Q1 2025 Evergy Inc Earnings Call
Thank you.
I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: Good day, and thank you for standing by. Welcome to the Evergy Q-1 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.
Speaker Change: To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Peter Flynn.
Speaker Change: Today's discussion will include forward-looking information. Slide two in the exposures in our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations.
They also include additional information on our non-GAAP financial measures.
Speaker Change: Joining us on today's Caller, David Campbell, Chairman and Chief Executive Officer, and Brian Buckler, Executive Vice President and Chief Financial Officer.
David Campbell: David will cover first quarter highlights, recent legislative outcomes, provide updates on economic development activities for 2025 integrated resource plan and regulatory updates.
Brian Buckler: Ryan will cover our first court of results, retail sales trends, and our financial outlook.
Brian Buckler: Other members of management are with us and will be available during the Q&A portion of the call.
I will now turn the call over to David.
David Campbell: Thanks, Pete. Good morning, everyone. I'll begin on slide five. This morning we reported first quarter adjusted earnings of 54 cents per share compared to 54 cents per share a year ago relative to last year. This quarter's results were driven by recovery of regulated investments partially offset by lower industrial demand and higher interest in depreciation expense. This quarter's results were driven by more than a year ago relative to last year. This quarter's results were driven by more than a year ago relative to last year.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
David Campbell: And while absolute retail demand grew 2.7% and heating to re-days increased 18%, the volume benefits from the cold weather did not manifest into margin given declining block pricing in the winter months.
David Campbell: We also saw weakness in sales due to scaled back activities following two significant heavy snow events.
David Campbell: as well as a large industrial customer adage caused by an unplanned maintenance shutdown at their refinery. Fortunately, this customer has returned to normal operations this month.
David Campbell: As we look forward to full year 2025, we continue to see strength in our underlying operations to keep us on track to deliver on our own exact expectations.
We are reaffirming our 2025 Adjusted EPS Guidance Range.
David Campbell: Ryan will go into more detail regarding our financial results as part of his remarks.
David Campbell: The long-term outlook for our business is as strong as it has been in decades.
David Campbell: Bolstered by strong demand from large new customers, one of the most robust customer pipelines in the industry and constructive regulatory frameworks and supportive legislation both Kansas and Missouri.
David Campbell: We are reaffirming our long-term earnings growth target of 4% to 6% through 2029 based on the 2025 midpoint to $4.02 per share.
David Campbell: From 2026 to 2029, we anticipate being in the top half of this guidance range relative to the 2025 baseline with significant additional tailwinds from potential large new customers and investments to serve them.
David Campbell: Moving operations, our teams drove solid performance in the first quarter. Our average attestoration and frequency, as measured by Sadie and Safey, are performing favorably relative
David Campbell: Our generation team achieved strong availability and ran well through extreme weather, including the Blizzard in early January and record-breaking cold over consecutive days in late February .
David Campbell: The latter cult spell drove a new Winter Peak Globe record of over 48 gigawatts in the Southwest Powerpool surpassing the previous record, and was set in December of 2022.
David Campbell: These outcomes demonstrate the benefits and need for our continued investment in energy infrastructure including grid modernization projects, grid modernization projects, and new dispatchable generation.
David Campbell: I'd like to thank all of our frontline employees for their unwavering dedication and hard work in maintaining the reliability of our system and keeping the lights on for our customers.
David Campbell: On a legislative front, constructive bills were passed in both Kansas and Missouri that enhance our strong regulatory frameworks and further enable infrastructure investment to drive growth and prosperity for our region.
David Campbell: On slide 6, we highlight recent legislation that will empower growth and investment in our region and firmly position Kansas and Missouri as premier destinations for new advanced manufacturing facilities and data centers.
David Campbell: These outcomes are the product of broad-based alignment between Evergy, the governor's offices, state legislators, our regulatory commissions, and key stakeholders as well as our shared commitment to seize on-the-growth opportunities out of us for our customers and communities.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
David Campbell: Constructive regulatory frameworks that enable timely infrastructure investment to meet the needs of both new and existing customers are critical to our success.
David Campbell: and the bills passed this year in both states, as well as last year in Kansas, directly advance these priorities.
David Campbell: The piece of natural gas sea whip provisions served a mitigate regulatory lag and support our strong credit profiles we execute on our 17.5 billion dollar capital plan.
David Campbell: While data center tax incentive packages bolster the business friendly environments that Candace and Missouri are already known for, which have been instrumental in attracting new customers.
David Campbell: All told these legislative advancements will attract the investment of major industry players and prove that Kansas and Missouri are top destinations for new business and growth. We'd like to thank our many stakeholders for the engagement and participation that made this possible.
