Full Year 2024 WEC Energy Group Inc Earnings Call
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Good afternoon, and welcome to W. E C Energy group's conference call for fourth quarter and year end 2024 results.
This call is being recorded for rebroadcast and all participants are in a listen only mode. At this time.
After the presentation the conference will be open to analysts for questions and answers.
In conjunction with this call a package of detailed financial information is posted at W. E C Energy group Dotcom.
A replay will be available approximately two hours after the conclusion of this call.
Before the conference call begins please note that all statements in the presentation other than historical facts are forward looking statements that involve risks and uncertainties that are subject to change at any time.
Such statements are based on management's expectations at the time they are made.
In addition to the assumptions and other factors referred to in connection with the statements factors described in W. E. C energy group's latest Form 10-K, and subsequent reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those contemplated.
During the discussions referenced earnings per share will be based on diluted earnings per share unless otherwise noted.
This call also will include non-GAAP financial information.
The company has provided reconciliations to the most directly comparable GAAP measures in the materials posted on its website for this conference call.
Speaker Change: And now it is my pleasure to introduce Scott Lauber, President and Chief Executive Officer of W. E C Energy group.
Speaker Change: Good afternoon, everyone and thank you for joining us today as we review our results for calendar year 2024.
Speaker Change: Here with me are Sha Lu, our Chief Financial Officer, and Best Straka, Senior Vice President of corporate Communications and Investor Relations.
Speaker Change: As you saw for the our news release. This morning, we reported full year 2024 adjusted earnings of $4 88, a share.
Speaker Change: I am pleased to report that we delivered another year of solid results on virtually every meaningful measure from.
Speaker Change: From customer satisfaction to financial performance through steady execution of our capital plan.
Speaker Change: And just a few minutes shall I'll provide more details on our financial results and outlook.
Speaker Change: For 2025 earnings recall that in early December we provided our guidance in the range of $5 17 to $5 27, a share we continue to target a six 5% to 7% long term compound annual growth rate.
Speaker Change: We have a robust capital plan driven by strong economic growth in our region.
Speaker Change: The Wisconsin unemployment rate stands at 3% continue continuing a long running trend below the national average.
Speaker Change: And as we discussed there have been many exciting developments along the I 94 corridor between Milwaukee and Chicago.
Speaker Change: In December less than a year after Eli Lilly acquired a facility in Pleasant Prairie the pharmaceutical company announced plans for a 3 billion dollar expansion Eli Lilly predicts the expansion will add 750 highly skilled jobs. In addition to 2000 construction jobs.
Speaker Change: To complete the project.
Speaker Change: Microsoft is making good progress and its large data center complex in southeast, Wisconsin work continues on the first phase of the project.
Speaker Change: Microsoft took a short pause and construction to evaluate the technical design of the second area that.
That pause was lifted and work has resumed.
Speaker Change: Microsoft is still reviewing designs fifth third area.
Speaker Change: Mike response reports that the potential design changes have not affected plans to invest $3 $3 billion in the project by the end of 2026, and we do not anticipate these changes will impact our capital plan our demand both growth projections over the next five years.
Speaker Change: In fact, Microsoft purchased an additional 240 acres of land just last week for another data Center development. We're delighted that Microsoft continues to expand its commitment to the Milwaukee region.
Speaker Change: Also in January cloverleaf announced plans to develop approximately 1700 acres in port Washington, just north of Milwaukee for another large data center campus.
Speaker Change: Lower leaf projects that construction could start this fall.
Speaker Change: In the initial announcement cloverleaf expect the load to be one gigawatt.
Speaker Change: This development is very in the very early stages, but all of this load is incremental to our current plan.
Speaker Change: So we're off to a strong start to the year with great economic prospects.
Speaker Change: To serve a growing economy of course, we need to continue investing in our generation facility and infrastructure.
Speaker Change: Our $28 billion five year capital plan, which we updated Echo October is the largest in our history.
Speaker Change: Balanced generation mix is a significant focus for our electric utilities.
Speaker Change: In the renewable area over the next five years, we have 4300 megawatts plan for our expected investment of $9 $1 billion.
Speaker Change: We wrapped up 2024 by bringing the Paris Solar park into service with an investment of approximately $319 million. It has added 180 megawatts of solar capacity for our Wisconsin utility customers.
Speaker Change: Next up on our schedule, we expect the 225 megawatt Darien solar part to go into service later this year.
Speaker Change: Natural gas also continues to be a critical resource for reliable service, we expect the Wisconsin Commission to make rulings on several major project filings throughout the year that includes 200 megawatts of efficient natural gas generation as well as 33 mile lateral.
Speaker Change: And AP and two Bcf, a liquefied natural gas storage.
