Q1 2024 NiSource Inc Earnings Call
Operator: Thank you for standing by. At this time, I'd like to welcome everyone to the Q1 2024 NiSource Earnings Conference Call. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. Thank you. I'd now like to turn the call over to Chris Turnure, Director of Investor Relations. Please go ahead.
Thank you for standing by at this time I'd like to welcome everyone to the Q1 2024 Nice source earnings conference call.
Operator: After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. Thank you I'd now like to turn the call over to Chris <unk> Director of Investor Relations. Please go ahead.
Christopher Turnure: Good morning, and welcome to the NiSource First Quarter 2024 Investor Call. Joining me today are President and Chief Executive Officer Lloyd Yates, Executive Vice President and Chief Financial Officer Shawn Anderson, Executive Vice President of Strategy and Risk and Chief Commercial Officer Michael Luhrs, and Executive Vice President and Group President of NiSource Utilities Melody Birmingham.
Christopher Turnure: Good morning, and welcome to the <unk> first quarter 2024 investor call.
Christopher Turnure: Joining me today are president and Chief Executive Officer, Lloyd Yates Executive Vice President and Chief Financial Officer, Shawn Anderson Executive Vice President of strategy and risk and Chief Commercial Officer, Michael Lewis and Executive Vice President and group President Nisource utilities Nobody Birmingham.
Christopher Turnure: The purpose of this presentation is to review NiSource's financial performance for the first quarter of 2024, as well as provide an update on our operations and growth drivers. Following our prepared remarks, we'll open the call to your questions. Slides for today's call are available in the investor relations section of our website. We would like to remind you that some of the statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements.
Christopher Turnure: The purpose of this presentation is to review <unk> financial performance for the first quarter of 2024 as well as provide an update on our operations and growth drivers. Following our prepared remarks, we'll open the call to your questions slides for today's call are available in the Investor Relations section of our web site.
Christopher Turnure: We would like to remind you that some of the statements made during this presentation will be forward. Looking these statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements information.
Christopher Turnure: Information concerning such risks and uncertainties is included in the risk factors and mDNA sections of our periodic SEC filing. Additionally, some of the statements made on this call relate to non-GAAP measures. Please refer to the supplemental slides, segment information, and full financial schedules for information on the most directly comparable GAAP measure and a reconciliation of these measures. I'd now like to turn the call over to Lloyd.
Christopher Turnure: Concerning such risks and uncertainties is included in the risk factors and MD&A sections of our periodic SEC filings.
Christopher Turnure: Additionally, some of the statements made on this call relate to non-GAAP measures. Please refer to the supplemental slides segment information and full financial schedules for information on the most directly comparable GAAP measure and a reconciliation of these measures I'd now like to turn the call over to Lloyd.
Lloyd: Thank you Chris.
Lloyd M. Yates: Chris, and good morning, everyone. I'll begin on slide three. The NiSource investment thesis is simple. We serve our customers by delivering safe and reliable energy at an affordable price. Affordable energy delivery requires the deployment of capital and operating assets efficiently. It requires operating in jurisdictions which have constructive regulatory mechanisms.
Lloyd: And good morning, everyone.
Lloyd M. Yates: I'll begin on slide three.
Lloyd M. Yates: The <unk> investment thesis is simple.
Lloyd M. Yates: We serve our customers by delivering safe and reliable energy at an affordable price.
Lloyd M. Yates: Affordable energy delivery requires deployment of capital and operating assets efficiently.
Lloyd M. Yates: It requires operating in jurisdictions, which have constructive regulatory mechanisms.
Lloyd M. Yates: The byproduct of these fundamentals generates competitive regulated returns for our shareholders while maintaining and improving our balance sheet position. Capital deployment comes from a $16.4 billion base CapEx plan projected over the next five years, plus over 1.5 billion upside projects, as well as substantial opportunity for investment beyond 2028. Stable public policy and rate making in our states across multiple election and regulatory appointment cycles has been crucial to efficient capital allocation and recovery to support our communities. As a result, our balance sheet is de-risked and more flexible than ever before and enables industry-leading sustainable organic investment.
Lloyd M. Yates: The byproduct of these fundamentals generates competitive regulated returns for our shareholders, while maintaining and improving our balance sheet position.
Lloyd M. Yates: Capital deployment comes from a $16 4 billion dollar base Capex plan projected over the next five years.
Lloyd M. Yates: Plus over $1 $5 billion in upside projects.
Lloyd M. Yates: As well as substantial opportunity for investment beyond 2028.
Lloyd M. Yates: Stable public policy and ratemaking in our states across multiple election, and regulatory appointment cycles has been crucial to efficient capital allocation and recovery to support our communities.
Lloyd M. Yates: Our balance sheet to de risk and more flexible than ever before and enables industry, leading sustainable organic investment.
Lloyd M. Yates: As part of this flexibility, we are more disciplined and return-focused with our internal allocation decisions than ever. We recognize the competitive environment for capital, and we do not take your investment for granted. Our total year-end 2023 rate base was $18.8 billion, consisting of $9 billion in Indiana, $4 billion in Ohio, $3 billion in Pennsylvania, and over $1 billion in Virginia.
Lloyd M. Yates: As part of this flexibility we are more disciplined and return focused with our internal allocation decisions than ever.
Lloyd M. Yates: We recognize that the competitive environment for capital and we do not take your investment for granite.
Lloyd M. Yates: Our total year end 2023 rate base was $18 8 billion.
Lloyd M. Yates: Consisting of $9 billion in Indiana.
Lloyd M. Yates: $4 billion in Ohio.
Lloyd M. Yates: $3 billion in Pennsylvania, and over $1 billion in Virginia.
Lloyd M. Yates: Our nearly 4 million customers contribute to a gross domestic product of over $3.8 trillion across our six states of operation, or approximately 14% of the U.S. GDP. We expect our system to see substantial growth over the next five years due to data centers and the reshoring of manufacturing. Northern Indiana offers constructive fundamentals for data-centered development through robust electric transmission, overall energy system capacity, plentiful land, Limited Physical Disaster Risk, tax incentives, and a pro-business policy environment.
Lloyd M. Yates: Our nearly 4 million customers contribute to gross domestic product of over three eight trillion.
Lloyd M. Yates: Across our six states of operation.
Lloyd M. Yates: Or approximately 14% of U S GDP.
Lloyd M. Yates: We expect our system to see substantial load growth over the next five years due to data centers and re shoring of manufacturing.
Lloyd M. Yates: Northern Indiana office constructive fundamentals for data center development through robust electric transmission.
Lloyd M. Yates: Overall energy system capacity plentiful land.
Lloyd M. Yates: Limited physical disaster risk.
Lloyd M. Yates: Tax incentives and a Po business policy environment.
Lloyd M. Yates: During the last five years, NIPSCO and the Columbia Gas family of companies have contributed over $1.4 billion in property taxes in their local communities. This funding goes to schools, parks, roads, emergency, and other essential services and keeps our communities moving in the right direction. Each and every day of the year, we provide safe, reliable, sustainable, and cost-effective service for our customers. Slide four shows our key priorities. Today we reported first quarter 2024 adjusted EPS of 85 cents, 10% above the 77 cents reported one year ago.
Lloyd M. Yates: During the last five years NIPSCO and the Columbia gas family of companies have contributed over $1 4 billion in property taxes in their local communities.
Lloyd M. Yates: This funding goes to schools parks rose emergency and other essential services and keeps our communities moving in the right direction.
Lloyd M. Yates: Each and everyday of the year, we provide safe reliable sustainable and cost effective service for our customers.
Lloyd M. Yates: Slide four shows our key priorities.
Lloyd M. Yates: We reported first quarter 2024, adjusted EPS of <unk> 85.
