Q4 2024 CenterPoint Energy Inc Earnings Call
Speaker Change: Good morning and welcome to CenterPoint Energy's fourth quarter and full year 2024 Earnings Conference Call with Senior Management.
Speaker Change: During the company's prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management's remarks. To ask a question, press star-one-one on your touch-tone keypad. I will now turn the call over to Jacqueline Richert, Senior Vice President of Corporate Planning, Investor Relations, and Treasurer. Ms. Richert?
Speaker Change: Good morning and welcome to CenterPoint's fourth quarter 2024 earnings conference call. Jason Wells, our CEO, and Chris Foster, our CFO, will discuss the company's fourth quarter and full year 2024 results.
Speaker Change: Management will discuss certain topics that will contain projections and other forward-looking information and statements that are currently based on management's beliefs, assumptions, and information currently available to management. These forward-looking statements are subject to risks and uncertainties.
Speaker Change: Actual results could differ materially based on various factors as noted in our Form 10-K, other SEC filings, and our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statements.
Speaker Change: We reported $1.58 and $0.38 for the full year and fourth quarter of 2024, respectively, on a gap basis.
Speaker Change: Management 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.
Speaker Change: For information on our guidance methodology and reconciliation of the non-GAP measures used in providing guidance, please refer to our earnings news release and presentation on our website.
Jason Wells: We use our website to announce material information. 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.
Speaker Change: Thank you Jackie and good morning, everyone I would like to begin by extending my sincere appreciation to all of our frontline personnel that worked through the unprecedented winter weather, we experienced across our various service territories.
Speaker Change: We experienced sub zero temperatures in Minnesota freezing rain in Indiana and record breaking snowfall in the Houston area.
Speaker Change: Through it all our team worked to keep the lights on and the gas flowing for our customers.
Speaker Change: On today's call I'd like to address four key areas of focus.
Speaker Change: First I'll touch on our fourth quarter and full year 2024 financial results.
Speaker Change: Second I'll provide a broader regulatory update including highlights of our recently filed system resiliency plan for Houston Electric and touch on the significant progress we've made in our various rate cases.
Speaker Change: Third I'll share an overview of the transaction, we have proposed to ERCOT that we believe benefits all stakeholders.
And lastly, I want to highlight the impressive growth drivers across the Houston area, and how that growth and formed the substantiated load. Finally, we recently submitted to ERCOT.
Speaker Change: Now starting with our fourth quarter and full year financial results. This morning, we announced non-GAAP EPS of <unk> 40 for the fourth quarter and $1 62 for the full year.
Speaker Change: Chris will provide additional details of the strong results in his section.
Speaker Change: The dollars 62 per share translates to 8% growth over our 2023 actual results.
Speaker Change: This is now the fourth consecutive year of meeting or exceeding our annual non-GAAP EPS guidance.
Speaker Change: It is also important to note that we have rebased, our long term growth targets off these higher earnings levels each year as we seek to deliver value for our investors each and every year.
Speaker Change: Consistent with this approach we are reaffirming our 2025 non-GAAP EPS guidance range of $1 74 to $1 76, which.
Speaker Change: Which equates to 8% growth at the midpoint from our deliver 2024, non-GAAP EPS of $1 52.
Speaker Change: Over the long term, we continue to expect to grow non-GAAP EPS at the mid to high end of the 6% to 8% range annually through 2030.
Speaker Change: We also expect to grow dividends per share in line with earnings growth over the same period of time.
Speaker Change: Now turning to my second key area.
Speaker Change: <unk> on our broader regulatory efforts, starting with our recently refiled system resiliency plan at Houston Electric.
Speaker Change: In line with our commitments, we refiled our system resiliency plan at the end of January.
Speaker Change: This filing proposes a total spend of $5 75 billion from 2026 through 2028 to improve system resiliency.
Speaker Change: $5 5 billion of this spend is related to capital expenditures.
Speaker Change: Chris will discuss the associated capital expenditure increase from our previous plan in his section, but I want to briefly touch on our system improvements we are focused on in this filing.
Speaker Change: Our plan outlines 39 specific resiliency measures.
Speaker Change: That are designed to strengthen tens of thousands of miles of our transmission and distribution system.
Speaker Change: The investments included in our filings represent the largest single investment incurred resiliency in our company's history as we work to improve the customer experience for those that live and work in higher risk areas.
Speaker Change: As a result of our planned work through 2028, we expect that our transmission system will be fully hardened with no remaining wood structures and that nearly all substations will be elevated above the 500 year floodplain.
Speaker Change: I am proud to say that with our accelerated pace in less than a year since hurricane barrel, we will have more than doubled the number of circuits that have automation on our system and we won't stop there.
Speaker Change: With our system resiliency plan and another three years, we will triple the number of automated devices since hurricane barrel.
Speaker Change: We estimate that our actions over the next several years will save customers more than 1 billion outage minutes and extreme weather events.
Speaker Change: In addition to contributing to an improved customer experience beginning in 2029. These investments are anticipated to result in an estimated $50 million of reduced storm related cost per year, which naturally support lower electric delivery charges over the long term.
Speaker Change: As I've mentioned before this is not the beginning of our journey to a more resilient system, but an acceleration of what we started a few years ago, when we targeted hardening and modernizing the electric transmission backbone as well as some of our Substations pro to flood risk.
Speaker Change: We believe that these investments combined with the other actions outlined in our greater Houston resiliency initiatives set us on a clear path to become the most resilient coastal grid in the country.
Speaker Change: Next I want to focus on the continued regulatory progress at Houston electric as.
Speaker Change: As many of you recently saw we reached a settlement in our 2024 rate case, we believe that the proposed settlement is constructive for both our customers and our investors.
Speaker Change: The proposed settlement if approved includes an annual revenue requirement decrease of $47 million.
Speaker Change: Which translates to a reduction of approximately $1 per month, and the average electric delivery charge for our residential customers.
Speaker Change: It also includes an increase to both our return on equity and equity ratio. These.
Speaker Change: These improvements strengthen our competitiveness in the capital markets that we regularly access to efficiently fund capital investments for the benefit of our customers.
Speaker Change: This unique outcome of lower customer bills with improvements of both the cost of capital and capital structure comes despite the fact that we've increased our vegetation management spend by 45% over the last few years.
Speaker Change: It also exemplifies our ability to improve customer outcomes, while also efficiently executing O&M reductions throughout the business.
Speaker Change: We'd like to thank all of our stakeholders for working together to submit to the PCT. What we believe is a constructive settlement for all parties.
