Q1 2025 Sempra Earnings Call
A live webcast of this teleconference and slide presentation are available on our website under events and presentations section.
Jeff Martin: We have several members of our management team with us today, including Jeff Martin Chairman and Chief Executive Officer, Karen Cedric Executive Vice President and Chief Financial Officer, Justin Bird Executive Vice President and Chief Executive Officer of simpler infrastructure.
Allen Nye: Allen Nye, Chief Executive Officer of Encore, Don Clevinger, Chief Financial Officer of Encore.
Speaker Change: Caroline Winn, Chief Executive Officer of STG, Manny, Peter Walsh, Senior Vice President Controller, and Chief Accounting Officer, and other members of our senior management team before starting I would like to remind everyone that we'll be discussing forward looking statements within the meaning of the private Securities Litigation Reform Act of $19 95.
Speaker Change: <unk> actual results may differ materially from those projected in any forward looking statements we make today.
Speaker Change: The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K and 10-Q filed with the SEC.
Speaker Change: Earnings per common share amounts in our presentation are shown on a diluted basis, we will be discussing certain non-GAAP financial measures.
Speaker Change: Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures.
Speaker Change: We also encourage you to review our 10-Q for the quarter ended March 31 2025.
Speaker Change: I'd also like to mention that forward looking statements contained in this presentation speak only of today may eight 2025, and it's important to note that the company does not assume any obligation to update or revise any of these forward looking statements in the future.
Speaker Change: With that please turn to slide three let me hand, the call over to Jeff.
Jeff Martin: Thank you all for joining us today earlier. This morning, we reported first quarter 2025, adjusted EPS of $1.44.
Speaker Change: Which compares favorably to the prior period's results of $1 34.
Speaker Change: In addition, we're pleased to affirm our full year 2025, adjusted EPS guidance range of $4 30.
Speaker Change: The $4 70, and we're also affirming our 2026 EPS guidance of $4 80 to $5 30.
Speaker Change: You'll also recall that we've issued a projected long term EPS CAGR of 7% to 9% for 2025 through 2029 and have guided to the high end or above that range.
Speaker Change: As we've discussed this projection is a compound annual growth rate for the five year planning period, and does not imply a linear growth year to year.
Speaker Change: Now, let's turn to our plan of execution for the remainder of the year.
Speaker Change: Today, our first quarter results reflect a positive step towards the execution of five value creation initiatives.
Speaker Change: First we plan to invest roughly $13 billion this year and energy infrastructure with over $10 billion targeted for our U S utilities.
Speaker Change: Just as important we have initiatives underway that are intended to improve the regulatory compact in both Texas and California.
Speaker Change: We continue to review opportunities to realign our portfolio to support the growth and expansion of our Texas, and California utilities, while also maintaining a strong balance sheet.
Speaker Change: As a result, we announced our intention to sell a minority interest in simpler infrastructure partners.
Speaker Change: Given the robust demand today for energy infrastructure assets, we expect to complete a transaction highlights the continued growth in the value of that business.
Speaker Change: Third we are continuing our strategy of selling non core assets and recycling capital to finance our future growth.
Speaker Change: Why we recently announced our plans to divest eco gas a regulated natural gas distribution utility in northern Mexico.
Speaker Change: In combination. These actions are designed to advance our company's broader effort to simplify the business and reduce reliance on future issuances of common equity to fund the Companys five year capital plan.
Speaker Change: With the close of these transactions and the anticipated growth of our utilities, we expect our regulated businesses will account for a much larger percentage of <unk> earnings on an annualized basis.
Speaker Change: It's also important to note that we expect these combined transactions to be accretive to the company's earnings per share forecast and credit enhancing we also continued to execute on our fit for 2025 campaign that we launched in the summer of 2020 for.
Speaker Change: The goal of this initiative is to reduce the company's cost structure to align with our future business needs. These efforts are also focused on new technology adoption, including the use of artificial intelligence to improve productivity and customer service taken.
