Q2 2024 Xcel Energy Inc Earnings Call

George: Hello, and welcome to the Xcel Energy second quarter 2024 earnings conference call. My name is George, and I'll be the coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be noticed in only in listen mode. However, a question and answer session will follow the prepared remarks, and questions will be taken from institutional investors and analysts. Reporters can contact Media Relations with inquiries, and individual investors and others can reach out to Investor Relations.

Speaker Change: Hello and welcome to the Xcel Energy second quarter 2024 earnings conference call.

George: My name is George. I'll be coordinator for today's event.

Speaker Change: Please note, this conference is being recorded and for the duration of the call, your lines will be in the listen-only mode. However, a question and answer session will follow the prepared remarks and questions will be taken from institutional investors and analysts.

Speaker Change: Reporters can contact media relations with inquiries and individual investors and others can reach out to investor relations.

George: To register for a question, please press star 1 on your default keypad. If you require assistance at any point, please press star zero, and you will be connected to an operator. I'd like to hand the call over to your host, Mr. Paul Johnson, Vice President, Treasurer, and Reservations, to begin today's call.

To register for a question, please press star 1 on your default keypad. If you require assistance at any point, please press star 0 and you will be connected to an operator.

Paul Johnson: And I'd like to hand the call over to your host, Mr. Paul Johnson, Vice President, Treasurer and Reservations, to begin today's conference.

Paul Johnson: Thank you. Good morning, and welcome to Xcel Energy's 2024 second quarter earnings call. Joining me today are Bob Frenzel, Chairman, President, and Chief Executive Officer, and Brian Van Abel, Executive Vice President and Chief Financial Officer.

Speaker Change: Please go ahead, sir.

Paul Johnson: Thank you. Good morning and welcome to Xcel Energy's 2024 second quarter earnings call.

Speaker Change: Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer, and Brian Van Abel, Executive Vice President and Chief Financial Officers.

Paul Johnson: In addition, we have other members of the management team in the room to answer questions if needed. This morning, we will review our 2024 second quarter results and highlights and share recent business developments. Slides that accompany today's call are available on our website. As a reminder, some comments made during today's call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and SEC filing. Today, we'll also discuss certain metrics that are non-gap measures. Information on comparable gap measures and reconciliations is included in our earnings. With that, I'll now turn the call over to Bob.

Speaker Change: Officer. In addition, we have other members of the management team in the room to answer questions if needed.

Speaker Change: This morning we will review our 2024 second quarter results and highlights and share recent business developments. Slides that accompany today's call are available on our website. As a reminder, some comments made during today's call may contain forward-looking information.

Paul Johnson: Significant factors that could cause results to differ from those anticipated are described in our earnings release and SEC filings.

Paul Johnson: Today we will also discuss certain metrics that are non- GAAP measures . Information on comparable GAAP measures and reconciliations are included in our earnings release.

Bob Frenzel: Thank you, Paul. Good morning, everyone.

Paul Johnson: With that, I'll now turn the call over to Bob.

Bob Frenzel: Thank you, Paul. Good morning, everyone. Thank you for joining us today.

Bob Frenzel: Thank you for joining us today. I'm pleased to report that the company delivered another quarter of solid operational and financial progress. Our long-term business model remains robust, and we continue to deploy capital for the benefit of our customers and communities. We enable a future powered by cleaner fuels and a more resilient and intelligent grid, partner with stakeholders to encourage economic development, and provide products and services capable of meeting our customers' most important needs. In the most recent quarter, we invested $1.7 billion in resilient and reliable energy infrastructure. We delivered earnings per share of $0.54 for our owners.

Bob Frenzel: I'm pleased to report that the company delivered another quarter of solid operational and financial progress.

Bob Frenzel: Our long-term business model remains robust.

Speaker Change: We continue to deploy capital for the benefit of our customers and communities.

Speaker Change: We enable a future powered by cleaner fuels and a more resilient and intelligent grid.

Speaker Change: to partner with stakeholders to encourage economic development.

Speaker Change: We provide products and services capable of meeting our customers' most important needs.

Speaker Change: In the most recent quarter, we invested $1.7 billion in resilient and reliable energy infrastructure.

Bob Frenzel: We provided industry-leading storm response and strong customer reliability despite challenging weather conditions for our customers. We accelerated our wildfire risk reduction measures to enable a safer and more resilient community. Xcel Energy's commitment to our communities and investors is anchored by our core investment thesis as an integrated pure play utility and a clean energy leader. For more than two decades, we've been a leading provider of wind energy to our customers, and we were the first U.S. energy company to commit to a carbon-free electric future.

Speaker Change: We delivered earnings per share of $0.54 for our owners. We provided industry-leading storm response and strong customer reliability despite challenging weather conditions for our customers.

Speaker Change: For more than two decades, we've been a leading provider of wind energy to our customers, and we were the first U.S. energy company to commit to a carbon-free electric future.

Bob Frenzel: We've delivered on earnings guidance for 19 straight years, one of the best records in our industry, and we look to make it 20 this year. We have a long-term and transparent growth plan, making investments in clean generation, new and enhanced energy grids, and economic development programs to support our community's vitality. Since 2020, our continuous improvement programs have saved $400 million in recurring O&M expense while improving operating outcomes and reducing enterprise risk. Steel for Fuel Strategy has delivered more than $4 billion in customer fuel-related savings since 2017.

Speaker Change: We've delivered on earnings guidance for 19 straight years, one of the best records in our industry, and we look to make it 20 this year.

Speaker Change: Our Steel for Fuel strategy has delivered more than $4 billion in customer fuel-related savings since 2017.

Bob Frenzel: This discipline, alongside support of state and federal policies, enables us to reduce emissions and keep residential electric and natural gas bills 28% and 14% below the industry average, and growth well below the rate of inflation. With our 11,000 plus employees' commitment to serving customers for 14 cents ahead of 2023 year-to-date earnings. And as a result, we are reaffirming our 2024 earnings guidance. During the quarter, we continued our progress on our clean energy transition through multiple resource planning and RFP cross- We issued an RFP for 1600 megawatts of wind, solar, storage, and hybrid resources in the Upper Midwest. Bids are due in September.

Speaker Change: This discipline, alongside support of state and federal policies, enables us to reduce emissions and keep residential electric and natural gas bills 28% and 14% below the industry average, and growth well below the rate of inflation.

Speaker Change: During the quarter, we continued our progress on our clean energy transition through multiple resource planning and RFP processes.

Speaker Change: We issued an RFP for 1600 megawatts of wind, solar, storage, and hybrid resources in the Upper Midwest.

Speaker Change: Dudes are due in September , we expect commission decisions in 2025.

Bob Frenzel: We expect commission decisions in 2025. We now have active RFPs for over 4,000 megawatts of resources in the Upper Midwest. New Mexico and Texas commissions approved 418 megawatts of company-owned solar generation that's expected to be in service between 2026 and 2027. And last week, we issued an RFP and SPS seeking 3100 megawatts of accredited capacity, which could ultimately yield more than 5,000 megawatts of renewables and firm dispatchable generation. Bids are due on January 25, and we expect commission approval in 2026.

Speaker Change: We now have active RFPs for over 4,000 megawatts of resources in the Upper Midwest.

Speaker Change: which could ultimately yield more than 5,000 megawatts of renewables and firm dispatchable generation.

Bob Frenzel: Last quarter, I discussed a number of initiatives that Xcel Energy is taking to reduce wildfires. I'm incredibly proud of what our team has been able to accomplish in a short amount of time. Since March, we've developed the capability to deliver enhanced daily wildfire safety operations across the enterprise, as well as the ability to conduct proactive public safety power shutoffs as evidenced by recent events in Colorado, Texas, and New Mexico during threatening conditions

Speaker Change: Last quarter I discussed a number of initiatives that Xcel Energy is taking to reduce wildfire risk.