Speaker Change: Beyond the rate case, we've also made progress on our traditional interim mechanisms and storm cost recovery filings at Houston Electric Chris will provide further details regarding these items in his section.
Speaker Change: Now turning to Indiana electric.
Speaker Change: A few weeks ago, we received a final order in our Indiana electric rate case.
Speaker Change: The final order was approved in line with the settlement filed in May of last year, which included a total annual revenue requirement increase of approximately $80 million.
Speaker Change: Any nine 8% return on equity.
Speaker Change: We believe this is a fair and balanced outcome as we have continued to invest for the benefit of our customers. While also being conscious of the impact of our capital investments on the customer Bill.
Speaker Change: Our move away from older generation facilities has enabled us to eliminate nearly $40 million of O&M directly benefiting our customer bills.
Speaker Change: We also previously securitized the remaining book value of one of our aging facilities foregoing profits related to this plant for the benefit of our customers.
Speaker Change: Moving forward, we will continue to be mindful of our customer bills and the reliability needs and work with stakeholders to achieve balanced outcomes for all parties.
Speaker Change: Moving to our Minnesota gas rate case during the fourth quarter, we reached an all party settlement in our Minnesota gas rate case the.
Speaker Change: The settlement includes a total revenue requirement increase of nearly $104 million for 2024 and 2025.
Speaker Change: Which reflects over 75% of our proposed revenue increase of approximately $136 million.
Speaker Change: Interim rates for the 2024 increase went into effect in January of last year and interim rates for 2025 went into effect last month.
Speaker Change: These rates closely mirror the increased revenue requirement included in the proposed settlement that is now pending a final order from the Minnesota Public Utilities Commission.
Speaker Change: The Commission has a statutory deadline of July one to issue its final order in this case.
Speaker Change: We also want to thank all stakeholders for working together to achieve what we believe is a strong outcome for all parties.
Finally, I want to briefly touch on our rate case for Ohio gas at the end of October we filed our Ohio gas rate case application, which included a revenue requirement increase of $99 $5 million.
Speaker Change: Over the last several years, we've had one of the lowest customer bills in the state.
Our request 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 and continue to prioritize pipeline modernization investments that we believe contribute to the overall safety and efficiency of the system.
Speaker Change: Before closing out my remarks on our regulatory progress I want to put into context, what has been a very busy and constructive regulatory cycle over the last 18 months. Our teams have been busy as they have filed five rate cases.
Of the five we have received final orders into and are awaiting approval of settlements for our Houston electric and Minnesota gas businesses.
Speaker Change: Together these four rate cases represent over 80% of our enterprise rate base.
Speaker Change: Should these cases be improved in line with their current proposed settlements, we will have been able to improve our consolidated return on equity and equity ratio, which naturally increases the earnings power of the company.
Speaker Change: I want to thank all of our teams for their hard work and dedication for working with stakeholders to achieve such strong outcomes for both our customers and our investors.
Speaker Change: Now I would like to provide an update on our proposed temporary generation transaction.
Speaker Change: Through engagement with a diverse set of stakeholders. It is clear that there is no longer a desire for transmission and distribution utilities in the state to invest in large temporary generation facilities to mitigate the impact of large load shed events.
Speaker Change: In response to this we have worked with the same set of stakeholders to develop what we believe is a truly unique Texas solution that benefits Houston electric customers other ERCOT customers and Centerpoint investors.
Speaker Change: I will briefly walk through the contours of this transaction and Chris will provide additional details related to the financial impacts.
Speaker Change: Our proposal to transfer the use of our units to a Texas peer utility will provide a temporary bridging solution for summer peak reliability needs in the San Antonio area.
Speaker Change: We will make these units available for this purpose for up to two years starting this spring.
Speaker Change: After that we intend to market. The 15 large units to third parties at what we expect to be prevailing higher market rates.
Speaker Change: Given current market demand, we believe that the revenues earned for marketing. These units after the period that they are in San Antonio will exceed the foregone revenues. During the period. These units are donated to ERCOT at no cost.
Speaker Change: We truly believe this Texas solution is a win for all stakeholders as part of this solution, we will make an unprecedented contribution of value for the benefit of the ERCOT grid.
Speaker Change: Houston electric customers will be made whole on charges related to the large temporary units and finally, our shareholders will receive the benefit of their investment when we take into consideration the anticipated profit from marketing after the period. These units operate in the San Antonio area.
Speaker Change: We appreciate all stakeholders for providing their feedback and working collaboratively to identify this unique solution that ultimately benefits everyone.
Speaker Change: Now switching gears I want to highlight the strong organic growth, we continue to see especially in our Texas service territories.
Speaker Change: While my earlier commentary focused on capital investments related to resiliency enhancements on our system I want to emphasize that we continue to experience significant electric demand growth across Texas, and particularly the greater Houston area.
Speaker Change: We are proud to partner with both existing and potential new customers to support their energy needs as our region continues to experience rapid economic development.
Speaker Change: It is these discussions that have informed our estimated electric load forecast for the Houston region that we recently submitted to ERCOT.
Speaker Change: I want to briefly touch on what we included in our submission and equally important what we excluded.
Last year's ERCOT and load report was largely focused on Texas electric needs outside of the greater Houston region.
Speaker Change: We are excited to have now submitted our expected load increase for the greater Houston region. This year.
Speaker Change: Like our peers, we've experienced an unprecedented level of interest in connecting to our grid.
Speaker Change: In fact, we have received approximately 40 gigawatts in load interconnection requests.
Speaker Change: Those load requests are incremental to our current peak of about 21 Gigawatts.
Speaker Change: While we are actively pursuing this full set of load interconnection requests. We believe our submission is a more realistic reflection of the low growth that will materialize by 2031.
Speaker Change: Currently we are forecasting a nearly 50% increase in peak demand from 'twenty, one gigawatts today to nearly 31 gigawatts by the end of 2031.
Speaker Change: To put that in perspective, the 10 gigawatt increase we are forecasting over the next seven years is more than the increase the greater Houston region has experienced over the last 25 years.
Speaker Change: A rigorous approach to forecasting low demand gives us confidence in our projections or outlook also benefits from the fact that this growth is not driven by a single industry or theme.
Speaker Change: Houston is clearly earned its reputation as the energy capital of the World.
Speaker Change: But our types of economic expansion go well beyond this core sector.
Speaker Change: It may come as a surprise to some that today energy constitutes only a little more than a third of the area's economy.