David Campbell: For our part, Evergy remains committed to investing to provide safe, affordable and reliable electric service to our 1.7 million existing customers and the new customers we are bringing online.
David Campbell: All of our stakeholders stand to benefit from this unprecedented investment opportunity, as large new customers help spread our fixed costs over a broader base.
David Campbell: Our communities benefit from job creation, development of ancillary businesses and services, improved economic resiliency with a more diversified industrial base, and a larger tax base.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Thank you. Bye.
Slide 7 describes our pipeline in greater detail.
David Campbell: As I just described, we are well positioned to continue to track economic development.
David Campbell: Relative to our size, our backlog of growth opportunities is one of the most robust in the country, reflecting the competitiveness and vitality of our region
David Campbell: Of course, the environment for new economic development projects is competitive and we do not expect to win all projects in the queue.
David Campbell: Since our fourth quarter call, our pipeline has expanded by one gigawatt to 12.2 gigawatts.
David Campbell: We've also moved 300 megawatts out of the finalizing agreement's category and into the active, actively building category.
David Campbell: This reflects the expansion of a data center project in Missouri and we expect this load to ramp beginning in 2030. This customer has signed agreements and we are actively building on the site.
David Campbell: We are in final stages in negotiation with two large customers for two data center projects representing 1.3 gigawatts of load.
David Campbell: One of these customers is evaluating our Kansas Service Territory and the other, an existing data center customer, is evaluating expansion in Missouri. We are very excited about the prospects of serving new projects and bringing economic development to our communities.
David Campbell: Both customers remain on track to share announcements regarding their plans later this year.
David Campbell: Subject to final agreements and project announcements we expect to begin to see an impact on our demand growth from these customers in 2027 and 2028 and into the next decade.
David Campbell: Ryan will cover this demand profile in more details as part of his remarks.
David Campbell: We also remain in advanced discussions with customers whose load would represent approximately three gigawatts.
David Campbell: While these customer projects are not as far along as the others in the pipeline that I've described, they have acquired land or land rights presented a site plan, and in some cases, sign letters of agreement to advance evaluation process.
David Campbell: The remaining balance of our pipeline, which grew from six gigawatts to seven, reflects initial conversations with potential customers.
David Campbell: While all this load may not be addressable, the continued interest nonetheless demonstrates the significant activity and interest in Kansas and Missouri and customers who stand ready if others drop out of the queue.
David Campbell: Moving to slide 8, we provide a consolidated summary of the R-2025 Integrated Resource Plan filing, which we submitted in Missouri and March and in Kansas last week.
David Campbell: This year's IRP reflects the impacts of updating our long-term expected demand growth.
David Campbell: including the addition of potential large loads and our finalizing agreements pipeline category.
David Campbell: as well as other important inputs such as reserve margin requirements of the Southwest Power Pool have changed, instruction cost estimates and commodity price workouts.
David Campbell: Overall, our approach reflects and all of the above strategy for new generation development and adds approximately 2.1 gigawatts of new generation from 2025 to 2035 relative to the last year's IRP.
David Campbell: Earlier this week, we issued an all-source request for proposals to solicit bids for projects through 2032 to identify and help serve these needs.
This process will complement our self-developed opportunities.
David Campbell: Our planning process involves identifying the most cost-effective and resilient plan that reliably serves our customers across uncertain future scenarios.
David Campbell: We believe that the renewable and natural gas additions, as shown in our IRP, are being planned in a manner that will allow Evergy to take advantage of best-in-class efficiency.
David Campbell: and support economic development in our service territory, while at the same time helping to minimize the impact on affordability and ensuring that we provide reliable electric service.
David Campbell: You also note that our preferred plan delays a retirement of certain facilities and factors in potential conversions to natural gas.
David Campbell: While there are risks and uncertainties for these plants given their age, the limited availability of replacement parts, and potential future investment requirements to maintain reliability, we are committed to a flexible approach that best serves our customers.
David Campbell: Evergy has managed our generation's lead to operate efficiently, meet environmental standards, and be available when called upon.
David Campbell: The ultimate goal of our R.P. is to ensure reliability and affordability for our customers.
David Campbell: As we advance the balance, all of the above generation portfolio. This view is reflected in the slide which includes solar, wind, batteries and natural gas.
David Campbell: Moving to slide 9, I'll provide a brief update on her regulatory priorities and activities in Kansas, Missouri.
David Campbell: On the Kansas side, we continue to work through our pending Kansas Central Ray case.
The procedural schedule calls for intervener testimony by June 6th
followed by Rebuttal testimony on July 3rd. [inaudible]
David Campbell: Settlement conferences will be held on July 8th and 9th with hearings commencing on July 21st.
