Q2 2024 NiSource Inc Earnings Call

Thank you for standing by. My name is John and I will be your conference operator for today. At this time, I would like to welcome everyone to this second quarter NiSource Earnings Conference Call 2024.

Unknown Executive: At this time, I would like to welcome everyone to the second quarter, NiSource Ernie's conference call 2024. All lives of in place and view to prevent any background noise.

Unknown Executive: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.

Speaker Change: All lines have been placed in mute to prevent any background noise.

Speaker Change: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Mr. Chris Turnure, Director of Investor Relations. Please go ahead.

Christopher Turnure: I would like to learn to call over, Commissioner Chris Turnure, Director of Investor Relations. Please go ahead. Good morning and welcome to the NiSource Second Quarter, 2024 Investor Call. Joining me today are President and Chief Executive Officer, Lloyd Yates; Executive Vice President and Chief Financial Officer, Shawn Anderson; Executive Vice President of Strategy and Risk and Chief Commercial Officer, Michael Luhrs; and Executive Vice President and Group President, NiSource Utilities, Melody Birmingham.

Chris Turnure: Good morning and welcome to the NiSource second quarter 2024 investor call.

Speaker Change: Joining me today are President and Chief Executive Officer Lloyd Yates, Executive Vice President and Chief Financial Officer Shawn Anderson, Executive Vice President of Strategy and Risk and Chief Commercial Officer Michael Luhrs, and Executive Vice President and Group President NiSource Utilities, Melody Birmingham.

Christopher Turnure: The purpose of this presentation is to review NiSource's financial performance for the second quarter of 2024, as well as provide an update on our operations and growth drivers. Following our prepared remarks, we'll open the call to your questions. Slides for today's call are available in the Investor Relations section of our website.

Speaker Change: The purpose of this presentation is to review NiSource's financial performance for the second quarter of 2024, as well as provide an update on our operations and growth drivers.

Speaker Change: Following our prepared remarks, we'll open the call to your questions.

Speaker Change: Slides for today's call are available in the Investor Relations section of our website.

Christopher Turnure: We would like to remind you that some of the statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the risk factors and MD&A sections of our periodic SEC filings.

Speaker Change: We would like to remind you that some of the statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements.

Speaker Change: Information concerning such risks and uncertainties is included in the risk factors and MD&A sections of our periodic SEC filings.

Christopher Turnure: Additionally, some of the statements made on this call relate to non-GAAP measures. Please refer to the supplemental slides, segment information, and full financial schedules for information on the most directly comparable GAAP measure and a reconciliation of these measures.

Unknown Executive: Please refer to the supplemental slides, segment information, and full financial schedules for information on the most directly comparable gap measure and a reconciliation of these measures. I'd now like to turn the call over to Lloyd.

Speaker Change: Additionally, some of the statements made on this call relate to non-GAAP measures. Please refer to the supplemental slides, segment information, and full financial schedules for information on the most directly comparable GAAP measure and a reconciliation of these measures.

Michael Luhrs: I now look to turn the call over to Luhrs.

Michael Luhrs: Thank you, Chris, and good morning, everyone. I'll begin on slide three. The NiSource investment thesis is simple. We serve our customers by delivering safe and reliable energy at an affordable price. Affordable energy requires efficient capital deployment, safe asset operations, and constructive regulatory recovery mechanisms. These fundamentals generate competitive returns while enhancing our balance sheet position. A trailing 12-month-earned ROE at the NiSource level was 10.3 percent, demonstrating our focus on shareholder returns despite rapidly growing deployed capital. This is a GAP number with an adjustment made only to normalize weather.

Speaker Change: I'd now like to turn the call over to Lloyd.

Lloyd: Thank you, Chris. And good morning, everyone. I'll begin on slide three.

Lloyd Yates: The NiSource investment thesis is simple; we serve our customers by delivering safe and reliable energy at an affordable price. These fundamentals generate competitive returns while enhancing our balance sheet position. We are also reaffirming annual 2023-2028 guidance for adjusted EPS growth of 6-8% for all years of the plan and rate-based growth of 8-10%. A huge effort is made to communicate proactively with stakeholders and demonstrate the value of our operations and investments on an ongoing basis.

Lloyd: The NiSource investment thesis is simple. We serve our customers by delivering safe and reliable energy at an affordable price.

Lloyd: Affordable energy requires efficient capital deployment.

Speaker Change: Safe Asset Operations, and Constructive Regulatory Recovery Mechanisms.

Speaker Change: These fundamentals generate competitive returns while enhancing our balance sheet position.

Speaker Change: A trailing 12-month earned ROE at the NiSource level was 10.3%, demonstrating our focus on shareholder returns despite rapidly growing deployed capital.

Speaker Change: This is a gap number with an adjustment made only to normalize weather.

Michael Luhrs: Slide four shows our key priorities. Today, we reported 2nd quarter, 2020 for adjusted EPS of 21 cents. We are reaffirming 2020 for adjusted EPS guidance of $1.70 to $1.74, and we now expect to achieve the upper half of this range. We are also reaffirming annual 2023 to 2028 guidance for adjusted EPS growth of 6 to 8 percent for all years of the plan and rate-based growth of 8 to 10 percent. We continue the target, FFO to debt of 14 to 16 percent in all years of the plan. Our superior regulatory and stakeholder foundation is differentiated.

Speaker Change: Slide 4 shows our key priorities.

Speaker Change: Today, we reported second quarter 2024 adjusted EPS of 21 cents.

Speaker Change: We are reaffirming 2024 adjusted EPS guidance of $1.70 to $1.74, and we now expect to achieve the upper half of this range.

Speaker Change: We are also reaffirming annual 2023-2028 guidance for adjusted EPS growth of 6-8% for all years of the plan and rate-based growth of 8-10%.

Speaker Change: We continue to target FFO to debt of 14 to 16 percent in all years of the plan.

Michael Luhrs: We have a long history of working collaboratively to deliver value across diverse constituencies. The huge effort is made to communicate proactively with stakeholders and demonstrate the value of our operations and investments on an ongoing basis, both during and between full-rate cases, while also incorporating a balanced respect for many of our participating stakeholders. Engaging with stakeholders in hands of alignment, providing advanced notice of coming changes, often helping to pave the way for stakeholders to support.

Speaker Change: Our Superior Regulatory and Stakeholder Foundation is differentiated.

Speaker Change: We have a long history of working collaboratively to deliver value across diverse constituencies. A huge effort is made to communicate proactively with stakeholders and demonstrate the value of our operations and investments on an ongoing basis.

Speaker Change: both during and between foray cases.

Speaker Change: while also incorporating a balanced perspective from many of our participating stakeholders.

Speaker Change: Engaging with stakeholders enhances alignment, providing advance notice of upcoming changes, often helping to pave the way for stakeholder support.

Michael Luhrs: Balance sheet flexibility remains on this page for a reason. Late last year, we raised over $2 billion in minority interest funding and projected up to $600 million of common equity issuance for 2024, to which we've made great progress. We have also been active in the hybrid security market last quarter.

Speaker Change: Balance sheet flexibility remains on this page for a reason. Late last year, we raised over $2 billion in minority interest funding and projected up to $600 million of common equity issuance for 2024, to which we've made great progress.

Speaker Change: We have also been active in the hybrid security market last quarter.

Michael Luhrs: NiSource is prepared for unforeseen challenges and opportunities. We have regularly discussed our upside CAPEX investment programs for the past several quarters. Recently, we have seen an acceleration of customer interest in our Northern Indiana service area. In June, Governor Hookam of Indiana announced plans for a significant new data center and a NIPSCO footprint following granting of a state sales package exemption. This is the fourth data center announcement statewide this year and just one of the many indications of customer interest in stakeholder support for NIPSCO. Indiana offers many attractive features to data center developers, access to infrastructure including rows and water, land, predictable climate and weather, low cost of living, stable and low taxes, and supportive regulation and government are just a few.

NYSOURCE: NiSource is prepared for unforeseen challenges and opportunities.

Lloyd Yates: We have regularly discussed our upside CapEx investment programs for the past several quarters. In June, Governor Holcomb of Indiana announced plans for a significant new data center in the NIPSCO footprint following the granting of a state sales tax exemption. This is the fourth data center announcement statewide this year and just one of the many indications of customer interest and stakeholder support for NIPSCO to diversify the employment base across the state of Indiana and provide greater value to existing customers and shareholders. And we'll be thoughtful about our system safety, reliability, and cost allocation for all our customers. Please turn to slide five.

NYSOURCE: We have regularly discussed our upside CapEx investment programs for the past several quarters.

NYSOURCE: Recently, we have seen an acceleration of customer interest in our Northern Indiana service area.

NYSOURCE: In June , Governor Holcomb of Indiana announced plans for a significant new data center in the NIPSCO footprint following granting of a state sales tax exemption.

NYSOURCE: This is the fourth data center announcement statewide this year and just one of the many indications of customer interest and stakeholder support for NIPSCO.

Speaker Change: Indiana offers many attractive features to data center developers.

Speaker Change: Access to infrastructure including roads and water, land, predictable climate and weather, low cost of living, stable and low taxes, and supportive regulation and government are just a few.

Michael Luhrs: We believe data center development can enhance our local tax base, diversify the employment base across the state of Indiana, and provide greater value to existing customers and shareholders. We are also uniquely positioned to be the convener of key stakeholders in serving the broader public interest. This puts us at the precipice of discussions on data center advancement and a balanced and thoughtful manner. Partically integrated utilities like NIPSCO are part of an interdependent group of communities and stakeholders and will be thoughtful about our system safety, reliability, and cost allocation for all our customers. We will move as quickly as possible while maintaining the integrity of our commercial planning, regulatory procurement, and operational execution process.

Speaker Change: We believe data center development can enhance our local tax base, diversify the employment base across the state of Indiana, and provide greater value to existing customers and shareholders.

Speaker Change: We are also uniquely positioned to be the convener of key stakeholders in serving the broader public interest.

Speaker Change: This puts us at the precipice of discussions on data center advancement in a balanced and thoughtful manner.

Speaker Change: Vertically integrated utilities like NIPSCO are part of an interdependent group of communities and stakeholders.

Speaker Change: And we'll be thoughtful about our system safety, reliability, and cost allocation for all our customers.

Speaker Change: We will move as quickly as possible while maintaining the integrity of our commercial planning, regulatory procurement, and operational execution processes.

Michael Luhrs: Please turn to slide five. In July, several new IP applications went live at NIPSCO Electric Operations. These are the first stages of rollout across categories of technology investment and are the culmination of work beginning back in 2022. Major software programs such as the supports safer and more efficient work practices. The new systems were quickly put to the test during severe July weather and performed as designed. I am pleased to report on this successful launch and look forward to the upcoming rollout across different areas of the organization. This is only one piece of our operational excellence initiatives.

Speaker Change: Please turn to slide five.

Speaker Change: In July , several new IT applications went live at NIPSCO Electric Operations.

Unknown Executive: These are the first stages of rollout across categories of technology investment and are the culmination of work begun back in 2022. The new systems were quickly put to the test during severe July weather and performed as designed. This is only one piece of our Operational Excellence Initiative, bringing tornadoes, wind speeds up to 90 miles per hour, and heavy rainfall. Our electric operations team monitors evolving weather patterns and prepares resources in advance of storms, including the engagement of contractors and mutual aid crews from neighboring utilities in Michigan and Wisconsin. Our teams continue to deliver on our commitment.

Speaker Change: These are the first stages of rollout across categories of technology investment and are the culmination of work beginning back in 2022.

Speaker Change: Major software programs such as these support safer and more efficient work practices.

Speaker Change: The new systems were quickly put to the test during severe July weather and performed as designed.

Speaker Change: I am pleased to report on this successful launch and look forward to upcoming rollouts across different areas of the organization.

Speaker Change: This is only one piece of our Operational Excellence Initiative.

Michael Luhrs: Project Apollo continues to find efficiencies throughout the organization after ramping up last year. Stable O&M over our plan horizon continues to be a part of achieving our financial commitments.

Speaker Change: Project Apollo continues to find efficiencies throughout the organization after ramping up last year.

Speaker Change: Stable O&M over our planned horizon continues to be a part of achieving our financial commitments.

Michael Luhrs: Last month, a major wind storm impacted our Indiana service area, bringing tornado activity, wind speeds up to 90 miles per hour, and heavy rainfall. Our electric operations team monitors the evolving weather patterns and prepares resources in advance of storms, including engagement of contractors and mutual aid crews from neighboring utilities in Michigan and Wisconsin. Our preparation and around-the-clock response involve 400 line workers and 86 tree trimming crews can enable a successful restoration. I want to thank each and every employee and contractor for their tireless dedication to restoring service and safety across our communities.

Speaker Change: Last month, a major windstorm impacted our Indiana service area, bringing tornadic activity, wind speeds up to 90 mph, and heavy rainfall.

Speaker Change: Our electric operations team monitors evolving weather patterns and prepares resources in advance of storms, including engagement of contractors and mutual aid crews from neighboring utilities in Michigan and Wisconsin.

Speaker Change: Our preparation and around-the-clock response involved 400 line workers and 86 tree-trimming crews, enabled a successful restoration.

Speaker Change: I want to thank each and every employee and contractor for their tireless dedication to restoring service and safety across our communities.

Michael Luhrs: In summary, the NiSource business plan offers a differentiated opportunity to return value to all stakeholders. Our teams continue to deliver on our commitments financially, operationally, and being a trusted business partner to customers and employees. Beyond keeping our plans on track, our teams are visually seeking enhancements to an already premium plan in ways to enhance value as we move forward.

Speaker Change: In summary, the NiSource Business Plan offers a differentiated opportunity to return value to all stakeholders.

Speaker Change: Our teams continue to deliver on our commitments, financially, operationally, and being a trusted business partner to customers and employees.

Speaker Change: Beyond keeping our plans on track, our teams are vigilantly seeking enhancements to an already premium plan and ways to enhance value as we move forward.

Melody Birmingham: I'd now like to turn the call forward to Melody. All right, thank you, Lloyd. I want to spend a few moments updating each of you on the important regulatory activity we have across our companies, which is profiled on slide six. Our focus on operational excellence, coupled with the softening commodity pricing, has driven lower bills over the last 12 months across our gas businesses, despite the critical investments our teams continue to make. During the 12 months which ended June 30th, our average residential gas customer bill declined over 16% from a year earlier on a total bill basis.

Speaker Change: I'd now like to turn the call over to Melody.

Melody: All right. Thank you, Lloyd. I want to spend a few moments updating each of you on the important regulatory activity we have across our companies, which is profiled on slide six.

Speaker Change: Our focus on operational excellence, coupled with the softened commodity pricing, has driven lower bills over the last 12 months across our gas businesses, despite the critical investments our teams continue to make.

Speaker Change: During the 12 months, which ended June 30th, our average residential gas customer bill declined over 16% from a year earlier on a total bill basis.

Melody Birmingham: In Indiana, last week, the Indiana Utility Regulatory Commission approved the Nipscope Gas Rate Case unanimous settlement, which was reached in March. The approval incorporated $1 billion of additional capital investment versus our last rate case, a new weather normalization adjustment, and approval of Nipscope's automated metering infrastructure or AMI project. In Kentucky, our general rate case was filed in May, and we expect intervener testimony later this month with hearings in October. Also wanted to know the Kentucky Public Service Commission Chair Kent Chandler recently vacated his post at the end of his three-year term, which ended on June 30th.

Speaker Change: In Indiana, last week, the Indiana Utility Regulatory Commission approved the NIPSCO gas rate case unanimous settlement, which was reached in March.

Speaker Change: The approval incorporated $1 billion of additional capital investment versus our last rate case.

Speaker Change: a new weather normalization adjustment, and approval of NIPSCO's Automated Metering Infrastructure, or AMI, project.

Speaker Change: In Kentucky, our general rate case was filed in May, and we expect intervener testimony later this month with hearings in October .

Speaker Change: Also wanted to note the Kentucky Public Service Commission Chair Kent Chandler recently vacated his post at the end of his three-year term which ended on June 30th.

Melody Birmingham: Our work in Pennsylvania is a great demonstration of the value of our risk reduction strategy and alignment with our stakeholders. Columbia Gas, the Pennsylvania, met with the Pennsylvania Utility Commission in late 2022. and was the first gas utility to seek the Commission's approval for the replacement of vintage plastic pipe in our long-term infrastructure plan. The Commission approved Columbia Gas Opensivaneous Request early in 2023. Just recently, the Chairman of the Commission made a motion directing other natural gas companies to amend their infrastructure plans to prioritize the replacement of vintage plastic pipe on their systems as well.

Unknown Executive: Our work in Pennsylvania is a great demonstration of the value of our risk reduction strategy and alignment with our stakeholders. We remain confident in achieving a constructive outcome to support our stakeholders and the value of our energy investments for Pennsylvanian customers and communities, projects such as this one.

Speaker Change: Our work in Pennsylvania is a great demonstration of the value of our risk reduction strategy and alignment with our stakeholders.

Speaker Change: Columbia Gas of Pennsylvania met with the Pennsylvania Utility Commission in late 2022.

Speaker Change: and was the first gas utility to seek the Commission's approval for the replacement of vintage plastic pipe in our long-term infrastructure plan.

Speaker Change: The Commission approved Columbia Gas of Pennsylvania's request early in 2023.

Speaker Change: Just recently, the Chairman of the Commission made a motion directing other natural gas companies to amend their infrastructure plans to prioritize the replacement of vintage plastic pipe on their systems as well.

Melody Birmingham: Meanwhile, our Pennsylvania rate case continues to progress on schedule after initial intervener testimony was filed in June, and hearings were held last month. We remain confident in achieving a constructive outcome to support our stakeholders and the value of our energy investments for Pennsylvania's customers and communities. In Virginia last month, the Commonwealth was named the top state in the country for business by CNBC for the third time in the last five years. The survey considered factors ranging from education quality to the cost of doing business. Also, recently, our Columbia Gas of Virginia team reached a preliminary settlement with a customer to build a gas pipeline to serve onsite generation for the customer's data center operations.

Speaker Change: Meanwhile, our Pennsylvania rape case continues to progress on schedule, after initial intervener testimony was filed in June and hearings were held last month.

Speaker Change: We remain confident in achieving a constructive outcome to support our stakeholders and the value of our energy investments for Pennsylvanian customers and communities.

Melody Birmingham: This project has the potential to be one of the largest multi-tenant data center operations in the world. This is made possible by the highly reliable and on-demand characteristic of natural gas, which will fuel the generation necessary to house this critical data. It's projects like these that can contribute to economic growth and lead to increased demand for energy and infrastructure services. In Ohio, our team was able to find a solution to help keep advanced manufacturer and extruder of aluminum pinnocks as a valued customer and vital employer in the state. Both Columbia Gas of Ohio and Pinnocks will now invest millions of dollars into the local economy, supporting hundreds of jobs and expanding manufacturing operations in an area that does not have many development opportunities.

Speaker Change: Both Columbia Gas of Ohio and Penix will now invest millions of dollars into the local economy, supporting hundreds of jobs and expanding manufacturing operations in an area that does not have many development opportunities.

Unknown Executive: It's helping our communities and helping our communities thrive. Early last month, NiSource released our 2024 Environmental, Social, and Governance, or ESG, report. In May, NiSource was awarded the Top AAA ESG Rating for the third consecutive year by MSCI ESG Ratings, and we now rank in the 89th percentile of global utility companies. And quite notably, Columbia Gas of Virginia was named number one, the top gas utility brand in the country.

Melody Birmingham: Projects such as this one is helping our communities and helping our communities thrive. These developments also create upside in our plans, growth on our systems, and create more opportunities for residential expansion within the region.

Melody Birmingham: Early last month, 9-source reliefs are 2024 Environmental, Social, and Governance, or ESG report. The report demonstrates progress on key initiatives designed to make a positive impact on the communities we serve while valuing our customers. customers. Highlights include continued reduction in fugitive methane emissions from gas, mains, and service lines; increased diverse suppliers spending; and advancement towards our top-desile safety performance. NiSource continues to achieve top quartile ESG performance when aggregated across five key ESG Raiders. In May, NiSource was awarded the top AAA ESG rating for the third consecutive year by MSCI ESG Rating. The AAA rating is reserved for the top 10% of utility, and the company was assessed as an ESG leader in corporate governance, corporate behavior, human capital development, and toxic emissions in waste.

Speaker Change: The report demonstrates progress on key initiatives designed to make a positive impact on the communities we serve, while valuing our customers.

Speaker Change: In May, NiSource was awarded the Top AAA ESG Rating for the third consecutive year by MSCI ESG Ratings.

Melody Birmingham: In July, we received our annual Financial Times Stock Exchange Index, or FTSE ESG score, and we now rank in the 89th percentile of global utility companies. Our FTSE ESG score increased to desiles since July of 2023.

Speaker Change: In July , we received our annual Financial Times Stock Exchange Index, or FTSE, ESG score. And we now rank in the 89th percentile of global utility companies.

Speaker Change: Our FTSE ESG score increased two deciles since July of 2023.

Melody Birmingham: In the last but not least, I would like to highlight the work our teams are doing to improve our overall customer satisfaction. In the JD Power gas residential mid-year 2024 customer satisfaction survey, Columbia Gas of Ohio, Columbia Gas of Kentucky, and Columbia Gas of Virginia outperformed the industry average within their respective segments. Quite notably, Columbia Gas of Virginia was named number one, the top gas utility brand in the country.

Speaker Change: And last but not least, I would like to highlight the work our teams are doing to improve our overall customer satisfaction.

Speaker Change: Columbia Gas of Ohio, Columbia Gas of Kentucky, and Columbia Gas of Virginia outperformed the industry average within their respective segments.

Speaker Change: And quite notably, Columbia Gas of Virginia was named number one, the top gas utility brand in the country.

Shawn Anderson: I'll now turn things over to Sean. Thanks, Melody. I'd like to begin by discussing the status of our generation assets under construction, which are being developed to support the Integrated Resource Plan preferred portfolio from the 2018 and 2021 IRPs. In May, we completed Cavalry Solar, which is our third solar project, owned by NIPSCO. It will provide power to approximately 60,000 homes in White County and is expected to generate $25 million of tax revenue for the county over its life. Construction continues on our remaining three solar build transfer projects and four PPA projects. All of these projects under construction remain on track and on budget to support the energy transition.

Speaker Change: I'll now turn things over to Shawn.

Shawn: Thanks, Melody. I'd like to begin by discussing the status of our Generation Assets under construction, which are being developed to support the Integrated Resource Plan Preferred Portfolio from the 2018 and 2021 IRPs.

Shawn: In May, we completed Cavalry Solar, which is our third solar project owned by NIPSCO. It will provide power to approximately 60,000 homes in White County and is expected to generate $25 million of tax revenue for the county over its life.

Unknown Executive: Construction continues on our remaining three solar build transfer projects and four PPA projects. NIPSCO filed unopposed proposed orders for two of these projects, Fairbanks and Gibson, and CPCN amendment proceedings, and the records are now closed in both.

Shawn: All of these projects under construction remain on track and on budget to support the energy transition NIPSCO has been executing since 2020 and which will retire our Schaefer Generating Station by the end of 2025 and Michigan City by the end of 2028.

Shawn Anderson: Nipsco has been executing since 2020, and which will retire our Schaefer generating station by the end of 2025 and Michigan City by the end of 2028. Nipsco filed unopposed proposed orders for two of these projects, Fairbanks and Gibson, and CPCN amendment proceedings, and the records are now closed in both. We expect final orders later this month. The record is also closed in the gas-peaker CPCN proceeding, and a final order is expected in the fourth quarter. In total, these ongoing generation investments add $2.1 billion of capital expenditures to support our retiring coal plants and are fully represented in the $16.4 billion base capital plan and satisfy the preferred portfolio from the 2021 IRP.

Shawn Anderson: Lee. Turning our attention to the latest IRP process, in late June, the Nipsco team held the second of five stakeholder meetings, waiting up to an anticipated filing in November. These discussions outline scenarios which included an incremental need for generation by 2035 of 2.6 gigawatts for the reference case and 8.6 gigawatts in the emerging load sensitivity case. It is important to note that the potential load growth assumptions built into these scenarios are not the total or maximum range of new load growth, but rather a risk-adjusted case using assumptions of how much of each project could be executed by each date.

Shawn: Turning our attention to the latest IRP process, in late June , the NIPSCO team held the second of five stakeholder meetings, leading up to an anticipated filing in November .

Shawn: These discussions outlined scenarios which included an incremental need for generation by 2035 of 2.6 gigawatts for the reference case and 8.6 gigawatts in the emerging load sensitivity case.

Shawn Anderson: Note, the IRP process looks at a 20-year load forecast for our region and is not a direct forecast of future NiSource generation projects or investment. With that said, the interest demonstrated from new customers to develop in the Northwest Indiana region is significant and presents a tremendous opportunity for our customers and communities to enhance the tax base, diversify employment opportunities, and participate in the technological innovation data centers bringing to our nation. Consistent with last quarter, this potential opportunity is not included in our base case or upside financial plans, and we will continue to advance commercial discussions to enhance visibility in the coming months.

Shawn: Note, the IRP process looks at a 20-year load forecast for our region and is not a direct forecast of future NiSource generation projects or investment.

Shawn: With that said, the interest demonstrated from new customers to develop in the Northwest Indiana region is significant.

Shawn: and presents a tremendous opportunity for our customers and communities to enhance tax base, diversify employment opportunities, and participate in the technological innovation data centers bring to our nation.

Shawn: Consistent with last quarter, this potential opportunity is not included in our base case or upside financial plans, and we will continue to advance commercial discussions to enhance visibility in the coming months.

Shawn Anderson: As we review our five-year base investment plan on slide 8, it is important to note the diversified nature of these investments, which span across electric generation, as well as gas and electric distribution modernization, system hardening, and customer growth. Our projects lack concentration risk by fuel type or by operating company and are highly executable given the skilled labor and partnerships we've developed.

Unknown Executive: As we review our five-year base investment plan on slide eight, it's important to note the diversified nature of these investments, which is expected to drive operational efficiencies and enhance our customer experience. We have the right of first refusal on projects in our service territory and expect a final MISO plan late this year. Second quarter adjusted EPS was $0.21 per share, a $0.10 per share increase versus the $0.11 per share reported in the same period last year.

Speaker Change: As we review our five-year base investment plan on slide eight, it's important to note the diversified nature of these investments, which span across electric generation, as well as gas and electric distribution modernization, system hardening, and customer growth.

Speaker Change: Our projects lack concentration risk, by fuel type or by operating company, and are highly executable given the skilled labor and partnerships we've developed.

Shawn Anderson: Let's move forward to slide 9. We also continue to work through the planning, design, regulatory, and timing considerations for projects not yet included in our $16.4 billion base capital plan. Automated meter reading or AMI investments commenced recently in Indiana. It is expected to drive operational efficiencies and enhance our customer experience. A portion of total AMI spending across the NISORS companies is included in our base capital plan with the potential to expand across the rest of our gas companies. We are developing MISO long-range transmission planning or LRTP tranche 1 projects expected to come online late this decade.

Speaker Change: Let's move forward to slide nine.

Speaker Change: We also continue to work through the planning, design, regulatory, and timing considerations for projects not yet included in our $16.4 billion base capital plan.

Speaker Change: Automated Meter Reading, or AMI, investments commenced recently in Indiana.

Speaker Change: It is expected to drive operational efficiencies and enhance our customer experience.

Speaker Change: A portion of total AMI spending across the NiSource companies is included in our base capital plan, with the potential to expand across the rest of our gas companies.

Speaker Change: We are developing MISO, Long-Range Transmission Planning, or LRTP, TRONCH1 projects, expected to come online late this decade.

Shawn Anderson: The three projects are the Indiana portion of a major multi-state line and are included in our base financial plan. Preliminary engineering has been conducted in point to higher costs, which exceed original MISO estimates. Our base plan does not include the additional capex potentially necessary to complete these projects. LRTP tranche 2 continues to be a longer term investment opportunity that would likely commence beyond the timeline of our current financial plan. These projects skewed towards higher voltage transmission and would not begin operation until early next decade. We have right-of-first-refusal on projects in our service territory and expect the final MISO plan late this year.

Speaker Change: The three projects are the Indiana portion of a major multi-state line and are included in our base financial plan.

Speaker Change: Preliminary engineering has been conducted and points to higher costs which exceed original MISO estimates.

Speaker Change: Our base plan does not include the additional CapEx potentially necessary to complete these projects.

Speaker Change: LRTP Tranche 2 continues to be a longer-term investment opportunity that would likely commence beyond the timeline of our current financial plan.

Speaker Change: These projects skew towards higher voltage transmission and would not begin operation until early next decade. We have right of first refusal on projects in our service territory and expect a final MISO plan late this year.

Shawn Anderson: Now I'll transition to our financial results. Second quarter adjusted EPS was 21 cents per share, a 10 cents per share increase versus the 11 cents per share reported in the same period last year. Net revenue increased 15% year over year, including $8 million of incremental normalized customer usage. Our regulatory weather normalization mechanisms continue to protect both customers and shareholders from volatility. In the second quarter, these constructs had an approximately $6 million revenue impact versus normal weather. Our states are growing, helping to reduce customer costs and support safety and reliability improvements to our system. Customer count and total weather normalized gas throughput for residential and commercial customers grew in the first half across our system.

Speaker Change: Now I'll transition to our financial results.

Speaker Change: Second quarter adjusted EPS was $0.21 per share, a $0.10 per share increase versus the $0.11 per share reported in the same period last year. Net revenue increased 15% year-over-year, including $8 million of incremental, normalized customer usage.

Speaker Change: Our regulatory weather normalization mechanisms continue to protect both customers and shareholders from volatility.

Speaker Change: In the second quarter, these constructs had an approximately $6 million revenue impact versus normal weather.

Speaker Change: Our states are growing, helping to reduce customer costs and support safety and reliability improvements to our system.

Unknown Executive: Customer count and total weather-normalized gas throughput for residential and commercial customers grew in the first half across our system. All of our five-year commitments are reaffirmed today as well. In particular, year-to-date execution on the financing and regulatory fronts has increased visibility into 2024 and 2025 results. Through June 30th, we are happy to report we have priced $500 million of our up to $600 million 2024 guided amount. We are capitalizing on favorable, absolute, and relative market dynamics within the capital structure to minimize the overall cost of capital.

Speaker Change: Customer count and total weather normalized gas throughput for residential and commercial customers grew in the first half across our system.

Shawn Anderson: Virginia and Ohio were standouts with an average first half weather-normalized throughput growth of 7.1% for residential and 5.7% for commercial customers across both states. And while the load growth forecasts from the IRP demonstrate a massive long-term increase of 11% compounded annually from 2024 to 2035 in the reference case. Normalized electric load grew 5% in the second quarter from our existing customers alone. Residential and commercial classes were particularly strong, and further existing data center customers have grown year-to-date uses by five times versus the same period last year and are projecting further growth through the remainder of this decade.

Speaker Change: Virginia and Ohio were standouts with an average first-half weather normalized throughput, growth of 7.1% for residential and 5.7% for commercial customers across both states.

Speaker Change: And while the load growth forecasts from the IRP demonstrate a massive long-term increase of 11% compounded annually from 2024 to 2035 in the reference case,

Speaker Change: Normalized electric load grew 5% in the second quarter from our existing customers alone.

Speaker Change: Residential and commercial classes were particularly strong.

Shawn Anderson: Our long-term financial guidance commitments are shown on Slide 11. As Lloyd indicated, we are reaffirming 2024 adjusted EPS guidance of $1.70 to $1.74, but we now expect to achieve the upper half of this range. All of our five-year commitments are reaffirmed today as well. This includes the year-over-year adjusted EPS growth rate of 68% annually off of the achieved results in 2024. We remain confident in achieving our long-term growth rate in all remaining years of the plan. In particular, year-to-date execution on the financing and regulatory fronts has increased visibility into 2024 and 2025 results. For example, approximately 97% of expected 2024 rate recovery is now finalized.

Speaker Change: Our long-term financial guidance commitments are shown on slide 11. As Lloyd indicated, we are reaffirming 2024 adjusted EPS guidance of $1.70 to $1.74, but we now expect to achieve the upper half of this range.

Lloyd: All of our five-year commitments are reaffirmed today as well.

Lloyd: This includes the year-over-year adjusted EPS growth rate of 6-8% annually off of the achieved results in 2024.

Speaker Change: We remain confident in achieving our long-term growth rate in all remaining years of the plan.

Speaker Change: In particular, year-to-date execution on the financing and regulatory fronts has increased visibility into 2024 and 2025 results.

Speaker Change: For example, approximately 97% of expected 2024 rate recovery is now finalized.

Shawn Anderson: Our forecasts incorporate continued use of long established capital trackers and nearly all of our jurisdictions and are based on what we believe are realistic regulatory outcomes and do not forecast material changes in the interest rate environment. More importantly, we are still able to deliver our $16.4 billion rate base investment to customers while keeping average annual residential total bill growth at or below 4% across the five-year period. As we look forward to November, we expect to continue with our annual cadence of updating our five-year financial plan, reflecting these updated assumptions as well as our capital allocation and investment portfolio.

Speaker Change: Our forecasts incorporate continued use of long-established capital trackers in nearly all of our jurisdictions, and are based on what we believe are realistic regulatory outcomes, and do not forecast material changes in the interest rate environment.

Speaker Change: More importantly, we are still able to deliver our $16.4 billion rate-based investment to customers while keeping average annual residential total bill growth at or below 4% across the five-year period.

Speaker Change: As we look forward to November , we expect to continue with our annual cadence of updating our five-year financial plan, reflecting these updated assumptions, as well as our capital allocation and investment portfolios.

Shawn Anderson: Santos, slide 12 details our financing plan. We are reaffirming 14 to 16% FFO to debt in all years of the plan, as well as our guided annual equity needs in each year through 2028. Consistent with prior updates, the figures shown on this page support our base capital plan. In May, we issued 500 million of 30-year junior subordinated notes at a 6.95% coupon for the first five-year period. In June, we issued 600 million of five-year senior unsecured notes at a 5.2% coupon. And our equity financing is limited to the use of our at-the-market (ATM) program. In all years, and consistent with previous indications, we prefer to utilize a forward ATM structure.

Speaker Change: Slide 12 details our financing plan.

Speaker Change: We are reaffirming 14-16% FFO to debt in all years of the plan, as well as our guided annual equity needs in each year through 2028.

Speaker Change: Consistent with prior updates, the figures shown on this page support our base capital plan.

Speaker Change: In May, we issued 500 million of 30-year junior subordinated notes at a 6.95% coupon for the first five-year period.

Speaker Change: In June , we issued $600 million of 5-year senior unsecured notes at a 5.2% coupon.

Speaker Change: And our equity financing is limited to the use of our at-the-market ATM program. In all years, and consistent with previous indications, we prefer to utilize a forward ATM structure.

Shawn Anderson: Through June 30, we are happy to report we have priced 500 million of our up to 600 million 2024 guided amount. We are capitalizing on favorable, absolute, and relative market dynamics within the capital structure to minimize the overall cost of capital. Our credit metrics are gradually moving higher, and we retain the flexibility we've built into our plan.

Speaker Change: Through June 30th, we are happy to report we have priced $500 million of our up to $600 million 2024 guided amount.

Speaker Change: We are capitalizing on favorable, absolute, and relative market dynamics within the capital structure to minimize the overall cost of capital. Our credit metrics are gradually moving higher, and we retain the flexibility we've built into our plan.

Shawn Anderson: I'll conclude with highlights of our growing track record on slide 13. Our financial commitments are on track for 2024, and we now expect to achieve the upper half of our $1.70 to $1.74 adjusted EPS range. Our near-term and long-term guidance remains resilient to market and other forces outside our control and are based on realistic and executable assumptions. Execution on numerous capital trackers, the conclusion of our Indiana gas rate case, and progress on CPCNs underscore our execution of recovery for critical investments to ensure safety and reliability of our systems. Year 8 financing activity, including pricing of the majority of our forward ATM plan for the year, and diversification utilized in the junior subordinated debt marketplace demonstrates our balance sheet flexibility.

Speaker Change: I'll conclude with highlights of our growing track record on slide 13. Our financial commitments are on track for 2024, and we now expect to achieve the upper half of our $1.70 to $1.74 adjusted EPS range.

Unknown Executive: Our credit metrics are gradually moving higher, and we retain the flexibility we've built into our plan. Our financial commitments are on track for 2024, and we now expect to achieve the upper half of our $1.70 to $1.74 adjusted EPS rate.

Speaker Change: Our near-term and long-term guidance remains resilient to market and other forces outside our control and are based on realistic and executable assumptions.

Speaker Change: Execution on numerous capital trackers, the conclusion of our Indiana gas rate case, and progress on CPCNs underscore our execution of recovery for critical investments to ensure safety and reliability of our systems.

Speaker Change: Year-to-date financing activity, including pricing of the majority of our forward ATM plan for the year, and diversification utilized in the junior subordinated debt marketplace demonstrates our balance sheet flexibility.

Shawn Anderson: Lastly, our base and upside cap ex estimates demonstrate the programmatic investment plans alongside accelerated upside for customers and investors. To reiterate, our rate base and adjusted EPS guidance includes neither the upside cap ex nor any data center load or investment and is built upon the known and socialized regulatory programs, which have contributed to the 8.1 percent adjusted EPS growth rate we've executed since 2021. The value proposition, nice source, continues to offer investors is diversified and fully regulated utility assets with the opportunity to invest in both programmatic gas infrastructure and the long-term energy transition story of a fully integrated electric business.

Speaker Change: Lastly, our base and upside CapEx estimates demonstrate the programmatic investment plans alongside accelerated upside for customers and investors.

Speaker Change: To reiterate, our rate-based and adjusted EPS guidance

Speaker Change: includes neither the upside catbacks

Speaker Change: nor any data center load or investment and is built upon the known and socialized regulatory programs.

Speaker Change: which have contributed to the 8.1% adjusted EPS growth rate we've executed since 2021.

Speaker Change: The value proposition NiSource continues to offer investors is diversified and fully regulated utility assets with the opportunity to invest in both programmatic gas infrastructure and the long-term energy transition story of a fully integrated electric business.

Shawn Anderson: These elements have been core to our story for some time, but the emerging opportunity to support economic development, ensuring and new data center development truly differentiate our value proposition relative to many alternatives in the market today. today.

Speaker Change: These elements have been core to our story for some time, but the emerging opportunity to support economic development, on-shoring, and new data center development truly differentiate our value proposition relative to many alternatives in the market today.

Unknown Executive: I'd now like to turn the call over to the operator for Q&A. Thank you, ladies and gentlemen. We will now begin our question and answer session. If you have doubt in and would like to ask a question, please press star, followed by the number one on your touchstone phone. If you would like to withdraw your questions, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker under a device, please speak up your headset and ensure that your phone is not on mute when asking your question. As a reminder, we will pause for a moment to compile the Q&A roster.

Speaker Change: I'd now like to turn the call over to the operator for Q&A.

Operator: Thank you. Ladies and gentlemen, we will now begin our question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your touchtone phone. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. As a reminder, we will pause for a moment to compile the Q&A roster. Thank you.

Speaker Change: Thank you. Ladies and gentlemen, we will now begin our question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your touchtone phone. If you would like to withdraw your question, simply press star one again.

Speaker Change: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: As a reminder, we will pause for a moment to compile the Q&A roster. Thank you.

Unknown Executive: Thank you.

Shahriar Pourreza: Your first question comes from the line of Shahri Pourreza from Guggenheim Partners. Please go ahead. Good morning. Morning, Shahriar. Morning, Lloyd.

Speaker Change: Your first question comes from the line of Shahriar Pourreza from Guggenheim Partners. Please go ahead.

Shahriar Pourreza: One Lloyd, I just want to drill a little bit further on sort of the MISO opportunities just on tranche 2.1. Can we get maybe a bit of a sense of how much of the 23 to 27 billion for the total tranche is relevant for you? And then 2.2? Obviously, it's coming in at 25. What are we looking at there from a spend perspective? Thanks.

Char Perez: Hey guys, good morning.

Shahriar Pourreza: I just want to drill a little bit further on sort of the MISO opportunities. On tranche 2.1, can we get maybe a bit of a sense of how much of the 23 to 27 billion for the total tranches relevant for you? Then 2.2, obviously it's coming in 25.

Shawn: Morning, Shahriar.

Shawn: Well Lloyd, I just want to drill a little bit further on sort of the MISO opportunities.

Shahriar Pourreza: On tranche 2.1, can we get maybe a bit of a sense of how much of the $23 to $27 billion for the total tranche is relevant for you? And then 2.2, obviously it's coming in 2025, what are we looking at there from a spend perspective?

Shawn Anderson: What are we looking at there from a spend perspective? Thanks.

Shawn Anderson: I'm going to throw that ball to Sean.

Shawn Anderson: A short morning. So tranche 1 projects, we began a process working with MISO and have estimated MISO's original estimate around $300 million of tranche 1 for the portfolio projects plan to be executed. We think that it will take a little bit more to be able to execute those projects safely and reliably, the way MISO is expecting that energy to be able to move across the multi-state region. So we're engagement right now with MISO, sharing those plans and identifying what that will look like. We plan to have more of an update as we step towards our next call in the November refresh of our capital plans.

Shahriar Pourreza: I'm going to throw that ball to Shawn, yeah.

Shawn: Hey Shahriar, good morning. So Tronch One projects, we began the process working with MISO and have estimated MISO's original estimate around $300 million of Tronch One for the portfolio projects that plan to be executed.

Shawn: We think that it will take a little bit more to be able to execute those projects safely and reliably the way MISO is expecting that energy to be able to be moved across the multi-state region. So we're in engagement right now with MISO, sharing those plans and identifying what that will look like. We plan to have more of an update as we step towards our next call in the November refresh of our capital plans.

Shawn Anderson: And then on tranche 2, still early on those, we haven't really formally put those estimates out. We do expect to see something at the very end of this year with MISO and plan to be able to estimate those thereafter once we've had a chance to really look at those plans. But reminder there, most of that is going to be beyond the plan horizon as it's in service states or early 2030s.

Shawn: And then on Trunch 2, it's still early on those. We haven't really formally put those estimates out. We do expect to see something at the very end of this year with MISO and plan to be able to estimate those thereafter once we've had a chance to really look at those plans.

Shawn: But reminder there, most of that is going to be beyond the plan horizon as it's in service dates or early 2030s.

Shahriar Pourreza: Okay.

Shahriar Pourreza: And then, Lloyd, just one last thing, maybe just for you, is the messaging kind of around data center opportunities, and those conversations haven't really changed since you started to talk about them at the start of this year. I guess, at what point do you think you'll have some level of confidence where some of these discussions you're having can start to kind of be embedded in the plan? As we're thinking about either the growth perspective or the CapEx perspective, because some of your peers have begun to quantify it? You've seen the load numbers tick higher.

Lloyd Yates: Perfect. And then, Lloyd, just last thing maybe just for you is the messaging kind of around data center opportunities and those conversations hasn't really changed since you started to talk about it at the start of this year. I guess at what point do you think you'll have some level of confidence where some of your discussions you're having can start to kind of be embedded in plan. So, as we're thinking about, you do the growth perspective, the catbacks perspective, because some of your peers have begun to quantify it. You've seen load numbers tick higher. You've seen some numbers around catbacks opportunities depending on the size of the DC or the hyperscaler.

Lloyd: Okay, perfect. And then Lloyd, just last thing maybe just for you is the messaging kind of around data center opportunities and those conversations hasn't really changed.

Speaker Change: Since you started to talk about it at the start of this year, I guess, at what point do you think you'll have some level of confidence with some of these discussions you're having?

Speaker Change: Can start to kind of be embedded in plan. So as we're thinking about either the growth perspective, the CapEx perspective, because some of your peers have begun to quantify it. You've seen load numbers tick higher. You've seen some numbers around CapEx opportunities.

Shahriar Pourreza: I guess at what point could we get a little bit more confidence around putting this into the plan?

Lloyd Yates: You've seen some numbers around CapEx opportunities depending on the size of the DC or the hyperscaler. I guess, at what point could we get a little bit more confidence around putting this into the plan? Is EEI kind of the right platform? Or are you thinking more like as we get to the back half of this year? Thanks.

Speaker Change: depending on the size of the DC or the hyperscaler. I guess at what point could we get a little bit more confidence around putting this into the plan? Is EI kind of the right podium? Or are you thinking more like as we get to the back half of this year? Thanks.

Lloyd Yates: Is EI kind of the right podium where you're thinking more like as we get to the back half of this year, thanks. So a little bit of a long-winded answer here. Let me start by saying, you know, we're really excited about the data center opportunity. We think it is a significant opportunity to grow the company. We also understand that Northern Indiana is just a very attractive location for data centers. So we're getting a lot of interest that I talked about in my script. You know, great public policy or Indiana pass legislation for failed tax exemption for data centers in 2019.

Unknown Executive: So, a little bit of a long-winded answer here. Let me start by saying, you know, we're really excited about the Data Center opportunity. We think it is a significant opportunity to grow the company, putting data centers and really big data centers in the state of Indiana. What we've been doing is meeting with various stakeholders, and I'm talking about the people in the governor's office, legislators, utility commissioners, and making sure that we understand in detail what their concerns are and what needs we need to meet.

Speaker Change: So a little bit of a long-winded answer here. Let me start by saying that we're really excited about the Data Center opportunity. We think it is a significant opportunity to grow the company.

Speaker Change: We also understand that Northern Indiana...

Speaker Change: It's just a very attractive location for data centers, so we're getting a lot of interest, as I talked about in my script.

Speaker Change: You know, great public policy. Indiana passed legislation for a sales tax exemption for data centers in 2019. We have great infrastructure in terms of roads, access to energy, transmission. So people are very interested in.

Lloyd Yates: We have great infrastructure in terms of roads, access to energy, and transmission. So people are very interested in putting data centers and really big data centers in the state of Indiana. What we've been doing is meeting with various stakeholders. And I'm talking about the people from the governor's office, legislators, utility commissioners, and making sure that we understand. You know, in detail what their concerns are and what needs we need to meet. Now let's say probably three important things came up. One is I think data centers have to work for the current customer base. I mean that the customers, our current customer base can't absorb any excess risk or long-term have any significant strand of investment as a result of this opportunity.

Speaker Change: putting data centers and really big data centers in the state of Indiana.

Speaker Change: And what we've been doing is meeting with various stakeholders, and I'm talking about the people from the governor's office, legislators.

Speaker Change: Utility Commissioners, and making sure that we understand.

Speaker Change: You know, in detail what their concerns are and, you know, what needs we need to meet. And I would say probably three important things came up. One is I think data centers have to work for the current customer base.

Unknown Executive: And I would say probably three important things came up. One is that I think data centers have to work for the current customer base. Anything else we do has to be upside to that plan. So with all that being said, Shahriar, you know, we are in conversations with the various counterparties. I think we're really aligned on all the things that we kind of need to accomplish as a result of those conversations, as a result of trying to get various transactions out about data centers. And I think if you start to look for EEI or later in the year, we'll put out a lot more clarity about what that looks like.

Speaker Change: Meaning that our current customer base can't absorb any excess risk or long-term have any significant stranded investment as a result of this opportunity.

Lloyd Yates: Second thing is no compromise in reliability. I think that's really important to all of our constituents and stakeholders. And then for NiSource, it has to work for our shareholders. I mean, this is a big issue, but if we're going to take risk, it has to be the appropriate amount of reward on the other side of that. So, if you think about all this thing, you said, and we talked earlier, we have a real strong plan. We're going to grow six to eight percent. We've actually out executed growth over the past three years, so we feel good about the plan we have with our data centers or anything else we do has to be upside to that plan.

Speaker Change: Second thing is no compromise in reliability.

Speaker Change: I think that's really important to all of our constituents and stakeholders. And then for NiSource, it has to work for our shareholders. I mean, this is a big initiative, but if we're going to take risk, it has to be the appropriate amount of reward on the other side of that.

Speaker Change: So, if you think about all those things you said, and we talked earlier, we have a real strong plan. We're going to grow six to eight percent. We've actually executed that growth over the past three years, so we feel good about the plan we have with our data centers, so anything we else...

Lloyd Yates: So, with all that being said, Shar, we're in conversations with the various counterparties. I think we're really aligned on all the things that we kind of need to accomplish as resolve those conversations, as resolve trying to get various transactions out about data centers.

Speaker Change: Anything else we do has to be upside to that plan.

Shard: So with all that being said, Shahriar, we are in conversations with the various counterparties. I think we are really aligned on all the things that we...

Shard: kind of need to accomplish as a result of those conversations, as a result of trying to get various transactions out about data centers. I think if you start to look for a EEI or later in the year we'll put out a lot more clarity about what that looks like.

Shahriar Pourreza: I think as you start to look for EEI later in the year, we'll put out a lot more clarity about what that looks like. Okay. Perfect. Thanks, Lloyd. The last part was important. Appreciate it. Thanks. Mm-hmm.

Shard: Okay, perfect. Thanks, Lloyd. That last part was important. Appreciate it. Thanks.

Nick Campanella: Your next question comes from the line of Nick Campanella from Berkley's.

Nick Campanella: Your next question comes from the line of Nick Campanella from Barclays. Please go ahead.

Nick Campanella: Peace. Go ahead. Hey. Good morning. Thanks for all the updates. Morning. Hey. So I appreciate the comment on 2024 guidance tracking to the high end of the range. Just acknowledging Sean's comments about the visibility in the fiscal 25. The fact that load is already trending five percent in this quarter alone, and then you have more capital coming into the plan. And we kind of extrapolate our models out to 2526, just one of the offsets that are keeping you at 7 percent growth, like the midpoint of that year-over-year, 6 to 8 percent range or could you be higher, could you just kind of expand that way how we should be thinking about this?

Speaker Change: Your next question comes from the line of Nick Campanella from Barclays. Please go ahead.

Nick Campanella: Hey, good morning. Thanks for all the updates.

Nick Campanella: What are the offsets that are keeping you at 7% growth, like the midpoint of that year-over-year 6% to 8% range, or could you be higher? Could you just kind of expand on how we should be thinking about this? Thanks.

Shawn Anderson: Thanks. Oh, why don't you take that one?

Shawn Anderson: Yeah, sure. Nick, thanks.

Shawn Anderson: Good morning. So obviously the headwinds that we always face, a volatile capital markets environment, which we're all experiencing right now, brings uncertainty around financing and the cost associated with financing. So, always a concern for us. Obviously, regulatory outcomes and making sure that we're pathing these investments in line with our stakeholders and keeping customer affordability in mind is always top of mind. In terms of how we'll be able to execute the sequencing of these programs. As you said, one of the things that de-risk the execution of this plan is growth in our customer count volumes and helping to spread some of those costs across a larger base.

Shawn Anderson: So right now experiencing some tailwinds, but hopefully the economy continues on the path we're on. That's helping to enable that growth, and we'd love to see that play forward. We don't project that growth to always continue. So it ends up providing a bit of a tailwind when it does continue to stick and move itself through the plan. Those are the major drivers of uncertainty. I would say we are still financing a lot of overall catbacks, especially when we think about the full ownership opportunity of projects at Nipsco, and a lot of that financing will occur in 2025.

Speaker Change: So right now experiencing some tailwinds, but hopefully the economy continues on the path we're on. That's helping to enable that growth, and we'd love to see that play forward. We don't project that growth to always continue, so it ends up providing a bit of a tailwind when it does continue to stick and move itself through the plan. Those are the major drivers of uncertainty. I would say we are still financing a lot of overall CapEx, especially when we think about the full ownership opportunity of projects at NIPSCO, and a lot of that financing will occur in 2025, and we'll need to be thoughtful about making sure we do that commensurate with the returns that would be required to get us into that 6% to 8% annual year-over-year growth rate.

Shawn Anderson: And we'll need to be thoughtful about making sure we do that commensurate with the returns that would be required to get us into that 6 to 8% annual year-over-year growth rate.

Nick Campanella: Okay, great. And then just on bill growth specifically, because I know you're keeping affordability in mind here, you know, the current plan targets, I think, 4% or less through 2028. When you factor in the NISCO load projections that you kind of talked about, the 11% and then, you know, the capital plan refresh, what's the outlook for Bill growth? Well, we haven't actually run those analyses just yet, as we haven't incorporated the load growth associated with data centers. We're still thinking, thoughtfully, about how that will be reflected in ramp on the customer side for these data centers. It will matter greatly into the timing of when we need to incur catbacks or when the systems would come online in the first instance.

Unknown Executive: Okay, great. And then just on bill growth specifically, because I know you're keeping affordability in mind here, the current plan targets, I think, 4% or less through 2028. When you factor in the NIPSCO load projections that you kind of talked about, the 11%, and then you know, the capital plan refresh,

Speaker Change: Okay, great. And then just

Speaker Change: On bill growth specifically, because I know you're keeping affordability in mind here, you know, the current plan targets, I think, 4% or less through 2028. When you factor in the NIPSCO load projections that you kind of talked about, the 11%, and then, you know, the capital plan refresh, what's the outlook for bill growth?

Nick Campanella: So we haven't actually run that, but when we talk about that customer affordability, we're focused on the residential customer path and we're focused on keeping residential customer bills at or below that 4%. We think that data centers can provide a bit of an upside to the way that our current plan is built in that there'll be a sharing of system cost in some level for us to be able to support data centers as they come online, but we haven't quantified what that looks like. Okay, no problem.

Shawn Anderson: And then I guess just one last one for me on the financing side, you know, as we kind of think about wrapping an additional capital. Is there a certain percentage of every dollar of catbacks that you would need additional equity? I know you kind of mentioned modest ATM increases here as you wrap an additional capital, but just wanted to check on that. Thank you. Yeah, great question. No, there's no rule of thumb here simply because the cash flow profile for each project really warrants how it would be financed. How much FFO can come off of any given project berries, especially when you think about when the opportunity could be something that has direct flow through at a higher rate than a regulated return just in the form of economic development compared to what we would have to put into hook on those new customers.

Speaker Change: Okay, no problem. And then I guess just one last one for me on the financing side, you know,

Speaker Change: As we kind of think about wrapping in additional capital, is there a certain percentage of every dollar of CapEx that you would need additional equity? I know you kind of mentioned modest ATM increases here as you wrap in additional capital, but just wanted to check on that. Thank you.

Speaker Change: Yeah, great question. No, there's no rule of thumb here, simply because of the cash flow profile for each project.

Shawn Anderson: That's just an example of where you might be able to get a higher FFO relative to the way the rest of the base plan is financed. Another example would be the tax profile associated with solar, which is pretty created some tailwinds for us. So we need to look at the projects before we can get to the financing and how it would impact equity. It also matters where we're at within the range in any given year of the 14 to 16%. So our commitment is to be thoughtful about the financing and to focus on the lowest cost of capital we can achieve while maintaining our commitment to 14 to 16% of all years of the plan.

Speaker Change: Another example would be the tax profile associated with solar, which has created some tailwinds for us. So we need to look at the projects before we can get to the financing and how it would impact equity. It also matters where we're at within the range in any given year of the 14 to 16 percent. So our commitment is to be thoughtful about the financing and to focus on the lowest cost of capital we can achieve while maintaining our commitment to 14 to 16 percent of all years of the plan.

Nick Campanella: All right. Have a great day.

Julien Dumoulin: Thank you. All right. Your next question comes from the line of Julian, the mold and Smith from Jeffries. Go ahead. Thank you. Morning, Kim. How you guys doing? Morning, Julian. Welcome back. Thank you so much. Appreciate it, guys. Good to chat.

Speaker Change: Alright, have a great day. Thank you.

Speaker Change: All right, one second.

Speaker Change: Morning, Julien. Welcome back. Thank you so much. Appreciate it, guys. Good to chat.

Julien Dumoulin: Maybe taking up where Nick left off. I mean, you guys, you know, obviously very keenly focused on bill affordability for your customers, rightly so. Can you talk a little bit about how you think about industrial tariffs for this emerging customer class? I think you guys have been pretty innovative in the past, in tackling these kinds of issues with your industrial customer class in previous years. So could this be part of like a subsequent race coming up here or how would you think about trying to preserve the bill integrity and inflation trajectory for the core customers while enabling and ensuring that these new customers pay their fair share if you want.

Julian: Maybe picking up where Nick left off, I mean, you guys, you know, obviously very keenly focused on bill affordability for your customers, rightly so. Can you talk a little bit about how you think about industrial tariffs for this emerging

Julian: in tackling these kinds of issues with your industrial customer class.

Julian: in previous years. So could this be part of like a subsequent rate case coming up here? Or how would you think about trying to preserve the bill integrity and inflation trajectory for the core customers while enabling and ensuring that these new customers pay their fair share, if you will?

Speaker Change: I'm just curious on when and how that clicked itself out.

Melody Birmingham: Thank you, Julien. So, yes, as Lloyd mentioned early, early on in his comments, the customer protection piece is a critical component associated with it. So, we are working through mechanisms associated with tariffs and other regulatory components that wouldn't enable that and be able to provide the customer protections, be able to provide the appropriate allocation of the system associated with it. Be able to help ensure the reliability due to the large loads that they that come in with data centers and the high load factors. We are looking at ways to help make sure that we're doing that in a timely and effective manner to be able to help accomplish the timelines that data centers want to associate with their activities.

Speaker Change: Michael

Michael: Thank you, Julien. So, yes, as Lloyd mentioned early on in his comments,

Michael: The customer protection piece is a critical component associated with it.

Michael: So we are working through the mechanisms associated with tariffs and other...

Speaker Change: Regulatory components that would enable that and be able to do that to one be able to provide the customer protections be able to provide the appropriate allocation of the system associated with it be able to help ensure the reliability due to the large loads that they

Speaker Change: that come in with data centers and the high load factors. We are looking at ways to help make sure that we're doing that in a timely and an effective manner to be able to help accomplish the timelines that data centers want to associate with their activities. So we want to be very customer centric on that.

Melody Birmingham: So, we want to be very customer centric on that. But at the same time, as you mentioned, we have found innovative ways to do that in the past, and we continue to look at those. Innovative ways moving forward and, you know, we will bring those support, you know, both in the current activities and in future regulatory violence. Yeah, and just in add a little bit to that, we're not sure whether or not this is something that we do in a rate case through the regulatory process or through the legislature process. So, we're still evaluating those things.

Speaker Change: But at the same time, as you mentioned, we have found innovative ways to do that in the past, and we continue to look at those innovative ways moving forward, and, you know, we will bring those support, you know, both in the current activities and in future regulatory filings.

Speaker Change: And just to add a little bit to that, we're not sure whether or not this is something that we do in a rate case through the regulatory process or through the legislature process. So we're still evaluating those things.

Julien Dumoulin: Got it.

Julien Dumoulin: And then related, I mean, it goes back to what Nick was asking a little bit, right? You've got this capex budget nips go roughly two, two and a half billion here in the near term. The later years drop off a little bit. How do you think about, you know, the affordability question and the ability to raise capex said differently, the extent to which that you see opportunities emerge. Could there be some element of deferral through the years? I get that there's sort of a step function lower in 26 as presented, but still, given the 4%.

Speaker Change: Got it and then related

Speaker Change: I mean, it goes back to what Nick was asking a little bit, right? You've got this CapEx budget, NIPSCO, roughly $2, $2.5 billion here in the near term. The later years drop off a little bit. How do you think about, you know, the affordability question and the ability to raise CapEx? Said differently, the extent to which that you see opportunities emerge, could there be some element of deferral through the years? I get that there's sort of a step function lower in 26 as presented, but still given the 4% number.

Shawn Anderson: Is there sort of a need to defer some of the some capex potentially within the NIPs go constrict here? Yeah, thanks. I appreciate that question. Yeah, now I see where you're going with that. I do think there's some offsets to that, right? We do see some O&M tailwinds that can come back to help moderate the bill in practices with the infrastructure investments. Most notably, there's much lower commodity prices as we move to a platform of 70% if you will renewables, which helps stabilize some aspect for the bill for customers. I think as we shut down our coal plants, we have two more units next year that will shut down that presents an opportunity for lower O&M to flow back to customers.

Speaker Change: Is there sort of a need to defer some of the, some CapEx potentially within the NIPSCO construct here?

Speaker Change: Is it not? Yeah, thanks Julien, appreciate that question.

Speaker Change: Yeah, I see where you're going with that. I do think there's some offsets to that, right? We do see some O&M tailwinds that can come back to help moderate the bill impact associated with the infrastructure investments. Most notably, there's much lower commodity prices as we move to a platform of 70%, if you will, renewables, which helps stabilize some aspects of the bill for customers. I think as we shut down our coal plants, we have two more units next year that will shut down. That presents an opportunity for lower O&M to flow back to customers. Project Apollo also continues to progress for us. It is achieving great results. That's helping us stabilize overall O&M. And while we target that flat O&M on an absolute basis, we have the potential to see higher O&M savings, if you will, and associated...

Shawn Anderson: Project Apollo also continues to progress for us. It is achieving great results that's helping us stabilize overall O&M. And while we target that flat O&M on an absolute basis, we have the potential to see higher O&M savings, if you will, and associated with something like the shape or shut down. It could be more specific in Indiana to the electric company in those circumstances. So we're thoughtful about it. I think there's opportunities for us to look across the system to grow. And the faster we can grow, obviously, the more we can bring down the cost of that flow to flat O&M on a per-customer basis across the broader network.

Speaker Change: with something like the Schaefer shutdown. It could be more specific in Indiana to the electric company in those circumstances. So we're thoughtful about it. I think there's opportunities for us to look across the system to grow. And the faster we can grow, obviously, the more we can bring down the cost of that flow to flat O&M on a per customer basis across the broader network.

Shawn Anderson: And that scale across nice source is something that becomes attractive for all customers and specifically customers in Indiana, which then benefits from the growth that we're seeing in a state like Ohio or Virginia, which is growing on the gas side and bringing down the cost on a per-customer basis in Indiana.

Speaker Change: And that scale across NiSource is something that becomes attractive for all customers and specifically customers in Indiana, which then benefits from the growth that we're seeing in a state like Ohio or Virginia, which is growing on the gas side and bringing down the cost on a per customer basis in Indiana.

Julien Dumoulin: Thank you, guys.

Durgesh Chopra: You're next question comes from the line of Durgesh Chopra from Evergaard ISI. Please go ahead. Hey team, good morning. Congrats on a solid quarter here. I just had one question, and that is related to the Pennsylvania race. Melody, thanks for all the color you shared up front. Maybe just a lot of focus, investor focus on the state, you know, your beer water utility got a decision where ROE was substantially lower than their previous decision. Just wondering if you could share more color on how things are going there, a potential for a settlement, and then how does that timeline look like.

Speaker Change: Thank you guys.

Speaker Change: Your next question comes from the line of Durgesh Chopra from Evercore ISI. Please go ahead.

Durgesh Chopra: Hey team, good morning. Congrats on a solid quarter here. I just had one question and that is related to the Pennsylvania rate case. Melody, thanks for all the color you shared up front. Maybe just a lot of focus, investor focus on the state, you know, your pure water utility.

Speaker Change: got a decision where ROE was substantially lower than their previous decision. Just wondering if you could share more color on how things are going there, potential for a settlement, and then how does that timeline look like? Thank you.

Melody Birmingham: Thank you.

Melody Birmingham: Yes, thank you for the question. You know, we do monitor what is taking place within each of her states with the utilities, and you know, understand some of the outcomes or the outcomes with the water utility. As far as our rate case, we're continuing, you know, to meet with the stakeholders, all of her interveners, and we are working towards settlement discussion. We don't know if there will be a settlement, but our teams always try to work towards the win-win outcomes for our customers as well as our stakeholders. So at this point, we continue in those discussions, and we will determine if a settlement is possible.

Melody: Yes, thank you for the question. You know, we do monitor what is taking place within each of our states with the utilities.

Melody: And, you know, we understand some of the outcomes or the outcomes with the water utility. As far as our rate case, we're continuing, you know, to meet with the stakeholders, all of our intervenors.

Melody: and we are working towards settlement discussion. We don't know if there will be a settlement but our teams always try to work towards the win-win outcomes.

Melody: for our customers as well as our stakeholders. So, at this point, we continue in those discussions and we will determine if a settlement is possible.

Durgesh Chopra: Okay, that's really all I had. Thanks again.

Unknown Executive: Okay, that's really all I had. Thanks again.

Richard Sunderland: Thank you. Your next question comes from the line of Richard Senderland from GP Morgan. Please go ahead.

Melody: Okay, that's really all I had. Thanks again.

Melody: Thank you.

Melody: Your next question comes from the line of Richard Sunderland from J.P. Morgan. Please go ahead.

Richard Sunderland: Hi. Good morning. Thank you.

Unknown Executive: Hi, good morning. Thank you for your time today.

Richard Sunderland: I think it's about the large power opportunity through another lens. What type of load growth could you see through Blackstone investment given the partnership in NISCO? Michael, why don't you take that one? So what I would say is, you know, we continue to look at economic development opportunities across our regions, and when we look at those investments and opportunities, obviously our partners are able to share that within the NISCO region associated with it. But really, it's the collaboration that we have with our communities, that we have associated with our states, with our governmental entities, and bringing in that economic development that lead to that investment.

Richard Sunderland: Hi, good morning. Thank you for your time today.

Richard Sunderland: Thank you. Thinking about the large power opportunity through another lens, what type of load growth could you see through Blackstone investment given the partnership at NIPSCO?

Richard Sunderland: Michael, why don't you take that one?

Michael: So what I would say is, you know, we continue to look at economic development opportunities across our regions, and when we look at those investments and opportunities,

Michael: Obviously, our partners are able to share that within the NIPSCO region associated with it.

Michael: But really it's the collaboration that we have with our communities, that we have associated with our states, with our governmental entities, and bringing in that economic development that lead to that investment.

Michael Luhrs: Maybe the one thing I would point to relative to potential is, as we're going through the current IRP process and working with the different stakeholders on that and walking that through, we have shown in our reference case an incremental 2600 megawatts of potential as we look through to 2035 associated with that. And we are running through those scenarios in cases now, but that would represent, you know, basically 100% increase to our peak load of system. So I think that gives a perspective relative to the potential with it. And in that potential is obviously the opportunity for our partners to be able to share in that upside.

Michael: Maybe the one thing I would point to relative to potential is, as we're going through the current IRP process and working with the different stakeholders on that and walking that through, we have shown in our reference case an incremental 2,600 megawatts

Michael: potential as we look through to 2035 associated with that and we are running through those scenarios and cases now but that would represent you know basically a hundred percent increase to our peak load of the system.

Michael: So, I think that gives a perspective relative to the potential with it, and in that potential is obviously the opportunity for our partners to be able to share in that upside.

Michael Luhrs: Got it, thanks. That's helpful commentary.

Unknown Executive: Got it, thanks. That's helpful commentary. And then similarly, given the Indiana Data Center tailwinds across the state and your commentary on reliability, do you see any potential for utilities to partner up on generation to upsize new plants? How do you think the state overall might think about ensuring supply to meet new load?

Michael Luhrs: And then, similarly, given the Indian and the data center tailwinds across the state and your commentary on reliability, do you see any potential for utilities to partner up on generation to up-sized new plants? How do you think the state overall might think about ensuring supply to me?

Speaker Change: Got it, thanks. That's helpful commentary.

Speaker Change: And then, similarly, given the Indiana data center tailwinds across the state and your commentary on reliability,

Speaker Change: Do you see any potential for utilities to partner up on generation to upsize new plants? How do you think the state overall might think about ensuring supply to meet new load?

Lloyd Yates: Meal Out. So, what we do, I think this is Lloyd, we do see it as an opportunity. You know, we'll work with our peer utilities and also with myself, but we think there's a significant opportunity for efficiencies bringing the various utilities. And I think what also makes the interconnection agreements on transmission a little bit easier. Great.

Speaker Change: But we do, I think, this is Lloyd.

Lloyd: We do see it as an opportunity. We'll work with our peer utilities and also with MISO. We think that's a significant opportunity for efficiency between the various utilities. And I think it would also make the interconnection agreements on transmission a little bit easier.

Unknown Executive: Great. That's all for me. Thank you.

Lloyd Yates: That's all for me. Thank you.

Lloyd: Great. That's all for me. Thank you.

Steve Fleishman: Your next question comes from the line of Steve Fleishman from Wolf Research. Please go ahead. Yeah, good morning. Just the, hey, Lloyd, just the, you mentioned this agreement to supply gas to a data center. Could you have a little more color on that? Is that, is that for backup power or is that to actually the core power of the data center? Or just maybe a little more color on that and whether there might be more of those digital dollars?

Speaker Change: Your next question comes from the line of Steve Fleishman from Wolf Research. Please go ahead.

Steve Fleishman: Good morning. Hey Lloyd, you mentioned this agreement to supply gas to a

Unknown Executive: Data Center. Could you give me a little more color on that? Is that it?

Melody: Data Center. Could you get a little more color on that? Is that for backup power or is that actually the core power of the data center? Just maybe a little more color on that and whether there might be more of those. Digital Dallas. Mellie, why don't you take that one?

Melody Birmingham: Melody, why don't you take that one?

Melody Birmingham: Yes, for digital dollars in Virginia, that's to provide power to the center directly. Okay. And do you see, so they're basically it's being fueled by gas, firepower, and are you seeing more that's correct about happening for your gas business?

Unknown Executive: Yes, for Digital Dulles in Virginia, to provide power to the center directly.

Melody: Yes, for Digital Dulles in Virginia, that's to provide power to the center directly.

Unknown Executive: Okay, and do you see fired power? And are you seeing more of that trend of that happening for your gas business, too?

Melody: Okay.

Speaker Change: Okay, and do you see...

Speaker Change: So basically it's being fueled by gas, fired power, and are you seeing more of that happening for your gas business?

Melody Birmingham: Yeah, so we don't talk a lot about that, Steve, but what are the opportunities we have, especially in Ohio and Virginia? Is the opportunity to build more gas infrastructure to support data centers. So more gas infrastructure going to generators provide energy to data centers. You know, building a gas pipeline for us is another opportunity that doesn't show up on our CapEx plan right now.

Speaker Change: Yeah, so we don't talk a lot about that, Steve, but what are the opportunities we have, especially in Ohio and Virginia?

Speaker Change: is the opportunity to build more gas infrastructure to support data centers. So, more gas infrastructure, going to generators, provide energy to data centers, you know, building a gas pipeline for us is another opportunity that doesn't show up in our CapEx plan right now. Like, Digital Dulles was not in our CapEx plan.

Steve Fleishman: Like digital dollars was not in our CapEx plan. Got it. Okay. And maybe just a minute.

Unknown Executive: And maybe just a minute. I know you did this as part of the

Speaker Change: Got it. Okay.

Michael Luhrs: I know you did this as part of the discussion at the commission, but remind us a little more of the color between the 2.6 gigawatts, the 8.6 gigawatts, and I think it was a number of like 30 gigawatts. And how are you defining what these different cases are? Michael. So when you look at the IRP, basically what you see is our peak load right now is roughly about 2,300 megawatts associated with the 2,600 megawatts that you're seeing was included in the reference case. And the reason that was included in the reference case is because, as we're working through with multiple counter parties associated with their interests within the state.

Speaker Change: And maybe just a minute, I know you did this as part of the...

Speaker Change: discussion at the Commission but remind us a little more the color between the 2.6 gigawatts the 8.6 gigawatts and I think it was a number of like 30 gigawatts and like how are you defining what these different cases are?

Speaker Change: Michael

Michael: So when you look at the IRP, basically what you see is our peak load right now is roughly about 2,300 megawatts associated with it. The 2,600 megawatts that you're seeing was included in the reference case, and the reason that was included in the reference case...

Michael: It's because as we're working through with multiple counterparties associated with their interests within the state, we feel like that is a reasonable expectation relative to qualified counterparties and potential, which we want to reflect in our scenarios.

Michael Luhrs: We feel like that is a reasonable expectation relative to qualified counter parties and potential, which we want to reflect in our scenarios. Above that, we also then have another 6 gigawatts above that that would be included in scenarios based on not only the potential for data centers that we've seen in interest within the areas. But also what we're seeing in additional economic development and growth just from, you know, base load capabilities. What we're seeing being on showing what that continues to be developed within our system. So we will run through that reference case. We will run through that scenario case associated with it.

Michael: Above that, we also then have another 6 gigawatts above that, that would be included in scenarios.

Michael: Based on not only the potential for data centers that we've seen in interest within the areas, but also what we're seeing in additional economic development and growth just from, you know, baseload capabilities, what we're seeing being on-shoring, what that continues to be developed within our system.

Michael: So we will run through that reference case, we will run through that scenario case associated with it, and then we will do on top of that, honestly, additional scenarios that allow us to look at different potential outcomes. But the big chunks are that base, you know, where we are today, 2300 megawatts,

Michael Luhrs: And then we will do, on top of that, honestly, additional scenarios that allow us to look at different potential outcomes. But the big chunks are that faith, you know, where we are today, 2,300 megawatts, 2,600 megawatts added to it, and then it's 6,000 on top. Okay.

Michael Luhrs: Okay, just high level, do we think about, I mean, I think about the territory there just historically, the very heavy industry of, you know, had been there of the past and probably a lot of that shut over time, so there like a lot of excess transmission and sites related to that that just make it particularly, you know, kind of good spot on top of the taxes and all the other stuff, is that? Yeah, that part of it, so Steve, I'll hit that one as well, but when you look at that Indiana territory, Lloyd hit on many of the attributes, but yes, I would say when you look at the combination of the, how it's near to large areas such as Chicago and others that have great fiber runs, you look at our transmission capacity and infrastructure through that part of the territory.

Michael: Okay.

Speaker Change: Okay, just high level, should we think about, I mean, I think about the territory there is just historically the very heavy industry of...

Speaker Change: You know, have been there in the past and probably a lot of that shot over time. So is there like a lot of excess?

Speaker Change: Transmission and sites related to that, that just make it particularly...

Speaker Change: You know, kind of good spot on top of the taxes and all the other stuff is that

Michael: So Steve, this is Michael, I'll hit that one as well, but when you look at that Indiana Territory, Lloyd hit on many of the attributes, but yes, I would say when you look at the combination.

Speaker Change: of how it's near to large areas such as Chicago and others that have great fiber runs.

Speaker Change: You look at our transmission capacity and infrastructure through that part of the territory, it has very strong characteristics associated with it.

Michael Luhrs: It has very strong characteristics associated with it. We have multiple sites that have, you know, 345 kV lines running through room and multiple 345 kV lines, so there's good transmission capacity and opportunity. In addition, you add on top of that there's accessibility of land, as well as water, roads, all those are positive characteristics. But then I would say, one of the most beneficial is how the state, the governmental, the economic development. Activities of those bodies is helping to facilitate the opportunities in the state, as well, relative to the diversification of tax-based load, etc. Got it.

Speaker Change: We have multiple sites that have 345 kV lines running through them and multiple 345 kV lines so there's good transmission capacity and opportunity.

Speaker Change: In addition, you add on top of that, there's accessibility of land, as well as water, roads.

Speaker Change: All those are positive characteristics, but then I would say one of the most beneficial is how the state, the governmental, the economic development activities of those bodies is helping to facilitate the opportunities in the state as well, relative to the diversification of tax base load, etc.

Steve Fleishman: Okay, thank you.

Speaker Change: Got it. Okay. Thank you.

Paul Fremont: Question comes from the line of all Freeman from Leidenburg, please go ahead. Thank you very much. When I look at the 500 million junior subordinated debt that you issued in May, that should have 50% equity credits, so that's roughly 250 million of equity. Is that included in the 600 million that you sort of identify as part of your ATM, or should we think of that as incremental to the 600?

Speaker Change: This question comes from the line of Paul Freeman from Leidenberg. Please go ahead.

Unknown Executive: Thank you very much. When I look at the 500 million junior subordinated debt that you issued in May, that should have 50% equity credit, so that's

Paul Freeman: Thank you very much. When I look at the 500 million junior subordinated debt that you issued in May, that that should have 50% equity credit. So that's

Paul Freeman: Roughly $250 million of equity. Is that included in the $600 million that you sort of identify as part of your ATM, or should we think of that as incremental to the $600 million?

Shawn Anderson: Thanks, Paul. This is Sean. I would, I would think about that as incremental to the 600. We're still expecting to issue up to 600 million dollars of ATM equity in 2024 and continue to maintain that balance sheet with 200 to 300 million dollars of ATM equity for each year of the plan thereafter. The use of the junior subordinated notes for us is a diversifier that helps us raise credit quality, potentially giving us even more cushion relative to the downgrade threshold of 13%. It also helps us manage the overall maturity curve that we have long term on the debt profile of the business.

Paul Freeman: Thanks, Paul. This is Shawn. I would think about that as incremental to the 600. We're still expecting to issue up to $600 million of ATM equity in 2024 and continue to maintain that balance sheet with $200 to $300 million of ATM equity for each year of the plan thereafter.

Speaker Change: The use of the junior subordinated notes for us is a diversifier that helps us raise credit quality, potentially giving us even more cushion relative to the downgrade threshold of 13%. It also helps us manage the overall maturity curve that we have long term on the debt profile of the business.

Shawn Anderson: So was it just in terms of upsizing then sort of the equity this year, is it just to sort of increase the level of cushion or was, was there some, you know, something that changed sort of in the capital spending profile that caused you to sort of increase your the amount of equity. Yeah, it's a great question. I think it's really more to enhance the cushion that we have in the current year. We've also seen other headwinds come through our plan, such as weather, lower proceeds, cash proceeds coming from warmer-than-usual weather in the first quarter, as an example.

Speaker Change: So, was it just, in terms of upsizing then, sort of the equity this year, is it just to sort of increase the level of cushion, or was...

Speaker Change: Was there some, you know, something that changed sort of in the capital spending profile that caused you to sort of increase your, the amount of equity?

Unknown Executive: Yeah, it's a great question. I think it's really more to enhance the cushion that we have in the current year. We've also seen other headwinds come through our plan, such as weather, lower receipts, and cash receipts coming from warmer than usual weather in the first quarter, as an example. And you still need to incorporate that into the overall FFO to debt that the rating agencies are asking us to maintain. So it gave us an opportunity to look across the curve and find a different way for us to source that equity content without having to go to a traditional equity marketplace.

Speaker Change: Yeah, it's a great question. I think it's really more to enhance the cushion that we have in the current year. We've also seen other headwinds come through our plan such as weather, lower receipts, cash receipts coming from

Shawn Anderson: And you still need to incorporate that into the overall FFO to debt that the rating agencies are asking us to maintain. So it gave us an opportunity to look across the curve and find a different way for us to source that equity content without having to go to a traditional equity marketplace.

Speaker Change: warmer than usual weather in the first quarter as an example and you still need to incorporate that into the overall FFO to debt that the rating agencies are asking us to maintain. So it gave us an opportunity to look across the curve and find a different way for us to source that equity content without having to go to a traditional equity marketplace.

Paul Fremont: Great. Thank you very much. Thank you.

Speaker Change: Great, thank you very much.

Unknown Executive: And that concludes the question-and-answer session.

Operator: And that does conclude the question and answer session. I would like to turn the floor back over to Mr. Lloyd Yates, CEO and President, for closing remarks.

Speaker Change: Thank you.

Lloyd Yates: I would like to turn the floor back over to Mr. Lloyd Yates, CEO and President for Customer Marks. So thank you for your questions. We're excited about the opportunity with Lipskill.

Speaker Change: And that does conclude the question and answer session. I would like to turn the floor back over to Mr. Lloyd Yates, CEO and President, for closing remarks.

Lloyd Yates: So thank you for your questions. We're excited about the opportunity with LIPSCO. Thank you for your interest, and look forward to seeing you guys next quarter.

Lloyd Yates: So thank you for your questions. We're excited about the opportunity with LIPSCO. Thank you for your interest and look forward to seeing you guys next quarter.

Unknown Executive: Thank you for your interest and look forward to seeing you guys next quarter.

Unknown Executive: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.