Christopher A. Foster: Our work articulated in our resiliency filing has 24 individual resiliency measures that are focused on advancing the overall resiliency of our system.

Christopher A. Foster: The three year plan is expected to significantly improve customer outcomes from the most severe system events associated with extreme wind flood temperature changes and wildfires.

Christopher A. Foster: Additionally measures are being undertaken to bolster our physical and cyber security.

Christopher A. Foster: Examples of some of the solutions will deploy include composite poles trips favorite devices and intelligent grid switching automation technology.

Jason P. Wells: Our work articulated in our resiliency filing includes 24 individual resiliency measures that are focused on advancing the overall resiliency of our system. The three-year plan is expected to significantly improve customer outcomes from the most severe system events associated with extreme wind, flood, temperature changes, and wildfires. Additionally, measures are being undertaken to bolster physical and cyber security. Examples of some of the solutions we'll deploy include composite poles. Trip Saver Devices and Intelligent Grid Switching Automation Technology

Christopher A. Foster: All of these are proven to help the system respond more favorably in extreme conditions, resulting in a reduced number of sustained interruptions at our customers experience.

Christopher A. Foster: In fact, we steadily deploy similar system automation in recent years saving our customers over 300 million minutes of interruptions over the last five years.

Christopher A. Foster: With the investments included in our resiliency plan filing we could more than triple that figure over the next few years.

Christopher A. Foster: In aggregate our filing includes a range of investments of approximately 2.2 to $2 $7 billion over the three year period of 2025 to 2027.

Jason P. Wells: All of these are proven to help the system respond more favorably in extreme conditions, resulting in a reduced number of sustained interruptions that our customers experience. In fact, we've steadily deployed similar system automation in recent years, saving our customers over 300 million minutes of interruptions over the last five years. With the investments included in our resiliency plan filing, we could more than triple that figure over the next few years. In aggregate, our filing includes a range of investments of approximately $2.2 to $2.7 billion over the three-year period of 2025 to 2027.

Christopher A. Foster: The high end of our filing if approved would increase our total capital expenditures from $44 5 billion to $45 billion over our 10 year plan ending in 2030.

Christopher A. Foster: Consistent with how we've historically incorporated incremental investment opportunities in our base plan.

Christopher A. Foster: $500 million of additional capital will be formally included in our capital investment plan. When we believe we can efficiently execute finance and recover these investments.

Christopher A. Foster: We will also align our execution with the feedback and final resolution of the resiliency plan proceeding, which we anticipate will be towards the end of this year.

Christopher A. Foster: While we have factored the majority of this resiliency investment within our updated Capex and financing plans discussed last quarter, Chris will describe thoughts on efficiently funding, the incremental $500 million of capital investment opportunity, including pursuing various state and federal incentives.

Jason P. Wells: The high end of our filing, if approved, would increase our total capital expenditures from $44.5 billion to $45 billion over our 10-year plan ending in 2030, consistent with how we have historically incorporated incremental investment opportunities in our base plan. The $500 million of additional capital will be formally included in our capital investment plan when we believe we can efficiently execute, finance, and recover these investments. We will also align our execution with the feedback and final resolution of the resiliency plan proceeding, which we anticipate will be towards the end of this year.

Christopher A. Foster: We are excited to work with the commission and other stakeholders to get feedback on our plan, we proposed and most importantly, executing this work to create a more resilient electric grid for our customers.

Christopher A. Foster: I now want to turn to an update on our broader regulatory calendar.

Christopher A. Foster: Cover these sequentially from the data file starting with the Texas gas rate case, where we have recently announced an all party settlement.

Christopher A. Foster: Although this settlement is still subject to railroad Commission approval. We believe the settlement agreement reached with parties as a constructive outcome for our customers and all other stakeholders.

Christopher A. Foster: In its current form pending approval. The case will result in an annual revenue requirement increase of approximately $5 million, which results in an average increase of well under 110th of 1% for our Houston area residential customers.

Jason P. Wells: While we have factored the majority of this resiliency investment within our updated CapEx and financing plans discussed last quarter, Chris will describe thoughts on efficiently funding the incremental $500 million of capital investment opportunity, including pursuing various state and federal incentives. We are excited to work with the Commission and other stakeholders to get feedback on the plan we proposed and, most importantly, to carry out this work to create a more resilient electric grid for our customers. I now want to turn to an update on our broader regulatory agenda.

Christopher A. Foster: This very modest customer Bill increase is a great illustration of the power of organic growth coupled with our continued focus on reducing O&M across our businesses.

Christopher A. Foster: The Texas gas rate case filing included nearly $500 million of new capital investments and an increase to its authorized cost of capital that I'll briefly touch on in a moment all wireless resulting in a very modest increase for our customers.

Christopher A. Foster: Since the last rate case, we have invested a total of $1 4 billion and Capex to continue to improve system safety and reliability for our customers. These investments have translated to more than 800 miles of pipe replacement and more than 300000 advanced meter upgrades, all helping to modernize our gas network.

Jason P. Wells: I'll cover these sequentially from the days file, starting with a Texas gas rate case where we have recently announced an all-party settlement. Although this settlement is still subject to Railroad Commission approval, we believe the settlement agreement reached with the parties is a constructive outcome for our customers and all other stakeholders. In its current form, pending approval, the case will result in an annual revenue requirement increase of approximately $5 million, which results in an average increase of well under one-tenth of 1% for our Houston-area residential customers.

Christopher A. Foster: As I just mentioned our $5 million settled revenue requirement proposal includes an increase to our authorized capital structure and return on equity.

Christopher A. Foster: Post settlement includes an authorized equity ratio of approximately 61% and an authorized return on equity of nine 8% across our entire Texas gas jurisdiction.

In comparison, we are currently authorized an average for a $55 five equity layer and a 964% return on equity across the four historic divisions.

Increasing both our authorized equity ratio and our authorized return on equity is vital to the Texas gas business as well as our other regulated businesses as we continue to compete for capital to make critical investments for our customers.

Jason P. Wells: This very modest customer bill increase is a great illustration of the power of organic growth coupled with our continued focus on reducing O&M across our businesses. The Texas gas rate case filing included nearly $500 million of new capital investment, an increase to its authorized cost of capital that I'll briefly touch on in a moment, all while resulting in a very modest increase for our customers. Since the last rate case, we have invested a total of $1.4 billion in CapEx to continue to improve system safety and reliability for our customers. These investments have translated into more than 1,800 miles of pipe replacement and more than 300,000 advanced meter upgrades, all helping to modernize our gas network.

In addition to the minimal impact to our customer bills. The settlement combines our for historic Texas gas jurisdictions into one jurisdiction for future capital recovery mechanisms, which will benefit all stakeholders through reduced administrative burden and the ability to spread future investments over a broader growing customer base.

Christopher A. Foster: We appreciate the effort of various parties involved in the rate case to this point and expect Railroad Commission consideration of the settlement this summer.

Christopher A. Foster: Moving to the filed Minnesota gas rate case.

Christopher A. Foster: As a reminder, we filed a rate case on November one of last year. They requested revenue increase of approximately $85 million and $52 million for 2024 and 2025 respectfully.

Christopher A. Foster: As discussed on our last call. The interim rates for 2024 were approved in mid December and went into effect on January one of this year.

Jason P. Wells: As I just mentioned, our $5 million settled revenue requirement proposal includes an increase to our authorized capital structure and return on equity. The proposed settlement includes an authorized equity ratio of approximately 61% and an authorized return on equity of 9.8% across our entire Texas gas jurisdiction. In comparison, we are currently authorized, on average, for a 55.5 equity layer and a 9.64% return on equity across the four historic divisions. Increasing both our authorized equity ratio and our authorized return on equity is vital to the Texas gas business as well as our other regulated businesses as we continue to compete for capital to make critical investments for our customers.

Christopher A. Foster: The commission will consider interim rates for 2025 towards the end of this year, depending on how far along we are in the case.

Christopher A. Foster: At this stage, we anticipate hearings to occur in the middle of December this year.

Christopher A. Foster: Ahead of those hearings, we intend to engage parties to the case in settlement discussions.

Christopher A. Foster: As you May recall, we have settled our previous three rate cases, and our Minnesota gas jurisdiction.

Christopher A. Foster: Now turning to the Indiana electric rate case, which we filed in December of last year, where they requested revenue requirement of $119 million.

As we've discussed previously much of this revenue requirement increase is associated with our investments in connection with our electric generation transition plan as we move away from coal to more efficient and cost effective fuel types, such as renewables and natural gas we.

Christopher A. Foster: We have slightly delayed the start of the hearings in this case to determine if a settlement is possible with parties absent a settlement we would expect a final decision in this case in the fourth quarter of this year.

Jason P. Wells: In addition to the minimal impact on our customer bills, the settlement combines our four historic Texas gas jurisdictions into one jurisdiction for future capital recovery mechanisms, which will benefit all stakeholders through a reduced administrative burden and the ability to spread future investments over a broader, growing customer base. We appreciate the effort of various parties involved in the rate case to this point and expect Railroad Commission consideration of the settlement this summer.

Christopher A. Foster: And finally, I'll touch on our largest jurisdiction Houston electric.

Christopher A. Foster: As many of you saw we have filed our rate case last month with their requested revenue requirement increase of two 6%, which is approximately $60 million. This.

Christopher A. Foster: This revenue requirement increase results in a relatively nominal residential customer charge increase of about $1 25 per month or less than 1%.

Christopher A. Foster: This revenue requirement increase is premised on a filing seeking an authorized equity ratio of approximately 45% and an authorized return on equity of 10, 4%.