Lloyd M. Yates: 10% above the 77 reported one year ago.
Lloyd M. Yates: We are reaffirming 2024 adjusted EPS guidance of $1.70 to $1.74. We are also reaffirming annual 2023-2028 guidance for adjusted EPS of 6-8% and rate base of 8-10%. We continue to target FFO to debt of 14 to 16% in all years of the plan.
Lloyd M. Yates: We are reaffirming 2024, adjusted EPS guidance of $1 70 to $1 74.
Lloyd M. Yates: We are also reaffirming annual 2023 to 2028 guidance for adjusted EPS of 6% to 8% and rate base of 8% to 10%.
Lloyd M. Yates: We continue to target <unk> to debt of 14% to 16% in all years of the plan.
Lloyd M. Yates: Our Superior Regulatory and Stakeholder Foundation is differentiated. We have a long history of working collaboratively to deliver value across diverse constituencies. The most recent example is our NIPSCO Gas General Rate Case Settlement announced in March. Late in the quarter, we also filed CTC and amendments for full ownership of the Fairbanks and Gibson Solar Project. This follows CPC and amendment approvals from the IURC for Calvary and Dunbridge II in January.
Lloyd M. Yates: Our superior regulatory and stakeholder foundation is differentiated.
Lloyd M. Yates: We have a long history of working collaboratively to deliver value across diverse constituencies.
Lloyd M. Yates: The most recent example is our NIPSCO gas general rate case settlement announced in March.
Lloyd M. Yates: Late in the quarter, we also filed CTC and amendments for full ownership of the Fairbanks and Gibson solar projects.
Lloyd M. Yates: This follows CPC and amendment approvals from the IU RSC for Calgary, and Dan's Bridge, two and January.
Lloyd M. Yates: Our intention has been to layer projects into our base plan during the course of the year. Consistent with our pending request at the IURC, today I am pleased to announce we are adding full ownership of the Fairbanks and Gibson projects to our base capital plan. This incremental NiSource investment simplifies the project structure and reduces costs to customers when compared to the prior tax equity configuration. Reliability and efficiency remain core elements of our operational excellence culture, as seen on slide five.
Lloyd M. Yates: Our intention has been to layer projects into our base plan during the course of the year.
Lloyd M. Yates: Consistent with our pending request at the IRC today I am pleased to announce we are adding full ownership of the Fairbanks and Gibson projects to our base capital plan.
Lloyd M. Yates: This incremental <unk> investment simplifies the project structure and reduces cost to customers when compared to the prior tax equity configuration.
Lloyd M. Yates: Reliability and efficiency remain core elements of our operational excellence culture as seen on slide five.
Lloyd M. Yates: In 2022, we begin the process of upgrading outdated technology that in some cases predated the Columbia gas merger in 2000. Our multi-year technology investment initiative is continuing to take shape with a work and asset management program addressing the scheduling, dispatch, and execution of work, and the management of underlying assets. An upfront investment can drive decades of both reliability improvement and cost savings for customers. In March, NISQA requested a regulatory deferral mechanism for these investments, seeking to align rate-making with long-term customer value realization.
Lloyd M. Yates: In 2022, we began the process of upgrading outdated technology that in some cases predated the Columbia gas merger in 2000.
Lloyd M. Yates: Our multiyear technology investment initiative is continuing to take shape with work and asset management program addressing the scheduling.
Lloyd M. Yates: <unk> next Houston at work and the management of underlying assets and.
Lloyd M. Yates: An upfront investment can drive decades of both reliability improvement and cost savings for customers.
Lloyd M. Yates: In March NIPSCO requested a regulatory deferral mechanism for these investments seeking to align ratemaking with long term customer value realization.
Lloyd M. Yates: Amid increasing weather extremes and natural disaster frequency throughout the country, customers are benefiting from energy resiliency more than ever. NiSource delivers this through multiple channels with both major gas and electric systems. Our electric generation mix includes renewables and on-demand natural gas, balancing intermittency and fuel price volatility risks. Meanwhile, our gas system is insulated from harsh weather and can deliver dependable energy for our customers in even the most extreme conditions. I want to wrap up my comments by acknowledging each of our over 11,000 employees and contractors. Without their tireless effort on behalf of our customers, none of this work would be possible. I'll now turn things over to Melody.
Lloyd M. Yates: Amid increasing weather extremes of natural disaster frequency throughout the country.
Melody: Customers are benefiting from energy resiliency and see more than ever.
Melody: Nisource delivered this through multiple channels with both major gas and electric systems.
Melody: Our electric generation mix includes renewables and on demand natural gas balancing intermittency and fuel price volatility risk.
Melody: Meanwhile, our gas system is insulated from harsh weather and can deliver dependable energy for our customers and even the most extreme conditions.
Melody: I want to wrap up my comments by acknowledging each of our over 11000 employees and contractors.
Melody: Without their tireless effort won't be half of our customers. None of this work will be possible.
Lloyd M. Yates: Now ill turn things over to melody.
Melody Birmingham: Lloyd, I'd like to turn to slide six to give you an overview of NiSource's safety journey since 2017. We often get asked by investors new to the company for a picture of specific risk mitigation metrics over time. I'll begin by saying that the magnitude of change at the company over the last six years cannot be overstated.
Melody: Thank you Lloyd.
Melody: To turn to slide six to give you an overview of nice sources safety journey since 2017.
Melody Birmingham: We often get asked by investors new to the company for a picture of specific risk mitigation metrics over time.
Melody Birmingham: I'll begin by saying that the magnitude of change at the company over the last six years cannot be overstated. Our centralized operations team has implemented both engineering design and process based solutions to improve our gas system safety.
Melody Birmingham: Our centralized operations team has implemented both engineering design and process-based solutions to improve our gas system safety. Our safety management system was recently reconfirmed for American Petroleum Institute Recommended Practice 1173, making NiSource one of only two utilities in the world to maintain this designation. We also completed a conformance assessment and are pursuing certification for standard 55001 by the International Organization for Standardization, or ISO. This validates advancements in our asset management practice maturity and illustrates our commitment to optimizing value through a balance of risk, asset performance, and cost. Our gas assets now have automatic shutoff valves and remote pressure monitoring on 100% of low-pressure systems. Isometric drawings provide 3D renderings of all our regulating stations.
Melody Birmingham: Our system management system, our safety management system was recently reconfirmed for American Petroleum Institute recommended practice, 11, 73, making nice source one of only two utilities in the world to maintain this designation.
Melody Birmingham: We also completed a conformance assessment and are pursuing certification for standard 55001, and international organization for standardization or ISO.
Melody Birmingham: This validate the advancements in our asset management practice maturity and illustrates our commitment to optimizing value through a balance of risk asset performance and cost.
Melody Birmingham: Our gas assets now have automatic shutoff valves and remote pressure monitoring on 100% of low pressure systems.
Melody Birmingham: Isometric drawings provide three D renderings of all our regulated regulating stations, we have 36% fewer miles of Pi designated as priority compared to year ending 2017.
Melody Birmingham: We have 36% fewer miles of pipe designated as priority compared to year-ending 2017. Additionally, 51% of our 55,000-mile system has been surveyed with advanced mobile leak detection vehicles. 98% of our gas service lines are mapped as of the year end 2023, which is up from only 4% six years ago. But these tangible, verified metrics are only a part of our story. Leading-edge safety management is fueled by culture, and it's critical to any safety work environment.
Melody Birmingham: 51% of our 55000 mile system has been surveyed with advanced mobile leak detection vehicles.
Melody Birmingham: 98% of our gas service lines are mapped as at the year end 2023, which is up from only 4% six years ago.
Melody Birmingham: These tangible verify metrics are only a part of our story.
