Q3 2024 Xcel Energy Inc Earnings Call

Hello and welcome to Excel Energy 3rd Quarter 2020 for earnings call. My name is Melissa and I will be your coordinator for today's event.

Please note this conference is being recorded and for the duration of the call your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star followed by one on your telephone keypad to register your question.

Questions will only be taken from institutional investors. Reporters can contact media relations with inquiries and individual investors and others can reach out to investor relations.

If you require assistance at any point, please press star, followed by zero, and you'll be connected to an operator. All now turn the call over to Paul Johnson, Vice President, Treasury, and Investor Relations. Please go ahead.

Paul Johnson: Thank you. Good morning and welcome to Excel Energy's 2024-3rd Quarter earnings call. Join me today, our Bob Frenzel, President, Chairman, Chief Executive Officer, Brian Van Abel, Executive Vice President and Chief Financial Officer. In addition, we have other members of the Management Team in the room to answer questions if needed.

This morning, we'll review our third quarter results in highlights. Share recent business and regulatory updates. Update our capital and financing plans and provide 2,025 guidance.

Fries that accompany today's call are available on our website. As a reminder, some of the comments during today's call may contain forward-looking information, significant factors that could cause results different from those anticipated, are described in our earnings releases, and SEC filings.

Paul Johnson: Today we will discuss certain metrics that our nine gap measures. Information on comparable gap measures and reconciliation are included in our earnings release.

In the third quarter of 24, the Minnesota Commission dislodved $46 million of replacement power costs associated with the extended outage of their circle plant in 2011.

As a result, we recorded a charge of 35 million or four cents in the third quarter, which was an addition to an 11 million dollar or two cent charge that was accrued in the second quarter of 24, related to that matter.

Given the non-recurring nature of these items,

Both charges have been excluded from third quarter and year-to-date earnings.

Paul Johnson: As a result, our gap earnings for the third quarter of 24, where dollar 21 per share, while our ongoing earnings, which exclude this charge.

Paul Johnson: and we're a dollar 25 for sure. All for the discussion in our earnings call today will focus on ongoing earnings. For more information on this, please see this closure in our earnings release. I'll now turn the call over to Bob.

Thank you Paul, good morning everyone and thank you for joining us today.

Police report that we delivered another quarter of solid operational and financial progress.

We continue to employ capital for the benefit of our customers and communities.

Paul Johnson: and we enable a future powered by cleaner fuels and a more resilient and intelligent grid.

We partner with stakeholders to encourage economic development and we provide products and services capable of leading our customers most important needs.

In the most recent quarter, we invested $2 billion in resilient and reliable energy infrastructure.

We delivered ongoing earnings of $1.25 per share for our owners.

We provided industry leading storm response, and strong customer reliability despite challenging conditions.

and we accelerated our wildfire risk reduction measures to enable safer and more resilient communities.

Excel Energy Commitment to our communities and investors is anchored by our core investment thesis as a clean energy leader.

The more than two decades we've provided we've been a leading provider of wind energy and with our filed resource plans we expect to stay in that position.

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

Paul Johnson: We have a long-term and transparent growth plan making investments in clean generation, new and enhanced energy grids, and economic development programs to support our community's vitality.

Deepened our commitment to serve as support customer needs efficiently.

For example, since 2020, our continuous improve programs have saved almost a half a billion in O&M expense while improving operating outcomes in reducing risk.

In addition, we've kept our ONM costs significantly below the rate of inflation over the last 10 years.

and our steel profile strategy is delivered more than $4 billion in customer fuel-related savings since 2017.

Paul Johnson: Finally, this discipline alongside supportive state and federal policies enable us to reduce emissions and keep residential electric and natural gas bills 28 and 14% below the industry average and growth well under the rate of inflation.

We're 16th since the head of 2023 year to date earnings and as a result we are reaffirming our 2024 guidance.

A $3.50 to $3.60 per share. And we are initiating our 2025 earnings guidance range of $3.75 to $3.85 per share.

And today we're introducing our updated five year 45 billion dollar capital investment plan which centers on four key areas.

Clean Energy, which continues investment in generation that provides customers with a secure and clean energy future while helping our states and our customers meet their ambitious policy goals.

Paul Johnson: [inaudible]

Paul Johnson: Customer electrification, which helps customers electrify their transportation needs, transitioning homes and businesses away from fossil fuel heating and converting fossil fuel loads to clean electric power loads.

New Load Growth, which expands our electric system to support customer-searching demand and requirements over the next decade and beyond.

and Safety and Reliability, which modernizes and hardens our system to ensure continued safe operations and address increasing risks from severe weather.

There's a lot of focus across our industry and country regarding data centers. Excel energy has nearly 9,000 megawatts of opportunities in our customer pipeline before 2030.

The scale of this pipeline gives us the ability to thoughtfully negotiate agreements that deliver the energy and capacity needed to important new customers in the region while protecting Excel energy and its customers and ensuring lasting relationships with our data center customers.

Paul Johnson: and sure that new data center load that's brought under our system benefits all customers.

The drive's load growth to increasingly decarbonite energy system.

Generates Economic Growth and Vitality in our communities.

and delivers on the national parative to support a domestic data center industry.

As a result of these guiding principles, we anticipate we will secure contracts with about 25% of this pipeline in the five year forecast period.

We also expect these opportunities to continue to grow and the need extends well past the next decade.

We've previously signed data center agreements with Metta and QTS and completed land sales with entities including Microsoft to support new facilities.

and October, a new data center customer completed a land acquisition service territory and we're in the final stage of the signing service contracts with that party.