Jason P. Wells: Moving to the Minnesota gas rate case. As a reminder, we filed our rate case on November 1st of last year with a requested revenue increase of approximately $85 million and $52 million for 2024 and 2025, respectfully. As discussed on the last call, the interim rates for 2024 were approved in mid-December and went into effect on January 1st of this year. The commission will consider interim rates for 2025 toward the end of this year, depending on how far along we are in the case. At this stage, we anticipate hearings to occur in the middle of December this year.

Christopher A. Foster: As a reminder, we've been funding the Houston electric business with a 45% equity ratio as we believe this is the minimum amount of equity with which this business should be capitalized even though we're currently authorized at 42, 5%.

Christopher A. Foster: The modest revenue requirement request truly exemplifies the strong advantage. We have here at Centerpoint is it's driven by one our relentless focus on reducing O&M, 1% to 2% per year on average to prior securitization charges rolling off the Bill in October of this year and three the nearly unparalleled.

Christopher A. Foster: The Houston electric and surrounding areas experience each and every year.

Christopher A. Foster: To put these combined factors into perspective since our last rate case in 2019, Houston Electric's rate basis, nearly doubled while the average residential charges were nearly the same amount at the beginning of 2024 as they were all the way back in 2014.

Speaker Change: As a management team we are acutely aware of the advantage we have to serve a growing economy like Houston, but we also understand the tremendous responsibility that accompanies it.

Jason P. Wells: Ahead of those hearings, we intend to engage parties to the case in settlement discussions. As you may recall, we have settled our previous three rate cases in our Minnesota gas jurisdiction. Now turning to the Indian electric rate case, which we filed in December of last year with a requested revenue requirement of $119 million. As we've discussed previously, much of this revenue requirement increase is associated with our investments in connection with our electric generation transition plan as we move away from coal to more efficient and cost-effective fuel types, such as renewables and natural gas. We have slightly delayed the start of the hearings in this case to determine if a settlement is possible between the parties.

Speaker Change: We are tasked with serving and supporting the dynamic growth of Houston's vibrant and diverse population.

Speaker Change: One recent tangible example of Houston's continued expansion can be seen from the nearly $6 billion and department of energy grants awarded a little over a month ago.

Speaker Change: Nearly one third of these grants were awarded for projects in the greater Houston area.

Speaker Change: If completed we believe these projects associated with these grants could contribute well over 500 megawatts alone and new load in the Houston Electric service territory.

Speaker Change: And this is just one of many examples of the explosive load growth potential in this region.

Speaker Change: We look forward to working with our stakeholders as we continue to support this incredible growth story here in Houston.

Before moving on I want to briefly mention that we have one other rate case that we will be filing in 2024 related to our Ohio gas business we have.

Speaker Change: <unk> filing in this rate case in August of this year and we'll provide more details as we get closer to the filing.

Speaker Change: We look forward to continuing to work with all of our stakeholders to reach constructive resolutions to all of our rate cases, we believe we are well positioned in all of our filings as we've made prudent investments on behalf of our customers and have made concerted efforts to reduce controllable O&M for the benefit of the communities we serve.

Jason P. Wells: Absent a settlement, we would expect a final decision in this case in the fourth quarter of this year. And finally, I'll touch on our largest jurisdiction, Houston. As many of you saw, we filed our rate case last month with a requested revenue requirement increase of 2.6%, which is approximately $60 million. This revenue requirement increase results in a relatively nominal residential customer charge increase of about $1.25 per month, or less than 1%.

Speaker Change: Those are all of my updates for now with.

With a strong start here in 2024, we have laid the foundation to once again meet or exceed expectations for the benefit of all of our stakeholders.

Speaker Change: Out of the early milestones already achieved in 2024 and look forward to being able to provide progress on our cases and how the resiliency plan filing and other opportunities may influence incremental investments in the future.

Speaker Change: I am confident in our path forward and our ability to continue as we reaffirm our commitment to our proven strategy into our non-GAAP EPS guidance target range of 8% in 2024 and at the mid to high end of our 6% to 8% non-GAAP EPS guidance target range annually from 2025 through 2030.

Jason P. Wells: This revenue requirement increase is premised on the filing seeking an authorized equity ratio of approximately 45% and an authorized return on equity of 10.4%. As a reminder, we've been funding the Houston electric business with a 45% equity ratio, as we believe this is the minimum amount of equity with which this business should be capitalized, even though we are currently authorized at 42.5%. The modest revenue requirement request truly exemplifies the strong advantage we have here at CenterPoint, as it's driven by one, a relentless focus on reducing O&M costs by one to two percent per year on average.

Speaker Change: And as we've mentioned in recent quarters will be prepared to update a new 10 year plan through an analyst day. Following the conclusion of a rate cases next year.

With that I'll hand, it over to Chris for his financial updates.

Christopher A. Foster: Thanks, Jason.

Christopher A. Foster: Today I'd like to cover three areas of focus.

Christopher A. Foster: First the details of our strong first quarter financial results.

Christopher A. Foster: I'll touch on our capital deployment progress this quarter and the potential for incremental capital related to Houston Electric system Resiliency plan filing.

Jason P. Wells: Two, prior securitization charges rolling off the bill in October of this year, and three, the nearly unparalleled growth that Houston Electric and surrounding areas experience each and every year. To put these combined factors into perspective, since our last rate case in 2019, Houston Electric's rate base has nearly doubled, while the average residential charges were nearly the same amount at the beginning of 2024 as they were all the way back in 2014.

Christopher A. Foster: And finally, I'll provide an update on where we stand with respect to our current financing plan and credit metrics.

Christopher A. Foster: Let's start with the financial results shown on slide six.

Christopher A. Foster: As Jason highlighted earlier, the first quarter of 2024 was yet another strong quarter of financial performance here at Centerpoint.

Christopher A. Foster: On a GAAP EPS basis, we reported <unk> 55 for the first quarter of 2024.

Christopher A. Foster: On a non-GAAP basis, we also reported <unk> 55 for the first quarter of 2024 compared to <unk> 50 in the first quarter of 2023.

Christopher A. Foster: With these first quarter results. We have now earned over a third of our full year 2024, non-GAAP earnings guidance at the midpoint.

Jason P. Wells: As a management team, we are acutely aware of the advantage we have to serve a growing economy like Houston. But we also understand the tremendous responsibility that accompanies it. We are tasked with serving and supporting the dynamic growth of Houston's vibrant and diverse population. One recent tangible example of Houston's continued expansion can be seen from the nearly $6 billion in Department of Energy grants awarded a little over a month ago. Nearly one-third of these grants were awarded for projects in the greater Houston area.

Christopher A. Foster: Diving into more detail of the earnings drivers for the quarter growth and rate recovery contributed nine cents.

Christopher A. Foster: Which was primarily driven by the ongoing recovery from various interim mechanisms for which customer rates were updated last year.

Christopher A. Foster: In addition to those capital recovery mechanisms interim rates in our Minnesota gas business went into effect on January one of this year.

Christopher A. Foster: These rates reflect a revenue requirement increase of approximately $69 million, which when combined with our requested 2025 revenue increase represent an approximately 5% average bill increase over the next two years.

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

Jason P. Wells: If completed, we believe these projects associated with these grants could contribute well over 500 megawatts alone in new load to the Houston Electric Service. And this is just one of many examples of the explosive load growth potential in this region. We look forward to working with our stakeholders as we continue to support this incredible growth story here in Houston. Before moving on, I want to briefly mention that we have one other rate case that we will be filing in 2024 related to our Ohio gas business. We anticipate filing this rate case in August of this year, and we'll provide more details as we get closer to the filing.

Christopher A. Foster: A great illustration of this continued growth can be found in the impressive job creation, we've observed in Houston over the last year.

Christopher A. Foster: According to the U S Department of Labor the Houston Metro area added the second most jobs in the entire U S from February of last year to February 2024.

Christopher A. Foster: Weather and usage were <unk> <unk> favorable when compared to the same quarter of 2023.

Christopher A. Foster: And despite the mild weather the <unk> <unk> favorable variance with.

Christopher A. Foster: With largely driven by more favorable weather when compared to an extremely mild Q1 of 2023.

Christopher A. Foster: Partially offsetting the favorable items from rate recovery in usage, where increases in O&M and interest expense.

Jason P. Wells: We look forward to continuing to work with all of our stakeholders to reach constructive resolutions in all of our rate cases. We believe we are well positioned in all of our filings as we've made prudent investments on behalf of our customers and have made concerted efforts to reduce controllable O&M for the benefit of the communities we serve. Those are all of my updates for now.

Christopher A. Foster: O&M was <unk> <unk> unfavorable for the first quarter.

Christopher A. Foster: The unfavorable variance was driven by additional work pulled forward into the first quarter of this year as well as storm response recovery efforts.

Christopher A. Foster: However, we remain on track to achieve our target of reducing O&M, 1% to 2% per year on average through 2030.

Interest expense was <unk> <unk> unfavorable primarily driven by the new debt issuances since the first quarter of last year at a higher relative cost of debt.

Jason P. Wells: With a strong start here in 2024, we have laid the foundation to once again meet or exceed expectations for the benefit of all of our stakeholders. I'm proud of the early milestones already achieved in 2024 and look forward to being able to provide progress on our cases and how the resiliency plan filing and other opportunities may influence incremental investments in the future. I am confident in our path forward and our ability to continue as we reaffirm our commitment to our proven strategy and to our non-GAP EPS guidance target range of 8% in 2024 and at the mid to high end of our 6 to 8% non-GAP EPS guidance target range annually from 2025 through 2030.