Speaker Change: When looking at Houston as low drivers, we see three economic activities as the catalyst for significant long term load growth.
Speaker Change: First Houston is a major logistics hub for the United States boasting the largest port by waterborne tonnage Houston as a gateway for goods coming from and going all over the world.
Speaker Change: We forecast that opportunities for port electrification fleet electrification and other associated projects will drive approximately 20% of the 10 gigawatt increase through 2031.
Speaker Change: Second Houston is home to the largest medical complex in the world and it is only growing.
Speaker Change: It continues to expand not only its offerings for patients who come from all over the globe for treatment, but continues to pioneer medical innovation and medical manufacturing, we forecasted its continued expansion as well as other commercial activities, including data centers will drive 30% of our anticipated loan growth by 2031.
Speaker Change: Third Houston is and will continue to be at the center for energy refining and LNG exports as.
Speaker Change: As the global energy mix continues to evolve Houston will play a central role in the development and exploitation of that energy.
Speaker Change: This significant growth will certainly require continued and increased investments in electric infrastructure, especially with respect to the transmission system.
Speaker Change: As a reminder, Houston makes up just over 2% of the geographic area of Texas, but as approximately a quarter of ERCOT peak load.
Speaker Change: On any given day, we import as much as 60% of the electricity consumed in the Houston area.
Speaker Change: Prior to formalizing our capital investment plans related to this immense growth.
Speaker Change: The feedback and final decisions from the Texas Public utility Commission regarding the 765 kv or $3 45 kv standard for transmission build outs, we anticipate further clarity on this topic by may of this year.
Speaker Change: Regardless of the direction. The PCT takes the continued growth of the Houston area is undoubtedly a long term tailwind and is one that is truly unique to centerpoint.
The diverse underlying fundamentals driving Houston growth gives us continued confidence in our belief that we have one of the most tangible long term growth plans in the industry.
Speaker Change: This growth will continue to drive investment opportunities for years to come but also provide a sustainable platform for our customers, whose charges will continue to benefit from the ever growing population.
Speaker Change: We are privileged to serve such a growing and vibrant area and look forward to continuing to partner with customers communities and other stakeholders to further enable is truly remarkable growth and with that I'll hand, it over to Chris.
Chris Foster: Thanks, Jason.
Chris Foster: Before I get into my updates I want to Echo Jason's gratitude for not only our centerpoint coworkers, but also the external frontline crews who aided in the restoration in Indiana.
Chris Foster: And kept energy flowing for our customers throughout our various service territories.
Chris Foster: This morning, I will plan to cover four areas of focus.
Chris Foster: First the details of our fourth quarter and full year financial results.
Chris Foster: Second I will touch on our capital deployment execution for the year as well as our upwardly revised capital plan that now reflects our recently filed system resiliency plan and an update on our other capital investment trackers.
Chris Foster: Third I will go into further detail on our temporary generation proposal and the associated financial impacts.
Chris Foster: And finally, I'll provide an update on where we completed the year with respect to our balance sheet.
Chris Foster: Let's now move to the financial results shown on slide eight.
Chris Foster: On a GAAP EPS basis, we reported 38 for the fourth quarter of 2024.
Chris Foster: On a non-GAAP basis, we reported <unk> 40 for the fourth quarter of 2024 compared to 32 in the fourth quarter of 2023.
Chris Foster: Our non-GAAP EPS results for the fourth quarter removes the impacts associated with the sale of Louisiana, and Mississippi gas Ldcs.
Chris Foster: In the fourth quarter. These impacts included an $8 million deferred tax remeasurement, reflecting a slightly lower effective state income tax rate post sale.
Chris Foster: Now taking a closer look at the quarter growth and rate recovery contributed <unk> <unk> when compared to the same quarter last year.
Chris Foster: Which was driven by the ongoing recovery from interim mechanisms for which customer rates were updated in addition to approved interim rates related to our Minnesota gas rate case.
Chris Foster: In addition.
Chris Foster: O&M contributed <unk> <unk> of favorability when compared to the comparable quarter of 2023.
Chris Foster: This favorability was primarily driven by the approximately <unk> <unk> of work that was pulled forward in Q4 of last year that we did not replicate this quarter.
Chris Foster: In addition to O&M and rate recovery.
Chris Foster: Other than usage contributed an additional <unk> favorability quarter over quarter.
Chris Foster: Interest expense and financing costs were <unk> <unk> unfavorable when compared to the comparable quarter in 2023.
Chris Foster: These <unk> were primarily driven by the $3 billion of net new debt issuances quarter over quarter.
Chris Foster: And despite the headwinds we faced this year, we were still able to deliver for our investors our full year 2024, non-GAAP EPS target of $1 62.
Chris Foster: I wanted to take a step back to discuss how we're thinking about O&M.
Over the last few years, we've been able to reduce our O&M by nearly 2% annually.
Chris Foster: We are now committed to continuing to do more vegetation management work at Houston Electric where we are now proposing to transition from our current five year vegetation management cycle to a three year cycle.
Chris Foster: This positions us well given the long seasonal growth periods and has us leading statewide in Texas and among the few in our industry that seek this level of proactive vegetation management.
Chris Foster: This more aggressive cadence will naturally reset our O&M levels in the near term however.
Chris Foster: We will be laser focused on continuing to take costs out of the business elsewhere and continuing to target, 1% to 2% O&M reductions from these higher levels ultimately benefiting customer charges.
Chris Foster: For example, as Jason pointed out earlier, starting in 2029, we anticipate saving roughly $50 million of storm costs annually from the investments outlined in our recently filed system resiliency plan.
Chris Foster: This overall level of execution gives us confidence in reiterating today, our full year 2025, non-GAAP EPS guidance target range of $1 74.
Chris Foster: To $1 76.
Chris Foster: The midpoint of this range represents annual growth of 8% from our actual 2024, non-GAAP EPS of $1 62.
Chris Foster: As we seek to deliver value for our shareholders each and every year.
Chris Foster: Next I'll touch on our capital investments execution for 2024 as shown here on slide nine.
Chris Foster: In the fourth quarter of 2024, we invested $1 $2 billion of base work for the benefit of our customers and communities.
For the full year, we invested $3 8 billion.
Chris Foster: Seeding, our 2024 capital expenditure target of $3 7 billion and this is despite multiple diversions from performing base work due to storm restoration.
As Jason touched on our recently filed system Resiliency plan includes capital investments of $5 5 billion.
Chris Foster: This updated plan resulted in a $500 million increase to the 47 billion capital investment plan that runs through 2030.
