Q3 2024 CenterPoint Energy Inc Earnings Call

Good morning, and welcome to Centerpoint Energy's third quarter 2024 earnings conference call with senior management.

During the Companys prepared remarks, all participants will be in a listen only mode. There will be a question and answer session. After managements remarks.

To ask a question. Please press star one one on your Touchtone keypad.

Speaker Change: Now I'll turn the call over to Jacky Records Senior Vice President of corporate planning Investor Relations and Treasurer.

Jacky Records: And this record. Please go ahead.

Jacky Records: Good morning, and welcome to Centerpoint Energy's third quarter 'twenty 'twenty four earnings conference call, Jason Wells, our CEO and Chris Foster, our CFO, who will discuss the company's third quarter results.

Jacky Records: Management will discuss certain topics that will contain projections and other forward looking information and statements that are based on management's beliefs assumptions and information currently available to management.

Jacky Records: These forward looking statements are subject to risks and uncertainties.

Jacky Records: Results could differ materially based upon various factors as noted in our Form 10-Q, other SEC filings and our earnings materials, we undertake no obligation to revise or update publicly any forward looking statements.

Jacky Records: We will be discussing certain non-GAAP measures on today's call when providing guidance we use the non-GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non-GAAP EPS.

Jacky Records: For information on our guidance methodology and reconciliation of the non-GAAP measures discussed on this call. Please refer to today's news release and presentation on our website.

Jacky Records: We use our website to announce material information.

Jacky Records: This call is being recorded information on how to access the replay can be found on our website.

Speaker Change: Now I'd like to turn the call over to Jason.

Thank you Jackie and good morning, everyone.

Jason Wells: I'd like to begin by extending our deepest sympathies to our families and communities impacted by the devastation caused by Hurricane Halloween and Hurricane Milton the destruction caused by this year's hurricane season is undoubtedly tragic.

Jason Wells: However, it is times like these that truly bring out the best in our industry.

Jason Wells: A few weeks ago, we saw the utility community come together to send more than 50000 utility workers from at least 43 States the district of Columbia, and Canada to support Hurricane restoration efforts across the southeast.

Speaker Change: From Centerpoint, we contributed to the effort by selling personnel, representing nearly a third of our electric frontline work force to assist in the restoration efforts for Hawaii and Milton.

As many of you know the greater Houston area benefited greatly from the same mutual assistance framework during hurricane barrel, where we caught up on 13000 workers from approximately 30 states to help restore power to more than 2 million customers.

Speaker Change: I want to thank all of our frontline teams as well as others throughout the industry that answered the call to help get the lights back on for the millions of people impacted by the destructive hurricane. So we've experienced this season.

Speaker Change: On today's call I'd like to address five key areas of focus.

Speaker Change: First I'll briefly touch on the third quarter financial results second I'll discuss the progress we've made and future goals with respect to our greater Houston resiliency initiatives urge AHRI.

Speaker Change: Third I'll provide an update on our various regulatory efforts fourth I'll highlight the organic growth we continue to experience, particularly in the Houston Electric service territory.

Speaker Change: Lastly, I will conclude with the initiation of our earnings guidance for 2025.

Speaker Change: Today, we reported non-GAAP EPS of <unk> 31 per share for the quarter.

Speaker Change: In addition, we are reaffirming our full year 2024, non-GAAP EPS guidance range of $1 61 to $1 63 per share.

Speaker Change: This represents 8% growth at the midpoint from our 2023 results.

Speaker Change: Chris will provide additional details on our financial results in his section.

Speaker Change: Now I'd like to provide an update on our ongoing execution of our electric operational plan, the greater Houston Resiliency initiative, which we launched in early August.

Speaker Change: As you may have seen we have already made significant strides toward strengthening the resiliency and reliability of our grid and the first phase of <unk> as well as enhancing our communications with our customers.

These actions have been informed by learnings from internal and external reviews engagement with stakeholders and benchmarking with high performing sector peers.

Speaker Change: During the third quarter, we took immediate action and accelerated our plans to deliver an unprecedented level of work. This.

This includes removing higher risk vegetation across 2000 line miles, replacing over 1100 Poles with new Poles capable of withstanding extreme win and installing over 300 automated reliability devices to help reduce the number and duration of customer outages.

Speaker Change: We accomplished all of this work before the end of August and ahead of schedule.

With respect to improving our communications, we launched our new and updated outage tracker on August one this.

Speaker Change: This tool is designed to enhance the customer experience during times of service disruptions.

Speaker Change: Additionally, we stated our commitment to hire senior emergency preparedness and response of communications leaders to bolster our leadership team.

Speaker Change: I am pleased to share we have hired leaders for both of these positions that bring a wealth of industry experience and will accelerate our efforts to improve our preparedness and response and our customer experience during emergency events.

Speaker Change: We believe our more proactive communications approach is already positively impacting the customer experience through more timely information. These.

These are great first steps and I'm proud of the progress thus far.

Speaker Change: But we have heard the call to action and we are committed to doing even more in the second and third phases of <unk> for the benefit of our customers and our communities.

Speaker Change: These next two phases will focus not only on reducing the number of outages, but also reducing the outage time customers experience through investments designed to create a self healing grid.

Speaker Change: I want to underscore however that <unk> does not represent the beginning of our enhanced resiliency investments. This is merely a continuation and acceleration of the work. We started well ahead of this year's events.

Speaker Change: Over the last few years, we have focused our resiliency investments on our electric transmission system, which is the backbone of our grid.

Speaker Change: Our transmission resiliency work included upgrading our transmission structures to better withstand extreme winds elevating our substations to mitigate flood risk and converting our older 69 kv transmission lines to a more robust 138 kv standard.

Speaker Change: This work has already produced tangible results during the day rate, Joe and Mei and Hurricane barrel in July are hard and transmission system withstood the extreme winds and sustained relatively little structural damage in fact, while other Texas utility customer sustained prolonged outages due to damage on their transmission system from hurricane barrel, we did not experience any customer.

Speaker Change: <unk> due to our transmission system.

Speaker Change: As we now turn our attention to accelerated investments in the distribution system in the next two phases of <unk>. We believe we are well positioned to make rapid improvement.

Speaker Change: Currently a little over 46% of our Houston Electric distribution system is underground, which on a proportional basis is more than twice the industry average.

Speaker Change: Our opportunity is to harden above ground feeders to those communities through smaller more targeted investments that should yield impactful results for approximately 60% of the customers that are served by underground service.

Speaker Change: This feeder Blitz is expected to have the additional benefit of substantially reducing the total outage numbers and accelerating restoration for other customers as resources can focus on the remaining circuits earlier in the restoration process.

Speaker Change: Another area, we believe we can make meaningful improvements on our distribution system is with respect to increased circuit segmentation and automation.

Speaker Change: Equipments, such as intelligent grid switching devices and trip savers help create a self healing grid by isolating outages to fewer customers rerouting power around impacted areas and automatically restoring power without manual intervention, where there is no structural damage.

Speaker Change: Presently approximately 30% of Houston Electric's overhead circuits have at least one automation device.

As part of phase two of <unk>, we anticipate installing 4500 trips papers and 350 intelligent grid switching devices before the next hurricane season, which will allow us to nearly double the number of distribution circuits with automation devices and the greater Houston area.

Speaker Change: Our investments in work during this face are anticipated to save our Houston area customers over $125 million outage minutes annually.

Speaker Change: Over the next five years, we plan to not only deploy even more devices, but also optimize their capabilities by employing AI based modeling.

Speaker Change: We plan to share additional details regarding our future resiliency investments on our fourth quarter call, which will take place. After we have filed our system resiliency plan.

Speaker Change: As a reminder, our revised system resiliency plan will include approximately $5 billion and resiliency investments from 2026 through 2028, an increase of approximately $2 5 billion over our previously withdrawn system resiliency plan.

Speaker Change: Chris will go into more detail in his section, but I want to highlight that even with the inclusion of these incremental resiliency investments, we anticipate Houston electric's customer delivery charge increases will track in line with our long term rate of inflation over the next 10 years.

Speaker Change: Turning to an update of our broader regulatory efforts starting with Houston electric.

Speaker Change: As many of you likely saw on August one we filed our notice to withdraw our Houston electric rate case filing this.

Speaker Change: This was draw allows us to continue to focus our attention on near term plan execution and long term system. Resiliency plan development is we are laser focused on year over year improvements. If they're withdrawal is approved we have stated that we will file a new Houston electric rate case, no later than June 32025, based on a 2024 calendar test year.

Speaker Change: Outside of the rate case filing we intend to continue to seek recovery of capital investments made for the benefit of our customers.

In the fourth quarter. This year, we anticipate filing to start recovery of both our recent transmission and distribution investments through our T costs in <unk> capital trackers.

Speaker Change: The efficient recovery of these investments is crucial to our ability to efficiently fund future investments. This is why we remain focused on reducing regulatory lag across all of our jurisdictions.

Speaker Change: Our latest earnings monitoring report highlights the regulatory lag we continue to experience at Houston electric for.

Speaker Change: For 2023, our weather normalized earned return on equity was nearly 150 basis points lower than our allowance.

Speaker Change: In addition to filing for recovery of our investments. We will also make the initial filing for the recovery of approximately $450 million in storm costs related to the meda ratio.

Speaker Change: Now turning to the Indiana electric rate case, a little over a month ago, We filed a proposed order with respect to our non unanimous settlement proposal.

Speaker Change: The Indiana utility regulatory commission has a statutory deadline to issue its final or by February three 2025.

Speaker Change: We want to thank all stakeholders for their contributions to the case as we seek to reach a fair outcome for all parties.

Moving next to the filed Minnesota gas rate case.

As some of you may have seen intervenor testimony was filed a few weeks ago.

Speaker Change: Since then we have had constructive settlement talks with stakeholders and intend to continue and the settlement negotiations leading up to our rebuttal testimony deadline of November 12.

Speaker Change: As you May recall, we have settled our previous three rate cases, and our Minnesota gas jurisdiction.

Speaker Change: Absent a settlement the Minnesota Commission may consider interim rates for 2025 towards the end of this year.

Speaker Change: Finally, I want to touch on our upcoming rate case application for Ohio gas in August our Ohio gas business filed its notice of intent with the public utility Commission of Ohio regarding our upcoming general rate case application, which we intend to file tomorrow.

Speaker Change: Over the last several years, we've had one of the lowest customer gas bills in the state.

Speaker Change: Our upcoming ask reflects an investment recovery rate that will put us more in line with our Ohio peers.

Speaker Change: In addition, this larger revenue requirement increase will allow us to more efficiently fund the continued pipeline modernization investments, which we believe contributes to the overall safety and efficiency of the system.

Speaker Change: Now I want to highlight the strong organic growth, we continue to see especially in our Texas service territories.

Speaker Change: While much of my earlier commentary focused on our investments in resiliency and reliability I want to emphasize that we continue to experience significant growth across Texas and in particular, the greater Houston region.

Over the last few decades, the greater Houston region has grown at.