Speaker Change: We look forward to working with our regulators and stakeholders over the coming months to achieve a constructive outcome for Kansas Central customers.
David Campbell: As a reminder, Kansas Ray cases run on an eight month clock and we anticipate final resolution in late September .
David Campbell: We also have pending requests for the KCC for predetermination on partial ownership of two combined cycle natural gas plants, as well as a new solar farm.
David Campbell: We are pleased to reach settlement agreements for these three projects.
David Campbell: We appreciate the dialogue and participation from KCC staff, curb, industrial consumers and other stakeholders all as part of the process, anticipate a commission order by July 7.
David Campbell: The KCC recently approved a procedural schedule for our request to approve a large load-power service tariff that would apply to prospective data center customers.
David Campbell: We believe the tariff allows for adequate cost recovery associated with large new loads while being competitive with rates in neighboring states.
David Campbell: The procedural schedule calls for an early settlement offer by June 20th, settlement discussions on June 23rd and a settlement agreement due by July 3rd. If an early settlement is not reached, there will be opportunities for additional discussions.
In the fall, head of hearing starting on October 8th [inaudible]
David Campbell: Pivoting to Missouri, we have pending requests for certificates of convenience and necessity or CCNs.
David Campbell: Related to two solar farms, partial ownership and two combined cycle natural gas units, and full ownership of a simple cycle natural gas plant.
David Campbell: In April , the Missouri Public Service Commission staff recommended approval of construction for all of these facilities with certain conditions.
David Campbell: We believe these projects, which are part of our IRP from Missouri, form a cost effective package of reliable energy solutions for our customers.
David Campbell: and demonstrate alignment with the Missouri Public Service Commission's interest in securing additional generation resources from Missouri Utilities.
David Campbell: For both the solar and gas projects, settlement conferences begin on May 22nd by hearings for solar on May 27th and natural gas on May 29th.
David Campbell: Thank you for watching. Please subscribe to my channel. I hope to see you again soon.
David Campbell: Similar to Kansas, in February we filed a request in Missouri to approve a large load power service tariff.
David Campbell: Parties proposed a joint procedural schedule that would call for Intervener Rebellt testimony by July 25th.
David Campbell: A Settlement Conference on September 23rd, and hearings from September 29th to October 3rd.
David Campbell: We're also working with Missouri State holders to have advanced settlement discussions similar to the Kansas schedule.
David Campbell: I'll conclude my remarks with slide 10 which highlights the core tenets of our strategy.
David Campbell: Our efforts to enhance affordability have yielded significant progress in improving regional rate competitiveness over the past few years.
David Campbell: Our strategic plan is designed to stain this momentum by keeping our long-term rate trajectory in line with the rate of inflation while still investing in infrastructure to support growth across our region.
Bi-prioritizing affordability, we support prosperity within our states.
and contribute to our robust economic development pipeline.
David Campbell: Ensuring reliability is also a core element of our strategy as measured by Sadie, Safety, Grid Resiliency, and Generations Lead Availability.
David Campbell: This also includes a focus on metrics relating to customer service, safety and all elements of our operations and infrastructure investment.
David Campbell: And with respect to sustainability, we continue advance the transition of our generation fleet as detailed in our 2025 IRP updates.
David Campbell: We look forward to continuing to advance a balanced all-the-above mix of resource additions over the coming years to support growth and prosperity in our states.
Brian Buckler: and with that I will turn the call over to Brian .
Brian Buckler: Thank you, David. Thank you, Pete. Good morning, everyone. I'll start on side 12 with the review of our results for the corner.
Brian Buckler: For the first quarter of 2025, Evergy delivered adjusted earnings of $125 million, or $0.54 per share, compared to $124.7 million, or $0.54 per share, in the first quarter of 2024.
Brian Buckler: As shown on the slide from left to right. The year over year drivers are as follows first the net impact to retail sales volumes pricing and weather drove a one cent benefit while colder winter weather produced an 18% increase in heating degree days.
Brian Buckler: The volume benefits from this weather manifested into a limited margin benefit.
Brian Buckler: Given the declining by pricing where rates in the winter decline as customer usage enters higher tiers. Our results also reflect the roll off of the leap year impact in 2024, which benefited the prior year by approximately <unk> <unk>.
Brian Buckler: Further impacting results was a large unplanned customer outage as I'll speak to shortly.
Brian Buckler: <unk> recovery of and return on regulated investments driven by new retail rates at <unk>, Missouri, West and FERC regulated investments contributed 13 cents of EPS.
Brian Buckler: Higher depreciation and interest expense due to increased infrastructure investment drove a 10% decrease in EPS and finally other items negatively impacted results by <unk>.