Speaker Change: Turning to our WEC infrastructure business, the Delilah, one and Maple flat Solar project went online at the end of last year between those two facilities, we invested approximately $890 million for 90% ownership of 550 megawatts of capacity.
Speaker Change: And we expect to close on the hardened three projects during the first quarter.
Speaker Change: We plan to invest approximately $407 million for 90% ownership ship interests of the project, which has a total capacity of 250 megawatts.
Speaker Change: As a reminder, this project fulfills our five year plan investment at WEC infrastructure.
Speaker Change: Regarding transmission as you saw in January MISO announced capital investments on tranche 2.1, we.
Speaker Change: We expect ATC to be assigned approximately $2 billion of that tranche.
Speaker Change: With an additional opportunity through through the right of first refusal or competitive bid of up to 1.5 to one $8 billion as you know we own 60% of ATC.
Speaker Change: Overall, we have a lot of confidence in our ability to execute on our capital plan and continue our growth trajectory.
Speaker Change: Now turning to the regulatory front I am pleased to report that we currently have no plan or active rate cases, as you know the Wisconsin Commission finalize their written orders for test year, 2025, and 2026 consistent with prior disclosures the commission maintained a 53% financial equity.
Speaker Change: You layer and a nine 8% return on equity for our Wisconsin utilities.
Speaker Change: In Illinois, we remain actively engaged in two proceedings of note one of the easy is evaluating the future of natural gas in Illinois. Currently is scheduled to extend into 2026.
Speaker Change: The other a review of the of our safety monetization program is close to its conclusion, we made our final or oral arguments before the comverse condition.
Speaker Change: Last week and expect a decision this quarter.
Speaker Change: Next up shall provide you more details on our financials.
Speaker Change: Thanks, Scott turning now to earnings our 2024 adjusted earnings were $4 88 per share an increase of 25 cents per share over 2023 adjusted earnings.
Speaker Change: In 2024, we experienced the warmest winter on record.
Speaker Change: Estimated weather headwind was 25 per share when compared to normal conditions.
Speaker Change: We were able to offset though by implementing a variety of initiatives, such as O&M and fuel management as well as tax and financing activity.
Speaker Change: This focus on execution with key for delivering our adjusted EPS near the top end of the earnings guidance.
Speaker Change: Now, let's take a closer look at our year over year variances.
Speaker Change: Our earnings package includes a comparison of adjusted full year results on page 17.
Speaker Change: I'll walk through a significant drivers.
Speaker Change: Starting with our utility operation weather decreased earnings year over year by an estimated five cents per share.
Speaker Change: This weather impact along with a total of 38 negative impact related to increases in depreciation and amortization day to day O&M and interest expense were more than offset by 49 tenths of total positive variance from rate base growth.
Speaker Change: Fuel tax and other.
Speaker Change: All in all the utility operations grew six cents year over year.
Speaker Change: Now before I discuss earnings comparison at the other segments, let me briefly comment on O&M and fail.
Speaker Change: Remember that originally we guided 2024 total company day to day O&M to be 6% to 7% higher compared to 2023, largely driven by assets that were placed in service and normal inflation.
Speaker Change: As you recall several of the assets in WEC infrastructure had a delayed in service until the end of the year.
Speaker Change: This in combination with the initiatives we took after the mild first quarter helped us achieve an overall increase of 2% over 2023 that is considerably lower and the original guidance.
Speaker Change: Regarding our weather normal sales for 2024 as you can see on pages 13, and 14 in our earnings package.
Speaker Change: <unk> retail electric and natural gas deliveries in Wisconsin were relatively flat year over year.
Speaker Change: For 2025, we are projecting weather normal retail electric sales in Wisconsin, excluding the iron ore mine to grill, 0.7%.
Speaker Change: And retail gas sales in Wisconsin, excluding power generation took well one 9% from the 2024 level.
Speaker Change: Now back to our earnings comparison.
Speaker Change: Regarding our investment in American transmission company earnings increased 7% compared to 2023.
Speaker Change: We recognized five cents in Q4 from the FERC order that resolved certain MISO ROE complaint and sets the R O E at 10.48%.
Speaker Change: The remaining two improved 19 ATC earnings was driven by continued capital investment.
Speaker Change: Earnings at our energy infrastructure segment grew 13% in 2024 compared to 2023. Please.
Speaker Change: <unk> were driven by additional investment in our power the future plants and they remain 10 cents relate to WEC infrastructure.
Speaker Change: Finally, you'll see that earnings at our corporate and other segment decreased to one penny.
Speaker Change: Higher interest expense was substantially offset by tax and other items.
Overall, we improved our performance by 25 per share on an adjusted basis in 2024.
Speaker Change: Next let's look at our earnings guidance for.
Speaker Change: For the first quarter. This year, we project to earn in the range of $2 13 per share to $2 23 per share.