Speaker Change: One of the fastest rates in the nation, we see that growth not only continuing but accelerating through the remainder of this decade and beyond and in fact, we believe our peak load of approximately 22 gigawatts in 2024 could increase by more than 30% by 2030.

Speaker Change: This potential growth is driven by continued population growth acceleration of electrification and increases in data center activity.

Speaker Change: Houston continues to be an attractive city to live and work over the last five years housing starts have increased over 9% per year on average.

Speaker Change: Which is more than three times the national average.

Speaker Change: We see this growth continuing as businesses and people alike continue to migrate to the Houston area.

Speaker Change: Our industrial load growth drivers are both large and diverse.

Speaker Change: Our substantial potential future load growth is underpinned by industrial electrification and energy exports, including hydrogen.

Speaker Change: Houston remains an ideal location for hydrogen developers as it already boasts the largest hydrogen infrastructure in the world. In addition to a proximity to the largest port by waterborne tonnage in the United States.

Speaker Change: Although we still are in the early stages of hydrogen development. We are working with approximately three five gigawatts of projects that are well into the advanced engineering phase.

Speaker Change: Outside or more traditional low drivers of energy and energy exports, we see growing potential incremental load from other sectors, notably over the summer we have seen a fundamental shift in data center development and.

Speaker Change: In fact, our interconnection queue for data centers now sits at over eight gigawatts.

Speaker Change: While we recognize that not all of this will be developed it is yet another tailwind and what we continue to believe is one of the most tangible long term growth stories in the industry.

Speaker Change: It is with this growth in our customer driven capital investments that we've made over the last couple of years that gives us conviction to initiate our 2025 non-GAAP earnings guidance target range of $1 74 to $1 76 per share.

Speaker Change: The midpoint of this range represents 8% growth from the midpoint of our 2024 guidance range of $1 61 to $1 63.

Speaker Change: Beyond 2025, we are also reaffirming our longer term guidance.

Speaker Change: Where we expect to grow non-GAAP EPS at the mid to high end of our 6% to 8% range annually through 2030.

Speaker Change: As well as targeting dividend per share growth in line with earnings per share growth over that same period of time.

For our customers. This strong Houston area growth gives us confidence that we will keep increases in electric delivery charges roughly in line with the forecast the rate of inflation over the next 10 years we.

We recognize the privilege and responsibility of being an energy delivery provider for our customers. We will be laser focused on both enabling growth in advancing system resiliency for the benefit of our customers through the work that we've outlined it and <unk> as well as the investments we will propose and our new system resiliency filing.

Speaker Change: We look forward to continuing to work with our customers regulators and others to make improvements for the benefit of all of our stakeholders and with that I'll turn it over to Chris.

Chris Foster: Thanks, Jason.

Chris Foster: Before I get to my updates I want to Echo Jason's gratitude for not only our centerpoint coworkers, but all utility and contractor employees that aid in the restoration efforts. During this very active hurricane season. It was truly remarkable to witness the dedication to a safe response and the speed of the restoration efforts that took place after two devastating.

Chris Foster: <unk> hit the southeast within two weeks of each other I want to thank the roughly one third of our internal Centerpoint line crews that made the journey to other sector peers to help get the lights back on after those hurricanes.

Chris Foster: For the quarter I'd like to cover four areas of focus first the details of our third quarter financial results, including our reaffirmation of 2020 for guidance.

Chris Foster: Second the initiation of 2025, non-GAAP EPS third I'll touch on our capital deployment status this quarter and forecasted storm costs and finally I'll provide an update on our financing plans, including an update to our plans to increase our equity guidance to fund our incremental $2 5 billion, which will be included in our system resiliency plan.

Chris Foster: <unk> totaling at least $5 billion in cumulative resiliency investments from 2026 through 2028.

Chris Foster: Let's now move to the financial results shown on slide seven.

Chris Foster: On a GAAP EPS basis, we reported <unk> 30 for the third quarter of 2024.

On a non-GAAP basis, we reported 31 for the third quarter of 2024 compared to <unk> 40 in the third quarter of 2023, our non-GAAP EPS results for the third quarter remove the costs associated with the sale of Louisiana, and Mississippi gas LDC.

Chris Foster: The reduced earnings quarter over quarter was primarily driven by increased and accelerated O&M that was completed as part of phase one of <unk>.

Chris Foster: When compared to the comparable quarter of 2023 O&M was 11 unfavorable this 11 not only represents the $70 million of vegetation management for which we will not seek recovery, but also the work we pulled forward from the fourth quarter to increase readiness for future potential inclement weather that could impact the Houston electric system.

Chris Foster: In addition to the headwind through O&M weather and usage contributed an additional <unk> of unfavorable <unk> quarter over quarter <unk> of this unfavorable variance was driven by reduced usage caused by outages from hurricane barrel.

Chris Foster: Along with the considerably milder summer in the Houston Electric service territory as compared to 2023, we.

Chris Foster: We continue to recover on a customer driven investments, which contributed <unk> <unk> of favorability this quarter when compared to the comparable quarter of 2023. This was primarily driven by the ongoing recovery from various interim mechanisms for which customer rates were updated last year as.

Chris Foster: As well as the interim rates in our Minnesota gas business that went into effect on January one of this year.

Chris Foster: In addition, the Houston area continues to see strong organic growth extending the long term trend of 1% to 2% average annual customer growth as Jason referenced this dynamic as in keeping future increases in our customer electric delivery charges roughly in line with our forecasted rate of inflation over the next 10 years interest expense and financing costs contributed <unk> <unk>.

Chris Foster: Our ability when compared to the comparable quarter in 2023 due to moderating interest rates and the favorable variance from the redemption of the series a preferred stock in September of last year and despite the headwinds we faced this quarter. We continue to reaffirm our full year 2024, non-GAAP EPS guidance range of $1 61 to $1 63.

Chris Foster: Our confidence in reiterating our full year 2024 guidance today is driven by the O&M work on the system that we accelerated into the third quarter. Our updated work plans are reflected in the <unk> 11 of unfavorable <unk> I mentioned as they otherwise would have been spread across the third and fourth quarters. This is a departure from last year, where we highlighted some high.

Here O&M costs in the fourth quarter, reflecting work, including incremental vegetation management.

Chris Foster: In addition to reaffirming full year 2024, non-GAAP EPS guidance. Today. We are also initiating our 2025 and non-GAAP EPS guidance target range of $1 74 to $1 76 per share the midpoint of this range represents annual growth of 8% from the midpoint of our 2024, non-GAAP EPS guidance target range of $1 60.

Chris Foster: One to $1 63, or 2025 figures are a byproduct of the significant investments we've made across our various jurisdictions over the last couple of years.

As you May recall, we accelerated investments in the Houston Electric service territory last year, and we continued our strong investment profile across our jurisdictions this year.

Chris Foster: These investments have resulted in a rate base CAGR of more than 11% over the last two years. The strong foundation of organic growth with the new capital investments combined with rates, we're anticipating through our interim rate mechanisms and rate case outcomes gives us the conviction in our 2025 non-GAAP earnings guidance initiated today.

Chris Foster: Next I will touch on our capital investments execution as of the quarter and 2024 as shown on slide eight.

Chris Foster: In the third quarter of 2024, we invested $900 million of base work for the benefit of our customers and communities.

Chris Foster: Excludes spending related to storm restoration year to date, we've invested approximately $2 6 billion.

Chris Foster: Which represents over 70% of our original 2024 capital expenditure target of $3 $7 billion.

Chris Foster: We remain on target to meet our base capital plan investment despite the interruptions of normal capital deployment from the storms we've experienced this year.

Chris Foster: I'd also like to provide a quick update on where we stand with storm costs related to the major <unk> of it and hurricane barrel with the majority of costs accounted for we are now able to refine our estimate to the low end of the previously disclosed $1 6 billion to $1 $8 billion range as we now estimate costs for both storms to total.

Chris Foster: <unk>, one 6 billion.

We intend to make our filing for cost determination in connection with the securitization for the May storm costs in the coming weeks and storm restoration costs associated with hurricane barrel in the first half of next year.

Chris Foster: I'll now turn to our capital investment targets for 2025 and beyond.

Chris Foster: For 2025, we are targeting to invest $4 9 billion across various jurisdictions for the benefit of our customers and communities.

Chris Foster: Looking to the remaining five years of our original 10 year capital investment plan that runs through 2030, we are now targeting to deploy approximately $26 billion of capital of which $21 billion is anticipated to be in the state of Texas.

Chris Foster: This brings our tenured total capital investment plan up to 47 billion.

Chris Foster: With $47 billion is a $2 $5 billion increase from our previously stated $44 5 billion.

Our incremental investment is expected to all be deployed and our Houston Electric service territory and will be reflected in our upcoming system resiliency plan that we have committed to filing by January 31 2025.

Chris Foster: We anticipate these investments will enhance the customer experience, but we remain cognizant of the impact of our investments on customer bills. However, based on the total current average Houston electric residential Bill we estimate that our investments combined with the estimated impacts of the to be securitized storms should result in customer bill increases roughly in line with our forecasted long.

Chris Foster: Term rate of inflation over the next 10 years.

As a reminder, our Houston electric residential customer delivery charges were the same in 2014 as when we started 2020 for this bill trajectory as a result of our continued focus on efficiency and our O&M activities. In addition to the consistent customer growth we've seen in the Houston area for the last three decades.

Chris Foster: Finally, I wanted to touch on our balance sheet and how we're thinking about funding our increased capital plan.

Chris Foster: As of the end of the third quarter, our calculated <unk> to debt was 13, 8% when adjusting for the storm costs on a pro forma basis based on our calculation aligning with Moody's methodology as shown here on slide nine we demonstrated our continued focus on preserving our balance sheet strength, while executing our capital plans despite incremental storm cost pressure.

Chris Foster: <unk> this year.

Chris Foster: Our efforts included the acceleration of $250 million of common equity into this year and the issuance of equity credit from hybrid debt Securities. We plan to maintain that same philosophy as we work to efficiently fund investments and preserve credit health both in the near term and beyond as we continue to focus on our long term target of Maine.

Chris Foster: Turning a cushion of 100 to 150 basis points above our downgrade threshold.

Chris Foster: We also had substantial cash inflows as part of our plan starting in 2025 looking over roughly the next 12 months to 18 months, we anticipate approximately $3 billion of gross cash proceeds from the divestiture of Louisiana, and Mississippi gas Ldcs.

Chris Foster: And storm related securitization issuances and.

Chris Foster: And with regard to those anticipated securitization issuances as a reminder, the state of Texas has seen 11 utility securitization transactions. Since 2008. So there is a strong history under this existing construct underpinning our conviction. We expect these combined proceeds will be a part of our strengthening story as we execute on additional customer driven investments.

Chris Foster: As we look to the long term financing plans through 2030, I also want to provide an update today on our equity guidance with respect to the incremental $2 $5 billion of resiliency investments, we expect to follow our previously provided guidance of funding incremental investments with 50% equity and 50% debt.

