Q4 2024 TXNM Energy Inc Earnings Call
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Speaker Change: Good day and welcome to the T X I know energy Q4, 2024 conference call all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please.
Please press Star then two please.
Speaker Change: Please note this event is being recorded.
Speaker Change: Now I'd like to turn the conference over to Lisa Goodman Investor Relations. Please go ahead.
Lisa Goodman: Thank you Assia and thank you everyone for joining us this morning for the T X N M Energy 2024 earnings call. Please note that the presentation for this conference call and other supporting documents are available on our website at T X N M energy Dot Com joining me today.
Pat Vincent: They are T X N M energy, Chairman and CEO, Pat Vincent <unk>.
Speaker Change: President and Chief operating Officer, Dan, Terry and senior Vice President and Chief Financial Officer, Lisa Eden.
Before I turn the call over to Pat I need to remind you that some of the information provided this morning should be considered forward looking statements pursuant to the private Securities Litigation Reform Act of 1995, we caution you that all of the forward looking statements are based upon current expectations and estimates and the T X N M Energia since.
Speaker Change: No obligation to update this information for a detailed discussion of factors affecting <unk> results. Please refer to our current and future annual reports on Form 10-K quarterly reports on Form 10-Q, as well as reports on form 8-K filed with the SEC.
Pat Vincent: With that I will turn the call over to Pat.
Lisa Goodman: Lisa Good morning, everyone and thank you for joining us today on the Eve of National Margarita Day, we thought that bringing this day to your attention now would allow you to celebrate the holiday on its ear in on the actual day you can thank us for that later.
Speaker Change: I'll start on slide four with our financial results and company update.
Speaker Change: Ongoing earnings for 2024 or $2 74 per share at the high end of our guidance for the year. This continues our strong track record of achieving our targets.
Speaker Change: We are introducing guidance for 2025 at a range of $2 74 to $2 84 per share. This reflects strong growth in Texas and incorporates the unopposed settlement and our rate request in new Mexico, which I will talk more about in a minute.
Speaker Change: We also incorporated the P N M.
Speaker Change: PNM unopposed settlement into our long term targets along with the incremental investment opportunities. We have shared over the last year or five year investment plan in Texas has increased by over $1 billion. Our future is so bright with these increased investment levels that we are now targeting earnings growth.
Speaker Change: 7% to 9% through 2029 leased.
Speaker Change: Lisa will provide more detail on all of those numbers.
Speaker Change: Now for a few company updates.
Speaker Change: In December the board increased the dividend by 5% this keeps us within our targeted payout ratio of 50% to 60% for 2025.
Speaker Change: Given our strong investment opportunities. The board believes this is the appropriate target.
Speaker Change: Before I hand, it over to Don for an update on our utilities I want to highlight two outstanding regulatory accomplishments for the year.
At PNM the team's engagement with stakeholders has provided us the opportunity to bring an unopposed stipulation to the new Mexico Public regulation Commission in our pending rate request.
Speaker Change: This is a significant accomplishment and I am very proud of the work that the team has done.
Speaker Change: At TNMP, our team put together their first system resiliency plan and reached a unanimous settlement with parties in the fourth quarter.
Speaker Change: This plan includes significant improvement to our system to strengthen resiliency against severe weather events, including wildfire prevention and vegetation management Don.
Speaker Change: Turn it over to you for more details.
Don: Thank you Pat and good morning, everyone I'll start on slide six with TNMP TNMP continues to set new system Peak records, including another one in December finishing the year with an 18% increase over the 2023 peak, we are still seeing growth across the board from our traditional.
Don: No volumetric and demand based customers and from data centers on both distribution and transmission basis.
Don: Data center demand on our system totaled over 600 megawatts at the end of the year, which reflects 200 megawatts added during the fourth quarter. Our interconnection requests in 2024 were 10% higher than the number of requests in 2023.
Don: Leading to an increase growth expectation in 2000.
Don: We are expecting 2% to 4% growth from distribution customers build on a volumetric basis, and 4% to 6% from customers build on a demand basis.
Pat Vincent: On the regulatory front, Pat talked about the unopposed settlement in our system resiliency plan filing with $566 million of capital investments.
Pat Vincent: This adds to the successful year of semiannual Picasso, and DC RF filings that we discussed last quarter recovering over $350 million of new rate base.