Christopher A. Foster: However, the impact of this increase was partially offset by the redemption of all outstanding shares of the series a preferred for $800 million last September which eliminated the approximately $12 million quarterly dividend.

Christopher A. Foster: I will discuss our long term financing plan and balance sheet in greater detail later.

Speaker Change: Next I'll touch on our capital execution, thus far in 2024 and the state of our 10 year capital plan target, which you can see here on slide seven.

In short we are right on plan.

Speaker Change: The first quarter of 2024 represented yet another quarter of solid capital investment execution, as we invested $800 billion for the benefit of our customers and communities.

Speaker Change: This represents a little over 20% of our 2024 capital expenditure target of $3 7 billion.

Speaker Change: Our approach to incorporating customer driven capital has resulted in a capital investment plan of $44 5 billion.

Jason P. Wells: And as we've mentioned in recent quarters, we'll be prepared to update a new 10-year plan through an analyst day following the conclusion of our rate cases next year. With that, I'll hand it over to Chris for his financial update. Thanks, Jason.

And potentially more which represents an increase of over 10% since our 2021 analyst day.

Speaker Change: This increased capital plan is expected to drive a nearly 10% rate base CAGR through 2030.

Christopher A. Foster: Today, I'd like to cover three areas of focus. First, the details of our strong first quarter financial results. Second, I'll touch on our capital deployment progress this quarter and the potential for incremental capital related to Houston Electric's System Resiliency Plan filing. And finally, I'll provide an update on where we stand with respect to our current financing plan and credit metrics. Let's start with the financial results shown on slide 6. As Jason highlighted earlier, the first quarter of 2024 was yet another strong quarter of financial performance here at CenterPoint. On a GAAP EPS basis, we reported 55 cents for the first quarter of 2024.

Speaker Change: Which supports strong earnings growth through the remainder of the decade.

Speaker Change: We continue to estimate our growth in customer delivery charges at Houston electric to be equal to or less than historical inflation rate of 2% through 2030 with this capital investment profile.

Speaker Change: We have confidence in our ability to achieve this given the size of Houston Electric's customer base and the underlying tremendous organic growth.

Speaker Change: Securitization charges that are rolling off the Bill later this year.

And our plan to reduce O&M as I referenced.

Speaker Change: In addition to enhancing the customer experience through our capital investments.

Speaker Change: We remain focused on affordability, both from an O&M and ongoing targeted capital perspective.

A great illustration as to why we are confident that we can continue to prudently invest while keeping customer charges modest can be found by looking at our utility delivery charge increases over the last 10 years.

Christopher A. Foster: On a non-GAAP basis, we also reported $0.55 for the first quarter of 2024, compared to $0.50 in the first quarter of 2023. With these first quarter results, we have now earned over a third of our full-year 2024 non-GAAP earnings guidance at the midpoint. Diving into more detail of the earnings drivers for the quarter, growth and rate recovery contributed $0.09, which is primarily driven by the ongoing recovery from various intramechanisms for which customer rates were updated last year. In addition to those capital recovery mechanisms, interim rates in our Minnesota gas business went into effect on January 1st of this year.

Speaker Change: Since 2014, Houston Electric's average monthly delivery charges have stayed essentially flat.

Speaker Change: That's a truly remarkable outcome for our customers.

Speaker Change: And as Jason mentioned.

Speaker Change: Our capital has potential for further incremental revisions driven by our resiliency filing in Texas.

Speaker Change: The system resiliency plan filing could drive incremental customer driven opportunities of up to $500 million at the high end range of our proposed investment.

Speaker Change: And I want to reiterate that over the past couple of years, we have been increasing our capital investment plan through 2030, as we identify incremental investment opportunities.

Speaker Change: We believe we can efficiently execute finance and recover.

Speaker Change: Let's spend a moment on the potential for funding the incremental resiliency investment opportunities of approximately $500 million, which Jason mentioned.

Christopher A. Foster: These rates reflect a revenue requirement increase of approximately $69 million, which when combined with our requested 2025 revenue increase, represents an approximately 5% average bill increase over the next two years. In addition, we continue to see strong organic growth in the Houston area, extending the long-term trend of 1-2% average annual customer growth, which continues to benefit both customers and investors. A great illustration of this continued growth can be found in the impressive job creation we've observed in Houston over the last year. According to the U.S. Department of Labor, the Houston metro area added the second most jobs in the entire U.S. from February of last year to February 2024.

Speaker Change: We are applying for various federal dollars through multiple avenues and have already applied for $100 million of great applications through the department of energy grid resilience and innovation partnership funding opportunity and that was submitted a little over a week ago.

Speaker Change: These funds if approved would primarily assist in providing a lower cost of borrowing for our resiliency initiatives around distribution circuit rebuilds and substation resiliency innovation.

Speaker Change: In addition.

Speaker Change: We will also seek other efficient funding opportunities through federal and state matching programs such as the Doe loan guarantee program.

Speaker Change: Centerpoint has three separate loan applications working through the process in various stages for over $2 billion in aggregate.

Speaker Change: While these are loan dollars not great in dollars the relative cost savings versus traditional debt can be substantial around 100 basis points, representing meaningful savings for customers.

Speaker Change: As Jason alluded to we are actively pursuing these avenues of funding as we believe these are incredibly valuable initiatives for customers.

Christopher A. Foster: Weather and usage were two cents favorable when compared to the same quarter of 2023, and despite the mild weather, the two-cent favorable variant was largely driven by more favorable weather when compared to an extremely mild Q1 of 2023, partially offsetting the favorable items from rate recovery and usage, or increases in O&M and interest expense. O&M was two cents unfavorable for the first quarter.

To the extent that we are not successful our consistent growth capital investment rule of thumb holds.

Speaker Change: Which is funding in line with our consolidated capital structure.

Speaker Change: Finally to highlight the balance sheet and credit strength.

Speaker Change: As of the end of the first quarter, our calculated <unk> to debt is 14, 6%.

Speaker Change: Based on our calculation aligning with Moody's methodology as shown on slide 20.

Speaker Change: On a full year 2024 basis, we still anticipate delivering on the 100 to 150 basis points cushion, we continued to emphasize when applying Moody's methodology.

Christopher A. Foster: This unfavorable variance was driven by additional work pulled forward in the first quarter of this year, as well as storm response recovery efforts. However, we remain on track to achieve our target of reducing O&M 1-2% per year on average through 2030. Interest expense was $0.04 unfavorable, primarily driven by new debt issuances since the first quarter of last year, at a higher relative cost of debt.

Speaker Change: As you can see on the slide. We've also included S&P's calculation on the slide this quarter and will continue to do so going forward.

Speaker Change: As the computation illustrates we've adjusted our calculations for one time items, mainly driven by winter storm here.

Speaker Change: We have had two years of one time items related to the over $1 billion of extraordinary gas costs associated with that store.

Speaker Change: We don't believe that this debt nor the eventual receipt of the proceeds and associated taxes were indicative of the fundamental credit health of the company and adjusted Accordingly.

Christopher A. Foster: However, the impact of this increase was partially offset by the redemption of all outstanding shares of the Series A preferred for $800 million last September, which eliminated the approximately $12 million quarterly dividends. I'll discuss our long-term financing plan and balance sheet in greater detail later. Next, I'll touch on our capital execution thus far in 2024 and the state of our 10-year capital plan target, which you can see here on slide 7.

Speaker Change: For comparative purposes, you can see on the slides that we put our calculated 14% in the middle of the 18, 5% <unk> to debt that Moody's derived and the 11, 2% calculation that S&P derived.

Speaker Change: To be clear, we see no need to change our current financing plan to be shared with our rating agencies earlier this year to improve the outlook from S&P on our credit metrics.

Speaker Change: In addition, we've made good progress against the modest $250 million at the market or ATM equity program year to date.

Christopher A. Foster: In short, we are right on plan. The first quarter of 2024 represented yet another quarter of solid capital investment execution as we invested $800 billion for the benefit of our customers and communities. This represents a little over 20% of our 2024 capital expenditure target of $3.7 billion.

Speaker Change: We have completed approximately 75% of our equity sales through today, leaving only around an expected $60 million of equity remaining to be issued this year.

Speaker Change: As a reminder, we continue to have slightly elevated parent debt to total debt as we are continuing to carry over $400 million of debt at the parent to support what we believe is the proper capitalization of the <unk> and <unk> operating companies through rate cases.

Christopher A. Foster: Our approach to incorporating customer-driven capital has resulted in a capital investment plan of $44.5 billion, and potentially more, which represents an increase of over 10% since our 2021 Analyst Day. This increased capital plan is expected to drive a nearly 10% rate-based CAGR through 2030, which supports strong earnings growth for the remainder of the decade. We continue to estimate our growth in customer delivery charges at Houston Electric to be equal to or less than the historical inflation rate of 2% through 2030 with this capital investment profile.

Speaker Change: We plan to continue to carry that through the CD rate case supporting its approximately 45% equity later today.

On the solid footing of our strong first quarter, we continue to reaffirm our non-GAAP EPS target of 8%. This year in the mid to high end of 6% to 8% annually thereafter through 2030.

Speaker Change: This growth is supported by differentiating factors that we enjoy including consistent customer organic growth, which has averaged 2% per year over the last 30 years in the Houston area.

Speaker Change: Texas is pro business environment, which continues to attract new investment, especially in the Gulf Coast region and.

Speaker Change: And lastly, our relentless focus on O&M discipline.