Chris Foster: Such you should expect that we will raise an incremental $1 $25 billion of equity. In addition to the $1 5 billion issuance through 2030, we previously guided to this takes the total equity plan guidance to approximately $2 5 billion through the remainder of the decade.

Chris Foster: You should expect that the equity issuances associated with these incremental expenses will likely come in towards the latter part of our remaining five year plan in the near term and as I mentioned previously the approximately $3 billion of cash inflows should allow us flexibility and mitigate the need for common equity in 2025.

Chris Foster: Although we do not foresee the need for common equity issuances through 2025, we plan to continue to be opportunistic and strengthening the balance sheet through credit enhancing instruments like those we issued earlier this year.

Chris Foster: We will of course focus on the most efficient ways to raise that equity be it through common equity issuances incremental equity content, such as hybrid or recycling proceeds.

Chris Foster: As we look across the state that we are fortunate to serve we remain confident in the continuation of our long term plan with a consistent focus on improving customer outcomes, delivering affordable service and building toward the most resilient coastal grid in the United States.

And with that I'll now turn the call back over to Jason.

Jason Wells: Thank you, Chris regardless of the challenges we face this management team remains firmly committed to delivering for all of our stakeholders our customers our communities, our regulators and legislators and our investors.

Thank you Jason operator, we're now ready to turn to Q&A.

Speaker Change: At this time, we will begin taking questions. If you wish to ask a question. Please press star one on your touch tone keypad. The company requests that when asking a question callers pick up their telephone headset. Thank you and one moment.

Our first question.

Speaker Change: And the first question will come from Shar.

Speaker Change: <unk> with Guggenheim Your line is now open.

Hey, guys good morning.

Hey, good morning good.

Speaker Change: Morning, Jason So just on 24, it looks like it's in good shape.

Speaker Change: Thinking about 25 guidance as a like kind of a lot of moving pieces, there, including sort of the <unk> withdrawal of request tracker filings potentially maybe higher O&M I guess, what is the level of confidence here and what happens if the <unk> withdrawal request as an approved which I guess, we will know in a couple of weeks. So there's just a lot of moving.

Speaker Change: PC and some key events would be great to maybe if you can bridge a little bit further for us. Thanks.

Yes, Thanks, Sharon for the question.

Speaker Change: Obviously, we have a high degree of confidence.

Speaker Change: In terms of initiating 25 here there are a few points that I want to highlight that support that confidence in the firm.

First is.

Speaker Change: Invested significantly for our customers over the last two years and have the rate base CAGR over the last few years of about 11%.

Speaker Change: Creates a solid foundation for 8% guide.

On earnings growth.

I think I'd probably highlight.

Speaker Change: We will have new base rates and.

Speaker Change: Many of our jurisdictions in 'twenty five.

Speaker Change: Texas gas.

Speaker Change: <unk> electric.

Speaker Change: And Minnesota gas and I think what's notable about Minnesota gas is as you recall over.

Speaker Change: In the past we have filed rate cases every other year in Minnesota.

That profile.

Speaker Change: Dynamic work in every year.

Speaker Change: We had zero increase in revenues in Minnesota, when we filed its multiyear rate case last year, we filed.

Speaker Change: With.

Speaker Change: Our requested.

Speaker Change: Kris revenues here in 2005, and so thats smooth profile for both the earnings but also for rate increases for our customers.

Speaker Change: That's a pretty notable change and then third you touched on this.

Speaker Change: We believe we have access to all the recovery mechanisms for our capital spend with the exception of Ohio, where we will be in the middle of that rate case and so.

Speaker Change: Those are the drivers that give us confidence for the 25 earnings guidance you mentioned that withdraw.

Speaker Change: Texas rate case.

As you recall, we had filed a modest revenue.

Speaker Change: Increase in that case about $60 million.

Speaker Change: And what we have historically.

Speaker Change: We expected that to be.

Speaker Change: Sure.

Speaker Change: Our rate case that resolve itself with flat potentially maybe a small decrease in revenues and so I don't think the timing of the Houston electric rate case as a real driver for 25, given those other factors I mentioned.

Speaker Change: Okay. That's perfect. Thanks, and then just lastly on equities, obviously, it's increased by another one 5% to $2 5 billion through 2030, I mean, obviously, you talked a little bit about the shape of that equity being more backend loaded but can you pre fund the needs is there an opportunity there to remove the overhang in our asset sales.

Speaker Change: Well, an opportunity with the <unk> or capital markets on there for that thanks.

Speaker Change: Yes, thanks for the question, Sarah what I would say.

Speaker Change: We've established I think a pretty strong track record of efficiently.

Speaker Change: And the equity.

We need.

Speaker Change: A series of transactions in the past.

Speaker Change: You can count on us doing the same here, we will efficiently fund this equity I don't necessarily think it comes in the form of a pre funding, but we will look at it in the most optimal way too.

Speaker Change: To finance these needs and as Chris mentioned I think we're in.

Pretty strong position with having 3 million of cash inflows over call. It the next.

Speaker Change: A 12 to 18 months that really gives us quite a bit of flexibility here as we.

Speaker Change: Think about the.

That's possible way to efficiently raise the equity.

Okay.

Speaker Change: Perfect. Thanks, guys appreciate it a couple of weeks.

And the next question comes from Steve Fleishman with Wolfe Research. Your line is now open.

Speaker Change: Yes, hi, good morning, good morning.

Speaker Change: Dave.

Steve Fleishman: So hey, so first just the detail on the Texas loan growth.

Steve Fleishman: 30%.

Steve Fleishman: Growth in peak.

Steve Fleishman: Through 2030 is that.

Steve Fleishman: <unk> include all the updates that you.

Steve Fleishman: Two I think our cost for early next year for kind of low growth plans.

Steve Fleishman: That the kind of range that we should be expecting.

There is the potential for incremental growth in that update.

Steve Fleishman: Yes.

Steve Fleishman: That process, where there is really trying to capture kind of all speculative.

30% figure.

Steve Fleishman: That I highlighted was a subset of that speculative loan where we have a much higher degree of confidence.

Steve Fleishman: As we look at and work with a number of companies in this region.

Steve Fleishman: As an example.

Steve Fleishman: Hydrogen related activity could be.

Steve Fleishman: Multiples of what's included in that number.

Steve Fleishman: As one example, so we will be working to categorize all of what I'll call speculative load activity and then providing various degrees of confidence for each of those categories and.

Steve Fleishman: I think the headline number should be higher, but we feel a high degree of confidence at least 30% in Peru.

Steve Fleishman: <unk>.

Okay.

Steve Fleishman: And then.

Speaker Change: Just maybe you could just give us an update on.

Maybe a little more color on where things stand with the rating agencies.

Speaker Change: What they are keying off of from here.

Speaker Change: Is it just the metrics or is there other things that they are watching.

Care about.

Speaker Change: Sure Stephen Good morning, I think it's really both pieces to start with the numbers.

Speaker Change: You saw it came out this morning with <unk>.

Speaker Change: Certainly measuring against Moody's and a 13% downgrade threshold there we came out with the adjusted number today at 38, 8%.

Speaker Change: Confident that as we continue to go forward what are you really going to see change there over the next year.

Speaker Change: Combination of the Louisiana, Mississippi gas LDC proceeds.

Speaker Change: As well as the securitization related proceeds so it's certainly the case of the rating agencies are watching closely.

Speaker Change: The securitization filings as well with the ultimate goal of really just seeing that really strong, Texas regulatory construct worked right and Thats why you thought today really highlight two things.

First again, the securitization process with a long history here in Texas of approval of 11 different securitization in.

Speaker Change: And the second is the opportunity without the rate case in front of us to pursue the traditional capital trackers, which we do intend to do.

Okay, great. Thanks, I appreciate it.

Speaker Change: Thanks, Steve.

Speaker Change: And our next question comes from Josh.

Speaker Change: Yes, Joe Pratt with Evercore Your line is open.

Joe Pratt: Hey, good morning team. Thanks for giving me time, Hey, Chris just to kind of follow up on the credit metrics discussion, maybe just can you help us maybe a little bit more detail on the timing of the securitization proceeds.

Joe Pratt: In 2025, and then just Directionally speaking.

Joe Pratt: That would be on a Moody's basis, what are you expecting 2024 metrics to be and then 2025 I'm thinking.

Chris Foster: Towards the end of the year and then pick back up in 2025 as you receive those proceeds but just just more color. There. Thank you Chris sure theater guys happy to do it let me just remind everybody against the highest or the focus of the company for the long term is to focus on a cushion of 100 to 150 basis points as we go but let me impact.

Joe Pratt: <unk> in particular.

Speaker Change: First you should assume that we filed two different securitization request. The first will be for the associated May storm derecho related storm costs will file that soon.

Speaker Change: As a result, I think you should generally assume roughly Q3 resolution and associated proceeds in 2025.

Speaker Change: Second we will file the hurricane barrel related costs were.

Speaker Change: We're generally targeting roughly Q2 next year once we get all those costs and to file for those barrel associated request.

Cumulatively, what we did this morning as we update it towards the low end of the cost themselves previously our guide was one six to $1 8 billion.

Speaker Change: David today, given the greater certainty we have now at $1 6 billion. So ultimately I'd say the first piece roughly Q3 dollars 25 seconds.

Speaker Change: Second component hurricane barrel related cost either late Q4 early.

Q1 2026.

Speaker Change: Thanks, Chris and then just so I guess by the end of.

Speaker Change: Next year are you sort of in that 14% to 50, I mean, you are very close to it as of the end of <unk>.

Speaker Change: I'm, just thinking about capex picking up next year.

Speaker Change: And the securitization proceeds.

Speaker Change: Where do you shake out in that 14% to 15 or you're going to be solidly in that range next year or is that a more of a 'twenty six.

Speaker Change: Event.

Speaker Change: Yes, I think it is ultimately once we get the securitization proceeds into cash will be stepping back into that.

Speaker Change: Potential cushion right. So ultimately probably be looking at Q1 'twenty six.

Speaker Change: We've got all that done keep in mind that we also emphasize this morning.

Speaker Change: Consistent focus we've got on the balance sheet you saw pull forward even in the 2025 equity funds.

Speaker Change: So I'll put it at that point, so you're just going to consistently see the focus here from the team.

Speaker Change: Understood really appreciate the detailed color. Thank you.

Speaker Change: Yes.

Speaker Change: And our next question comes from Jeremy Tonet with J P. Morgan Securities. Your line is open.

Speaker Change: Hi, good morning.

Speaker Change: Jamie.

Jeremy Tonet: Just wanted to start off I guess looking at the state as a whole how things stand and Texas, how have stakeholder conversations trended there since completing your GH alright phase one work versus the initial aftermath of the storm.

Speaker Change: Yes, Thanks, Jeremy for the question I think things continue to improve.

Speaker Change: We can cut date, obviously extensive outreach elected officials customers or communities community leaders and what we've heard.

Consistently is that.

Speaker Change: Everybody wants a more resilient system.

Speaker Change: To improve communications.

We saw improved communications as we prepare for France.

Speaker Change: And I think they have appreciated the progress we made in August and that we're carrying forward.

Speaker Change: The resiliency investments.

Speaker Change: And the second phase of <unk>.

As I highlighted on the call.

Speaker Change: I think yes.

Speaker Change: Area, where we can make them.

Speaker Change: Single biggest sort of improvement in a short period of time is on this concept of any segmentation in automation and in the plan that we've got here in the second phase.

Speaker Change: When it's all implemented will save our customers about $125 million outage minutes annually and I think thats been eruption that our stakeholders want to see US go ahead Joe.

Joe: Honestly, there's more to be done.

It is a focus of ours to continue to where you are in trust. We know that we've got to continue to lean into those conversations both with elected officials as well as our communities, but I think we're headed in a direction that everybody wants that's again, a more resilient and reliable grid.

Joe: Much better communication.

Got it that's helpful. There. Thanks.

Speaker Change: Just moving to 2024 guide real quick here, despite the 11 <unk> O&M track this quarter.

Speaker Change: Reaffirming 2024 hole.

Speaker Change: This suggests I guess a lot of offsets in <unk>, just wondering if you could walk us through that a bit more what is contemplated there.

Speaker Change: As far as the offsets and then I guess, how does this position for 2025.

Sure. Good morning, I think there's a few pieces to keep in mind, there and which and formerly the confidence of maintaining our guide I think the first piece again is just the consistency of the.

Speaker Change: Trackers that we've got the last couple of quarters, there have seen a benefit of roughly 9% to 10% quarter over quarter related to those trackers, specifically and so we are going to expect that trend to continue really across our jurisdictions relative to the fourth quarter of last year.

Speaker Change: The second piece and I'll hit this one in my prepared remarks, specifically Bill again, just reiterate we did a lot of incremental work on the system in Q3, certainly highlighting the critical vegetation management work during the sprint.

Speaker Change: We undertook during August of this year and a lot of that work was incremental to the year, but keep in mind. Some of it was an acceleration from Q4. So I would expect that to result in about a penny benefit Q4 as well.

Speaker Change: And then on top of that recall last year that we pulled forward into the fourth quarter and so that work was about <unk> <unk> from 2024 to 2023.

Speaker Change: And so that again should benefit us here as we look at Q4 2024, when you do the quarter over quarter look.

Speaker Change: All confident here for the year.

Speaker Change: Okay great helpful. Thank you.

Speaker Change: Thanks Jerry.

And our next question comes from David Arcaro with Morgan Stanley. Your line is now Ben.

Speaker Change: Hey, Thank you good morning.

Speaker Change: Good morning.

David Arcaro: I'm wondering if you could give an update on kind of where you stand with the proposal that you put forth regarding the temporary gen. Rick.

David Arcaro: Coverage or what the next move is would that.

David Arcaro: With that proposal.

David Arcaro: As a quick reminder.

David Arcaro: I think the real focus.

Speaker Change: The state's attention on the temporary generation portfolio is really on the large units.

Speaker Change: And when we look at the amount of investment and it was largely an edge.

Speaker Change: There is a little less than $100 million.

Speaker Change: Profit or equity earnings.

Speaker Change: That has not yet been recognized on those units.

Goes without we made in August was basically to forego the equivalent a little bit more than a handful of land.

Speaker Change: That remaining profit.

Speaker Change: We put forward a proposal, where we look forward to about $110 million of profit.

Speaker Change: Clearly I think stakeholder saw that as a good step forward.

Speaker Change: I think theres still a discussion around the use of these units and as we've indicated.

Speaker Change: Patients.

Speaker Change: We are working with everybody in the state defined.

Speaker Change: A solution that works a solution that works for our customers.

Speaker Change: In terms of.

Speaker Change: Hello, Chad, we still have an obligation.

Speaker Change: Our once every 12 hours.

And at that and given our industrial load profile critical.

Speaker Change: <unk> like the Texas Medical Center.

Speaker Change: We believe that many of those large units too.

Speaker Change: To comply with that order, but if.

Speaker Change: They want us to say.

They want to change that requirement and wants us to look at the AGM as differently, we're happy to work with the state in that regard and so there's no prescribed timing.

Speaker Change: We attempted to address the concerns on our profit.

Speaker Change: The remaining profit on them.

Speaker Change: Large units and we'll work with the state to find.

Speaker Change: A final resolution.

Speaker Change: Okay got it I appreciate the update there.

Speaker Change: And then maybe.

Speaker Change: On the on the transmission outlook in the state there are couple of big programs out there and get the Permian plan.

Speaker Change: Potential for 765 kv investments wondering if you could.

Speaker Change: Talk about how you could be involved there when might we see some of the potential projects are upside opportunities start to crystallize for your plan.

Speaker Change: I think more directly the opportunities around 765 kv project. There are a couple of our substations that would tie into that project.

Speaker Change: As you know the standard here in taxes as writer first refusal.

Speaker Change: Yes.

Speaker Change: For the lines that connect into <unk>.

Speaker Change: Our substations and so we see the opportunity.

Speaker Change: For significant investment in next Gen 755 kv lines that are outside are not incorporated in the 47 billion Capex plan that we've highlighted here so thats potential upside.

Speaker Change: I think theres less potential upside with the Permian basin.

Speaker Change: Direct lead that's really focused kind of outside of our service territory, what I would say indirectly though.

Speaker Change: And back to my response.

Speaker Change: Earlier.

Speaker Change: ERCOT will update speculative load study in early 'twenty five.

Speaker Change: At that point they will incorporate.

Speaker Change: An estimate of speculative load in the greater Houston region.

Speaker Change: Given the explosive growth that we talked about.

Speaker Change: Have to believe that there are going to be more transmission lines that are needed to serve that.

Speaker Change: That increasing load as a reminder, on any given day, we're importing about 60% of electricity needed to serve our customers.

Speaker Change: Electricity demand grows there will be more need for incremental transmission lines and substations until we see electric transmission has been sort of a long term.

Speaker Change: Tailwind for our Capex plan and would likely start to kind of see that come into greater focus probably in 'twenty five.

Speaker Change: Around this speculative load update.

Okay, Great. That's helpful. Thanks, so much.

Speaker Change: Operator, I think we have time for one more if there is another in the queue.

All right. Our last question will come from Julien Dumoulin Smith with Jefferies. Your line is now.

Hey, good morning team. Thank you guys very much thanks to chat with you guys again.

Speaker Change: If I can follow up on a few different things just a little nitpick here from the call. Thus far with respect to mobile generation I mean, just to understand the contract terms and permutations here. How do you think about any strategic avenues here to the extent to which that ultimately the state when the legislative session or otherwise ultimately effectively pushes you into a decision to effectively.

Speaker Change: Divest if you will in the broadest terms, how do you think about what is possible within the construct that you have here.

Yes, thanks, especially for a state that short.

Speaker Change: I think that Mccain.

Speaker Change: Your last comment Ryan there's been very little.

Speaker Change: Net generation dispatch of generation Bill clearly has been a lot of generation of Illinois, and think about intermittent renewables, but on a net basis in terms of.

Speaker Change: Newbuild less retirements. The state has really seen very little in the way of dispatch will build and so I think the focus for the state is really trying to.

Speaker Change: In particular these days.

Speaker Change: Our path for the winter.

Speaker Change: We saw the benefit of that.

Speaker Change: Battery storage deployment here this past summer.

Speaker Change: I didn't notice.

Speaker Change: <unk> storage.

Speaker Change: Investments are really helping kind of summer peak, where we're talking about ours.

Speaker Change: Not necessarily as helpful. In the winter people potentially short for days and so I think what we're looking for is a solution that can help address.

Speaker Change: Dispatch will need you on the state that could mean.

Speaker Change: Sub leasing our equipment to others.

Speaker Change: So that it doesn't leave the state, but as an available resource.

At the same level.

Speaker Change: Otherwise, obviously, we work with.

Speaker Change: Our elected officials if they have a different point of view and so I don't think there is a definitive path forward, but I think everybody is trying to find a solution that protects customers in the event of flow Chad, but also so sort of optimal from a cost standpoint and were happy to find that balance with everyone.

Speaker Change: Excellent and just a quick nitpick on the last response, just the transmission update from ERCOT here, obviously ERCOT released their own load forecast here recently, you talked about this eight gigawatt number on the call momentarily ago, how does that inbound again I get this is a fluid situation reckon.

Speaker Change: Reconcile against ERCOT demand and effectively are you, suggesting there is a further sort of net uptick in aircrafts and <unk>.

Speaker Change: <unk> updated load forecast they came up with doesn't necessarily yet reflect their transmission expectations I'm just trying to understand that.

Speaker Change: Think you suggested that there is an uptick in both the demand as well as their transmission planning to reflect the eight gigawatts that you just alluded to on datacenter specifically potentially.

Speaker Change: Yes, John I think that's the short of it.

Speaker Change: Both on new managed transmission.

Speaker Change: The updated numbers don't start offering flat.

Speaker Change: Potential development here in the greater Houston region that ethane as I've mentioned really is coming.

Speaker Change: And early.

Speaker Change: 25%, what we have seen this summer is like a fundamental shift in data center activity.

Speaker Change: Up until early summer we had.

Speaker Change: About a gigawatt.

Speaker Change: And in the queue.

Over eight gigawatt.

Speaker Change: At the time of this call and I think that really reflects the fact that as we talk to developers in hyperscale.

Speaker Change: Latency becomes less of an issue as you move more of a development too.

Speaker Change: AI driven data centers, Texas remains very attractive in terms of being able to build new transmission lines new generation.

Speaker Change: Our interconnection timelines compare very favorably in a state that that.

Speaker Change: It can move quickly with large infrastructure investments and so I think that's why we've seen it dramatically changed the summer all of that to your point will get incorporated into ERCOT.

Speaker Change: Load forecast early next year and just given the point that I was recently highlighted we continue to highlight that 60% of our electricity.

Speaker Change: As imported on any given day, that's likely going to mean more transmission here for the greater Asian region.

Speaker Change: Right, so even accelerating in the last quarter despite ERCOT.

Speaker Change: Update even the last couple of months here. It seems like there is an upward bias there.

Speaker Change: Excellent guys. Thank you for the time and clarifying that.

Thanks, Julian and with that operator, I think that will conclude our Q&A for today. Thanks, everyone for participating in this quarterly call.

Speaker Change: This concludes Centerpoint Energy's third quarter 2024 earnings conference call. Thank you for your participation you may now disconnect.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

[music].

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Yes.

Speaker Change: Okay.

Speaker Change: Okay.

[music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yes.

Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Yes.

Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Tom.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Thanks.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Okay.

Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Thanks.

Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Okay.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Sure.

Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Thanks.

Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Okay.

Speaker Change: Yes.

Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Okay.

Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Yes.

Speaker Change: Yes.

Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Sure.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Sure.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Sure.

Right.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Okay.

Speaker Change: Okay.

Sure.

Yes.

Speaker Change: Right.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Thanks.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thanks.

Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Right.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: <unk>.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Okay.

Speaker Change: <unk>.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Great.

Speaker Change: Okay.