Speaker Change: Taken together. These efforts are expected to help support improvements and the affordability of our services and our financial performance and we will continue our foundational work of delivering safe and reliable energy for our customers through operational excellence, we're an established leader today in wildfire science and mitigation.
Speaker Change: And we'll look to build on those competitive advantages here in California, as well as at Encore.
Speaker Change: The key takeaway is we have an exceptional opportunity to grow and competitively differentiate our company through the end of the decade to deliver on that opportunity, we understand the importance of executing well in the near term.
Speaker Change: Our first quarter financial results are an important first step and as a management team. We have a plan of execution in place for the balance of 2025 that we believe will make our company stronger and more valuable with that please turn to slide four where Kevin will walk through business and financial updates.
Kevin: Thank you Jeff.
Kevin: Start by saying, our three growth platforms are off to a solid start for the year, let's start with Texas.
Kevin: Last year ERCOT projected peak load growth to increase to 150 Gigawatts by 2030.
Kevin: To meet this demand ERCOT is proposing a regional transmission plan, yes, but overlaid new high voltage backbone across the states transmission grid.
Kevin: Both the $3 45 kv and a 765 kv investments are under consideration.
Kevin: Together with the Permian plan ERCOT estimates these investments will total between $30 billion to $35 billion.
Kevin: That includes approximately 14% to $15 billion for the Permian plan with the import transmission pass being constructed at the 765 kv level and $18 billion to $20 billion for the remaining transmission buildout.
Kevin: I would refer you to slide nine in the appendix for graphic that provides additional details on this.
Speaker Change: As a major owner of existing endpoint to cross, Texas, We believe encore is well positioned to construct significant portion of the required transmission infrastructure that's been identified by ERCOT.
Speaker Change: Encore is still assessing the impact of these developments and expects to have a better sense of the projected investment opportunity once the associated Ccm's are filed.
Speaker Change: Oncor has begun seeking approvals for the remainder of the Permian plan and expect to continue making the required CCN filings, including for the import path through 2026.
Speaker Change: We're also currently monitoring the legislative session in Texas, including potential legislation that is passed might have beneficial impacts on the regulatory framework supporting T&D investments in Texas.
Speaker Change: In the meantime, encores, continuing to prepare to file its comprehensive base rate review and currently anticipates filing in the second quarter.
Speaker Change: Moving to Central California, I'd like to start by discussing an update on the regulatory front.
Speaker Change: Every three years, California utility submit a new cost of capital application to the CPUC.
Speaker Change: Authorized rates of return for their investments in critical infrastructure.
Speaker Change: In March <unk>.
Speaker Change: <unk> and Socal gas along with other large, California, ious filed the respective cost of capital applications.
Speaker Change: Cost of capital filings or for the years 2026 through 2028 and.
Speaker Change: And seek to update S. D D D and silicon gases respects of rates of return to align with current market conditions.
Speaker Change: S TDD requested a 54% common equity layer and 11, 5% return on equity.
Speaker Change: At Socal gas the company requested a 52% common equity layer and 11% return on equity.
Speaker Change: Please see slide 11 in the appendix for a breakout of additional details.
Speaker Change: We expect a decision from the CPUC by the end of the year with a newly authorized rates of return effective at the start of 2026.
Speaker Change: As a reminder, this will be subject to the cost of capital adjustment mechanism, otherwise known as the CCM, which would apply in the years 27 and 2028.
Speaker Change: As it relates to the FERC T O six filing Sce's current authorized rate of 10, 1% in.
Speaker Change: And you'll recall that <unk> requested a base ROE of 11, 75%.
Speaker Change: Which excludes the 50 basis point queso at or currently in the appeals process.
Speaker Change: New interim rates are scheduled to be implemented June one subject to refund.
Speaker Change: The settlement process is ongoing and expected to be resolved in the second half of this year.