Melody Birmingham: Leading edge safety management is fueled by culture, and it's critical to any safety work environment.
Melody Birmingham: Every day, our NiSource team lives the core four through employee certification and training, knowledge transfer, technology utilization, and community engagement. Now, let's move to slide 7, where you'll see a timeline of our regulatory activity. As we've said previously, our five-year financial plan does not include extensive regulatory stay-out periods.
Melody Birmingham: Every day, our Nisource team lives the core four through employee certification and training now.
Melody Birmingham: Knowledge transfer technology utilization and community engagement.
Melody Birmingham: Let's move to slide seven where you will see a timeline of our regulatory activity.
Melody Birmingham: As we've said previously our five year financial plan does not include extensive regulatory stay out period.
Melody Birmingham: We've had the ability to employ capital trackers and or forward-looking rate case test years on the majority of our capital expenditures. Columbia Gas of Ohio recently filed its Annual Infrastructure Replacement Program, or IRP Tracker, for $231 million of capital investment with a requested effective date this month. In March, NIPSCO's gas settlement was the result of the rigorous rate case process in Indiana and involved a highly engaged stakeholder group of intervenors working with our team and all parties, either signing or not opposing the agreement.
Melody Birmingham: <unk> has the ability to employ capital trackers and or forward looking rate case test years on the majority of our capital expenditures.
Melody Birmingham: <unk> gas of Ohio recently filed its annual infrastructure replacement program or ERP tracker for $231 million of capital investment with a requested effective date this month.
Melody Birmingham: In March NIPSCO gas settlement was the result of the rigorous rate case process in Indiana and involved a highly engaged stakeholder group of intervenors working with our team and all parties, either signing or not opposing the agreement.
Melody Birmingham: A final order is expected in the third quarter of this year. We kicked off our Triennial Integrated Resource Plan, or IRP process, in April with the first of five stakeholder meetings planned for this year. Throughout the process, all interested parties will provide extensive information on load requirements and generation planning for the report's 20-year time horizon.
Melody Birmingham: A final order is expected in the third quarter of this year.
Melody Birmingham: We kicked off our triennial integrated resource plan, our IRB process in April with the first of five stakeholder meetings planned for this year.
Melody Birmingham: Throughout the process all interested parties will provide extensive information on load requirements and generation planning further reports 20 year time horizon.
Melody Birmingham: These are just some examples of our commitment to proactive engagement with our stakeholders. We have a high degree of confidence in the value of our investments for our communities, and we work regularly to ensure that there are no surprises during the regulatory cycle.
Melody Birmingham: These are just some examples of our commitment to proactive engagement with our stakeholders, we have a high degree of confidence in the value of our investments for our community and we work regularly to ensure that there are no surprises during the regulatory cycle.
Melody Birmingham: Yeah.
Melody Birmingham: Economic development continues to be a competitive advantage for our service territory. One in particular, Virginia-based Northrop Grumman broke ground earlier this year on a $200 million advanced electronics manufacturing and testing facility in the town of Waynesboro. This growing customer base here and throughout our NiSource service area requires new gas infrastructure but also makes the entire system more economical for all of our customers. Across the NiSource footprint, we have invested more than $1.7 billion in capital expenditures over the 12-month period ending in March. During this same time period, residential gas customer bills actually decreased by 15%. With that, I will turn it over now to Shawn to review our capital projects and financial results.
Melody Birmingham: Economic development continues to be a competitive advantage for our service territory.
Shawn: One in particular of project, Virginia based Northrop Grumman broke ground earlier this year on a $200 million advanced electronics manufacturing and testing facility in the town of Waynesboro.
Shawn: This growing customer base here and throughout our nice source service areas requires new gas infrastructure, but also makes the entire system more economic for all of our customers.
Shawn: Across the Nisource footprint, we have invested more than $1 7 billion of capital expenditures over the 12 month period ending in March during the same time period residential gas customer bills actually decreased by 15%.
Shawn: With that let me turn it over now to Sean to review, our capital projects and financial results.
Shawn Anderson: Thanks, Melody. Let's begin on slide eight. We are steadfast in our commitment to deliver safe and reliable energy to our customers at an affordable price. Therefore, growing our investment opportunities is a crucial element. And our base capital plan is now comprised of a portfolio of projects projected at $16.4 billion through 2028. The plan is driven by programmatic and enduring investments necessary to maintain safe, reliable, and sustainable energy infrastructure that our customers deserve. These investments are diversified across renewable electricity, Gas and Electric Customer Growth, Distribution Modernization, and System Hardening for both the electric and gas business. Importantly, there is limited large individual project execution risk in our plan.
Shawn: Thanks Melody, let's begin on slide eight we are steadfast in our commitment to deliver safe and reliable energy to our customers at an affordable price.
Shawn Anderson: Growing our investment opportunity is a crucial element to this and our base capital plan is now comprised of a portfolio of projects projected at $16 $4 billion through 2028.
Shawn Anderson: The plan is driven by programmatic and enduring investments necessary to maintain safe reliable and sustainable energy infrastructure that our customers deserve.
Shawn Anderson: These investments are diversified across renewable electricity gas and electric customer growth distribution modernization and system hardening for both the electric and gas businesses.
Shawn Anderson: Importantly, there is limited large individual project execution risk in our plan.
Shawn Anderson: Moving ahead to slide nine, I'd like to provide an update on our Renewable Development Program. The table shows base plan amounts and reflects incremental CapEx from the full ownership of the Fairbanks and Gibson solar projects, which Lloyd just highlighted. By displacing tax equity investor capital and removing the associated joint venture structure, we are able to reduce customer bills relative to our prior plan and be more resilient in our operations over the energy generated for our customers.
Melody Birmingham: Moving ahead to slide nine I'd like to provide an update on our renewable development program.
Shawn Anderson: The table shows base plan amounts and reflects incremental capex from the full ownership of the Fairbanks and Gibson solar projects, which Lloyd just highlighted.
Shawn Anderson: By displacing tax equity investor capital and removing the associated joint venture structure, we are able to reduce customer bills relative to our prior plan and be more resilient in our operations over the energy generated for our customers.
Shawn Anderson: In the aggregate, our billions of dollars of renewable generation investments negotiated since 2019 remain significantly cheaper and lower risk for our customers compared to the alternative status quo scenario across their useful life. NIPSCO's final coal retirements continue to project to conclude by 2028, and each of the remaining four owned and four PPA renewable projects remain on schedule for delivery.
Shawn Anderson: In the aggregate are billions of dollars of renewable generation investments negotiated since 2019 remained significantly cheaper and lower risk for our customers compared to the alternative status quo scenario across their useful life.
Shawn Anderson: NIPSCO is final coal retirements continue to project to conclude by 2028 and each of the remaining four owned and four PPA renewable projects remain on schedule for in service.
Shawn Anderson: On slide 10, you'll see an overview of additional investment opportunities. We continue to identify capital investment opportunities to enhance service for our communities beyond the capital projected in the base plan. Generation Investments, Gas Distribution and Transmission Systems Modernization, Advanced Metering, and Renewable Natural Gas Investments all represent potential upside investments compared to our current-based plan. The long-term plan does not currently include any data center load growth assumptions or significant infrastructure investments and upgrades.
Shawn Anderson: On slide 10, Youll see an overview of additional investment opportunities.
Shawn Anderson: We continue to identify capital investment opportunities to enhance service for our communities beyond the capital projected in the base plan.
Shawn Anderson: Generation investments gas distribution and transmission system modernization.
Shawn Anderson: Advanced metering and renewable natural gas investments all represent potential upside investments compared to our current base plan.
Shawn Anderson: The long term plan does not currently include any data center load growth assumptions or significant infrastructure investments and upgrades. However.