Brian Buckler: Turning to slide 13, I'll provide more details on our sales trends.
Brian Buckler: Although that's inside of the screen you will see total demand grew two 7% while weather normalized demand decreased by 3%.
Peter Flynn: Peter Winter weather led to increases in residential and commercial usage, but major snowstorms limited the business activity in January and to some degree in February.
Peter Flynn: On the industrial side as I briefly alluded to the year over year decline in demand was driven primarily by large industrial.
Peter Flynn: Customer going offline for most of the first quarter due to a temporary unplanned maintenance shutdown.
Peter Flynn: Importantly in April this customer began to resume operations and we expect them to be at normal production levels. This map.
Peter Flynn: While the combination of these factors had an outsized impact on weather normalized load in the first quarter. We continued to anticipate healthy growth for the balance of the year. Our forecast is supported by strong underlying increases in customer numbers, which which were up 1% compared to the two last year as well as the expected ramp of meta and Panasonic in the <unk>.
Peter Flynn: Half of the year.
Peter Flynn: As we move to slide 14, I'd like to discuss year ago consideration supporting our 2025 adjusted EPS guidance.
Peter Flynn: The unusual items I noted earlier, the first quarter was a slower start to the year than anticipated we have analyzed the balance of the year drivers and without mitigation, we would be.
Peter Flynn: Approximately five below our 2025 adjusted EPS guidance mid point.
Peter Flynn: Fortunately the foundational earnings drivers at the company remained strong and we anticipate meeting the midpoint of our EPS target with normal weather the rest of the year.
Peter Flynn: There are a few factors that give us confidence in achieving our target for example year to date, our operational performance, including O&M cost management has been strong.
Peter Flynn: As we look to the balance of the year, we remain laser focused on driving cost efficiencies and point O&M levers as necessary to achieve our financial targets.
Peter Flynn: Additionally, as I previously described we anticipate a rebound in weather normalized demand growth in the third and fourth quarters, which we expect to be supplemented by growth in revenue from recovery of our state and FERC regulated investments.
Peter Flynn: In short we are committed to executing our plan and achieving our financial goals.
Peter Flynn: Let's now turn to our financing plan on slide 15, our projected capital investments over the five years through 2029 stand at $17 5 billion consistent with our capital plan update we provided on our fourth quarter earnings call. In fact, there is no change in our messaging from the previous quarter with respect to our financing plan through 2020.
Peter Flynn: Nine.
Peter Flynn: We anticipate funding our investments prudently targeting an <unk> to debt ratio of approximately 15% throughout the forecast period, our strong cash flows from operations will be supplemented by the issuance of debt equity and equity like instruments.
Peter Flynn: Our forecasted equity issuances across 26 2029 remain at $2 8 billion and as a reminder, our 2025 guidance does not contemplate new equity issuances. This year and we anticipate roughly $1 2 billion of equity issuances in total across 2026 and 2027 combined.
Peter Flynn: As I.
Peter Flynn: During our fourth quarter call the EPS and financing plan. We are sharing with you again today only includes load growth expectations from the first set of large customer additions. We are optimistic that our equity needs will be lower for the $17 5 billion of our capital plan. If additional <unk> customers began to come online by 2028.
Peter Flynn: As previously discussed is becoming increasingly likely.
Peter Flynn: In short our customer pipeline has the potential to not only increase average these earnings power, but would also provide a substantial benefit to operating cash flow, allowing us to moderate equity issuance in the future assuming a $17 5 billion our capital plan is unchanged.
Peter Flynn: You may soon see us take steps.
Peter Flynn: To begin to address our future equity needs, we would expect any equity issuance activity in $2025 to settle no earlier than 2026. These steps will allow us to be nimble in our approach to accessing the capital markets.
Peter Flynn: Turning to slide 16 here, we profile our demand growth outlook in tandem with the tremendous large customer opportunities in front of us.
Peter Flynn: As a reminder, our 2% to 3% demand growth forecast through 2029, only reflects large customer announcements today.
Peter Flynn: We expect the combination as Panasonic meta and Google's load ramps to contribute approximately 500 megawatts of new load by 2029 with the balance driving growth into the early 2000 <unk>.
Peter Flynn: This is incremental to our traditional base retail planning assumption of 5% to 1%.
David Campbell: As David described earlier.
David Campbell: Byrd from customers in the finalizing agreements category would be additive to the two to 2% to 3% demand growth forecast.
David Campbell: Reflecting approximately 600 megawatts of incremental demand by 2029.
David Campbell: This would potentially drive our total retail sales growth to 4% to 5% through 2029 with further additional upside in those years for the next customer pipeline that we have term to be in the advanced discussion stage.