Chris Foster: As such we are updating our capital investment target to $47 5 billion through the end of the decade.
Chris Foster: And we will fund our incremental capital investments consistent with our prior guidance.
Chris Foster: As such you should assume we will fund in line with the enterprises approximate consolidated capital structure, a 50% equity and 50% debt.
Chris Foster: Separately we.
Chris Foster: We are back now in our more traditional rhythm of seeking ongoing capital plan recoveries using existing mechanisms.
At the same time, we continue to make progress on storm recoveries related.
Chris Foster: Related to those recoveries, we are focused on progressing through the securitization process here in Texas and are currently ahead of plan.
Chris Foster: That is because we have now reached a settlement in principle on a major ACO event costs.
Chris Foster: As part of the proposed settlement, we will recover 98% of the cost attributable to the storm.
Chris Foster: This is a great outcome and one that further illustrates the constructive business and regulatory environment in which we operate here in Texas.
Chris Foster: We're also still on track to make our cost recovery filings related to hurricane barrel in the second quarter.
Chris Foster: In addition, we continued to advance on our capital recovery mechanisms at Houston Electric.
During the fourth quarter, we filed both our transmission and distribution trackers.
Chris Foster: In our transmission tracker or T costs.
Chris Foster: We requested a revenue increase of approximately $63 million, which was approved.
Chris Foster: And rates were updated to reflect this increase in mid January.
Chris Foster: Our distribution tracker or <unk> with.
Chris Foster: With filed at the beginning of December and reflected the requested revenue increase of approximately $100 million.
Chris Foster: We recently withdrew this filing because we are updating it with the revised figures to reflect the capital investments included in the rate case filing.
Chris Foster: We will also incorporate incremental capital investments through the end of December 2024, and our revised filing that we anticipate filing by the end of the first quarter.
Speaker Change: I would now like to discuss the expected financial impacts for customers and investors associated with our temporary generation transaction that Jason referenced.
Speaker Change: First I wanted to take a step back and walk through how we're thinking about our investment related to the lease of our large temporary emergency generation units.
Speaker Change: There are essentially three periods with the lease running through June of 2029.
Speaker Change: First the period, where the units were available to our centerpoint customers to mitigate potential large load shed events.
Speaker Change: Second the period the units will serve our fellow Texans.
Speaker Change: And third the period, where we will seek to market. All 15 large temporary generation units to third parties at prevailing market rates.
Speaker Change: When crafting our proposal our focus first and foremost within our customers.
Speaker Change: We intend to be responsive to stakeholders have expressed a desire for us to offset collections from regulatory recoveries of roughly $475 million.
Speaker Change: That's approximately the amount we'd seek to offset for our customers.
Speaker Change: Let me summarize how we would go about doing that.
Speaker Change: There are three components of customer benefit at a high level.
Speaker Change: First in the spring of this year, we are proposing to make all of our 15 large temporary emergency generation units available to serve the San Antonio area.
Speaker Change: To support reliability needs identified by ERCOT ahead of the summer load peak.
Speaker Change: We will make an unprecedented contribution for the benefit of Texans of approximately $180 million of value for an up to two year period.
Speaker Change: That's the time in which we would propose the large temporary generation unit will serve ERCOT customers, resulting in us not seeking future recovery of this balance from Houston electric customers.
Speaker Change: They will cease to be a regulated investment.
Speaker Change: Second our Houston electric customers will receive the benefit of the Houston electric rate case settlement.
Speaker Change: When approved <unk>.
Speaker Change: Saving customers around $250 million over roughly a five year period.
Speaker Change: And third as we highlighted in the third quarter, we performed as significant incremental work related to both the may storms and hurricane barrel recovery and we will not seek recovery for roughly $110 million of these costs.
Speaker Change: We anticipate that during the time the units are serving as a statewide system benefit cash flow will be slightly lower as collections from customers will be reduced to account for the foregone recovery related to the future use of these units.
Speaker Change: At the end of that time, the third period will begin where we seek to market. All 15 large temporary generation units to third parties at prevailing market rates.
Speaker Change: The market has and continues to move favorably for mobile power units such as these.
Speaker Change: Where we have seen market rates that are roughly double our original lease rate.
Speaker Change: As I briefly touched on once these units move to the San Antonio area.
Speaker Change: We will not earn a regulated return with respect to our investment in them.
Speaker Change: Given the unregulated nature of this investment going forward, we will remove the impacts both favorable and unfavorable from our non-GAAP earnings numbers.
Speaker Change: Although we project the earnings and cash flow profile has the potential to equal or better the prior regulated investment profile.
Speaker Change: This is now largely a timing item and.
Speaker Change: And the asymmetric earnings profile of this investment is not consistent with our core regulated business.
Speaker Change: I will reiterate jason's sentiments with respect to this Texas centric solution.
Speaker Change: We believe this transaction is a tremendous outcome for all stakeholders.
Speaker Change: Finally, I want 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 year.
Speaker Change: Our adjusted <unk> to debt ratio based on the Moody's rating methodology was 13, 6%.
Speaker Change: When removing storm related costs.
Speaker Change: This is slightly below our target range of 14% to 15%.
Speaker Change: But as a reminder, it is transitory in nature as we anticipate receiving approximately $1 billion in cash proceeds next month from the closing of our Louisiana and Mississippi LDC sale. We also expect an additional $500 million of securitization.
Speaker Change: <unk> proceeds by the end of June.
Speaker Change: And we continue to expect to file for securitization of the $1 $1 billion of storm costs related to hurricane barrel within the next few months.
Speaker Change: With proceeds anticipated coming by the end of the year.
Speaker Change: We will continue to stay laser focused in supporting balance sheet health, while also investing for the benefit of our customers and communities.
Speaker Change: Now four consecutive years meeting or exceeding expectations.
Speaker Change: We continue to reaffirm our non-GAAP EPS target of 8% this year.
Speaker Change: In the mid to high end of 6% to 8% thereafter through 2030.
Jason Wells: And with that I'll now turn the call back over to Jason.
Thank you Chris in summary, I'm proud of our team for persevering through 2024, which marks our fourth year of meeting or exceeding our financial guidance. This performance places us in the top decile within our utility peer group.
Jason Wells: In addition, we have a strong foundation in place for 2025 and beyond a foundation that includes a comprehensive plan to deliver the most resilient coastal grid for our customers.
Jason Wells: Incremental capex announced today a $500 million.
Jason Wells: Driving 10% rate base growth through the end of the decade, which is one of the highest in the sector.
Jason Wells: Constructively settling for rate cases, representing over 80% of enterprise rate base, giving us clear line of sight for the next four years and the privilege to serve one of the fastest growing regions in our country with an expected peak load increase of approximately 50% in the Houston area through 2031 powered by a diverse set of economic drivers.
Jason Wells: Yeah.
Jason Wells: This load growth undoubtedly provides incremental capex tailwind to an already industry leading plan.
Jason Wells: We look forward to sharing more comprehensive details about the long term investment opportunities later this year.
Speaker Change: Thank you Nathan.
Speaker Change: Operator, we're now ready for Q&A.
Speaker Change: Thank you at this time, we will begin taking questions. If you wish to ask a question. Please press star one one of your Touchtone keypad the <unk>.
Speaker Change: Company request I would ask a question Carl is pick up the telephone handset. Thank you.
Speaker Change: Our first question comes from Steve Fleishman with Wolfe Research Your line is open.
Steve Fleishman: Yes, hi, good morning. Thanks can you hear me in good morning, Yes, good morning.
Speaker Change: Hi, everyone.
Steve Fleishman: So just I guess.
Jason Wells: The you kind of talked to this at the end, Jason but just on the.
Steve Fleishman: On the growth forecast.
Jason Wells: The.
Jason Wells: That you gave is there any way to kind of compare what you gave to what you what ERCOT might have used last year.
Jason Wells: For this and then also how.
Jason Wells: To think about how much of this growth kind of in your.
Jason Wells: Capital plan.
Jason Wells: Or what's still like upside, including the transmission decision.
Decision that you mentioned.
Jason Wells: Coming up.
Jason Wells: Yes, happy to shed a little color.
Jason Wells: Color on that.
Jason Wells: As it relates to the ERCOT submission.
Jason Wells: During the course of the last year that was largely related to west Texas.
Jason Wells: So on the Permian originally so last year I think we estimated roughly.
Jason Wells: It had to be less than half a megawatt.
Speaker Change: Gigawatt of.
Jason Wells: Interconnection demand, we basically add.
Speaker Change: We werent a.
Speaker Change: Participate in last year's study effectively.
Speaker Change: So this will be the first time that the growth in the Houston area is really going to be reflected in our guidance.
Speaker Change: Substantiated load finally, moving forward. So it will be a 10 gigawatt increase to what they were projecting last year.
Speaker Change: We've also talked about I would have to imagine that some of that load last year.
Speaker Change: Was submitted it was submitted under our standard that was.
Speaker Change: Designated as speculative load.
Speaker Change: ERCOT is trying to tighten the planning parameters.
Speaker Change: Move to more of a substantiated load.
Speaker Change: Essentially a higher level of confidence in that load materializing and so there may be a little bit of downward pressure on the total ERCOT market, but undoubtedly we will add about 10 gigawatts of new demand to what otherwise existed last year. So hopefully that provides the context around.
Speaker Change: The ERCOT submission as it relates to Capex as I mentioned this is an incredible tailwind for the company. It's still a little early to size. It really is going to come down too.
Speaker Change: The decision on voltage whether we pursue a 765 JV standards were $3 45 JV Sandra.
Speaker Change: I would say, though.
Speaker Change: Because we are a load pocket here in Houston.
Speaker Change: On any given day, we're in 40% to 60% of our energy needs.
Speaker Change: This will undoubtedly drive at least another $3 billion.
Speaker Change: <unk>.
Electric transmission Capex, that's not in the plan.
Speaker Change: I would really be surprised if it's not higher than that.
Speaker Change: But ultimately we need policy direction on the voltage standards to refine that estimate and so we will be providing more of that benefit as we get through the course of the year.
Speaker Change: Okay. That's very helpful and then on the.
Speaker Change: Any update on kind of a rating agency views I know you gave the metrics just.
Speaker Change: When are they going to are they mainly going to be focused on the.
Recovery from Burl to kind of.
Speaker Change: Steve stabilizing of the ratings.
Speaker Change: Good morning, Steve I think it's probably three factors.
Speaker Change: First is just.
Speaker Change: The constructive nature of the Texas regulatory environment, which I think we've been able to already showcase our interim cut capital recovery mechanisms as a key area of progress there too.
Speaker Change: Houston Electric rate case again for the certainty that that provides.
Speaker Change: Thank you.
Speaker Change: <unk> seen there we have.
Speaker Change: An all party settlement ideally, hoping for action at the PUC.
Speaker Change: Either March 13th 2007 years would be ideal and their next public meetings third is certainly the securitizations of the prior storm cost what I would point out. There is we are actually ahead of plan and have been sharing that with the rating agencies meeting the $500 million associated with the May storm impact we have.
Speaker Change: <unk> now achieved a settlement in principle, which puts US ahead of plan in terms of being able to execute towards the end of this quarter excuse me towards the end of the second quarter the actual securitization.
Speaker Change: Finally, I do think it's going to be important for them to see progress on the <unk>.
Speaker Change: Prudency review step associated with the hurricane related costs, and we'll get that filing.
Speaker Change: Filed at the PUC here in the next few months. So ultimately I think those are the three factors that they are watching and I think we're already able to show progress on and certainly two of the three if not three of the three.
Speaker Change: Great. Thanks, Thanks very helpful.
Steve Fleishman: Thanks, Steve.
Speaker Change: Thank you. Our next question comes from Sharper Rosa with Guggenheim Partners. Your line is open.
Speaker Change: Hey, guys good morning good.
Good morning, Chuck.
Speaker Change: Morning, just just to follow up on Steve's question.
Speaker Change: Have you committed to an analyst day any sense of timing there and are you going to know enough around the 50% load growth upside that you guys kind of highlighted for Houston.
Speaker Change: Bad debt in the capital plan.
Speaker Change: For the analyst day.
Speaker Change: Yes, that's a great question Shar.
Speaker Change: Yes, we are committed to updating.
Speaker Change: And rolling forward, what will be a new 10 year plan.
Speaker Change: For capital investment this year.
Speaker Change: Yes.
Speaker Change: We do want to make sure that we incorporate this policy decision our direction.
Speaker Change: Texas will make in terms of the voltage standard we anticipate that by by May This year and so.
Speaker Change: Our our update to the market will likely follow that so that we can incorporate.
Speaker Change: Better estimate of the transmission.
Speaker Change: Capex increase associated with serving this really just tremendous outlet growth here. So we haven't set a date, but we're committed to providing an update.