Pat Vincent: In West, Texas. The projects described as common in ERCOT as Permian Basin reliability studies are moving forward. After receiving no protests, we are working through the process set forth by the commission and executing the local projects and developing schedules for the required CCN filings.
Pat Vincent: We are also securing the equipment needed for these projects.
Pat Vincent: As we look forward to 2025 and beyond on slide seven we will continue to focus on supporting the high level of growth in Texas with a reliable and resilient grid, we have increased our capital investments to support a higher level of core projects across our service territory.
Pat Vincent: The capital spending for the Permian Basin reliability common projects has been incorporated into our five year plan approximately $350 million included through 2029, while the remaining 400 million is in 2030 projects will be cleared into service individually and included in our T cost filings as they.
Pat Vincent: Our completed.
Pat Vincent: There is still an opportunity for incremental investments associated with the $3 45 kv import that although we have not included this in our capital our earnings power ERCOT has recommended in favor of the higher voltage alternatives, which will not.
Pat Vincent: Got it.
Pat Vincent: <unk> plan that is.
Pat Vincent: We expect it to make a decision on the import voltage by May.
We had already included.
Pat Vincent: Capital in our forecast.
25 through 2027.
Pat Vincent: In fact that <unk> capital will continue to include a similar level of spending.
Pat Vincent: And.
Pat Vincent: At $200 million per year as well.
Pat Vincent: Each of the specific.
Pat Vincent: And apply our alerts.
Yes.
Pat Vincent: Specific assumption around mobile generation as we expect ongoing.
Pat Vincent: The legislative session to modify the rules.
Pat Vincent: <unk>.
Pat Vincent: In total we increased units.
Pat Vincent: By just over one.
Pat Vincent: So a total of $4 2 billion.
Pat Vincent: We expect to continue to utilize semi annually T cost in D. C are off mechanisms to recover our capital investments.
Pat Vincent: We have talked about filing a base rate review in 2025, recognizing that the components of our base rates last approved in 2000 2018 2018 have changed overtime. We will look to file. This case near the end of the year. After we make both of our T costs and DC RF filings.
Pat Vincent: Let's move on to PNM on slide eight.
Pat Vincent: We continue to make progress on our transition to clean energy. We added another 500 megawatts of solar and storage to our system in November bringing our total for the year to approximately 500 megawatts and nearly doubling our carbon free resource capacity. The resources approved for 2026 will bring our portfolio.
Pat Vincent: 275% carbon free.
Pat Vincent: The approval of our grid modernization plan was another PNM highlight in 2024 that will bring benefits to our customers the update to our grid will allow for more customer integration of renewable resources, and we will provide customers more information to better manage their energy usage.
Pat Vincent: 2024, it was a constructive regulatory year for us at PNM in November we reached an unopposed stipulation with the intervening parties to our general rate request the details of the stipulation or independents. The agreement balanced key issues from each of the parties and keeps customers at the forefront with a phased in approach.
Pat Vincent: Earlier in the year, we received approval of our grid modernization modern modernization plan and our 2026 resource application workshops held by the commission on regional markets helped us formalize our path to join the California Day ahead market, which is expected to bring significant benefits to PNM customers.
Pat Vincent: Turning to slide nine we will continue to focus on balancing customer affordability with our systems infrastructure needs.
Pat Vincent: The phase in of our proposed rates in our 2025 rate request is one example, under the unopposed stipulation we will phase in our rates beginning July 2025, with the full amount in April of 2026 hearings on our stipulated agreement took place earlier this week wrapping up on Tuesday, we would expect.
Pat Vincent: The decision from the commission in the second quarter ahead of our requested implementation of rates in July.
Pat Vincent: Regional coordination that expands our energy imbalance market and that market could also lower customers net fuel cost and.
Pat Vincent: And we will continue to partner with the state on its efforts for economic development, which is which has the effect of reducing the per customer cost on system wide investments the new Mexico business community has been building momentum for multiple economic development bills and this year's legislative session, including Bill is focused on utility.
Pat Vincent: Site readiness this would allow us to better plan for expected load additions versus waiting to run through the regulatory processes. After customer agreements are finalized and reduce the amount of time. It takes to bring new customers online. Our five year investment includes the approved grid modernization plan and 2026 resource apps.