David Campbell: To step back again and relative to our size. We continue to believe we have one of the most compelling customer growth opportunities and the entire industry that could drive robust growth not just in our five year forecast, but into the next decade for <unk> and for the communities we serve.
David Campbell: I'll close on slide 17, with a recap of our long term financial expectations as David stated <unk> long term business outlook is as strong as it's been in decades, we are reaffirming both our adjusted EPS guidance range for 2025 as well as our long term adjusted EPS growth target of 4% to 6% through 2029.
David Campbell: Based upon the midpoint of $4 <unk> in 2025, we expect to grow in the top half of our 4% to 6% adjusted EPS target range through 2029 with additional tailwind through this plan, including potential additional adds from our large customer pipeline.
David Campbell: Our employees remain focused on consistent execution of our customer operational and financial goals as we advance our strategic objectives of ensuring affordability and reliability for our customers and driving a sustainable sustainable business model for the long term prosperity of our customers and our communities. Thank you for joining us.
David Campbell: Day, and we will now open the call up for your questions.
David Campbell: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please stand by while we compile the Q&A roster.
Speaker Change: Our first call comes from the line of <unk> Chopra of Evercore. Your line is open.
Chopra: Hey, good.
Speaker Change: Good morning, Thank you for.
Chopra: Hey, David Martin.
Speaker Change: Just to start off a quick clarification on the quarter itself, Brian you mentioned five.
Speaker Change: Below your expectations and you mentioned that was the number after to mitigate mitigating actions, maybe just give us what the gross number.
Speaker Change: Is.
Speaker Change: And if my understanding of the <unk> is accurate.
Speaker Change: Yes, they're gas just to clarify there.
Speaker Change: The $3 97, and appointed two which is five <unk> short of the $4 <unk>, that's actually before mitigating items. So that's just our base plan our base outlook, if you will.
Speaker Change: The full year sitting here today before mitigating items, we're already we've already been in active discussions with our entire officer team to mitigate that five delta and we actually fully expect to be at $4 <unk> for the full year sitting here today.
Speaker Change: Okay. So just to be cleared our first quarter gaming <unk> below where you would have expected it to be is that a fair.
Speaker Change: Articulation.
Speaker Change: That's the way to think about it.
Speaker Change: Okay. Thanks.
Speaker Change: We shed that and then just any color you can share on the timing of the one three gigawatts.
Speaker Change: Nice to see the 300 megawatts moved into the execution mode here, but just any color you can share on the timing of when.
Speaker Change: Those those contracts maybe signed in and doesn't sound like this is again, just asking for confirmation, but doesn't sound like you're seeing any softness softness of demand premier customers with just any perspective, there given all the Microsoft noise Etsy.
Speaker Change: Et cetera.
Speaker Change: Yep.
Speaker Change: Great question, we still have.
Speaker Change: Tremendous confidence in the discussions we're having very active discussions in the pipeline has actually expanded so the folks who stand ready if later in the queue of folks drop out as well.
Speaker Change: Buses ever.
Speaker Change: And we have advanced significant conversations with the folks in the active rebuilding and finalizing agreements categories. A lot of investment has already been made.
Speaker Change: Directly on behalf of those customers have either paid for directly are backstopped I anticipate exact timing, we think it's probably linked to when we finalize the large load power service tariff proceedings, which we do expect to wrap up by year end.
Speaker Change: But the exact timing is a little dependent on whether we get settlements and following the hearings but.
Speaker Change: To be right around the end of the third quarter and into the fourth quarter and I expect you to announcements could proceed that but theres a linkage obviously with finalizing those tariffs but back to your overall question very positive discussions.
Speaker Change: We haven't disclosed all the names of the Counterparties of course, though some of the names have been public in the past that there have been a couple of announcements and those parties continue to show commitment to the underlying strategy. That's reflected in very robust interest in our in our territory and we continue to take the steps needed to make sure that we can serve them.
David Campbell: Thank you David.
David Campbell: Q3, Q4 after kind of most likely after you.
Speaker Change: These tariff discussions in both states understood. Thank you and I'll get back into queue.
David Campbell: Great. Thank you. Thank you.
David Campbell: Thank you very much one moment for our next question.
Nathan Richardson: Our next question comes from the line of Nathan Richardson of Barclays. Your line is open.
Nathan Richardson: Hey, everybody can you hear me okay.
Speaker Change: We can good morning.
Nathan Richardson: Good morning.
Speaker Change: My first question is so I know you talked a little bit about how increased sales could lead to downward pressure on equity, but I was wondering if you could quantify that at all.
Speaker Change: There is a sensitivity every 1% of sales growth is X billion dollars of equity or anything.
Speaker Change: Along those lines.