Speaker Change: This forecast takes into accounts January weather and assumes normal weather for the rest of the quarter.
Speaker Change: Remember last year, we earned a dollar and 97 cents per share in the first quarter.
Speaker Change: And as Scott stated for the full year 2025, we are reaffirming our annual guidance of $5 17.
Speaker Change: To $5 27 per share.
Speaker Change: Yes.
Speaker Change: Finally, some comments on financing.
Speaker Change: In 2024, we successfully executed over $4 $5 billion of external funding, including almost $200 million of common equity.
In 2025, consistent with previous disclosures, we expect to issue $700 million to $800 million of common equity via our ATM program as well as the dividend reinvestment and employee benefit plan.
Speaker Change: Including this as a reminder, total common equity financing over the next five years is still expected to be between two seven and $3 $2 billion.
Speaker Change: Going forward to support the region strong economic growth and our capital investment we continue to expect any incremental capital will be funded with safety percent equity content.
Speaker Change: Overall, we are confident in our long term EPS growth CAGR of six 5% to 7%.
Scott Lauber: With that I'll turn it back to Scott.
Scott Lauber: Thank you sure now as you may have seen our board in its January meeting increased the dividend by six 9% to an annualized $3 57 per share.
Scott Lauber: This will mark the 20 <unk> consecutive year that our shareholders will be rewarded with higher dividends.
Scott Lauber: The increase is consistent with our policy of paying out 65% to 70% of our earnings and dividends.
Scott Lauber: Overall, we are on track and focus on providing value for our customers and our stockholders. Operator, we are now ready for the question and answer portion of the call.
Scott Lauber: Thank you and now we will take your questions. The question and answer session will be conducted electronically to ask a question. Please press the star key followed by the digit one on your phone.
Scott Lauber: If you are using a speaker phone turn off your mute function to allow your signal to reach our equipment and we will take as many questions as time permits once again press star one on your phone to ask a question.
Operator: And your first question comes from the line of Shar <unk> with Guggenheim Partners. Your line is open.
Shar: Hey, guys.
Speaker Change: Hey, Shar.
Scott Lauber: Scott.
Scott Lauber: Surprisingly a couple of data center questions for you.
Scott Lauber: First I just wanted to Scott just wanted to touch on the recent cloverleaf data center announced that looks like it's a thousand acre campus in Port Washington.
Scott Lauber: There has been some local headlines have kind of indicated that there's been pushback from the constituencies and and some of the local obviously way Paris could we just get a status there what's the timing expectations, how many megawatts.
Scott Lauber: As the project is expected to be and would this be incremental to your current plan. Thanks.
Scott Lauber: Sure absolutely so.
Scott Lauber: Announced the plan up in Port, Washington, which is just north of Milwaukee and our understanding it's about 1700 acres. So a little over 1000, there was announced at one time being 1000, but I think they're up 1700 acres now.
Scott Lauber: And right now the initial look and in their initial announcement they talk about a gigawatt of additional which would be all incremental to our plan I think there is.
Scott Lauber: It's early stages, yet so 17 other acres provides a lot of opportunities and my understanding is at Port Washington in the city of Fort Washington has been very very constructive and positive under development. So we're excited about it I think cloverleaf is excited about it and it looks like a good opportunity for all of us.
Speaker Change: Got it and then just I just sorry, Scott. This is this any opportunity will be incremental to the current plan.
Speaker Change: Correct correct. So that 1800 megawatts that we talked about in our current five year plan that never contemplated any of this.
Speaker Change: That was just announced and when we.
Speaker Change: We wait till the customers make an announcement like I said before we've talked to a lot of data centers and other developers, but as they make announcements. That's when we'll first start rolling them into our plan will take time now as we go through the plan and working with them. This summer.
Speaker Change: And when does that staged throughout the five year plan and into the future into the future five year capital.
Speaker Change: Got it perfect and then just.
Speaker Change: Just touching on just some of the recent Microsoft News. There has obviously been reports and we're seeing that they are acquiring more land in Wisconsin. So it looks like it's full speed ahead, obviously deep seek headlines have caused some confusion around U S spending opportunities and then their star Gate are you seeing any sort of impacts in <unk>.
Speaker Change: Either direction with the Microsoft spending opportunities a trajectory. So just any kind of visibility there and is there any update on the tariff negotiations. Thanks.
Speaker Change: Sure.
Speaker Change: So in the Microsoft in fact.
Speaker Change: I was listening to the Microsoft <unk> conference call to get Intel on what their thoughts are on deep seek in other conference calls about it and everything I have heard is if AI becomes more efficient more people will use it and the demand is going to still be there. So we also internally when we saw deep seek and other.
Speaker Change: Discussions about that we reached out to data centers and even.
Speaker Change: The discussion that happened.