Speaker Change: Also in the first quarter. The CPUC approved an expansion of Westside Canal battery storage, adding 100 megawatts of energy storage capacity, the existing 131 megawatts facility.
Speaker Change: This expansion to be fully operational this summer and represents a significant investment in our region's energy infrastructure.
Speaker Change: Supporting local communities by providing more reliable and clean power and positioning the region as a leader in sustainable energy solutions.
Speaker Change: Moving to affordability initiatives, Jeff discussed are fit for 2025 campaign earlier, but I also want to mention that STG in Socal gas customers received a onetime, California climate credit lowering bills last month by as much as $136 at SCE, Jeannie and $87 at Socal gas.
Speaker Change: Also there'll be a second credit applied to the bills of sdd customers in October.
Speaker Change: Bringing the total expected bill credit up to $217 in 2025.
Speaker Change: Also in March an amended memorandum and ruling was issued establishing the scope and schedule for Trac III of the 2020 for DRC.
Testimony was filed to review the reasonableness of Socal gas pipeline safety enhancement cost for 2015 to 2020.
Speaker Change: <unk> pipeline safety enhancement cost from 2014 to 2019 and.
Speaker Change: And STG knees wildfire mitigation costs in 2023.
Speaker Change: This decision is anticipated in the first half of 2026 on the tariff front, we are closely monitoring potential impacts at Sempra, California.
Speaker Change: We've been proactive in taking action to manage rising prices to reduce impacts to our ratepayers.
Speaker Change: Since the pandemic, we analyzed where more supply chain risk exists and added additional sources of supply.
Speaker Change: We expect these diversified sources to help us better manage and mitigate tariff risks.
Speaker Change: We've also engage with suppliers in an effort to source more domestically produced equipment and materials where possible.
Speaker Change: Stocking inventory of critical materials, and exploring new sources of supply that help reduce tariff exposure.
Speaker Change: These activities from a part of our larger program of improving the affordability of our utility services.
Speaker Change: To Sempra infrastructure in March we announced our plan to sell a certain noncore energy infrastructure assets in Mexico, as well as the minority interest and Sempra infrastructure partners.
Speaker Change: Jeff discussed both earlier, what I would like to add that initial interest around these assets has been robust.
Speaker Change: On the minority interest sale process simpler infrastructure partners, you'll recall that KKR in audio have certain rights of first offer followed by temporary right to respond.
Speaker Change: Also as is customary.
Speaker Change: Were unable to reach an agreement with our current partners. We're prepared to pursue a third party bids in an open competitive process to help increase the value for sempra shareholders.
Speaker Change: [noise] outlined we believe it will take a reasonable amount of time for both transactions to unfold and expect to provide our next update in the second quarter call in August.
Speaker Change: Moving to operational updates Cameron LNG phase, one loaded 55, cargos and achieved a 98% <unk> liability in Q1 2025.
Speaker Change: Together with our partners, we're very pleased with the high quality operations from this critical infrastructure assets.
Speaker Change: And as it relates to tariff impacts we're actively monitoring the evolving situation and assessing its potential impact on our businesses.
Speaker Change: Our current understanding is that energy as defined in the cross border electric and natural gas deliveries in the U S. M. C. A compliant good and is therefore unaffected by tariffs.
Speaker Change: As a result, we do not currently anticipate significant impacts from cross border energy transactions.
Speaker Change: We also continued to advance major construction projects at Cimarron win that's the LNG phase one in Port Arthur LNG Phase one.
Speaker Change: Cimarron Windows progressing key construction activities, including turbine installations and continues to target power generation in late 2025 with C. O D plan for the first half of 2026.
Speaker Change: And Echo LNG phase one we have over 5200 workers on site and construction is currently focused on pipe testing electrical activities instrumentation and installation with the product around 92% complete.
Speaker Change: Additionally, we're excited to share that LNG phase one has achieved mechanical completion of various subsystems, which allows for the start of pre commissioning activities.
Speaker Change: These developments are consistent with the expectation of commercial operations in spring of 2026.
Speaker Change: Moreover, I would note that at the LNG phase one our EPC contractor has completed its engineering and procurement activities. So we're not anticipating any significant impacts from increases in material costs.
Speaker Change: Moving to Port Arthur LNG phase, one I'd like to take a moment to acknowledge the safety incidents that occurred last week at the Port Arthur facility.
Speaker Change: Which has resulted in the loss of three Bectal employees.
Speaker Change: Our deepest condolences go out to the families and colleagues affected by this incident.
Speaker Change: Quarter over construction has progressed, including the foundations steel and pipe installations dredging activities major equipment setting and other key milestones.
Speaker Change: Also on the tariff front port Arthur LNG began to bidding all items in a designated foreign trade zones into the United States.
Speaker Change: Preemptive action back in February to avoid higher costs being levied on these items.
Speaker Change: Earlier this year, we announced that we expected to take F. I D on Port Arthur LNG phase two by the end of 2025.
Speaker Change: That remains our target as we're continuing to feel strong commercial interest in the project.
Speaker Change: With that said uncertainty in the macroeconomic environment may affect the timing of project development.
Speaker Change: And we have done in the past, we'll continue to exercise patience as we seek to mitigate cost risk and lock in favorable long term economics.
Speaker Change: To wrap up energy infrastructure remains a crucial component to economic growth and development and allies in Europe, and Asia are looking into American leadership to improve their energy security.
Speaker Change: That's why we continue to believe simpler infrastructure is well positioned to create value for its owners as we look to complete a series of important construction projects and capture new opportunities by extending the scale and reach of our platform.
Speaker Change: Now please turn to the next slide where I'll walk through an update on our financial performance.
Speaker Change: Earlier today <unk> reported first quarter 2025, GAAP earnings of $906 million for $1 39 per share.
Speaker Change: This compares to first quarter 2024, GAAP earnings of $801 million or $1 26 per share.
Speaker Change: On an adjusted basis first quarter 2025 earnings were $942 million or $1 44 per share.
Speaker Change: This compares to our first quarter 2024 earnings of $854 million or $1 34 per share.
Speaker Change: We're pleased with these financial results and believe they represent a solid start to the year. Please.
Speaker Change: Please turn to the next slide.
Speaker Change: Variances in the first quarter 2025 of adjusted earnings as compared to the same period last year can be summarized as follows at Sempra, California, We had $88 million from higher CPUC base operating margin net of operating expenses and lower authorized cost of capital.
Speaker Change: California also had $54 million of higher income tax benefits, partially offset by higher net interest expense and other.
Speaker Change: As a reminder, in the first three quarters of 2020 for Sempra, California reported revenues and taxes in accordance with 2023 CPUC authorized levels.
Speaker Change: Turning to Sempra, Texas, we had $37 million of lower equity earnings primarily from higher interest and operating expenses, partially offset by higher revenues from invested capital and higher consumption attributable to weather and customer growth.
Speaker Change: A simpler infrastructure, we largely reported in line to the prior period was $2 million of decreased driven by lower asset optimization, partially offset by lower O&M and higher interest income.
Speaker Change: And at the parent $15 million decrease is primarily due to higher net interest expense, partially offset by other expenses. Please turn to the next slide.
Jeff Martin: To conclude our prepared remarks, we're off to a solid start for the year, we understand the importance of our plan of execution for 2025 and across our management team. We're focused on delivering the strategic initiatives that Jeff outlined on today's call.
Jeff Martin: Taken together these initiatives are designed to divest non core assets and supportive of recycling proceeds into new investments in our Texas and California utilities.
Jeff Martin: Strengthen the company's balance sheet will efficiently funding growth and improving the quality and affordability of our services and reward sampras owners with improved visibility to consistent growth in earnings and cash flows and long term value creation.
Jeff Martin: Our first quarter results represent an important first step in our growth plans with that we'll now take a moment to open the lines and answer your questions.