Brian Buckler: Hey, Nathan good morning, it's Brian Thanks.
Speaker Change: Thanks for the question we haven't.
Speaker Change: Laid out our exact.
Speaker Change: Kind of Guy.
Speaker Change: Guidance, if you will on how much equity.
Speaker Change: Issuances could go down with the load growth but.
Speaker Change: Going from the 2% to 3%.
Speaker Change: Expectation is currently embedded in our five year plan to what we think is ultimately going to be more like 4% to 5%.
Speaker Change: More of these customer sign up and began operations as early as late 2027, and we think there'll be some pretty robust load growth from them in 2008 and 2029.
Speaker Change: It's really impactful to your <unk>.
Speaker Change: So dollar goes a long way to improving your metrics on the <unk> to debt.
Speaker Change: So suffice it to say it could be hundreds of millions of dollars of less equity.
Speaker Change: Over that five year period again based on a $17 5 billion our capital plan.
Speaker Change: Okay.
Speaker Change: That makes sense. Thank you and then one more question. So I saw that there is some increased guidance on the IRB.
Speaker Change: Given that there is clearly some pressure higher on load growth does the RP currently tie into the 2% to 3% prior guidance or could it absorbs some of the incremental megawatts that are popping up in the backlog right now.
Speaker Change: It's a good question, we've actually in the latest integrated resource plan filings given how advanced the discussions are in the need to plan ahead. We actually included the customers in the actively building and finalizing agreements categories in the integrated resource plan.
Speaker Change: And Thats one of the drivers of why you see the increased resource needs and also <unk>.
Speaker Change: Some flexing in retirement timelines in consideration of conversions to natural gas and.
Speaker Change: And I know that leaves the natural question of Okay, well, which resources R&R.
Speaker Change: Financial plan to $17 5 billion capital plan, and which are not so we actually added a page give full credit to the team in doing that so at slide 23 in the appendix lays out which resources in our latest integrated resource plan are in the capital plan and which are not yet in the capital plan.
Speaker Change: And.
Speaker Change: Consistent with our overall approach of sticking with the demand growth forecast of 2% to 3%.
Speaker Change: We do see real opportunities just as Brian described on incremental load waltzer CV incremental resources, we expect to have.
Speaker Change: And the mix to serve these customers.
Speaker Change: So those will be part and parcel as we give updates as customers make their announcements.
Speaker Change: Got it that makes a lot of sense. That's all I had thank you everybody.
Speaker Change: Thank you thank you Nathan.
Speaker Change: Thank you very much.
Speaker Change: For our next question.
Speaker Change: Our next question comes from the line of Travis Miller at Morningstar. Your line is open.
Speaker Change: Thank you and good morning.
Speaker Change: Good morning, good morning drafts.
Speaker Change: Just wanted to clarify something so the 300 megawatts that you were talking about that one.
Speaker Change: In the construction I suppose.
Speaker Change: And then ramping your expectation in 2030 is that the typical timeline that youre seeing among.
Speaker Change: The large load customers or even specifically data center customers that kind of four year type of building ramp.
Speaker Change: I think the when you see both the actively building and finalizing agreements category, we tried to lay out in both how many how much of the total megawatts will we see.
Speaker Change: <unk> hundred 29, and then how much coming online after 29 Youll see in both categories. It's one one gigawatts in the actively building category about 500 megawatts.
Speaker Change: That we expect through 2029 up to 500 megawatts through 2029 is what we expect in those categories. Obviously more further along and finalizing agreements categories. Obviously were advanced discussions there as well 600 megawatts by 2029, So I think a.
Speaker Change: There are obviously still extremely large customers, but it is reasonably typical to see a ramp for these folks over time so.
Speaker Change: So I would describe the.
Speaker Change: Shifting the category was partly reflects an expansion and when they expect that to come online, but the degree of conviction in the level of discussion in the amount of work underway as why we shifted in the actively building category, but that mix is pretty similar across the two groups as you saw by 29 versus ramping up after the 2009 time period.
Speaker Change: And Ah trial I might just add.
Speaker Change: On the.
Speaker Change: Slide seven that shows the advanced discussions of two nine gigawatts.
Speaker Change: Some of that load or some of that.
Speaker Change: Customer peak demand could start impacting our load as early as late 'twenty seven certainly by 2008 2029. So just wanted that maybe gives you a feel to that even some of our.
Speaker Change: Deeper parts of our pipeline could turn into load growth here in the five year plan.
Speaker Change: Okay, so kind of staggered across different customers.
Speaker Change: That comparison.
Speaker Change: Okay that makes sense and then just another clarification on the residential demands the weather adjusted.
Speaker Change: Demand decline can you go over that again or explain what happened.