Speaker Change: In cloverleaf is after the deep seek so all our all our capacity plans in all of our growth plans are still intact as no changes there.
Speaker Change: So that's been all very positive while we have seen and it just to be very clear there was an area to areas in the Microsoft project that was paused. The one area has been released of the pause designed issues that theyre looking at and then the other area is still being reviewed and design.
Speaker Change: Items that they're looking at I think it has to deal with.
Speaker Change: Looking at a closed loop water system. So that we expect to get more information on that in the next couple of months. So all moving forward there we're actively working.
Speaker Change: With these large very large customers on tariffs, we expect something probably in the next six months that we will be filing with them but.
Speaker Change: We're all aligned on what we need to do in order to be fair on cost allocation and they all agree they need to pay their fair share so more to come but all positive.
Speaker Change: Fair enough Scott. Thanks, again Super helpful color. So you soon bye.
Speaker Change: Yep.
Speaker Change: And your next question comes from the line of Bill <unk> with UBS. Your line is open.
Bill: Hi, Good Hey, Bill.
Speaker Change: Hi.
Speaker Change: Just going a little bit expanding on the.
Speaker Change: The incremental demand that you're seeing I mean, as we look across the 1800 megawatts you guys outlined.
Speaker Change: Back in Q4.
Speaker Change: Can you just remind us of what the generation capacity looks like and when you factor in the combustion turbines and some of the stuff. That's in the current plan, but where does that get you in terms of.
Speaker Change: Linked in the system relative to what maybe another wave of incremental demand from maybe from cloverleaf or from additional Microsoft development.
Speaker Change: Sure and as we put our five year plan together last fall with the 1800 megawatts in the southeastern Wisconsin region, which is all of the great economic development going on in the region. In addition to Microsoft We are looking at the generation plan in the MISO rules and really building to what we need.
Speaker Change: For capacity to support the MISO rules and the economic development. So there's not excess capacity out there. This would all be incremental support that we'd need for reliable capacity.
Speaker Change: So that will be reflected in our updated capital plans going forward.
Speaker Change: Okay right. So so.
Speaker Change: Projects like cloverleaf were to come to fruition and the Microsoft expansion that would likely need to be supported by additional generation investments.
Speaker Change: That is correct and a lot of these investments are looking for a mix of not just reliable gas capacity, but also renewables in the generation mix just like we laid out at our plants.
Okay, and then I mean, how quickly can that be developed I mean, there's a lot of talk in the market about just the lead times for.
Speaker Change: Putting in additional generation capacity.
Speaker Change: And whether or not that syncs up with sort of the development profiles or timelines of some of the data centers and large load customers.
Speaker Change: Yeah. It's a good question because a lot of people.
Speaker Change: A lot of people have plans that everyone wants to do very fast when you look at the develop a data center, starting with a farm field along with the transmission and the generation it could take three to four years to get there.
Speaker Change: That's why we're working hand in hand in glove with.
Speaker Change: At American transmission company to continue to grow and what we need to do to deliver.
Speaker Change: Okay, and then just lastly on the on the system modernization program hearings last week.
Speaker Change: I guess, what should we make a decision when we get it I mean does that have any impact on.
Speaker Change: The gas Capex outlook in Illinois.
In the more near term or do we need to see what the future of natural gas proceeding kind of yields before we can make any longer term capital decisions.
Speaker Change: Sure and just to give you a little color. What we currently have in our plan is approximately $90 million annually to support.
Speaker Change: <unk> facility Relocates for like the city of Chicago, or any key reliability or safety issues that we need to address so that's about $90 million in our in our filings. We talked about you know in order to get back to a plan that would take up to about $300 million of capital now remember the day.
Speaker Change: <unk> will come we expected February.
Speaker Change: We'll kind of gauge what's going off of their decision, but it would take a while to ramp up because remember we were told to pause and start stop all activity and reduce that spending so we'd have to put more contracts in place go through the permitting and go through the engineering all of that so it takes a while to ramp up but we will see what.
Speaker Change: It comes out of that decision in February we expected in February March.
Speaker Change: Alright, great. Thank you so much.
Speaker Change: Okay.
Speaker Change: Thank you your next.
Speaker Change: Your next question comes from the line of <unk> Chopra with Evercore ISI. Your line is open.
Speaker Change: 18, good afternoon, thanks for taking my questions.
Speaker Change: Just.
Speaker Change: To start off.
Speaker Change: Updates on point Beach.
Speaker Change: I know you were kind of.
Speaker Change: Talking with next year are there any any updates there since since we last spoke.
Speaker Change: No there really there really hasn't been any updates and just so everyone recalls the contracted point beach the first.
Speaker Change: Lease ends in 'twenty 30, and the PPA. The second PPA ends in 2033, so it's not.