Speaker Change: Page.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Great.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Hi.

Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Yes.

Speaker Change: Yes.

Speaker Change: Sure.

Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Yes.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Good morning, and welcome to Centerpoint Energy's third quarter 2024 earnings conference call with senior management.

Speaker Change: During the Companys prepared remarks, all participants will be in a listen only mode.

Speaker Change: Will be a question and answer session after managements remarks.

Speaker Change: To ask a question. Please press star one on your Touchtone keypad.

I'll now turn the call over to Jackie Richert, Senior Vice President of corporate planning Investor Relations and Treasurer.

Speaker Change: This record. Please go ahead.

Jackie Richert: Good morning, and welcome to Centerpoint Energy's third quarter 2024 earnings Conference call, Jason Wells, our CEO and Chris Foster our CFO will discuss the Companys third quarter results.

Jackie Richert: Management will discuss certain topics that will contain projections and other forward looking information and statements that are based on management's beliefs assumptions and information currently available to management.

Jackie Richert: These forward looking statements are subject to risks and uncertainties.

Jackie Richert: <unk> results could differ materially based upon various factors as noted in our Form 10-Q, and other SEC filings and our earnings materials, we undertake no obligation to revise or update publicly any forward looking statements.

Jackie Richert: We will be discussing certain non-GAAP measures on today's call when providing guidance, we use the non-GAAP EPS measure and diluted adjusted earnings per share on a consolidated basis referred to as non-GAAP EPS.

Jackie Richert: For information on our guidance methodology and reconciliation of the non-GAAP measures discussed on this call. Please refer to today's news release and presentation on our website.

Jackie Richert: We use our website to announce material information.

Jackie Richert: This call is being recorded information on how to access the replay can be found on our website.

Now I'd like to turn the call over to Jason.

Jason Wells: Thank you Jackie and good morning, everyone.

Jason Wells: I'd like to begin by extending our deepest sympathies to our families and communities impacted by the devastation caused by Hurricane Helene and Hurricane Milton the destruction caused by this year's Hurricane season is undoubtedly tragic. However, it is times like these that truly bring out the best in our industry.

Jason Wells: A few weeks ago, we saw the utility community come together to send more than 50000 utility workers from at least 43 States the district of Columbia, and Canada to support Hurricane restoration efforts across the southeast from.

Jason Wells: From Centerpoint, we contributed to the effort by sending personnel representing nearly a third of our electric frontline work force to assist in the restoration efforts for Helene and Milton.

As many of you know the greater Houston area benefited greatly from the same mutual assistance framework during hurricane barrel, where we call. It upon 13000 workers from approximately 30 states to help restore power to more than 2 million customers.

Jason Wells: I want to thank all of our frontline teams as well as others throughout the industry that answered the call to help get the lights back on for the millions of people impacted by the destructive hurricane. So we've experienced this season.

Jason Wells: On today's call I'd like to address five key areas of focus.

Jason Wells: First I'll briefly touch on our third quarter financial results.

Jason Wells: I'll discuss the progress we've made and future goals with respect to our greater Houston resiliency initiatives urge AHRI.

Jason Wells: Third I'll provide an update on our various regulatory efforts for us.

Jason Wells: I'll highlight the organic growth, we continue to experience, particularly in the Houston Electric service territory.

Jason Wells: Lastly, I will conclude with the initiation of our earnings guidance for 2025.

Jason Wells: Today, we reported non-GAAP EPS of <unk> 31 per share for the quarter. In addition, we are reaffirming our full year 2024, non-GAAP EPS guidance range of $1 61 to $1 63 per share.

Jason Wells: This represents 8% growth at the midpoint from our 2023 results.

Jason Wells: Chris will provide additional details on our financial results in his section.

Jason Wells: Now I'd like to provide an update on our ongoing execution of our electric operational plan, the greater Houston Resiliency initiative, which we launched in early August.

As you may have seen we have already made significant strides towards strengthening the resiliency and reliability of our grid and the first phase of <unk> as well as enhancing our communications with our customers.

Jason Wells: These actions have been informed by learnings from internal and external reviews engagement with stakeholders and benchmarking with high performing sector peers during.

Jason Wells: During the third quarter, we took immediate action and accelerated our plans to deliver an unprecedented level of work. This.

Jason Wells: This includes removing higher risk vegetation across 2000 line miles, replacing over 1100 Poles with Nepal is capable of withstanding extreme win and installing over 300 automated reliability devices to help reduce the number and duration of customer outages.

Jason Wells: We accomplished all of this work before the end of August and ahead of schedule.

Jason Wells: With respect to improving our communications, we launched our new and updated outage tracker on August one this.

Jason Wells: This tool is designed to enhance the customer experience during times of service disruptions.

Jason Wells: Additionally, we stated our commitment to hire senior emergency preparedness and response communications leaders to bolster our leadership team.

Jason Wells: I am pleased to share we have hired leaders for both of these positions that bring a wealth of industry experience and will accelerate our efforts to improve our preparedness and response and our customer experience during emergency events.

We believe our more proactive communications approach is already positively impacting the customer experience through more timely information.

Jason Wells: These are great first steps and I'm proud of the progress thus far.

Jason Wells: But we have heard the call to action and we are committed to doing even more in the second and third phases of <unk> for the benefit of our customers and our communities.

Jason Wells: These next two phases will focus not only on reducing the number of outages, but also reducing the outage time customer experience through investments designed to create a self healing grid.

Jason Wells: I want to underscore however, the AHRI does not represent the beginning of our enhanced resiliency investments. This is merely a continuation and acceleration of the work. We started well ahead of this year's events.

Jason Wells: Over the last few years, we have focused our resiliency investments on our electric transmission system, which is the backbone of our grid.

Our transmission resiliency work included upgrading our transmission structures to better withstand extreme winds elevating our substations to mitigate flood risk and converting our older 69 kv transmission lines to a more robust 138 kv standard.

Jason Wells: This work has already produced tangible results during the day rate Joe and Mei.

Jason Wells: Hurricane barrel in July are harden transmission system withstood the extreme wins and sustained relatively little structural damage in fact, while other Texas utility customer sustained prolonged outages due to damage on their transmission system from hurricane barrel, we did not experience any customer outages due to our transmission system.

Jason Wells: As we now turn our attention to accelerating investments in the distribution system in the next two phases of <unk>. We believe we are well positioned to make rapid improvement.

Jason Wells: Currently a little over 46% of our Houston Electric distribution system is underground, which on a proportional basis is more than twice the industry average.

Jason Wells: Our opportunity is to harden above ground feeders to those communities through smaller more targeted investments that should yield impactful results for approximately 60% of the customers that are served by underground service.

Jason Wells: This Peter Blitz is expected to have the additional benefit of substantially reducing the total outage numbers and accelerating restoration for other customers as resources can focus on the remaining circuits earlier in the restoration process.

Jason Wells: Another area, we believe we can make meaningful improvements on our distribution system is with respect to increased circuit segmentation and automation equipment.

Jason Wells: Equipments, such as intelligent grid switching devices and trip savers helped create a self healing grid by isolating outages to fewer customers rerouting power around impacted areas and automatically restoring power without manual intervention, where there is no structural damage.

Jason Wells: Presently approximately 30% of Houston Electric's overhead circuits have at least one automation device.

Jason Wells: As part of phase two of <unk> we.

Jason Wells: So payments totaling 4500 trips papers and 350 intelligent grid switching devices before the next hurricane season, which will allow us to nearly double the number of distribution circuits with automation devices and the greater Houston area.

Jason Wells: Our investments in work during this space are anticipated to save our Houston area customers over $125 million outage minutes annually over the next five years, we plan to not only deploy even more devices, but also optimize their capabilities by employing AI based modeling.

Jason Wells: We plan to share additional details regarding our future resiliency investments on our fourth quarter call, which will take place. After we have filed our system resiliency plan.

Jason Wells: As a reminder, our revised system resiliency plan will include approximately $5 billion and resiliency investments from 2026 through 2028, an increase of approximately $2 5 billion over our previously withdrawn system resiliency plan.

Chris will go into more detail in his section, but I want to highlight that even with the inclusion of these incremental resiliency investments, we anticipate Houston electric's customer delivery charge increases will track in line with our long term rate of inflation over the next 10 years.

Jason Wells: Turning to an update of our broader regulatory efforts starting with Houston electric.

Jason Wells: As many of you likely saw on August one we filed our notice to withdraw our Houston electric rate case filing.

This was draw allows us to continue to focus our attention on near term plan execution and long term system resiliency plan development as we are laser focused on year over year improvements. If there was a draw is approved we have stated that we will file a new Houston electric rate case, no later than June 32025, based on a 2024 calendar test year.

Jason Wells: Outside of the rate case filing we intend to continue to seek recovery of capital investments made for the benefit of our customers.

In the fourth quarter. This year, we anticipate filing to start recovery of both our recent transmission and distribution investments through our T costs in DCF capital trackers.

Jason Wells: The efficient recovery of these investments is crucial to our ability to efficiently fund future investments. This is why we remain focused on reducing regulatory lag across all of our jurisdictions.

Our latest earnings monitoring report highlights the regulatory lag we continue to experience at Houston electric for.

Jason Wells: For 2023, our weather normalized earned return on equity was nearly 150 basis points lower than our allowance.

Jason Wells: In addition to filing for recovery of our investments. We will also make the initial filing for recovery of approximately $450 million in storm costs related to the major ratio.

Now turning to the Indiana electric rate case.

Jason Wells: Little over a month ago, we filed a proposed order with respect to our non unanimous settlement proposal.

The Indiana utility regulatory Commission has a statutory deadline to issue its final order by February three 2025.

We want to thank all stakeholders for their contributions to the case as we seek to reach a fair outcome for all parties.

Jason Wells: Moving next to the filed Minnesota gas rate case.

As some of you may have seen intervenor testimony was filed a few weeks ago.

Jason Wells: Since then we have had constructive settlement talks with stakeholders and intend to continue and the settlement negotiations leading up to our rebuttal testimony deadline of November 12.

Jason Wells: As you May recall, we have settled our previous three rate cases, and our Minnesota gas jurisdiction.

Jason Wells: Absent any settlement the Minnesota Commission may consider interim rates for 2025 towards the end of this year.

Jason Wells: Finally, I want to touch on our upcoming rate case application for Ohio gas in August our Ohio gas business filed its notice of intent with the public utility Commission of Ohio regarding our upcoming general rate case application, which we intend to file tomorrow.

Jason Wells: Over the last several years, we've had one of the lowest customer gas bills in the state.

Jason Wells: Our upcoming ask reflects an investment recovery rate that will put us more in line with our Ohio peers.

Jason Wells: In addition, this larger revenue requirement increase will allow us to more efficiently fund that continued pipeline modernization investments, which we believe contributes to the overall safety and efficiency of the system.

Now I want to highlight the strong organic growth, we continue to see especially in our Texas service territories.

Jason Wells: While much of my earlier commentary focused on our investments in resiliency and reliability I want to emphasize that we continue to experience significant growth across Texas and in particular, the greater Houston region.