Christopher A. Foster: We have confidence in our ability to achieve this given the size of Houston Electric's customer base and the underlying tremendous organic growth, as well as the securitization charges that are rolling off the bill later this year and our plan to reduce O&M, as I referenced. In addition to enhancing the customer experience through our capital investment, we remain focused on affordability, both from an O&M and ongoing targeted capital perspective. A great illustration as to why we are confident that we can continue to prudently invest while keeping customer charges modest can be found by looking at our utility delivery charge increases over the last 10 years. Since 2014, Houston Electric's average monthly delivery charges have stayed essentially flat.

Speaker Change: We believe these factors will allow us to sustainably grow for years to come.

Speaker Change: The last thing I want to mention is that we are making good progress related to the sale of our Louisiana, and Mississippi gas L. D. CS.

We along with a buyer have now made all required regulatory filings, including filings with the Louisiana and Mississippi Public Service Commission.

Speaker Change: And we look forward to working constructively with the commission to facilitate the approval proceedings.

Speaker Change: We still anticipate closing the sale late first quarter 2025, and is anticipated to result in after tax cash proceeds of approximately $1 billion.

Which equate to an earnings multiple of nearly 32 times 2023 earnings.

Speaker Change: This will be in terrific outcome for all stakeholders.

Speaker Change: With that I'll now turn the call back over to Jason.

Jason P. Wells: Thank you, Chris I look forward to continuing not only to execute on what I believe to be one of the most tangible long term growth plans in the industry, but also enhancing it for the benefit of all of our stakeholders in both the near and long term.

Christopher A. Foster: That's a truly remarkable outcome for our customers, and as Jason mentioned, our capital has the potential for further incremental revisions driven by our resiliency filing in Texas. The System Resiliency Plan filing could drive incremental customer-driven opportunities of up to $500 million at the high-end range of our proposed investment. And I want to reiterate that over the past couple of years, we have been increasing our capital investment plan through 2030 as we identify incremental investment opportunities that we believe we can efficiently execute, finance, and recover.

Jason P. Wells: Thanks, Jason Operator, we're now ready for Q&A.

Jason P. Wells: Thank you at this time, we will begin taking questions.

Jason P. Wells: You wish to ask a question. Please press star one on your catch 10 key pad.

Any requests that when asking a question collars pick up their telephone headset.

Jason P. Wells: Thank you.

Jason P. Wells: And the first question will come from Shar <unk> with Guggenheim Partners. Your line is open.

Jason P. Wells: Hi, Good morning team, it's actually Constantine <unk>, congrats on a great quarter.

Christopher A. Foster: Let's spend a moment on the potential for funding the incremental resiliency investment opportunities of approximately $500 million, which Jason mentioned. We are applying for various federal dollars through multiple avenues and have already applied for $100 million in grant applications through the Department of Energy Grid Resilience and Innovation Partnerships funding opportunity, and that was submitted a little over a week ago. These funds, if approved, would primarily assist in providing a lower cost of borrowing for our resiliency initiatives around distribution circuit rebuilds and substation resiliency innovations.

Constantine: Thanks, Scott and good morning.

Good morning.

Constantine: I appreciate the updates on the call today, especially with the resiliency filing and I see that it was largely embedded in the <unk> update.

Constantine: But as we think about the $500 million upside just how are you thinking about.

Constantine: In terms of accretion versus the 10% rate base growth and maybe any specific thresholds or incremental on the incremental updates on capex.

Constantine: How are you kind of planning to announce any kind of financing optimization there.

Speaker Change: Yes, Thanks, Scott, it's a pretty comprehensive question there.

Speaker Change: Let me kind of start at the highest level I think there's three main points to this capex.

Speaker Change: First is.

Christopher A. Foster: In addition, we will also seek other efficient funding opportunities through federal and state matching programs, such as the DOE Loan Guarantee Program. CenterPoint has three separate loan applications working through the process in various stages for over $2 billion in aggregate.

Speaker Change: We've got a great base plan.

Speaker Change: 10% rate base growth through the through the end of the decade.

Speaker Change: And the second point I'd make is we've been spending significantly on resiliency because it's the right thing to do for our customers.

Speaker Change: Case in point, we've increased our capex plans over 10% since our 2021 analyst day that was largely to support increased resiliency efforts and so this is.

Christopher A. Foster: While these are loan dollars, not grant dollars, the relative cost savings versus traditional debt can be substantial, around 100 basis points, representing meaningful savings for customers. As Jason alluded to, we are actively pursuing these avenues of funding as we believe these are incredibly valuable initiatives for customers. To the extent that we are not successful, our consistent growth capital investment rule of thumb holds, which is funding in line with our consolidated capital structure. Finally, to highlight the balance sheet and credit strength. As of the end of the first quarter, our calculated FFO to debt is 14.6%, based on our calculation aligning with Moody's methodology, as shown on slide 20.

Speaker Change: I can spend that has been already incorporated in this plan.

Speaker Change: And then importantly, I do think third.

Speaker Change: We have a significant amount of opportunities in front of us.

Speaker Change: Those take the form of continued resiliency investment, particularly on the distribution side, one of the things that I'm.

Speaker Change: Probably most excited about is the industrial electrification opportunity that we have here, particularly in the greater Houston area. Just as one quick example, theres about 10 gigawatts of hydrogen production and development to come online before 2030.

Speaker Change: That hydrogen production requires significant increases in electric transmission capacity substation capacity also carries with it significant jobs.

Speaker Change: Which will help continue to drive residential load growth.

Speaker Change: The gas side of things, we continue to see significant opportunities for incremental capex, particularly around maybe local gas transmission.

Christopher A. Foster: On a full year 2024 basis, we still anticipate delivering on the 100 to 150 basis points cushion we continue to emphasize when applying Moody's methodology. As you can see on the slide, we've also included S&P's calculation on the slide this quarter and will continue to do so going forward. As the computations illustrate, we've adjusted our calculations for one-time items, mainly driven by Winter Storm Yuri. We have had two years of one-time items related to the over $1 billion of extraordinary gas costs associated with that storm. We don't believe that this debt, nor the eventual receipt of the proceeds and associated taxes, were indicative of the fundamental credit health of the company or adjusted accordingly.

Speaker Change: Pipeline capacity in the greater Houston area.

Speaker Change: We're one of the few gas ldcs in the country that don't have localized gas transmission capacity and I think it can help our customers help mitigate the cost and severe.

Speaker Change: Weather events and so the short of it is we've got a great base plan, we've been spending on resiliency and we have significant increases in capex.

Speaker Change: It's still in front of us.

Speaker Change: In terms of being accretive to the plan.

Speaker Change: What do you spend it if it wasn't the right thing to do for customers was the right thing to do for shareholders.

Speaker Change: For all of our stakeholders.

Speaker Change: Developed a track record of executing upon that in terms of financing, maybe I'll turn it over to Chris to share some thoughts about funding any incremental capex from from this point forward.

Christopher A. Foster: Sure happy to hit it in the morning, Constantine I think if you look at the.

Christopher A. Foster: Larger incremental potential capex that Jason was just referencing you should think about it is just the prior approach that we've referenced which is continuing to incorporate that into our capital plan as we can execute it finance it and recovered in the way in which we would do it would largely be to fund it in line with our enterprise cost structure as you look specifically at the.

Christopher A. Foster: For comparative purposes, you can see on the slides that our calculated 14% is in the middle of the 18.5% FFO to debt that Moody's derived and the 11.2% calculation that S&P derived. To be clear, we see no need to change our current financing plans that we shared with our rating agencies earlier this year to improve the outlook from S&P on our credit metric. In addition, we've made good progress against the modest $250 million at-the-market or ATM equity program year-to-date. We have completed approximately 75% of our equity sales through today, leaving only around an expected $60 million of equity remaining to be issued this year.

Christopher A. Foster: Roughly <unk> $500 million opportunity, we referenced this morning around the resiliency filing we did reference that we're going to go after some potential both federal and state based loaned and cost matching program, but to the extent that we're not successful on those again the simple way to think about it as we'd be funding in line with the enterprise capital structure.

Speaker Change: Excellent I appreciate that and maybe maybe a quick follow up on that.

Speaker Change: You kind of highlighted the path on credit metrics.

Speaker Change: Thinking about options of refinancing needs on both floating rate exposure and kind of near term maturities and there any optimization opportunities.

Speaker Change: They're with convertibles hybrid <unk> et.

Speaker Change: The federal loan programs to supplement.

Speaker Change: Sure happy to touch on it and I have to say, we're pleased with where we are today source reported $14 six in terms of episode of debt based on the Moody's calc and consistently are seeing as we go forward a good trajectory both on the Moody's and S&P calculation as we think about the different financing alternatives. It is certainly the case that we are on.

Christopher A. Foster: As a reminder, we continue to have slightly elevated parent debt to total debt as we are continuing to carry over $400 million of debt at the parent to support what we believe is the proper capitalization of the CEHE and CERC operating companies through rate cases. We plan to continue to carry that through the CE rate case, supporting its approximately 45% equity layer today. On the solid footing of a strong first quarter, we continue to reaffirm our non-gap EPS target of 8% this year and the mid to high end of 6% to 8% annually thereafter through 2030.

Speaker Change: Already pursuing some.

Speaker Change: Loan program to the tune of just over $2 billion already so those have already been filed really that's just a cheaper alternative for better financing cost for customers.

Speaker Change: We look at the financing.

Speaker Change: Financing plan throughout the year certainly we've got a few maturities here that are coming up we have hedged against a portion of the current offering thats probably closer here in front of us at the parent level and then as you look at hybrid alternative I think you referenced there that's certainly something that we're evaluating you should assume.

