Q1 2024 Evergy Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the Q1 2024 Evergy, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Pete Flynn, Director of Investor Relations. Please go ahead. Thank you.

Good day and thank you for standing by welcome to the Q1 'twenty 'twenty four ever G Inc Earnings Conference call.

At this time all participants are in a listen only mode.

After the Speakers' presentation, there'll be a question and answer session.

I ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again please.

Please be advised that today's conference is being recorded.

I would now like to hand, the conference over to your first speaker today, Pete Flynn Director of Investor Relations. Please go ahead.

Peter Francis Flynn: Thank you, Brianna. Good morning, everyone.

Peter Francis Flynn: Thank you Briana and good morning, everyone welcome to <unk> first quarter 2024 earnings conference call.

Peter Francis Flynn: Welcome to Evergy's first quarter 2024 earnings conference call. Our webcast slides and supplemental financial information are available on our investor relations website at investors.evergy.com. Today's discussion will include forward-looking information. Slide two in the disclosures in our SEC filings contains a list of some of the factors that could cause future results to differ materially from our expectations. They also include additional information on our non-GAAP financial measures.

Peter Francis Flynn: Our webcast slides and supplemental financial information are available on our Investor Relations website at investors Dot <unk> Dot com.

Peter Francis Flynn: Today's discussion will include forward looking information slide.

Peter Francis Flynn: Slide two and the disclosures in our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations.

Peter Francis Flynn: They also include additional information on a non-GAAP financial measures.

Peter Francis Flynn: Joining us on today's call are David Campbell, Chairman and Chief Executive Officer, and Kirk Andrews, Executive Vice President and Chief Financial Officer. David will cover first quarter highlights, our updated integrated resource plan, and provide an update on our regulatory and legislative priorities. Kirk will cover in more detail our first quarter results, retail sales trends, and our financial outlook for 2024. Other members of management are with us and will be available during the Q&A portion of the call. I'll now turn the call over to David.

Peter Francis Flynn: Joining us on today's call are David Campbell, Chairman, and Chief Executive Officer and.

Peter Francis Flynn: And Kirk Andrews, Executive Vice President and Chief Financial Officer.

David A. Campbell: David will cover first quarter highlights our updated integrated resource plan and provide an update on our regulatory and legislative priorities.

Kirkland B. Andrews: Kirk will cover in more detail, our first quarter results retail sales trends and our financial outlook for 2024.

Speaker Change: Other members of management are with us and will be available during the Q&A portion of the call.

Speaker Change: I'll now turn the call over to David.

David A. Campbell: Thank you, Pete, and good morning, everyone. I'll begin on slide 5. This morning, we reported first quarter adjusted earnings of $0.54 per share compared to $0.59 per share a year ago. Relative to last year, this quarter's results were driven by higher operations and maintenance expense, appreciation and amortization expense, and interest expense, partially offset by new retail rates and transmission margins. Unseasonably warm weather was also a factor. Heating degree days were 11% below normal for the quarter, negatively impacting our results by an approximate $0.07 per share.

David A. Campbell: You Pete and good morning, everyone I'll begin on slide five this morning, we reported first quarter adjusted earnings of 54 per share compared to 59 per share a year ago.

David A. Campbell: Relative to last year. This quarter's results were driven by higher operations and maintenance expense depreciation and amortization expense and interest expense.

David A. Campbell: Partially offset by new retail rates and transmission margin.

David A. Campbell: Unseasonably warm weather was also a factor here.

David A. Campbell: Heating degree days were 11% below normal for the quarter negatively impacting our results by an approximate <unk> <unk> per share.

David A. Campbell: Kirk will discuss these earnings drivers in more detail in his, In terms of reliability, we've experienced a good start to the year through March; our average added duration and frequency measured by SADI and SAFI are trending favorably relative to our targets, demonstrating the benefits of our continued grid modernization investment and the hard work of our transmission and distribution teams. I'm also pleased to report that we're nearing completion of the 26th Wolf Creek nuclear refueling outage, consistent with our plan. Wolf Creek generates around 1,200 megawatts of non-carbon emitting energy, enough to power more than 800,000 homes.

David A. Campbell: Kirk will discuss these earnings drivers in more detail in his remarks.

David A. Campbell: In terms of reliability, we've experienced a good start to the year through March our average outage duration and frequency measured by safety and safety are trending favorably relative to our targets demonstrating the benefits of our continued grid modernization investment and the hard work of our transmission and distribution teams.

David A. Campbell: I'm also pleased to report that we are nearing completion of their 26 Wolf Creek nuclear refueling outage consistent with our plans.

David A. Campbell: Creek generates around 1200 megawatts of non carbon emitting energy enough to power more than 800000 homes.

David A. Campbell: The plan employs over 700 people, and that number effectively doubles during out-of- I'd like to thank everyone involved for their hard work and focus on sustaining the excellent operational performance. Our team's execution has enabled a solid start to the year, despite the mild weather, and we are reaffirming our 2024 adjusted EPS guidance range of $3.73 to $3.93 per share, as well as our target long-term annual adjusted EPS growth target of 4% to 6% from 2023 to 2026.

David A. Campbell: The plant employees over 700 people in that number effectively doubles during outages.

Speaker Change: I'd like to thank everyone involved for their hard work and focus on sustaining the excellent operational performance of the plant.

Speaker Change: Our team's execution has enabled a solid start to the year. Despite the mild weather and we are reaffirming our 2024 adjusted EPS guidance range of $3 73 to $3 93 per share as well as our target long term annual adjusted EPS growth target of 4% to 6% from 2023 to 2026.

David A. Campbell: Slide six highlights our Triennial Integrated Resource Plan, or IRP, which was filed on April 1st in Missouri and will be filed on May 17th in Kansas. This year's IRP reflects the impacts of updating our long-term expected load growth, including the addition of the recently announced Google Data Center in Missouri, as well as other important inputs such as resource adequacy requirements of the Southwest Power Pool. Construction Cost Estimates and Commodity Price Forecast

Speaker Change: Slide six highlights our triennial integrated resource plan, our AARP, which was filed on April 1st in Missouri and will be filed on may 17th in Kansas.

Speaker Change: This year's <unk> reflects the impacts of updating our long term expected load growth.

Speaker Change: Including the addition of the recently announced Google data Center in Missouri, as well as other important inputs such as resource adequacy requirements of the southwest power pool construction cost estimates and commodity price forecast.

David A. Campbell: I'd like to briefly touch on the new rules recently issued by the Environmental Protection Agency. Our IRP process includes consideration of environmental rules, SPP rules, and other regulatory requirements, so the EPA's newly issued rules will play a role in our resource planning going forward. Our overarching goal in the IRP process is to identify the most cost-effective and resilient plan that reliably serves our customers across uncertain futures.

Speaker Change: I'd like to briefly touch on the new rules recently issued by the Environmental Protection Agency.

Speaker Change: Our IRB process includes consideration of environmental rules SVP rules and other regulatory requirements.

Speaker Change: The EPA is newly issued rules will play a role in our resource planning going forward.

Speaker Change: Our overarching goal on the ERP process is to identify the most cost effective and resilient plan that reliably serves our customers across uncertain future scenarios.

David A. Campbell: We believe that renewable and natural gas additions, as shown in our IRP, are being planned in a manner that will allow Evergy to reduce carbon emissions, take advantage of best-in-class efficiency, and support economic development in our service territory, while striving to minimize the impact on affordability and ensuring that we can provide reliable electric service. We are assessing the potential impact of the new EPA rules from an affordability and reliability perspective, as the rules would likely require significant incremental investment relative to what is currently in our IRP. For example, carbon capture and storage is an important element in the new greenhouse gas rule. At present, carbon capture and storage technology is not commercially demonstrated at scale on existing plants.

Speaker Change: We believe that renewable and natural gas additions as shown in our ERP are being planned in a manner that will allow <unk> to reduce carbon emissions take advantage of best in class efficiency and support economic development in our service territory.

Speaker Change: Striving to minimize the impact on affordability and ensuring that we can provide reliable electric service.

Speaker Change: We are assessing the potential impact of the new EPA rules from an affordability and reliability perspective as rules would likely require significant incremental investment relative to what is currently in our ERP.

Speaker Change: For example, carbon capture and storage is an important element and the new greenhouse gas rule.

Speaker Change: At present carbon capture and storage technology is not commercially demonstrated at scale on existing plants.

David A. Campbell: Along with costly and as yet unproven retrofitted control equipment, it would require pipeline and storage infrastructure which are not in place in our region. The EPA rules are expected to face legal challenges, and we will monitor those developments closely. As a reminder, in 2023, nearly half of the energy that we generated for retail customers came from carbon-free resources, reflecting the contributions of our Wolf Creek nuclear plant and the 4,600 megawatt portfolio of renewable resources that we either own or contract through long-term power purchases.

Speaker Change: Along with costly and as yet unproven retrofitted control equipment, it require pipeline and storage infrastructure, which are not in place in our region.

Speaker Change: The EPA rules are expected to face legal challenges and we will monitor those developments closely.

Speaker Change: As a reminder, in 2023 nearly half of the energy that we generated for our retail customers came from carbon free resources.

Speaker Change: Reflecting the contributions of our Wolf Creek nuclear plant and the 4600 megawatt portfolio of renewable resources that we either own or our contract through long term power purchase agreements.

David A. Campbell: Evergy has invested significantly to enable our fossil units to meet existing environmental standards, operate reliably, and be available to support our customers when called upon. We continue to take a balanced forward view of generation needs, as shown through our IRP, which includes significant new solar, wind, and natural gas plants balanced against the paced retirements of our coal. In aggregate, the 2024 preferred plan includes 5,800 megawatts of resource additions through 2033, representing an increase of 1500 megawatts over the next 10 years when compared to the 2023 preferred plan.

Speaker Change: <unk> has invested significantly to enable our fossil units to meet existing environmental standards operate reliably.

Speaker Change: And be available to support our customers when called upon.

Speaker Change: We continue to take a balanced forward view of generation needs as shown through our ERP, which include significant new solar wind and natural gas balance against the paste retirements of our coal fleet.

Speaker Change: In aggregate. The 2024 preferred plan includes 5800 megawatts of resource additions through 2033.

Speaker Change: Representing an increase of 1500 megawatts over the next 10 years when compared to the 2023 preferred plan.

David A. Campbell: As our generation fleet evolves, we are focused on achieving a responsible balance between renewables, which are non-emitting and have low or negative marginal costs, but are intermittent, and both new and existing thermal resources, which have higher marginal costs for fuel and O&M but can be dispatched to meet customer demand when they are needed most.

Speaker Change: As our generation fleet evolves, we are focused on achieving a responsible balance between renewables, which are non emitting and have low or negative marginal costs, but are intermittent.

Speaker Change: And both new and existing thermal resources, which have higher marginal cost for fuel and O&M.

Speaker Change: But can be dispatched to meet customer demand when they are needed most.