Speaker Change: In that residential category.
Speaker Change: It's a good question I'll ask Brian to go into later.
Speaker Change: I'm, a big fan of the weather adjusted analysis, but when weather gets extreme it can become a little.
Speaker Change: There's a little bit of art and the science, if you will so youll see that the overall residential demand.
Speaker Change: It was up.
Speaker Change: 8%.
Speaker Change: Weather adjusted down 3%, so it's a little bit of art in what that split is.
Speaker Change: I don't we're not reading if Brian mentioned on the total number of customers went up so we don't think there's something systematic going on there, but it's something that we'll track we've had robust.
Speaker Change: Both in the residential side last couple of years. So I think it's a little bit in the art and science, It's my personal view that's right.
Speaker Change: And the phenomenon that we bid side and this is something that is not true in all jurisdictions frankly in my past history was a little bit different but the black pricing phenomenon is real I decided when our biggest residential groups within <unk>.
Speaker Change: Missouri Metro and once you get to the highest levels of usage.
Speaker Change: Rates dropped by 45%.
Speaker Change: So a declining block phenomenon of pricing in the winter is real it's actually.
Speaker Change: The inverse in the summer it doesn't go up by nearly that percentage, but actually goes up a little bit as you consider more so that's the dynamic that happened to anyone who has.
Speaker Change: <unk> in the school systems Integrator, Kansas City area knows that they had a couple full weeks when they basically didn't have their kids in schools that had some impact on commercial activity and some knock on industrial so that an unusual quarter in the.
Speaker Change: Amount of.
Speaker Change: Snow impacts on some of the underlying economic activity and then the concentration residential that was mitigated by the block pricing.
Speaker Change: Anything you'd add on that.
Speaker Change: No that's perfect well, maybe just brief I was thinking about this.
Speaker Change: Some more yesterday Travis when you look at a rolling 12 months do you get a better feel for trends real trends in residential and commercial <unk> residential is up one 2% on a weather normalized basis over a rolling 12 month period and commercials up nearly one 5% over a rolling 12 month period. So.
Speaker Change: Once you have that as well, it's kind of shows the overall economic strength.
Speaker Change: Strength in the growth of residential numbers actually here.
Speaker Change: Kansas areas.
Speaker Change: Sure, Okay figured or Youre <unk> is always obviously, a little bit lower than <unk> certainly.
Speaker Change: Okay, well, that's very helpful. I appreciate all the details.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you one moment for our next call.
Speaker Change: Our next question comes from the line of Julien Dumoulin Smith Your line is open.
Turner: Hi, This is Turner on for Julien Good morning.
Speaker Change: Yeah.
Speaker Change: Good morning, you somewhat spoke to this in your response to Nathan's question on the ERP, but drilling in on the coal plant retirements, specifically could you discuss the rationale that went into extending the timing of the retirement.
Speaker Change: Specifically.
Speaker Change: Regarding the specific dates chosen clearly keeping these plants online provide some room to help at least in the near term accommodate and integrate new large customer load, even if it's not directly tied but kind of depending on how things break over the next few years is there further flexibility to manage these retirement dates.
Speaker Change: That's a great question you heard me comment on that in my remarks. So theres. There are some risks and uncertainties that are higher with older units. Like these is once we get into the 2000 <unk>.
Speaker Change: Excuse me the.
Speaker Change: 80 of our coal fleet will be in.
Speaker Change: At <unk> for more than six years old and I think thats, a tremendous age for human being because that'll be in that same category, but for our coal plants as you get into that phase and we've made some investments in a number of these but the units that were identified for retirement are ones that either have potential incremental investment needs for environmental retrofit equipment does.
Speaker Change: Pending a status of EPA rules of the time or they had some maintenance that hasnt been done in light of the expected timeline Lawrence switches the.
Speaker Change: Unit.
Speaker Change: 450 megawatts in total is our oldest unit.
Speaker Change: Jeffrey Energy Center unit two is one that for example doesn't have an SCR. So there is some flexibility, but as you get over time the age of the unit the availability of replacement parts. Because there you have to sometimes do dedicated forgings to buying spare parts and the potential incremental investment requirements to maintain reliability meet.
Speaker Change: Standards that could change, there's some flexibility, but we recognize that it's like an older car. There's only so far along that you can take it. So some of this will be responsive to what the rules are that are applicable of course on the federal side, but this flexibility. We think makes sense. Lawrence is our oldest unit you see it as a short amount of time and we've deferred that in.
Speaker Change: Terms of the retirement timeline and even the conversion, but with this reflects our best thinking, but we know that theres a little more uncertainty with some of these older units given their age.
Speaker Change: Great. Thanks, and then.