Pat Vincent: Occasion, and also now that 2028 resource application filed in November hearings on the 2028 resource are scheduled for early April and we expect a decision from the commission in the third quarter.
Pat Vincent: We have added transmission projects at PNM to build two to $3 45 kv transmission lines to increase the connection to critical transmission pass serving our high load areas. These projects are designed to serve the expected increases in system peak demand and ease the constraints on existing lines, we will need to file for <unk>.
Pat Vincent: And if the commission, which we expect to do in the second half of this year. We also expect to file an application for new resources identified in our IRB, we issued an all source RFP for resources available between 2029, and 2032 and we'll be working through those proposals this year we forecasts.
Pat Vincent: And in need of at least 500 megawatts of new capacity by 2030 with the actual amount dependent upon the types of resources selected from the independently monitor process. We have not included any amounts associated with our investment plan and we'll wait for that process to play out as you can tell it will be another busy.
Lisa Goodman: Year for Us in Texas, and new Mexico with that I'll turn it over to Lisa for a more detailed look at the numbers.
Lisa Goodman: Thank you Don and good morning, everyone I'll start on slide 11, with a recap of 2024 results.
Lisa Goodman: Earnings per share with $2.74.
Lisa Goodman: Coming in at the high end of our guidance for this year.
Lisa Goodman: Earnings benefited from recovery of capital investment through <unk> and <unk> mechanisms at TNMP, the implementation of new retail rates at PNM in January.
Lisa Goodman: And our annual FERC rate update.
Lisa Goodman: Higher retail load growth particular at PNM was partially offset by milder weather year over year <unk>.
Lisa Goodman: Improved market performance on our decommissioning Trust also improved earnings.
Lisa Goodman: Lower market prices reduced our FERC transmission margins.
Lisa Goodman: We implemented new depreciation rates at PNM as part of the rate reviews finalized at the beginning of 2024, resulting in increased depreciation. We also had higher depreciation property tax and interest expense associated with new investments year over year.
Lisa Goodman: Lastly, dilution impact from shares.
Lisa Goodman: Issued in December of 2023 lowered our per share amount of earnings.
Lisa Goodman: Now turning to 2025 on slide 12 I'll.
Lisa Goodman: Covered assumptions around our guidance introduced today at a range of $2 74 to $2.84.
Lisa Goodman: PNM includes the mid year implementation of this first phase of customer rate.
Lisa Goodman: Versus the full year of the cost associated with new investments.
Lisa Goodman: This also causes more of our quarterly distribution to be weighted to the second half of the year.
Lisa Goodman: TNMP is expected to have another year of strong earnings growth as we recover transmission and distribution investments through to CCAR and <unk> mechanism.
Lisa Goodman: We're filing our rate case towards the end of the year.
Lisa Goodman: Detailed year over year drivers for each of our segments are available in the appendix.
Lisa Goodman: On slide 13, we have rolled forward our capital plans to 2029 and incorporated the additional investment that's on discussed.
Lisa Goodman: Increasing our five year forecast to seven $8 billion. This is a $1 6 billion increase from our prior five year total largely at TNMP, where rate based growth 17% over the period.
Lisa Goodman: And surpasses PNM retail in 2027.
Lisa Goodman: Total rate base growth over 12%.
Lisa Goodman: I'll cover our financing plan on slide 14.
Lisa Goodman: In 2024, we sold $100 million of equity through our ATM program and settle those shares in December.
Lisa Goodman: We also did another $50 million in forward sale under the program during the fourth quarter we.
Lisa Goodman: We do not plan to settle those shares until December of 2025.
Lisa Goodman: In June we issued $550 million of junior subordinated convertible bonds to refinance a portion of our term loan at the holding company.
Lisa Goodman: Abiding a debt for debt exchange with equity credit.
Lisa Goodman: Our financing plan in 2025 include the refinancing of the remaining $450 million balance of holding company term loan and.
Lisa Goodman: And we will continue to utilize instruments that provide equity credits for this refinancing.
Lisa Goodman: To fund our increased capital investment plans and maintain our credit metrics, we continue to to the issuance of equity or equity linked securities consistent with our previous statements.
Lisa Goodman: We have assumed the $1 6 billion.
Lisa Goodman: Incremental capital is financed with 44% equity or $700 million. This brings our total equity needs for this.