Shawn Anderson: However, we are receiving robust inquiries from potential customers looking to invest in our northern Indiana electric service territory due to the attractive business climate we know and appreciate in Indiana. We are focused on developing accretive projects across all utility companies to support our stakeholders, and we intend to move projects from the upside category into our base capital plan as they meet our threshold of stakeholder alignment and execution visibility, just as we did this quarter.
Shawn Anderson: However, we are receiving robust inquiries from potential customers looking to invest in our northern Indiana Electric service territory due to the attractive business climate, we know and appreciate in Indiana.
Shawn Anderson: We are focused on developing accretive projects across all utility companies to support our stakeholders and we intend to move projects from the upside category into our base capital plan as they meet our threshold of stakeholder alignment and execution visibility just as we've done this quarter.
Shawn Anderson: As Melody highlighted, NIPSCO has commenced its Triennial Electric Integrated Resource Planning Project. The process will provide a point of view on generation and capacity required to serve customers beyond the retirement of our last existing pull units by 2028. It builds on generation already included in our five-year base capital plan and will analyze energy demand projected across the next two decades associated with economic development, including potential data center development, electrification, and electric vehicle utilization, as well as incorporating changing policy and resource adequacy requirements. The process will conclude with a filing at the IURC this fall.
Shawn Anderson: There's nobody highlighted NIPSCO has commenced its triennial electric integrated resource planning process. The process, we will provide a point of view on generation and capacity required to serve customers beyond the retirement of our last existing coal units by 2028 it.
Shawn Anderson: It builds on generation already included in our five year base capital plan, and we'll analyze energy demand projected across the next two decades associated with economic development, including potential datacenter development electrification electric vehicle utilization as well as incorporating changing.
Shawn Anderson: Policy and resource adequacy adequacy requirements.
Shawn Anderson: The process will conclude with a filing at the <unk>. This fall.
Shawn Anderson: We'll focus next on slide 11. I'd like to point out two changes to our financial disclosures this quarter. First, with the completion of the NIPSCO Minority Interest Transaction, we have realigned segments to reflect the new ownership structure. Second, to simplify presentation and better align our performance metrics with peer companies, we are changing the name of our primary financial metric to adjusted EPS from net operating earnings per share, as previously referenced. This refers to non-GAAP fully diluted earnings per share, and there are no changes to the underlying calculation of this measure. First quarter adjusted EPS was $0.85, a 10% increase over the $0.77 reported last year. However, positive results from regulatory activity and other income were partly offset by higher O&M and depreciation.
Shawn Anderson: We will focus next on slide 11.
Shawn Anderson: To point out two changes to our financial disclosures this quarter first with the completion of the NIPSCO minority interest transaction, we have realigned segments to reflect the new ownership structure.
Shawn Anderson: Second to simplify presentation and better align our performance metrics with peer companies. We are changing the name of our primary financial metric to adjusted EPS from net operating earnings per share as previously referenced.
Shawn Anderson: This refers to non-GAAP fully diluted earnings per share and there are no changes to the underlying calculation of this metric.
Shawn Anderson: First quarter adjusted EPS was <unk> 85.
Shawn Anderson: 10% increase over the 77 reported last year.
Shawn Anderson: <unk> results from regulatory activity and other income were partly offset by higher O&M and depreciation.
Shawn Anderson: Normalized customer usage drove an $8 million and $4 million pre-tax benefit at the Columbia and NIPSCO segments, respectively. Interest expense and preferred interest netted to roughly no change following the NIPSCO minority interest transaction and the redemption of the last tranche of our preferred equity securities issued in 2018. For years, NiSource has adjusted Gap Net Income and EPS to present a weather-adjusted figure for our investors to project comparable performance periods. Well, following the mild weather experience this quarter, I also want to remind you of the underlying regulatory mechanisms insulating both shareholder cash flow and customer bill volatility. All of our gas jurisdictions will have weather decoupling mechanisms.
Shawn Anderson: Normalized customer usage drove an $8 million and $4 million pre.
Shawn Anderson: Pre tax benefit at the Columbia, and NIPSCO segments, respectively.
Shawn Anderson: Interest expense and preferred interest netted to roughly no change following the NIPSCO minority interest transaction and the redemption of the last tranche of our preferred equity securities issued in 2018.
Shawn Anderson: For years <unk> as adjusted GAAP, net income and EPS to present, a weather adjusted figure for our investors to project comparable performance periods.
Shawn Anderson: Well following the mild weather experienced this quarter I also want to remind you of the underlying regulatory mechanisms insulating both shareholder cash flow and customer bill volatility.
Shawn Anderson: All of our gas jurisdictions will have whether decoupling mechanisms should our gas settlement be approved later this year.
Shawn Anderson: Should our gas settlement be approved later this year, the mechanisms apply to select customer classes and a range from full decoupling to partial decoupling and provide more stable customer bills and cash receipts in volatile weather periods. Our long-term financial guidance commitments are shown on slide 12. As Lloyd mentioned, we are reaffirming the current guidance of $1.70 to $1.74 in adjusted EPS for 2024. All of our five-year commitments are reaffirmed today as well.
Shawn Anderson: The mechanisms apply to select customer classes in a range from a full decoupling to partial decoupling and provide more stable customer bills and cash receipts and volatile weather periods.
Shawn Anderson: Our long term financial guidance commitments are shown on slide 12.
Shawn Anderson: As Lloyd mentioned, we are reaffirming the current guidance of $1 70 to $1 74, and adjusted EPS for 2024.
Shawn Anderson: This includes the year-over-year adjusted EPS growth rate delivered at 6 to 8 percent annually off of the achieved results in 2024. We remain confident in achieving our 2024 guidance and our long-term growth rate in all remaining years of the plan due to increased visibility of the return of capital through highly constructive regulatory mechanisms. Enhance visibility into the financial results for 2025 and beyond. Our internal forecasts incorporate continued use of long-established capital trackers in nearly all our jurisdictions and are based on what we believe are realistic regulatory outcomes. O&M discipline also remains a key assumption and a flexible part of achieving our five-year commitment.
Shawn Anderson: All of our five year commitments are reaffirmed today as well. This includes the year over year adjusted EPS growth rate delivered at 6% to 8% annually off of the achieved results in 2024.
Shawn Anderson: We remain confident in achieving our 2020 for guidance and our long term growth rate in all remaining years of the plan.
Shawn Anderson: Increased visibility of the return of capital through highly constructive regulatory mechanisms enhanced visibility into the financial results for 2025 and beyond.
Shawn Anderson: Our internal forecasts incorporate continued use of long established capital trackers and nearly all of our jurisdictions and are based on what we believe are realistic regulatory outcomes.
Shawn Anderson: O&M discipline also remains a key assumption and a flexible part of achieving our five year commitments.
Shawn Anderson: Our cost of capital assumptions are resilient and reflect the rate environment from third quarter 2023. And most importantly, we're still able to deliver our $16.4 billion base investment plan to customers while keeping average annual residential total bill growth at or below 4% during the five-year period. Stable and low commodity prices available in our region support our unwavering focus on customer value, allowing us to maintain this commitment.
Shawn Anderson: Our cost of capital assumptions are resilient and reflect the rate environment from third quarter 2023.
Shawn Anderson: Most importantly, we're still able to deliver our $16 $4 billion billion base investment plan to customers, while keeping average annual residential total bill growth.
Shawn Anderson: At or below 4% during the five year period.
Shawn Anderson: Stable and low commodity prices available in our region support our unwavering focus on customer value.
Shawn Anderson: Allowing us to maintain this commitment.
Shawn Anderson: Okay.