Speaker Change: Without a fire drill that we're actively at it and you could see we've been busy with a lot of stuff and I think you can tell <unk> been busy on a lot of stuff. So it hasn't been on the front burner for all of US I expect we will have more information in the first half of the year.
Speaker Change: Oh, that's perfect. Thank you Scott and then maybe just a big picture question.
Speaker Change: With these tariffs how should we understand investors think about implications.
Speaker Change: Two Wisconsin, and just broadly utilities.
Speaker Change: You know as it.
Speaker Change: It seems like these these China tariffs are in fact right now we're not sure how long their last but how you're thinking through all of this.
Well, we're watching it very closely as you can imagine.
Speaker Change: You know in the China tariffs could affect us somewhat when you think about some of the solar projects, we have and some of the sourcing that's needed but once again, it's not a large part of the solar projects. So we think it's very manageable, where they're currently at and the tariffs that we potentially.
Speaker Change: Out of Canada to Canada, and Mexico, we are watching very closely also along with the cost of gas.
Speaker Change: But even with the cost of gas when you're watching it at a 10% tariff that was moving that gas cost from $3 to $3 30, and that's a small portion of the gas supply that we have and we saw the gas prices move a lot faster with just some cold weather coming across so we.
Speaker Change: We think it's going to be manageable, but we're watching them very closely.
Speaker Change: Got it. Thank you Scott really appreciate the time.
Speaker Change: Thank you.
Speaker Change: And your next question comes from the line of Carly Davenport with Goldman Sachs. Your line is open.
Speaker Change: Hey, good afternoon, thanks for taking the questions.
Speaker Change: You referenced before renewable capacity as being part of what is being considered.
Speaker Change: By some of these large load customers I guess do you see any implications from new policy priorities post inauguration that could potentially impact the cadence of your capital investment in renewables.
Speaker Change: There is a potential and we're evaluating all of that as we see what goes on with the with the administration and and the tariffs and production tax credits. However, I do think.
Speaker Change: That production the Ptc's will continue and they won't just be phased out immediately I think there is a longer term benefit for a lot of people a lot of construction jobs a lot of value for our customers. So.
Speaker Change: I'm not anticipating big changes there, but of course all of us, including the large customers are watching it.
Speaker Change: But at this time I don't see any any issues on the horizon.
Speaker Change: Got it great Thats helpful. And then maybe just a housekeeping item just with the O&M coming in lower in 2024 versus your expectations any color that you can provide on how we should think about the year over year impacts for O&M looking into 2025.
Speaker Change: Sure and I'll, let and remember there's a lot of this because of individual projects didnt come into service.
Shah: And a lot of new projects are coming online in 2025, but Shah has pulled together some analysis I'll, let her walk you through it.
Shah: Carly so over remember 24 came in about 5% last time, what we originally forecasted.
Shah: And some of that is short term initiatives to offset the mild heating season, and some of that is delayed us a capital put in service. So we need to restore that kind of run rate first of all and on top of that we have a new new projects, we will put in service this year.
Shah: Sure.
And also in the current.
Shah: The last rate cases in Wisconsin Commission approved some increasing reliability spending, particularly for vegetation management. If you add all of those moving pieces it could be a relatively.
Shah: Figure of growth year over year, but it's all right.
And by the factors I mentioned already.
Shah: Got it and when you say higher relative growth year over year are you talking about in reference to the original guidance for 'twenty, four or where you actually ended up coming in.
Shah: Oh, when compared to our original guidance is pretty normal, but if you compare to what 2024 came in and it could be you know I don't know 810% growth year over year.
Shah: Okay got it that's super helpful. Thanks, So much for the time.
Speaker Change: And your next question comes from the line of Julien Dumoulin Smith with Jefferies. Your line is open.
Speaker Change: Hey, good afternoon team. Thank you guys very much if you guys are doing well.
Speaker Change: Thanks, Julien Yeah, we're doing we're doing great in Wisconsin.
Speaker Change: Excellent Hey, just a couple of cleanup items here following up first in Illinois, I want to come back to us.
Speaker Change: Is that staff recommendation for option three at seven point. This was one 9 billion. It was a big number obviously you've put in.
Speaker Change: A fairly modest plan here, how much of a delta is there versus what you guys are reflected.
Speaker Change: Again, I get that apples to apples is difficult to discern at times, but how would you characterize that as far as far as the comparison.
Speaker Change: Sure and to get up to that staff number.
Speaker Change: Because they even said we should may be do it at the same pace or even a little bit faster to get up at SaaS number we'd have to ramp up to 300, maybe $350 million a year in the short term and then go higher than that.
Speaker Change: As you get through just.
Speaker Change: Factored in just different inflation and stuff, so, we'll see where that goes but that would be.