Christopher A. Foster: This growth is supported by differentiating factors that we enjoy, including consistent customer organic growth, which has averaged 2% per year over the last 30 years in the Houston area. Texas' pro-business environment, which continues to attract new investment, especially in the Gulf Coast region, and lastly, our relentless focus on O&M discipline.

Speaker Change: We kind of like the profile there, but we are looking really at a couple of alternatives. Both for some tax alternatives. This year and some some hybrid opportunities if they make sense and it's just my way of saying Constantine that we're always going to be pursuing the most efficient financing we can as we go forward.

Constantine: Okay Everything's on the table and just a.

Speaker Change: A quick one on Jason's comments around demand growth that you mentioned.

Speaker Change: Cost shifts have kind of become more of a prominent issue with the inflection in load that we are seeing do you see any issues in Texas or even in D&O, where you would need to adjust cost allocation would those be addressed in the current rate case process or any kind of separate proceedings.

Christopher A. Foster: We believe these factors will allow us to sustainably grow for years to come. The last thing I want to mention is that we are making good progress related to the sale of our Louisiana and Mississippi gas LDCs. We, along with a buyer, have now made all required regulatory filings, including filings with the Louisiana and Mississippi Public Service Commissions, and we look forward to working constructively with the Commission to facilitate the approval proceedings.

Speaker Change: I think it's a great question.

Speaker Change: Probably less kind of an issue directly in our service territories.

Speaker Change: We serve.

Speaker Change: Largely because the growth that we're seeing both the potential for it up in southwest, Indiana as well as here in.

Speaker Change: In the greater Houston area is really driven by industrial.

Speaker Change: Industrial load growth that comes with significant jobs.

Christopher A. Foster: We still anticipate closing the sale late in the first quarter 2025 and it is anticipated to result in after-tax cash proceeds of approximately $1 billion, which equates to an earnings multiple of nearly 32 times 2023 earnings. This would be a terrific outcome for all stakeholders. With that, I'll now turn the call back over to Jason. Thank you, Chris.

Speaker Change: Much of the discussion over the last couple of quarters has been around data centers.

Speaker Change: High growth.

Speaker Change: Some of the toughest electric load growth of certain low margin doesn't necessarily come with that.

Speaker Change: John.

Speaker Change: And so to your point sort of pressure more largely on cost allocation I think here again, where it's at.

Jason P. Wells: I look forward to continuing not only to execute on what I believe to be one of the most tangible long-term growth plans in the industry but also to enhancing it for the benefit of all of our stakeholders in both the near and long term. Thank you, Jason. Operator, we're now ready for Q&A. Thank you. At this time, we will begin taking questions. If you wish to ask a question, please press star 11 on your touchtone keypad.

Speaker Change: Clear differentiator for Centerpoint, we serve load that.

Speaker Change: It's not only growing from a residential standpoint, and an industrial standpoint keeps that got in cost allocation issue sort of.

Speaker Change: Less.

Speaker Change: Less impactful than maybe some of the peers that have data center growth really driving there.

Speaker Change: Electric sales.

Speaker Change: Thanks, that's really helpful really appreciate the questions today.

Speaker Change: One moment for the next question.

Speaker Change: The next question will come from James <unk> with BMO capital markets. Your line is open.

Operator: The company requests that when asking a question, callers pick up their telephone headsets. Thank you. And the first question will come from Shahriar Pourreza with Guggenheim Partners. Your line is open. Hi, good morning team. It's actually Constantine, I'm on behalf of Shahriar.

James: Good morning, guys. Thanks for the time.

James: Hey, good morning.

James: I just wanted to follow up on <unk> question on the system resiliency filing.

James: The planned two two to $2 seven which I think is roughly almost double the $1 three been planning for the last couple of years, but if I heard you correctly. The 500 million of incremental capital is kind of in line with the higher end of the filing so.

Constantine Lednev: Congratulations on a great quarter. Thanks, Constantine. Good morning. Good morning.

Unknown Executive: Appreciate the updates on the call today, especially with the resiliency filing, and I see that it was largely embedded in the 4Q update. But as we think about the 500 million upside, just how are you thinking about it in terms of accretion versus a 10% rate-based growth, and maybe any specific thresholds or incremental? on the incremental updates and CapEx. And how are you planning to announce any kind of financing update? Yeah, thanks, Constantine.

James: If we kind of run this forward if the PUC ultimately decides to approve spending say near the bottom this or even below the range could you talk a little bit about where you see other investment opportunities and how would this change your financing plan if at all.

Speaker Change: Yes, maybe a couple of quick points on that Jimmy So the two point to the low end of the range is consistent with a 44 and a half.

Speaker Change: Upper end of that resiliency filing that incremental 500 would put us to $45 billion overall through 2030.

Speaker Change: Look I think if there is pretty strong alignment across the state here in Texas around investments.

Jason P. Wells: Pretty comprehensive question there. Let me kind of start at the highest level, and I think there are three main points to this CapEx update. You know, the first is... We've got a great base plan. 1% rate-based growth through the end of the decade.

Speaker Change: Great resilience and going to help the economic growth that we're experiencing in Texas.

Speaker Change: Also I think what's important part of this filing.

What is maybe different than some of the historical resiliency spend is.

Jason P. Wells: The second point I'd make is we've been spending significantly on resiliency because it's the right thing to do for our customers. Case in point, you know, we've increased our CapEx plans to over 10% since our 2021 Analyst Day, and that was largely to support increased resiliency efforts. And so, you know, this is against them.

Speaker Change: It's part of the filing we have to prove.

Speaker Change: Benefits of the incremental resiliency.

Speaker Change: Mitigation measures exceed the cost.

Speaker Change: So part of this filing.

Speaker Change: Really demonstrates that on a net basis.

Speaker Change: Still in the customer's best interest for us to make these investments.

Speaker Change: And so I feel like there's going to be a strong support for our filing and the other filings of the transmission and distribution utilities that being said to your point. If there is concern around the proposed mitigation measures that.

Jason P. Wells: It has already been incorporated in this plan. And, importantly, I do think thirdly, we have a significant amount of opportunities in front of us. Those take the form of continued resiliency investment, particularly on the distribution side. One of the things that I'm probably most excited about is the industrial electrification opportunity that we have here, particularly in the greater Houston area. Just as one quick example, there are about 10 gigawatts of hydrogen production and development to come online before 2030.

Speaker Change: That we have in our filing.

Speaker Change: As a quick reminder, this is about 15% of our total Capex plan and as I alluded to in my answer to Argentina, I think we have plenty of incremental capex opportunities outside of this.

Speaker Change: And then maybe on the gas side of the business I talked about local transmission pipeline there potential to accelerate our next generation smart meter deployment.

Speaker Change: And then on the electric side I, just I cannot reiterate enough the opportunity with this exponential load growth driven by industrial electrification.

Jason P. Wells: That hydrogen production requires significant increases in electric transmission capacity, substation capacity, also carries with it significant jobs, which will help continue to drive residential load growth. And on the gas side of things, we continue to see significant opportunities for incremental capex, particularly around maybe local gas transmission and pipeline capacity in the Greater Eastern Area. We're one of the few gas LDCs in the country that don't have localized gas transmission capacity, and I think it can help our customers help mitigate the cost and severe weather events.

Speaker Change: Electrification commercial fleets so.

I think that there are abundant set of opportunities.

Speaker Change: <unk> of incremental Capex and I don't know, Chris if you want to continue to reinforce thoughts on.

Speaker Change: On the financing plan and share just to build on that again as we look at the base plan.

Speaker Change: The 14th at the low end of the resiliency of filing that would just support the 44 five with the ongoing very modest ATM program that we've got through 2030 and again as we look beyond that for some of these incremental opportunities it really would be funny in line with with existing cap structure.

Speaker Change: Great. Thank you so much for the update guys.

Speaker Change: One moment for the next question.

Speaker Change: The next question will come from Steve Fleishman with Wolfe Research your line of sight in Spain.

Speaker Change: Okay.

Yes, hi, good morning. Thanks.

Jason P. Wells: And so the short of it is, you know, we've got a great base plan, we've been spending on resiliency, and we have a significant Unknown Speaker still in front of us, in terms of being creative.

Speaker Change: Just.

Steven Isaac Fleishman: On the Indiana update that you mentioned on the settlement.

Steven Isaac Fleishman: Or I guess delay in the hearing just maybe a little more color on how long it's.

Steven Isaac Fleishman: Delayed and just.

Speaker Change: Got it.

Speaker Change: If an agreement.

Speaker Change: Good morning, Steve Thanks for the question.

Speaker Change: We pushed the start.

Speaker Change: The hearings by a day.

Jason P. Wells: We wouldn't spend it if it wasn't the right thing to do for customers, wasn't the right thing to do for shareholders, you know, for all of our stakeholders. I think we've developed a track record of executing on that. In terms of financing, maybe I'll turn it over to Chris to share some thoughts about funding any incremental CapEx. Sure, happy to hit it in the morning, Constantine.

Speaker Change: As we continue to explore the potential here for settlement.

Okay.

Speaker Change: It's hard to handicap kind of expectations I think we're working hard with stakeholders to find what we believe would be a constructive path forward.

Speaker Change: As a quick reminder, in this case a lot of the Capex. That's included in A&D electric filing has been in front of.

Speaker Change: The IR.

Speaker Change: <unk>.

Speaker Change: And our stakeholders and previous forums, whether thats the cost of it.