Shawn Anderson: Slide 13, Details or Finance. We are reaffirming our 14 to 16% FFO to debt in all years of the plan. In March, S&P completed its annual review with no change to our triple B plus rating and stable outlook.
Shawn Anderson: Slide 13 details our financing plan.
Shawn Anderson: We are reaffirming our 14% to 16% <unk> to debt in all years of the plan.
Shawn Anderson: In March S&P completed their annual review with no change to our Triple B plus rating and stable outlook.
Shawn Anderson: Our expected equity issuances for 2024 are on track to be completed by year end through the use of our ATM, with approximately one-third executed to date, and we continue to have the option to use a forward structure to align proceeds with our flow of work. Flexible financing plans, such as utilizing our ATM, the NIPSCO Minority Interest Transaction, potential use of hybrid securities, and senior unsecured debt, are examples of our plan's diverse funding sources and balance sheet flexibility, enabling us to navigate the balance between growth and credit quality.
Shawn Anderson: Our expected equity issuances for 2024 are on track to be completed by year end through the use of our ATM with approximately one third executed to date and we continue to have the option to use a forward structure to align proceeds with our flow of work.
Shawn Anderson: Our flexible financing plan, such as utilizing our ATM. The NIPSCO minority interest transaction potential use of hybrid securities and senior unsecured debt are examples of our plans diverse funding sources and balance sheet flexibility, enabling us to navigate the balance between growth and credit quality.
Shawn Anderson: The figures shown on this page support our base capital plan, including the additions Lloyd mentioned earlier. The Full Ownership Capital Investments of the Fairbanks and Gibson Project substitute tax transferability from tax equity funding. Credit agency treatment of upfront cash supports FFO to debt compared to traditional capital expenditure. Despite the addition of $400 million of investment to our plan, our equity needs through this five-year period remain unchanged due to the positive cash flow attributes of this subsidy.
Shawn Anderson: The figures shown on this page support our base capital plan, including the additions Lloyd mentioned earlier.
Shawn Anderson: The full ownership capital investments of the Fairbanks and Gibson projects substitutes in tax transferability from tax equity funding.
Shawn Anderson: Credit agency treatment of upfront cash supports <unk> to debt compared to traditional capital expenditures.
Shawn Anderson: Despite the addition of $400 million of investment to our plan our equity needs through this five year period remain unchanged due to the positive cash flow attributes of this substitute.
Shawn Anderson: I'd like to conclude by highlighting another quarter of meeting our commitments on slide 14. Our financial commitments are resilient over the five-year period through 2028, and our first quarter results keep us on track to meet our previously increased 2024 EPS guidance. The NIPSCO Gas Settlement and Continued Employment of Capital Trackers underscore our superior regulatory and stakeholder foundation. Increasing investment in our base capital expenditure plan without modifying the need for external equity demonstrates our balance sheet flexibility.
Shawn Anderson: I'd like to conclude by highlighting another quarter of meeting our commitments on slide 14.
Shawn Anderson: Our financial commitments, our resilient over the five year period through 2028.
Shawn Anderson: Our first quarter results keep us on track to meet our previously increased 2024 EPS guidance.
Shawn Anderson: The NIPSCO gas settlement and continued employment of capital trackers underscore our superior regulatory and stakeholder Foundation.
Shawn Anderson: Increasing investment in our base capital expenditure plan without modifying the need for external equity demonstrates our balance sheet flexibility.
Shawn Anderson: And finally, revised base and upside CapEx figures demonstrate the programmatic and enduring nature of our plan. The value proposition NiSource continues to offer investors is a diversified and fully regulated utility, with the opportunity to invest in both programmatic gas infrastructure and the long-term energy transition story for a fully integrated electric business. While this fundamental has previously been the case, the emerging opportunity to support unprecedented energy development and power demand resulting from robust economic development on-shoring as well as new data center development truly differentiates the value proposition relative to many alternatives in the marketplace today.
Shawn Anderson: And finally, our revised base and upside Capex figures demonstrate the programmatic and enduring nature of our plan.
Shawn Anderson: The value proposition Nisource continues to offer investors is a diversified and fully regulated utility.
Shawn Anderson: With the opportunity to invest in both programmatic gas infrastructure.
Shawn Anderson: And the long term energy transition story for a fully integrated electric business.
Shawn Anderson: While this fundamental has previously been the case the emerging opportunity to support unprecedented energy development empower demand, resulting from robust economic development onshoring as well as new datacenter development.
Shawn Anderson: Truly differentiate the value proposition relative to many alternatives in the marketplace today.
Speaker Change: And now I'd like to turn the call back to the operator for Q&A.
Operator: At this time, I'd like to remind everyone to ask a question. Press star 1 on your telephone keypad.
Speaker Change: At this time I would like to remind everyone to ask a question press star one on your telephone keypad. Our first question comes from the line of constant led notes your line is open.
Operator: Our first question comes from the line of Constant Lednev. Your line is open.
Unknown Caller: Hey guys, it's Shahriar for Konstantin. Morning. [inaudible] Good morning, good morning, Lloyd.
Constant Lednev: Hey, guys, it's a sharp <unk> good morning.
Speaker Change: Hey, Marty.
Unknown Caller: Let me just on the data center side, I mean, obviously, we've all seen kind of media reports of maybe just sizable data centers coming to Indiana, including Amazon, right? I guess, can you maybe talk a little bit about what you're seeing in terms of that potential demand and what it means to the overall plan? I guess, can you be a little bit more specific on when it can hit the plan?
Speaker Change: Good morning.
Shahriar: Let me just from the data center side I mean, obviously, we've all seen kind of media reports of kind of maybe it's a sizable data centers coming to Indiana, including Amazon right. I guess can you maybe talk a little bit about.
Unknown Caller: What youre seeing in terms of that of that potential demand and what it means to the overall plan I guess could you be a little bit more specific on when it can hit the plan and when it obviously more important this whole topic of rate design as you guys are tracking data centers.
Unknown Caller: And when it's obviously, you know, more important, you know, this whole topic of rate design, as you guys are, you know, attracting data centers, while also trying to protect, I guess, that residential customer base. How are you thinking about rate design and maybe special tariffs for these hyperscalers? As you're in discussions, I mean, would you need to file, you know, updated proceedings in order to get the rates? Thanks.
Unknown Caller: We're also trying to protect I guess that residential customer base.
Unknown Caller: How are you thinking about rate design and maybe special tariffs for these hyperscale.
Unknown Caller: As you are in discussions I mean would you need to file.
Unknown Caller: Updated proceedings in order to get the rates. Thanks.
Lloyd M. Yates: So I think, as I said in some of my remarks, and I think Shawn also repeated it, when you think about the NIPSCO system in northern Indiana, we have a number of fundamentals, you know, one, a very robust transmission system. Plentiful land, you know, a lot of farmland there. Available Energy Capacity.
Unknown Caller: So I think as I said in some of my remarks, and I think Sean also repeated it when you're thinking about the NIPSCO system in northern Indiana, and we have a number of fundamentals.
Lloyd M. Yates: Robust transmission system.
Lloyd M. Yates: Plentiful land a lot of farm land there.
Lloyd M. Yates: Available energy capacity.
Lloyd M. Yates: Great energy policy, you know, really, Indiana is a really positive place to do business. I mean, you start to realize the region is ripe for data center development. And because of that, you know, we are in the middle, and have been in the midst of discussions with several data center developers and really optimistic about the opportunity to grow our load with respect to data centers. I think you said something really important, and that is, I think we're working hard on how we can, We're evaluating ways to structure the opportunity so that it benefits all stakeholders.
Lloyd M. Yates: Great.
Lloyd M. Yates: Energy policy really and there is a really positive place to do business. I mean, you start to realize a region is ripe for data Center development.