David A. Campbell: The ultimate goal of this balance is to ensure reliability and affordability for our customers as we advance a responsible transition of our generation. This transition requires sustained investment over the coming years and will incorporate the most recent IRP and its higher levels of new generation when we provide an update to our capital plan in the third quarter earnings call later this year. On slide seven, we highlight details about three customers, Google, Panasonic, and Meta, which represent major economic development wins in three of our four jurisdictions. In aggregate, the demand from these three customers represents approximately 750 megawatts of load, and each will be the largest customer in their respective jurisdictions by a wide margin.

Speaker Change: The ultimate goal of this balances to ensure reliability and affordability for our customers as we advance a responsible transition of our generation fleet.

Speaker Change: This transition will require sustained investment over the coming years and will incorporate the most recent IRB and its higher levels of new generation. When we provide an update to our capital plan in the third quarter earnings call later this year.

Speaker Change: On slide seven we highlight details about three customers, Google Panasonic and matter.

Speaker Change: Which represent major economic development wins three of our four jurisdictions.

Speaker Change: In aggregate demand from these three customers represented approximately 750 megawatts of load and each will be the largest customer in their respective jurisdiction.

David A. Campbell: The overall economic development pipeline continues to show promise in both Kansas and Missouri with more than $10 billion of projects considering locating in our service territory. We are very excited to work with these potential customers as they consider our resources. As part of the exercise, alongside the economic development rates that are in place in both Kansas and Missouri, we are looking at rate design elements to ensure that there is appropriate and adequate recovery associated with large new loads.

Speaker Change: By a wide margin.

Speaker Change: The overall economic development pipeline continues to show promise in both Kansas, and Missouri with more than $10 billion of projects considering locating in our service territories.

Speaker Change: We are very excited to work with these potential customers as they consider our region.

Speaker Change: As part of the exercise alongside the economic development rates that are in place in both Kansas, and Missouri, where looking at rate design elements to ensure that there is appropriate and adequate recovery associated with large new loads.

David A. Campbell: More broadly, our strategic focus on affordability and regional rate competitiveness is an important contributor to this large pipeline and provides a foundation for our support of the tremendous economic potential in our state. As shown on slide 8, when factoring in economic development and these large new loads, including the recently announced Google data center, we are extending our weather normalized demand growth forecast of 2% to 3% to 2028 off of the 2023 base, which previously ran through 2026.

Speaker Change: More broadly our strategic focus on affordability and regional rate competitiveness is an important contributor to this large pipeline and provides a foundation for our support of the tremendous economic potential in our states.

Speaker Change: As shown on slide eight when factoring in economic development in these large new lows, including the recently announced Google data Center, we are extending our weather normalized demand growth forecast of 2% to 3% to 2028 after the 2023 base.

Speaker Change: Which previously ran through 2026.

David A. Campbell: Moving to slide nine, I'll provide an update on our regulatory and legislative priorities in both Kansas and Missouri. I'm very pleased to start by discussing House Bill 2527 in Kansas, which becomes effective on July 1st this year. The passage of HB 2527 signals the support of Kansas legislators, regulators, and stakeholders for infrastructure investment, the support of economic development, and the importance of a competitive and constructive regulatory framework for that infrastructure investment. It is an exciting time in our region, as reflected by the significantly higher sales growth forecast relative to recent history that this has brought.

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

David A. Campbell: In terms of financial impact, the PISA provisions in HB 2527 serve to mitigate regulatory lag between rate cases very similarly to how it works in Missouri. The construction work and progress provisions that apply to new natural gas units also demonstrate Kansas' support for our plans to invest in new natural gas fire generation. For our current capital expenditure plan, many of you have asked to quantify the financial impact relative to not having HB 2527 in place and how it helps to reduce the gap between allowed returns and actual realized returns.

Speaker Change: I am very pleased to start by discussing house Bill $25 27 in Kansas, which became which becomes effective on July one of this year.

Speaker Change: The passage of HB, 20, 527 signals, a support of Kansas legislators regulators and stakeholders.

Speaker Change: For infrastructure investment and support of economic development and the importance of a competitive and constructive regulatory framework for that infrastructure investment.

Speaker Change: It is an exciting time in our region as reflected by the significantly higher sales greater sales growth forecast relative to recent history of the business abroad.

Speaker Change: In terms of financial impact of the piece of provisions in HB $25 27 serve to mitigate regulatory lag between rate cases, very similar to how it works in Missouri.

Speaker Change: The construction work in progress provisions that apply to new natural gas units.

Speaker Change: Also demonstrated Kansas is support for our plans to invest in new new gas fired generation.

Speaker Change: For our current capital expenditure plan. Many of you have asked to quantify the financial impact relative to not having HB $25 27 in place and how it helps to reduce the gap between allowed returns and actual realized returns.

David A. Campbell: Under the provisions of the new law, in the first year following a rate case, at our current investment levels, the impact is roughly three to four cents per share. If we go two full years between rate cases, the impact is roughly $0.10 a second. And as we've described, we expect our cadence array cases going forward to be roughly every other year, though that won't be true for every jurisdiction. Of course, that estimated impact is a stand-alone view of a single item and does not factor in any other potential drivers, such as changes in interest rates or changes to the capital plan just in situ.

Speaker Change: Under the provisions of the new law in the first year. Following a rate case at our current investment levels. The impact is roughly <unk> <unk> per share.

Speaker Change: If we go to full years between rate cases, the impact is roughly <unk> <unk> in the second year.

Speaker Change: And as we've described we expect our cadence of rate cases going forward to be roughly every other year, so that won't be true for average euro assumption.

Speaker Change: Of course that estimated impact as a standalone view of a single item and does not factor in and does not factor in any other potential drivers such as changes in interest rates or changes to the capital plan just to cite two examples.

David A. Campbell: Overall, the most important aspect of the passage of HB 2527 is the alignment that it reflects in Kansas about a competitive framework for investment as we respond to a historic economic development opportunity. I'd like to thank legislative leaders, Kansas Corporation Commission staff, representatives from CURB, industrial stakeholders, the governor's office, and many other stakeholders, as well as the Evergy Public Affairs team, for their participation and engagement in getting this legislation passed. I also want to highlight the passage of Senate Bill 410, which provides a 10-year property tax exemption for Newly Constructed Natural Gas. The benefits of this exemption will be shared with our customers.

Speaker Change: Overall, the most important aspect of the passage of HB 2025 27 is.

Speaker Change: Is the alignment that it reflects and Kansas about a competitive framework for investment as we respond to historic economic development opportunities.

Speaker Change: I'd like to thank Legislative leaders, Kansas Corporation Commission staff Representatives from curb industrial stakeholders, the Governor's office and many other stakeholders as well as the average public affairs team for their participation and engagement in getting this legislation passed.

Speaker Change: I also want to highlight the passage of Senate Bill 410, which provides a 10 year property tax exemption for newly constructed natural gas units.

Speaker Change: The benefits of this exemption will be shared with our customers.

David A. Campbell: This bill further reflects Kansas' support for our planned natural gas investment, which is a crucial aspect of our long-term resource planning to meet the demands of our growing customer base and ensure reliability. On May 17th, we will file our 2024 IRP with the Kansas Corporation Commission and provide our outlook for Kansas Central, similar to what we provided in our Missouri IRP file. Now pivoting to Missouri, we continue to work our way through our pending general rate case in Missouri West. On June 27th, staff and other interveners will file their direct testimony, and rebuttal testimony is due by August 6th. During the subsequent weeks, parties will file.

Speaker Change: This bill further reflects Kansas is support for our planned natural gas investments, which are crucial aspect of our long term resource planning to meet the demands of our growing customer base and ensure reliability.

Speaker Change: On May 17th we will file our 2024 ERP with the Kansas Corporation Commission.

Speaker Change: Provide our outlook for Kansas Central similar to what we provided in our Missouri IRB filings.

Speaker Change: Now pivoting to Missouri, we continue to work our way through our pending general rate case in Missouri West.

Speaker Change: June 27th staff and other Interveners will file their direct testimony and rebuttal testimony is due by August 6th.

Speaker Change: During the subsequent weeks parties will file.

David A. Campbell: True Up and Cerebral Testimony, followed by a settlement conference around September 23rd. Hearings will occur in late September through early October, and revised rates in Missouri West will go into effect January 2025. We look forward to working collaboratively with the Missouri Public Service Commission staff and our stakeholders to achieve a constructive outcome for our Missouri West customers regarding Missouri legislative initiatives. Language to amend the PISA statute has passed the House and awaits further action in the Senate.

Speaker Change: True up in Surabaya testimony, followed by a settlement conference around September 23rd hearings will occur in late September early October and revised rates in Missouri West will go into effect January 2025.

Speaker Change: We look forward to working collaboratively with the Missouri Public Service Commission staff.

Speaker Change: And our stakeholders to achieve a constructive outcome farmers very west customers.

Speaker Change: Regarding Missouri Legislative initiatives language to amend the piece of statute has passed the house and awaits further action in the Senate.

David A. Campbell: Key provisions would amend the PISA statute to include new natural gas units at a 90 percent deferral and extend the PISA sunset to 2035. Discussions around the topic and the need for new gas generation have been positive, reflecting broad support. However, given the schedule and overall session dynamics, it will be hard to get any new legislation passed in the short time remaining for the 2024 session.

Speaker Change: Key provisions would amend the piece of statute to include new natural gas units at a 90% deferral.

Speaker Change: And extend the piece of Sunset to 2035.

Speaker Change: Discussions around the topic and the need for new gas generation have been positive reflecting broad support.

Speaker Change: However, given the schedule and overall session dynamics it will be hard to get any new legislation passed in a short time remaining for 2024 session.

David A. Campbell: This initiative is no exception. I'll conclude my remarks with slide 10, which highlights the core tenets of our strategy, affordability, reliability, and sustainability. Our efforts to enhance affordability have yielded significant progress in improving regional rate competitiveness over the past few years. Our strategic plan is designed to sustain this positive trajectory. By prioritizing affordability, we contribute to the robust economic development pipeline ahead of us and support the substantial economic potential within our state.

Speaker Change: This initiative is no exception.

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

Speaker Change: Our efforts to enhance affordability have yielded significant progress in improving regional re competitiveness over the past few years our.

Speaker Change: Our strategic plan is designed to sustain this positive trajectory.

Speaker Change: By prioritizing affordability, we contribute the robust economic development pipeline ahead of us and support the substantial economic potential within our states.

David A. Campbell: Ensuring reliability is also a core element of our strategy, as reflected by SADI safety, excuse me, safety, safety, grid resiliency, and public safety. This also includes a focus on metrics relating to customer service, and the commercial availability of our fleet. Safety in all elements of our operations, including infrastructure. With respect to sustainability, we continue to advance the cost-effective transition of our generation. Since 2005, we've reduced carbon emissions by 53% and reduced sulfur dioxide and NOx emissions by 98% and 90%, respectively.

Speaker Change: Ensuring reliability is also a core element of our strategy are as reflected by safety safety.

Speaker Change: She is my safety safety grid, resiliency and public safety.

Speaker Change: This also includes a focus on metrics relating to customer service the commercial availability of our fleet safe.

Speaker Change: Safety in all elements of our operations, including infrastructure investments.