Lisa Goodman: Seven 8 billion dollar investment plan to one $3 billion.
Lisa Goodman: This will be achieved through a variety of ways like our ATM program or other offerings and we will make those decisions based on market opportunity throughout the period.
On slide 15, we have incorporated the upstream from our capital financing plan into our potential earnings power view through 2029.
Lisa Goodman: Deep update support our increased EPS growth target of 7% to 9%.
Lisa Goodman: Our previous target was 6% to 7% using our 2024 guidance midpoint.
Lisa Goodman: We have rebased our growth targets using this year's guidance midpoint of $2 79.
Lisa Goodman: And or incorporated several updates.
Lisa Goodman: And this view of our system the lines of PNM retail PNM and.
Lisa Goodman: TNMP reflect rethink math and assume and meet our goals to earn our authorized return using the allowed equity ratio.
Lisa Goodman: At PNM retail, we have incorporated the 945% Roe.
Lisa Goodman: And 51% equity layer from your pending stipulation the.
Lisa Goodman: The midyear implementation of new rates and the impact of the season results in a lower earned return in 2025. However, the stipulated increase though our ROE and equity layer growth our earnings potential in future years.
Lisa Goodman: We also refreshed our capital plan and incorporated a new investments at PNM for our proposed 2028 resource application implant transmission Bill.
Lisa Goodman: Bumping up the combined rate be for PNM retail Lucerne to $5 billion in 2028, and five $4 billion in 2029, increasing pnm's earnings potential.
Lisa Goodman: TNMP is the fastest growing part of our business.
Lisa Goodman: With rate base growth of 17% over the period.
Lisa Goodman: Our updated plans to add $500 million of rate base through 2028, and then continue the higher growth rate through 2029 the earnings growth.
Lisa Goodman: Earnings potential growth at a corresponding rate based on the 965% ROE and 45% equity layer last approved for TNMP in 2018 for.
Lisa Goodman: For dose of you who may be comparing display to a prior version I'll take a moment to note that the roll forward of our base period also includes a roll forward our share count to 2025. This test effects of shifting to 2020 filings.
Lisa Goodman: <unk> previously categorized as financing into each of the utilities to align with our earnings guidance.
Lisa Goodman: To provide additional transparency into our financing impact we're showing two separate lines.
Lisa Goodman: Assisting financing line carries forward, our 2025 holding company debt balance under a range of different financing alternatives.
Lisa Goodman: This line includes the impact of the junior subordinated convertible bonds issued in 2024, along with the refinancing of the remaining term loan.
Lisa Goodman: The growth financing line contemplate the cost of any new equity or debt issuances at the parent to fund our capital investment plan.
Lisa Goodman: A total of $1 3 billion of equity content is assumed across the five years, we'd ranges to include varying amounts of time or types of financing instruments.
Lisa Goodman: Taken together these pieces add up to the potential earnings per share in 2029 of $3.86 at the midpoint supporting the top half of our 7% to 9% earnings growth target.
Lisa Goodman: We are confident in our ability to achieve these targets.
Lisa Goodman: Create value for shareholders.
Pat Vincent: With that I'll turn it back over to Pat.
Lisa Goodman: Thank you ladies.
Speaker Change: We have our shades on here in new Mexico in part because it is setting here today, but most importantly, because 7% to 9% is a pretty significant growth rate highlighting the high level of growth we are seeing in Texas.
Speaker Change: Before I open it up for questions. Let me, thank our teams across Texas, and new Mexico for the wonderful accomplishments. They achieved in 2024 I am looking forward to seeing what we can do in 2025.
Speaker Change: Sure, let's open it up for questions.
Speaker Change: Thank you.
Speaker Change: You ask a question you May press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys is that any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: The first question comes from Julien Dumoulin Smith with Jefferies. Please go ahead.
Speaker Change: Hey, good morning team Wow, you guys must feel pretty cool window shades, all I say huh.
Speaker Change: Hey, Julien minor little Marsha shaped green and yellow.
Courtesy of Roswell.
Speaker Change: There, we go very apropos to new Mexico Indeed.
Speaker Change: Excellent and kudos on the update here very nicely done one of only a handful of moving the EPS CAGR as of late so my very good indeed.
Speaker Change: Maybe to follow up on that in fact, as you think about what's in the plan and maybe specifically what's not in the plan can we go through a couple of nuances here, obviously you've provided.