Lloyd M. Yates: And because of that we are in the midst and had been in the midst of discussions with several data center developers and we're really optimistic about the opportunity to.
Lloyd M. Yates: Grow our load with respect to data centers I think you said.
Lloyd M. Yates: Nothing really important and that is I think we're working hard on how do you.
Lloyd M. Yates: We're evaluating ways to structure the opportunity further.
Lloyd M. Yates: <unk> fits all stakeholders that includes our customers our shareholders and the communities. We serve so I know I'm not directly answering your question because we don't have real specifics, we like to have detail and have quantifiable detailed before we put them into our ERP and our low growth projections and we're still working on those things although we are.
Lloyd M. Yates: That includes our customers, our shareholders, and the communities we serve. So I know I'm not directly answering your question because we don't have real specifics. We like to have detail and quantifiable detail before we put it into our IRP and our low-growth projections. And we're still working on those things, although we are very optimistic about our ability to develop data centers in the NIPS School Service Territory.
Lloyd M. Yates: Optimistic about our ability to develop data centers in the NIPSCO service territory.
Unknown Caller: Perfect. I appreciate that, Lloyd.
Speaker Change: Perfect I appreciate that Lloyd and then just lastly here I know you've mentioned.
Speaker Change: Before you ensure that you could ramp up the ATM to cover sort of any incremental equity needs from upside Capex, that's being shifted over to the plan right I guess for the remaining $1 $6 billion of upside capital.
Unknown Caller: And then just lastly here, I know you and Shawn have mentioned before that you could ramp up the ATM to cover sort of any incremental equity needs from upside capex that's being shifted over to the plan, right? I guess for the remaining $1.6 billion of upside capital, what could be next in terms of projects that move into that base plan from there? And then, just more importantly, how do we think about the funding source for that? Thanks.
Speaker Change: What could sort of be.
Speaker Change: What could be next in terms of projects that move into that base plan from there and then just more importantly, how do we think about the funding source for that thanks.
Shawn Anderson: So I'll tell Shawn to handle that. Maybe Michael will help him. Yes.
Unknown Caller: So Sean maybe Michael will help them, yes, so sharp first and foremost thing to your question on what are the types of projects. The upside Capex plan. So we still have some electric generation projects in our upside plan based on the results of the 2021 IOP. So we will launch the 2020 for IRB process to understand how these upside projects might fit in our investment in time.
Shawn Anderson: Yes. So, Shahriar, first and foremost, thank you for your question on what the types of projects are in the upside CAPEX plan. So, we still have some electric generation projects in our upside plan based on the results of the 2021 IRP. So, we'll watch the 2024 IRP process to understand how these upside projects might fit in our investment timelines. I think gas infrastructure work around FIMSA requirements and some of the additional projects that stand out to us are compelling, particularly based on compliance requirements, but we need to watch and see how that plays itself out from a regulatory standpoint.
Shawn Anderson: I think gas infrastructure work around themes of requirements and some of the additional project standout stand out to us are compelling, particularly based on compliance requirements, but we need to watch and see how that plays itself out from a rulemaking standpoint.
Shawn Anderson: Likewise, electric T&D has several projects which could create upsides to the plan, both as we think about MISO tranche one and maybe as we start to approach the next decade tranche two. But grid modernization and system hardening are still important work for us to do to deliver reliable service.
Shawn Anderson: <unk> electric T&D as several projects, which could create upsides to the plan both as we think about MISO tranche, one and maybe as we start to approach. The next decade tranche, two but grid modernization and system hardening is still important work for us to do to deliver reliable service.
Shawn Anderson: And then to Lloyd's point, I mean, we added economic development, data center, and technology innovation support, and the energy infrastructure to deliver that to slide 10 as we start to think about the formulation of our upside plan. We think there's a lot of work there, but economic development is challenging. It requires alignment from many different stakeholders, but it can make a big splash for our communities, just like the Intel project did in central Ohio.
Shawn Anderson: And then towards point I mean, we added the economic development and datacenter and technology innovation support the energy infrastructure to deliver that to slide 10, as we start to think about the formulation of our upside plan, we think theres a lot of work there, but economic developments challenging it requires alignment for many different stakeholders.
Shawn Anderson: But it can make a big splash for communities just like the Intel project in Central Ohio, So it's entirely possible that these the portfolio.
Shawn Anderson: So it's entirely possible that the portfolio of these projects develops and could do so quickly, but we don't put those into the base plan, as Lloyd said, until we're highly certain that these are projects that can deliver value. And then, in terms of financing for these projects, we'll evaluate that as it arises. Part of the criteria for investing in these upside projects is seeking creative projects to help NYSOURCE and our communities grow.
Shawn Anderson: All of these projects develop and could do so quickly, but we don't put those into the base plan as Lloyd said until we're highly certain that these are projects that can deliver value and then in terms of financing for these projects. We will evaluate this as it arises part of the criteria for investing these upside projects is seeking accretive projects to help nisource and our communities.
Shawn Anderson: ROE.
Shawn Anderson: We believe the portfolio of projects that we've identified will help us do just that. And in many cases, we think the financing required will be fairly efficient because of the profile of these projects. Fortunately, we operate in constructive regulatory jurisdictions with efficient regulatory mechanisms that balance value creation for customers and shareholders. But we're a fully regulated business and committed to balancing our capital structure to ensure the credit quality that we've been able to obtain here, and we will continue to do so.
Shawn Anderson: We believe the portfolio of projects that we've identified will help us do just that.
Shawn Anderson: And in many cases, we think the financing required will be fairly efficient because of the profile of these projects.
Shawn Anderson: Fortunately, we operate in constructive regulatory jurisdictions with efficient regulatory mechanisms, which balanced the value creation for customers and shareholders.
Shawn Anderson: But we're fully regulated business and committed to balancing our capital structure to ensure that credit quality that we've been able to obtain here and we will be committed to do so.
Shawn Anderson: God, I appreciate the creative growth, nonetheless. All right, thank you guys so much.
Speaker Change: Got it appreciate it accretive growth Nonetheless, alright. Thank you guys. So much.
Shawn Anderson: Yeah.
Operator: Our next question comes from the line of J.P. Morgan Chase. Your line is open.
Shawn Anderson: Our next question comes from the line of Jpmorgan Chase Your line is open.
Operator: Okay.
Unknown Caller: Hi, Rich here. Can you hear me?
Operator: Hi, Rich here can you hear me.
Unknown Executive: We hear you. Good morning, Rich.
Rich: Good morning Rich.
Unknown Caller: Picking up the data center question again, I'm just curious if you see the IRP, the 24 IRP, to be specific, as the best look over the next, say, 12 months on how that might layer in incrementally to your current plan, or do you see things evolving, I guess, either faster or slower than that process?
Rich: Great. Thank you.
Unknown Caller: Picking up the data center question again.
Unknown Caller: Just curious if you see the AARP 24 IRB to be specific.
Unknown Caller: Best of luck over the next say 12 months on how that might layer in incremental to your current plan or do you see things evolving I guess, either faster or slower than that process.
Lloyd M. Yates: Sorry
Unknown Caller: So I think it could be a combination of both, but things could definitely evolve faster than the IRP process in Indiana. I think, you know, just like all the other companies across the industry, data center developers are talking to a lot of people. I think that they are looking for utilities or energy companies that can move quickly. We want to be one of those. And I think that process may develop or could or probably will develop faster than the IRP process.
Unknown Caller: So I think it could be a combination of both but things could definitely evolved faster than the IRB process in Indiana.
Unknown Caller: I think just like all the other companies across the industry.
Unknown Caller: Data center developers are talking to a lot of people I think that they are looking for utilities are energy companies that can move quickly we want to be one of those and I think that process may develop could will probably will develop faster than the IRB process.