Jason Wells: Over the last few decades, the greater Houston region has grown.

Jason Wells: One of the fastest rates in the nation, we see that growth not only continuing but accelerating through the remainder of this decade and beyond.

Jason Wells: In fact, we believe our peak load of approximately 22 Gigawatts in 2024 could increase by more than 30% by 2030.

Jason Wells: This potential growth is driven by continued population growth acceleration of electrification and increases in data center activity.

Jason Wells: Houston continues to be an attractive city to live and work over the last five years housing starts have increased over 9% per year on average.

Jason Wells: Which is more than three times the national average, we see this growth continuing as businesses and people alike continue to migrate to the Houston area.

Our industrial load growth drivers are both large and diverse.

Jason Wells: Our substantial potential future load growth is underpinned by industrial electrification and energy exports, including hydrogen.

Jason Wells: Houston remains an ideal location for hydrogen developers as it already boasts the largest hydrogen infrastructure in the world. In addition to a proximity to the largest port by waterborne tonnage in the United States.

Although we still are in the early stages of hydrogen development. We are working with approximately three five gigawatts of projects that are well into the advanced engineering phase.

Jason Wells: Outside our more traditional low drivers of energy and energy exports, we see growing potential incremental load from other sectors.

Jason Wells: Notably over the summer we have seen a fundamental shift in data center development and.

Jason Wells: In fact, our interconnection queue for data centers now sits at over eight gigawatts.

Jason Wells: While we recognize that not all of this will be developed it is yet another tailwind and what we continue to believe is one of the most tangible long term growth stories in the industry.

Jason Wells: It is with this growth in our customer driven capital investments that we've made over the last couple of years. So that gives us conviction to initiate our 2025 non-GAAP earnings guidance target range of $1 74 to $1 76 per share.

The midpoint of this range represents 8% growth from the midpoint of our 2024 guidance range of $1 61 to $1 63.

Jason Wells: Beyond 2025, we are also reaffirming our longer term guidance.

Jason Wells: Where we expect to grow non-GAAP EPS at the mid to high end of our 6% to 8% range annually through 2030.

Jason Wells: As well as targeting dividend per share growth in line with earnings per share growth over that same period of time.

Jason Wells: For our customers. This strong Houston area growth gives us confidence that we will keep increases in electric delivery charges roughly in line with the forecast the rate of inflation over the next 10 years we.

Jason Wells: We recognize the privilege and responsibility of being an energy delivery provider for our customers. We will be laser focused on both enabling growth in advancing system resiliency for the benefit of our customers through the work that we've outlined it and <unk> as well as the investments we will propose and our new system resiliency filing.

Jason Wells: We look forward to continuing to work with our customers regulators and others to make improvements for the benefit of all of our stakeholders and with that I'll turn it over to Chris.

Chris Foster: Thanks, Jason.

Chris Foster: Before I get to my updates I want to Echo Jason's gratitude for not only our centerpoint coworkers, but all utility and contractor employees that aid in the restoration efforts. During this very active hurricane season. It was truly remarkable to witness the dedication to a safe response.

Chris Foster: The speed of the restoration efforts that took place after two devastating hurricanes hit the southeast within two weeks of each other I want to thank the roughly one third of our internal Centerpoint line crews that made the journey to other sector peers to help get the lights back on after those hurricanes.

Speaker Change: For the quarter I'd like to cover four areas of focus first the details of our third quarter financial results, including our reaffirmation of 2020 for guidance.

Speaker Change: Second the initiation of 2025, non-GAAP EPS third I'll touch on our capital deployment status this quarter and forecasted storm costs and finally I'll provide an update on our financing plans.

Speaker Change: <unk>, an update to our plans to increase our equity guidance to fund our incremental $2 5 billion, which will be included in our system resiliency plan totaling at least $5 billion in cumulative resiliency investments from 2026 through 2028.

Speaker Change: Let's now move to the financial results shown on slide seven.

Speaker Change: On a GAAP EPS basis, we reported <unk> 30 for the third quarter of 2024 on a non-GAAP basis, We reported 31 for the third quarter of 2024 compared to <unk> 40 in the third quarter of 2023, our non-GAAP EPS results for the third quarter remove the costs associated with the sale of Louisiana, and Mississippi gas LDC.

Speaker Change: The reduced earnings quarter over quarter was primarily driven by increased and accelerated O&M that was completed as part of phase one of the AHRI when compared to the comparable quarter of 2023 O&M was <unk> 11 unfavorable this 11, not only represents the $70 million of vegetation management for which we will not seek recovery.

Speaker Change: Also the work we pulled forward from the fourth quarter to increase readiness for future potential inclement weather that could impact the Houston electric system.

Speaker Change: In addition to the headwind through O&M weather and usage contributed an additional <unk> of unfavorable <unk> quarter over quarter <unk> of this unfavorable variance was driven by reduced usage caused by outages from hurricane barrel.

Speaker Change: Along with the considerably milder summer in the Houston Electric service territory as compared to 2023.

We continue to recover on a customer driven investments, which contributed <unk> <unk> of favorability this quarter when compared to the comparable quarter of 2023. This was primarily driven by the ongoing recovery from various interim mechanisms for which customer rates were updated last year as.

Speaker Change: As well as the interim rates in our Minnesota gas business that went into effect on January one of this year.

Speaker Change: In addition, the Houston area continues to see strong organic growth extending the long term trend of 1% to 2% average annual customer growth.

Speaker Change: Jason referenced this dynamic as in keeping future increases in our customer electric delivery charges roughly in line with our forecasted rate of inflation over the next 10 years interest expense and financing costs contributed <unk> <unk> of favorability when compared to the comparable quarter in 2023 due to moderating interest rates and the favorable variance from the redemption of the series a preferred stock.

In September of last year, and despite the headwinds we faced this quarter, we continue to reaffirm our full year 2024, non-GAAP EPS guidance range of $1 61 to $1 63.

Speaker Change: Our confidence in reiterating our full year 2024 guidance today is driven by the O&M work on the system that we accelerated into the third quarter. Our updated work plans are reflected in the <unk> 11 of unfavorable <unk> I mentioned as they otherwise would have been spread across the third and fourth quarters. This is a departure from last year, where we highlighted some high.

Speaker Change: Here O&M costs in the fourth quarter, reflecting work, including incremental vegetation management.

Speaker Change: In addition to reaffirming full year 2024, non-GAAP EPS guidance. Today. We are also initiating our 2025 and non-GAAP EPS guidance target range of $1 74 to $1 76 per share the midpoint of this range represents annual growth of 8% from the midpoint of our 2024, non-GAAP EPS guidance target range of $1 61.

One to $1 63, or 2025 figures are a byproduct of the significant investments we've made across our various jurisdictions over the last couple of years.

Speaker Change: As you May recall, we accelerated investments in the Houston Electric service territory last year, and we continued our strong investment profile across our jurisdictions this year.

Speaker Change: These investments have resulted in a rate base CAGR of more than 11% over the last two years. The strong foundation of organic growth with the new capital investments combined with rates, we're anticipating through our interim rate mechanisms and rate case outcomes gives us the conviction in our 2025 non-GAAP earnings guidance initiated today.

Next I'll touch on our capital investments execution as of the quarter and 2024 as shown on slide eight.

In the third quarter of 2024, we invested $900 million of base work for the benefit of our customers and communities.

Speaker Change: Excludes spending related to storm restoration year to date, we've invested approximately $2 6 billion.

Speaker Change: Which represents over 70% of our original 2024 capital expenditure target of $3 $7 billion.

Speaker Change: We remain on target to meet our base capital plan investment despite the interruptions of normal capital deployment from the storms we've experienced this year.

Speaker Change: I'd also like to provide a quick update on where we stand with storm costs related to the major <unk> of it and hurricane barrel with the majority of costs accounted for we are now able to refine our estimate to the low end of the previously disclosed $1 6 billion to $1 $8 billion range as we now estimate costs for both storms to total.

Speaker Change: <unk>, one 6 billion.

Speaker Change: We intend to make our filing for cost determination in connection with the securitization for the May storm costs in the coming weeks and storm restoration costs associated with hurricane barrel in the first half of next year.

Speaker Change: I'll now turn to our capital investment targets for 2025 and beyond.

Speaker Change: For 2025, we are targeting to invest $4 9 billion across various jurisdictions for the benefit of our customers and communities.

Speaker Change: Looking to the remaining five years of our original 10 year capital investment plan that runs through 2030, we are now targeting to deploy approximately $26 billion of capital of which $21 billion is anticipated to be in the state of Texas.

This brings our tenured total capital investment plan up to 47 billion.

Speaker Change: With $47 billion is a $2 $5 billion increase from our previously stated $44 5 billion.

Speaker Change: Our incremental investment is expected to all be deployed and our Houston Electric service territory and will be reflected in our upcoming system resiliency plan that we have committed to filing by January 31 2025.

Speaker Change: We anticipate these investments will enhance the customer experience, but we remain cognizant of the impact of our investments on customer bills. However, based on the total current average Houston electric residential Bill we estimate that our investments combined with the estimated impacts of the to be securitized storms should result in customer bill increases roughly in line with our forecasted long.

Speaker Change: Term rate of inflation over the next 10 years.

Speaker Change: As a reminder, our Houston electric residential customer delivery charges were the same in 2014 as when we started 2020 for this bill trajectory as a result of our continued focus on efficiency and our O&M activities. In addition to the consistent customer growth we've seen in the Houston area for the last three decades.

Speaker Change: Finally, I wanted to touch on our balance sheet and how we're thinking about funding our increased capital plan.

Speaker Change: As of the end of the third quarter, our calculated <unk> to debt was 13, 8% when adjusting for the storm costs on a pro forma basis based on our calculation aligning with Moody's methodology as shown here on slide nine we demonstrated our continued focus on preserving our balance sheet strength, while executing our capital plans despite incremental storm cost pressure.

Speaker Change: <unk> this year.

Speaker Change: Our efforts included the acceleration of $250 million of common equity into this year and the issuance of equity credit from hybrid debt Securities. We plan to maintain that same philosophy as we work to efficiently fund investments and preserve credit health both in the near term and beyond as we continue to focus on our long term target of Maine.

Speaker Change: Turning a cushion of 100 to 150 basis points above our downgrade threshold.

Speaker Change: We also had substantial cash inflows as part of our plan starting in 2025 looking over roughly the next 12 months to 18 months, we anticipate approximately $3 billion of gross cash proceeds from the divestiture of Louisiana, and Mississippi gas LDC.

Speaker Change: And storm related securitization issuances and.

Speaker Change: And with regard to those anticipated securitization issuances as a reminder, the state of Texas has seen 11 utility securitization transactions. Since 2008. So there is a strong history under this existing construct underpinning our conviction. We expect these combined proceeds will be a part of our strengthening story as we execute on additional customer driven investments.

Speaker Change: As we look to the long term financing plans through 2030, I also want to provide an update today on our equity guidance with respect to the incremental $2 $5 billion of resiliency investments, we expect to follow our previously provided guidance of funding incremental investments with 50% equity and 50% debt.