Speaker Change: To the market here. This year I would also say that while we're talking a lot about the.
Speaker Change: Electric transmission opportunities here in Texas, which are significant as I mentioned they are not our only.
Speaker Change: Capex tail winds.
Speaker Change: We continue to see I think really constructive opportunities for our customers around.
Speaker Change: Some localized transmission here in the greater Houston.
Speaker Change: Area on the gas side of the business and we're going to be pursuing some electric transmission opportunities up in Indiana, and so I think the.
Speaker Change: The tailwind from a capex standpoint are significant and we look forward to sharing.
Speaker Change: A little later this year when they come into better focus.
Speaker Change: Okay, perfect and then just in terms of financing needs. I know you guys. Obviously, there is a slight change in language around the ATM use versus equity content can you just elaborate on the range of options and timing of equity funding and as kind of asset optimization still an avenue given the emphasis we're seeing in your.
Speaker Change: Core Houston jurisdiction, thanks, guys.
Speaker Change: Sure. Good morning, Shar I think if you look just at the immediate year itself. We have indicated we've taken care of the equity needs for 2025 for the plan as you go beyond that we have consistently said and they are staying there that we'd be utilizing the ATM.
Speaker Change: To take care of our modest equity needs going forward and as we mentioned.
Speaker Change: Today, you should assume we continue to fund the business the enterprise at 50% debt, 50% equity and I'll, just say again, we consistently evaluate the most efficient way to fund this growth capex going forward I mean, really just like the Louisiana and Mississippi gas LDC sale that we referenced will actually be closing this quarter.
Speaker Change: <unk> seen here the team demonstrate that ability.
Speaker Change: To look at multiple different options everything from utilizing the base ATM to the hybrid structures and junior subordinated notes that we utilized as well as the potential for <unk> four transaction. When they are the most efficient way to produce excuse me to pursue this financing.
Speaker Change: Okay. So this will be this will also be a big part of the update that we have later in this year we're committed to.
Speaker Change: Funding any of the equity needs efficiently as we have demonstrated and we're also committed to preserving the balance sheet, creating a healthy cushion before between that downgrade threshold.
Speaker Change: Yes.
Speaker Change: We are running the business and so that will be part of this comprehensive update that we'll provide later this year.
Speaker Change: Yeah and I appreciate it and then you guys have been fairly successful on the asset optimization side, which is why I asked the question. Thanks, guys I appreciate it.
Speaker Change: Thanks sure.
Speaker Change: Thank you.
Speaker Change: Next question comes from James Thalacker with BMO capital markets. Your line is open.
James Thalacker: Good morning can you guys hear me.
Speaker Change: Good morning, James How're you doing.
Speaker Change: Good how are you I just wanted to touch quickly on your cost control program and target to keep the O&M that like a 1% to 2%.
Speaker Change: Decline across your plan.
Speaker Change: Given the increase in resiliency spending, including the higher vegetation management spending could you talk a little bit about that.
Speaker Change: Discrete levers you are looking at are identified to allow you to kind of deliver on this O&M reduction program as you go forward.
Speaker Change: Sure. Thanks, Good morning, I think if you look at what we talked about this morning, we will have a substantial increase which is needed for our system.
Speaker Change: For a much more aggressive vegetation management standard, but really nothing has changed in terms of our focus on taking out 1% to 2% per year. We have delivered that clearly over the last three years. It actually just shy of 2% per year going forward, there's probably a couple of areas I would touch on I know, we mentioned in our <unk>.
Speaker Change: Prepared remarks, the ability to actually reduce O&M as a direct result of the capital that we'll be putting on the system for the system resiliency plan and a basic way to think about that is we'll have fewer truck rolls because we'll have automated devices on a grid, which allow for self healing right in those instances, where otherwise you would have to roll a truck for our frontline team members to take care of the fuse.
Speaker Change: On the system or otherwise we reenergized.
Speaker Change: Second area of focus for us will be on really legacy systems and standardization across the footprint that we have we have the ability in certain instances to sync up our it systems and network systems as well as standards that are utilized are slightly different in the different states that we serve and we're utilizing the lean operating system here together to really focus on <unk>.
Speaker Change: We've got strong standardization.
Speaker Change: In some instances vendor rationalization and other steps, we can take to reduce costs year over year and then the third I would say is really just our focus on.
Speaker Change: Empowering those closer to the work ultimately James that allows us to really allow for year over year improvements on everything from.
Speaker Change: Empowering our co workers to be able to evaluate existing standards take out those costs and just make the process simpler to get the work done. So when you look across the three areas. We have a high level of confidence, we'll continue that track record of 1% to 2% per year over the plan.
Speaker Change: That's great really appreciate the color, Chris and congratulations on a great quarter.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Jeremy Tonet with Jpmorgan Securities. Your line is open.
Jeremy Tonet: Hi, good morning.
Good morning.
Speaker Change: Just wanted to come back to the.
Speaker Change: Mobile Gen a little bit more thank you for all the details on how that would look on the financial side. I was just wondering if you might be able to expand a bit more I guess on how conversations have evolved.
Speaker Change: With regulators with all the stakeholders in the state just wondering kind of state of affairs as you can share.
Speaker Change: Yes, Jamie I. Appreciate the question, we continue to have dialogue with all stakeholders and I think folks recognize.
Speaker Change: <unk> recognized the value here ERCOT has signaled a real need in the San Antonio region, if otherwise was a drastic could impact.
Speaker Change: The entire ERCOT market.
Speaker Change: We want to be a constructive partner.
Speaker Change: <unk> said that from day, one I think our commitment to donate these units effectively.
Speaker Change: At zero cost to help.
Speaker Change: The ERCOT market reflects that and I think people say.
Stakeholders as we've had these conversations recognize that that is a.
Speaker Change: Pretty significant gesture.
Speaker Change: Behalf of the company, we also heard loud and clear.
Speaker Change: Demands to make our customers hold for the period, where our customers benefited from this equipment.
Speaker Change: We've worked hard to.
Speaker Change: Find a great solution, there that Chris outlined and so I'm.
Speaker Change: Im optimistic that we are moving to.
Speaker Change: To a path where collectively this is a win win for all stakeholders.
Speaker Change: I think the next time it will be addressed as at the special meeting for ERCOT on February 25th.
Speaker Change: ERCOT really once these units in place before the summer season. So I would expect this to get resolved here over the coming month or so so we can get these units in place by this spring.