Unknown Caller: Got a very helpful caller there. And then just a few regulatory items, the Pennsylvania rate case, anything you can speak to on kind of stakeholder engagement there, how the process has been running so far, and how you feel about kind of catalysts over the back half of the year with regard to those case milestones, maybe prospects for settlement. And then separately, the NIPSCO deferral you referenced, what kind of timeline to think about for getting an approval there, and does that have any financial impacts on the plan that we should think about?
Speaker Change: Got it very helpful color, there and then just.
Unknown Caller: A few regulatory items.
Unknown Caller: Sylvania rate case.
Unknown Caller: I can speak to on kind of stakeholder engagement there how the process has been running so far and how you feel about kind of catalysts over the back half of the year with regards to those case milestones maybe prospects for settlement and then separately. The NIPSCO deferral, you referenced kind of any timeline to think about.
Unknown Caller: Getting an approval there instead of any financial impacts of the plan that we should think about.
Melody Birmingham: I'll pass it to Melody, who heads up our regulated utility. Yes.
Melody Birmingham: So I'll pass that the melody, who heads up our regulated utilities.
Melody Birmingham: Yes, can you hear me okay? Yes, we can hear you. Okay, very good. Thank you.
Melody Birmingham: Yes can you hear me okay.
Melody Birmingham: Yes, we can hear you.
Melody Birmingham: As far as the Pennsylvania rate case, which you no doubt know that we filed March 15, it's coming along well. Our team continues to engage with our stakeholders there in Pennsylvania. This is not the first time, just so you know, when we have a rate case, that we begin to have discussions with stakeholders or to understand what interveners are wanting or expecting from us. So it's an ongoing dialogue that the team in Pennsylvania has throughout the year up until the time that we file.
Melody Birmingham: Okay very good thank you.
Melody Birmingham: As far as the Pennsylvania.
Melody Birmingham: Rate case with no doubt now that we filed March 15th.
Melody Birmingham: It's it's coming along well our team continues to engage with our stakeholders there in Pennsylvania.
Melody Birmingham: This is not the first time, just so you know when we have a rate case that we began to have discussions with our stakeholders or to understand what intervenors are wanting to we're expecting from us. So it's an ongoing dialogue that the team at.
Melody Birmingham: And Pennsylvania has throughout the year up until the time that we file.
Melody Birmingham: With all cases, you know, they're uncertain, but we do work to stay as aligned as possible with those stakeholders to mitigate any surprises. So I would say it's going as well as we expect at this point. And then your next question.
Melody Birmingham: We with all cases, they are uncertain, but we do work to stay as aligned as possible with our stakeholders to mitigate any surprises. So I would say, it's going as well as we expect at this point.
Melody Birmingham: And then your next question.
Melody Birmingham: Okay.
Unknown Caller: The NIPSCA deferral, just overall timing to get an outcome there, and is that something that we should think about having a financial impact or rate case timing impact or anything else?
Melody Birmingham: NIPSCO deferral, just overall timing to get an outcome there.
Unknown Caller: Is that something that we should think about having a financial impact or rate case timing impact or anything else.
Unknown Caller: Okay.
Melody Birmingham: But it should not, so it should not have an impact on the rate case. We still expect to get an order on the NIPSCO gas rate case sometime this summer. And because of the deferral mechanism, it should not have a negative impact on our finances.
Unknown Caller: Scott.
Unknown Caller: It should not so it should not have an impact on the rate case, we still expect to get an order.
Melody Birmingham: The NIPSCO gas rate case sometime this summer.
Melody Birmingham: And because of the deferral mechanism is should not have a negative impact on our financials.
Unknown Caller: Got it, understood. That's all for me. Thank you.
Speaker Change: Got it understood. That's all for me. Thank you.
Unknown Caller: Okay.
Operator: Our next question comes from the line of Miller and Travis. Your line is open.
Unknown Caller: Our next question comes from the line of Miller Travis Your line is open.
Unknown Caller: Hi everyone, this is Travis Miller. Thank you for taking the question. On the $1.6 billion of upside, the slide there, some of those gas-related upside numbers, can you talk about what jurisdictions have the most upside? And again, I'd realize there's a scale difference here, but just maybe on a percentage basis, which of those gas jurisdictions do you think could check a lot of the boxes here in terms of the upside?
Operator: Hi, everyone. This is Travis Miller.
Unknown Caller: Uh huh.
Speaker Change: Good morning, Johanna question Heather.
Unknown Caller: On the $1 $6 billion of upside.
Unknown Caller: There are some of those gas related upside numbers.
Unknown Caller: Can you talk about what jurisdictions have the most upside.
Unknown Caller: I realize there's a scale difference here, but just maybe on a percentage basis, which of those guests.
Unknown Caller: Jurisdictions do you think could check a lot of the boxes here in terms of the upside.
Lloyd M. Yates: I mean, I think the way to think about it is to think about the size of our jurisdictions, right? So you think about Ohio, Indiana, and then Pennsylvania will have the broadest impact in terms of capital investment from those rules or that $1.6 billion.
Lloyd M. Yates: I mean,
Unknown Caller: I mean, I think the way to think about it is think about the size of our jurisdictions right. So you think about Ohio, Indiana, and Pennsylvania, and we will have the broadest impact in terms of capital investment from from those rules are that $1 6 billion.
Lloyd M. Yates: Okay.
Lloyd M. Yates: On a scale basis, are there other opportunities in the smaller?
Lloyd M. Yates: On a scale basis would are there other opportunities in the smaller.
Unknown Caller: There are. I mean, you asked the biggest impact. I think there are opportunities in all of those jurisdictions for capital investment as a result of the new rules. But again, it'll be, I'd say, allocated to the size of the jurisdiction. Michael, do you want to add anything to that?
Lloyd M. Yates: Once it there are I mean, you you asked the biggest impact I think there are opportunities in all of those jurisdictions for capital investment as a result of the new rules.
Unknown Caller: But again, it'll it'll be I'd say allocated to be a size of the jurisdiction that the way to think about that Michael you want to add anything to that yes. The only thing I would add to that is when we look across all of our territories. That's one of the benefits of having sort of a diversified territories and what we have in our current capabilities and so you can take things such as Enbrel.
Michael Luhrs: Yeah, the only thing I would add to that is when we look across all of our territories, that's one of the benefits of having sort of diversified territories and what we have in our current capabilities. And so you can take things such as in Virginia, where there is very constructive legislation around biofuels that allows us to look at those opportunities. When we look at many of our others, we have multiple opportunities, whether that be through what's already been mentioned on the economic development side or AMI transitions associated with it, or some of the opportunities when we're looking at what we're going to have to do associated with just hardening and the electric liability that Shawn mentioned earlier.
Michael Luhrs: There is very constructive legislation around biofuels, but allow us to look at those opportunities.
Michael Luhrs: When you look at many of our others, we have multiple opportunities whether that be through what's already been mentioned on the economic development side or omri transitions associated with it or some of the opportunities. When we're looking at what we're going to have to do associated with just hardening and be electric reliability that Sean mentioned earlier quite frankly, there is a pretty.
Michael Luhrs: Quite frankly, there's a pretty strong pipeline of opportunities for that $1.6 billion upside. And just as we've done previously, as you've seen with some of the full ownerships on the projects, as we work through those methodically, we will bring those into the plan and make sure that we announce them once we have that level of confidence, as Lloyd mentioned.
Michael Luhrs: Broad pipeline of opportunities for that $1 6 billion upside and just as we've done previously.
Michael Luhrs: <unk> seen with some of the full ownership of our projects as we work through those methodically, we will bring those into the plan and make sure.
Michael Luhrs: We announced on once we have that level of confidence as Lloyd mentioned.