Speaker Change: With respect to sustainability, we continue to advance the cost effective transition of our generation fleet.

Speaker Change: Since 2005, we have reduced carbon emissions by 53% and.

Speaker Change: And reduce sulfur dioxide and nox emissions by 98% and 90% respectively.

David A. Campbell: We look forward to ongoing progress along this path. Our mission is to empower a better future, and our vision is to lead the responsible energy transition in our region, always with an eye on affordability and reliability, as well as sustainability. I will now turn the call over to Kirk.

Speaker Change: We look forward to ongoing progress along this path.

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

Speaker Change: I will now turn the call over to Kirk.

Kirkland B. Andrews: Thanks, David, and good morning, everyone. Turning to slide 12, I'll start with a review of our results for the quarter. For the first quarter of 2024, Evergy delivered adjusted earnings of $124.7 million, or $0.54 per share, compared to $136.1 million, or $0.59 per share, in the first quarter of 2023. As shown on the slide from left to right, the year-over-year decrease in first quarter adjusted EPS was driven by the following. Firstly, similar to the first quarter of 2023, we saw milder than normal weather, particularly in the months of February and March this year.

Kirkland B. Andrews: Thanks, David and good morning, everyone turning.

Kirkland B. Andrews: And while the year-over-year adjusted EPS impact was flat, compared to normal, weather was an estimated 7 cents unfavorable. Next, compared to the strong demand recovery we saw in the first quarter of 2023, whether normalized retail sales declined by half a percent, primarily driven by lower commercial and industrial demand, will remain neutral to EPS. New retail rates in Kansas contributed $0.05 to the quarter.

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

Kirkland B. Andrews: Higher transmission margin resulting from our ongoing investments to enhance our transmission infrastructure drove a four-set increase, and O&M drove a $0.06 negative variance for the quarter. This was driven by significantly lower O&M in the first quarter of 2023, which resulted from the implementation of an early retirement program, as well as timing of expenditures in 24. And overall, our O&M outlook is flat for the balance of the year versus 2023. Next, higher depreciation and amortization expense due to increased infrastructure investment drove a 4 cent increase. Higher interest expense drove a three cent decrease. And based on our expected capital investments and the current outlook for interest rates, our expectation for interest expense for the full year remains on target. And finally, other items drove a penny.

Kirkland B. Andrews: For the first quarter of 2024 average delivered adjusted earnings of $424 7 million or <unk> 54 per share.

Kirkland B. Andrews: <unk> to $136 1 million or <unk> 59 per share in the first quarter of 2023.

Kirkland B. Andrews: As shown on the slide from left to right the year over year decrease in first quarter adjusted EPS was driven by the following.

Kirkland B. Andrews: First similar to the first quarter of 2023, we saw milder than normal weather, particularly in the months of February and March this year.

Kirkland B. Andrews: And while the year over year adjusted EPS impact was flat compared to normal weather was an estimated seven unfavorable.

Kirkland B. Andrews: Next compared to the strong demand recovery, we saw in the first quarter of 2023 weather normalized retail sales declined by half a percent, primarily driven by lower commercial and industrial demand.

Kirkland B. Andrews: Neutral to EPS.

Kirkland B. Andrews: New retail rates in Kansas contributed <unk> <unk> to the quarter.

Kirkland B. Andrews: Higher transmission margins, resulting from our ongoing investments to enhance our transmission infrastructure drove a <unk> increase.

Kirkland B. Andrews: And O&M drove a <unk> <unk> negative variance for the quarter.

Kirkland B. Andrews: This was driven.

Kirkland B. Andrews: By significantly lower O&M in the first quarter of 2023, which resulted from the implementation of an early retirement program as well as timing of expenditures in 2004.

Kirkland B. Andrews: And overall, our O&M outlook is flat for the balance of the year versus 2023.

Kirkland B. Andrews: Next higher depreciation and amortization expense due to increased infrastructure investment drove a <unk> <unk> decrease.

Kirkland B. Andrews: Higher interest expense drove a <unk> <unk> decrease in.

Kirkland B. Andrews: And based on our expected capital investments and the current outlook for interest rates, our expectation for interest expense for the full year remains on target.

Kirkland B. Andrews: And finally other items drove a penny decrease.

Kirkland B. Andrews: Turning next to slide 13, I'll provide a brief update on our recent sales trend. On the left side of the screen, you'll see whether normalized retail sales decreased by half a percent over the first quarter of 2023, driven primarily by decreases in both commercial and industrial use. While we did see further recovery from our largest refining customers in industrial, we've also continued to see lower demand for other industrial customers. This was driven in part by plant retooling and expansion projects being undertaken by our customers in the food processing and additive sectors, which began in late 2023.

Speaker Change: Turning next to slide 13, I'll provide a brief update on our recent sales trends.

Kirkland B. Andrews: On the left side of the screen you will see weather normalized retail sales decreased by half a percent over the first quarter of 2023, driven primarily by decreases in both commercial and industrial usage.

Kirkland B. Andrews: While we did see further recovery from our largest refining customers industrial.

Kirkland B. Andrews: We also continued to see lower demand for other industrial customers.

Kirkland B. Andrews: This was driven in part by plant retooling and expansion projects being undertaken by our customers in the food processing and additive sector, which began in late 2023.

Kirkland B. Andrews: As these events are expected to be temporary, with demand from these customers recovering thereafter, we expect industrial demand to recover as we move through 2024. This will be further augmented by the expected uptick as large customers from our recent economic development winds begin to come online later this year. And we expect a more notable pickup from these new customers beyond 2024, as we expect Panasonic, Meta, and Google will fully ramp up their usage to full run rates in 2026, 2027, and 2028, respectively.

Kirkland B. Andrews: These events are expected to be temporary with demand from these customers recovering thereafter, we expect industrial demand to recover as we move through 2024.

Kirkland B. Andrews: This will be further augmented by the expected uptick as large customers from our recent economic development wins.

Kirkland B. Andrews: To come online later this season and we expect a more notable pickup from these new customers beyond 2024, as we expect Panasonic meta and Google will fully ramp their usage to full run rates in 2026, 2027 and 2028, respectively.

Kirkland B. Andrews: As David noted in his remarks, in total, we are extending our weather-normalized demand growth forecast of two to three percent now through 2028. Our demand projections continue to be supported by a strong local labor market as Kansas and the Kansas City metro area unemployment rates remain below the national average. And finally, on slide 14, I'll wrap up with an overview of our long-term financial. We are reaffirming both our adjusted EPS guidance range for 2024, as well as our long-term adjusted EPS growth target of 4 to 6% through 2026, based on the original 2023 adjusted EPS guidance midpoint of $3.65, and continue to expect to achieve this growth without the need for new equity.

Kirkland B. Andrews: As David noted in his remarks in total we are extending our weather normalized demand growth forecast of 2% to 3% now through 2028.

Kirkland B. Andrews: Our demand projections continue to be supported by strong local labor market, as Kansas, and Kansas City Metro area unemployment rates remain below the national average.

Kirkland B. Andrews: And finally on slide 14, I'll wrap up with an overview of our long term financial expectations.

Kirkland B. Andrews: We are reaffirming both our adjusted EPS guidance range for 2024, as well as our long term adjusted EPS growth target of 4% to 6% through 2026.

Kirkland B. Andrews: Based on the original 2023, adjusted EPS guidance midpoint of $3 65.

Kirkland B. Andrews: And continue to expect to achieve this growth without the need for new equity.

Kirkland B. Andrews: Our recently updated capital investment plan, which includes $12.5 billion in infrastructure investment, does not yet reflect and incorporate the impact of changes that were reflected in our 2024 IRP. And, as David mentioned earlier, we will provide you an update on our capital plan on our third quarter earnings call. In addition to allowing us to achieve our financial targets, executing on our investment plan advances our key objectives of ensuring affordability, reliability, and sustainability over the long term. And with that, I'm happy to open the call to questions. Thank you.

Kirkland B. Andrews: Our recently updated capital investment plan, which includes $12 5 billion in infrastructure investment does not yet reflect and incorporate the impact of changes that were reflected in our 2004 IOP and as David mentioned earlier, we will provide you an update on our capital plan on our third quarter earnings call.

Kirkland B. Andrews: In addition to allowing us to achieve our financial targets executing on our investment plan advances, our key objectives of ensuring affordability reliability and sustainability over the long term.

Speaker Change: And with that we're happy to open the call for questions.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from the line of Nicholas Campanella from Barclays. Your line is now open.

Speaker Change: Thank you at this time, we will conduct a question and answer session.

Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby will be compile the Q&A roster.

Speaker Change: Our first question comes from the line of Nicholas Campanella from Barclays. Your line is now open.

Nicholas Joseph Campanella: Hey, good morning. Thanks for taking my question and for all the updates today. Good morning. So I just want to say... Morning, morning. I just wanted to clarify, it's great to see the load growth extended to 2028, and I know you have the IRP coming to Kansas. Just how should we kind of think about, you're doing a 6% rate-based CAGR right now, and does this extend your visibility to that CAGR, or do you see that kind of pressure higher in this new plan?

Nicholas Joseph Campanella: Hey, good morning, Thanks for taking my question and for all the updates today.

Nicholas Joseph Campanella: Good morning, I just wanted to morning morning, I just wanted to clarify.

Nicholas Joseph Campanella: It's great to see the load growth extend into 2028 and I know you have the ERP coming in Kansas.

Nicholas Joseph Campanella: How should we kind of think about youre doing the 6% rate base CAGR right now and does this extend your visibility to that CAGR do you see that kind of pressuring higher.

Speaker Change: In this new plan.

David A. Campbell: So it's a great question. We won't get ahead of the capital expenditure update that we're doing in the third quarter, but I will describe that. You're right, our current expectation rate-based growth through 2028 is 6%. So that was the capital expenditure plan we put out in our Q4 call. It is at the low end of all of our peers, significantly below the average of our peers.

Speaker Change: So it makes great question, we don't get ahead of the capital expenditure update that we're doing in the third quarter, but I will describe that.

Speaker Change: Our current expectation of rate base growth through 2022% to 6%. So that was the capital expenditure plan, we put out in our Q4 call.

Speaker Change: It is at the low end of all of our peers significantly below the average of our peers and part of why <unk> hundred $25 27 was so important was because we do see a historic economic development opportunity and pipeline in our territory.

David A. Campbell: And part of why HB 2527 was so important was that we do see a historic economic development opportunity and pipeline in our territory. And investing to take advantage of that opportunity is a lot more difficult when the returns you can offer investors are not competitive. HB 2527 significantly improves on that.

Speaker Change: Investing to take advantage of that opportunity is a lot more difficult. When the returns you can offer capital are noncompetitive HB $25 seven significantly improves on that so we've noted that we do plan to update our capital expenditure plan and that's really to reflect several things. One is the updated RP does have higher level of <unk>.

David A. Campbell: So, we've noted that we do plan to update our capital expenditure plan, and that's really to reflect several things. One is that the updated IRP does have a higher level of generation addition. So, we'll incorporate the 2024 IRP. We'll also incorporate economic development activities and wins we've had. For example, the Google announcement is subsequent to our capital expenditure plan. There have been a lot of other activities as well. And obviously, we're continuing to look at other grid modernization opportunities that we have.

Speaker Change: Generation additions so on corporate at the 2024 ERP will also incorporate economic development activities and the wins, we've had and for an example.

Speaker Change: Our Google announcement of subsequent to our capital expenditure plan, there's been a lot of other activity as well and obviously were continuing to look at the other grid monetization on the opportunities that we have so we will we do plan to give a capital expenditure update on the third quarter. We wont get ahead of what's in it but there are several factors that I think we will.

David A. Campbell: So, we will, we do plan to give a capital expenditure update for the third quarter. We won't get ahead of what's in it, but there are several factors that I think will create an upward bias. But we're always, we always take a balanced approach. We're excited to be able to invest to take advantage of the opportunities that we see for our region.

Speaker Change: Do create an upward bias, but we're always we always take a balanced approach, where we're excited to be able to invest to take advantage of the opportunities that we see for our region.

Kirkland B. Andrews: That's really helpful. And then, I guess, as we're kind of toggling CapEx and thinking about what could be incremental to the plan, can you just remind us where you stand on your current credit metrics, where you're trending for 24, and then where that is relative to your minimums and just how to think about equity needs past the timeframe you've guided.

Speaker Change: That's really helpful and then I guess as we're kind of.

Speaker Change: Toggling, Capex and thinking about what could be incremental to the plan can you just remind us where you stand on your current credit metrics, where youre trending for 24 and then.

Speaker Change: <unk>.

Speaker Change: Where that is relative to your minimums and just how to think about.

Speaker Change: Equity needs past the timeframe you've guided.

Kirkland B. Andrews: Sure, Nick. It's Kirk. I'll focus on the Moody's metric which we updated on our fourth quarter call. Due to a few items, most notably the changes and the fact that we were still waiting, obviously, to securitize the Missouri West Weirstorm Yuri cost, which we successfully did subsequent to the year end. Pro forma for that and some other items going into 2024 were about 15%, which is that threshold. But as we move into 2024, some of the elements where we get a more current and efficient return, both from an earnings and a cash perspective, most notably our transmission investments in Kansas and other items help contribute to the fact that we continue to see a surplus relative to that 15% threshold for Moody's.

Kirkland B. Andrews: Sure Nick it's Kirk.

Kirkland B. Andrews: I'll focus on the on the Moody's metric, which we updated on our fourth quarter call.

Kirkland B. Andrews: Due to a few items, most notably the <unk>.

Kirkland B. Andrews: <unk>, we were still waiting obviously to securitize, the Missouri, West where storm Yuri.

Kirkland B. Andrews: Costs, which we successfully did subsequent to the year end pro forma for that and some other items going into 2024 were about 15%, which is that threshold, but as we move into 2020 for some of the elements, where we get a more current and efficient return both from a earnings and a cash perspective, most notably our transmission investments.

Kirkland B. Andrews: In Kansas and other items helped contribute to the fact that we continue to see a surplus relative to that 15% threshold for Moody's we expect to utilize that surplus to help.

Kirkland B. Andrews: We expect to utilize that surplus to help supplement our operating cash flow to fund those capital investments without the need for new equity through 2026. And we don't, we won't sacrifice those credit ratios in the process. So we feel comfortable with that surplus and our ability to utilize it and sort of maintain our ratios that are above the threshold through 2026.

Kirkland B. Andrews: Supplement our operating cash flow to fund those capital investments without the need for new equity through 2026, and we don't we won't sacrifice those credit ratios in the process.

Kirkland B. Andrews: So we feel comfortable with with that surplus and our ability to utilize it and sort of maintain our our ratios at or above the threshold through 2026.

Nicholas Joseph Campanella: Okay, I appreciate it. Thank you. Thank you.

Speaker Change: Okay I appreciate it thank you.

Speaker Change: Thank you.

Operator: Thank you, and please wait one moment for our next question. Our next question comes from Shahriar Pourreza of Guggenheim Partners. Your line is now open.

Speaker Change: Thank you and one moment our next question.

Speaker Change: Our next question comes from Shar <unk> of Guggenheim Partners. Your line is now open.

Shar: Hey, guys good morning.

Shahriar Pourreza: Shahriar. Morning, morning. You know, obviously, you guys have mentioned economic development; it's obviously been a key part of the slide decks. Data centers have obviously been kind of front and center for a lot of calls this cycle. Do you sort of have maybe a rule of thumb at this point for the amount of maybe transmission investments you're making with these sites? We've heard some of your peers, like in Pennsylvania, talk about, you know, somewhere between 50 to 150 million. Is that kind of fair to you?

Shar: <unk> morning morning.

Shar: Obviously, you guys have mentioned economic development, it's obviously been a key part of the slide decks Datacenters have obviously been kind of front and center for a lot of calls this cycle.

Shar: You sort of have maybe a rule of thumb at this point for the amount of maybe transmission investments, you're making with these sites. We've heard some of your peers like in Pennsylvania talk about somewhere between $50 million to $150 million is that kind of fair to you.

David A. Campbell: You know, Shahriar really does vary depending on where the location is. Typically, there are incremental investments for very large loads, their system investment. So it's, you know, always a little difficult if you peg the last bit of investment; it's all tied to that single customer. But when you have loads in the hundreds of megawatts, given the size of our system, and as you think of the overall transition base, there's certainly some loads that will have investments around that level if you get to a significant size.

Shar: So it really does vary depending on where the location is typically there are incremental investments for very large loads.

Shar: Their system investments so it's.

Speaker Change: Or is it little difficult you pegged the last bit of investment and it's all tied to that single customer, but when you have loads in the one hundreds of megawatts given the size of our system and as you think of a share of our overall transition base. There is certainly some loads that will have investments around that level. If you get to a significant size. So it.

David A. Campbell: So it does vary depending on where it is and where it is located. We typically, if not, don't have a lot of spare hundreds of megawatts of capacity in our system. So if you add that much load, obviously, that's going to help you spread your fixed costs more broadly, but there will be some incremental costs as well. So that's, we haven't given a rule of thumb, but if you're talking hundreds of megawatts, that's a, you're going to have incremental investment in the system.

Speaker Change: It does vary depending on where it is and where we're located we typically have not don't have a lot of spare hundreds of megawatts of capacity in our system. So if you add that much load.

David A. Campbell: And I think probably most of our utilities will see similar numbers in a similar way. And just to note, for our plan, both META and Panasonic had been announced before we had put out our Q4 CapEx plan, so they're included in the plan that we published, but Google had not yet announced, so it has not yet been included in our CapEx plan.

Speaker Change: Obviously, that's going to help you spread your fixed costs more broadly, but there will be some incremental costs as well so.

Speaker Change: We haven't given a rule of thumb, but and you are talking about hundreds of megawatts of youre going to have incremental investment in the system and I think probably both of our utilities will see similar numbers in a similar range and just to note.

Speaker Change: Per our plan.

Speaker Change: Both meta and Panasonic had been advanced had been announced before we had put out our Q4.

Speaker Change: Our capex plans. So they are included in the plan that we publish but Google has not yet announced so it has not yet been included in our Capex plan.

David A. Campbell: Maybe just to hone in a little bit, just maybe if you could just provide a little bit of directional color on the mechanics and the margin on the Google deal. Because, as we understand it, you're supplying the actual megawatts, but some of the press releases, including ones coming from the governor, were framing this as a self-supply setup, 400 megawatts from Ranger and D.E. Shaw. So I'm just trying to understand your exposure and obligations here.

Speaker Change: And then maybe just just to hone in a little bit just maybe if you could just provide a little bit of directional color on the mechanics and the margin on the Google deal because if we understand it you are supplying the actual megawatts, but some of the press releases, including coming from the Governor were framing this as a self supply setup 400 Mega.

Speaker Change: What's from Ranger and D E. Shaw, so just trying to understand your exposure and obligations here. Thanks.

David A. Campbell: Yeah, so the rates are subject to confidentiality agreements. So I won't discuss specific rates.

Speaker Change: Yes so.

Speaker Change: The rates are are subject to confidentiality agreements I won't describe it civic rates generally when you bring in large new loads.

Speaker Change: And they are typically.

Speaker Change: Eligible for economic development rates, but as I described in my comments in the script.

Speaker Change: We're actively working on rate design elements to ensure that large new loads.

Speaker Change: We the incremental.

Speaker Change: Farmers are factored in as those or are considered there are a number of players who signed virtual ppas, we will still be the supplier to Google So there'll be a customer of ours and the megawatts. They receive will be from us. They will yes. They are.

Speaker Change: Agreement will be.

Speaker Change: And in fact, a virtual PPA with Dolby.

Speaker Change: Offtake or an economic off taker, but that asset where its added will become another generation resource in the southwest power pool.

David A. Campbell: Generally, when you bring in large new loads, and they're typically eligible for economic development rates, but as I described in my comments in the script We're actively working on rate design elements to ensure that large new loads, We, the incremental requirements are factored in as those are considered, you know, there are a number of players who sign virtual PPAs, we'll still be the supplier to Google, so there'll be a customer of ours, and the megawatts they receive will be from us, they will, their agreement will be, in effect, a virtual PPA with, there'll be an offtaker, an economic offtaker, but that asset where it's added will become another generation resource in the Southwest Power Okay, got it. And then just lastly, on the EPA regs, I mean, obviously, this was a key part of your opening, you know, prepares, right?

Speaker Change: Got it and then just lastly on the EPA Regs I mean, obviously this was a key part of your opening prepares right.

Speaker Change: There's obviously been a lot of chatter this quarter on the regs and potential impacts to <unk> in gas generation plant does the April <unk> put out account for this thinking specifically for example on the gas additions you proposed which may not get credit for coal firing hydrogen under the final rules.

David A. Campbell: There's, I mean, there's obviously been a lot of chatter this quarter about the regs and potential impacts to IRPs and gas generation plans. Does the April IRP just put this thinking specifically, for example, on the gas additions you proposed, which may not get credit for co-firing hydrogen under the final rules? to use only, I guess. How are you approaching planning around this? Yeah, thanks, Shahriar. It's a great question.

Speaker Change: So <unk> only I guess, how are you approaching planning around this thanks.

David A. Campbell: The IRP that we just issued in Missouri, and it's an overall corporate IRP also, we'll file a Kansas one here in a couple weeks. But that IRP does not include the EPA's recently issued rules that just came out too late to be included in the process. There's a ton of analysis that goes into it, and so the new rules will be factored into our IRPs going forward. I do not anticipate that while there's still a lot of analysis to do, it's going to change our plans to build new gas units.

Speaker Change: Yes, Thanks, Charles Great question.

Speaker Change: The RFP that we just.

Speaker Change: Issued in Missouri, and it's an overall corporate IOP also fiber, Kansas one here in a couple of weeks, but.

Speaker Change: That RFP does not include the Epa's recently issued rules that just came out too late to be included in the processes a ton of analysis that goes into it.

Speaker Change: So the new rules will be factored into our <unk> going forward.

David A. Campbell: We're going to need new gas to ensure reliability, and it will be needed for the capacity in the system as well. We will impact our analysis of what type of gas units are added, what makes the most sense, and that will probably be an analysis that goes down the jurisdictional level. As you know, the EPA rules set rates that new efficient gas turbines can achieve. There are just some limits on the capacity factors at which they can run. So, for peaking units, in effect, anything at the peaking unit level is a 20% capacity factor, and then the intermediate units can run up to a 40% capacity factor before CCU.

Speaker Change: <unk>.

David A. Campbell: I do not anticipate while there's still a lot of analysis I don't anticipate its going to change our plans to build new gas units, we're going to need new gas to ensure reliability.

Speaker Change: Needed for the capacity in the system as well.

Speaker Change: Will impact our analysis of what type of gas units are added what makes most sense and that will probably be.

Speaker Change: And analysis that goes down the jurisdictional level is as you know that.

Speaker Change: <unk> rules.

Speaker Change: Set rates that new efficient gas turbines can achieve some.

Speaker Change: Some limits on our capacity factors at which they can run so far.

Speaker Change: Peaking units in affect anything.

David A. Campbell: Peaking unit level is that 20% capacity factor and then intermediate.

David A. Campbell: Carbon capture and storage is required. Now, we'll be looking at this in the requirements because it is going to, it will impact our resource plans, particularly with respect to the obligations for coal and the coal retirement timeline. And I won't go into all the details on this call, but basically, in a nutshell, as I mentioned in my remarks.

Speaker Change: Units can run up to a 40% capacity factor before CCU carbon capture and storage is required.

Speaker Change: Now.

Speaker Change: We will be looking at this and their requirements because it is going to it will impact our resource plans, particularly with respect to the obligations for coal and the coal retirement timeline.

Speaker Change: And I won't go into all the details on this call, but basically in a nutshell as I mentioned in my remarks.

David A. Campbell: For coal units that you're going to operate long term, carbon capture and sequestration is required, and that's just not a technology that's proven at scale, in a retrofit context for existing units. So to operate a unit past 2038, you have to have carbon capture and storage, and you have to have it in place by 2032. I think it is. You can do gas co-firing if you get on that pass and operate in the mid to late 2030s.

Speaker Change: For coal units that youre going to operate long term carbon capture and sequestration is required.

Speaker Change: And Thats just not.

Speaker Change: Technology that's proven.

Speaker Change: Proven.

Speaker Change: At scale.

David A. Campbell: And in retrofit context for existing units so.

Speaker Change: To operating unit past 2038, you have to have carbon capture and storage and you have to have it in place by 2030.

Speaker Change: Two I think it is.

Speaker Change: You can do gas co firing if.

David A. Campbell: If you get on that path and operate to the mid to late 2000 <unk>. So this rule is going to get the greenhouse gas rule, we get a lot of scrutiny and attention has all the other rules of the EPA put out we think were pretty good position to comply with the other rules, but lots of analysis is still to do there'll be legal challenges and we'll monitor it closely but our go forward <unk> will reflect the impact of the EPS.

David A. Campbell: So this rule is going to get, the greenhouse gas rule will get a lot of scrutiny and attention, as will the other rules that the EPA puts out. We think we're in a pretty good position to comply with the other rules, but lots of analysis still to do. There'll be legal challenges, and we'll monitor them closely, but our go-forward IRPs will reflect the impact. Net-net, though, gas is going to be an important part of the equation for us to ensure reliability and meet the new customer demand we're seeing and enable us to keep the lights on affordably. Perfect. Thank you.

Speaker Change: Net net.

Speaker Change: Gas is going to be important part of the equation for us to ensure reliability.

Speaker Change: The new customer demand, we're seeing and enable us to keep the lights on affordably.

Shahriar Pourreza: Perfect. Thank you guys. I appreciate it. Thanks, Shahriar.

Speaker Change: Perfect. Thank you guys appreciate it.

Shahriar Pourreza: Thanks Shar.

Operator: Thank you, and please wait one moment for our next question. Our next question comes from Durgesh Chopra of Evercore ISI. Your line is now open.

Speaker Change: Thank you and one moment for our next question.

Speaker Change: Our next question comes from Doug is Chopra of Evercore ISI. Your line is now open.

Durgesh Chopra: Hey, good morning, team. Thanks for giving me time. Can I just ask for a good morning, David?

Durgesh Chopra: Hey, good morning team, Thanks for getting me time.

Durgesh Chopra: Good morning explore hey, good morning, David can I, just ask for clarification on the upside David that you listed from two five to seven to five to seven.

David A. Campbell: Can I just ask for clarification on the upside, David, that you listed from 2527, House Bill 2527? The three to four cents, is that really like a 20, like first year upside to 2025? So this year, because the village is effective in July, is it really one half of that three to four cents? Am I thinking that correctly?

Speaker Change: <unk> is that really like.

Durgesh Chopra: Like first year upside. So 2025, so this year because of the village Vic of July its only one half of that 2% to four <unk>.

David A. Campbell: You know how I described Durgesh, and I've... We, you know, want to be softball to describe really that what HB 2527 does is it just helps to reduce the gap between the authorized return and your realized return. So it's a, it helps to mitigate regulatory lag and gives us a better opportunity to get it right. So to get closer to earning our authorized return the way it is described, it is in the first year following a rate case.

David A. Campbell: Thinking about that correctly.

Durgesh Chopra: How I describe it.

David A. Campbell: Okay.

David A. Campbell: We.

David A. Campbell: Bob you talked about it it's got really what HB 25, 27 does it just helps to reduce the gap between the authorized return any realized return so.

Durgesh Chopra: It helps to mitigate regulatory lag and gives us a better opportunity to get approximate.

David A. Campbell: To get closer to earning.

David A. Campbell: Our authorized return the way you described it as in the first year. Following a rate case, it's three to three or four.

David A. Campbell: It's $0.03 to $0.04. We are in the first year filing rate case. It's fair to think of it that way. And the second full year filing rate case, it's roughly $0.10. So it's a standalone item without consideration of anything else, how to think about the impact in terms of reducing regulatory lag it would otherwise have.

David A. Campbell: Were in the first year filing rate cases fair to think of it that way.

David A. Campbell: And the second full year following a rate case, it's roughly 10, so as a standalone item without consideration anything else that's.

David A. Campbell: How to think about the impact in terms of reducing regulatory lag that would otherwise occur.

David A. Campbell: And a jump from $0.04 to $0.10, I'm sorry if this is not a great question, but that's just basically capital doubling, right? Like your asset base doubling, you know, between the two. Yeah, I would think about that.

David A. Campbell: Thank you and then jumped from four five cents to <unk> 10, sorry. If this is not a great question, but that's just basically capital doubling right like your asset base doubling.

Speaker Change: What do you think about it is.

David A. Campbell: Yeah, it's a lot like how it works in Missouri. I mean, slightly different provisions. It's a 90% deferral versus 85. But for example, if you look at our realized returns in Kansas Central, 21 to 22 to 23, you see those realized returns got lower and lower, much lower than an authorized level because we were in a five-year stay out. So the regulatory lag impacts, as we continue to invest in our system, got higher and higher.

David A. Campbell: Yes, it's a lot of like how it works in Missouri slightly different provision its a 90% deferral versus 85.

David A. Campbell: For example, if you look at our realized returns in Kansas Central in.

David A. Campbell: 21% to 22% to 23, you saw those realized returns got lower and lower much lower than our authorized level. Because we are in a five year stay out so the regulatory lag impacts as we continue to invest in our system got higher and higher so thats why you see the further you go out from a rate case and the bigger the impact now if you have a more regular cadence of rate cases.

David A. Campbell: So that's why you see the further you go out from a rate case, the bigger the impact. Now, if you have a more regular cadence array case, you know, you'll eliminate that, right? So we don't have, we don't, we're not in a five-year stay out.

David A. Campbell: Yeah.

David A. Campbell: You eliminate that right. So we don't we don't we're not in a five year stay out and we as we described while will be true in every jurisdiction. The general cadence we expect to have every other year for rate case.

David A. Campbell: And we as we described, what will be true in every jurisdiction, the general cadence we expect is every other Got it. That's very helpful. I understand it now.

David A. Campbell: And then just quickly, can I ask you for your level of confidence in retail sales? You know, it was flat last year, 23, over 22. And then the first quarter came in a half percent below the first quarter of 24. And obviously, you're projecting 2 to 3% at the end of the year. And, you know, what gives you that level of confidence? And I know you mentioned a certain significant amount of load coming online, but just maybe share a little bit more color there.

Speaker Change: Got it that's very helpful. I understand that now and then just quickly can I ask you for your level of confidence and the retail sales.

David A. Campbell: It was flat last year 23 over 2002, and then first quarter came in at 5% below the first quarter of 'twenty, four and obviously, you're projecting 2%, 3% and the entity and the year end.

David A. Campbell: What gives you that level of content I know you mentioned.

David A. Campbell: Significant amount of load coming online, but just maybe share a little bit more color there.

David A. Campbell: Sure, I'll start and ask Kirk to weigh in. I think last year, if you break down the demand trends, residential and commercial were up 23.8% and 1%, respectively. It was industrial that was down; the industrial margins tend to be lower, as you know, and we can really trace the industrial demand being down in 2023 to a few customers that had unique circumstances. So that I think is the basis for why we have the underlying confidence that we saw the robustness of the residential commercial sector last year and understand the industrial trends and kind of customer by customer level. And Kirk talked about that for the length of the first quarter; we won't overreact too much to the first quarter; there was still some pretty strong trajectory on the residential side. It was a very mild quarter.

Speaker Change: Sure I'll start and ask Kirk to plan I think last year, if you breakdown the demand trends residential commercial were up 23, 8% and 1% respectively.

David A. Campbell: It was industrial it was down on the industrial margins tend to be lower as you know and we can really Tracy industrial demand being down in 2023 to a few customers that had unique circumstances, so and I think as the basis for why we have the underlying confidence that the robustness of.

David A. Campbell: The residential commercial sector last year and understand the industrial trends that kind of a customer a customer level and Kirk talked about that at length in the first quarter, we won't overreact too much in the first quarter.

David A. Campbell: There are still some pretty strong trajectory on the residential side.

Kirk: It was a very mild quarter. So we'll be we'll be tracking how to go through the year now in terms of.

David A. Campbell: So we'll be tracking how that goes through the year. Now, in terms of larger customers coming online. You know, there can always be timing issues otherwise.

David A. Campbell: The large <unk> customers coming online.

David A. Campbell: It can always be timing issues, otherwise, but if you drive out to Desoto, Kansas you will see a very very large battery manufacturing plant facility.

David A. Campbell: But if you drive out to DeSoto, Kansas, you will see a very, very large battery manufacturing plant facility well underway in terms of construction. So we feel good about that. The metadata center is under construction. Google's down the road. So it's got to run a further stop. But we feel good about the overall growth trajectory. Kirk, anything you'd add? Oh, great. I mean, our

David A. Campbell: Well underway in terms of the construction. So we feel good about that the amount of data centers under construction Google's down the road. So it's got the furthest out but we feel.

David A. Campbell: Good about the overall growth trajectory Kirk I need at a great I mean, our residential and commercial growth assumptions are roughly consistent with what we saw in the actuals in 2023, it's really is buoyed by that expectation of industrial recovery, both sort of cycling through some of those temporary events that I talked about before and then.

Kirkland B. Andrews: Agreed. Our residential and commercial growth assumptions are roughly consistent with what we saw in the actuals in 2023. It's really just buoyed by that expectation of industrial recovery, both sort of cycling through some of those temporary events that I talked about before and then supplemented by some of those. I need to talk about the new economic development customers coming on later this year on the industrial side. So, good.

Kirkland B. Andrews: Rented by some of those.

Kirkland B. Andrews: You just talked about the new economic development customers coming out later this year on the industrial side.

Durgesh Chopra: Thank you so much. I appreciate it, guys. Thank you.

Speaker Change: Thank you so much I appreciate it guys.

Speaker Change: Thank you.

Operator: Thank you, and please wait one moment for our next question. Our next question is from Travis Miller of Morningstar Inc. Your line is now open.

Speaker Change: Thank you Ed one moment for our next question.

Operator: Our next question is from Travis Miller of Morningstar, Inc. Your line is now open.

Travis Miller: Thank you. Good morning, everyone. Good morning.

Travis Miller: Thank you and good morning, everyone.

David A. Campbell: Hey, congrats on getting all the stuff done there in Kansas. Wondering, as a follow-on to that, what are you still working on? Is there a timeline? And what might be involved in getting more done in Kansas?

Travis Miller: Good morning.

Travis Miller: Congrats on getting all this stuff done there in Kansas wondering as a follow on to that what are you still working on is there a timeline.

David A. Campbell: <unk>.

Travis Miller: Might be involved in.

Travis Miller: More done in Kansas.

David A. Campbell: Our work is never done. No, it will get done.

David A. Campbell: Our work is never done.

David A. Campbell: We certainly are working with our stakeholders on a series of issues in both states really just looking for I think the most important thing is how do we respond to that economic development opportunities that are before us and ensure the best frameworks are in place to take advantage of those so the discussion in Kansas look we <unk> hundred 20, $25 27, I can't emphasize enough that it's not.

David A. Campbell: We certainly are working with our stakeholders on a series of issues in both states, really just looking for the most important thing is how do we respond to the economic development opportunities that are before us and ensure the best frameworks are in place to take advantage of those. So the discussion in Kansas, look, HB 2527, I can't emphasize enough that it's not only important in terms of provisions for reducing lag but also important as a reflection of the broad-based consensus and support for investments to take advantage of economic development opportunities and have a constructive framework for those investments. Ongoing things that we'll look at. We'll continue to be; for example, we plan to have a workshop later this year on capital structure and ROE. We agreed with the parties.

David A. Campbell: Important in terms of the provisions reduced lag, but also important is a reflection of the broad based consensus and support.

David A. Campbell: For investments to take advantage of economic development opportunities and having a constructive framework for those investments.

David A. Campbell: Ongoing things that we'll look at and we will continue to be well we plan to have a workshop later this year on capital structure and ROE.

David A. Campbell: We agreed with the parties.

David A. Campbell: That wouldn't be included in the legislative effort this spring, but we would talk about it in a workshop this fall. So ensuring that Kansas has a competitive framework for this kind of authorized returns, we think continues to be important. As I mentioned, our rate-based growth is significantly lower than our peer jurisdictions.

David A. Campbell: It wouldn't be included in the legislative effort. This spring when we would talk about in a workshop. This fall so ensuring that Kansas has it a competitive framework.

David A. Campbell: Or kind of authorized returns we think continues to be important as I mentioned our rate base growth is.

David A. Campbell: And we hear a lot from investors about the relative competitiveness of returns offered in various states, so we look forward to that dialogue in Kansas. On the Missouri side, as I mentioned, there's been broad-based support for legislation relating to natural gas plants because we and other utilities in the Missouri side are planning to build gas. It's really going to be needed for reliability and to serve incremental load. So enhancing the provisions that are applicable to new dispatchable generation will be an important step to take over time in Missouri.

David A. Campbell: Currently lower than our peer jurisdictions, and we hear a lot from investors about the relative competitiveness of the returns offered in various states. So we look forward to that dialogue in Kansas.

David A. Campbell: On the Missouri side as I mentioned, there has been a broad based support for legislation relating natural gas plants, because we and other utilities in the Missouri side are planning to build gas, it's really going to be needed for reliability and to serve incremental load.

David A. Campbell: So enhancing the provisions that are applicable to new dispatch will generation will be important step to take over time in theory, but we've had a constructive dialogue with stakeholders in both states really pleased with that constructive dialogue and we look forward to working with.

David A. Campbell: But we've had a constructive dialogue with stakeholders in both states, and we're really pleased with that constructive dialogue we've been working on with regulators, legislators, staff, and other curbs and other intervenors, you know, OPC in Missouri to move forward.

David A. Campbell: Our regulators legislators staff another curve and other intervenors RPC in Missouri to move forward.

Travis Miller: Okay, perfect. That workshop would be during the legislative sessions or regulatory?

David A. Campbell: Okay, perfect that workshop would be in the ledger.

Travis Miller: Ladies recessions or regulatory.

David A. Campbell: Regulatory. Yeah, and we expect to have that later this year. I haven't been scheduled, but we're aligned with parties, and we'll work with parties to find the right time to do it. I'd expect it later this year, later this summer or fall.

Travis Miller: Regulatory yes, we expect to have that later this year admin schedule, but we're aligned with parties and will work with partners to find the right time to do it. After the expected later this year later this summer fall sure Okay.

Travis Miller: Sure. Okay. Now, the higher level on the EPS growth, you've described, obviously, a lot of positive things going on. Your growth rate is at or higher than other utilities. You've got the CapEx, which you've suggested might be higher in the third quarter. Why not get to that five to seven, or perhaps so?

Travis Miller: The higher level on the EPS growth you've described obviously a lot of positive things going on your growth rate is at or higher than other utilities.

Travis Miller: Capex, which you've suggested might be higher here in the third quarter, what pushes you at least to a 5% to 7% number maybe not back to the 6% to 8% but.

Travis Miller: Why not get to that five to seven or perhaps should we anticipate that when you come out with a new Capex plan.

David A. Campbell: Do we anticipate that when you come out with a new CapEx plan? As I said earlier, we won't get ahead of the CAPEX plan. We certainly won't get ahead of any earnings forecast.

David A. Campbell: As I said earlier, we wont get ahead of our Capex plan, we certainly will get ahead of any.

David A. Campbell: I think that when you look at our financial plan overall, we have the lowest rate-based growth. And as a consequence of that, we have a relatively lower earnings growth trajectory. Those two are generally in sync.

David A. Campbell: Earnings forecast I think that when you look at our financial plan overall, we are the lowest.

David A. Campbell: Rate base growth and as a consequence of that we have a relatively lower earnings growth trajectory of those two are generally.

David A. Campbell: Thank the rate base growth and earnings growth targets typically the earnings growth target lags. Some level there was a little lower than the rate base growth target because of the drag from financings. So for us what we're looking at fundamentally is how do we invest at the right level to ensure that we can take advantage of economic drilling opportunities ensure reliability may.

David A. Campbell: The rate-based growth target and the earnings growth targets, typically the earnings growth target lags behind at some level; it's a little lower than the rate-based growth target because of the drag from finance. So for us, what we're looking at fundamentally is how do we invest at the right level to ensure that we can take advantage of economic development opportunities, ensure reliability, and make sure our system doesn't fall behind others in terms of performance, resilience, reliability, and ability to meet new customer demand.

David A. Campbell: Sure our system doesn't fall behind others.

David A. Campbell: In terms of performance resilience reliability and ability to meet customer demand.

David A. Campbell: That will lead to higher levels of investment and we will see where it goes from there but we.

David A. Campbell: I think that will lead to higher levels of investment, and we'll see where it goes from there. But certainly, we start from the position of affordability, reliability, and sustainability. How do we make sure that we are competitive and taking advantage of these great demand growth opportunities? I do think that will lead to more capital investment because I think that's going to be to the benefit of all our customers and our strategic objectives. And we'll discuss over time what that means for the earnings trajectory, but we really start with supportability, reliability, and sustainability. What is the capital investment plan that will best enable us to advance?

David A. Campbell: We certainly we start from the position of affordability reliability sustainability, how do we make sure that we are competitive and taking advantage of these great demand growth opportunities.

David A. Campbell: Do think that will lead to more capital investment because I think that's going to be to the benefit of all of our customers and our strategic objectives.

David A. Campbell: And we will discuss over time, what that means for the earnings trajectory, but we really start with affordability reliability sustainability. What is the capital investment plan that will best enable us to advance it.

Travis Miller: Okay, that's great. No, I appreciate it and figured you wouldn't answer my question by saying, yeah, five to seven.

Speaker Change: Okay, that's great and I appreciate it and figured you want answered my question by saying five to seven.

David A. Campbell: I appreciate the details. Thanks so much. Thank you.

Speaker Change: I appreciate it appreciate the details thanks, so much thank you.

Operator: Thank you, and one moment for our next question. Our next question comes from Paul Patterson of Glenrock Associates. Your line is now open. Hey, good morning.

Speaker Change: Thank you and one moment our next question.

Operator: Our next question comes from Paul Patterson of Glen Rock Associates. Your line is now open.

Paul Patterson: Hey, good morning.

Paul Patterson: Um, just wanted to go over just a few quick things on the quarter. First of all, the decrease in labor capitalization. Can you elaborate a little bit more on what's driving that and how that's going to impact the rest of the year?

Paul Patterson: Good morning, Paul.

Paul Patterson: Just wanted to go over just a few quick things on the quarter first of all the decrease in labor capitalization can you elaborate a little bit more on what's driving that.

Paul Patterson: That's going to impact the rest of the year.

Kirkland B. Andrews: Oh, that's correct. The decrease in labor capitalization is really a function of we had a little bit of a change in our transformer labor capitalization approaches in the first quarter, a little bit of a catch up there. So now what you're seeing is just the ongoing effects of that as we move forward.

Paul Patterson: I'll, let Curt the decrease in labor capitalization is really a function of we had a little bit of a change in our transformer labor capitalization approaches.

Kirkland B. Andrews: Approaches in the first quarter is a little bit of a catch up there. So that what youre seeing is just the ongoing effects of that as we move forward.

Kirkland B. Andrews: All you get the prize from an in-depth reading of the materials. Thank you. Thank you.

Speaker Change: All you get the prize remote in depth reading our materials.

Paul Patterson: Okay, um, but, but what's, what's, how much was...

Kirkland B. Andrews: Okay.

Speaker Change: But how much was that I guess.

Kirkland B. Andrews: And we'll have to get back to you, I'll have to get back to you offline on that, Paul. I'll be happy to do that. Okay, no problem. The sales growth numbers for the quarter, does that reflect leap year? Yes, yes, it does.

Speaker Change: I will have to get back I'll have to get back to you offline on that.

Kirkland B. Andrews: Paul will be happy to do that.

Speaker Change: No problem.

Kirkland B. Andrews: Yes.

Kirkland B. Andrews:

Kirkland B. Andrews: The sales the sales growth numbers for the quarter does that reflect leap year.

Kirkland B. Andrews: Yes, yes, it does.

Paul Patterson: Okay, um, and then, um. The PISA legislation, it sounds like you guys, in Missouri, I'm talking about, don't see much opportunity for the House bill. I think there's also a Senate bill. I mean, I know it's going to end soon, but is that pretty much how you feel that I hear you, right? I guess.

Kirkland B. Andrews: Okay.

Paul Patterson: <unk>.

Paul Patterson: Then.

Paul Patterson: The.

Paul Patterson: Pisa legislation it sounds like you guys, Missouri I'm talking about it sounds like you don't see much opportunity for the the house Bill I think there is also the Senate Bill.

Paul Patterson: I know, it's going to end soon but is that does that pretty much. How you feel the I hear you right I guess.

David A. Campbell: I think, Paul, yes, you heard me right. We've had the PISA provisions, the PISA language, and changes to PISA relating to natural gas investments to 90% and extending the date. I passed out of the house.

Speaker Change: I think Paul Yes, you heard you heard me right. We've had the pizza provisions pizza language and changes to pizza relating to.

David A. Campbell: Natural gas investments to 90% extending the date.

David A. Campbell: Pass out of house Theres very good discussion around it is broad based support it's just hard to given the tight timeline and the session overall session dynamics, it's going to be hard to get anything passed. So we think this is no different.

David A. Campbell: There was very good discussion around it. There's broad-based support. It's just hard to, given the tight timeline in the session, and overall session dynamics, it's going to be hard to get anything passed. So we think this is no different. We certainly think it will be beneficial, but it's the session dynamics and timeline of the real constraints, not support for the provisions we think is proper.

David A. Campbell: I wouldn't rule it out we certainly think it would be beneficial, but it's the session dynamics a timeline of the real constraint is not.

David A. Campbell: Support for the provision we think has broad based support.

Paul Patterson: Paul, I'll follow up for you. Sorry Paul, that transformer labor just to come back to you is about two pennies. Okay, year over year. Okay, good.

Speaker Change: Well I'll follow up more of that.

Paul Patterson: Okay.

Paul Patterson: Sorry, Paul that transformer labor just to come back to us by two pennies.

Paul Patterson: Okay year over year.

Paul Patterson: Okay, and then. Thanks for that. And then just on the Missouri, if I'm correct, if it ends, the session ends, the floor action ends tomorrow, is that right?

Speaker Change: Okay and then.

Paul Patterson: Thanks for that and then just.

Paul Patterson: The Missouri public correct.

Paul Patterson: And the session ends before action hands Tomorrow is that right.

Paul Patterson: The 17th is when it formally ends, Paul.

Paul Patterson: The 17th I think is when it formally ends.

Paul Patterson: All? Okay, but I thought there was a floor action deadline or something. Okay, but okay, the 17th, okay. Okay, thank you. Appreciate that. And then finally, Ami, you mentioned that your next IRP will reflect, The The impact of the E.K. rules. How do you think about depreciation with these EPA rules and when, I mean you mentioned litigation and you know the uncertainty that's associated with it, how should we think about depreciation potentially changing with certain assets given these EPA rules and when you guys might have to deal with that regulatorily or not, I mean just how are you, sort of big picture, how are you thinking about the issue of asset life depreciation and these rules and how those would sort of figure out, how those would sort of pencil out if you follow me.

Paul Patterson: Paul.

Paul Patterson: Okay, but I thought there was a forex and deadline or something okay, but okay. The 17th okay.

Paul Patterson: Okay. Thank you appreciate that and then finally, you mentioned that your next therapy.

Paul Patterson: Reflect.

Paul Patterson: <unk>.

Paul Patterson: The impact of the EPA rules.

Paul Patterson: Do you think that.

Paul Patterson: How do you think about depreciation.

Paul Patterson: With these EPA rules and.

Paul Patterson: When.

Paul Patterson: I mean, you mentioned the litigation and the uncertainty associated with it how should we think about depreciation potentially changing with certain assets. Given these EPA rules and when that when you guys might have to deal with that regulatory or not I mean, just how are you sort of big picture. How are you thinking about the issue of.

Paul Patterson: Asset life depreciation in these rules and how those would sort of figure out what sort of pencil out looking for them.

David A. Campbell: Yeah, well, Paul, it's a great question and one that is going to take a lot of work on our part and a lot of work with our stakeholders because the affordability and reliability impacts of the rules are ones that we're really going to all have to dig into. And there are some provisions in the rules that give some potential outs, but those are relatively short-term in nature. But to your point, we'll have to assess whether carbon capture and sequestration is required for any unit that's operating beyond 2038. But how does that apply if that technology is not commercially proven today?

Speaker Change: Yes, what policy Great question, you won that.

David A. Campbell: Is it going to take a lot of work on our part and a lot of work with our stakeholders because the.

David A. Campbell: And the affordability.

David A. Campbell: And reliability impacts of the rules are ones that we're really going to all have to dig into.

David A. Campbell: And there are some provisions in the rules that give some potential outs on those are relatively short term in nature, but.

David A. Campbell: To your point, we will have to SaaS carbon capture and sequestration is required for any unit. This operating beyond 2038, but then apply that technology is not commercially proven today.

David A. Campbell: I do not want to get ahead of the analysis we're going to do and any discussions we'd have with our regulators around it, but that provision, in particular, around carbon capture and storage, is no doubt going to be the focus of a lot of discussion by a lot of parties. But the affordability and reliability impacts are certainly going to be at the forefront, and any change in depreciation schedules would. Along with any incremental investments that might be required, it would have impacts on the affordability side. So, under the provisions of the rule, you can look at our RP, and it would imply absent CCS.

David A. Campbell: I do not want to get ahead of an analysis, we're going to do and any discussions we have with our regulators around it that that provision in particular is around carbon Catherine storage is no doubt <unk>.

David A. Campbell: Let me to focus a lot of discussion by a lot of parties.

David A. Campbell: But the affordability and reliability impacts are certainly can be at the forefront and any change in depreciation schedules.

David A. Campbell: Along with any incremental investments that might be required would have impact on the affordability side. So.

David A. Campbell: Under the provisions of the rule you can look at our RFP would imply absent Ccs.

David A. Campbell: It's going to have some impacts outside... But we've got some time to analyze it. We've got some time to work through with parties.

David A. Campbell: It's going to have some impacts in the out years, but we've got some time to analyze it got some time to work through with parties, but youre, noting an important issue is that these rules are consequential and the affordability and reliability impacts are real and.

David A. Campbell: But you're noting an important issue is that these rules are consequential, and the affordability and reliability impacts are real and significant. And we'll be analyzing them over time. And we'll do that on a systematic basis because something that's important we won't rush into. And we'll absolutely be working with our regulators and stakeholders in Kansas and Missouri as we do that analysis. And we'll be tracking the litigation closely.

David A. Campbell: Insignificant and we will be analyzing them over time, and we'll do that on a systematic basis because sterling is important we won't rush into an.

David A. Campbell: Absolutely working with our regulators and stakeholders in Kansas, Missouri, as we do that analysis and we'll be tracking the litigation closely.

Paul Patterson: Awesome. Thanks so much, guys.

Speaker Change: Awesome. Thanks, so much guys.

Speaker Change: Thank you.

Operator: Thank you, and please wait one moment for our next question. Our next question comes from Ryan Levine of Citi. Your line is now open.

Speaker Change: Thank you and one moment, Sir our next question.

Ryan Michael Levine: On the one slide, you highlight over $10 billion worth of new development projects in Kansas and Missouri. But do you have a little bit of color around what industries are most represented in that $10 billion number and in which service territories are they awaiting? and any color around the load opportunities for them?

Operator: Our next question comes from Ryan Levine of Citi. Your line is now open.

Speaker Change: Good morning.

Ryan Michael Levine: I'm wondering the one client you highlight over $10 billion worth of new development projects in Kansas, and Missouri, and you haven't tried a little bit of color around what industries are most represented in that $10 billion number in which service territories as they are awaiting towards.

Ryan Michael Levine: And any color around the load opportunities to that meeting.

David A. Campbell: Sure. So the it's you won't be surprised here. It's data centers, but also advanced and large manufacturing that can range from Semiconductor Auto, Food Products, and Food Service Industries are all pretty big presences in our space. So, like others, you know, we've got a pretty big presence of data centers already with Meta and Google. And there are a number of those are data centers, but there's also a lot of advanced manufacturing, and we're excited about all of them.

Speaker Change: Sure so the.

David A. Campbell: You won't be surprised here its data centers, but also advanced in large manufacturing that can range from.

David A. Campbell: Semiconductor auto food products Foodservice industries are all pretty big presence in our space. So.

David A. Campbell: We like others, we've got a pretty big presence to data centers already with.

David A. Campbell: Net on Google and there's a number of those are data centers, but there is also a lot of advanced manufacturing.

David A. Campbell: We haven't quantified the exact megawatts, but 10 billion obviously add up to a very material increase in potential load, but and this is across, really, I'd say it's across all of our jurisdictions, there are a number of those parties that are interested in the metro region and our Missouri West area. So META, for example, is in Missouri West, Google's in Metro, and the Panasonic data plan is in Kansas Central.

David A. Campbell: We're excited about all of them we haven't quantified.

David A. Campbell: But the exact megawatts, but 10 billion, obviously add up to a very material increase.

David A. Campbell: Increase.

David A. Campbell: In.

David A. Campbell: Potential load, but and it's across realized say, it's across all of our jurisdictions. There are a number of those parties that are interested in metro region.

Ryan Michael Levine: So I think you'll continue to see broad-based interest across those. I think I also left out aerospace. We've got a very large aerospace presence in the center part of Kansas.

David A. Campbell: And our Missouri West area. So a meta for examples in Missouri West Google's.

Ryan Michael Levine: Metro and the Panasonic data point us in Kansas Central So I think Youll continue to see broad based interest across those I think also let that aerospace will get a very large aerospace presence in the central part of Kansas and that's also an area of high interest. So it's an exciting time.

David A. Campbell: And that's also an area of high interest, so it's an exciting time. And we're glad with the big, big new customers we've been able to land. It's been a mix of data centers and large manufacturing. I think we continue to see that kind of mix across, those are not exclusively data centers. I know there tend to be a lot of focus in the discussions recently, but we're big fans of advanced manufacturing coming to our territory too because it brings a lot of jobs. Incremental benefits. Data centers are also a big positive. They don't bring as many jobs, of course, but it's an exciting time in terms of the pipeline.

David A. Campbell: And we're glad with the big Big.

David A. Campbell: New customers will be able to land and it's been a mix of data centers and large manufacturing I think we continue to see that kind of mix across those are not exclusively data centers. I know they are tend to be a lot of the focus of the discussions recently, but.

David A. Campbell: We're big fans of advanced manufacturing coming in our territory here do they bring a lot of jobs.

David A. Campbell: Incremental benefits data centers are also big positive they don't bring as much jobs of course, but it.

David A. Campbell: It's an exciting time in terms of the pipeline.

Ryan Michael Levine: As you're working through your resource planning and with the federal legislation passed in Kansas, are there any non-financial constraints to being able to serve incremental load in your service territories, i.e., particularly on the gas generation side? that we should keep in mind that may constrain your growth.

David A. Campbell: As Youre working through your resource planet planning and with the airbag legislation passed in Kansas are there any non financial.

Ryan Michael Levine: Constraints to be able to serve incremental load in your service territory I E.

Ryan Michael Levine: Particularly on the gas generation side.

Ryan Michael Levine: And that we should keep in mind that may constrain growth.

David A. Campbell: So, I mean, I think for all of us, all utilities, and for us, you know, when you add the three customers I mentioned today, we said approximately 750 megawatts of load. That's a nearly 205 to 10% increase in our overall demand peak. You add several hundred megawatts in any location you're going to run into where the evaluation is on transmission and distribution infrastructure.

Ryan Michael Levine: So I mean I.

David A. Campbell: I think for all of us all utilities and for us.

David A. Campbell: Let's parse our system, adding these three customers I mentioned today, we said approximately 750 megawatts of load.

David A. Campbell: That's a nearly.

David A. Campbell: Between five and 10% increase in our overall demand peak.

David A. Campbell: <unk>.

David A. Campbell: You add several hundred megawatts into location youre going to run into where the valuation is on transmission and distribution infrastructure.

David A. Campbell: So what do you have adequate transmission, do you have adequate substation infrastructure in place? And with Southwest Power Pool requirements getting tighter, there's certainly capacity issues as well. When we're looking at sites and sites that are opportunities for our customers, you know, a lot of them are being responsive to where they're interested.

David A. Campbell: So what do you have adequate transmission, you've adequate substation infrastructure in place.

David A. Campbell: And with fast with powerful requirement is getting tighter there certainly capacity issues as well so when.

Ryan Michael Levine: But to the extent that they're flexible, then it's all about how you work through the grid constraints, so transmission, distribution, and then capacity constraints. So it absolutely is factored into our overall resource planning. That's part of why you see more resources in our plan. Some of that is higher requirements in the Southwest Power Pool, but some of that is a reflection of higher demand. So there are grid constraints. I think we're not unique in that; I think it's a general phenomenon across the U.S.

David A. Campbell: When we're looking at sites and sites that are opportunities for our customers you know a lot of them.

Ryan Michael Levine: We're being responsive to where they're interested but to the extent, they're flexible and it's all about how do you work through that.

Ryan Michael Levine: Grid constraints, so transmission distribution and then capacity constraints. So it absolutely is factored into our overall resource planning Thats part of why you see more resources in our plan. Some of that is higher requirements in the southwest power pool to something that is a reflection of higher demand. So there are grid constraints.

Ryan Michael Levine: Capacity constraints, you need to work through and that's an opportunity.

Ryan Michael Levine: We're not unique in that I think it's a general phenomenon across the U S. We are seeing a higher level of demand and we've seen in decades.

David A. Campbell: I was trying to get at is if you're building new gas plants, are there any pipeline constraints or anything else that, Oh, sorry. Yeah, be more onerous to overcome or any permitting or any other challenges that we should keep in mind.

Speaker Change: What I was trying to get at is if you are.

David A. Campbell: Building, new gas plants are there any pipeline constraints or anything else there that oh sorry.

David A. Campbell: More onerous to overcome are hurting.

David A. Campbell: Permitting or any other challenges that.

Speaker Change: No we should keep in mind.

David A. Campbell: Yeah, I think that the way the EPA rules are structured, the new efficient gas turbines can meet the requirements, so there'll be capacity factor limitations. But our team's evaluation of new gas sites that we've not announced where the new gas sites are certainly taking into consideration existing gas and grid infrastructure, so we think we'll be able to work through those. There's always a permitting and interconnection process, so it takes years to get these things done, and that's a reflection of why the gas plants are appearing in the years they appear. That really reflects the lead time that we expect to be required to work through all those. Various issues, but we do think we'll be able to get it done.

David A. Campbell: Yes, I think that the.

David A. Campbell: I think late AEP rules EPA rules are structured the new efficient gas turbines can meet the requirements. So that would be capacity capacity factor limitations, our team's evaluation of new gas sites that we have not announced where the new gas sites are certainly taking into consideration existing gas and grid infrastructure. So we think we'll be able to work through those.

David A. Campbell: So there is always a permitting and interconnection process. So it takes years to get these things done and Thats a reflection of why.

David A. Campbell: The gas plants are appearing in the year as they appear that really reflects the lead time that we expect to be required to work through all of those.

David A. Campbell: Various issues, but we do think we'll be able to get it done.

Ryan Michael Levine: Thank you for taking my question. Yeah, thank you.

Speaker Change: Thank you for taking my question.

Speaker Change: Thank you.

Operator: Thank you, and one moment for our next question. Our final question comes from Michael Sullivan of Wolf. Your line is now open.

Speaker Change: Thank you Ed one moment for our next question.

Operator: Our final question comes from Michael Sullivan of Wolfe. Your line is now open.

Michael P. Sullivan: Hey, good morning.

Michael P. Sullivan: Good morning Mike. Hey guys, I just wanted to ask about the mild weather to start the year and how you're thinking about levers to offset that.

Michael P. Sullivan: Good morning.

Michael P. Sullivan: Hey, guys just wanted to ask on the <unk>.

Michael P. Sullivan: Mild weather to start the year and how youre thinking about.

Michael P. Sullivan: Leverage to offset that.

David A. Campbell: So it's a welcome to 2024, same as 2023, because we had a mild start to 2023 as well. You know, like we looked across the various levels of business, the important part of that, obviously, is cost management. We mentioned that the new legislation in Kansas, in the first year filing rate case, provides a benefit.

Michael P. Sullivan: So it's a well.

Michael P. Sullivan: Welcome to 2024 same as 2023, because we had a mild start to 2023 as well.

David A. Campbell: Yes.

David A. Campbell: Mike we look across the various levels of our business is an important part of that obviously is cost management.

David A. Campbell: We mentioned that the new legislation in Kansas.

David A. Campbell: In the first year. Following a rate case provides the benefits are obviously, we are in the first year filing a rate case. So we've got a relatively large enterprise we've got a range of levers that we typically worked through.

David A. Campbell: So, obviously, we're looking at that. So we've got, you know, a relatively large enterprise; we've got a range of levers that we typically work through. It's a...

David A. Campbell: It's not the first quarter; it's not our biggest quarter. So we'll be watching to see how the second and third quarter go in particular, but I view that as that's sort of in the routine category of things to manage. So we always prefer to be in normal weather, but we've got some levers that we can work on and some positives that we've also already manifested.

Speaker Change: Yes, it's not in the first quarter is not our biggest quarter. So we'll be watching to see how second or third quarter go in particular, but.

David A. Campbell: I put it I view this as sort of in the routine category. Thanks to manage so we would always prefer to be normal weather, but we've got some levers that we can work on and some positives that we've seen also.

Michael P. Sullivan: Okay, great. And then when I just think about this upcoming CapEx refresh. I think you usually do that for five years. And the IRP is kind of more like a 10 plus year outlook, and If I just, I know what you're talking about. Capacity upside over 10 years, but if I just look at like the next five years plan over plan, I think we're in a similar spot, a different mix of generation, but just wanted to try to reconcile that as we think about CapEx plan refresh and what changed in this IRP.

David A. Campbell: Already manifested.

David A. Campbell: Okay, Great and then when I just think about this upcoming.

Michael P. Sullivan: Capex refresh.

Michael P. Sullivan: I think you usually do that for five years and the IRT is kind of more like a 10 plus year outlook.

Michael P. Sullivan: If I just I know youre talking about <unk>.

Michael P. Sullivan: Capacity upside over 10 years, but if I just look at like the next five plan over plan I think.

Michael P. Sullivan: We're in a similar spot a different mix of generation, but.

Michael P. Sullivan: I just wanted to try to reconcile that as we think about Capex plan refresh and what changed in this IOP.

David A. Campbell: It's a good question, Mike, and you'll see that we've also got to make rental if you look at I anticipate our CapEx refresh will be through 28. We probably won't introduce 29 until February, but Kirk and the planning team may decide that they, you know, I'll leave it to them on where we approach that.

Michael P. Sullivan: Yes.

Speaker Change: It's a good question, Mike the you'll see that we've also got some incremental if you look at.

David A. Campbell: I anticipate our Capex refresh will feature 28, it probably won't introduce 29 until February but Kirk and the planning team may decide the day I'll leave it to them and we're even approach that because we've got a lot of gas that's coming in.

David A. Campbell: Because we've got a lot of gas that's coming in at the 28 to 30 timeframe, that will lead to some earlier spending. In a lot of renewable energy spend, you can time a little more closely to when the online date is, but gas plants will have it, an earlier spent trajectory. Part of why we're really pleased with the construction work and progress provisions in the legislation in HB 2527. So between that, between the evaluation that we're doing relating to economic development, and between other grid modernization efforts we're going to look at, there are some factors that we think create an upward bias in the capital plan, but again, we'll lay those all out when we get to the third.

David A. Campbell: 28% to 30 timeframe.

David A. Campbell: That that will lead to some earlier spend and a lot of renewable spend you can time, a little more closely to win the online datas, but gas plants will have.

David A. Campbell: On an earlier expense trajectory part of while we're very pleased with the construction work in progress.

David A. Campbell: Provisions in the legislation and the <unk> hundred $25 27.

David A. Campbell: So between that between the evaluation that we're doing relating to economic development.

David A. Campbell: Between other grid monetization efforts were to look at there are some factors that we think create a upward bias in the capital plan, but again, we'll lay those all out we get to the third quarter, but the RFP just looking on a standalone basis. If you think about the amount of gas that we will be bringing on in 2009 and 30, we do expect there'll be the ERP in and of itself will also it will be incremental investments.

David A. Campbell: So the IRP, just looking at it on a standalone basis, if you think about the amount of gas that we'll be bringing on in 29 and 30, we do expect there'll be the IRP in and of itself, as well as incremental investments, really reflecting the demand growth that we've seen in the generation we're adding to AMITA.

David A. Campbell: Really reflecting the demand growth that were.

David A. Campbell: What we've seen in the generation, we are adding to meet it.

Michael P. Sullivan: Okay, very helpful. Thank you.

Speaker Change: Okay very helpful. Thank you.

Speaker Change: Thank you Mike.

David A. Campbell: This now concludes the question and answer session. I would now like to turn it back to David Campbell for closing remarks.

Michael P. Sullivan: This now concludes the question answer session I would now like to turn it back to David Campbell for closing remarks.

David A. Campbell: Thank you, Brie, and thank you, everyone, for your interest in Evergy. Be safe and have a great day. This now concludes our call.

David A. Campbell: Thank you Barry and thank you everyone for your interest in <unk> be safe and have a great day. This now concludes our call.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

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