Speaker Change: Coal transition or the transmission and distribution investments.

Speaker Change: We're making to improve reliability and resiliency in that in that area and so a lot of the <unk>.

Christopher A. Foster: I think if you look at the larger incremental potential CapEx that Jason was just referencing, you should think about it as just the prior approach that we've referenced, which is continuing to incorporate that into our capital plan as we can execute it, finance it, and recover it. And the way in which we would do it would largely be to fund it in line with our enterprise cap structure. As you look specifically at the roughly $500 million opportunity we referenced this morning around the resiliency filing, we did reference that we're going to go after some potential both federal and state-based loan and cost-matching programs. But to the extent that we're not successful on those, again, the simple way to think about it is we'd be funding in line with the enterprise capital structure. Thanks, everyone.

Issues of the case have kind of been seen by stakeholders in a number of different forms and so we continue to try to work constructively towards a settlement.

Speaker Change: <unk>.

Speaker Change: We'll update you.

Speaker Change: Sure.

Speaker Change: As we have.

Speaker Change: More information.

Okay.

Speaker Change: Great and then just on the kind of S&P negative outlook I just want to clarify.

Just as you're I mean.

Speaker Change: These things usually take.

Speaker Change: Look a year or so to go through but just are you. Your intention is just that these metrics will get better just as the Yuri.

Impact goes away and that should be sufficient.

To meet the targets there.

Speaker Change: How to think about it.

Speaker Change: Good morning, Steve.

Speaker Change: Really what S&P was looking at was the path right as they evaluated and arrived at that outcome. Our general assumption. It is that roughly a year long period and as we look at the plan going forward as we look over the next few years Youll see naturally that Yuri impact roll off and we'll see ourselves really.

Unknown Executive: Appreciate that. And maybe a quick follow-up on that. You kind of highlighted the path on credit metrics. And how are you thinking about options for refinancing needs on both floating rate exposure and kind of near-term maturities? And are there any optimization opportunities there with convertibles, hybrids, or any of these?

Speaker Change: As we see even just in 2024 looking at the year Youre going to see us at Moody's continuing to target that 100 to 150 basis point cushion that won't change and.

Speaker Change: And Additionally, youll see it grow into a greater cushion at S&P as we walk into the subsequent years, so comfortable with the debate financial plan and what it informs for the years ahead.

Speaker Change: I think Steve if I could add to that.

Christopher A. Foster: Federal loan programs to supplement. Sure. I'm happy to touch on it. And I have to say, you know, we're pleased with where we are today. You saw us report at 14.6 in terms of FFO to debt based on the Moody's calc and consistently are seeing as we go forward a good trajectory both on the Moody's and S&P calculations. As we think about the different financing alternatives, it is certainly the case that we are already pursuing some DOE loan program dollars to the tune of just over $2 billion already. So those have already been filed.

Steven Isaac Fleishman: Obviously as Chris said, we're comfortable but I think it's important to highlight the core difference in methodology here because it is transitory in nature.

Speaker Change: The way to that.

Steven Isaac Fleishman: Yes, sure I'd add is we've received securitization proceeds from.

Speaker Change: What are sort of mirrored significant cash inflow, we have to pay taxes on that cash outflow S&P's methodology excludes.

Speaker Change: That significant inflow.

Speaker Change: But includes the associated cash outflow, alright, that's sort of out.

Speaker Change: Transitory effect and as Chris said as we look forward.

Speaker Change: We feel comfortable about the trajectory that we're on.

Speaker Change: Various sort of idiosyncratic.

Speaker Change: Impact from from their calculation.

Christopher A. Foster: Really, that's just a cheaper alternative for better financing costs for customers. As we look at the financing plan throughout the year, certainly, we've got a few maturities here that are coming up. We've hedged against a portion of the current offering that's probably closer to us at the parent level. And then as you look at hybrid alternatives, I think you referenced there, that's certainly something that we're evaluating.

Speaker Change: Okay and then last question just on Texas, I know you kind of answered this in the hydrogen hub.

Speaker Change: It sounds exciting that just feels like that just takes time, but theres just so many other.

Speaker Change: Dynamic economic things, whether it's data centers or other industrial just could you just give.

Speaker Change: Maybe a little more flavor of kind of Centerpoint <unk> ability to get.

Speaker Change: Two opportunity set related to the.

Speaker Change: The growth.

Christopher A. Foster: We kind of like the profile there, but we are really looking at a couple of alternatives, both for some tax alternatives this year and some hybrid opportunities, if they make sense. And it's just my way of saying, Constantine, that we're always going to be pursuing the most efficient financing we can as we go forward. Okay, so everything's on the table.

Speaker Change: In Texas.

Speaker Change: Yes, Thanks, David.

Speaker Change: What I would say is I don't think you can find a more dynamic setting anywhere in the country, particularly on electric sale.

This growth in again here.

Speaker Change: Residential load growth continues to.

Speaker Change: A best in class right, we continue to see the industrial load growth that I mentioned transportation electric load growth I think that's really reflective in our sales.

Jason P. Wells: And just a quick one on Jason's comments around demand growth that you mentioned. Cost shift has kind of become more of a prominent issue with the inflection and load that we are seeing. Do you see any issues in Texas or even Indiana where you would need to adjust any kind of cost allocation and would those be addressed in the current rate case process or any kind of separate proceedings? Constantine, I think it's a great question.

Speaker Change: Number is for the first quarter on a quarter over quarter basis, when we adjust for weather sales are up 8% over first quarter last year, driven by strong residential commercial and large industrial growth.

Speaker Change: Electrification.

Speaker Change: At one of our nation's largest ports here in Houston.

Speaker Change: We continue to see.

Speaker Change: Incremental growth in the Petro Chem complex, we're becoming one of the galvin areas in the country for life Sciences.

Jason P. Wells: Probably less of an issue directly in the service territories that we serve, largely because the growth that we're seeing both the potential for it up in southwest Indiana as well as here in the greater Houston area is really driven by industrial load growth that comes with significant jobs. You know, much of the discussion over the last couple of quarters has been around data centers. AI Grove.

Speaker Change: So what I would say is basically the growth that you see in any one sector, including data centers around the country, we see it in all of those sectors.

Speaker Change: Here in the greater Houston area, So I see it showing up in the numbers this quarter and I see it driving continued growth.

Speaker Change: Through the remainder of the decade and beyond.

Speaker Change: Okay. Thank you.

One moment for the next question.

Speaker Change: The next question comes from Nick Campanella with Barclays. Your line is open.

Jason P. Wells: That's some of the toughest electric load growth to serve, right? But low margin doesn't necessarily come with the job. And so it puts pressure on your point sort of more largely on cost allocation. I think here, again, where I think, a Clear Differentiator for CenterPoint. We sort of load that, you know, it's not only growing from a residential standpoint and industrial standpoint, but it keeps that cost allocation issue sort of, you know, let's be less impactful than maybe some of the peers that have data center growth really driving their electricity bill. I think that's really helpful. I really appreciate the questions today. One moment for the next question. The next question will come from James Thalacker with BMO Capital Markets. Your line is open. Morning, guys. Thanks for the time. Hey, good morning.

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

Nick Campanella: A lot of things have been answered but I.

Nick Campanella: I guess just on your comment about kind of pursuing state and federal incentives for this plan. It sounds like some of this is as grants, but some of it's also loans but.

Can you just kind of talk I think it's very helpful from a financing benefit and from a customer affordability benefit, but how do we kind of think about the contribution from EPS. If you were to kind of pursue state programs rather than kind of traditional financing.

Speaker Change: Hey, good morning, I think about it is just to be clear very small.

Speaker Change: We're really talking about component here, where we're looking at.

Speaker Change: Federal programs from a loan standpoint, as you mentioned as well as the.

Speaker Change: Specificity that we provided around the grip program, that's there which has already been filed we've also got some.

Speaker Change: Texas Department of Energy excuse me emergency management funds that we've also asked for on the state level those would be in the form of grant again, just just a situation where we can get better outcomes in total for customers I don't know, Jason If you wanted to give kind of color on high level, how it informs the EPS guide yes.

Unknown Executive: I just wanted to follow up on Constantine's question on the system resiliency filing. The plans are 2.2 to 2.7, which I think is roughly almost double the 1.3 you've been spending the last couple of years. But if I heard you correctly, the 500 million of incremental capital is kind of in line with the higher end of the filing. So if we kind of run this forward, if the PUCT ultimately decides to approve spending that's, you know, say, near the bottom, that's or even below the range.

Jason P. Wells: Yes, Thanks, Chris.

Jason P. Wells: What we've consistently said Nick is that we will come back. After these rate cases next year and provide new 10 year plan well into the mid 2000 <unk> at a reflecting our continued confidence our long term growth.

Jason P. Wells: I want to highlight though are there's been a handful of things.

Jason P. Wells: We've been able to accomplish since we rolled out that guidance long term EPS guidance, which is again, 8% growth year in 2024 and in the mid to high end of the 68% range through 2030.

Unknown Executive: Could you talk a little bit about where you see other investment opportunities? How would this change your financing plan, if at all? Yeah, maybe a couple of quick points on that, Jim. So the 2.2, the low end of the range, is consistent with a 44 and a half.

Speaker Change: And what I would say is we.

Speaker Change: Certainly a more tailwind than we are.

Jason P. Wells: The upper end of the resiliency filing that incremental 500 would put us to $45 billion overall through 2020. You know, look, I think that there is pretty strong alignment across the state here in Texas around investment. Transcription by Transcription Outsourcing, LLC.