Shawn Anderson: Yeah, maybe one last point here, Mr. Shawn, stakeholder alignment is critical, and so the timing to implement the rules will matter, as you think about our current CapEx plan, 23 to 2028, so we'll need to pace that through. So what you'll see, if it moves from the upside plan to the base plan, will be actionable projects within the context of the timing of this CapEx plan, but those rules could extend the amount of work into the early 2030s. And so how we segment that along the actual jurisdictions that Michael just referenced will be dictated a lot by our stakeholder engagement and the pace set forth by PHMSA. Okay, perfect.
Speaker Change: Yeah, maybe one last point here in the U S.
Shawn Anderson: Sean and stakeholder alignment is critical and so the timing to implement the rules will matter as you think about our current Capex plan 23 to 2028, so we will need to pace that through so what youll see if it moves from the upside planned in our base plan will be actionable projects within the context of the timing of this capex plan, but those rules.
Shawn Anderson: Could extend the amount of work into the early 2000, <unk> and so how we segment that along the actual jurisdictions that Michael just referenced will be dictated a lot by our stakeholder engagement and the pacing set forth by Samsung.
Unknown Caller: Perfect. That's really helpful. And then one other, obviously, the hot topic, data centers. But if you think about your mix of business in terms of gas and electric, how much upside, or, you know, available upside, at least, is manufacturing, which you mentioned, versus data centers?
Speaker Change: Okay, perfect that's really helpful.
Unknown Caller: And then one other obviously the topic of the data centers, but if you think about your mix of business in terms of gas and electric.
Unknown Caller: How much upside or available upside at least is manufacturing, which you mentioned versus data centers.
Lloyd M. Yates: So I'd say, some, I mean, I think you start thinking about the economic development in Ohio and Indiana, outside of data centers, is really strong. If you think about reshoring, you think about the Intel project just here in Columbus, you think of some of the battery, Stellantis in Indiana. I mean, reshoring or on-shoring, however you want to characterize that, is, again, a great opportunity for us. You know, we are strengthening our economic development pipeline, getting more focused on that, because there are more people interested in that.
Unknown Caller: Oh, so I would say.
Lloyd M. Yates: Some I mean, I think you started thinking about the economic development in Ohio.
Lloyd M. Yates: In Indiana outside of data centers is really strong and you think about <unk> and you think about the Intel project just here in Colombia as you think of some of the battery Atlantis in Indiana.
Lloyd M. Yates: Re shoring or onshoring. However, you want to characterize that is again great opportunity for us we are strengthening our economic development pipeline and getting more focused on that because there are more people interested in that I mean, I think we have I mean, the strength on the strength of the company as you did the.
Lloyd M. Yates: I mean, I think one of the strengths of the company is the jurisdictions we operate in. Most, if not all, of our states provide huge economic development incentives, and people are very motivated to create manufacturing jobs where possible. That's the one thing, no matter what your politics are, everybody agrees on job creation and economic development. And we're positioned very well to take advantage of those.
Lloyd M. Yates: Fictions, we operate in most of it most of if not all of our states.
Lloyd M. Yates: I'll provide huge economic development.
Lloyd M. Yates: Incentives and people are very motivated to create manufacturing jobs, where possible. That's the one thing no matter what your politics, everybody agrees on job creation and economic development and we are positioned.
Lloyd M. Yates: Well to take advantage of those.
Unknown Caller: Yeah, that's great. Okay. Thanks so much. It's all I had.
Speaker Change: That's great. Okay. Thanks, so much that's all I had.
Operator: As a reminder, to ask a question, press star one on your telephone keypad. Our next question comes from UBS Securities. Your line is open.
UBS Securities: As a reminder to ask a question press star one on your telephone keypad. Our next question comes from UBS Securities. Your line is open.
Unknown Caller: Yeah, it's Bill LaFesseli from UBS. Good morning.
Operator: Yeah, Hi, it's bill up itself from UBS good morning.
Unknown Caller: Yeah.
Unknown Caller: Just going back to the technology capital deferral mechanism. I guess how much capital could flow through that? And then, just to clarify, that would be a deferral on DNA and O&M?
Bill LaFesseli: Just asking the question.
Bill LaFesseli: Just going back to the technology capital deferral mechanism.
Bill LaFesseli: I guess, how much capital could flow through that.
Unknown Caller: Then just to clarify that would be a deferral on DNA and O&M.
Shawn Anderson: Yeah, this is Shawn. I'll take that. The existing project cost allocation is set forth to be about $250 million across NiSource, but that splits itself into the allocation across their jurisdictions. So think about it around $150 million of capital that'll flow through NIPSCO, both on the electric side and the gas side. And then, yeah, it covers the one-time O&M components of it, and then some depreciation and amortization.
Unknown Caller: Yes. This is Shawn I'll take that the existing project cost allocations as set forth to be about $250 million across nisource, but that splits itself to the allocation across our jurisdictions. So think about it around $150 million of capital that will flow through NIPSCO, both on the electric side and the gas side.
Shawn Anderson: And then it covers the onetime O&M component of it and then some depreciation and amortization.
Unknown Caller: Okay, all right, great. And then, just going back to the FMSA rules, and maybe can you just share exactly what you need to see coming out of that final rulemaking to trigger some of the incremental capital?
Speaker Change: Okay, Alright, great and then.
Unknown Caller: Just going back to the FEMSA rules and maybe you can just share exactly what you need to see coming out of that final rulemaking to trigger some of the incremental capital.
Unknown Caller: Yeah, I mean, we're actively involved with the federal government. And I'll say the FEMSA rulemaking, as you probably know, FEMSA is about really, you know, grading leaks and repair timelines, and leak detection methodologies. We think those rules will be finalized by the end of this, by the end of 2024. So far, and as we start to develop. Transcripts provided by Transcription Outsourcing, LLC
Speaker Change: Yeah, I mean, we're actively involved with federal government and I'll say the Fender rulemaking as you probably know affirm those about really.
Unknown Caller: <unk> leaks and repair timelines and leak detection methodologies, we think those rules will be finalized by the end of this by the end of 2024.
Unknown Caller: So far and.
Unknown Caller: And as we start to develop.
Unknown Caller: Plans for compliance to those roles Youll start to see us have.
Unknown Caller: Input to our capital plan or additions to our capital plan to facilitate those rules by sometime in the middle of the plan. So given it up a compliance plan within 18 months and then 36 months.
Unknown Caller: Enrollment of your capital plans. So we expect to see capital upside from the vendors are all sometime in the middle of the plant.
Unknown Caller: Yeah.
Unknown Caller: Okay. All right. Thank you. And then lastly, and apologies if you said this earlier, but on the ATM issuance, can you just remind us how much you've done year to date?
Speaker Change: Okay, Alright, Thank you and then lastly, and I apologize if you said this earlier, but on the ATM issuance can you just remind us how much you've done year to date.
Unknown Caller: Okay.
Unknown Caller: We have done approximately one-third of the ATM to date. OK.
Speaker Change: We did approximately one third on the ATM to date.
Unknown Caller: Okay.
Unknown Caller: All right, perfect. Thank you very much.
Speaker Change: Perfect. Thank you very much.
Operator: Thank you, and I will now turn the call back over to management for closing remarks.
Speaker Change: Thank you and I will now turn the call back over to management for closing remarks.
Unknown Executive: Again, thank you for participating in the phone call. We're optimistic about the NiSource plan. Appreciate the questions. Have a great day.
Speaker Change: Again, thank you for participation in the phone call. We are optimistic about the nice towards plan I. Appreciate the questions have a great day.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Operator: Yeah.
Speaker Change: Thank you.
Operator: Okay.
Operator: Okay.
Operator: Okay.
Operator: