Q2 2024 CMS Energy Corp Earnings Call

Okay.

Speaker Change: Good morning, everyone and welcome to the CMS energy 2024 second quarter results.

Operator: The earnings news release issued earlier today and the presentation used in this webcast are available on CMS Energy's website in the Investor Relations section. This call is being recorded. After the presentation, we will conduct a question and answer session, and instructions will be provided at that time. If at any time during the conference you need to reach an operator, please press the star key followed by the digit zero.

The news release issued earlier today and the presentation used in this webcast are available on CMS Energy's website in the Investor Relations section.

Speaker Change: This call is being recorded after the presentation, we will conduct a question and answer session and instructions will be provided at that time, if at any time during the conference you need to reach an operator. Please press the star key followed by the did you see it right.

Operator: Just a reminder, there will be a rebroadcast of this conference call today, beginning at 12 p.m. Eastern Time, running through August. This presentation is also being webcast and is available on CMS Energy's website in Investor Relations. At this time, I would like to turn the call over to Mr. Jason Shore, Treasurer and Vice President of Investor Relations. Thank you, Harry. Good morning, everyone.

Speaker Change: Just a reminder that will be a rebroadcast of this conference call today, beginning at 12 P. M. Eastern time running through August 1st.

Speaker Change: <unk> is also being webcast and is available on CMS Energy's website in the Investor Relations section at this time I would like to turn the call over to Mr. Jason Sure Treasurer, and Vice President of Investor Relations.

Jason M. Shore: Thank you Harry good morning, everyone and thank you for joining US today with me are Garrick Roche, our president and Chief Executive Officer, and <unk> Hayes Executive Vice President and Chief Financial Officer.

Jason M. Shore: And thank you for joining us today. With me are Garrick Rochow, President and Chief Executive Officer, and Rejji Hayes, Executive Vice President and Chief Financial Officer. This presentation contains forward-looking statements that are subject to risks and uncertainties. Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actual results to differ materially. This presentation also includes non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted on our website.

Speaker Change: This presentation contains forward looking statements, which are subject to risks and uncertainties.

Speaker Change: Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actual results to differ materially.

Speaker Change: This presentation also includes non-GAAP measures.

Speaker Change: Conciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted on our website.

Garrick J. Rochow: And now, I'll turn the call over to Garrick. Thank you, Jason, and thank you, everyone, for joining us today. Our proven investment thesis, which delivers six to eight percent adjusted earnings growth and affordable bills for our customers, has been durable for more than two decades because we focus on what matters. Today, I'm going to highlight two key areas of our investment thesis. First, Michigan's Strong Regulatory Environment, built on a solid constructive framework, much of which is codified in Michigan law.

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

Gary: Thank you, Jason and thank you everyone for joining us today.

Gary: Our proven investment thesis, which deliver 6% to 8% adjusted earnings growth.

Gary: And affordable bills for our customers has been durable for more than two decades, because we focus on what matters.

Gary: Today I'm going to highlight two key areas of our thesis first.

Garrick J. Rochow: 10 Month Forward-Looking Rate Cases, Important Financial and Fuel Recovery Mechanisms, and Increased Energy Waste Reduction Incentives, just to name a few attributes. This robust framework supports Michigan's position as a top-tier regulatory environment and provides important supportive incentives for needed investments to make our electric and gas systems safer, more reliable and resilient, and cleaner, and second, our continued commitment to affordable bills for our customers. As I've said before, we work both sides of the equation. We make important investments, and we keep customer bills affordable. I consider our use of CEWay, our lean operating system, one of the best in the industry.

Gary: Michigan's strong regulatory environment.

Gary: Build on a solid constructive framework much which is codified in Michigan law.

Gary: 10 month forward looking rate cases important financial and fuel recovery mechanisms increased energy waste reduction incentives.

Gary: Just to name a few attributes.

Gary: This robust framework supports Michigan's position as a top tier regulatory environment and provides important supportive incentives for needed investments to make our electric and gas system safer more reliable and resilient.

Gary: And cleaner.

Speaker Change: And second.

Speaker Change: Our continued commitment to affordable bills for our customers.

Speaker Change: As I've said before we work both sides of the equation, we make important investment and we keep customer bills affordable.

Speaker Change: I consider our use of the CE way.

Speaker Change: Our lean operating system, one of the best in the industry.

Garrick J. Rochow: This approach limits upward pressure on customer bills and is critical in the delivery of our investment plan. And we continue to see a long runway of cost-saving opportunities well into the future, delivering industry-leading results for all our stakeholders. From a regulatory perspective, we're off to a strong start for the year. As you can see on slide four, our regulatory calendar is mostly complete. We received a constructive order in our electric rate case in March, filed our new electric rate case in May, and settled our gas rate case earlier this month, the fourth consecutive settlement in our gas rate case, for consecutive settlements in gas. Yet another proof point highlighting the strong regulatory environment in Michigan.

Speaker Change: This approach limits upward pressure on customer bills and is critical in the delivery of our investment plan.

Speaker Change: And we continue to see a long runway of cost saving opportunities well into the future.

Speaker Change: Livery industry, leading results for all our stakeholders.

Speaker Change: From a regulatory perspective, we're off to a strong start for the year.

Speaker Change: As you can see on slide four our regulatory calendar is mostly complete.

Speaker Change: We received a constructive order in our electric rate case in March.

Speaker Change: Filed our new electric rate case in May and settled our gas rate case earlier this month.

Speaker Change: The fourth consecutive settlement in our gas business.

Speaker Change: Four consecutive settlements and gas yet another proof point, highlighting the strong regulatory environment in Michigan.

Garrick J. Rochow: We're very pleased with our recently approved gas settlement, which calls for $62.5 million in effective rate relief, a 9% or 9.9% ROE, and a 50% equity ratio. We plan to file our next gas rate case in December of this year. Outside of rate cases, our upcoming 20-year Renewable Energy Plan, or REP, filing in November is the only major remaining filing for the year. Let me pause there for a moment. Midway through the year, our financial regulatory outcomes are known. This is a great place to be.

Speaker Change: We're very pleased with our recently approved gas settlement.

Speaker Change: Calls for a $62 $5 million of effective rate relief, a 9% or nine 9% Roe.

Speaker Change: And a 50% equity ratio.

Speaker Change: We plan to file our next gas rate case in December of this year.

Speaker Change: Outside of rate cases are upcoming 20 year renewable energy plan or our <unk> filing in November is the only major remaining filing for the year.

Speaker Change: Let me pause there for a moment.

Speaker Change: Midway through the year.

Speaker Change: Our financial related regulatory outcomes are known.

Speaker Change: This is a great place to be.

Speaker Change: I also want to talk about our formula to deliver customer affordability.

Garrick J. Rochow: I also want to talk about our formula to deliver customer affordability as we make important investments. Long-term filings, like our Renewable Energy Plan, detail the significant planned investments that support safe, reliable, clean, and affordable energy for our customers. As we've shared previously, we see more investment opportunities as we make the transition to renewables and clean energy. In addition to the $17 billion of needed customer investments in our five-year capital plan, our electric reliability roadmap and natural gas delivery plans highlight important investments well beyond what's in our financial plan. Now, that's a long way of saying we see a long runway of necessary and important customer investment. However, these investments must be balanced with a laser focus on customer affordability.

Speaker Change: As we make important investments.

Speaker Change: Long term filings like our renewable energy plan detailed a significant planned investments that supports safe reliable clean and affordable energy for our customers.

Speaker Change: As we've shared previously.

Speaker Change: See more investment opportunities as we make the transition to renewables and clean energy.

Speaker Change: In addition to the $17 billion of needed customer investments in our five year capital plan.

Speaker Change: Our electric reliability road map and natural gas delivery plan highlight important investments well beyond what's in our financial plan.

Speaker Change: Now that's a long way of saying, we see a long runway of necessary and important customer investments.

Speaker Change: These investments must be balanced with a laser focus on customer affordability.

Garrick J. Rochow: We take seriously our ability to create capital headroom to make those investments through continued use of the CEA, which provides over $50 million of annual customer savings, renegotiating overmarket PPAs, and retiring our coal facilities, which together provide well over $200 million in savings as we transition toward cleaner resources, capitalizing on economic development opportunities, particularly in manufacturing, which brings jobs and significant mission investments, spreading fixed costs over a larger customer base, benefiting all customers. Lastly, leveraging our best-in-class energy waste reduction programs to help customers reduce bills. This is a formula that works for everyone, continuing to strengthen the system with important investments while keeping customer bills affordable. Now, let's look at the results in Outlook.

Speaker Change: We take seriously our ability to create capital headroom to make those investments.

Speaker Change: Through continued use of the CE way, which.

Speaker Change: <unk> over $50 million.

Speaker Change: Of annual customer savings renegotiating.

Speaker Change: Renegotiating over market Ppas and retiring our coal facilities.

Speaker Change: Which together provide well over $200 million in savings as we transition toward cleaner resources.

Speaker Change: Capitalizing and economic development opportunities, particularly in manufacturing, which brings jobs insignificant, Michigan divestments spreading fixed costs over a larger customer base benefiting all customers.

Speaker Change: Lastly, leveraging our best in class energy waste reduction programs to help customers reduce bills.

Speaker Change: This is a formula that works for everyone.

Speaker Change: Continuing to strengthen the system with important investments, while keeping customer bills affordable.

Speaker Change: Now, let's look at the results and outlook.

Speaker Change: For the first half we reported adjusted earnings per share of $1 63 up.

Garrick J. Rochow: For the first half, we reported adjusted earnings per share of $1.63, up $0.18 for the first half of 2023, largely driven by the constructive outcomes in our electric and gas rate case. We remain confident in this year's guidance and long-term outlook and are reaffirming all our financial objectives. Our full-year guidance remains at $3.29 to $3.35 per share with continued confidence toward the high end. Longer term, we continue to guide toward the high end of our adjusted EPS growth range of 6% to 8%, which implies and includes 7% up to 8%. With that, I'll hand the call over to Rejji. Thank you, Garrick, and good morning, everyone.

Speaker Change: <unk> 18.

Speaker Change: The first half of 2023, largely driven by the constructive outcomes in our electric and gas rate cases.

Speaker Change: We remain confident in this year's guidance and long term outlook and are reaffirming all our financial objectives.

Speaker Change: Our full year guidance remains at $3 29.

Speaker Change: To $3 35 per share with continued confidence towards the high end.

Speaker Change: Longer term, we continue to guide toward the high end of our adjusted EPS growth range of 6% to 8%, which implies and include seven update.

Speaker Change: Hep to 8%.

Speaker Change: With that I'll hand, the call to Reggie.

Reggie: Thank you, Eric and good morning, everyone.

Rejji P. Hayes: On slide 7, you'll see our standard waterfall chart, which illustrates the key drivers impacting our financial performance for the first six months of 2024 and our year-to-go expectations. For clarification purposes, all of the variance analyses herein are in comparison to 2023, both on a year-to-date and a year-to-go basis. In summary, through the first half of 2024, we delivered adjusted net income of $485 million, or $1.63 per share, which compares favorably to the comparable period in 2023, largely due to higher rate relief net of investment costs.

Reggie: On slide seven Youll see our standard waterfall chart, which illustrates the key drivers impacting our financial performance for the first six months of 2024, and our year ago expectations.

Reggie: For clarification purposes, all of the variance analysis herein are in comparison to 2023.

Reggie: Both on a year to date and a year to go basis.

Reggie: In summary through the first half of 2024, we delivered adjusted net income of $485 million.

Reggie: A $1 63 per share, which compares favorably to the comparable period in 2023, largely due to higher rate relief net of investment costs.

Reggie: And while we have seen some glimpses of favorable weather, particularly in June overall weather continues to be a headwind through the first half of the year equating to <unk> <unk> per share of negative variance and that figure includes the warm winter weather experienced in our service territory in the first quarter.

Rejji P. Hayes: And while we have seen some glimpses of favorable weather, particularly in June, overall weather continues to be a headwind through the first half of the year, equating to five cents per share of negative variance. And that figure includes the warm winter weather experience in our service territory in the first quarter, which I'll remind you has the second lowest number of heating degree days in the past 25 years.

Reggie: <unk>, which I'll remind you and the second lowest number of heating degree days in the past 25 years.

Rejji P. Hayes: As mentioned, rate relief, NEV investment-related expenses, one of the key drivers of our first half performance, resulted in $0.13 per share of positive variance due to constructive outcomes achieved in our electric rate order received in March and last year's gas rate case settlement. From a cost perspective, our financial performance in the first half of the year was negatively impacted by heavy storm activity, including a notable weather system that impacted our service territory in late June, resulting in three cents per share of negative variance versus a comparable period in 2023. Rounding out the first six months of the year, you'll note the $0.13 per share of positive variance highlighted in the catch-all bucket in the middle of the chart.

Reggie: As mentioned rate relief net of investment related expenses.

Reggie: One of the key drivers of our first half performance resulted in 13 per share of positive variance due to constructive outcomes achieved in our electric rate order received in March and last year's gas rate case settlement.

Reggie: From a cost perspective, our financial performance in the first half of the year was negatively impacted by heavy storm activity, including a notable weather system that impacted our service territory in late June resulting in <unk> per share of negative variance versus the comparable period in 2023.

Reggie: Rounding out the first six months of the year Youll note. The <unk> 13 per share of positive variance highlighted in a catch all bucket in the middle of the chart. The primary sources of upside here were related to solid operational performance at North Star and higher weather normalized electric sales.

Rejji P. Hayes: The primary sources of upside here were related to solid operational performance at NorthStar and higher weather-normalized electric sales. Looking ahead, as always, we plan for normal weather, which equates to $0.20 per share of positive variance for the remaining half of the year, given the mild temperatures experienced in the final six months of 2023. From a regulatory perspective, we'll realize $0.12 per share of positive variance, largely driven by the aforementioned electric rate order received from the Commission earlier this year and the constructive outcome achieved in our recently approved gas rate case settlement, which Garrick summarized earlier.

Reggie: Looking ahead as always we plan for normal weather, which equates to <unk> 20 per share of positive variance, but have remained remaining half of the year given the mild temperatures experienced in the final six months of 2023 from a regulatory perspective, we will realize <unk> 12 per share of positive variance largely driven by.

Reggie: The aforementioned electric rate order received from the commission earlier this year.

Reggie: And the constructive outcome achieved and a recently approved gas rate case settlement, which Derek summarized earlier.

Rejji P. Hayes: Closing out the glide path for the remainder of the year, as noted during our Q1 call, we anticipate lower overall O&M expense at the utility, driven by usual cost performance fueled by the CEA and the residual benefits from select sustainable cost reduction initiatives implemented in 2023, such as our voluntary separation plan, among others. Collectively, we expect these items to drive $0.09 per share of positive variance for the remaining six months of the year.

Reggie: Closing out the glide path for the remainder of the year as noted during our Q1 call. We anticipate lower overall O&M expense at the utility driven by the usual cost performance fueled by the CE way and the residual benefits from select sustainable cost reduction initiatives implemented in 2023, such as our voluntary.

Reggie: Separation plan among others.

Reggie: Collectively we expect these items to drive nine cents per share of positive variance for the remaining six months of the year.

Rejji P. Hayes: Lastly, in the penultimate bar on the right-hand side, you'll note a significant negative variance, which largely consists of the absence of select one-time countermeasures from last year and the usual conservative assumptions around weather normalized sales and non-utility performance among other items. In aggregate, these assumptions equate to 35 cents to 41 cents per share of negative variance.

Reggie: Lastly on the penultimate bar on the right hand side, you'll note a significant negative variance, which largely consists of the absence of select onetime countermeasures from last year and the usual conservative assumptions.

Reggie: Around weather normalized sales and non utility performance among either among other items in aggregate. These assumptions equate to 35 to 41 per share of negative variance.

Rejji P. Hayes: In summary, despite a challenging first half of the year, we're well positioned to deliver on our 2024 financial objectives to the benefit of customers and investors. Moving on to our financing plan, Slide 8 offers more specificity on the balance of our planned funding needs in 2024, which at this point are limited to debt issuances at the utility. I'll bring to your attention a relatively modest increase in our 2024 planned financing of the utility.

Reggie: In summary, despite a challenging first half of the year, we are well positioned to deliver on our 2024 financial objectives to the benefit of customers and investors.

Reggie: Moving on to our financing plan slide eight offers more specificity on the balance of our planned funding needs in 2024, which at this point are limited to debt issuances at the utility.

Rejji P. Hayes: Specifically, we are now planning to issue approximately $675 million in the second half of the year versus the implied estimates in our original guidance of $500 million to rebalance the rate-making capital structure at the utility in accordance with recent rate case outcomes. Although not highlighted in the table on the slide, I'm pleased to report that we've completed all of our planned tax credit sales for the year at levels favorable to our plan and ahead of schedule.

Reggie: Bring to your attention a relatively modest increase to our 2024 planned financing of the utility specifically, we are now planning to issue approximately $675 million in the second half of the year versus the implied estimates in our original guidance of $500 million.

Reggie: To rebalance the ratemaking capital structure at the utility in accordance with recent rate case outcomes.

Reggie: Though not highlighted in the table on the slide I am pleased to report that we've completed all of our planned tax credit sales for the year at levels favorable to our plan and ahead of schedule.

Rejji P. Hayes: I'll also reiterate that we have no planned long-term financing at the parent in 2024 but remain opportunistic should we see a cost-efficient opportunity to pull ahead some of our 2025 financing needs. As I've said before, our approach to our financing plan is similar to how we run the business. We plan conservatively and capitalize on opportunities as they arise. This approach has been tried and true year in and year out and has enabled us to deliver on our operational and financial objectives irrespective of the circumstances, to the benefit of our customers and investors. And this year is no different.

Reggie: I'll also reiterate that we have no planned long term financings at the parent in 2024, but remain opportunistic should we see a cost efficient opportunity to pull ahead some of our 2025 financing needs.

Reggie: As I've said before our approach to our financing plans are similar to how we run the business, we plan conservatively and capitalize on opportunities as they arise. This approach has been tried and true year end and year out and has enabled us to deliver on our operational and financial objectives.

Gary: <unk> of the circumstances to the benefit of our customers and investors and this year is no different and with that I'll hand, it back to Gary for his final remarks before the Q&A session.

Rejji P. Hayes: And with that, I'll hand it back to Garrick for his final remarks before the Q&A session. Thank you, Rejji. CMS Energy.

Gary: Thank you Rajeev.

Gary: CMS energy.

Gary: Only one years of consistent industry, leading financial performance.

Gary: I have confidence in our strong outlook this year and beyond as we continue to execute on our simple investment thesis and make the necessary and important investments in our system, while maintaining customer affordability.

Harry: That Harry.

Garrick J. Rochow: 21 years of consistent industry-leading financial performance. I have confidence in our strong outlook this year and beyond as we continue to execute on our simple investment thesis and make the necessary and important investments in our system while maintaining customer affordability. That, Harry, please open the lines for Q&A. Thank you very much, Garrick. The question and answer session will be conducted electronically. If you'd like to ask a question, please do so by pressing the star key, followed by the digit one on your touchtone telephone.

Speaker Change: Please open the lines for Q&A.

Harry: Thanks, very much Garrett the question and answer session will be conducted electronically.

Garrett: If you'd like to ask a question. Please do so by pressing the stocky followed by the digit one on your Touchtone telephone.

Garrick J. Rochow: If you're using a speaker function, please make sure you pick up your headset. We'll proceed in the order you signal us, and we'll take as many questions as time permits. If you do find that your question has been answered, you may remove yourself by pressing the star key, followed by the digit two on your touchtone telephone.

Garrett: If you are using a speaker function. Please make sure you pick up your headset.

Garrett: We will proceed in the order you signal us and we will take as many questions as time permits.

Garrett: If you do find that your question has been answer you may remove yourself by pressing the stocky followed by because you're too on your Touchtone telephone.

Operator: We'll now pause for just a second. Our first question today comes from the line of Jeremy Tonet of J.P. Morgan. Please go ahead. Your line is: Hi, good morning. Hey, good morning, Jeremy. How are you?

Garrett: I'll now pause for just a second.

Speaker Change: Our first question today comes from the line of Jeremy Tonet with J P. Morgan. Please go ahead. Your line is open.

Jeremy Bryan Tonet: Hi, good morning.

Jeremy: Hey, good morning, Jeremy.

Jeff: Good good thanks, Jeff.

Jeremy Bryan Tonet: Good, good. Thanks. Just wanted to turn towards DIG for a little bit here if we couldn't, and just wanted to get updated thoughts with regard to recontracting overall and just, I guess, the outlook in this environment, given trends in power. I would suggest, Jeremy, it's consistent with what we shared in the past. In the energy and capacity markets, that upward pressure continues to be a ripe opportunity, and we continue to strike nice bilateral contracts to secure higher energy and capacity prices well above our plan. And so, again, it's a good opportunity to continue to do that, and as we've shared in the past, this just continues to strengthen and lengthen our financial performance. I got it.

Jeremy Bryan Tonet: Just wanted to turn towards dig for little bit here and just wanted to get updated thoughts.

Speaker Change: With regards to re contracting overall and just I guess the outlook in this environment given kind of trends in power prices.

Speaker Change: I would suggest that Jeremy is consistent consistent with what we shared in the past energy and capacity markets that upward pressure continues to be a ripe opportunity and we continue to strike nice bilateral contracts to to secure.

Speaker Change: Higher energy and energy and capacity prices, well above or well above our plan and so again, that's a good opportunity to continue to do that and as we've shared in the past. This just continues to strengthen and lengthen our financial performance.

Speaker Change: Got it. Thank you for that and then it seems like halfway through the year CMS is in a pretty good position overall, just wondering any thoughts you could share with regards to I guess, how weather is looking and impacts for <unk> as it stands right now and really getting towards I guess.

Garrick J. Rochow: Thank you for that. And then it seems like halfway through the year, CMS is in a pretty good position overall. Just wondering any thoughts you could share with regard to, I guess, how the weather is looking and impacts for 3Q as it stands right now and really getting towards, I guess, you know, cost management thoughts and whether, you know, they might be in a position to pull forward costs to further de-risk the future outlook and how you think about all that. Jeremy, it's Rejji.

Jeremy Bryan Tonet: Cost management thoughts and weather.

Speaker Change: It might be in a position to pull forward cost to further derisk the future outlook and how you think about all of that.

Speaker Change: Hey, Jeremy it's Reggie I appreciate the question.

Rejji P. Hayes: Appreciate the question. And I would say the weather outlook looks fairly good for Q3, but obviously early days. And personally, I don't give a lot of credence to two and three month outlooks. I'm much more focused on the 10 days ahead, which appear to be a bit more accurate. And so we always remain paranoid about weather.

Speaker Change: I would say.

Speaker Change: Another outlook.

Speaker Change: Looks fairly good for Q3, but obviously early days and I will just say personally I don't give a lot of credence to two and three months outlooks are much more focused on the 10 days of Ed which appear to be a bit more accurate and so we always remain paranoid about the weather and just based on year to date weather has not been all that kind and so we will continue to execute on cost.

Speaker Change: Performance related initiatives, we've had some good success over the last several years and executing on cost management over the course of the year and we'll continue to do that through Q3 as I mentioned in the first quarter call. It's still premature to start thinking about pull ahead for 2025, I'd say historically, even in the best of years, where weather was really helps.

Rejji P. Hayes: And just based on year to date, weather has not been all that kind. And so we'll continue to execute on cost performance-related initiatives. We've had some good success over the last several years in executing on cost management over the course of the year, and we'll continue to do that through Q3. However, as I mentioned in the first quarter call, it's still premature to start thinking about pull aheads for 2025. I'd say historically, even in the best of years where weather was really helpful in the first couple of quarters, we still didn't think about flexing up or pull ahead or any of those types of de-risking mechanisms until we got deeper into Q3 and had a really good outlook for the fourth quarter. So hopefully, we have more to talk about from a 2025 de-risking perspective next quarter. But at this point, it's too premature to get into that.

Speaker Change: Paul.

Paul: In the first couple of quarters, we still didn't think about flexing up or pull ahead. There are any of those types of derisking mechanisms until we got deeper into Q3 and had a real good outlook on the fourth quarter. So hopefully more to talk about from a 2025 Derisking perspective next quarter, but at this point, it's too premature to get into that.

Garrick J. Rochow: And if I could just add to that, Jeremy, in part of my call here, in my prepared remarks, I talked about confidence. Confidence comes from the fact that we're executing on the CEA. We've done that historically. We typically have been at a runway of greater than $50 million on an annual basis.

Paul: I'd just add to that Jeremy part of the call here in my prepared remarks, I talked about the confidence confidence comes from the fact that we're executing on the CE way, we've done that historically.

Speaker Change: <unk> been on a run rate of greater than $50 million on annual basis, we see we see that continuing.

Garrick J. Rochow: We see that continuing. There are a number of things that we did in 2023 in terms of ready, shared, and prepared remarks, voluntary separation, and contract controls. Those continue to yield benefits in the year. And also, we're applying a lot of digital solutions, everything from work in the field to automated work all the way into the office, things like work management that continue to provide additional cost savings in the year. So again, confidence, as I shared in the call here earlier, and delivery guidance for the area. Got it.

Paul: There are a number of.

Paul: Things that we did in 2023 in terms of.

Ready: Ready shared in his prepared remarks voluntary separation contracts controls both continue to yield benefit in the year and also we are buying a lot of digital solutions everything from working in the field to automate work all the way into the office things like work management to continue to provide additional cost savings in the year. So again confident.

Paul: I shared on the call here earlier and delivery guidance for the year.

Speaker Change: Got it I appreciate that and then if I could just wrap with.

Jeremy Bryan Tonet: I appreciate that. And then, if I could just wrap up with thoughts on opportunities to service data centers going forward here and, I guess, the interplay with regard to legislation in Michigan, whether that comes to fruition and how that might impact the pace of such types of development. Jeremy, you know us well enough, the Hayes-Rochow team here.

Speaker Change: Thoughts on opportunity to service data centers going forward here and I guess, the interplay with regards to legislation in Michigan, whether that comes to fruition and how that might impact the pace of such type of development.

Speaker Change: Jeremy you know us well enough.

Jeremy Bryan Tonet: The haze Roche out team here, we're pretty we're pretty conservative in our approach to the financials.

Garrick J. Rochow: Well, we're pretty conservative in our approach to financials, and as I shared in the Q1 call, we want to make sure it's signed on the dotted line before we talk about it, so we don't inflate our sales forecast. I would just say that there's a lot of interest in both manufacturing and data centers in the state. As I shared in the Q1 call, we've seen a lot of manufacturing growth that will continue into Q2.

Paul: And as I shared in the Q1 call we wanted to make sure.

Paul: The sign on the dotted line you might say before we talk about it so we don't we won't.

Paul: In place our sales forecast.

Paul: I'd, just say that there's a lot of interest in both manufacturing and data centers in the state as I shared in the Q1 call. We've seen a lot of manufacturing growth that continues into Q2.

Paul: We saw data center can you talk about one that we signed in Q1 230 megawatts. There continues to be strong interest in the state both the hyper scaler and also we're seeing some growth in what I call mid scalar.

Garrick J. Rochow: We saw data centers, we talked about one that we signed in Q1, 230 megawatts. There continues to be strong interest in the state, both the hyperscalers, and also we're seeing some growth in what I call mid-scalers, data center perspective. Those continue to move forward, regardless of legislation in the state. And so the sales and use tax piece will continue to be part of the conversation in the legislature. But again, it's a bit of the cherry on top of Sunday, you might say.

Paul: Data Center perspective, those continue to move forward, regardless of legislation in the state and so the sales and use tax piece will continue in the conversation in the legislature.

Paul: But again, it's a bit of the.

Gerry: Gerry Gerry on top of Sunday, you might say.

Paul: Yes.

Speaker Change: Got it makes sense fair enough I'll leave it there thanks.

Operator: Got it. Makes sense. Fair enough. I'll leave it there. Thanks. Thank you, Jeremy. Our next question today is from the line of Shahriar Pourreza of Guggenheim Partners. Please go ahead.

Jeremy Bryan Tonet: Thank you Jeremy.

Paul: Okay.

Speaker Change: Our next question today is from the line of Sherri <unk> of Guggenheim Partners. Please go ahead. Your line is now open.

Sherri: Hey, guys good morning.

Shahriar Pourreza: Your line is: Hey guys, good morning.

Paul: Sure.

Paul: So.

Rejji P. Hayes: Morning, sure. So, good morning, Rej. So, I know you guys noted previously that the FCM mechanism could be incremental, sort of on the new generation, not in plan. As we're kind of getting closer to the November rep filing, any thoughts on where demand is headed and how maybe CMS would be positioned for upside there? So, any thoughts on incremental CapEx versus the PPA options? Have you started to embed any, you know, higher load growth in your assumptions? Thanks. Thank you, Shahriar. I was really hoping for a rate design question, but you're throwing curveballs.

Rich: Good morning Rich.

Speaker Change: So I know you guys noted previously that the FCA mechanism could be incremental sort of on the <unk> and the new generation not in plan as we're kind of getting closer to the November rep filing.

Speaker Change: Any thoughts on where demand is headed and how maybe CMS would position for upside there so any thoughts on incremental capex versus the PPA options.

Speaker Change: You started to embed any higher load growth assumptions. Thanks.

Speaker Change: Shar I was really hoping for a rate design question here.

Speaker Change: If there are comments.

Garrick J. Rochow: It's coming. It's coming. Hold tight. That's my follow-up. Let's talk about this. We definitely see as a part of this energy law additional additional upside that shows up in ownership of assets, it shows up in the financial compensation mechanism. Both those are true. Let me, let me talk about how they'll play out.

Speaker Change: Hang tight that's my follow up.

Speaker Change: Yeah.

Paul: Okay.

Speaker Change: Talk about let's talk about this.

Paul: We see we definitely see as a part of this energy law additional additional upside that shows up in ownership.

Paul: Asset that shows up in the financial compensation mechanism. Both of those are true. Let me, let me talk about how that will play out.

Garrick J. Rochow: So we're going to file this our renewable energy plan in November. It's a 10 month process. So we'll know in 2025, the latter half of the year, what that looks like. And so in our 2026 Capital Plan, you'll see what that means, our 2026 financials, both from an FCM perspective, as well as what the ownership mix might look like. That's where it'll play out.

Paul: We're going to file that our renewable energy plan in November.

Paul: 10 month process. So we will know in 2025 kind of latter half of the year, what that looks like and so in our 2026 capital plan Youll see what that means our 'twenty 'twenty six financials, both from an STM perspective, as well as what might the ownership mix look like and so.

Garrick J. Rochow: In addition to that, that's probably only part of the story, because in 2026, we'll also file our integrated resource plan, which will talk about some of the reliability pieces and some of the work to deliver the capacity component of that. So between 26, 27, 28, I think that's when you'll see the capital impact as well as the financial compensation mechanism play out in terms of our financials. I will say this, we've seen some good economic growth in the state, and that will show up in our renewable energy plan.

Paul: That's where it'll play out in addition to that there's probably a portion of the story because in 2026 will also file our integrated resource plan, which we'll talk about some of the reliability pieces and some of the work to deliver the capacity component of that so between 26 27, 28, I think thats when youll see the capital impact as well as the financial compensation.

Paul: <unk> mechanism play out in terms of our financials.

Speaker Change: I will say this we have seen some good economic growth in the state.

Paul: That will show up in our renewable energy plan.

Speaker Change: We're definitely seeing greater need.

Garrick J. Rochow: We're definitely seeing a greater need than was in our original 2021 IRP, so I'll leave it at that. And certainly, that will provide a helpful additional upside opportunity in terms of capital growth in addition to the energy law. And then just a quick follow-up, and obviously, I'll dedicate this to Garrick. Just on the great case filing on the electric side, obviously, it's in the early innings. It's kind of more of a 25 event.

Speaker Change: And within our original 2021 ERP.

Paul: So I'll leave it at that and certainly that will provide helpful. Additional upside opportunity in terms of capital growth. In addition to the energy law.

Speaker Change: Perfect and then just a quick follow up and I also dedicate this garik.

Speaker Change: On the rate case filing on the electric side. It's obviously, it's in the early innings, it's kind of a more of a 'twenty five event the provisions.

Shahriar Pourreza: And sort of the mechanisms like the IRM and DR remain unchanged. I guess, do you feel there would be some opportunity for settlement after testimony, given this is kind of a less complex case? I guess, how are you sort of thinking about settlement paths versus the prior litigated path? And is there anything, and I dedicate this to you, any of the rate design stuff in there that could cause some contention? Thanks. I set myself up for that one, didn't I?

Speaker Change: And sort of the mechanisms like the IRR and Dr remain unchanged I guess do you feel there would be sort of an opportunity for settlement. After testimony. Given this is kind of a less complex case I guess, how are you sort of thinking about settlement app versus the prior litigated.

Paul: And then is there anything in a dedicated to any of the rate design stuff in there that can cause some potential.

Paul: Yeah.

Speaker Change: I set myself up for that one did not.

Garrick J. Rochow: I will always look for settlement opportunities. I'm also very confident in our team. We put a great case together, and we can go the full distance, just as we did this year in our March order. And so when I think about this electric grade case, there are some things that have to be figured out to really get some context around the opportunity for settlement. One, I think it's really important to understand that electric cases are more complex than gas cases. So, for example, we have less than 10 intervenors in our gas case. We have a little over 20 in our electronics case.

Paul: Yes.

Speaker Change: As shared on the call I will always look for settlement opportunities and I'm also very confident in our team we put great case together and we can go to full business just as we did this year and our March order.

Speaker Change: So when I think about this electric rate case, theres, some things that have to be figured out.

Speaker Change: To really get some some context around the opportunity for settlement.

Paul: I think it's really important to understand that electric cases are more complex than gas cases. So for example, we had less than 10 intervenors in our gas case, we have a little over 20% in <unk>.

Garrick J. Rochow: That's not abnormal; it's just it's a more complex case; there are more interested parties, so we have to navigate through that. I also think it's important to find where staff is and where the attorney general is in this case.

Paul: <unk> electric case.

Paul: That's not abnormal it's just it's a more complex cases more interested parties. So weapon navigate through that I also think it's important to find where staff is and where the attorney general are at in this case that will come in September those are important.

Garrick J. Rochow: That will come in September. Those are important points to know in the context of the settlement opportunity. But understand this; I am very confident this case is focused on electric reliability. That's well aligned with what customers are asking, what the commissioners and the staff are asking for, and what I've committed to do. And so this case has great capital investment. Undergrounding has important work in hardening the system, and automated transfer reclosers technology on the system.

Paul: To know in the context of settlement opportunities.

Paul: But understand that I am very confident in this case is focused on electric reliability, that's well aligned with what customers are asking for what the commissioners and the staff are asking for and what I've committed to do and so this case has great capital investments under grounding.

Speaker Change: Important work.

Speaker Change: Hardening the system.

Speaker Change: Automated transfer re closers technology on the system. There is important work in O&M and Sri training or <unk>.

Garrick J. Rochow: There's important work in O&M in tree trimming, our number one cause of outage, and other important maintenance work across the system. We're going to leverage the infrastructure recovery mechanism, we'll certainly look for, and we're going to try another storm mechanism in this case as well. And so I feel confident in our ability to get a very constructive outcome, just given how well aligned we are across the Commission, staff, as well as our customers. So hopefully, that gives you some context on the case.

Speaker Change: Number one cause of outage and other important maintenance work across the system, we're going to leverage the infrastructure recovery mechanism.

Speaker Change: We will certainly look for.

Speaker Change: I know the store mechanism in this case as well and so feel confident in our ability to get the very constructive outcome, just given how well aligned we are across commit.

Speaker Change: Commission staff as.

Speaker Change: As well as our customers. So hopefully that gives you some context on the case now on rate design, Let me just talk a little about rate design.

Garrick J. Rochow: Now on rate design, let me just talk a little about rate design. Specifically, data centers are not at our economic development rate. We had an ex parte filing that made an adjustment to that, and that was approved.

Speaker Change: Specifically data centers are not in our economic development rate, we had ex parte filing that made an adjustment in that that was approved.

Garrick J. Rochow: And so, in the meantime, they are at an industrial rate; we call it our GDP rate. And what that does is it's a better balance of both capacity and energy costs, the cost to serve those customers. The commission, as well as the utility, have been looking into the opportunity-specific data center rate.

Speaker Change: And so in the meantime, they are industrial array, we thought our GT Jeep GDP rate and what that does is it better balanced both capacity and energy cost the cost to serve those customers The commission as well.

Speaker Change: The utility has been looking and exploring the opportunity specific data center right when the interest.

Garrick J. Rochow: But in the interest of time, GDP is a good proxy for that in our model. And so well suited from a rate design perspective from a data, Data Center perspective. I also said GDP. I think that's the wrong thing. I was hoping for something different there. Maybe that was a typo, but GDP is what I meant. Sorry about that, Shahriar.

Speaker Change: Time that GDP is a good proxy for that in our mind and so well suited from a rate design perspective from us.

Speaker Change: Data.

Speaker Change: Data Center perspective, I also I said GDP I think that's the wrong thing I was hoping for something different there.

Speaker Change: It was.

Speaker Change: But <unk> is what I meant GPT.

Speaker Change: Sorry about that.

Garrick J. Rochow: I had my eyes on the economics. You know, it's election time. I have my mind on other things, like what's going to happen with our economy.

Speaker Change: Then the economics.

Speaker Change: Alright.

Speaker Change: His election time.

Speaker Change: Things like what's going to happen.

Speaker Change: Got it.

Speaker Change: Yeah.

Garrick J. Rochow: There you go. I appreciate it, guys. I think you just set up the next caller to ask you an election question. I'll see you soon.

Speaker Change: There you go I appreciate it guys. Thank you just set up in the next call. It ask you, but I'll ask a question I'll see you soon thanks guys.

Speaker Change: Thank you.

Speaker Change: Our next question today is from the line of Michael Sullivan of Wolfe Research. Please go ahead. Your line is now open.

Shahriar Pourreza: Thank you, guys. Thank you. Our next question today is from the line of Michael Sullivan of Wolf Research. Please go ahead. Your line is now. Hey Michael.

Michael P. Sullivan: Hey, good morning.

Michael P. Sullivan: Hey, everyone. Good morning. Good morning. Good morning.

Michael P. Sullivan: Good morning, Eric.

Michael P. Sullivan: Good morning. Good morning, just wanted to go back to the data center legislation discussion.

Operator: Morning, morning. I just wanted to go back to the data center legislation discussion. I think on the last call, you talked about the 230 Megawatt Data Center coming in 2026. Was that contingent on the legislation, or your understanding is still moving forward, and are there any other examples of that, or is everyone else good? [inaudible] It was not contingent. That one's still moving forward. That's the sign piece.

Michael P. Sullivan: On the last call you talked about.

Speaker Change: 230 megawatt data center coming in 2026 was that contingent on the legislation or your understanding is still moving forward.

Speaker Change: Are there any other pools of matters everyone else COVID-19.

Speaker Change: Weighted.

Speaker Change: Inflation.

Speaker Change: It was not contingent that one still moving forward Thats design piece and that's I guess, that's my point.

Garrick J. Rochow: And that's I guess that's my point. What we hear from data centers is more important about how fast can you get transmission here? How much capacity can you build that conversion from transmission distribution to substation?

Speaker Change: What we hear from data centers, it's more important about how fast can you get transmission here, how mckesson you're building that conversion from transmission distribution substation, how fast can you get supply here and we're able to do that and so many of those mid scale or hyperscale or continue to make forward steps.

Speaker Change: The progress on the sales new stack and just to give you a little context at the end of the spring session.

Garrick J. Rochow: How fast can you get a supply here? And we're able to do so. And so many of those mid-scalers and hyper-scalers continue to make forward steps, regardless of the progress on the sales and use tax. And just to give you a little context, at the end of the spring session, the legislature was focused on the state budget. In the words of our governor, we've got to fix these damn roads. We've got to fund schools, right? And so those are important things, too. I don't want to get, I don't want, we want smart kids in the state.

Speaker Change: The legislature was focused on the state budget.

Speaker Change: In the words of our Governor we got to fix the Damn road.

Speaker Change: Got to fund schools right. So those are important things to I don't want to I don't want to.

Speaker Change: We want smart kids in the state. So those are important things underway that conversation on net data centers in the sales tax will continue into the fall now where an election, so it'll be difficult for me to predict how fast that will move or it could happen in the lame duck and so we'll continue that conversation in the state, but again it is not.

Garrick J. Rochow: So those are important things underway. That conversation on data centers and the sales tax will continue into the fall. Now we're in elections, so it'll be difficult for me to predict how fast that will move, or it could happen during the lame duck session. And so we'll continue that conversation in the state, but again, it is not. It's non-stop, and thanks for moving forward.

Speaker Change: It's not stop and things are moving forward Michael.

Speaker Change: Okay and is that like a good proxy for how long it takes new load to come onto your system about two years with that one being 2026.

Michael P. Sullivan: Okay, and is that like a good proxy for how long it takes new load to come on to your system, about two years with that one being 2026? There's a number of variables there, Mike. So in the case of that data center, what we talked about is they're bringing on load by 2025, 2026, and where they're located on the system makes a big difference. And so we're able to accommodate that. Depending on where a data center is located from a property perspective makes a difference.

Speaker Change: There's a number of variables there Mike.

Speaker Change: So in the case of that data center, what we talked about as they're bringing on load by 'twenty 'twenty five 'twenty six and where they are located on the system makes a big difference and so we're able to accommodate that dependent on where data center located.

Speaker Change: <unk> perspective makes a difference.

Garrick J. Rochow: Just in terms of how far do we have to extend the lines, you know, is this greenfield, is this brownfield? There's all kinds of variables that go into it, but we're in that two to three years cycle. And again, even if you're at the tail end of that cycle, data centers are moving quickly, and that doesn't seem to be holding them up. Okay, good. And then separately, just kind of sticking with legislation, I think there were some comments a few months ago from the PSC chair about Raid Case Timelines being a bit compressed these days.

Speaker Change: As far as how far do we have to extend line.

Speaker Change: It's greenfield as brown, but theres all kinds of variables that go into it but we're in that two to three years cycle.

Speaker Change: Again, even if you're at the tail end of that cycle data centers are moving quickly.

Speaker Change: I'm going to be holding them up too much.

Speaker Change: Okay, Great and then separately just kind of sticking with legislation I think there were some comments a few months ago from the PSC chair about right.

Speaker Change: The rate case timelines being a bit.

Garrick J. Rochow: Are you hearing any chance of legislation coming up that would, you know, revert back to 12 months for a cycle from 10 and just a general sense for Rate Fatigue in the state in light of those comments? The short answer is no.

Speaker Change: Compress these days.

Speaker Change: Are you hearing any chance of.

Speaker Change: Legislation coming up that would revert back to 12 months for a cycle from from Japan and just.

Speaker Change: General sense for.

Speaker Change: Rate fatigue in this state in light of those comments.

Speaker Change: The short answer is no.

Speaker Change: As you know.

Garrick J. Rochow: As you know, what makes Michigan great is that much of the regulatory environment is set in law. So 10 months for looking right cases is in the law, financial compensation mechanisms, and energy efficiency incentives are in the law. And we just went through that law, which was just open, and it was just signed here last November. And we're hearing nothing in terms of opening that law back up or looking at different provisions.

Speaker Change: What makes Michigan grade is.

Speaker Change: Much of the regulatory environment and set in law. So 10 months forward looking rate cases, and the law financial compensation mechanism energy efficiency incentives are in the law and we just went through that law, which is open and it was just signed here last November and we're hearing nothing in terms of opening outlaw back up or looking at different.

Speaker Change: Provision now.

Garrick J. Rochow: We continue to have a constructive dialogue with the commission and the staff. And so I do think there are opportunities, in terms of terms. And so I'll give you one example, just one example of probably many you could think about. We have a great process for an integrated resource plan and a renewable energy plan that lay out an energy supply portfolio. So we get it pre-approved, and then it flows into Ray-Caits. It really streamlines Ray-Caits.

Garrick J. Rochow: We continue to always have a constructive dialogue with the commission staff and so I do think there are opportunities right and the terms and so.

Speaker Change: I'll give you. One example, just one example, and probably many of you could you could think about.

Speaker Change: We have a great process for an integrated resource plan and renewable energy plan that lay out in energy supply portfolio. So we get a preapproved and then it flows into rate cases really streamed streamlined rate cases.

Garrick J. Rochow: What if we could do the same thing on the distribution system? Wouldn't that be great? Let's build a five-year reliability roadmap. Wait, we've already done that. Let's do that. Let's approve that, and then have that flow in for array cases. That could really streamline the process. And if done in the right way, you could potentially see a path where you could stay out for a period of time.

Speaker Change: What if we could do the same thing on the distribution system when that would be great. Let's build a five year reliability roadmap wait we've already done that let's do that.

Speaker Change: Let's approve that.

Speaker Change: And then have that flow into rate cases that can really streamline the process and have done in the right way you could potentially see a path where you could stay out for a period of time again done in the right way and so.

Garrick J. Rochow: Again, done in the right way. The kind of nature of Michigan's constructive regulatory environment, let's explore that. Let's see if there are opportunities there to even further bolster Michigan's constructive nature. Okay, that's really helpful, Collar. Thanks a lot.

Speaker Change: The kind of the nature of Michigan's constructive regulatory environment, let's explore that let's see if there's opportunities there to even further bolstered Michigan's.

Speaker Change: Constructive nature.

Speaker Change: Okay. That's really helpful color. Thanks, a lot.

Mike: Thank you Mike.

Mike: Our next question today is from the line of Andrew Weisel of Scotia Bank. Please go ahead. Your line is now open.

Michael P. Sullivan: Thank you, Michael. Our next question today is from the line of Andrew Weisel of Scotiabank. Good morning, Andrew. Hi, good morning. I have two quick ones.

Mike: Good morning, Andrew Hi, good morning.

Speaker Change: Yeah.

Andrew: Hi, Good morning, two quick ones first.

Speaker Change: DNI weather adjusted volumes were down in the quarter.

Andrew Marc Weisel: First, and foremost, weather-adjusted volumes were down in the quarter. It's a bit of a reversal from the first quarter. I know the first quarter was extremely mild weather, so those numbers are probably a little bit goofy, but any commentary on the underlying trends and the near-term outlook for the rest of this year? Maybe early thoughts on 2025? Sure, Andrew. This is Rejji.

Speaker Change: But a bit of a reversal from the first quarter I know the first quarter was extremely mild weather. So those numbers are probably a little bit goofy, but any commentary on the underlying trends in the near term outlook for the rest of this year, maybe early thoughts on 2025.

<unk>: Sure. Andrew This is <unk> I'll take and I. Appreciate the question is always yes, we did see a little bit of a pullback in Q2 versus Q2 of last year.

Rejji P. Hayes: I'll take and appreciate the question, as always. Yeah, we did see a little bit of a pullback in Q2 versus Q2 of last year for whether or not normalized sales for electric cars. I will always caveat, and I think you alluded to it, that this is a very imperfect science, and the team does a really good job trying to pull these numbers together with real accuracy. But again, it's very difficult to get real precision here.

Speaker Change: For weather normalized.

<unk>: <unk>.

Rejji P. Hayes: Sales for electric I'll always caveat and I think you alluded to it but its a very imperfect science and the team does a really.

<unk>: Good job trying to pull these numbers together with real accuracy, but again, it's very difficult to get real precision here just.

Rejji P. Hayes: Just so everybody's grounded, residential for the quarter versus Q2 of 2023 was slightly up about 0.1%, commercial down about a point, industrial down about two points, excluding one large low-margin customer, and then all-in blended was down about a point. And so that is, to your comment, unfavorable from the trends we were seeing in the first quarter. But I would say on a year-to-date basis, the trend remains quite good, and we continue to be surprised by the upside really across all customer classes because our assumptions were incredibly conservative, as they always are for the year.

Speaker Change: So everybody is grounded residential for the quarter versus Q2 of 2023, which is slightly up about 1% commercial down about a point industrial down about two points, excluding one large low margin customer and an all in <unk>.

Speaker Change: Blended was down about a point and so that is to your comment unfavorable from the trends we were seeing in the first quarter, but I would say on a year to date basis. The trend remains quite good and we continue to be surprised to the upside really across all customer classes, because our assumptions were incredibly conservative as they always.

Rejji P. Hayes: For the year and so we are outperforming across every customer class.

Rejji P. Hayes: And so we are outperforming across every customer class compared to our initial expectations that were embedded in our original guidance, and so we are still seeing non-weather sales upside. I'll also note, as I've said before, that we have energy waste reduction incorporated into all of those numbers that you're seeing, and so you should always add 2% to each of those customer classes because we're delivering the 2% reduction across every customer class year over year, and we've been doing that now really since the 2008 law or thereabouts. And so another way to think about those numbers I just quoted is that you should add or gross up 2% across each of those if you want to get the underlying economic conditions.

Speaker Change: What our initial expectations were that were embedded in our original original guidance and so we are still seeing non weather sales upside.

Speaker Change: I'll also note as I've said before that.

Rejji P. Hayes: We had energy waste reduction incorporated into all of those numbers that you are seeing and so you should always add 2% to each of those customer classes, because we are delivering.

Speaker Change: The 2% reduction across every customer class year over year, and we've been doing that now really since the OE or thereabouts and so.

Rejji P. Hayes: Another way to think about those numbers I just quoted that you should add or gross up 2% across across each of those if you want to get the underlying economic conditions. So we still remain quite good and then we see.

Rejji P. Hayes: So we still remain quite good, and then we still remain quite pleased, rather, with the results. And then when you think about it on a year-to-date basis, resi is up about a point, commercial is up over 1%, industrial is down about a point, and all-in is up about a little over half a percent. So again, all things considered, particularly when you gross up for energy waste reduction, we think conditions in Michigan remain quite good, really across all customer classes. Was that helpful? Yes, a good reminder on efficiency. And yes, we all know that you're conservative.

Rejji P. Hayes: He'll remain quite pleased rather with the results and then when you think about on a year to date basis, whereas he is up about a point commercial is up over 1% industrial down about a point and all in is up about a little over half a percent. So again, all things considered particularly when you gross up for energy waste reduction, we think conditions in Michigan remain.

Speaker Change: Quite good really across all customer classes was that helpful.

Speaker Change: Yes.

Speaker Change: Yes. Good reminder, on the efficiency and yes, we all know that you are conservative.

Andrew Marc Weisel: Next, an operational question: you noted there was some heavy storm activity in the quarter. What kind of score or grade would you give yourself in terms of restoration efforts? Reliability is obviously a big focus for you. You talked about that in your comments. What would you say went well? What could have gone better?

Andrew Marc Weisel: Next an operational question you noted there was some heavy storm activity in the quarter, what kind of score a grade would you give yourself in terms of restoration efforts reliability is obviously a big focus for you you talked about that in your comments what would you say went well what could have gone better and how does it folds into your efforts as part of the.

Garrick J. Rochow: And how does this fold into your efforts as part of the electric rate case and the audit? So we're seeing a number of great improvements as a result of the investments we have made to date. And so, in fairness, I'd give ourselves a B in the context that there's more to be done for our customers. And that's evident in the rate case filing that we're doing.

Garrick J. Rochow: The electric rate case in the audit.

Garrick J. Rochow: So we're seeing a number of great improvements as a result of the investments we have made to date more needs to be done.

Rejji P. Hayes: Along those lines and so in fairness I would give us.

Garrick J. Rochow: <unk>.

Garrick J. Rochow: And then kind of tech and there is more needs to be done for our customers and that's evident in the rate case filing.

Garrick J. Rochow: We're doing where we've worked a lot. This year is reducing the size of the outage and so we've put in a lot of fusing. So what I mean by that is you have less customers impacted when the tree comes on the line. That's an important work we've more than doubled our tree trimming work over the last three years. That's also provide a benefit when we trimmed treating.

Garrick J. Rochow: Where we've worked a lot this year is reducing the size of the outage. And so we put in a lot of fusing. So what I mean by that is you have fewer customers impacted when the tree comes on the line. That's an important job. We've more than doubled our tree trimming work over the last three years.

Garrick J. Rochow: That's also provided a benefit. When we trim trees in there, we see a greater than 60 percent reduction in the number of outages. You may ask, why not 100 percent? Because we still see trees outside the right of way that impacts our performance.

Garrick J. Rochow: There, we see a greater than 60% reduction in a number of.

Garrick J. Rochow: Outages.

Speaker Change: You may ask why not 100%, because we still see trees outside the right away.

Garrick J. Rochow: Impacts our performance.

Garrick J. Rochow: But I would also put it in context. Rejji talked about the last week of June, and there was a larger event in June, but there were a lot of smaller events, which we would anticipate. We're trying to shrink the size, which makes restoration easier, but there are a lot of pockets throughout the state. We brought in a number of resources. We leveraged a lot of our existing union resources to be able to respond to that, and we had a good response from that perspective. We measure in terms of storing our customers within a 24-hour window. We want to have all customers restored within a 24-hour window.

Garrick J. Rochow: But I would also put into context right. We talked about the last week of June and there was a larger event in June but there was a lot of more smaller events, which we would anticipate we're trying to shrink the size, which makes restoration easier, but a lot of pockets throughout the state.

Garrick J. Rochow: We brought in a number of resources, we leveraged a lot of our existing.

Garrick J. Rochow: Union resource to be able to respond to that and we had good response from that perspective, we measure in terms of.

Garrick J. Rochow: We're storing.

Garrick J. Rochow: Our customers within a 24 hour window.

Garrick J. Rochow: Have all customers restored within a 24 hour window.

Garrick J. Rochow: And last year, in 2023, we were at 90% within a 24-hour window. This year, we're upwards of 95%. And so that shows the directional improvement. Now, the year's not done. We've got a lot of work to do, and we'll continue to make some important investments throughout this year. And again, this electric rate case shows a path for more. So hopefully, that gives that some context.

Garrick J. Rochow: And last year in 2023 were at 90% within a 24 hour window. This year, we're upwards of 95%. So that shows the directional improvement now the year is not done we've got a lot of work to do.

Speaker Change: And we will continue to make some important investments throughout this year and again this electric rate case shows a path for more so hopefully give that some context I know regiments to add to it as well Andrew all I would add to <unk>.

Rejji P. Hayes: Now, I know Rejji wants to add to it as well. Andrew, all I would add to Garrick's good comments on the operational side is really applying a financial lens. And I would give us about a B plus, an A minus on the financial side because through utilization of the CE way, we've done a really good job reducing unit costs in our actual service restoration, and we're seeing at this point over $40 million of avoided costs. Now, needless to say, I talked about negative variance attributable to overall service restoration costs versus last year. However, the cost would have been decidedly higher, as in the problem solving we've done throughout the year.

Rejji P. Hayes: Good comments on the operational side is really applying a financial lens and I would give us about a b plus a minus the financial side because through utilization of the CE way, we have done a really good job reducing unit cost in our actual service restoration and we're seeing at this point over $40 million of avoided costs now needless to say I talked about negative variance attributable to overall.

Rejji P. Hayes: All service restoration costs versus last year. However, the cost would have been decidedly higher absent the problem solving we've done throughout the year and so we're contracting third parties more efficiently, we're using more automation to reduce manual inspections and definitely leveraging the tools of the CE way to really execute on storm restoration.

Speaker Change: Much more efficiently than we have in the past and so in addition to all the operational.

Rejji P. Hayes: And so we're contracting third parties more efficiently. We're using more automation to reduce manual inspections, and definitely leveraging the tools of the CE way to really execute on storm restoration much more efficiently than we have in the past. And so, in addition to all the operational feats that Garrick highlighted, we're also applying a really thoughtful financial lens as well to make sure that we're bringing customers back online as quickly as possible and as quickly as possible and as cost-efficiently as possible. So I'd be remiss if I didn't add that as well. It sounds better than in years past. Thank you very much.

Rejji: Garik highlighted we're also applying a really thoughtful financial lens as well to make sure that we're bringing customers back online as quickly as possibly and as as quickly as possible and as cost efficiently as possible. So I'd be remiss, if I didn't add that as well.

Speaker Change: Certainly sounds better than years past. Thank you very much I appreciate the details.

Andrew: Thank you Andrew.

Speaker Change: Our next question today is from the line of Julien Dumoulin Smith of Jefferies. Please go ahead. Your line is open.

Andrew Marc Weisel: I appreciate the details. Thank you, Andrew. Our next question today is from the line of Julien Dumoulin-Smith of Jefferies. Please go ahead. Your line is: Hey, good morning team.

Andrew Marc Weisel: Okay.

Julien Patrick Dumoulin: Thank you guys very much. I appreciate it. Good to chat with you guys again. Yeah, good to hear from you again. Likewise, Garrick, what do you put in your hat? Uh, when are you putting yourself in the ring here for VP, given all the political conversation here, right? Now you want to fix the damn roads.

Julien Patrick Dumoulin: Hey, good morning team. Thank you guys very much appreciate it good to chat with you guys again.

Garrick: Yes, good to hear from you again.

Speaker Change: Yeah, Likewise, Gary what do you put in your house.

Garrick: What are you putting yourself in the ringer for VP, given all the political conversation here.

Speaker Change: Now you want to fix them road.

Garrick J. Rochow: And here's Rochow's ticket. I don't know. I don't know if it has a ring to it, but I'll give it a try. I'll give it a try.

Speaker Change: Obviously our ticket.

Speaker Change: I don't know if it has a rig.

Speaker Change: Thats right.

Garrick J. Rochow: I love it. Anyway, look, you guys are clearly, you've got your front foot forward here for sure. Look, you favorably have pulled back on O&M savings here. You're talking about leaning in, being in a good position against near-term and longer-term targets. You issued more debt. I think it was $675 versus $500 to rebalance your equity ratio.

Garrick J. Rochow: Robert.

Garrick J. Rochow: Anyway.

Garrick J. Rochow: You guys are clearly you get your foot forward here for sure look favorably have pulled back on the O&M savings here, you're talking about leaning in.

Speaker Change: In a good position against near term and longer term targets.

Speaker Change: <unk> issued more debt I think there was 375 years of the 500 to rebalance your equity ratio.

Julien Patrick Dumoulin: What's driving this level of outperformance? I just want to try to clarify the debt signaling as well as just overall the commentary, especially considering the O&M factor that you flag here. Typically, you lead with cost, but I'm wondering what other factors there are. Yeah, Julien. It's Rejji.

Speaker Change: Whats driving this level of outperformance, but I just want I'm, just going to try to clarify like the debt signaling as well as just overall the commentary, especially considering the O&M factor that you flag. It typically you'll leave with costs, but I'm wondering what other factors there.

Julien Patrick Dumoulin: Yeah, Julian it's Reggie I appreciate the question and welcome back I really good to hear your voice let.

Rejji P. Hayes: Appreciate the question and welcome back. Really good to hear your voice. Let me start with a few of the reasonable premises or working assumptions you offered up in the question.

Rejji P. Hayes: So let me start with a few of the just premises are working assumptions you offered up in the question and so just let me start with the debt at the utility just for factual purposes, and so we are planning to issue about $675 million in the second half of the year at the utility as part of our financing plan. It was initially half half of $1 billion.

Rejji P. Hayes: And so just let me start with the debt at the utility, just for factual purposes. And so we are planning to issue about $675 million in the second half of the year at the utility as part of our financing plan. It was initially half a billion, and so we've slightly increased it. And that's really just because of our rate case outcomes, which had modestly lower equity levels. And so we'll have more debt at the operating company.

Rejji P. Hayes: And so we have slightly increased and thats really just because of our rate case outcomes, which had modestly lower equity levels and so we will have more debt.

Rejji P. Hayes: At the operating company and so I just wanted to make sure that that was abundantly clear and obviously, we will look to execute on that financing as cost efficiently as possible and there'll be thoughtful about the maturity profile is well the outperformance.

Rejji P. Hayes: And so I just want to make sure that that was abundantly clear. And obviously, we'll look to execute on that financing as cost efficiently as possible. And we'll be thoughtful about the maturity profile as well. The outperformance has been, obviously, we always try to deliver on the cost performance side.

Rejji P. Hayes: It's been obviously, we always try to deliver on the cost performance side, but as I mentioned in my prepared remarks rate relief net of investments has been helpful. In getting constructive orders the electric rate order in early March the gas rate case last year, we're still seeing the residual benefits from that and so that's really what's helped us in the first half of the year and also.

Rejji P. Hayes: But, as I mentioned in my prepared remarks, rate relief net of investments has been helpful in getting constructive orders. The electric rate order in early March, the gas rate case last year, we're still seeing the residual benefits from that. And so that's really what's helped us in the first half of the year. And also, though it's embedded in that catch-all bucket, as I noted in my prepared remarks, Northstar has really outperformed.

Rejji P. Hayes: Though it's embedded in that catch all bucket as I noted my prepared remarks, Northstar has really outperformed they had a really soft comp in the first half of 2023, just given last year's plan was a bit more back end loaded and there were also some outage related issues at big given a transform ratios. So this year they have really gotten out of the gates pretty strong data.

Rejji P. Hayes: They had a really soft comp in the first half of 2023, just given last year's plan was a bit more back and loaded. And there were also some outage-related issues at DIG, given a transformer issue.

Rejji P. Hayes: And so this year, they've really gotten out of the gate pretty strong. DIG is up about five cents year over year. And we're seeing the residual benefits from some solo projects that came in late last year. And so I'd say it's a combination of rate relief, net of investments, outperformance at Northstar, as well as some cost performance, as you alluded to, offset by mild weather conditions, which have hurt the top line, as well as storms, as we talked about in the prior question.

Rejji P. Hayes: Five.

Rejji P. Hayes: Year over year and were seeing the residual benefits from some solar projects that came in late last year and so I'd say, it's a combination of rate relief net of investments outperformance at North star as well as some cost performance as you alluded to offset by mild weather conditions, which have hurt the top line as well as the storms as we talked about on the prior question.

Rejji P. Hayes: So I'd say it's a combination of all that, which gives us just good confidence going into the second half of the year. Excellent. And, Rejji, just to follow up on that real quick, you know, a lot of that dynamic with North Star, some of it is true up there. You talk about outages year over year.

Rejji P. Hayes: So I'd say, it's a combination of all of that which gives us good confidence going into the second half of the year.

Rejji P. Hayes: Excellent and Rajeev just to follow up on that real quick.

Speaker Change: A lot of that dynamic with Northstar some of it is true up there you talk about outages year over year you should in theory, some of that should have been expected to solar and service.

Julien Patrick Dumoulin: In theory, some of that should have been expected, the solar in service. I mean, I'm curious about the outperformance here. Is this more of a true story or is there sort of a compounding effect across the subsequent years? How do you think about the leading indicators there? Yeah, good question.

Julien Patrick Dumoulin: I'm curious the outperformance here I mean is this.

Julien Patrick Dumoulin: It's more of a true or is there sort of a compounding effect across the across the subsequent years. How do you think about started a leading indicator.

Rejji P. Hayes: Northstar is on plan. We anticipated a front-end loaded year for all of the reasons you noted. So a good portion of Northstar's performance was on plan, but I will say big did surprise a little bit to the upside in the first quarter because operationally, not only are they executing very well, but they're also executing on a lower unit cost basis, which drives a little bit of additional margin. They are also opportunities for off-peak margin that the team has capitalized on.

Speaker Change: Yes. Good question Northstar unplanned, we anticipated a front end loaded year for all the reasons you noted so a good portion of North Star's performance was on plan, but I will say big did surprise a little bit to the upside in the first quarter because operationally not only are they executing very well, but there are also executing on a lower unit cost basis, which drives a little bit of additional mark.

Rejji P. Hayes: And they also are opportunities for off peak margin that the team has capitalized on so I'd say, it's a combination of being on plan. Because we are the front end loaded plant at North Star, but also saw operational efficiency, which we've seen so that's really the thrust of it at Northstar.

Rejji P. Hayes: So I'd say it's a combination of being on plan because it was a front-end loaded plan at Northstar, but we also saw operational efficiency, which we've seen. So that's really the thrust of it at Northstar. All right, guys. Chat soon. All right. Good luck, Garrick. Thank you. Our next question today is from the line of Durgesh Chopra of Evercore. Please go ahead. Your line is now open. Good morning, Durgesh.

Speaker Change: Alright, guys chat soon alright, thank you.

Rejji P. Hayes: Thanks.

Durgesh: Thank you.

Speaker Change: Our next question today is from the line of Douglas chunk of Evercore. Please go ahead. Your line is now open.

Durgesh: Good morning.

Durgesh Chopra: Hey, good morning, Garrick. Thanks for taking my question. All my other questions have been answered. I just wanted to see if there's an update on the performance-based rate making docket here coming out of the legislation last year. Where do we stand there? Can you just update us on that, please? Sure, that's been a very constructive dialogue. As I've shared in the past, it started really wide in the number of metrics. And then, through good dialogue, it was narrowed down to the next four benchmarkable metrics. It's grown a little bit to accommodate some storm provisions.

Durgesh Chopra: Good morning, Gary Thanks for taking my question.

Durgesh Chopra: Just.

Durgesh Chopra: All my other questions have been answered I just wanted to see if theres an update on the performance based ratemaking.

Garrick J. Rochow: However, there's still constructive dialogue underway here in July and August, and there are filings to be able to navigate that. There are a few things we still wanna work through and get, dot the I's and cross the T's on, you might say. And then I expect that this is gonna play out over several rate cases. And so it's not gonna be implemented here immediately. I think it just speaks to the constructive dialogue we have here in Michigan. Good intervenors and filings that go back and forth to really make sure it's going to be a productive rate-making mechanism.

Dr <unk>: Dr <unk>.

Speaker Change: Coming out of the legislation last year, where do we stand there can you just update us on that please.

Speaker Change: Sure that's been a very constructive dialogue as I've shared in the past passed it started really wide and the number of metrics and then through good dialogue it was narrowed down to <unk>.

Speaker Change: For benchmark level.

Speaker Change: Metrics it.

Garrick J. Rochow: It has grown a little bit to accommodate some storm provisions. However, there is still a constructive dialogue underway here in July and August theres filings to be able to navigate that theres a few things we still want to work through.

Garrick J. Rochow: Dot the I's and cross T's on you might say.

Garrick J. Rochow: And then I expect that this is going to play out of out over.

Garrick J. Rochow: Over several rate cases, and so I'm not going to be implemented here immediately.

Garrick J. Rochow: But I think it just speaks to the constructive dialogue, we have in Michigan here a lot of.

Garrick J. Rochow: Good intervenors.

Garrick J. Rochow: Filings that go back and forth to really make sure it's going to be a productive.

Garrick J. Rochow: Productive already big Ratemaking mechanism.

Speaker Change: Got it so just kind of the.

Durgesh Chopra: Got it. So just kind of the framework of this would be a potential earnings uplift, and then on the downside, a potential penalty on certain metrics. And then when did you say this could go into effect? This is a 25 item, 26, just any thoughts there?

Durgesh Chopra: The framework of this would be a potential earnings uplift and then on the downside of potential penalty on on certain metrics.

Speaker Change: And then when did you say this could go into effect. This is the 25 item 26, just any thoughts there.

Speaker Change: I would put a several rate cases away so over maybe.

Garrick J. Rochow: I would put it several rate cases away, so maybe a year or two years out from an implementation perspective. Again, that's my view, just what I see in the world. The intent is for it to be symmetric, and so there's upside opportunity and downside opportunity. The downside opportunity is marked at about $10 million at this context, which is manageable in the context of the year. That means the upside opportunity is roughly that same amount, or at least as it's proposed currently. Thanks so much.

Garrick J. Rochow: A year or two years out from an implementation perspective.

Garrick J. Rochow: Again Thats my view, just on what I see of the world.

Garrick J. Rochow: The intent is it for it to be symmetric and so there is upside opportunity is downside and downside opportunity.

Garrick J. Rochow: The downside opportunity as market about $10 million at this context, which is manageable in the context of the year that means the upside opportunity is roughly that same amount.

Garrick J. Rochow: And at least at this proposal.

Garrick J. Rochow: Okay.

Garrick J. Rochow: Thanks, so much I appreciate the time.

Durgesh Chopra: I appreciate your time. As a reminder, if you would like to ask a question, please dial star followed by one on your telephone keypad. And our next question is from the line of Travis Miller of Morningstar. Please go ahead. Your line is now. Thank you. Good morning, everyone. Good morning. Hi Travis.

Garrick J. Rochow: Yes.

Speaker Change: As a reminder, if you would like to ask a question. Please dial staff, but about one on the telephone keypad and our next question is from the line of <unk> of Morningstar. Please go ahead. Your line is now.