Jeff Martin: Thank you. This concludes the prepared remarks, we will now open the line to take your questions. If you would like to ask a question. Please signal by pressing star one on your telephone keypad.
Jeff Martin: Please make sure your mute function is turned off we will pause for just a moment to allow everyone to signal for questions.
Ross Sandler: And our first question will come from Ross Sandler from Bank of America. Your line is open.
Speaker Change: Good morning, how are you good morning, Jeff Good morning, Karen.
Ross Sandler: Good morning.
Ross Sandler: So just a couple of questions to touch on.
Ross Sandler: And maybe I'm, just tired because I'm 42 hard choices deep.
Ross Sandler: But just to walk through the process from here.
Ross Sandler: I think KKR would be due on May 12, and then we've got if I've got it right 10 business days for audio and then you would have 30 days to respond to either one of those which would kind of put US late June early July and that's the sort of contextualize Asian for while you were talking about an update on our second quarter call am I thinking about that correctly.
Ross Sandler: Yeah. The only thing I would clarify is to think about that sequentially. So what's KKR provides their written offer if they were to bid than Sempra has a 30 day process to deliberate that Andrew will respond after that process. Then Audi would have their 10 days followed by a <unk> 30 days to respond.
Ross Sandler: So I think we.
Ross Sandler: Feel comfortable that Q2 call will be the appropriate time to update it look.
Ross Sandler: Certainly realize that people like more details I think for all the best thing to do is just let the process play itself out I think Q2 will be the appropriate time for an update.
Ross Sandler: Perfect. Thank you and then Alan maybe maybe one for you just because we sort of contextualize.
Speaker Change: What you referred to I think in our conversations in the past as the Texas Miracle.
Ross Sandler: And the Texas gross.
Ross Sandler: We've seen a 765 kv network because I look at slide nine.
Ross Sandler: Into the Permian and then there's this other 765 stuff off to the east.
Speaker Change: What would be the advantages or disadvantages.
Speaker Change: The rest of that 765 or $3 45, and then just contextualize what youre seeing on the growth front in Texas right now.
Alex: Sure. Please go ahead Alex.
Alex: You bet. Thanks, Ross, Yeah, the Texas Miracle as I've said before continues.
Speaker Change:
Speaker Change: Just from a general high level perspective, thanks, I generally talk about what I'm talking about growth premise growth up again, 3% over quarter, one last year of 19000, new Prentiss.
Speaker Change: Transmission.
Speaker Change: As a new request up 66% year to date first quarter versus last year first quarter total active requests up 35%.
Speaker Change: Our L C&I large customer to continues to grow at a record pace.
Speaker Change: 30% of where we were last quarter of the $1 52, I think that's what we announced last time.
Speaker Change: West, Texas far West, Texas, whether its own up 3% New P. Culberson.
Speaker Change: <unk> about 41% over last year's taken Stanton transmission loop.
Speaker Change: About 9% eight 8% over last year's peak. So those are kind of the metrics that generally talk about on these calls.
Speaker Change: Round growth, obviously, we've got a lot of other things going on that you mentioned there is the Permian plan, obviously with the latest announcement that we're going to be doing the important paths was 765 kv that's a big one.
Speaker Change: And then the the remainder of the the step program the 765 plan.
Speaker Change: Plan that ERCOT and the PUC are looking at.
Speaker Change: There is.
Speaker Change: We've said before we were kind of we were agnostic from a financial perspective on 765 versus $3 45, because if you don't build a 765 you have to build a lot more $3 45, so we're going to be good either way. However from an operational perspective, we've been very adamant that operationally 765, it makes a lot more sense for.
Speaker Change: State that's growing like ours.
Speaker Change: Obviously, if you build bigger capacity now on less right away as you have increased ability to operate your system differently and more effectively.
Speaker Change: It provides for the allowance of generation siding.
Speaker Change: Pretty much anywhere you can connect to the 765 as opposed to having to build $3 45 directly to locations where generation is coming online.