Paul Johnson: [inaudible]

Turning to the supply side of the equation, we continued progress during the quarter on our clean energy transition through multiple resource planning and RFP processes.

We reached a settlement in our upper Midwest resource plan and as part of that settlement, 720 megawatts of company owned natural gas CTs and battery investments were selected.

In addition, the agreement reflects the need for an incremental 4200 megawatts of wind solar and storage. A portion of which is included in existing RFP solicitations.

The settlement's pending a decision by the Minnesota Commission, which is expected in the first quarter of 2025.

and October we made a new energy resource filing in Colorado called the Just Transition solicitation.

Our projections indicate the need for the 14,000 megawatts of new generation to meet the phase out of our coal plan to accommodate increasing demand from data centers into achieve state and customer emissions goals.

We anticipated the decision that filing in fall of 2025 with RFPs to be issued in early 2026.

and we're working on our solicitation in SPS, which can ultimately yield more than 5,000 megawatts of renewable and firm dispatcher generation. Did you do in January of next year and we expect commission approvals in 2026?

Paul Johnson: [inaudible]

Protecting our customers from the threats of extreme weather also remains a top priority. In August, severe thunderstorms brought heavy rain, hail, and winds of over 60 miles an hour to customers in Minnesota and Wisconsin.

Paul Johnson: Excell energy employees and contractors safely and promptly restored power to over 250,000 customers who lost service during those storms.

Paul Johnson: We're thankful for the dedication of our employees and contractors that ensure that our communities continue to have safe and reliable service that they expect from Excel energy.

and the addition we like to thank our crews who worked tirelessly to provide mutual aid assistance to other utilities to support recovery and restoration efforts from the devastating hurricane, Talline and Milton.

Paul Johnson: and regarding wildfire risk reduction, we continue to make progress on our accelerated wildfire mitigation efforts, as well as our Colorado wildfire mitigation plan filing.

and the fourth quarter, we anticipate filing our Texas Resiliency Plan, which will include wildfire mitigation in the Southwest.

Paul Johnson: Finally.

Turning to a tradition that I'm very proud. During the third quarter, nearly 2,200 volunteers from Excel energy in our two communities took action to support nonprofit organizations during our 14th annual Day of Service.

Volunteers dedicated almost 8,000 hours to support 125 projects for nonprofits across our age states.

We're grateful to the thousands of volunteers and nonprofits that came together, come together year after year to put good energy in the action that fuels growth, influences change and lifts up our neighbors.

With that, turn over to Brian.

Brian: Thanks Bob and good morning everyone.

Starting with our financial results.

Brian: Excel Engie had ongoing earnings of $1.25 per share for the third quarter of 2024.

Brian: and I'm going earning his $1.23 for share in 2023.

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

Brian: O'KIMS for great cases in non-fuel riders increased earnings by 25 cents per share and higher AFUDC increased earnings by 4 cents per share.

Offsetting these positive drivers were up.

Iroan, I'm expenses decrease earnings by 9 cents per share. Tired of appreciation and amortization decrease earnings by 8 cents per share reflecting our capital investment programs.

Higher interest charges decreased earnings by 8 cents per share driven by rising interest rates and increased that level to fund capital investments and other items decreased earnings by 2 cents per share.

Brian: Turning to sales, year-to-date weather in leap year-justed electric sales increased 0.2%. However, third quarter weather adjusted sales increased 1.3%. Based on our forecast, we are reaffirming our full-year guidance of a 1% increase in weather adjusted electric sales.

A new five-year plan includes five percent per year electric sale to grow.

of which approximately 50% is from data centers with other growth coming from the oil and gas industry in EVs.

Our sales forecasts only assumes contracted or high probability data centers.

We also expect large data center log, we also expect that large data center log growth will continue beyond our five-year plan and there's upside to what we have included.

Brian: the

Brian: [inaudible]

Dear to date, O&M increased $58 million. Primarily driven by increased generation maintenance, damage prevention, wild firm mitigation, and storm expenses.

In addition, we are facing increased cost from our recent accessibility insurance renewal. As such, we are revising our full year-owned M4, past 3 to 4% increased relative to 2023.

3-2-4, we also made progress in several rate cases.

Brian: Earlier this month, the Colorado Commission completed deliberations on our natric acid case, which reflects an estimated rate increase of about approximately $130 million.

Brian: which includes $15 million of incremental depreciation that was not included in our original request.

The decision was based on a historic test-year of an average rate-based and a weighted average cost of capital of 7%. Reflecting an ROE range of 9.2 to 9.5%. An equity ratio of 52 to 55%.

Rachel go into fact in November.

In early November, we plan to file a Minnesota electric break case, seeking a rate increase of $490 million over two years. Based on an ROE of 10.3% in the 52.5% equity ratio.

We're also requesting interim rates of $224 million to go into fact in January of 2025. Final decision is expected in 2026.

Brian: We continue to make progress in the Smokehouse Creek Wildfire claims process.

Brian: We've settled 86 of the 179 submitted claims, which will be review as a positive and constructive outcome. 23 lawsuits have also been filed.

In addition, there is no change to our estimated accrued liability of $215 million.

As a reminder, we have approximately 500 million out of excess liabilities in terms coverage for this fire.

Speaker Change: Gifting Tour Investment Plans

We provided an updated $45 billion five-year base capital expenditure forecast.

Brian: which reflects annual rate-based growth of 9.4%.

These investments are critical to sort of growing electric demand, meet clean energy goals, and ensure system safety and reliability.

We have an additional $10 billion plus of pipeline of potential investment, which we view as conservative and could be significantly higher.

and the additional capital reflects.

Brian: Generation from RFP's and resource plans.

Brian: Low Girl from Data Center's and beneficial electrification.

and the Digital Transmission, including opportunities from Microsoft Trance 2 and the Southwest Powerpool.

We also refreshed our base financing plan, which reflects approximately $19 billion of debt in $4.5 billion of equity.

We anticipate that any incremental capital investment would be funded by approximately 40% equity in 60% debt.

It's important to recognize we've always maintained a balanced financing strategy, which includes a mix of debt and equity to fund the creative growth while maintaining a strong balance sheet in credit metrics.

As a result, you'll notice that we should $1.1 billion equity via our ATM program this year.

The Secretary of the Issues is not part of our 25 to 29 financing plans, and reflects our commitment to credit quality while delivering on our long-term financial objectives.

and maintaining solid credit ratings in favorable access to capital markets are critical to fund the clean energy transition to deliver strong shareholder returns and keep customer bills well.

Brian: [inaudible]

Moving to earnings, we're reaffirming our 2024 ongoing earnings guidance range of $3.50 to $3.60 per share.

We're also initiating our 2025 earnings guidance range of $3.75 to $3.85 per share, which will relax 7% growth from the midpoint of 2024 guidance.

Key assumptions are detailed in our earnings release.

We're updating our long-term EPS growth objective to 6 to 8% with expectations to deliver earnings in the upper half of the range.

Brian: The increase in the EPS growth rate reflects our significant investment pipeline and confidence in our financial outlook.

We also modified our Diving Growth Objective to 4 to 6% with the expectation to be at the low end of the range. A lower Diving Growth rate allows us to retain additional cash flow to fund growth and lower equity funding needs.

In addition, it will lower our dividend pay-al-race over time, which provides greater financial flexibility and drive-polleter for the future.

with that. I'll wrap up with a quick summary.

Brian: We reached a settlement in our Minnesota resource plan and found our latest Colorado resource plan, which allowed us to lead the clean energy transition, ensuring customer affordability and reliability while driving economic growth.

Brian: We continue to make progress on our wildfire mitigation plans which will reduce risk from extreme weather.

We announced an updated capital investment program that provides strong, transparent, ray-based growth and significant customer value.

We provided a balanced financing plan to fund the creative growth while maintaining a strong balance sheet and credit metrics.

Brian: We're on track to meet our 2024 ongoing earnings guidance and have provided 2025 guidance consistent with our growth objectives.

and we revised our long-term earnings growth to the upper half of the 68% objective range and dividend growth to low end of the 4 to 6% objective range, which is indicative of our significant capital investment pipeline.

Brian: This concludes our prepared remarks operator. We'll now take questions.

Speaker Change: Thank you very much. As a reminder, if you would like to ask a question on today's call, you may press star, followed by one on your keypad to register your question. To withdraw your question for any reason, you may press star too.

Our first question is from Nicholas Campanella with Barkley's. Please go ahead.

K. Good morning, thanks for taking my questions.

More than Nick.

Speaker Change: So, it's morning, so...

I just wanted to ask, you know, you were talking to your prepared remarks, you had a customer make a large land acquisition

Speaker Change: What specifically, where was that exactly, was that in Minnesota? Did you provide more details on that? Is that included in this 5% consolidated load growth outlook on term for the company? Or is that pressure higher? And then how do we think about rate design there? I know that's a lot in one. Thanks.

Hey, Nicky, good morning. The undisclosed customer, but yes, it wasn't Minnesota, and that's one of the calls, has we think about high probability laws. We've been, you know, as you can imagine, in active discussions with them, in significant progress on services agreement. So great to see the continued progress we have on the data center fronts.

Brian: Um...

And so I'm going to work getting into, as part of the negotiations, you get into rate design in terms of pricing, but I think as important as a Bob laid out the guiding principles and how we think about it and ensuring that all of our customers benefit from these large loads that come on. So it helps drive economic growth first, state, but also benefits all of our customers.

Brian: I think it's just something I'm not sure if people caught up with those a planning session at the Minnesota Commission on Tuesday that included.

Brian: The data center is IBEW, Department of Commerce, Austin, other significant stakeholders talking about how do we support and move faster on the data center front? And so we're pretty excited about those conversations if that are really constructive and look forward to working with our commission on these opportunities.

and Nick, just to answer, I think, probably part two of a three-part question was, you know, as it included in our forecast.

Brian: So we've got...

Brian: Um...

Brian: About a quarter of that 9,000 megawatts are included in our five year sales forecast.

This land acquisition would be one of the projects that would be a part of.

Brian: and that forecast obviously.

Brian: You know, we think that this is a trend that's likely to continue in our regions for a lot of reasons and we have real confidence and our ability to meet that forecast as well as to continue to see sales growth transition into our regions over time.

Okay, that's great. I appreciate that maybe a one-part question, but on the finance thing, I know you price the 1.1 billion. Are you done for the year? Would you dearest to five-year planet at this point? And, you know, what's the right, you know, mechanisms to do that in your mind? Thanks.

Yeah, Nick, thanks for the question. Yeah, as you can see, we did about a billion dollars of PM issuance in Q3, so certainly a very strong quarter for us. And that does fulfill our equity needs for the year.

and that was our plan for the year. Now it doesn't mean we can't be offered to nistic. If we think through the end of the year we like something but we actually don't need to do anything through the end of the year.