Speaker Change: 200, so a little over $200 million more than whats annually more than what's in our plan.
Speaker Change: Got it alright, thanks for trying to reconcile I know, it's tricky on the fly here and then just going back to I know, there's been a lot of focus on data and stuff, but I just want to make sure I got this right here. So we know the quantum of megawatts I thought there was like a three gigawatt number out there with with cloverleaf do you have any sense of timing at all on the ramp and similarly for phase.
Speaker Change: Three what would be contemplated on a ramp I just want to make sure.
Speaker Change: I have a sense from you.
Speaker Change: That's what you were to get details here.
Speaker Change: Quantum of Gigawatts, and especially the ramp rate and would this be ready for like a sort of updates this year. It sounds like maybe that's not a 25 of that and as much as it could take some time to come together.
Speaker Change: Sure.
Speaker Change: Sharing and cloverleaf.
Speaker Change: A tremendously they cite it as a great opportunity.
Speaker Change: And in our prepared remarks, we set a gigawatt I have heard.
That it could be significantly larger like you mentioned.
Speaker Change: I anticipate that if things continue to move as they have that we could start seeing some construction, perhaps this fall, even but that ramp rate than to actually get to.
Speaker Change: Energy flowing probably would take three to four years I would imagine.
Speaker Change: Flow substantial amounts so probably in that 28 or 2009 timeframe, but we're working with them and working with American transmission company to provide services as fast as they can they need it.
Speaker Change: Got it in phase III similar dynamic.
Speaker Change: Maybe the private side is would you expect there to be kind of a tangible update by the end of this year kind of in your normal course, absolutely just to set expectations today, absolutely okay great.
Speaker Change: I think there'll be a more and more of an update by the end of this year, absolutely that our updated five year plan.
Speaker Change: Okay perfect. Thank you guys very much appreciate the time thank you.
Speaker Change: And your next question comes from the line of Andrew Weisel with Scotiabank. Your line is open.
Speaker Change: Okay.
Speaker Change: Hi, good afternoon.
Speaker Change: Hey, Andrew.
Speaker Change: My first question then you might have just been alluding to this a moment ago, but I was wondering when we might get the next updates to the long term spending plans you typically give those in November I know, but you've already mentioned $2 billion of MISO transmission spending with maybe almost $2 billion more to come soon.
Speaker Change: Relief spending, adding more incremental capex and possibly some other needs should we expect to hear anything between now and November or would we wait till later in the year for your typical timing.
Speaker Change: Sure. That's a great question and just to set expectations I anticipate it will be in that October November timeframe, and here's why the American transmission growth that we're talking about 2.1, that's most likely in that 'twenty eight 'twenty nine more in the 29 30 and past timeframe.
Speaker Change: So later out farther so it really won't affect this five year plan as much and then as you think about these.
Speaker Change: Additional megawatt hour sales potential as we said it will take a while to ramp up probably later in the five year plan and we will pull all of those plans together right now so it's not like it's really going to affect dramatically in 'twenty five 'twenty six 'twenty seven probably.
Speaker Change: Okay, Great and then I guess similar question on the regulatory front you. Obviously just completed your two year rate cases in Wisconsin, but you'll probably need to make some important investments decisions sooner than the next rate cases.
Speaker Change: You made the comment about a quiet regulatory calendar, but how do we juxtapose that with a very busy environment with economic development.
Speaker Change: Sure.
Speaker Change: A very good question and we have from a rate case perspective, it's very quiet from a Wisconsin perspective, as we have significant number of projects at the commission right now for approval. So I think we have close to $5 billion of projects sitting at the commission in between.
Speaker Change: You know the gas generation, which includes <unk> and res units.
Speaker Change: Gas lateral and the LNG plant that we put in service to have that additional reliability plus solar wind and some battery capacity. There is a lot of projects at the commission to get approval when they get approval they get approved which we anticipate some of the gas turbines to get approved by probably in the <unk>.
Speaker Change: Second or third quarter, we'll start construction and during that period.
Speaker Change: We're really incurring are earning <unk> on those projects and then they will go into the future rates.
Speaker Change: Future rate cases, it takes a while to build so we do have a very busy schedule getting approval on projects.
Speaker Change: Okay, Great. That's really helpful and one last one infrastructure I believe he has now completed all of your planned spending for the five year outlook.
Speaker Change: First question Am I correct that 2025, we will still have some earnings growth. Thanks to the recently completed projects and then how do you think about your appetite for incremental unregulated projects. We obviously have a ton of utility opportunities. How do you think about the opportunity for more stuff that wiki.
Speaker Change: Sure and you described it very well.
Speaker Change: We've had two projects that came in the end of last year. One we expect to close the next one we expect to close in the first quarter of this year, So theres incremental which includes incremental production tax credits, but you hit the nail on the head we have so much growth in Wisconsin in American transmission company.