Speaker Change: Have headwinds from a tailwind standpoint.

Speaker Change: We had some success in the legislative session, helping reduce some regulatory lag in key jurisdictions.

Speaker Change: As I mentioned previously we've increased capex since we issued that guidance by more than 10%.

Speaker Change: The third thing that I'd point to is last quarter, when we announced the sale of Louisiana, Mississippi and the recycling of that capital that's moving.

Jason P. Wells: I also think what's an important part of this filing and what is maybe different than some of the historical resiliency spend is that, as part of the filing, we have to prove the benefits of the incremental resiliency exceed the cost. So, you know, part of this filing really demonstrates that, on a net basis, this is still in the customer's best interest for us to make these investments. And so, you know, I feel like there's going to be strong support for our filing and the other filings of the transportation.

Speaker Change: Nearly $800 million of rate base in a $1 billion of Capex in new jurisdictions that earn a higher return.

Speaker Change: I'd be remiss to say that obviously interest rates are a little higher and we've announced a modest equity program, but.

Speaker Change: But suffice it to say.

Speaker Change: The tailwind Trc, the headwinds and as we get to the other side of these rate cases will be in a better position to give a long term comprehensive update to the to the earnings guidance for the company.

Jason P. Wells: That being said, to your point, if there is concern around the proposed mitigation measures that we have in our filing. As a quick reminder, this is about 15% of our total CapEx plan. And as I alluded to in my answer to Constantine, I think we have plenty of incremental CapEx opportunities outside of this, whether they be on the gas side of the business; I talked about the local transmission pipeline there, potential to accelerate our next generation smart meter deployment.

Speaker Change: That's great and then I guess, just kind of a follow up on <unk>.

Speaker Change: High grading the plan here you mentioned in your prepared remarks.

Speaker Change: The higher for longer interest rate environment and.

Speaker Change: Expectations I think across the market has certainly changed from January to today on the trajectory of rates can you just kind of remind us on not necessarily what youre, assuming if you don't want to comment, but just how the plan is kind of provisioned.

Speaker Change: In the back half of this year and then going forward. If we do kind of continue to be higher for longer here.

Jason P. Wells: And then on the electric side, I just cannot reiterate enough the opportunity with this exponential load growth driven by industrial electrification. Electrification Commercial. So, you know, I think that there are an abundant set of opportunities for incremental CapEx. And I don't know, Chris, if you want to continue to reinforce that.

Speaker Change: Sure thing, Nick and I will just say.

Speaker Change: As we are building the plan heading into 2023, I don't know that any of us really.

Speaker Change: Could it perfectly predicted the impact there, but I think you saw the company execute well overcome that pressure as we look into 2020 for walking into the year, we definitely plan conservatively there it's hard for me to be too specific but.

Speaker Change: Just know that as you look across our planet hope that you've seen we're consistently bringing forward conservatism. So that there are no surprises in the end.

Christopher A. Foster: And sure, just to build on that again, as we look at the base plan, the 40 at the low end of the resiliency filing that would just support the 44.5 with the ongoing very modest ATM program that we've got through 2030. And again, as we look beyond that, for some of these incremental opportunities, it really would be foolish in line with the existing cap structure. Great. Thank you so much for the update.

Speaker Change: It's the same thing on our capital programs right as we've as we folded in Capex over time, we're making sure we're doing so conservatively as we see opportunity to execute it finance it and recover it. So it really holds on the same side in terms of higher for longer we walked into this year, assuming this was going to be the case.

Speaker Change: That's really helpful. Thank you.

Speaker Change: Thank you one moment for the next question.

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

Unknown Executive: One moment for the next question. The next question will come from Steve Fleishman with Wolf Research. Your line is open. Yeah, hi, good morning.

Jeremy Bryan Tonet: Hi, good morning.

Jeremy Bryan Tonet: Good morning, Jerry.

Jeremy Bryan Tonet: Just wondering going back to the SRP here, if you could frame overall wildfire mitigation needs relative to the $140 million in the FRP filing and looking more broadly how might SRP capital competition evolve over time from this first application.

Steven Isaac Fleishman: Thanks. Just on the Indiana update that you mentioned about the settlement, or getting a delay in the hearing, just maybe a little more color on how long it's delayed and just the likelihood of an agreement. Good morning, Steve.

Jason P. Wells: Thanks for the question. You know, we pushed the start of the hearings by a day. You know, as we continue to explore the potential here for settlement, it's hard to handicap the kind of expectations.

Jeremy Bryan Tonet: What does the SRP investment runway look like at this point.

Jeremy Bryan Tonet: Yes. Thanks for the comprehensive question look from a wildfire standpoint, as you highlighted $140 million isn't a significant driver of available all $2 two to $2 $7 billion plan I think it's important to understand why.

Jason P. Wells: I think we're working hard with stakeholders to find what we believe would be a constructive path forward. You know, as a quick reminder, in this case, a lot of the CapEx that's included in the electric filing has been in front of the IREC and our stakeholders in previous forums, whether that's the cost of it. Coal Transition, or the transmission and distribution investments that we are making to improve reliability and resiliency in that area. And so a lot of the issues of the case have kind of been seen by stakeholders in a number of different forums.

Jeremy Bryan Tonet: 60% of our system is currently underground.

Speaker Change: Jeremy as I know you know we have high relative humidity here, so all things being equal we have significantly lower wildfire risks that are peers that being said, obviously we haven't.

Speaker Change: Sat on our hands, we have been addressing this rash with changes in operations.

Speaker Change: Got it off at an adequate closures enhanced inspections during periods of.

Speaker Change: Higher wildfire risk, but this plan basically addresses.

Speaker Change: About 1% of overhead miles.

Jason P. Wells: And so we continue to try to work constructively towards a settlement. We'll update you as soon as we can, as we have, you know, more information. Okay, great.

Speaker Change: That.

Speaker Change: Are in higher fire risk areas and so this is probably under the current set of conditions sufficient to mitigate our wildfire risks now obviously, we're going to continue to look at weather pattern stripe patterns to see how that.

Steven Isaac Fleishman: And then just on the kind of S&P negative outlook, I just want to clarify. Just, is your intention, I think these things usually take, you know, like a year or so to go through, but just, are you, your intention is that these metrics will get better just as the yearly impact goes away, and that should be sufficient? to meet the targets there. Is that how you think about it?

Speaker Change: <unk> over time, but I don't really see the wildfire mitigation has been a significant long term driver of Capex, where I do see further opportunity beyond. This plan is really on the distribution side as I said in my prepared remarks.

Speaker Change: We have been really focused on hardening the backbone of our system the electric transmission.

Christopher A. Foster: Morning, Steve. I hope that that's accurate. Really, what S&P was looking at was the past, right? As they evaluated and arrived at that outcome, our general assumption, it is that roughly year-long period. And as we look at the plan, going forward, as we look over the next few years, you'll see naturally that yearly impact roll off. And we'll see ourselves really, as we see, even just in 2024, looking at the year, you're going to see us at Moody's, continuing to target that 100 to 150 basis points, And additionally, you're going to see us grow into a greater cushion at S&P as we walk into the subsequent years.

Speaker Change: Substation.

Speaker Change: Flood control efforts, we will largely be through those programs by the end of this first cycle and so the real opportunity as I mentioned is on the distribution side going forward.

Speaker Change: And really creating an even more resilient reliable.

Speaker Change: Overhead electric system.

Speaker Change: Customers.

Speaker Change: So more to come on that front, we're happy to make this first filing.

Speaker Change: And I see the opportunity for continued capex growth as we make subsequent filings in the future.

Speaker Change: Got it makes sense if theres one thing we know that Houston is humid I'll leave it there. Thank you.

Speaker Change: Sure.

Speaker Change: Operator, I think we have time for one more question. Please.

Speaker Change: Okay, one moment.

Christopher A. Foster: So comfortable with the base financial plan and what it informs for the years ahead. I think, Steve, if I could add to that, obviously, as Chris said, we're comfortable, but I think it's important just to highlight the core difference in methodology here because it is transitory in nature. You know, the way the issue at hand is, you know, we've received securitization proceeds from winners for your significant cash inflow. But we have to pay taxes on that cash outflow. S&P's methodology excludes that significant inflow but includes the associated cash outflow, right?

Speaker Change: And the last question will come from Doug Josh <unk> with Evercore. Your line is open.

Doug Josh: Hey, Thanks for giving me time I appreciate it I'll ask two very quick questions I'll ask them together just.

Doug Josh: First can you.

US sort of been other timeline for the resiliency plan approval what to look for there and then second Jason in your comments, you mentioned regulatory lag as a tailwind opportunity can you just quickly remind us what's your regulated ROE is are as of the end of the first quarter. Thank you.

Jason P. Wells: That's sort of a transitory effect, and as Chris said, as we look forward, we feel comfortable about the trajectory that we're on. And so, just a very idiosyncratic impact from their calculations. Okay, and then last question just on Texas. I know you kind of answered this, and the hydrogen hub sounds exciting, but it just feels like that just takes time, but there's just so many other dynamic economic things, whether it's data centers or other industrial things. Could you just give maybe a little more flavor of kind of CenterPoint's ability to get to, you know, opportunities that are related to the growth in Texas?

Jason P. Wells: Yes, Thanks Stewart Ashley yes, good questions on the first side the timeline for approval of the resiliency plan I think.

Jason P. Wells: Legislation.

Call for about a six month approval period, what I will say this is first of its kind legislation.

Jason P. Wells: So we'll have to kind of get in the middle of it I'm sure there'll be a number of parties sort of intervening, but I would look towards the tail end of this year calendar year two.