Brian: Second part of your question, you know, look, 8, we view an ATM and we've always talked about this as it's an efficient mechanism to get our equity issues and to zone. But, you know, it doesn't mean we won't look at all other products and options on the table as we move forward.

Speaker Change: Thank you so much.

Thank you, our next question, come from Steve Slaicman from Wolf's Research. Please go ahead.

Dear High Good Morning. Good Morning, okay?

Speaker Change: We can hear you great.

Good, so just wanted to reconcile the capettes increase with equity, because I think capettes went up about 6 billion, but equity only went up.

Speaker Change: Ferdouille.

So it's kind of a lot less than that, 40, 60. So is that because you're pre-funded, some of this billion-warn is that because cash flows just getting better or just how should we think about that?

Speaker Change: Yeah, A-Steeve a couple things and thanks for the question.

Speaker Change: Um...

One, you're right, you know, generally we guide investors to a 40% 60% mix.

Part of that is we do get a little bit of benefit as we lower the dividend growth rate that I talked about That helps a little bit in the five year but also gives us a more dry powder longer term

but is really about kind of a cash full in the timing of the capital and if you look at how we design it when we put together that slider on the credit metrics are credit metrics with very stable. So, but generally still going forward, we expect that 46-mix.

I'm a we're able to be a little bit flexible here and not have as much equity as we need it as we roll for with our five year.

Speaker Change: Okay, great, that's helpful.

and all these type of questions just that.

You know, my gun wood worked in, hopefully nearly end of wildfire season if it ever ends and we haven't seen anything happen. So maybe you could just talk to, five maybe just talk to the actions that you've taken while on fire mitigation. How you feel they're working, what else?

You might do and then related, could you just clarify the insurance amount in our tutoring?

Deferral that, you know, guidance, or you assume you had to expand it in 25 or yeah.

Good evening. Yeah, great questions. Appreciate it. You know, I've said before, I'm very proud of the activities and the accomplishments that the company has executed to predict our customers and our communities. You know, since the March timeframe, I think we've really built a lot of muscle around.

around our wildfire protection mechanisms.

First and foremost is operating the system with safety and so our capabilities in both enhanced powerline safety settings and our abilities to execute PSPS.

is first and foremost in our minds of what helps protect our customers and communities in that process. I think we built a lot of muscle and capability there. Over time we know that we have to harden the system and segment the system and we take a lot of lessons learned.

Speaker Change: from our peers in California and what they've done in terms of situational awareness, the ability to see whether they're coming sooner or the ability to alert their customers faster and more confidently in their ability to segment the system so that the impacts of EPSS or PSPSR are mitigated or muted in that process.

and we've been working on the...

We've been working on the intelligence side of that. We've installed AI cameras, we're starting to look at weather stations.

and starting corporate other data feeds in this timeframe. And again, huge benefits from being a fast follower here to what other people have plowed ground on and learning that they've had over a decade of dealing with this kind of risk.

and then on the regulatory side, obviously we're moving forward with our Wildfire Plan in Colorado and a system resiliency plan in Texas. All of those will help us.

Speaker Change: and the way he's doing it, is to accelerate polar inspections, accelerate a replacement of anything that we see out there, more aggressive vegetation management. So I think we've done a lot.

and the short term. I think our actions as we go forward are going to be very much focused on how we mitigate the impacts on our customers over the long term and making sure that we have a resilient and safe system into the future.

Hey Stephen, all-handle that second part of the question around just insurance deferrals. We completed our insurance renewable in this month. Premiums are significantly higher as we kind of alluded to in Q2. We saw premiums triple on us.

Speaker Change: Dick Cassie did shrink some. So we do have, we have a regulatory deferral docket in front of the Colorado Commission, where they have a sudden expedited schedule to get the decision by the end of the year, and we're in discussions with our peer utilities and staff in Texas.

and the industry issue around increasing excess liability premiums. We do in conclude, constructive regulatory outcomes in our 2025.

Guidance, and that is included in the getting recovery of our referrals, and constructive cost recovery around our welfare mitigation plans in an overall part of our constructive regulatory outcomes for 25.

Speaker Change: Okay, thank you.

Speaker Change: Thank you, our next question comes from Carly Dabinport from Goldman Sachs. Please go ahead.

Hey, good morning. Thanks for taking the questions and for all the updates.

Maybe you just to start on the new capital plan. I guess how should we think about the kind of six billion dollar capital increase relative to the 40 basis points increase in the rate-based cagor, such as the function of base effects rolling forward the plan another year or anything else that we should be keeping in mind there.

Don't Carl, you're exactly right. It's just a function of rolling forward and having a bigger base as we roll forward to the next five years. So that's all it is a function of nothing else going on.

and then maybe to follow up, just on the 5% new load growth forecast, you mentioned in the slides that being sort of back end loaded due to the timing of data center load coming in. So is there any other granularity you can provide in terms of sort of one you expect to see that more significant inflection and load and any sense of the magnitude there?

Speaker Change: Yeah, Carla, I think, you know, if you look at our 2025 guidance, our sales guidance is...

3% for 25 and expected to go up to their...

to 5% in the years after that, in really peaking in 2020, as we see it. And that's really driven by, like I said, kind of a combination, which is what we view as a great have the diversity. Half of that sales growl to the 5% is coming from data centers. But we also have significant growth in the oil and gas.

Regen in SPS, the Permian Basin, and a certain to see the effects of beneficial excavation around EVs and other BE in Colorado that helps drive in kind of the other part of that growth. So I think we see kind of more kind of middle to back and weighted, but also having this diversity in growth is helpful in the overall plan.

Great, thanks so much for the color.

Thank you, our next question is from Jeremy Connet with J.C. Morgan, please go ahead.

Speaker Change: Hi, good morning. Take a morning, Jeremy.

Jeremy Connet: and Happy Halloween. Thank you for all the details that you provided on the call today. Just wanted to come back to kind of high level thought process here. Historically, you've stuck to the conservative 5% to 7% EPS cakeer with the plus more recently.

But noted that, you know, there's all these array of new opportunities as you talked about, you know, and so just want to get, I guess your thought process on moving it to 68% cagur at this point and it sounds like you're still at the high end there, so just want to kind of walk through that a little bit more of possible.

Yeah, I hate Jeremy Good morning. You know, I think you think about it in two ways is one. Now if you just look at our base plan.

Speaker Change: and the majority of that, that caple, investing in our wires business, where folks on it kind of safe and safe and resilient and our wires business, and that base plan drives 9.4% rate-based growth.

But then it's all about the additional steel and steel in the ground related to the projects we need to deliver on retiring our coal plants as Bob talked about and executing on 5% plus percent electric's growth. So we view that as a tremendous opportunity.

Speaker Change: Rob talked about a resource plans in flight. When you add all those up,

and the first time we've been in the industry for over 20 years. There's between 15,000 and nearly 30,000 megawatts of generation. We need to add to our system to serve our customers over the call through 20, 30. So a huge opportunity.

Speaker Change: and I think the other part is that we've demonstrated through the RFP process recently that can be extremely competitive in these generation procurement processes.

and the company's, though we have a top-care internal regulate development team that can bring projects that are very competitively priced. And so we expect to build a no one. I would say at least $10 billion of those pipeline projects.

and that's why we're sitting here very confident about not only the next five years, but longer-term, executing at that upper half of the range and potential going above it.

Speaker Change: Got it, that's very helpful there. So with that last comment potentially going above it, I thought it might be too early to ask there, but just wanted to dive in a little bit more. I think you talked about three buckets that feed into the incremental cat-backs opportunity. Can you weigh out? I guess over the next 12 months what some of the milestones could be and kind of what would take to move more of that into plan.

Speaker Change: Yeah, so let's hit the first ones that are more near-term. MysoTrunch 2.1, which we should get to the decision by the end of the year, then we'll need to go through the regulatory approval processes. But that's roughly about $2 billion of transmission opportunities.

We got the SPP ITP that was just approved by the board this month

and that's another about $2 billion of projects that we expect to be awarded to us because the reliability driven projects, meaning that near the need is within a few years. So those are kind of the transmission buckets.

Speaker Change: SPS RFP is another big bucket 5 to 10,000 megawatts. We'll get busy in January and the first look on Vassos will probably get is roughly...

Probably Q2 of next year and we follow our preferred portfolio at New Mexico. So now at least get some insight into that with approvals.

going into 2026 for that.

Speaker Change: Um...

The Minnesota Resource Plan, we should get a Q1 decision out of our commission on the overall resource plan, which includes as Bob mentioned 720 megawatts of storage and CTs in there, along with some additional RFPs we're working through.

and then finally related to Colorado. We just filed the Colorado Resource Plan, which was pretty excited about with upwards of 14,000 megawatts in that.

and we'll work through that resource plan in within a year and then we'll file RFB. So there'll be a little bit longer data out of the opportunities, but you'll continue to see an execution of opportunities throughout the next 12 to 24 months, farce.

You know, Jeremy just to add under Brian's comments. I'm really...

Speaker Change: Excited, we're starting to see this energy transition we've been talking about and working on for the past five years.

really start to accelerate as we start to get to the period where we're...

You know, probably removing our coal plants from the system and replacing them with cleaner. In some cases, lower cost generation resources. Brian's right, the development team that we've built in house starting with our...

Speaker Change: 2017 steel for fuel plan has been an incredible asset for the company. We've remiss if I did talk about...

and our transmission capabilities. Obviously we have a lot of transmission to build in the company and across the country. We've been the leading provider of new line miles of transmission over the last 15 years as a company and with all the projects we mentioned here, whether it's the Colorado Power Pathway, whether it's

Speaker Change: LRTP 2.0 2.1, the ITP process in the Southwest. You've got a terrific transmission development construction team here that are helping us execute on a very strategic asset for the company and the country.

Speaker Change: Got it, exciting times ahead, thank you for that.

Thank you, our next question is from Julian Dimolean Smith from Jeffree's, please go ahead.

Speaker Change: Good morning team!

Speaker Change: Keep going, I'm super impressed here, so thank you.

Speaker Change: Look, I am wonderful up on the sixth date and obviously the timing here is obviously coincident with an accelerating backdrop on sales growth here but what does it say about confidence in wildfire outcomes in your mind? Is there anything implicit in the reading to this? I mean, again somewhat of an unknowable but I'm just curious if there's anything that you see in a litany of recent developments on that front as well here if you can.

Good morning. I'm sorry, Julie. It's Bob. Thanks for the question. First of all, as I think about, you know, wildfire, current proceedings as well as...

Speaker Change: Litigation and Long-Term.

Alcum's in our state. I feel confident.

Speaker Change: and our wildfire position, both from my comments earlier on what we're doing to protect the customers and the community going forward.

Speaker Change: as well as our position is unchanged as it pertains to our litigation matters both in the Southwest and in Colorado regarding Marshall and Smokhouse Creek.

Young, you know, long-term, I think we're doing the right thing in the system to card net and protect our customers. There's obviously some investment that's needed there.

Speaker Change: I would suggest that obviously six to eights and ongoing earnings number if we had an unexpected outcome and any of the proceedings, we'd have to accommodate that. Our position is then, we didn't work, we didn't act negligently in our systems in the Smokhouse Creek.

You know, our accruals are consistent quarter of a quarter and within our limits of our insurance.

and we look forward to working through those proceedings and really getting a behind us and starting to partner with our communities as we move forward in time with our resiliency plans.

Okay, all right, fair enough, and actually just go back to see this question for earlier and for the work that I get Jeremy all the time. It just, I was said, you mentioned EPSS and PSPS, I mean these are obviously terms we know well from California. I mean given, you know, you talk about being a fast-forward, how quickly can some of this be implemented, right? In terms of achieving meaningful derisking of this system here. I mean what kind of time frame are you looking at? I mean seems like some fairly readily implemented kind of solutions.

So, look, I think...

Speaker Change: Quickly, and I mean that in a, we have the capability to do PSPS today. We have the capability to do EPSS today as we think in every single day we do a wildfire risk assessment on the conditions across our system, across all eight states and make decisions on how we position the system, how we set up breakers and how we set up controls.

I think that the difference between where we sit and where some of our peers in California sit

is the granularity with which we can do that. Our protection may come at a...

and Tyre Feeder, Leville, which might be a 10-mile long stretch of distribution line.

are goal in the future to be able to segment that distribution line into much more man's will maybe one mile chunks instead of one ten mile chunk so that we can be more targeted with the protections and more protective of customers.

So I think as the final analysis, we have great...

We have great sort of bulk protection systems and we need to get, you know, I would say we're working with a flood chamber today. We need a scalpel in the future and that takes investment over time. But I think from a true protection mechanism, we've got a lot of the capabilities that we need. It's just a little bit blunter than we'd like.

Thank you, our next question is from Durgish Chopra with Evercore IFI. Please go ahead.

Hey team, good morning, thank you for taking my questions. Just maybe on the good to see the equity out of the way for this year, you know, strong quarter, Brian, like you mentioned. Maybe just how should we think about the timing of the 4.5 billion that is in the plan?

Radable over basically same amount over year annually or back in loaded just any color there.

Yeah, a good morning, Dergesh.

Yeah, I think you've heard this before, as we don't necessarily comment on, or give guidance on the timing of our equity, but here's...

The way to think about it is if you look at the shape of our annual capex over the next five years That's a good way to assume it kind of follows that shape as our annual capex is larger in the first few years. So that's how I think about it.

That's helpful. Thank you, Brian. And something that is near and dear to you, the transferability, maybe just help out what portion of the CFPW in the plan is transferability, how are you doing there versus your annual target for 2024?

Speaker Change: We've executed all of our credit sales for 2024, working on 2025, significant demand, and really it's kind of an in and out right in terms of seeing, you know, we would.

Give the customer what the offset and revenue and then we'd used to pick it up on the tax line. So, I'll provide a cash flow perspective in and out.

You know, we've had many discussions about this, I think, every of us is leaders in this.

in terms of the opportunity is also working with the large buyers of this. You know, it's helpful to have.

We have 17 Fortune 500 companies in our backyard here that we know extremely well. And so we're not only looking at 25 but also longer-term deals.

and getting the pricing we expected. So I think overall we expect will be monetizing $700 million credit annually going forward and the market's there and it's been a great tool to have.

How much do you do this here? Can you just remind us quickly?

A Roughly 4 to 500 million.

Thanks so much congrats.

Speaker Change: Thank you.

Thank you, our next question is from Ross Fowler from Bank of America. Please go ahead.

and we're on the ring.

and some of the couple of things. Maybe.

Wining back to the Marshall Fire a little bit, we saw the judge's order on September 30th.

on the 25th trial so...

Obviously, you know, now we're talking a different level of multiplier from that and we sort of bucket it into pieces from what I can tell. So is there any reduction or settlement of claims related to that or how do we think about the calendar from here given that that order is out?

Bob Frenzel: Okay, hey, process, it's Bob.

Let me try and address what I think your question is, first of all, you know, in Marshall

Let's start with, you know, we don't think we acted negligently. We know that the fire was started.

and the first technician to be on the 12th Tribes property. The first technician to be there. We don't believe we act in negligently in the operation of our system. We dispute the share of support that we call it the second ignition.

and notwithstanding obviously the litigation persists and the structure of the trial was architected in the judge's orders about a month ago. So the way they constructed it is...

Speaker Change: You know, the first trial will determine...

and the issue did XL Energy's equipment start a second ignition as part of the process of the overall fire.

Will use a second trial if necessary to determine damages and then each individual claimant is going to have to prove up their own damages and we're not going to have sort of a blanket or a blanket number applied to, you know.

Any challenges? So...

Yeah, we think that the trial structure was constructive from the judges perspective. So that's what happened in September. I'm not certain if I answered your question or not. Yeah, and I think the other part is just that in terms of the multi, I think you're asking a little bit of all the multiplier effect where the actual jury would have to hear each.

and each award damages and can have a multiplier across all plaintiffs. So helpful, I'll come in that regard.

and then next next calendar steps will put to we look for the next sort of.

Thank you for watching. So we're in, we're in, we're in diligence right now. Heavy diligence, the trial set for next September for a couple of weeks. So I think we've got a while before there are any real milestones in the trial going forward.

Speaker Change: Ok.

and then you go through in the slides today on slide 11. You're well below the National average in most jurisdictions on bills.

Speaker Change: So maybe contextualizes a lot of increase in cap X here and a really good great base growth. Have you sort of laid out what that increase would be to custom a build over the course of the forecast?

Get a look. I think that we sit in a really good, good, starting position as you mentioned it and it's for a host of reasons obviously.

and as we move forward through time we actually think the Bill impacts a relatively benign as well. We sit in a region that is...

Speaker Change: and Cretibly Advantage for Renewables and so this opportunity to invest in clean generation.

and maybe even fractions of the cost that other parts of the country see is really what helps us keep bills low for our customers. But there's a couple other mechanisms. Obviously, we've been very prudent in managing our operating expenses over a decade.

and that helps keep bills while below the average. I think we have very proactive and productive energy efficiency and demand management programs which help our customers manage.

the size of their energy usage and obviously the access to lower cost energy helps along the way. So these are the programs that we think help keep build down. I think probably the best thing we've done is we filed.

and our Colorado just transitioned solicitation proceeding. We filed a 20 year plan in Colorado that incorporates all the investment that's expected in Colorado over that period and yielded a customer bill in creative about 2.2% over that long duration. It'll be ups and downs from that number and won't be linear along the way, but we think it's relatively manageable. And we're always looking for ways to mitigate even those types of increases through, again, very aggressive cost management. Our 1XL energy wave program I mentioned in my remarks.

has delivered real benefits and avoided costs to our operating expense line into our fuel line.

Yeah, I just add, I think that's somewhere really proud of you mentioned slide 11, but the slide before that around Presidential share of law is somewhere really proud of. Our bills and inflation adjusted our lower than they were a decade ago And then if you look at our two biggest jurisdictions

Colorado's second lowest of the country in sure of wallet, Minnesota's fifth lowest in the country in sure of wallet. So we're starting from a really good place too as we think about the significant investment cycle. So I appreciate the question on that.

Thanks for being up here today.

Speaker Change: Thank you, our next question comes from Sophie Carb from Keybank. Please go ahead.

Sophie Carb: Hi, good morning everyone. Congrats on the great update all around here. There are a couple questions for me.

You guys have a couple of elements in front of the Minnesota Commission, one of the resource plan, the gas rate case.

Speaker Change: Any reason to think that some items in those two maybe controversial and will cause some delay in the summer to prove?

Speaker Change: Hey, so if you're good morning, no, let me take first one, Minnesota gas case, you nanomissed settlement. I think it was very straightforward. A.L.J. recommended approval of our settlement.

Speaker Change: and so we expect the commission decision in Q1. So it's certainly optimistic that that'll be approved. On the resource plan I think again those.

Speaker Change: A resource, a settlement with the major stakeholders and interveners in that document.

I think it really demonstrates kind of our work with our stakeholders, the three Ford, the Bellman, that not only dresses the resource plan and in a really expeditious manner.

which is great to see but also results one of our eased out standing. So overall I think we're pretty excited about the work and partnership with our stakeholders on their resource finding and hopeful the mid-Sarc mission of proofs that which would be a Q1 event too.

Speaker Change: Great, great, thank you. And then I'm going to ask on wildfires and how industry have been talking for a while about legislative solutions to that.

Speaker Change: and I'm going to curious if you have any insight into which states where you operate or other states may be in the West to make things that happen. I've got a negative session. Is there any kind of data points on that right now?

So from a radio to a perspective, obviously we think Colorado will take up and we expect a decision in our wildfire proceeding in August of this year. I'll get to the next year.

Speaker Change: are resiliency plan in Texas. The Accombations Ben.

Speaker Change: Working through those documents very efficiently so we expect outcomes in Texas.

Next year as well. On the legislative front to think that's probably a longer, longer burn candle.

Making sure we look at the...

Speaker Change: Legislation in all the states. I think it's on top of goal for certainly all the western states as we move through time. I'm not certain I suggest there's a lot of outcomes that we expect in 2025, but a lot of dialogue around, how do we protect customers and communities?

in those states.

and I just had a lot of folks on education with our stakeholders and our legislators of Park Dr. Glenn Colorado and we're also working with our peer utilities in Texas.

Speaker Change: on that front in terms of dogmas tables on Texas. It's also one of EIs primary topics in issues that they're looking to address. So very typical for our industry and we'll continue work with our states to see if there's longer term solutions.

Thank you. Appreciate the comments.

Speaker Change: Thanks. Thank you. Our next question comes from Travis Miller with Morningstar. Please go ahead.

Good morning, thank you.

Speaker Change: The Travis.

Travis Miller: I know this is no longer the hot topic, but Green Hydrogen, one on the update on where you all stand, and there's a big initiative for you at least several quarters ago, does it show up in...

Pusses are my initial open the new investment plan hydrogen hubs. Any updates you're generally on.

Speaker Change: The Green Hiders in the Mission Disco.

Yeah, thanks for the question. You're right. It's sort of been on a bit on the back burner.

for the company and probably for the country as well. We're still seeing progress made in Europe around hydrogen.

A saw a big energy pipeline complex get approved in Germany.