Speaker Change: That right now we don't have anything at our plans for that work infrastructure now never say never but right now we really don't have any plans in that infrastructure, because we have so much to execute within the utilities.
Speaker Change: Alright, very good thank you.
Speaker Change: Thanks, Michael.
Speaker Change: And your next question comes from the line of Michael Sullivan with Wolfe Research. Your line is open.
Michael Sullivan: Hey, good afternoon.
Scott Lauber: Hey, Michael Hey, Scott.
Speaker Change: I wanted to go back to just the sales growth conversation I think.
Scott Lauber: Given everything seems on track with maybe even upward bias.
Scott Lauber: You're pointing to just shy of a 1% growth on the electric side this year.
Speaker Change: Are we going to get into that like four and a half 5% range by next year is that still fair.
Scott Lauber: Assumption to work with.
Scott Lauber: Yeah.
Scott Lauber: Yes.
Scott Lauber: <unk> looked at that we are slowly going to start to see some ramp up but really the big stuff goes into service in 2026 at Shire and the other.
Scott Lauber: I think that's it and embedded in that 7% growth is the L. C&I growth, which is about one 9% Michael So that's a good nice ramp up from where we landed in 2024 and everybody is focused on data centers, but we really have a really good growth.
Scott Lauber: Cross all the 16 sectors that we track just to give you a sense 11 of the 16 factors last year had positive or relatively flat growth.
Scott Lauber: By the end of 2024, so we feel really good about the forecast for 25, and we think the four four and a half four 5% to 5% will be reached maybe and then I don't know late 2026 timeframe.
Speaker Change: Okay very helpful. I appreciate the color there.
Speaker Change: And then switching back to the ATC side of things just the upside potential beyond the $2 1 billion. When would you anticipate getting some clarity on that whether it be competitive bids or the rover option.
Speaker Change: Sure in the role for option.
Speaker Change: <unk> transmission company is working with the legislature to hopefully get something adopted our proposed and hopefully approved in this in this quarter or this first half of the year and then I think if theres a bidding option I think those bids will be required if we don't get the rule for those bids required probably in the first half of this year too so more would come in.
Speaker Change: The next couple.
Speaker Change: Next coupled.
Speaker Change: Next year or so here.
Speaker Change: Well when we looked at the role for in the role for when you are in Wisconsin, and you have the role for it's a great investment for our.
Speaker Change: For American transmission company, but it also when you look at the cost and how they're allocated it's a good investment also for our Wisconsin customers. It saves money for them too. So we think theres a great opportunity for the ROFO in Wisconsin.
Speaker Change: Great. Thanks, so much I appreciate it.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: And your next question comes from the line of Jeremy Tonet with J P. Morgan Your line is open.
Jeremy Tonet: Hi, good afternoon.
Jeremy Tonet: Hey, Jeremy how are you doing.
Jeremy Tonet: Good how about yourself.
Jeremy Tonet: Not bad.
Speaker Change: Just a real quick one for me I was thinking with regards to your experience with the <unk> engines. There we hear a lot about speed to market. These days do you think your experience with <unk> at the utility or wacky or will offer you kind of the ability to give a differentiated service as it relates to speed to market.
Speaker Change: Well that's a good question and we have the race units in our plan. We've got three sites of Reis units up and running very happy with the race units and.
Speaker Change: And we have a combination of reis units along with <unk>. So we look at it.
And all of the above and how do we grow our generation to be reliable.
Speaker Change: Reis units is just part of the compliment I don't know I think it's good to have them part of our mix, but I don't know if we'd just go 100% with race units or <unk>. So it's been a combination. So they are very good and they've been very effective for us as we've been using them at our load here for a couple of years, though.
Speaker Change: Got it.
Speaker Change: That's helpful. There. Thanks.
Speaker Change: I might've missed it earlier.
Speaker Change: If you touched on already sorry, but any thoughts on open AI CFO mentioned, Wisconsin is it possible data center site and beyond.
Speaker Change: Beyond Microsoft could you walk us through your ability to.
Speaker Change: Accommodate if you do get more of these.
Speaker Change: More people coming in.
Speaker Change: Sure.
Speaker Change: And then like I said, our development people are talking.
Speaker Change: All the time with potential opportunities and we work with them and kind of lay out. The game plan. You know you need to get transmission, but in order to get orders in itself you design your purchase cancellation agreements to protect our core customers. So we're working with a variety of people.
Speaker Change: So potentially there is even more out there, but we've just got to get into the queue and lay out a game plan with them. So theres always more potential.
Speaker Change: Got a quick last one if I could with all of this hitting in the backend of the plan.
Speaker Change: How do you think this might impact the CAGR.
Speaker Change: You know, we're going to put all that together this summer as we look at our fall here.