Jason P. Wells: Get a final decision on the resiliency plan that we filed.

Jason P. Wells: Sure.

Jason P. Wells: On the.

Question on regulatory lag.

We've historically seen particularly here in the Texas business.

Jason P. Wells: Yeah, thanks. What I would say is I don't think you can find a more dynamic setting anywhere in the country, particularly on electric sales growth, and you can't hear it, residential low growth continues to be the best in class, right? We continue to see the industrial load growth that I mentioned, and transportation electric load growth. And I think that's really reflective in our sales numbers for the first quarter. On a quarter-over-quarter basis, when we adjust for weather, sales are up 8% over the first quarter last year, driven by strong residential, commercial, and industrial growth, and electrification at one of our nation's largest ports here in Houston.

Jason P. Wells: About 150 basis points on average.

Jason P. Wells: Batori lag and what I would say is we sort of meaningfully.

Jason P. Wells: Starting now.

Jason P. Wells: It's an odd time to really be calculating kind of regulatory lag as at the end of the first quarter just because we're in the middle of a rate case filing and as a result, we don't have access to the full complement of.

Jason P. Wells: Capital recovery mechanisms that we will have sort of on the other side of this rate case and so.

Jason P. Wells: We've taken steps to begin to reduce.

Jason P. Wells: That historical regulatory lag and I think we'll be in play.

Jason P. Wells: Just to give sort of a more normalized view of that on the other side of the rate case.

Jason P. Wells: You know, we continue to see incremental growth in the petrochemical complex, which is becoming, you know, one of the dominant areas in the country for life sciences. So, what I would say is basically the growth that you see in any one sector, including data centers around the country; we see it in all those sectors here in the Greater Houston area. And so I see it showing up in the numbers this quarter, and I see it driving continued growth, at least through the remainder of the decade, if not. Okay, thank you.

Speaker Change: That's very helpful. Thank you so much again I appreciate the time.

Thanks for your question.

Speaker Change: Okay.

Speaker Change: Later with that that concludes our call for the quarter. Thanks, everyone for joining.

Speaker Change: This concludes Centerpoint Energy's first quarter 2024 earnings conference call. Thank you for your participation have a great day.

Speaker Change: Okay.

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Speaker Change: Okay.

Speaker Change: Okay.

Operator: One moment for the next question. The next question comes from Nick Campanella with Barclays. Your line is open. Hey, good morning.

Speaker Change: Sure.

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Nicholas Joseph Campanella: Thanks for taking my questions. A lot of things have been answered. But I guess just on your comment about kind of pursuing state and federal incentives for this plan. You know, it sounds like some of this is grants, but some of it's also, you know, DOE loans, but can you just kind of talk about that? I think it's very helpful from a financing benefit and from a customer affordability benefit. But how do we kind of think about the contribution from EPS if you were to kind of pursue state programs rather than kind of traditional financing? Hi, good morning. I think about it as, just to be clear, very small, right?

Speaker Change: Okay.

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Christopher A. Foster: We're really talking about a component here where we're looking at federal programs from the loan standpoint, as you mentioned, as well as the specificity that we provided around the GRIP program that's there, which has already been filed. We've also got some Texas Department of Energy, excuse me, emergency management funds that we've also asked for on the state level. Those would be in the form of grants. Again, just a situation where we can get better outcomes in total for customers. But I don't know, Jason, if you want to give some kind of color at a high level on how it informs the EPS guide.

Jason P. Wells: Yeah, thanks, Chris. What we've consistently said, Nick, is that we'll come back after these rate cases next year and provide a new 10-year plan well into the mid-2030s, kind of reflecting our continued confidence in long-term growth. What I want to highlight, though, are, you know, there's been a handful of things that we've been able to accomplish since we rolled out that guidance, that long-term EPS guidance. Again, 8% growth here in 2024 and then the mid to high end of that range through 2030. And what I would say is, you know, we certainly have more tailwinds than we have headwinds, from a tailwind standpoint.

Jason P. Wells: We had some success in the legislative session, helping reduce some regulatory lag. And as I mentioned previously, we've increased the cap at, and issued that guidance by more than 10%. You know, the third thing that I point to is, you know, last quarter when we announced the sale of Louisiana and Mississippi and the recycling of that capital, that's moving what is nearly 800 million of rate base and a billion of capex into jurisdictions that earn a higher return.

Jason P. Wells: I'd be remiss to say that, you know, obviously interest rates are a little higher, and we've announced a, you know, a modest equity program, but suffice it to say... The tailwinds here exceed the headwinds, and as we get to the other side of these rate cases, we'll be in a better position to give a long-term comprehensive update. That's great. And I guess just a kind of a follow up on, you know, high grading the plan here, you mentioned in your prepared remarks, the higher for longer interest rate environment, and, you know, expectations, I think, across the market have certainly changed, you know, from January to today on the trajectory of rates, can you just kind of remind us on, you know, not necessarily what you're assuming, if you don't want to comment, but just how the plan is kind of provisioned into the back half of this year, and then and then going forward, if we do kind of continue to be higher for longer here.

Jason P. Wells: Sure thing, Nick. And I'll just say, you know, as we were building the plan, heading into 2023, I don't know that any of us really could have perfectly predicted the impact there. But I think you saw the company execute well and overcome that pressure. As we look into 2024, walking into the year, we definitely plan conservatively there. And I, you know, it's hard for me to be too specific, but just, just know that if you look across our planet, I hope that you've seen, we're consistently bringing forward conservatism so that there are no surprises in the end.

Jason P. Wells: I think it's the same thing on our capital programs, right? As we've folded in CapEx over time, we're making sure we're doing so conservatively, as we see the opportunity to execute it, to finance it, and recover it. So it really holds on the same side.

Christopher A. Foster: In terms of hiring for longer, we walked into this year assuming this was going to be the case. That's really helpful. Thank you. Thank you. The next question comes from Jeremy Tonet with JP Morgan Securities. Your line is open. Hi, good morning. Good morning, Chair.

Jeremy Bryan Tonet: I'm just wondering, going back to the SRP here, if you could frame overall wildfire mitigation needs relative to the $140 million in the SRP filing and look more broadly, how might SRP capital composition evolve over time from this first application and, what does the SRP investment runway look like? Yeah, thanks for the comprehensive question. Look, you know, from a wildfire standpoint, as you highlighted, 140 million is a significant driver of the overall $7 billion plan.

Speaker Change: [music].

Jeremy Bryan Tonet: I think it's important to understand why, you know, 60% of our system is currently underground. You know, and Jeremy, as I know you know, we have high relative humidity here. So all things being equal, we have significantly lower wildfire risk than our peers. That being said, obviously, we haven't addressed this risk with changes, operations, shutting off automatic reclosers, and during the early days, higher wildfire risk. But this plan basically addresses about 1% of the overhead miles that are in higher fire risk areas.

Jason P. Wells: And so this is probably under the current set of conditions sufficient to mitigate our wildfire risk. Now, obviously, we're gonna continue to look at weather patterns, drought patterns, and see how that evolves over time. But I don't really see wildfire mitigation being a significant long-term driver of CapEx.

Jason P. Wells: Where I do see further opportunity beyond this plan is really on the distribution side. As I said in my prepared remark, we have been really focused on hardening the backbone of our system, the electric transmission and the substation. Flood Control Efforts

Jason P. Wells: We will largely be through those programs by the end of this first cycle, and so the real opportunities I mentioned are on the distribution side going forward and really creating a more resilient, reliable economy, overhead electric system. More to come on that front. We're happy to make this first filing, and I see the opportunity for continued CapEx growth as we do. Makes sense. If there's one thing we know, it's that Houston is humid.

Jeremy Bryan Tonet: I'll leave it there. Thank you. Operator, I think we have time for one more. Okay, one moment. And the last question will come from Durgesh Chopra with Evercore. Your line is open.

Operator: Hey, thanks for giving me time. I appreciate it. I'll ask you two very quick questions, and I'll ask them together.

Durgesh Chopra: Just first, can you help us sort of pen out a timeline for the resiliency plan approval, what to look for there? And then second, Jason, in your comments, you mentioned regulatory lag as a tailwind opportunity. Can you just quickly remind us what your earned or regulated ROEs are as of the end of the first quarter? Thank you. Yeah, thanks, Durgesh, for the questions. On the first side, the timeline for approval of the resiliency plan, I think the legislation calls for about a six-month approval period. What I will say is this is first-of-its-kind legislation.

Jason P. Wells: So we'll have to kind of get in the middle of it. I'm sure there'll be a number of parties sort of intervening, but I would look towards the tail end of this year, calendar year, to get a final decision on the resiliency plan that we filed. On the question of regulatory lag, we've historically seen... particularly here in the Texas business, about 150 basis points on average for regulatory lag. And what I would say is we've sort of meaningfully reduced that amount.

Jason P. Wells: But it's an odd time to really be calculating kind of what regulatory lag is at the end of the first quarter just because we're in the middle of our rate case filing. And as a result, we don't have access to the full complement of capital recovery mechanisms that we will have sort of on the other side of this rate case.

Jason P. Wells: And so, just know that we've taken steps to begin to reduce that historical regulatory lag, and I think we'll be in a place that gives sort of a more normalized view of that on the other side of the rate case. That's very helpful. Thank you so much again. I appreciate the time.

Operator: Operator, with that, that concludes our call for the quarter. Thanks, everyone, for joining. This concludes CenterPoint Energy first quarter 2024 earnings conference call. Thank you for your participation. Have a great day. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

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