Travis Miller: A very high level of electric demand. I wonder if you could elaborate on how it's trending versus your 2021 IRP and how, as you had mentioned earlier in the call, how that could affect, potentially, the Renewable Energy Plan filing. Here, is it trending higher or lower? And how does that impact the REP?

Speaker Change: Okay. Thank you and good morning, everyone.

Garrick J. Rochow: Yeah, it's definitely trending higher based on all the economic development activity that is, Again, not speculating on that, that is signed, and we're out building transmission, not building transmission, substations, and there's transmission being built to serve these customers. And so in our renewable energy plan filing, you should anticipate that there's additional sales referenced there above and beyond our 2021 IRP. And is it fair to make the leap then that we would need more renewable energy on that same percentage basis as what's in the law?

Garrick J. Rochow: Let's prepare. Yes. Generally speaking, yes.

Travis Miller: Good morning Travis.

Garrick J. Rochow: Okay.

Speaker Change: High level on electric demand I Wonder if you could.

Speaker Change: Elaborate on how it's trending versus your 2021, ERP and how as you had mentioned earlier in the call how that would affect potentially the renewable energy plan filings.

Speaker Change: Or is it trending higher or lower.

Speaker Change: How does that impact the RVP, yes.

Garrick J. Rochow: It's definitely trending higher based on all the economic development activity that is.

Garrick J. Rochow: Again, not speculative speculating on that that is signed or in and around building transmission nobility transmission substation.

Garrick J. Rochow: Theres transmission being built to serve these.

Garrick J. Rochow: These customers.

Garrick J. Rochow: And Ari and our renewable energy plan filing you should anticipate that there is additional.

Garrick J. Rochow: Sales referenced there above and beyond our 2021 ERP.

Garrick J. Rochow: Yes.

Speaker Change: Is it fair to make the leap then that you would need more renewable energy on that same percentage basis is what's in the law.

Garrick J. Rochow: But.

Garrick J. Rochow: Yes, generally speaking yes.

Garrick J. Rochow: Hey.

Travis Miller: Okay. Okay, and then also, I've seen a lot of talk in the media about Palisades. From your perspective, is it accurate that you're seeing development moving forward on that plant? And then, if so, would you be interested in it?

Garrick J. Rochow: Okay and then also.

Travis Miller: I'll talk about in the media about Palisades from your perspective is it accurate that you are seeing development moving forward on.

Travis Miller: That plant and then if so would you be interested in.

Garrick J. Rochow: Either implementing that in terms of the capacity and energy and or signing a PPA. Palisades is making forward progress in the state. From a state budget perspective, another $150 million was allocated toward the forward direction of the facility.

Speaker Change: They are implementing that in your plan in terms of the capacity and energy <unk> signing a PPA.

Garrick J. Rochow: Palisade is palisades is making forward progress in the state.

Garrick J. Rochow: From a state budget perspective, another $150 million was allocated toward.

Speaker Change: Forward direction of the facility there havent public meetings that are going on right now on site. So again forward forward steps.

Garrick J. Rochow: We're having public meetings that are going on right now on site. So, again, forward steps in moving forward that plan. Now, I'll remind you that a PPA has already been struck for the offtake from the Palisades facility. That goes to a co-op in Michigan and a co-op in Indiana, so it's already spoken. Now we have, it's good for Michigan that Palatate is returning, and we at CMS Energy do not see any adverse impact as a result of Palatate coming back. Okay, great. Thanks a lot.

Garrick J. Rochow: And moving forward that that plant now.

Garrick J. Rochow: I'll remind you that a PPA is already been struck.

Garrick J. Rochow: For the offtake from the palisade facility that goes to a co op in Michigan and a co op in Indiana. So it's already spoken for now it's good for Michigan.

Garrick J. Rochow: Palo cases is returning and we at CMS energy do not see any adverse impact as a result of palisades coming back.

Speaker Change: Okay, great. Thanks, a lot that's all I have.

Speaker Change: Thank you.

Speaker Change: Our next question today is from the line of Nick Campanella of Barclays. Please go ahead. Your line is open.

Travis Miller: That's all I have. Thank you. Our next question today is from the line of Nick Campanella of Barclays. Please go ahead. Your line is: Hey, thanks and hope everyone's having a great summer. Just one for me today.

Nicholas Joseph Campanella: Hey, Thanks, and hope everyone is having a great summer.

Nicholas Joseph Campanella: Just one for me today.

Nicholas Joseph Campanella: So I know, Rejji, you said you would be opportunistic and you'd prepare the marks around financing and, you know, potentially pulling things forward from 2025. I'm just cognizant that you do have kind of when you start to issue equity in 2025, and maybe you can just kind of give us some more color, and you're just kind of talking about pulling forward hybrid or debt or everything on the table. How would you think about that?

Speaker Change: No Rajeev you said you would be opportunistic in your prepared remarks around financing.

Rejji: Potentially pulling things forward from 25.

Speaker Change: I'm just cognizant that you do have kind of start to issue equity in 2025, and maybe you can just kind of give us some more color.

Rejji: Just kind of talking about pulling forward hybrid or dead or is everything on the table.

Rejji: Thank you.

Nicholas Campanella: Yeah, appreciate the question, Nick.

Speaker Change: Yes, I appreciate the question Nick.

Rejji P. Hayes: Thank you. Yeah, I appreciate the question, Nick. I would say, in short, I wouldn't say everything is on the table. So you won't see us issuing equity in 2024. What we have done in the past, though, is we have executed on forwards opportunistically to at least take some of the price risk off the table. And, you know, I would say where the equity is today, I don't think that seems like the most likely trade. But I was speaking more about parent debt financing needs.

Nicholas Campanella: I would say, in short, I wouldn't say everything is on the table, so you won't see us issuing equity in 2024. We have done in the past, though, as we have executed on boards, opportunistically, to at least take some of the price for a scoffer table. You know, I would say where the equity is today, I don't think that seems like the most likely trade, but I was speaking more towards parents on debt financing needs. And certainly, our thinking is quite expansive; everything from senior notes, the hybrids, and those types of security is all of which we've done pretty opportunistically in the past, as you may recall.

Rejji P. Hayes: I would say.

Rejji P. Hayes: In short I wouldn't say everything is on the table. So you won't see us issuing equity.

Rejji P. Hayes: In 2020 for what we have done in the past, though as we have executed on forwards opportunistically to at least take some of the price risk off the table.

Rejji P. Hayes: I would say where the equity is today I don't think that it seems like the most the most likely trade.

Rejji P. Hayes: Speaking more towards parent debt financing needs and certainly our thinking is quite expansive everything from senior notes to hybrids and those types of securities all of which we've done pretty opportunistically in the past as you may recall, we've got about $250 million.

Nicholas Joseph Campanella: And certainly, our thinking is quite expansive, everything from senior notes to hybrids and those types of securities, all of which we've done pretty opportunistically in the past. As you may recall, we've got about $250 million coming due at the holdco next year. And so we're mindful that we have, I'd say, modest new money needs on top of that. And so we will see if there's good pricing in the market, particularly if the speculation around potential dovish policy, dovish monetary policy from the Fed, comes to fruition, but I've stopped wagering on that.

Nicholas Campanella: I've got about $250 million coming due at the holding code at the whole code next year, and so we're mindful that we have, that's a modest new money needs on top of that. And so we will see if there's good pricing in the market, particularly if the speculation around potential dovish policy, dovish monetary policy from the Fed comes to fruition, but I've stopped wagering on that. So we'll see what happens, but if we start to see a correction in the yield curve that's favorable and it creates opportunities for whole code.

Nicholas Joseph Campanella: <unk> do at the holding co at the Holdco next year and so we're mindful that we have that's a modest new money needs on top of that.

Nicholas Joseph Campanella: And so we will see if there is good pricing in the market, particularly if the speculation around potential dovish policy dovish monetary policy from the fed comes to fruition, but I've stopped wagering on that.

Nicholas Joseph Campanella: So we'll see what happens. But if we start to see a correction in the yield curve that's favorable, and it creates opportunities for holdco debt financing, we'll look to do that. And again, I'd say the equity needs are still up to $350 million starting next year.

Rejji P. Hayes: And I don't see us pulling any of that. All right, that's super helpful. I really, I really appreciate it. And I'm looking forward to seeing you at the conference in September. Thanks. See you then. With no further questions in the queue at this time, I would like to hand the call back to Mr. Garrick Rochow for any closing remarks. Thanks, Gary. I'd like to thank everyone for joining us today. I look forward to seeing you on the road soon. Take care and stay safe. This concludes today's conference. We thank everyone for your participation.

Speaker Change: So we will see what happens, but if we start to see a correction in the yield curve that is favorable and it creates opportunities for holdco.

Speaker Change: Debt financings, we will look to do that and again I would say the equity needs still as is.

Nicholas Campanella: Dets and Ancings will look to do that, and again, I'd say the equity needs still has is up to 350 million starting next year; that obviously is pulling any of that forward.

Speaker Change: 350 million, starting next year and I don't see its pulling any of that forward.

Eric: All right, that's super helpful.

Rejji P. Hayes: Alright, that's super helpful. I really I really appreciate it and I'm looking forward to seeing at the conference in September.

Eric: I really appreciate it, and I'm looking forward to seeing the conference at the time.

Eric: Thanks. See you there.

Rejji P. Hayes: Dana.

Rejji P. Hayes: With no further questions in the queue at this time I would like to hand, the call back to Mr. Kevin Russia for any closing remarks.

Garrett Rochelle: With no further questions in the queue at this time, I would like to hand the call back to Mr. Garrett Rochelle for any closing remarks. Thank you, Eric. I'd like to thank everyone for joining us today. I look forward to seeing you on the road, too. Take care. Stay safe.

Eric: Thanks, Eric.

Speaker Change: I'd like to thank everyone for joining us today and look forward to seeing you on the road soon take care and stay safe.

Garrett Rochelle: This concludes today's conference. We thank everyone for your participation.

Rejji P. Hayes: This concludes today's conference we thank everyone for your participation.

Rejji P. Hayes: [music].

Rejji P. Hayes: Yes.

Rejji P. Hayes: Yeah.