Speaker Change: Switching gears with respect to your ability to pull O&M levers to meet 25 guidance can you discuss the different buckets, you can sort of manage through the end of the year and maybe how to think about the effect that could have in terms of your future optionality available to you in 'twenty six 'twenty seven.
Speaker Change: Especially as you target EPS CAGR accelerates.
Speaker Change: Yes.
Speaker Change: Well I think for better or worse, we like other companies have a fair bit of experience in.
Speaker Change: You always want to have some flexibility to manage our business and mitigate.
Speaker Change: Issues that arise so <unk> category is something that our team has demonstrated the ability if <unk> seen our cost management in the past years.
Speaker Change: And there's a wide range of levers.
Speaker Change: Cross the business so it's from.
Speaker Change: Generally involves discretionary activity third party spend we will do what we need to do to make sure we maintain reliability and keep the integrity of our system going but theres always some levers that you can pull in managing your business and it's a really across all the different parts of our business and we've got a fair bit of experience with it I don't think we're unique in that I think other companies have that same.
Speaker Change: <unk> capability and it's it's early in the year, it's a pretty modest amount still important. So we've got work to do to make sure we get there, but we're confident in our ability to identify that amount given that we're sitting here is still eight months left in the year.
Speaker Change: And we don't I don't think it impacts our ability to hit our future targets or the.
Speaker Change: The growth that we see in the future I will make sure that we're still spending what we need to to ensure reliability and serve our customers.
Speaker Change: Okay.
Speaker Change: Great. Thank you very much.
Speaker Change: Thank you very much.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from the line of Paul Cole of Bank of America. Your line is open.
Paul Cole: Thank you good morning.
Paul Cole: I wanted to go back if I could to the large load tariff disclosures you made around Kansas and Missouri can you talk about the spread of parties and interests and these dockets.
Paul Cole: How important to constructive outcome is and the conversations that youre, having with the data center developers and other large users.
Paul Cole: I think it's a great question. Thank you Paul.
Paul Cole: It's obviously a very important discussion we went the route of filing for a large load power service tariffs because we think having a dialogue that includes the key parties is really important is.
Paul Cole: These are very large new customers, we think theres, a real opportunity here to have a win for.
Paul Cole: Are the new customers, because we have the ability to serve them, we're a market where you've got competitive rates and the ability to have the transmission generation capacity to serve in the time any too at the same time have a win for our existing customers because we are bringing in larger customers who.
Paul Cole: It can really help to spread fixed costs, but they are large enough that we wanted to have a tariff so that it's a proceeding in which everyone is involved very wide participation in these proceedings in both states as you would expect.
Paul Cole: We've had a high level of dialog with our.
Paul Cole: Large customers as you would expect this pits constructed throughout so we've been very transparent in our approach.
Paul Cole: With those customers they know exactly what we're trying to achieve and they continue to have.
Paul Cole: Advanced discussions with us so they know what we're trying to do where we're trending.
Paul Cole: And we wanted to get ahead of this because we know it's an important element of the process, but theyre also solving for availability and can we get a ramp rate in kidney timelines. So we've taken the steps that <unk> taken the steps to stay on that track, while we're having a conversation. So we still have to get through those proceedings, but we're already in constructive dialog with parties and you obviously see the result later this year.
Paul Cole: Here, but we feel good about how they are trending.
Paul Cole: Perfect. Thank you.
Speaker Change: And then just a quick follow up Brian some of the comments you made around equity expectations for this year and can I am I understanding correctly, when I say that youre not precluding the option of issuing equity this year, but it would be andre mechanism, whereby there'll be no dilution and onto 2026.
Brian Buckler: Hey, Paul Good morning, Yes, yes, your understanding is right.
Speaker Change: Many of our peers.
Speaker Change: <unk>.
Speaker Change: We may be thoughtful about accessing the market here in 2025.
Speaker Change: But anything we do would have a forward component to it that settles in 2026 of 2027.
Speaker Change: And as we've articulated we have.
A sizable equity need beginning in 2006 in the out years as our capital investment plan increases.
Speaker Change: What's really nice is that we have low growth. That's also accelerating beginning in 'twenty six in those out years. So the plans. We think has come together very nicely, but there'll be no no.
Speaker Change: No dilution from new equity issuances here in 2025.
Speaker Change: That's perfect. Thank you for clarifying.
Speaker Change: Great have a good day. Thank you.
Speaker Change: Thank you very much. This concludes the question and answer session I would now like to turn it back to David Campbell for closing remarks.
David Campbell: Thank you Corey thanks, everyone on the call for your interest in averaging.
Speaker Change: This concludes our session today have a great day.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.
Speaker Change: And have a wonderful day.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.