Speaker Change: Such you should expect that we will raise an incremental $1 $2 5 billion of equity. In addition to the $1 5 billion issuance through 2030, we previously guided to this takes the total equity plan guidance to approximately $2 $5 billion through the remainder of the decade.

Speaker Change: You should expect that the equity issuances associated with these incremental expenses will likely come in towards the latter part of our remaining five year plan in the near term and as I mentioned previously the approximately $3 billion of cash inflows should allow us flexibility and mitigate the need for common equity in 2025.

Speaker Change: Although we do not foresee the need for common equity issuances through 2025, we plan to continue to be opportunistic and strengthening the balance sheet through credit enhancing instruments like those we issued earlier this year.

Speaker Change: We will of course focus on the most efficient ways to raise that equity be it.

Speaker Change: Through common equity issuances incremental equity content, such as hybrid or recycling proceeds.

Speaker Change: As we look across the state that we are fortunate to serve we remain confident in the continuation of our long term plan with a consistent focus on improving customer outcomes, delivering affordable service and building toward the most resilient coastal grid in the United States.

Speaker Change: And with that I'll now turn the call back over to Jason.

Jason Wells: Thank you, Chris regardless of the challenges we face this management team remains firmly committed to delivering for all of our stakeholders our customers our communities, our regulators and legislators and our investors.

Thank you Jason operator, we're now ready to turn to Q&A.

Speaker Change: At this time, we will begin taking questions. If you wish to ask a question. Please press star one on your Touchtone keypad. The company requests that when asking a question callers pick up their telephone handsets.

Speaker Change: And one moment for our first question.

Speaker Change: The first question will come from Shar.

Speaker Change: <unk> with Guggenheim Your line is now open.

Speaker Change: Hey, guys good morning.

Speaker Change: Hey, good morning good.

Speaker Change: Morning, Jason So just on 24, it looks like it's in good shape.

Speaker Change: Thinking about 25 guidance as a like kind of a lot of moving pieces, there, including sort of the <unk> withdrawal of request tracker filings potentially maybe higher O&M I guess, what is the level of confidence here and what happens if the <unk> withdrawal request as an approved which I guess, we'll know in a couple of weeks. So there's just a lot of moving.

Speaker Change: PC and some key events would be great to maybe if you can bridge a little bit further for us. Thanks.

Speaker Change: Yeah, Thanks, Sharon for the question.

Speaker Change: Obviously, we have a high degree of confidence.

Speaker Change: In terms of initiating 25 here there are a few points that I want to highlight that support that confidence and the first is <unk>.

Speaker Change: Invested significantly for our customers over the last two years and has a rate base CAGR over the last few years of about 11%.

Speaker Change: A solid foundation for 8% guide.

Speaker Change: Earnings growth second thing I'd, probably highlight.

As you know, we will have new base rates in three of our jurisdictions in 'twenty five.

Speaker Change: Texas gas.

Indiana electric.

Speaker Change: In Minnesota gas and I think what's notable about Minnesota gas is as you recall over the.

Speaker Change: In the past we have filed rate cases every other year in Minnesota.

Speaker Change: That profile.

Speaker Change: Dynamic we're in every year.

Speaker Change: We had zero increase in revenues in Minnesota, when we filed its multiyear rate case last year, we filed.

Speaker Change: Yes.

Speaker Change: A requested increase revenues here in 2005, and so that smooth the profile for both our earnings but also for rate increases for our customers and so I think thats a pretty notable change and then third you touched on this.

Speaker Change: We believe we have access to all the recovery mechanisms for our capital spend with the exception of Ohio, where we will be in the middle of that rate case, and so I think those are the drivers that give us confidence for the 25 earnings guidance you mentioned that withdraw.

Speaker Change: Texas rate case.

Speaker Change: And as you recall, we had filed.

Speaker Change: Modest revenue increase in that case about $60 million.

Speaker Change: And what we have historically.

Speaker Change: We expected that to be.

Speaker Change: Our rate case that resolve itself with flat potentially maybe a small decrease in revenues and so I don't think the timing of the Houston electric rate case.

Speaker Change: The real driver for 25, given those other factors I mentioned.

Speaker Change: Okay. That's perfect. Thanks, and then just lastly on equities, obviously, it's increased by another $105 to $2 5 billion through 2030, I mean, obviously, you talked a little bit about the shape of that equity being more backend loaded but can you pre fund the needs is there an opportunity there to remove the overhang in our asset sales still.

Speaker Change: And opportunity with DLD sees or capital markets aren't there for that thanks.

Speaker Change: Yes, Thanks for the question Charles what I would say.

Speaker Change: We've established I think a pretty strong track record of efficiently raising the equity.

Speaker Change: That we need a series of transactions.

Speaker Change: Actions in the past.

Speaker Change: You can count on us doing the same here, we will efficiently fund this equity I don't necessarily think it comes in the form of pre funding, but we will look at the most optimal way too.

Speaker Change: To finance these needs and as Chris mentioned I think we're in a.

Speaker Change: Pretty strong position with having $3 billion of cash inflows over call. It the next.

A 12 to 18 months that really gives us quite a bit of flexibility here as we think about the.

Speaker Change: Best possible way to efficiently raise the equity.

Speaker Change: Okay.

Speaker Change: Thanks, guys I appreciate it a couple of weeks yes.

Speaker Change: And the next question comes from Steve Fleishman with Wolfe Research. Your line is now open.

Steve Fleishman: Yes, hi, good morning.

Morning, Steve.

Steve Fleishman: So hey, so first just the detail on the Texas loan growth.

Steve Fleishman: 30%.

Steve Fleishman: Growth in peak.

Steve Fleishman: Through 2030 is that.

Steve Fleishman: <unk> include all the updates that you.

Steve Fleishman: Two I think cod for early next year for kind of low growth plans.

Speaker Change: Is that the kind of range that we should be expecting.

Speaker Change: There is the potential for incremental growth in that update.

Speaker Change: That process with our partners is really trying to capture and kind of all speculative load in the 30% figure.

I highlighted was a subset of that speculative loan where we have a much higher degree of confidence.

Speaker Change: And as we look at and work with a number of companies in this region.

As an example.

Speaker Change: Trojan related activity could be.

Multiples of what's included in that number.

As one example, so we will be working to categorize all of what I'll call speculative load activity and then providing various degrees of confidence for each of those categories.

Speaker Change: I think the headline number should be higher, but we feel a high degree of confidence at least 30% through 2030.

Speaker Change: Okay.

Speaker Change: And then.

Just maybe you could just give us an update on.

Speaker Change: Maybe a little more color on where things stand with the rating agencies.

Speaker Change: What they are keying off of from here.

Speaker Change: Is it just the metrics or other things that they are watching.

Speaker Change: Care about.

Speaker Change: Sure Stephen Good morning, I think it's really both pieces to start with the numbers.

Speaker Change: Your thoughts about this morning, with we're consistently measuring against Moody's and a 13% downgrade threshold. There we came out with the adjusted number today at 38, 8%.

Speaker Change: Confident that as we continue to go forward, what we're really going to see change there over the next year.

Speaker Change: Combination of the Louisiana, Mississippi gas LDC proceeds.

Speaker Change: As well as the securitization related proceeds so it's certainly the case of the rating agencies are watching closely.

Speaker Change: Those securitization filings as well with the ultimate goal of really just seeing the really strong Texas regulatory construct worked right. That's why you thought today really highlight two things.

Speaker Change: First again, the securitization process with a long history here in Texas of approval of a 11 different securitization.

Speaker Change: And the second is the opportunity without the rate case in front of us to pursue the traditional capital trackers, which we do intend to do.

Speaker Change: Okay, great. Thanks, I appreciate it thanks.

Steve Fleishman: Thanks, Steve.

Speaker Change: And our next question comes from Jess <unk>.

<unk> with Evercore Your line is open.

Speaker Change: Hey, good morning team. Thanks for giving me time, Hey, Chris just to kind of follow up on the credit metrics discussion maybe.

Speaker Change: Maybe just can you help us maybe a little bit more detail on the timing of the securitization proceeds.

Speaker Change: In 2025, and then just Directionally speaking.

Speaker Change: Where do you on a Moody's basis, what are you expecting 2024 metrics to be and then 2025 I'm thinking if they dip towards the end of the year and then pick back up in 2025 as you receive those proceeds but just just more color there. Thank you Chris.

Speaker Change: Sure. Thank you guys happy to do it let me just remind everybody again, the highest or the focus of the company for the long term is to focus on a cushion of 100 to 150 basis points as we go but let me impact.

Speaker Change: <unk> is for your particular <unk>.

Speaker Change: First you should assume that we filed two different securitization request. The first will be for the associated May storm derecho related storm costs will file that soon.

Speaker Change: As a result, I think you should generally assume roughly Q3 resolution and associated proceeds of 2025.

Speaker Change: Second we will file the hurricane barrel related cost.

Speaker Change: We're generally targeting roughly Q2 next year once we get all those costs.

Speaker Change: To file for those barrel associated request.

Speaker Change: Cumulatively, what we did this morning as we update it.

Speaker Change: Towards the low end of the cost themselves previously our guide was $1 68 billion.

We updated today given the greater certainty we have now at $1 6 billion. So ultimately there guys I'd say the first piece roughly Q3 dollars 25.

Speaker Change: Components hurricane barrel related costs, either late Q4 or early <unk>.

Speaker Change: Q1 2026.

Thanks, Chris and then just so I guess by the end of.

Speaker Change: Next year are you sort of in that 14% to 50, I mean, you were very close to it as of the end of <unk>.

Speaker Change: Just thinking about capex picking up next year.

Speaker Change: A new securitization proceeds.

Speaker Change: Where do you shake out in that 14% to 15 or are you going to be solidly in that range next year or is that more of a 'twenty six.

Speaker Change: You bet.

Speaker Change: Yes, I think it is ultimately once we get the securitization proceeds into gas will be stepping back into that.

Speaker Change: Substantial cushion right. So ultimately probably be looking at Q1 'twenty six.

Speaker Change: We've got all that done keep in mind that we also emphasize this morning.

Speaker Change: Consistent focus we've got on the balance sheet you saw it pull forward even to 2025 equity funds.

Speaker Change: So I pointed at that point, so you're just going to consistently see the focus here from the team.

Speaker Change: Understood really appreciate the detailed color. Thank you.

Speaker Change: Yes.

Speaker Change: And our next question comes from Jeremy Tonet with J P. Morgan Securities. Your line is open.

Jeremy Tonet: Hi, good morning.

Speaker Change: Hey, Jamie.

Jeremy Tonet: Just wanted to start off I guess looking at the state as a whole how things stand in Texas, how have stakeholder conversations trended there since completing your GH alright phase one work versus the initial aftermath of the storm.

Speaker Change: Yes, Thanks, Jamie for the question I think things continue to improve.

Speaker Change: <unk> got data, obviously extensive outreach elected officials customers or communities community leaders and what we've heard.