This has been a big priority for the DOE and I've been on record saying that the country needs a cleaner molecule and hydrogen is probably the most flexible one that we've seen and whether it's it's it's used in its pure form as as green hydrogen or it's combined with

CO2 to make something more like a clean fuel, like a green methane. I think that we're going to need a molecule like that in the country for industrial processes.

Speaker Change: It has slowed down in its initiatives. We were a recipient of a hydrogen grant.

with the DOE and that work continues. I'll be at fairly slowly.

Speaker Change: and we're still really waiting on regulations coming out of Treasury Final Regulations on 45Q, that would be on the production tax credit for hydrogen.

Speaker Change: So a little bit back further for us, I still think it's a promising technology and as you look at the increase in growth that we're seeing across the country in terms of electricity, you know, firming up wind and solar is going to need to happen. It's likely to happen with gas and batteries and the short term and over the longer term, maybe a combustion turbine fired on a cleaner fuel is the path forward. So like we're seeing the acceleration and nuclear RD, you might see some acceleration in green hydrogen, R&D and advancements in the cost curve.

because I think the need is going to be higher as we move forward in time.

and nothing's been said in our Capitol Forecast for hydrogen. Nothing.

Okay, nothing, did I hear you that right? Correct!

Okay, okay, and then yeah, you kind of answered my question but the resource plans then it's too early.

to expand the green hydrogen to the other end of the track.

and I hope you enjoyed this video.

Thank you, our next question is from Paul Patterson from Glen Rock Associates. Please go ahead.

Paul Patterson: Take good morning.

Paul, just back to the, I guess, Ross' question on the end.

Ray Projectory, I guess. You guys, the QU has mentioned 2.2% in Colorado. He's that over the next few years, that found like a long term thing I'm just wondering just...

and you guys have different expectations in terms of...

Sales quote, the one happy and I would assume that would offset a lot of the, over the next few years, is that kind of the area we should be thinking about just roughly, obviously it's going to vary. But is that kind of roughly what we should be expecting around your service territories?

and the next three years or so of just...

Speaker Change: in that neighborhood.

Speaker Change: This is Brian yet. What Bob was mentioning was in our Colorado Resource Plan, we filed a longer term rate trajectory that encompasses all of our expected investments over.

is a 5, 10, 15 and 20 year period. Bob was mentioning the 20 year numbers with, you had to 2.2%.

Rape Growth over that time period. So right in line with inflation, and that included Rape Bay's growth of 9% so significant investment. And that was the retail sales growth of roughly 5% of the time for him to help to offset that, which is really a point is, this large loads can help provide customer, headroom, and bill hydrant for all their customers.

and so, a good piece of analysis that we included in our Colorado Resource Plan. I think over the next five years, it's going to vary by jurisdiction. Over the next five years, we're roughly seeing about a 3% bill impact, which we think is very man's, we have a longer term, an opportunity, as we showed in the Colorado Resource Plan, to have the large, to have kind of

Okay, and then just on slide 9 and the sort of the potential there on data centers.

Just because you just remind me what that means, these customer requests.

and I guess sort of the cadence that we might see in terms of, I mean, there's a huge delta between the two.

I'm sorry to get to serve elaborate a little bit more on that. Sure, I mean think of that as our pipeline of the requested, if we're like, request that we've actually taken in our X-Firm our economic development team. But then it's...

Then how we get down to the high probability lowered it is what Bob talked a little bit about is the public economics projects with signed agreements.

Weather, they acquired land or purchased from us and were close to signing maybe in the next 12 months. So that's kind of how we bring that down to that 2.6% growth that we include on that slide. But what this also demonstrates is...

If a high probability load doesn't come to a fruition, there's a significant pipeline behind it So not only do we think it's conservative, but we also see this growth extending beyond 2029 We just give you five of your sales growth number and we expect that to continue to build in our opportunity Where we're focused on is continuing to help serve these data centers customers in the long term

Speaker Change: [inaudible]

and we know there's double counting in a lot of people's, you know, inbound requests as these large loads come looking for, you know, transmission and generation service.

Speaker Change: But it's highlights a different need, which is we as a country, we as an industry need to be accelerating our ability to develop a transmission in generation to serve, you know, the load that we think is on the come and, you know, on the face of it.

It's a meaningful load. It's a little more concentrated. If you divide it across the entire country, it seems manageable. As you get into very specific load pockets.

It comes with a lot of need and a lot of speed that's needed. And so we think about a pace.

Speaker Change: and a scale of both investment to meet this need as a company and as a country and partnerships with our stakeholders and local communities, regulators, legislators.

Speaker Change: and we're coming together to make sure that we can solve this opportunity for the country as we see it. And as you mentioned,

You know, rising tide lifts all ships if we have a higher load factor on our system, you know, that brings the per unit down cost down for everybody. And so today, you know, if the country has a load factor in the 40 to 50 percent with, you know, high load factor customers like these.

with EV's Charging at Night.

Speaker Change: with other high intensive energy loads. I think that is an opportunity for us to mitigate costs and creases across the entire country as we transition both our transmission and generation footprint for the next generation. I'm excited about it. I really am. It's an opportunity that we're going to have to step into very quickly and in partnership with a lot of people and some new people at the table, but I'm excited about all of it.

and welcome to the next episode.

Speaker Change: Thank you very much. We have no further questions in the queue. I would like to turn it back over to CFO Brian Abel for any closing remarks.

Yeah, thank you all for participating in our earnings call this morning. Please contact our investor relations team with any follow-up questions.

Speaker Change: Thank you very much. That concludes today's conference. If you may now, disconnect.

Speaker Change: Music Music