Speaker Change: And we will update that and whatever we decided to do they'll come on our third quarter call.
Speaker Change: Fair enough. Thank you very much.
Speaker Change: Thank you.
Speaker Change: And your next question comes from the line of Paul Fremont with Ladenburg. Your line is open.
Speaker Change: Thank you.
Speaker Change: Quick question of.
Speaker Change: Clarification for the sort of for the Microsoft pause.
Speaker Change: My understanding is that the closed loop design is also being used in Arizona.
Speaker Change: The pause, Wisconsin specific or is it more generic to all of their facilities that are going to use the closed loop design.
Speaker Change: Well I don't know the specifics of what's going on on the other projects I did read that their projects going forward, new projects, including Arizona and Mount Pleasant well pilot.
Speaker Change: Zero water evaporating designs in 2026, so I can't speak to the other other projects at Microsoft's area I know ours is a short pause here.
Speaker Change: They've already started one of the one of the sites back up it's just the one that's on a Pos bill.
Speaker Change: Great.
Speaker Change: And then just a quick question on sort of any comments on the Nextera GE, even though or no.
Speaker Change: The partnership in <unk>.
Speaker Change: What impact that might have on the availability of gas turbines as you move out into the future.
Speaker Change: That's a good question and what we have in our five year plan, we have already sites, so that generation and we'll see what the demand is.
Speaker Change: As we continue to work with our large customers in GL for $29 $30 31.
Speaker Change: I mean, there's no doubt that GE is probably ramping up their supply and the ability also to deliver more units. So we'll see where it goes.
Speaker Change: Paul the good news for us.
Speaker Change: Our current Cts and.
Speaker Change: Generation plan in our current five year plan, we already signed the contract so we're ready to move on.
Speaker Change: Right now for this space.
Thank you. Thank you very much.
Speaker Change: Thanks, Paul.
Speaker Change: And your final question comes from the line of Paul Patterson with Glen Rock Associates. Your line is open.
Paul Patterson: Hey, good afternoon.
Speaker Change: Okay Paul.
Paul Patterson: Just a few quick questions so on.
Paul Patterson: Illinois.
Paul Patterson: When you guys had your gas case, there was a ameren gas case that was.
Paul Patterson: Kind of at the same time frame and they've gotten the.
Paul Patterson: An order from the Appeals court.
Paul Patterson: That reversed so the denials.
Paul Patterson:
Paul Patterson:
Paul Patterson: So the denials and what have you.
And.
Paul Patterson: I was wondering how you felt.
Paul Patterson: How about if that has any.
Paul Patterson: Any impact on your thoughts regarding.
Paul Patterson:
Paul Patterson: The gas situation.
Paul Patterson: With respect to the S&P or your other.
Speaker Change: I think you guys also appeal to a gas case, if I'm not wrong, if theres any maybe carry over there that you might be thinking about.
Speaker Change: Sure. That's a good question and I did see where some of those are appeals were sent back to the commission.
Speaker Change: And we also have appealed our rate case order specifically as it related to some of our.
Speaker Change: Service Center facilities that were denied 100% and and other aspects of the case, we will see where our appeals go.
Speaker Change: As it relates to the SMP I think we will.
Speaker Change: Our record was very clear it's needed for reliability as students for safety. There is a lot of old pipes in the city of Chicago in fact, we're working on one back from $18 61. So I think the facts of the case are going to drive it.
Speaker Change: As the S&P four for what we'll see in the next quarter here and the appeal, we'll see where the court goes with <unk> I think it's at a different circuit, but it's somewhat positive to see.
Speaker Change: Appeal that Ameren won a few of them to go back to the commission.
Speaker Change: Okay, and then finally, just a just a bookkeeping on the extinguishment of debt.
Speaker Change: What are your expectations going forward on what kind of opportunities might be there.
Speaker Change: With respect to that category.
Speaker Change: Well, we've been using that as a.
Speaker Change: I don't know, it's not in the plan, but we try to be opportunistic last December when we extinguished some of the debt we were able to realize some gains but really also.
Speaker Change: Neutral for 2025, so we want to be flexible and if I'm. If you have a really bad hearing whether or something that could be a tool for us to consider and so but it's not in the base plan.
Speaker Change: Have to also see what the market's like at that time exactly.
Speaker Change: Okay, and the opportunities are being driven pretty much by interest rates is that how we should think about it or was there anything else something unusual date doesn't come to mind.
Speaker Change: You will see yes market conditions interest rate.
Speaker Change: Everything around it.
Speaker Change: Awesome. Thanks, so much.
Speaker Change: Thank you.
Speaker Change: Well that concludes our conference call for today. Thank you for participating if you have any more questions feel free to contact Beth Straka at 4142 to 14639.
Speaker Change: And ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
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