Bob Frenzel: We've accelerated poll inspections, including replacing Priority 1 and Priority 2 polls across our system. We're expanding visual coverage with our Pano AI-enabled camera system to over 50,000 square miles in Colorado, enabling first responders access to critical information, including precision triangulation and fire location.

Speaker Change: We're expanding visual coverage with our Pano AI-enabled camera system to over 50,000 square miles in Colorado, enabling first responders access to critical information including precision triangulation and fire location.

Bob Frenzel: We've accelerated the deployment of TechnoSilva's RISC modeling system and expect it to be operational enterprise-wide by the end of the year. We recently filed an updated Colorado wildfire mitigation plan that integrates industry experience, incorporates evolving risk assessment methodology, adds new technology, and expands the scope, pace, and scale of our programs to reduce wildfire risk. The plane has four primary programs that include enhanced situational awareness, improved meteorology, area risk mapping and modeling, artificial intelligence cameras, and continuous monitoring.

Speaker Change: We recently filed an updated Colorado wildfire mitigation plan that integrates industry experience, incorporates evolving risk assessment methodologies,

Bob Frenzel: Operational mitigations that include enhanced power line safety settings and public safety power shutoff capability. System resiliency through increased asset assessment and remediation, pole replacements, line rebuilds, targeted undergrounding, and vegetation management, and Improved Coordination, Technology, and Real-time Data Sharing with Customers and Other Stakeholders as well as PSPS Resiliency Rebates. We expect to follow our resiliency plans with SPS that will include wildfire mitigation later this year and are developing formal wildfire mitigation plans for the rest of our state.

Speaker Change: Operational mitigations that include enhanced power line safety settings and public safety power shutoff capabilities.

Speaker Change: We expect to file resiliency plans with SPS that will include wildfire mitigation later this year and are developing formal wildfire mitigation plans for the rest of our states.

Bob Frenzel: Finally, we're working with stakeholders at both the state and federal level on legislation to enhance the safety of our communities from evolving weather risks while protecting the financial integrity of companies that provide these essential services. Moving on to economic development.

Speaker Change: Finally, we're working with stakeholders at both the state and federal level on legislation to enhance the safety of our communities from evolving weather risks while protecting the financial integrity of companies that provide these essential services.

Bob Frenzel: We're seeing a material shift in long-term electric demand on our system after several years of relatively flat sales growth. Our current five-year electric sales forecast assumes approximately 3% annual growth. Nearly half of that growth is driven by electrification of oil and natural gas production, electric vehicle adoption, and beneficial electrification, economic growth, and increasing. The remainder of that growth is driven by contracted and high probability data center load, including previously announced deals with Meta and Microsoft in Minnesota and QTS in Colorado, as well as others.

Speaker Change: Our current five-year electric sales forecast assumes approximately 3% annual growth.

Bob Frenzel: We believe this forecast is now conservative, given a pipeline of data center requests totaling 6,700 megawatts by 2030. If all of the data center requests came to fruition, our data center sales CAGR would be over 9%. We continue working through the requests and plan on updating our sales and capital investment forecasts on the third quarter call. Xcel Energy is strategically positioned to secure economic data center load with high-quality partners due to our access to low-cost renewable generation, the availability of water and fiber infrastructure, unencumbered land, and our speed to market.

Speaker Change: We continue working through the requests and plan on updating our sales and capital investment forecasts on the third quarter call.

Bob Frenzel: At the same time, we'll continue to focus on the impacts on all customers, ensuring we have both economic contracts and system resources to provide safe, clean, and reliable power to our community. During the quarter, there were two regulatory outcomes that provide for cleaner and more resilient electric and natural gas distribution systems. First, Colorado passed a bill that enables qualified electric utilities to make necessary distribution investments.

Speaker Change: First.

Bob Frenzel: Timely Recovery to Achieve State Policy Goals, including Transportation and Building Electrification in Enabling Distributed Energy Resources. This was the result of an extensive stakeholder process supported by the Colorado Energy Office, our IBEW Labor Partners, Environmental Advocates NRDC and WRA, as well as the Colorado Solar and Storage Association and others. Second, the Colorado Commission approved a modified clean heat plant, which establishes a starting point for reducing greenhouse gas emissions from our national gas distribution.

Speaker Change: This was the result of extensive stakeholder process supported by the Colorado Energy Office, our IBEW Labor Partners, Environmental Advocates NRDC and WRA, as well as the Colorado Solar and Storage Association and others.

Speaker Change: Second, the Colorado Commission approved a modified clean heat plant.

Bob Frenzel: A four-year budget of up to $441 million was approved, which sets funding primarily for beneficial electrification and natural gas efficiency. We look forward to working with stakeholders and regulators to implement these initiatives to meet our long-term sustainability goals in Colorado. Finally... We recently released our 19th sustainability report. We're proud of our history at Xcel Energy, and as we look forward, we're committed to delivering the essential energy services our customers value and need while driving positive change that supports the environment and community. We are deeply appreciative and thankful for the commitment and hard work of our employees and partners to deliver a clean energy future.

Speaker Change: We look forward to working with stakeholders and regulators to implement these initiatives to meet our long-term sustainability goals in Colorado.

Bob Frenzel: We remain relentless in our pursuit of our vision and will continue to deliver long-term value to our shareholders and affordable, reliable, and sustainable energy for the communities in which we live and work. With that, I'll turn it over to Brian. Thanks, Bob. And good morning, everyone.

Brian Van Abel: Starting with our financial results, we had earnings of $0.54 per share for the second quarter of 2024 compared to $0.52 per share in 2023. The most significant earnings drivers for the quarter included the following, revenues from electric rate cases and riders to recover capital investments, which combined to increase earnings by 26 cents per share. Higher AFUDC increased earnings by $0.04 per share, and revenues from natural gas rate cases increased earnings by two cents per share. Offsetting these positive drivers, higher depreciation and amortization decreased earnings by 18 cents per share, reflecting our capital investment program. Higher interest charges decreased earnings by seven cents per share.

Brian Van Abel: Higher O&M expenses decreased earnings by four cents per share, and other factors combined to reduce earnings by one cent per share. According to our sales discussion, year-to-date weather and leap year adjusted electric sales decreased by 0.4%, and natural gas sales increased by 0.4%. We're updating our 2024 forecast to reflect a 1% increase in electric sales with expected increases in C&I load in the second half of the year. Longer term, we continue to see robust demand in our C&I sector driven by data center loads in Minnesota and Colorado, along with oil and natural gas electrification in SPS.

Speaker Change: The most significant earnings drivers for the quarter included the following.

Speaker Change: Revenues from electric rate cases and riders to recover capital investments combined to increase earnings by 26 cents per share.

Speaker Change: Higher AFUDC increased earnings by four cents per share.

Speaker Change: Offsetting these positive drivers for higher depreciation and amortization decreased earnings by 18 cents per share, reflecting our capital investment programs.

Speaker Change: We're updating our 2024 forecast to reflect a 1% increase for electric sales with expected increases in C&I load in the second half of the year.

Speaker Change: Longer term, we continue to see robust demand in our C&I sector driven by data center loads in Minnesota and Colorado, along with oil and natural gas electrification in SPS.

Brian Van Abel: During the quarter, we continued to make progress on a relatively light rate case calendar. In June, we reached an uncontested settlement in our Minnesota natural gas case, providing a $46 million rate increase based on a 9.6% ROE and a 52.5% equity ratio. The final commission decision is expected by year-end.

Speaker Change: During the quarter, we continued to make progress on a relatively light rate case calendar.

Speaker Change: In June , we reached an uncontested settlement in our Minnesota natural gas case, providing a $46 million rate increase based on a 9.6% ROE and a 52.5% equity ratio.

Brian Van Abel: In our Colorado natural gas rate case, we received intervener testimony in July. There's a settlement deadline at the end of August, with hearings scheduled for September. Expect a commission decision in the fourth quarter. And in July, the Texas Commission approved our $13 million distribution rider request.

Speaker Change: The final commission decision is expected by year-end.

Speaker Change: In our Colorado natural gas rate case, we received intervener testimony in July . There's a settlement deadline at the end of August with hearings scheduled for September .

Speaker Change: And in July , the Texas Commission approved our $13 million distribution rider request. This represents our first distribution rider request in Texas, and we expect it will allow us to reduce the frequency of future rate cases.

Brian Van Abel: This represents our first distribution rider request in Texas, and we expect it will allow us to reduce the frequency of future rate cases. We also continue to make progress on the claims process for the Smokehouse Creek wildfire. We've received 141 claims, of which 43 have been settled, which we view as a positive and constructive outcome. 21 lawsuits have also been filed.

Speaker Change: We also continue to make progress on the claims process for the Smokehouse Creek wildfire.

Speaker Change: We've received 141 claims, of which 43 have been settled, which we view as a positive and constructive outcome. 21 lawsuits have also been filed.

Brian Van Abel: In addition, there was no change to our estimate of our accrued liability of $215 million. As a reminder, we have approximately $500 million of excess liability insurance coverage for the fire. Finally, we are reaffirming our 2024 earnings guidance range of $3.50 to $3.60 per share, which is consistent with our long-term EPS growth objective of 5 to 7%. In addition, we've updated key assumptions to reflect the latest information, which are detailed in our earnings release.

Speaker Change: As a reminder, we have approximately $500 million of excess liability insurance coverage for the fire.

Speaker Change: Finally, we are reaffirming our 2024 earnings guidance range of $3.50 to $3.60 per share, which is consistent with our long-term EPS growth objective of 5% to 7%.

Brian Van Abel: With that, I'll wrap up with a quick summary. We continue to expect to deliver 2024 earnings within our guidance range, as we have for the past 19 years. We're executing our capital investment plan, including clean generation, transmission, and distribution to support reliability and resiliency, and economic development to support our communities. We're proactively enhancing our wildfire mitigation actions to manage the risks to our systems and protect our customers from extreme weather. We remain confident we can deliver long-term earnings growth at or above the top end of our 5 to 7% range starting in 2025. This concludes our prepared remarks. The operator will now take questions. Thank you very much, sir.

Speaker Change: With that, I'll wrap up with a quick summary.

Speaker Change: We continue to expect to deliver 2024 earnings within our guidance range, as we have for the past 19 years.

Speaker Change: We're executing our capital investment plan, including clean generation, transmission and distribution to support reliability and resiliency, and economic development to support our communities.

Speaker Change: We're proactively enhancing our wildfire mitigation actions to manage the risks to our systems and to protect our customers from extreme weather.

Speaker Change: We remain confident we can deliver long-term earnings growth at or above the top end of our 5-7% range starting in 2025.

Speaker Change: This concludes our prepared remarks. Operator will now take questions.

Operator: Once again, for analysts to register for a question, please press star 1 on your telephone keypad. Our first question is from Jeremy Tonet of J.P. Morgan. Please go ahead.

Speaker Change: Thank you very much, sir. Once again, for analysts to register for a question, please press star 1 on your telephone keypad.

Speaker Change: Our first question is coming from Jeremy Tonet of J.P. Morgan. Please go ahead.

Bob Frenzel: I just wanted to start off with the wildfires, if I could, and risk mitigation there. How do you think the system risk stands now? How do you expect it to, I guess, improve over time with the wildfire mitigation plan? Is work kind of even across the system, or are there certain parts in focus? And then finally, it seems like there are some fires in Colorado right now. I was just wondering if any of your equipment was involved in any way.

Speaker Change: I just wanted to start off with the wildfires, if I could, and risk mitigation there. How do you think system risk stands now?

Bob Frenzel: Yeah, appreciate the question. Look, As I said in my prepared remarks, I'm really proud of what we're going to accomplish on the operational side, providing the real-time risk reduction that we need today to give us the time to make the necessary enhancements and system resiliency and hardening for our system over time. Clearly, we're further ahead in Colorado. We just filed our second wildfire mitigation plan, and we've been working on the first one for over four years, but that shouldn't be taken as anything other than a huge focus that we also have in Texas and in New Mexico around our plans there.

Speaker Change: Yeah, appreciate the question. Look, um.

Speaker Change: for our system over time. Clearly we're further ahead.

Speaker Change: a huge focus that we also have in Texas and in New Mexico.

Bob Frenzel: Our capability to do wildfire safety operations and PSPS exists on a daily basis across the entire enterprise, which drives real-time risk reduction. You know, we're benefited as a company by all the hard work of the people that have come before us in California. We expect to dramatically reduce our wildfire risk based on their experiences in doing some of the lessons learned from all of those organizations. They've been more than accommodating and helping us and others across the country.

Speaker Change: You know, we're, we're...

Bob Frenzel: You know, clearly the need is there and evident, and we think there's a real supportive backdrop in our states to help us pursue these necessary investments to continue to risk reduce our business. Yeah, and Jeremy, this is Brian. Good morning.

Speaker Change: Clearly, the need is there and evident, and we think there's a real supportive backdrop in our states to help us pursue these necessary investments to continue to risk-reduce our business.

Brian Van Abel: Just on the second part of your question about the current fires in Colorado, you know, our assets were more than a mile away from any of those believed to have started the ignition.

Bob Frenzel: Got it. That's all very helpful. Thank you for that. And then I just wanted to pivot here a little bit to the data center opportunity. As you outlined there, it seems like the opportunities are accelerating from when you last discussed them with the market. Just wondering if you could frame that a bit more, what you're seeing and where across your footprint that's happening. And just any more color would be helpful.

Bob Frenzel: Yeah, Jeremy, Bob, again, look, we're really excited about what we're seeing. Obviously, we believe we have a very attractive service territory across all eight of our states for different reasons in all of them. But when we speak with hyperscalers and other data center developers, we have what they're looking for, you know, low cost, clean energy, access to fiber, access to water, and other infrastructure, human capital, and land that makes us attractive. Right now, we're seeing most of these opportunities materialize in the Minnesota and Colorado footprint. But our deeper backlog, I would say it's across all of our service territories in all of our states. I don't know if I caught all your questions.

Speaker Change: Got it.

Speaker Change: We believe we have a very attractive service territory across all eight of our states for different reasons and all of them but when we speak with hyperscalers and other data center developers

Brian Van Abel: Yeah, Jerry, I can just expand on that a little bit. If you caught the slide that we put in our earnings release today, which is updated from the data center slide that we had a couple months ago, you can see there's been a significant increase in customer requests. As Bob said, you know, the biggest opportunity was in Minnesota. Now it's growing.

Brian Van Abel: We're seeing significant opportunities in Colorado now and even expanding outside of Minnesota into Wisconsin and South Dakota. And so, you know, we're working closely internally with our economic development team. You know, we think about it as we're updating our long-term sales forecast right now, which we'll roll out in Q3. Now, our long-term sales forecast right now is in the 2 to 3 percent range. I would expect that to look more like the 4 to 5 percent range.

Speaker Change: The biggest opportunity was in Minnesota, now it's growing, we're seeing significant opportunity in Colorado now, and even expanding outside of Minnesota into Wisconsin and South Dakota. And so, you know, we're working closely internally with our economic development team. You know, we think about it as, you know, we're updating our long-term sales forecast right now, which we'll roll out.

Speaker Change: in Q3. Now our long-term sales forecast right now is in the 2% to 3% range. I would expect that to look more like the 4% to 5% range in our base long-term sales forecast when we roll that out as we incorporate some of these high probability loads into our five-year guidance.

Bob Frenzel: And our base long-term sales forecast, when we roll that out, is we incorporate some of these high probability loads into our five-year guidance. Just another good example of how we look to proactively work with our commissions. You know, the Minnesota Commission here in Minnesota has publicly stated they're going to have planning sessions around how do we accommodate and meet this both an economic development opportunity for our communities and also how do we provide benefits to all of our current customers and create more opportunities for investment. Chairman, I think this is part of a much broader theme that I've been talking about as it pertains to our company.

Speaker Change: Just another good example about how we look to proactively work with our commissions. You know, the Minnesota Commission here in Minnesota has publicly stated they're going to have planning sessions around how do we accommodate and meet this both

Bob Frenzel: If you put those criteria that data centers are looking at today, I would suggest that's true for almost any energy-intensive industry. In our view, they're at some point going to overly co-locate in parts of the country where energy costs are lower and green energy could be cleaner, and that sits right across the footprint that we straddle. And so, as you look at stuff like hydrogen and clean energy production, if we get to direct air capture as a means of carbon mitigation, you could see a lot of that HQing itself or locating itself in our backyard, as well as other manufacturing, probably where transportation isn't as critical. I think all of those are economic development opportunities that are, not in our forecast, but areas that we think should benefit the parts of the country that we serve.

Speaker Change: stuff like

Jeremy Tonet: Got it. Great to hear. Big numbers there. Congratulations. I'll leave it there. Thanks.

Operator: Thank you. That's your question, sir. Thank you. We'll move to Carly Davenport of Goldman Sachs. Please go ahead.

Operator: Hey, good morning. Thanks so much for taking my questions. Good morning, Carly. Good morning.

Speaker Change: We'll move to Carly Davenport of Goldman Sachs. Please go ahead.

Operator: I wanted to just follow up on a couple of Jeremy's questions there, maybe just first on the wildfire front. Is there any sort of feedback from stakeholders you can share so far on the wildfire mitigation plan you filed in Colorado? And then you mentioned plans to file additional wildfire mitigation or system resiliency plans in other states. Can you just talk about what forms that might take and where you're most focused in the near term?

Carly Davenport: Hey, good morning. Thanks so much for taking my questions.

Speaker Change: Um, maybe you want to... More garlic.

Speaker Change: Good morning. I wanted to just follow up on a couple of Jeremy's questions there, maybe just first on the wildfire front. Is there any sort of feedback from stakeholders you can share so far on the wildfire mitigation plan you filed in Colorado? And then you had mentioned plans to file additional wildfire mitigation or system resiliency plans in other states. Can you just talk about what forms that might take and where you're most focused in the near term?

Brian Van Abel: Hey Carly, this is Brian. It's now early in the process for the wildfire mitigation plan filing in Colorado. We're just starting to see some discovery requests, but overall, we think about the work and the support we're getting from so-called first responders in the community has been positive. You know, our investment in the Pano AI cameras is already paying off. There have been some recent articles where it's helped identify fires not started by the utility but helped work very proactively with the first responders to get them out and mitigate fire risks and protect our communities and our So I think overall it has been supportive.

Brian Van Abel: But again, like I said, early in the process. Kind of the next, kind of pivoting to your second part of the question is what we're focusing on right now is developing our system resiliency plan in Texas, which will incorporate our wildfire mitigation plan. So that'll be later this year, and look for a similar filing in New Mexico later this year too. And then work through what it will look like in Minnesota and in the Midwest for wildfire mitigation plans. We can incorporate a lot of wildfire mitigation plans into our multi-array case in Minnesota as we think about what we'll file in November of this year.

Speaker Change: You know, our investment in the Pano AI cameras has already, you know, there's been some recent articles where it's helped identify fires not started by the utility, but helped work very proactively with the first responders to get them out and mitigate fire risks and protect our communities and our customers. So I think overall, it has been supportive. But again, like I said, early in the process.

Speaker Change: are kind of the next.

Speaker Change: That's kind of pivoting to your second part of the question.

Speaker Change: is

Speaker Change: focusing on right now is developing our system resiliency plan in Texas, which is what will incorporate our wildfire mitigation plan. So that'll be later this year.

Speaker Change: and look for a similar filing in New Mexico later this year, too, and then working through what it will look like in Minnesota and in the Midwest for wildfire mitigation plans. We can incorporate a lot of wildfire mitigation planning into our multi-array case in Minnesota as we think about which we'll file in November of this year.

Operator: Great. That's really helpful. Thank you for that.

Speaker Change: Great. That's really helpful. Thank you for that.

Speaker Change: And then the second one was just on the load growth and the data center piece. Could you just talk a little bit about your process for working down the request into the pipeline, or I guess said another way, what is sort of your bar for including load in that near-term pipeline estimate which goes into your broader load growth estimate?

Operator: And then the second one was just on the load growth and the data center piece. Could you just talk a little bit about your process for working down the request into the pipeline? Or, to put it another way, what is your bar for including load in that near-term pipeline estimate, which goes into your broader load growth estimate?

Speaker Change: Yeah, so if you think, I'll give a little bit of color, we kind of highlighted on that slide in the earnings deck is one, we have a contract with them, for example, QTS and Meta, that's included in their five-year forecast, and then we have something called near-term pipeline, which, for example, maybe we've sold a parcel of land to them, and what we consider is 80% probability.

Brian Van Abel: Yeah, so if you think, I'll give you a little bit of color, we kind of highlighted on that slide in the earnings deck one, we have a contract with them, for example, QTS and Meta, that's included in their five-year forecast. And then we have something called the near-term pipeline, which, for example, maybe we've sold a parcel of land to them, and what we consider is an 80% probability. So, very high probability that it's going to come into our sales forecast within the next five years. And this is working very closely with our operating companies and our economic development team with these customers.

Speaker Change: So, very high probability that it's going to come into our sales forecast within the next five years. And this is working very closely with our operating companies and our economic development team with these customers. Then everything above that, we do not have in our sales forecast. So, there's a huge opportunity above what we call 80% high probability load.

Brian Van Abel: And then everything above that, we do not have in our sales forecast. So there's a huge opportunity above what we call 80% high probability load. And so that's a little bit of color. So as we continue to kind of march through time, you know, you think some of the stuff that we don't use 80% probability today becomes more of an opportunity to drop into that which we include in our base forecast.

Speaker Change: and so that's a little bit of color. So as we continue to kind of march through time, you know, you think some of the stuff that we don't use 80% probability today becomes more of an opportunity and you can drop into that what we include in our base forecast.

Operator: Okay, thank you so much for your time.

Operator: Thank you for your questions, Cardi. Our next question today will be from Julien Dumoulin-Smith of Jefferies. Please go ahead.

Speaker Change: Thank you for your questions, Cardi.

Operator: Hey, good morning, team. Thank you guys very much. Good to chat again.

Bob Frenzel: Hey Julien, congratulations. I hear you're a proud papa these days.

Speaker Change: Hey, good morning team. Thank you guys very much. Good to chat again.

Julien Dumoulin: Thank you. I appreciate that. Absolutely. Guys, it's nicely done here.

Speaker Change: Hey Julian, congratulations. I hear you're a proud papa these days.

Julien Dumoulin: I got to say, lots on that pipeline. Maybe to pick up where Carly left it off here on just some kind of probability waiting here. How do you think about that filtering through your processes? For instance, I know you didn't emphasize as much the relative load growth of the SPS, for instance, in the context of data centers, but how do you think about even the numbers that you guys were throwing out there of the five gigawatt number getting updated here, sort of pro forma for that process that you're working through right now?

Julian: Thank you. I appreciate that.

Speaker Change: Guys, nicely done here. I've got to say, lots on that pipeline. Maybe to pick up where Carly left it off here on just kind of probability waiting here. How do you think about that filtering through your processes? For instance, I know you didn't emphasize as much the relative load growth of the SPS for instance, in the context of data centers. But how do you think about even the numbers that you guys were throwing out there of the 5 gigawatt number getting updated here, sort of pro forma for that process that you are working through right now? Effectively, as you probability wait and update with 4Q, how does that filter into the processes you already have in flight?

Julien Dumoulin: Effectively, as you probably wait and update with 4Q, how does that filter into the processes you already have in flight for procurement given what seems like a perhaps more pressing need to address the RFPs that would need to be processed? Necessary.

Bob Frenzel: Yeah, Julien, so I'll start and then Brian can add on. I think you know the company pretty well. We've generally taken a pretty conservative approach to forecasting, whether it was capital investment opportunities or, in this case, sales opportunities. Our process is alive and well right now, and it's geared towards a comprehensive update on the third quarter earnings call. And so we'd expect, as Brian walked through the sales funnel, Carly's question, and then the update on our capital forecast, whether that's, you know, the RFP results coming into our forecast, whether that's new sales, or whether that's capital needs driven by our wildfire mitigation plans, our need to serve customers to the extent that we see high probability load growth that needs investment, as well as all of our resiliency and Julian, just let me add to that a little bit.

Speaker Change: Yeah, hey Julien, so I'll start and then Brian can add on.

Julian: We've generally taken a pretty conservative approach to forecasting, whether it was

Speaker Change: Capital Investment Opportunities, in this case, Sales Opportunities.

Speaker Change: The update on our capital forecast, whether that's, you know, the RFP results coming into our forecast, whether that's new sales or whether that's capital needs driven by our wildfire mitigation plans.

Speaker Change: Our need to serve customers to the extent that we see high probability load growth that needs investment.

Speaker Change: as well as all of our resiliency and reliability plans as we roll forward in time. So expect something at the end of the third quarter, end of the fourth quarter from us on a fulsome enterprise-wide look.

Brian Van Abel: If we think about all the RFPs we have in flight, for example, Minnesota, you know, we have multiple RFPs in flight while we're looking at this potential new load that's rapidly evolving. So we have that opportunity as we go through these RFPs, and we're in a resource plan following with the Minnesota Commission, which we've provided kind of what we call a base view, but also an electrification and high load view So we have processes in place that help us move quickly on this stuff and secure resources and work with our stakeholders.

Speaker Change: and all the parameters. Hey Julien, just let me add to that a little bit, if we think about...

Brian Van Abel: Similar in SPS, we just followed up an RFP for over 3,000 megawatts of accredited capacity. Now, that was based on our resource plan in New Mexico that had a base plan, but also a high electrification plan working with all of our oil and gas customers. And that's why you see us talking about this 5 to 10,000 megawatt nameplate capacity range in SPS, because we see that load out there. We're working with our oil and gas customers. So SPS is much more of an electrification of the oil and gas industry. Down there, we're Colorado, Minnesota, and the Midwest is much more of a potential data center opportunity.

Speaker Change: similar in SPS. We just followed up in RFP for over 3000 megawatts of accredited capacity. Now that was based on our research plan in New Mexico that had a base plan, but also high electrification plan working with all of our oil and gas customers.

Operator: Excellent, guys. Thank you.

Speaker Change: And that's why you see us talking about this 5,000 to 10,000 megawatt nameplate capacity range in SPS, because we see that load out there when we're working with our oil and gas customers. So SPS is much more of an electrification of the oil and gas industry. Down there, we're Colorado, Minnesota, and the Midwest is much more of a potential data center opportunity.

Julien Dumoulin: And then maybe on the other side of this, nicely done in Colorado on some of this legislative effort here. How do you think about the timeline and implementation of that legislation, just given the sub-8% earned ROE on a trailing basis? How do you think about that improving, you know, said number, you know, 50 basis points or what have you from the legislation here over time?

Speaker Change: Excellent guys, thank you. And then maybe on the other side of this, nicely done in Colorado on some of this legislative effort here. How do you think about the timeline and implementation?

Speaker Change: of that legislation, just given the sub-8% earned ROE on a trailing basis, how do you think about that improving, you know, said number of, you know, 50 basis points or what have you from the legislation here over time?

Brian Van Abel: Yeah, Julien, and maybe I'll just take a step back and just say this is a really good piece of legislation now supported by a broad coalition of stakeholders. And as we think about it, it's really kind of, you know, how do we help advance state policy around beneficial electrification, whether that's electrification of the transport sector, electrification of home heating, and so work with a very broad group of stakeholders to get support and passage of this legislation.

Speaker Change: Julien, and maybe I'll just take a step back and just say this was a really good piece of legislation now supported by a broad coalition of stakeholders.

Speaker Change: As we think about it, it's really kind of, you know, how do we help advance state policy around beneficial electrification, whether that's electrification of the transport sector, electrification of home heating, and so work with a very broad group of stakeholders to get support and passage of this legislation. As I think about it,

Brian Van Abel: As I think about it, there's a distribution system plan that we'll file in November in Colorado, which is really kind of the basis for this legislation, and think of it as almost a resource plan for the distribution system about the capacity investments we need to make. And how do we think about the different levels of penetration and how accelerated some of this can be?

Speaker Change: There's a distribution system plan that we'll file in November in Colorado, which is really kind of the basis of this legislation And think of it almost a resource plan for the distribution system of all

Speaker Change: The capacity investments we need to make and how do we think about the different levels of penetration and how accelerated some of this can be.

Brian Van Abel: And so we'll file that in November, work through that, and so there's a full rider rider will be implemented in 2026 around the investments needed to kind of drive our distribution system forward. And now we think about from an earned ROE perspective, we've earned about 8% in Colorado over the past year or so. So this will really help us drive a significant closure of that gap as we think about it as we go through, like I said, 2026 when it's fully implemented.

Speaker Change: And so we'll follow that in.

Speaker Change: November work through that. And so there's a the full rider rider will be implemented in 2026.

Speaker Change: around the investments needed to kind of drive our distribution system forward.

Speaker Change: and now we think about from an earned ROE perspective, you know, we've earned about 8% approximately in Colorado over the past few years. So this will, you know, really help us drive a significant closure of that gap.

Speaker Change: as we think about it as we go through, kind of like I said, 2026 when it's fully implemented. But we'll also have other investments in Colorado as we think about the renewable investments we're making.

Brian Van Abel: But we also have other investments in Colorado, as we think about the renewable investments we're making and the transmission investments that we're making to help drive state policy, achieve our decarbonization goals with the state, that could bring concurrent recovery, too. And so as those investments ramp up, that will help close that gap.

Speaker Change: and the transition investments that we're making to help drive state policy and achieve our decarbonization goals with the state that get concurrent recovery too. And so as those investments ramp up, that'll help close that gap too.

Operator: Awesome. Nicely done, guys. Speak to you soon.

Operator: Thank you. That's your question, sir. I'll now move to Sophie Karp calling from KeyBank. Please go ahead, ma'am; your line is open.

Speaker Change: Awesome. Nicely done guys. Speak to you soon.

Speaker Change: Thank you for your questions, sir.

Sophie Karp: Hi, good morning. Thank you for taking my question. I have a question on the, you know, going back to the data center strand. So I guess, is there a point at which this incremental load growth and the acceleration of sales trends translates into earnings growth? And at what point would you be comfortable sort of making that leap?

Speaker Change: We now move to Sophie Karp calling from Key Bank. Please go ahead ma'am, your line is open.

Sophie Karp: Hi, good morning. Thank you for taking my question. I have a question on the, you know, going back to the data center strand.

Sophie Karp: So, I guess, is there a point at which this incremental load growth and the acceleration of sales trends translates into the earnings growth? At what point would you be comfortable sort of making that leap?

Brian Van Abel: Yeah, Sophie, as I think about it, right? I think about this data center opportunity in two ways. One is really getting the contracts right.

Speaker Change: Yeah, Sophie, as I think about it, right, I mean, I think about this data center opportunity in two ways. One is really

Brian Van Abel: And having the data centers, and adding new data centers, provides benefits to all of our customers on the system. And that's really important to demonstrate benefit, going to the commission with a contract that demonstrates benefits to our current customers. Now, longer term, absolutely, there's an investment opportunity or investment need here to support these customers. These are large loads. And so as I think about it, we're moving through the planning process right now, both from the sales forecast perspective and the high probability loads, and how that translates into our capital forecast. So expect a broader update from us, both on that five-year capital plan and the sales forecast plan in Q3. And that should help address the problem.

Speaker Change: getting the contracts right and having the data centers.

Speaker Change: adding new data centers to provide benefit to all of our customers on the system. And that's really important to demonstrate benefit going into a commission with a contract that demonstrates benefit to our current customers.

Speaker Change: Now, longer term, absolutely, there's an investment opportunity or investment need here to support these customers. These are large loads. And so, as I think about it, we're moving.

Speaker Change: through the planning process right now, both from the talk about a sales forecast perspective and the high probability loads, and how that translates into our capital forecast. So expect a broader update from us, both on that five-year capital plan and the sales forecast plan in Q3, and that should help address your question.

Brian Van Abel: Got it, got it. Thank you. And then a more of a higher level question. With all this new load coming in, and I'm not sure if this load is going to be interruptible or not interruptible, but do you see the need for, I guess, more gas-fired generation on your grid anytime soon? And how receptive do you think the regulators would be to those types of generation additions?

Speaker Change: Got it, got it. Thank you. And then a more of a higher level question.

Bob Frenzel: Thank you.

Speaker Change: with all this new load coming in and I'm not sure if this load is going to be interruptible or not interruptible, but do you see the need for, I guess, more gas fired generation on your grid anytime soon? How receptive

Operator: Hey, Sophie. Look, I think that those are great questions.

Speaker Change: do you think the regulators would be to those types of generation additions? Thank you.

Bob Frenzel: We sit in a resource-rich area for wind and solar. We see increasing needs for storage resources, but as evidenced by our most recent RFPs and our resource plans, we do have incremental combustion turbines that serve to back up and serve our customers to make sure that we have reliability when the wind or the sun or the storage is unavailable. So, in our most recent ERPs in Colorado, and in our recent resource plan up here in the upper Midwest, we have incremental CTs coming back.

Speaker Change: Hey Sophie, it's Bob. Look, I think that...

Sophie Karp: Great questions

Sophie Karp: We sit in a resource-rich area for wind and solar. We see increasing needs for storage resources.

Speaker Change: but as evidenced by our most recent RFPs

Speaker Change: and our resource plans, we do have incremental combustion turbines that serve to back up and serve

Sophie Karp: our customers to make sure that we have reliability when the wind or the sun or the storage is unavailable. So in our most recent ERP's in Colorado

Bob Frenzel: And I think with increased load of the magnitude we're talking about, we would actually see increased numbers of backup generation, almost as an insurance policy for our networks to make sure that we have reliable and affordable energy for all.

Sophie Karp: Our recent resource plan up here in the upper Midwest, we have incremental CTs coming back. And I think with increased load of the magnitude we're talking about, we would actually see increased numbers of backup generation, almost as an insurance policy.

Speaker Change: for our networks to make sure that we have reliable and affordable energy for all.

Bob Frenzel: But there are no plans to add CCGTs for now.

Speaker Change: but no plans to add CCGTs for now.

Operator: I'm sorry. Can you say that again?

Operator: No plans to add CCGTs combined cycle.

Speaker Change: I'm sorry, can you say that again? No plans to add CCGTs, combined cycle.

Bob Frenzel: No, at this point, we don't have any plans today to add any combined cycles to our network. But I mean, we have to evaluate the probability of real load and what the resource availability is to serve it. So not today, but you know, I wouldn't say that anything's off the table.

Speaker Change: No, at this point we don't have any plans today to add any combined cycles to our network but I mean we have to evaluate the probability of real load and what the resource availability is to serve it so not today but you know I wouldn't say that anything's off the table.

Operator: Got it. Thanks so much.

Operator: Thank you very much for your questions. We'll now take questions from Greg Oro calling from UBS. Please go ahead.

Speaker Change: Got it. Thanks so much.

Speaker Change: Thank you very much for your questions.

Speaker Change: We'll now take questions from Greg Oro, calling from UBS. Please go ahead.

Operator: Yeah, hi, thanks very much. Just regarding the You know, you're working your way through the smokehouse fire settlements. And just kind of how are you thinking about whether, you know, how those are going in terms of, you know, are there any groups that are precedentential? How do you think about kind of, you know, resolving that and moving forward, sort of timing and process. Hey, Greg, I can provide...

Greg Oro: Hi, thanks very much. Just regarding the...

Brian Van Abel: Hey, Greg, I can provide some color on that, you know, so the 141 claims settled in, we're moving expeditiously through those and have already reached settlement on 43 of those claims. And so, as I look at it, these claims have spanned, call it a variety of items, everything from homes to agricultural buildings to fencing, cattle feed, personal property. So it gives us a pretty good data point. Well, so, 43 settled is not all-encompassing, but it gives us a good data point.

Speaker Change: Hey Greg, I can provide some color on that, you know, so 141 claims settling, we're moving expeditiously through those and have already reached settlement on 43 of those claims.

Brian Van Abel: And I think the important point is we think about it, you know; we reassess our liability of $215 million, and the claims so far support and help validate our accrual. Another data point, the report that we received in Q2 was from the Texas A&M AgriLife Extension, and that report covered, it was an economic estimate of the agricultural losses from the entire complex of fires down there. And that report put a value of $123 million on agricultural losses.

Greg Oro: and help validate our accrual.

Speaker Change: Another data point, the report they received in Q2 was from the Texas A&M AgriLife Extension. And that report covered, it was an economic estimate of the agricultural losses from the entire complex of fires.

Brian Van Abel: And that report included some very large buckets, cattle, feed, and agricultural structures. And so when we look at that report and that number and what we've included for our accrual, it does support our assumptions. And so that's the latest information we have through Q2, and we'll continue to provide updates as we move through time.

Speaker Change: down there, and that report put a value of $123 million for agricultural losses. And that report included some very large buckets.

Speaker Change: cattle, feed, agricultural structures. And so when we look at that report and that number and what we've included for our accrual, it does support our assumptions. And so that's the latest information we have through Q2 and we'll continue to provide updates as we move through time.

Operator: Our next question will be coming from Nick Campanella, calling from Barclays. Please go ahead.

Speaker Change: It's helpful, thanks.

Speaker Change: Thank you, sir.

Speaker Change: Our next question will be coming from Nick Campanella, calling from Barclays. Please go ahead.

Operator: Hey, good morning, everyone. I hopped on late, so hopefully I'm not repeating others, but just, you know, first, as you're progressing through Colorado gas, what is the ability to settle this in your mind at this point? Is that something that you're open to, or is this taking a fully litigated path? And then I just have one follow-up. Thank you.

Nick Campanella: Hey, good morning, everyone.

Nick Campanella: I hopped on late, so hopefully I'm not repeating others, but first, as you're progressing through Colorado gas, what's the ability to settle this in your mind at this point? Is that something that you're open to, or is this taking a fully litigated path? And then I just have one follow-up. Thank you.

Brian Van Abel: Yeah, but hey, Nick. Yeah, we received intervener testimony relatively recently. We are at our settlement deadline of August 27th, and we certainly look forward to working with our stakeholders and with the interveners to attempt to reach a settlement. We've reached settlement in the past few cases in Colorado. So we're hopeful that we can reach a settlement, but we're also ready to go through the fully litigated process if we need to. That'd be hearings in the middle of September and a CPUC decision by the end of the year.

Greg Oro: Yeah, but hey, Nick, yeah, I know we were served.

Speaker Change: We received intervener testimony relatively recently. We have our settlement deadline of August 27th, and we certainly look forward to working with our stakeholders and with the interveners to attempt to reach a settlement. So we've reached settlement in the past few cases in Colorado. So we're hopeful that we can reach a settlement. Also ready to go through the fully litigated process if we need to. That'd be hearings in middle September and this CPUC decision by the end of the year.

Operator: That's great. I appreciate it. And then I guess if I could just ask about the financing quickly, you know, I know you priced a little bit of ATM in the quarter. Is ATM the primary vehicle to use here for the rest of the year in terms of your equity needs? Yeah, I mean,

Speaker Change: That's great, I appreciate it. And then I guess if I could just ask on the financing quickly. I know you priced a little bit of ATM in the quarter. Is ATM the primary vehicle to use here for the rest of the year in terms of your equity needs?

Brian Van Abel: But overall, ATM is our plan. But also, you know, I look at where our CFO to debt is; it's at 17%. Right now, we have flexibility given, you know, we have strong credit metrics. And that's why we maintain a strong balance sheet is that we have flexibility in terms of when we can look at issuing equity.

Brian Van Abel: Yeah, I mean, the ATM is it will be our primary primary vehicle. That doesn't mean we wouldn't be opportunistic if there's a potential block. We'll also look at some of the other equity content products as we go through time.

Speaker Change: Yeah, I mean the ATM will be our primary vehicle. It doesn't mean we wouldn't be opportunistic if there's a potential block. We'll also look at some of the other equity content products.

Speaker Change: as we go through time, but overall ATM is our plan, but also, you know, I look at where our CFO to debt is, it's at 17% right now. We have flexibility given, you know, we have strong credit metrics and that's why we maintain strong balance sheets. We have flexibility in terms of when we can look at issuing equity.

Operator: Thank you very much, Mr. Campanella. We'll now go to Travis Miller calling for Morningstar. Please go ahead.

Speaker Change: Great. Thanks a lot.

Speaker Change: Thank you very much Mr. Campanella. We'll now go to Travis Miller calling for Morningstar. Please go ahead.

Operator: Good morning. Thank you. Hey Travis, I wonder if there was any update on timing or plans for the Minnesota electric rate case and then tied to that any lessons learned or takeaways from the settlement in the gas case that could be applied to any timing or request on the electric side.

Travis Miller: Good morning, thank you.

Travis Miller: Hey Travis, I wonder if there was any update on timing or plans for the Minnesota electric rate case and then tied to that any lessons learned or takeaways from the settlement in the gas case that could be applied to

Brian Van Abel: Hey, Travis. Yeah, we're looking, and we're planning a November 1 filing for a multi-year plan on the electric side. If you remember, we're in year three of our multi-year plan right now. So we've communicated that. As we think about the gas side, you know, we always look to see if we're going to reach a constructive settlement with the parties, and we have been able to do so on the gas side. So I think that's a good data point as we think about it.

Speaker Change: Any timing or request on the electric side?

Travis Miller: Hey, Travis. Yeah, we're looking, we're planning November 1 filing for a multi-year plan on the electric side. If you remember, we're in year three of our multi-year plan right now. So, we've communicated that. As we think about the

Speaker Change: the gas side. Now, we always look to see if we can reach a constructive settlement with the parties, and we've been able to on the gas side, so I think that's a good data point as we think about it.

Brian Van Abel: So, you know, early days, given that we haven't made the filing yet, but think November 1 filing; it's a longer process in Minnesota. But once we get through the intervener's direct testimony, our rebuttal testimony, we'll look to see if there's an opportunity to settle.

Travis Miller: early days, given that we haven't made the filing yet, but I think November 1 filing, you know, it's a longer process in Minnesota, but once we get through kind of the intervener direct testimony, our rebuttal testimony, we'll look to see if there's an opportunity to settle.

Travis Miller: Thanks. And then back to the data center, that 6,700 or whatever it ends up being in terms of requests and potential, how sensitive is that number to regulatory proceedings, whether it's the planning process that you're talking about was going on in Minnesota, whether it's rate cases, RFPs? How much, how much sensitivity is that to just all regulatory proceedings?

Speaker Change: Thanks. And then back to the data center, that 6,700 or however much it ends up being in terms of requests and potential.

Speaker Change: How sensitive is that number to regulatory proceedings? Whether it's the planning process that you were talking about that was going on in Minnesota, whether it's rate cases, RFPs.

Travis Miller: How much sensitivity is that to just all regulatory proceedings?

Bob Frenzel: Hey, Travis. It's Bob. Look, when I think about the opportunity that's in front of us, our obligation as a company is to make sure that we're able to serve our current customers as well as our future customers and make sure that everyone is treated economically and fairly. You know, I'll be honest, you know, we don't have, we're a 21, 22 gigawatt peak load system today, we don't have 6000 megawatts of capacity available today, but we have some.

Travis Miller: Hey, Travis, it's Bob. Look, when I think about the opportunity here that's in front of us, our obligation as a company is to make sure that

Travis Miller: We're able to serve our current customers as well as our future customers and make sure that everyone is treated economically and fairly.

Speaker Change: You know, I'll be honest, you know, we don't have, we're...

Speaker Change: 21, 22 gigawatt peak load system today. We don't have.

Travis Miller: 6,000 megawatts of capacity available today. We have some, but we would need to, as part of our existing RFPs and resource plans,

Bob Frenzel: But we would need to, as part of our existing RFPs and resource plans, add more generation to the stack. So that would require a resource planning process and a regulatory process. I think we've proven over the last seven or eight years our ability to do that and do that with efficiency to make sure that we can address the expanding needs of our customers in our state. So we will need generation over time.

Travis Miller: to add more generation to the stack. So that would take a resource planning process and a regulatory process.

Travis Miller: I think we've proven over the last seven or eight years our ability to do that, and do that with efficiency to make sure that we can address the expanding needs of our customers and our states. So, we will need generation over time, but I think we have plans and processes that are in place that allow us to speed the market.

Bob Frenzel: I think we have plans and processes that are in place that allow us to accelerate the market to address the needs that our customers might need, our new customers might need today, as well as the growth that they forecast through the end of the decade.

Travis Miller: to address the needs that our new customers might need today, as well as the growth that they forecast through the end of the decade.

Bob Frenzel: Okay, great. And then just real quick, transmission and distribution capacity. You talked about generation capacity. Is there enough T&D? Yes. Okay. Great. Or would that also be a constraint?

Speaker Change: Okay, great. And then just real quick, transmission distribution capacity. Talk about generation capacity. Is there enough T and D?

Bob Frenzel: So, largely, these customers are largely transmission customers, so we'll talk about transmission grid needs, and we've got, again, some capacity in the grid today to meet their needs today. In all of our jurisdictions, we're expanding our transmission pretty aggressively, whether it's through the MISO LRTP processes up here in the U.S. and what's been approved and what's on the horizon, as well as the power pathway in Colorado and other transmission proceedings in Piesco.

Speaker Change: Or would that also be a constraint?

Speaker Change: So largely, these customers are largely transmission customers, so we'll talk transmission grid needs and

Speaker Change: We've got, again, some capacity in the grid today to meet their needs today. In all of our jurisdictions, we're expanding our transmission.

Travis Miller: pretty aggressively, whether it's through the MISO LRTP processes up here in the U.S. and what's been approved and what's on the come, as well as the Power Pathway in Colorado and other transmission proceedings in Piesco. And then our work in SPS with the Southwest Power Pool to build more transmission down there. So I think we've got transmission in flight.

Bob Frenzel: And then our work in SPS with the Southwest Power Pool to build more transmission down there. So, I think we've got transmission in flight. Again, the capacity today is available, but not the full extent of the 6700. So, you know, our goal is to make sure the transmission generation needs are ramped according to what becomes our high-probability customer needs.

Speaker Change: Again, you know, the capacity today is available, but not the full extent of the 6700. So, you know, our goal is to make sure the transmission generation needs are ramped according to what becomes our high probability customer needs.

Operator: Got it. Okay. Thanks so much. I appreciate it.

Operator: Thank you for your questions, Mr. Miller. I'm sorry, sir. Our next question will be coming from Ryan Levine, calling from Citi. Please go ahead.

Bob Frenzel: Got it. Okay. Thanks so much. Appreciate it.

Speaker Change: Thank you for your questions Mr. Miller. I'm sorry sir. Our next question will be coming from Ryan Levine calling from Citi. Please go ahead.

Ryan Levine: Good morning. Any color you can share around rate design for the data center opportunity? In an earlier answer, you mentioned the economic development opportunity. Does that signal a certain rate structure for this customer class? And on the similar vein, what role do you see VPPs impacting the ability of Xcel to service this data center load in Colorado and more broadly across your service territories?

Ryan Levine: Good morning. Any color you can share around rate design for the data center opportunity? In an earlier answer you mentioned economic development opportunity. Does that signal a certain rate structure for this customer class? And on the similar

Ryan Levine: What role do you see VPPs impacting the ability of Excel to service the status center load in Colorado and more broadly across your service territories?

Brian Van Abel: Hey, Ryan, you broke up on the second part of your question, but your first part of the question seemed like it was around the rate design. As we think about these data center loads, you know, so far, we've approached it on a contract by contract basis. And so it can be unique, but the principle is that we need to make sure that the revenue that we receive from these data centers covers more than the incremental cost that comes into our system.

Brian Van Abel: Hey Ryan, you broke up on the second part of your question, but your first part of the question was seems like it was around rate design as we think about these data center loads.

Brian Van Abel: You know, so far we've approached it on a contract-by-contract basis, but...

Brian Van Abel: And so it can be unique, but the principle is that we need to make sure that the revenue that we receive from these data centers covers more than the incremental cost that comes to our system. So what I mean simply is that our current customers are not harmed by adding these.

Brian Van Abel: So what I mean simply is that our current customers are not harmed by adding these. And whether that means you have a provision in the contract that's a ratchet if they don't deliver on the load, they said they're going to deliver or take or pay type contract. So these are fluid conversations, but the principle is that we need to bring something to our commission that is in the best interest of our current customers. And if you wouldn't, I wouldn't; I couldn't catch up. You broke down a little bit on the second part of your question, so if you could repeat it, that'd be helpful. Sure.

Brian Van Abel: and whether that means you have a provision in the contract that's a ratchet if you don't deliver on the load they said they're going to deliver or take or pay type contract. So these are fluid conversations but the principle is that we need to bring something to our commission that is in the best interest of our current customers.

Operator: Sure. What role do you see VPPs impacting the ability of Xcel to service the status center load in Colorado and across your service territories?

Operator: And if you wouldn't I would I couldn't catch up you broke a little bit on the second part of your question So if you could repeat it, it'd be helpful. Sure. What role do you see VPP's? Impacting the ability of Excel to services data center load in Colorado and across your service territories

Brian Van Abel: Look, I mean, I think, you know, VPPs can almost be another demand-side management tool, as we think about it. So we think there could be a role there.

Speaker Change: Well, I mean, I've...

Brian Van Abel: I think, you know, VPPs can almost be another, um...

Brian Van Abel: Demand-side management tool as we think about it. So we think there could be a role there. I know there's now part of our distribution legislation in Colorado to do some planning and study work around BPPs. So I actually think they can play a role in the future, just like if you think about some of this potential large load, could you have it on an interruptible load on certain peak periods? So I think there's a lot of opportunity as you think about the overall umbrella of more demand-side management tools.

Brian Van Abel: I know it was part of our distribution legislation in Colorado to do some planning and study work around VPPs. So I absolutely think they can play a role in the future, just like if you think about some of this potential large load, could you have it on an interruptible load during certain peak periods? So I think there's a lot of opportunity as you think about the overall umbrella of more demand-side management tools to address and serve this significant low growth that we see in our future.

Brian Van Abel: I mean, and Brian, today we have almost 10% of our peak load in Colorado available for demand management tools already. And so we'll continue to work with the Commission and providers, as Brian said, on the distribution bill that we just passed in Colorado. So there's an opportunity here, but we do have a very full demand response program already in existence in Colorado.

Brian Van Abel: to address and serve this significant log growth that we see in our future. I mean, and Brian, today we have almost 10% of our peak load in Colorado is available for demand management tools already. And so we'll continue to work with commission and providers, as Brian said, with the distribution bill that was just passed in Colorado.

Brian Van Abel: So there's an opportunity here, but we do have a very full demand response program already in existence in Colorado.

Brian Van Abel: Thank you. And then, do you have a way of quantifying what percentage of historical wildfire risk has been reduced or will be reduced by the implementation of the current WMP? And how do you see this risk evolving in the coming years?

Speaker Change: Thank you. And then, do you have a way of quantifying what percentage of historical wildfire risk has been reduced or will be reduced by the implementation of the current WMP? And how do you see this risk evolving in the coming years?

Bob Frenzel: I don't think we've got a quantitative number for you today, but as I've made in my prepared remarks,

Bob Frenzel: I don't think we've got a quantitative number for you today, but as I made in my prepared remarks...

Speaker Change: As I think about the operational mitigations that we've put in place, dramatically reduce real-time wildfire risk in our business. We do this on a daily basis, enterprise-wide, and that affords us the time to go in and then do some of the...

Speaker Change: situation awareness and system hardening and enhanced operational things that we want to do in our system. Today the tools we have are pretty blunt tools and we'd like to get to more surgical use of those tools over time and that's a big piece of what our

Speaker Change: wildfire mitigation plans do is use the operational tools we got today, make them more surgical so they're less customer impactful over time.

Bob Frenzel: Yeah, and Ryan, if you read our wildfire mitigation plan in Colorado, we say that the RWMP investments in plan will reduce our risk similar to that of what we see in the leading utilities in this space.

Operator: We do not have any further questions at this time. I'll turn the call back to CFO Brian Van Abel for closing remarks. Thank you.

Speaker Change: Thank you for the time.

Speaker Change: Thank you, sir.

Speaker Change: We do not have any further questions at this time. I'll turn the call back to CFO Brian Van Abel for closing remarks. Thank you.

Speaker Change: Thank you all for participating in our earnings call this morning. Please contact our investor relations team with any follow-up questions.

Speaker Change: Thank you very much, sir. Ladies and gentlemen, that concludes today's conference. We wish you a very good day and you may now disconnect.