Speaker Change: Some degree of updates here.
Speaker Change: ERP, but ultimately, especially in the later dated portion of the plant can you speak a little bit to what the incremental opportunity is again I just wanted to clarify what's not and then also I think you provided some additional commentary in the remarks here on the Permian and the total sum 50, but how do you think about the different potential scenarios that could play out may around that.
Speaker Change: And in an upside there as well as any related opportunities that could enter tied to new Mexico.
Speaker Change: That's about five questions Julien I think I'll kind of try to think it was let's see upside to the upside Julien.
Speaker Change: No absolutely, let me talk a little bit about new Mexico first because I think thats helpful. And then I'll jump to Texas. So in new Mexico, I mean, it's a balance for us about portability in our Capex plan, but there are two things that are happening in new Mexico that we're excited about and one of them is economic development legislation.
Speaker Change: Which would allow us to prebuilt.
Speaker Change: And that really benefits prebuilt a capex.
Speaker Change: Infrastructure that we would need to serve larger customers in that both benefits our existing customers based on rates and affordability in that arena and it will also benefits new Mexico as well. The second element is we did at our first transmission small transmission.
Speaker Change: <unk>, two and the capital plan and as we look at new Mexico going forward the opportunity to help existing customers is to remove some of those constraints. So theres going to be opportunities because we think in the latter part of the plan for continued transmission Bill too.
Speaker Change: <unk> some of those constraints that we have there.
Speaker Change: And I think the third thing in new Mexico as you were in the midst of the 2029 to 2032, RFP and Thats. The replacement of four corners would be in there and again, we have to run through that process and don't want to get ahead of that because it is governed by an independent evaluated but there would be opportunity there and in the Texas side, we've had.
Speaker Change: Added a significant amount of opportunity over $1 billion of capital, but Texas continues to perform well and I talked a little bit about the interconnections, 10% interconnection requests.
<unk> 2023, and 2024 and I will tell you. That's in every service area that we operate and that's the goal that's north of Dallas, They are spread fairly evenly in west, Texas, and it's interesting because we're seeing data center interest in <unk>.
Speaker Change: Each of those.
Speaker Change: In both the residential and <unk>.
Speaker Change: We're seeing a significant data interconnection requests in both north of Dallas as well as the Gulf Coast area as we think about the play out of the Permian Basin.
Speaker Change: We're excited that we got the 751.
Speaker Change: I know we've added that into our plan again 400 will be added in 2030, when we roll that out next year.
Speaker Change: I think the 345 kv as well as the 765 kv.
It looks like our parties have filed in there. So there is there's about 10 that are pro with the commission in about eight or nine that are against it.
Speaker Change: Just have to wait and see how it plays out as I mentioned ERCOT is pushed pretty hard for the larger 765 kv.
Speaker Change: But we'll have to wait and see if that if it goes that route we wouldn't expect any more capital out of that plan. If it goes to $3 45 kv, we would see in the upwards of another $900 million. So that's kind of the landscape both in Texas and new Mexico as we think forward.
Speaker Change: Got it yes, a lot of moving pieces, there indeed still on the upside to the upside as you say, but.
Speaker Change: Sorry, and the more and the more mundane sense, though just to come back the Nit picking on the commentary for 25 financing activity I think you said the remaining $4 50 term loan.
Speaker Change: What structure are you assuming there and just what's reflected in the updated long term guidance I think you alluded to this but I wanted to get a little bit more explicit.
Speaker Change: Yeah, Julien so weird looking at replacing that term loans really desperate death right and then include equity content two to strengthening our core.
Speaker Change: Credit metrics, so thats why were looking to do.
Speaker Change: Got it alright, and Thats reflected in there.
Speaker Change: Some of that equity content as reflected in the updated dps.
Speaker Change: That's it reflected in throughout the earnings period, and we split it out sort of existing financing. So the term loans are included in that in existing financing line and then you have the growth financing and that's really the thing.
Speaker Change: The equity and all the things that are associated with growing.
Speaker Change: The investments in the growing capital budget that we have.
Speaker Change: Wonderful alright, guys I'll, let it be thank you so much right all the best So you guys soon.
Speaker Change: <unk>.
Michael: Our next question comes from Michael line again with Evercore ISI. Please go ahead.