Speaker Change: And consistently is that everybody wants a more resilient system you want to improve.

Indications I think they saw improved communications as we prepare for France.

Speaker Change: And I think they have appreciated the progress we made in August and that we're carrying forward.

When the resiliency investments.

And the second phase of <unk>.

As I highlighted on the call.

Speaker Change: I think.

Speaker Change: The area, where we can make them.

Speaker Change: Sure.

Speaker Change: Single biggest sort of improvement in a short period of time is on this concept of better segmentation in automation in the plan that we've got here in the second phase when it's all implemented will save our customers about $125 million outage minutes annually and I think thats been direction that our stakeholders want to see US go ahead and so.

Obviously, there is more to be done.

Speaker Change: Okay.

Speaker Change: It's a focus of ours to continue to earn trust. We know that we've got to continue to lean into those conversations both with elected officials as well as our communities, but I think we're headed in a direction that everybody wants that's again, a more resilient and reliable grid and much better communication.

Speaker Change: Got it that's helpful. There. Thanks.

Speaker Change #100: Just moving to 2024 guide real quick here, despite the 11 <unk> O&M track this quarter.

Reaffirming 2024 hole.

Speaker Change #101: This suggests I guess a lot of offsets in <unk>, just wondering if you could walk us through that a bit more what is contemplated there as far as the offsets and then I guess, how does this position for 2025.

Sure. Good morning, I think there's a few pieces they keep in mind, there and which and formerly the confidence in maintaining our guide I think the first piece again is just the consistency of the.

Speaker Change #101: Trackers that we've got the last couple of quarters, there have seen a benefit of roughly nine to 10 quarter over quarter related to those trackers, specifically and so we are going to expect that trend to continue really across our jurisdictions relative to the fourth quarter of last year. The second piece and I'll hit this one in my prepared remarks.

Speaker Change #102: Bill again, just reiterate we did a lot of incremental work on the system in Q3, certainly highlighting the critical vegetation management work during the sprint.

Speaker Change #102: We undertook during August of this year and a lot of that work was incremental to the year, but keep in mind. Some of it wasn't acceleration from Q4. So I would expect that to result in about any benefit to Q4 as well.

Speaker Change #102: And then on top of that recall last year that we pulled forward into the fourth quarter and so that work was about <unk> <unk> from 2024 to 2023.

Speaker Change #102: And so that again should benefit us here as we look at Q4 2024, when you do the quarter over quarter look all in all.

Speaker Change #102: All confident here for the year.

Speaker Change #103: Okay great helpful. Thank you.

Speaker Change #103: Thanks Jerry.

Speaker Change #105: And our next question comes from David Arcaro with Morgan Stanley. Your line is now open.

David Arcaro: Hey, Thank you good morning.

Speaker Change #106: Good morning.

David Arcaro: I'm wondering if you could give an update on kind of where you stand with the proposal that you put forth regarding temporary gen. Rick.

Speaker Change #106: <unk> or what the next move is would that.

Speaker Change #106: With that proposal.

Yes.

Speaker Change #106: <unk>.

Speaker Change #106: I think the real focus.

Speaker Change #106: The state's attention on the temporary generation portfolio is really on the large units.

And when we look at the amount of investment and it was largely an edge.

Speaker Change #106: There is a little less than $100 million.

Speaker Change #106: Profit our equity earnings.

Speaker Change #106: That has not yet been recognized on those units.

Speaker Change #106: It goes without we made in August was basically to forego the equivalent a little bit more than a handful.

Speaker Change #106: That remaining profit.

Speaker Change #106: We put forward a proposal, where we look forward to about $110 million of profit.

Speaker Change #106: Clearly I think stakeholder saw that as a good step forward.

Speaker Change #106: I think theres still a discussion around the use of these units and as we've indicated.

Speaker Change #106: Patients.

We are working with everybody to say defined.

Speaker Change #106: A solution that works a solution that works for our customers.

Speaker Change #106: In times of.

Hello, Chad, we still have an obligation to rotate our once every 12 hours.

Speaker Change #106: And at that and given our industrial load profile critical.

Speaker Change #106: <unk> like the Texas Medical Center.

Speaker Change #106: We believe that many of those large units too.

Speaker Change #106: To comply with that order, but if the state want us to.

Okay wanted to change that requirement and wants us to look at the AGM as differently, we're happy to work with the state in that regard and so there's no prescribed timing.

Speaker Change #106: We attempted to address the concerns on our profit.

Speaker Change #106: The remaining profit on them.

Large units and we'll work with the state to find.

Speaker Change #106: And a final resolution.

Speaker Change #107: Okay got it I appreciate the update there.

And then maybe add.

Speaker Change #107: On the on the transmission outlook in the state there are couple of big programs out there and we get the Permian plan.

Speaker Change #107: Potential for 765 kv investments wondering if you could.

Talk about how you could be involved there when might we see some of the potential projects are upside opportunities start to crystallize for your plan.

Speaker Change #108: I think more directly in the opportunities around the 765 kv project. There are a couple of our substations that would tie into that project.

Speaker Change #108: As you know the standard here in taxes as writer first refusal.

Speaker Change #108: Yes.

For the lines that connect into <unk>.

Speaker Change #108: Our substations and so we see the opportunity.

Speaker Change #108: For significant investment in next Gen 755 kv lines that are outside are not incorporated in the $47 billion Capex plan that we've highlighted here so thats potential upside.

Speaker Change #108: I think theres less potential upside with the Permian basin.

Speaker Change #108: Correct.

Speaker Change #108: We're really focused kind of outside of our service territory, what I would say indirectly though.

Speaker Change #108: And back to my response.

Speaker Change #108: Earlier.

Speaker Change #108: ERCOT will update the speculative load study in early 'twenty five.

Speaker Change #108: At that point they will incorporate.

Speaker Change #108: An estimate of speculative load in the greater Houston region give.

Speaker Change #108: Given the explosive growth that we talked about.

Speaker Change #108: Have to believe that there are going to be more transmission lines that are needed to serve that.

Speaker Change #108: That increasing load as a reminder, on any given day, we're importing about 60% of electricity needed to serve our customers.

Speaker Change #108: Electricity demand grows there will be more need for incremental transmission lines and substations and so we see electric transmission as being sort of a long term.

Speaker Change #108: Tailwind for our Capex plan and would likely start to kind of see that come into greater focus probably in 'twenty five.

This speculative load update.

Speaker Change #109: Okay, Great. That's helpful. Thanks, so much.

Speaker Change #110: Operator, I think we have time for one more if there is another in the queue.

Speaker Change #111: Alright, and our last question will come from Julien Dumoulin Smith with Jefferies. Your line is now.

Hey, good morning team. Thank you guys very much thanks to chat with you guys again.

If I can follow up on a few different things just a little it takes here for the call. Thus far with respect to mobile generation I mean, just to understand the contract terms and permutations here. How do you think about any strategic avenues here to the extent to which that ultimately the state where the legislative session or otherwise ultimately effectively pushes you into that decision to effectively.

Speaker Change #111: Divest if you will in the broadest terms, how do you think about what is possible within the construct that you have here.

Yes, thanks, especially for a state that's short.

Speaker Change #112: I think thats the key anyway.

Speaker Change #113: Your last comment Ryan there's been very little.

Speaker Change #113: Net generation dispatch of generation Bill clearly has been a lot of generation of Illinois, and think about intermittent renewables, but on a net basis in terms of.

Speaker Change #113: Newbuild West retirements. The state has really seen very little in the way of dispatch mobility and so I think the focus for the state is really trying to.

Speaker Change #113: In particular these days find a path forward for the winter.

Speaker Change #113: We saw that benefit.

Speaker Change #113: Battery storage deployment here this past summer.

Speaker Change #113: I think those.

Battery storage.

Investments are really helping kind of summer peak, where we're talking about ours.

Speaker Change #113: Not necessarily as helpful. In the winter peak when oil potentially short for days and so I think what we're looking for is a solution that can help address.

Speaker Change #113: Dispatch will in Asia in the state that could mean.

Speaker Change #113: Sub leasing.

Speaker Change #113: And to others.

Speaker Change #113: When it doesn't meet the state, but as an available resource.

Speaker Change #113: At the same level.

Speaker Change #114: Otherwise, obviously, we will work with our elected officials if they have a different point of view I don't think there is a definitive path forward, but I think everybody is trying to find a solution that protects customers in the event of a flow Chad, but also got us so sort of optimal from a cost standpoint and where.

Speaker Change #114: Happy to find that balance with everyone.

Excellent and just a quick nitpick on the last response, just the transmission update from ERCOT here.

Speaker Change #115: ERCOT released their own load forecast here recently, you talked about this a gigawatt number on the call momentarily ago, how does that inbound again I get this is a fluid situation.

Speaker Change #116: Reconcile against ERCOT demand and effectively are you, suggesting there is a further sort of net uptick in aircrafts.

Speaker Change #116: Updated load forecast they came up with does it necessarily yet reflect their transmission expectations Im just trying to understand I think you suggested that there is an uptick in both the demand as well as.

Speaker Change #116: Their transmission planning to reflect the eight gigawatts that you just alluded to on datacenter specifically potentially.

Speaker Change #117: Yes, John I think that's the short of it is there's an uptick.

Speaker Change #116: Both on demand and transmission.

Speaker Change #116: The updated numbers don't start offering flat.

Speaker Change #116: Potential development here in the greater Houston region that updated as I've mentioned really is coming out of it.

Speaker Change #116: In early.

25%, what we have seen this summer is like a fundamental shift.

Speaker Change #116: Data center activity.

Speaker Change #116: Up until early summer we had.

Speaker Change #116: About a gigawatt of dim.

Speaker Change #116: And in the queue.

Speaker Change #116: Over eight gigawatts.

Speaker Change #116: Sure.

Speaker Change #116: At the time of this call and I think that really reflects the fact that as we talk to developers in hyperscale.

Speaker Change #116: Sure.

Speaker Change #116: Yes.

Speaker Change #116: Latency becomes less of an issue as you move more into development to.

Speaker Change #116: AI driven data centers, Texas remains very attractive in terms of being able to build a new transmission lines new generation.

Speaker Change #116: Our interconnection timelines compare very favorably in a state that.

Speaker Change #116: That can move quickly with large infrastructure investments and so I think that's why we've seen it dramatically changed the summer all of that to your point will get incorporated into ERCOT.

Load forecast early next year and just given the point that I was recently highlighted we continue to highlight that 60% of our electricity.

As reported on any given day, that's likely going to mean more transmission here for the greater Asian region.

Speaker Change #118: Right, so even accelerating in the last quarter. Despite ERCOT update even the last couple of months here. It seems like there is an upward bias there.

Speaker Change #119: Excellent guys. Thank you for the time and clarifying that.

Speaker Change #120: Thanks, Helane, Thanks, Julien and with that operator, I think that will conclude our Q&A for today. Thanks, everyone for participating in this quarterly call.

Speaker Change #121: This concludes Centerpoint Energy's third quarter 2024 earnings conference call. Thank you for your participation you may now disconnect.