Speaker Change: Got it that's helpful. There and then go into the legislative session in Texas, a little bit more any proposals that are out there. They are on your radar right now and really kind of taken about the proposed SB six regarding large load in transmission charges, just wondering if passage happens here.
Speaker Change: How this could impact centerpoint in your mind.
Speaker Change: Yes, thanks for the question.
Speaker Change: The Texas Legislature is really now just starting to kick off in pace is going to really increase from here a lot of the work to date has been committee assignments.
Speaker Change: Kind of policy orientation.
Speaker Change: What I would say Jeremy is we were pretty active in the 'twenty one 'twenty three legislative sessions will probably be less active in this one.
Speaker Change: Obviously working to support constructive legislation that.
Speaker Change: Continues to help drive resiliency of our system as well as help support this incredible.
Speaker Change: Texas economies experiencing with respect to Senate Bill.
Speaker Change: Look I really look at that.
Speaker Change: Just making sure.
Speaker Change: Large loans pay their fair share as sort of a cost allocation.
Speaker Change: Focus.
Speaker Change: Those large loads in corpus.
Speaker Change: Encompass a lot of our.
Speaker Change: Our largest customers here in the greater Houston region, given our strong industrial base and so we're going to work constructively with obviously, our legislators regulators customers to find what is a fair cost allocation for everyone.
Speaker Change: I think it's early days in that regard.
Speaker Change: We're working with with all parties to find out just had a constructive outcome.
Speaker Change: Got it we'll stay tuned there and just a real quick last one if I could any guardrails you can put on the transmission opportunity depending on our 765 decision.
Speaker Change: Jeremy Guardrails in terms of where do I think they are going to land are or how much in terms of incremental capex. Just help me kind of correction of the Capex sorry.
Speaker Change: Look I think there's 70 65 kv standard will result.
Speaker Change: And obviously more capacity on the system, but at a higher cost right and so when I threw out that we think it will be at least $3 billion, if not more I think thats reflective of more of a $3 45 kv standard.
Speaker Change: Also there is still some work to be done on the specific routes but.
Speaker Change: Check the number.
Speaker Change: We will push well north of that under our 765 kv standard.
Speaker Change: At or above that level under our $3 45 JV.
Speaker Change: Got it thank you for that.
Speaker Change: Thank you. Our next question comes from <unk> Chopra with Evercore ISI. Your line is open.
Speaker Change: Hey, Ken Good morning, I just had one.
Speaker Change: Question on 2020 guidance.
Speaker Change: Maybe just Chris can you for our models can you help us bridge.
Speaker Change: In 2024, what was included in core temporary generation and then 2020 what are you excluding that.
Speaker Change: He said I don't think the language has changed but just wanted to I want to make sure that we have the right pieces I assume there will be some write downs and you're excluding that but just what is in 'twenty four and then it was in 'twenty five and going forward. Thank you.
Speaker Change: Sure happy to paint for you guys in short what was in the prior recovery as you can see and tie back directly to what we filed for recovery of an <unk> filing for sure. It's temporary emergency electric facilities right. So we had filed for that you could already see there you would have logically the leaf based costs.
Speaker Change: Associated rate base in the equity and debt return.
Speaker Change: As it relates to going forward. Once these units in the spring are provided to the San Antonio area, we would essentially be removing.
Speaker Change: What remains from rate base we.
Speaker Change: We would also from a earnings standpoint, excluding as I referenced this morning from non-GAAP any of the related.
Speaker Change: Future benefit as well as the interim period or roughly two years, while they are intended to be excluding that detriment, including which would start in 2025.
Speaker Change: If I could add to your gas.
Speaker Change: A point of reference.
Speaker Change: Temporary generation equipment was being amortized over a short period of time and so.
Speaker Change: Equity earnings rapidly decreasing.
Speaker Change: Each year. So as we're now several years into this is less of a material driver.
Was originally going to be.
Speaker Change: A material driver as Chris said, we're going to take us obviously at a rate base, but.
Speaker Change: It's a manageable level of equity earnings on a regulated side to overcome.
Speaker Change: You had mentioned a write down I don't anticipate to write down the value of this equipment has effectively doubled in the market and Thats why we feel like we can be constructive here in the state by donating this equipment to help our cost for two years and then more than make up that difference on the backend when we can market. This equipment two to third party.
Chris Foster: As Chris said.
Chris Foster: When we send these units to San Antonio were effectively creating an unregulated subsidiary that does not reflect the ongoing earnings power of the company. So we intend to exclude the loss during the period there in San Antonio we won't have any revenue, but we'll still have the lease expense. We will also similar we exclude the gains that and those gains.
Chris Foster: Well exceed the cost when one of the market.
Chris Foster: At the end, we just don't think is reflective of the ongoing earnings power of the company net over time, we expect to fully recover that investment.
Chris Foster: Just began because.
Chris Foster: I mentioned the market has moved so fundamentally undervalue those units.
Chris Foster: That's helpful. Okay. So theres no underlying change in the value of the assets. It's just the earnings contribution.
Speaker Change: <unk> is going to be regulated worse as nonregulated.
Speaker Change: Kind of splitting that out of your core earnings right is that a fair way to put it.
Speaker Change: Fair way to put it.
Speaker Change: Would have remained.
Speaker Change: As regulated earnings.
Speaker Change: Is very manageable because it's been this equipment's been being amortized.
Speaker Change: So quickly.
Speaker Change: So we will no longer have any more regulated earnings on it.
Speaker Change: After.
Speaker Change: The spring of this year.
Speaker Change: And then as we look out then it will effectively be an unregulated portion of our business for a short period of time and.
Speaker Change: And we will exclude that from our non-GAAP.
Speaker Change: Earnings because it's just not reflective of the ongoing.
Speaker Change: Underlying earnings power of the business.
Speaker Change: Okay very clear thanks, so much I appreciate the time.
Speaker Change: Thank you. Our next question comes from David Arcaro with Morgan Stanley. Your line is open.
David Arcaro: Hey, thanks, so much good morning.
Speaker Change: Good morning.
Speaker Change: Good.
Speaker Change: I was wondering on the load growth outlook that you've laid out could you frame the status of the projects and customer requests in that 61 gigawatt load growth level et cetera.
Speaker Change: Huge potential.
Speaker Change: <unk> there that through 2031 is that something that you.
Speaker Change: Year by year, we might see even more of these projects come in are they I think very early stage and very.
Speaker Change: A lower probability.
Speaker Change: I think you've summarized it while they are at the end in terms of.
Speaker Change: Lower probability again, maybe the way to think about it.
Speaker Change: We've had.