Michael: Hi, good morning, Thanks for taking my questions.
Michael: Good morning, Michael Good morning, good morning.
Michael: So in the Texas Legislative session in House, Bill 28, 68 was introduced.
Michael: Obviously early in the session, but as it stands now it would require the PUC to use the utility's actual capital structure or the national average in determining rates. So my question is when you file your Texas rate case towards the end of the year. What are you targeting for your actual capital structure going into the case.
Michael: I don't want to hop in front of us filing the actual rate case, but we're very cognizant of the house Bill 2868. So.
Michael: Okay got it and then in that rate case are there any key components are.
Michael: Big ticket items, we should expecting aside from ROE and capital structure, Obviously, you know you.
Michael: The T cost in D C RF mechanisms covering that capital, but anything in particular that we should keep note of you haven't had a rate case since 2018.
Michael: You had mentioned.
Michael: Yes, given the mechanisms in Texas that take out the D costs were.
Michael: We're fairly close to earning our ROE.
Michael: Every year.
Michael: It would be really be balancing between the distribution and transmission side of the business and it's been we're starting our seventh year. So it's important to go in and allow that balance to happen.
Michael: Got it thank you.
Michael: Thank you have a good day.
Anthony Codell: Our next question comes from Anthony Codell with Mizuho. Please go ahead.
Anthony Codell: Hey, good morning team.
Anthony Codell: Just one housekeeping question first what was the song was playing before.
Anthony Codell: The call started it was if I get any rebate June.
Anthony Codell: No no the future stuff right you got you've gotta wear shades.
Anthony Codell: What was the artist on that.
Anthony Codell: And then I got let me check with a check that's fine.
Anthony Codell: Excuse me I wasn't familiar with but nicely done I guess.
Tim Murray: Tim Murray.
Speaker Change: 10 Bucks right.
Speaker Change: I must I must have a box set somewhere in my house the CD box.
Speaker Change: I guess just quickly.
Speaker Change: Not to nitpick on slide 15, you really lay out the earnings power potential I don't know if you want to give more clarity, but I think when you talk about the growth financing line I just pick one of the years, 2027% to 35% to 41.
Speaker Change: I think you talk about.
Speaker Change: The range there is really different alternatives for <unk>.
Speaker Change: Equity financing.
Speaker Change: Could you just tell me what the bookends are this would assume.
Speaker Change: Well all equity or this would assume a different type of instrument is there is there something like that that you would be willing to share.
Anthony Codell: So Anthony.
Anthony Codell: Great to talk to you in great question.
Anthony Codell: I think that when we look at over a five year period, we've put out that we're going to do $1 $3 billion of equity and equity linked securities and so will be included in this line.
Anthony Codell: A variety of ways of financing that both from a timing and using different security and really this line is trying to give you sort of guidance what that would look like in executing on that.
Anthony Codell: Equity plan.
Anthony Codell: I didn't do the math, but does this assume like us linear.
Anthony Codell: Linear approach issuing equity over the period or is there some lumpiness to your assumption of the $1 3 billion financing over the plant.
Anthony Codell: So Anthony I mean capital is not even every year, which means that rates basis, not even and then you have different clearing depending on if you have sort of quicker projects or more long term projects, which means that also financing we will also be not.
Anthony Codell: Even evenly spread during that time period, so it's really matching your capital rate base with financing.
Anthony Codell: Great.
Speaker Change: Lisa had asked me to make sure I ask Pat a couple of questions. So Pat.
Anthony Codell: Just.
Speaker Change: I know you probably just wanted to talk about the company, but other job I think president of the EI I'm just curious.
Anthony Codell: The industry's approach may be wildfire.
Anthony Codell: I guess my question would be do you is there are buying with all the utilities where the.
Anthony Codell: The wildfire sensitivity for your company maybe.
Anthony Codell: Maybe more focus on some other utilities, where maybe urban utility like a con edison or something that may not be as focused on it I'm just talking about I'm wondering any whereas <unk>, whereas the industry focused on maybe wildfire legislation or whatever at the federal level and is their support though across all the utilities for it.
Anthony Codell: I'd tell you what it is and I would love to have that discussion with you, but I will have that offline.
Anthony Codell: Because wildfire is a complicated story and it is it a high priority and the good news is the utilities are aligned but but let's take that one that will let Nick Goodman said something up when I can where my shades for Ya.
Speaker Change: You bet. Thanks, so much.
Anthony Codell: Okay.
Speaker Change: Once again, if you have a question. Please press Star then one.
Speaker Change: Our next question comes from Andrew Weisel with Scotiabank. Please go ahead.
Andrew Weisel: Hi, Thanks, Good morning, everyone here in New York, we need to wear sunglasses, because it's so great with the sudden reflecting off the snow on the ground, so I'm a little bit jealous.
Speaker Change: We're sorry.
Speaker Change: First one quick question to clarify for Don I think you mentioned something about mobile generation units in Texas and they are prepared remarks, sorry, if I missed it but just to clarify does the new Capex plan includes spending related to those units are not.
Speaker Change: No we're going to wait until legislation works its way through.
Speaker Change: The rules are set and then legislate theres some legislation out there. So we'll wait until that happens and then and then make some decisions at that point.
Speaker Change: Okay. Thanks for clarifying.
Speaker Change: And then on the new CAGR.
Speaker Change: Impressive numbers certainly a good pickup there want to understand how should we think about the wider range at 200 basis points versus 100 previously is that a function of the higher numbers are a reflection of regulatory uncertainty or how should we think about that.
Speaker Change: Yeah.
Speaker Change: Andrew that that you've just you know we used to have a two percentage points and then we narrowed it and now it's a five year period. There is a lot of Capex included in this budget is and so we were just comfortable with that 7% to 9% range a little larger than we've had in.
Speaker Change: And as last year.
Speaker Change: Okay.
Speaker Change: And then lastly for me on the dividend growth.
Speaker Change: 5% increase is that a good bogey for how we should be thinking about the next few years at least till you get to the middle of the targeted 50% to 60% and then once you get there should we think about dividend eventually accelerating to match the pace of earnings or is that not even a consideration at this point.
Speaker Change: No the board looks at it every year and Theres a variety of factors and one of it is the pace of earnings it's our capital spending et cetera et cetera. So.
Speaker Change: It can change during the year, but we just I think the biggest thing to keep in mind, we just targeted at the middle of that payout ratio seven years there'll be a little over seven years there'll be a little under but the target is the middle.
Speaker Change: Okay, so 5% until we get towards that middle probably.
Speaker Change: It will change every year it won't vary significantly, but it does it can vary by year.
Speaker Change: Okay fair enough. Thank you very much everyone.
Peter: Thank you Peter.
Speaker Change: Our next question comes from Ryan Levine with Citi. Please go ahead.
Speaker Change: Good morning, everybody.
Peter: Good morning, Ryan.
Speaker Change: Okay, Herpes Fisher Margarita day.
Speaker Change: Yes.
Speaker Change: Given the history around four corners, and the comments made in the prepared remarks curious if theres any color you could share around the timeline for stakeholder engagement. This go around.
As it relates to.
Speaker Change: Four corners itself.
Speaker Change: And what type of solutions.
Speaker Change: Yes.
Speaker Change: Any decision there.
Speaker Change: Yes.
Speaker Change: We've committed to it within a rate case and through our intervenors that our plan is to exit four corners in 2031, when the operating agreement as is done and so forth and that's that's why we've issued one of the reasons why we've issued the 29% to 30 to RSP is a replacement to the alternative for the four quarters.
Speaker Change: Our couple of hundred megawatts that are there plus the additional growth that we expect.
Speaker Change: I mean, just as a follow up for that I mean, given all of the new generation being built in this country.
Speaker Change: Are there any long lead time items that you need to take action. This year in the near term to be able to address.
Speaker Change: That incremental generation in that.
Speaker Change: Yes, good question and we issued the RFP a lot sooner than we normally would for that specific reason. So we'll have the results of that RFP internally by mid year, and then as we work through it and so forth. So we're we're well in advance of what we normally would have issued the RFP on and it's a broader window of that as well.
Speaker Change: And that's the whole reason why we did that process.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Todd Simpson colon for any closing remarks. Please go ahead.
Speaker Change: Thank you and thank you all for joining US. This morning, we hope you enjoy the eve of National Margarita Day, and then again Tomorrow, we'll see I'm sure. Many of you soon on the road. Thank you bye bye.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Dave.
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Speaker Change: Jamie.
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