Speaker Change: Requests totaling roughly 40 gigawatts to connect to our system.
Speaker Change: Some of those are exploratory in nature. So.
Speaker Change: Lower likelihood of occurring.
Speaker Change: Some of those are.
Speaker Change: Early stage and maintenance materialized later.
Speaker Change: And so what we wanted to frame here was.
Speaker Change: Potential.
Speaker Change: Growth is really incredible.
Speaker Change: Double our peak that we currently see today, we just are trying to take a more realistic point of view of what's likely between now and 2031 and that's what we think the 10 Gigawatts I think over time to your point, we will see some of that.
Speaker Change: Incremental I'll call it than 30 Gigawatts some of it may come in there will also be new projects.
Speaker Change: Come to knock on our door.
Speaker Change: So there will constantly be a churn we think 10 gigawatts that we fold it into the substantiated as the most realistic point of view today, and we're going to be annually updating this number moving forward.
Speaker Change: A reflection of the fact that there is.
Speaker Change: Again, a significant desire to connect to the grid here in Texas as well.
Speaker Change: <unk> double what our current peak is.
Speaker Change: What's realistic over the next few years is probably something closer to the 10 gigawatts.
Speaker Change: Okay, great Yeah, absolutely thats helpful.
Speaker Change: And then obviously yourself. So curious are you able to provide an update on within that outlook, how much of a data center pipeline that youre seeing any.
Refresh numbers versus the eight gigawatts that I think you talked about before.
Speaker Change: Yes, we continue to see an increase in demand from.
Speaker Change: Data center activity is now north of 11 Gigawatts here just in the greater Houston area again, I would put that 11 gigawatts as part of the 40 or so.
Speaker Change: Those conversations are exploratory in nature. Some of those conversations are data centers that are pursuing interconnection requests throughout Texas and other states. So I wouldn't anticipate that all 11 Gigawatts materializes.
Speaker Change: But suffice it to say the level of activity.
Speaker Change: To accelerate from where we were just a year ago.
Speaker Change: I would also say we continue to see data center activity up in Indiana, which has been a little bit less of a focus just given the substantiated.
Speaker Change: Process that we've recently filed under here in Texas, but up in Indiana remains a central market for for a number of the Hyperscale.
Speaker Change: We are a vertically integrated business up there with the ability to quickly convert.
Speaker Change: Our simple cycle gas combined cycle.
Speaker Change: Really giving kind of incremental capacity in that region and so we continue to see data center demand up there I'd be surprised if we're not talking about landing.
Speaker Change: Some portion of our business.
Speaker Change: A significant hyper scaler opportunity at some point, but.
Speaker Change: But we're we.
Speaker Change: We like many of our peers are in the middle of these conversations as we speak.
Speaker Change: Awesome, Thanks for all that color well keep an eye out for that.
Speaker Change: Operator, given we're getting close to the edge.
Speaker Change: We will take one more.
Speaker Change: Thank you our last question comes from Julien Dumoulin Smith with Jefferies. Your line is open.
Speaker Change: Hey, good morning team. Thank you guys very much I appreciate the time.
Speaker Change: Maybe just to come back to maybe a little clean up on a couple of things that were mentioned here first just with respect to mobile generation just wanted to make it very crystal clear about this with respect to what's assumed from a cash perspective, not from an earnings perspective, you're effectively assuming full recovery of the whatever expenses are incurred here with any pro forma counterparty and then related.
Speaker Change: If you can speak to it obviously you mentioned the fab 25, ERCOT special meeting.
Which that were or were not to prevail can you speak a little bit to the market depth certainly we're seeing this mobile generation subject.
Speaker Change: <unk> and other circumstances.
Speaker Change: If you can speak to kind of backup plans as well.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: With respect to the first issue on cash flows.
Speaker Change: There will be.
Speaker Change: Variation between years, but kind of a net over the life I see this is actually a cash flow tailwind for the company.
Speaker Change: As I said the market on these on this equipment has doubled.
Speaker Change: We had originally prepaid this we since then we have the opportunity to market under significantly higher rates rougher.
Speaker Change: Roughly two years from now when this equipment is done so if anything I think of it as a potential cash flow tailwind for the company.
David Arcaro: As it relates to the special meeting look I think this is a great solution for everybody Arcata as Saturday.
David Arcaro: Have a need and that San Antonio market, we're happy to step up and provide that equipment at no cost.
Speaker Change: That's an incredible offer.
Speaker Change: A really constructive outcome for immediate solution if for whatever reason, though archived decides to take a different direction, we've heard loud and clear that this equipment will.
Speaker Change: Come out of our regulated operations.
Speaker Change: And we will turn and begin to market this equipment to third parties.
Speaker Change: As an alternative and so I don't look at that necessarily as a downside if anything.
Speaker Change: This is the opportunity to.
Speaker Change: Two.
Speaker Change: Turning to the market that I said is incredibly quite favorable for this equipment. As you know there is only a handful of manufacturers of this type of equipment and Theres really no new significant capacity coming online for.
Speaker Change: For the next several years and so we think the value.
Speaker Change: Hold up over this period of time.
Speaker Change: Yes, no absolutely and then lastly, a quick cleanup item.
Speaker Change: With respect to the storm recoveries year, Youre, obviously, making a filing for the subsequent storm here in <unk> as you alluded to.
Speaker Change: Any reason to think that there is a meaningfully different outcome than what you saw here with the first <unk>.
Speaker Change: <unk> arrangement and the specific nuances that we should be watching on that front just to set expectations.
Speaker Change: Sure Julian I think.
Speaker Change: The short answer is no I think we will be planning as you said as you said Q2. This will be for roughly $1 1 billion for Hurricane barrel response, the why behind my answer is that ultimately a lot of the costs themselves were driven by the incredible mutual aid and other crews that helps our teammates restore power timely.
Speaker Change: And so thats the major driver both the materials and the labor associated with getting the lights back on for our customers and so from that standpoint, we think from both a timing and resolution standpoint, we should be on plan.
Speaker Change: Wonderful excellent alright, guys. Congrats on everything so as soon as they were.
Speaker Change: Thanks, Julia and thank you.
Speaker Change: Thanks, Julian and thanks, operator with that.
Speaker Change: Our call for today.
Speaker Change: Create everyone dialing in and look forward to speaking with everyone.
Speaker Change: Okay.
Speaker Change: Thank you. This concludes Centerpoint Energy's fourth quarter and full year earnings conference call. Thank you for your participation you may now disconnect.
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