Speaker Change: So we think there are operational benefits of sub 65, that's what we said at the legislature. So as I said at the PUC.
Speaker Change: And we were pleased with that announcement now we'll have to see what happens with kind of the eastern half of the 765 plan again, there is a decision to be made there as to how and when.
Speaker Change: That will that will take place of PC and the legislation goes forwards, but obviously.
Speaker Change: As we've said before and I think as Jeff alluded to we have.
Speaker Change: Opportunities on both those plants given the number of the endpoints that we owe.
Speaker Change: One is around I think over 1300 now.
Speaker Change: And the application of <unk>.
Speaker Change: The $19 38 billion.
Speaker Change: Which formalized the ERCOT criteria of using endpoints to determine the ownership of transmission lines. So we feel very good about the growth in Texas, we feel very good about.
Speaker Change: The PUC are headed with these two major transmission plans and.
And we think will be a major participant in both well.
Speaker Change: So only thing I would add is it's obviously a very ambitious plan. We think it's critical to support the state's future growth I think given the endpoints that allergists identified we certainly expect to be in a position to build over half of the proposed investment.
Speaker Change: Okay. Thanks for that Jeff and Pat Allen as well just one last one from me.
Speaker Change: Jeff you highlighted in your opening comments that fit for 2025 program can you maybe talk about some <unk>.
Speaker Change: I'm thinking that program, a little bit more specific like what you've achieved so far or what you might have syfy to just to give a little bit of flavor of what youre seeing there and what those programs actually entail.
Ross Sandler: Yes, sure last year, Ross, we kicked off our fit for 2025 campaign to improve the competitive cost structure of our company. This isn't something that's new et cetera for those of you have followed our company for a long period of time, we routinely go back and look for ways to reduce costs and improve productivity.
Ross Sandler: We're fundamentally trying to do Ross is find new and better ways to serve customers. So we're looking at opportunities to reduce head count through voluntary retirement program, we're making new investments in technology as <unk> targeted using artificial intelligence for example at over 40% of its customer interactions and its call center.
Ross Sandler: We're continuing to look at ways to basically outsource costs, where we think it can be generally cheaper basis, but look I think part of serving customers better is working hard to improve the affordability of their services. So let me just give you a quick recap of where we think we're at in Texas. Today Encore. For example has the lowest rates among industrial and utilities.
Ross Sandler: And notwithstanding their current $36 billion capital plan walls.
Ross Sandler: Back to remain the lowest across the five year plan.
Ross Sandler: Similarly in Socal gas you recall that is the largest natural gas utility platform in the United States.
Ross Sandler: Their bills today are in the bottom quartile nationally and similarly at <unk>.
We have the lowest average bills amongst industrial and utilities in the state so.
Ross Sandler: As you think about our value creation initiatives part of creating a more competitive cost structure is about finding better ways to be responsive to the needs of our customers and maybe before I wrap up Caroline you could add a few specifics that you are taking it FPGA to give a little more color to Ross sure happy to do so we remain laser focused on.
Speaker Change: Affordability for customers and we're proud that <unk> monthly electric delivery bills are lower for the second year in a row, but we have more work to do there through our fit for 25 initiative, we're driving down operating costs and improving efficiencies, we're securing non rate payer sources of funding like tax credits for batteries and advocating for.
Speaker Change: Policy changes, we applaud the governor of California, issuing the executive order last year, which focuses on improving electric affordability, that's highly constructive and the order is largely focused on pass through programs that become less cost effective and does not appear to impact equity or capital deployment.
Speaker Change: SD Jamie recently filed to reduce costs associated with certain energy efficiency programs that are no longer cost effective and if approved it could save customers $300 million and we're really happy about the use of climate credits that Karen mentioned to lower energy bills by $217. This year.
Speaker Change: Customer affordability is a top priority and we're doing everything possible to make sure that our bills are transparent they're stable and therefore it all thank you Ross.
Speaker Change: Thank you have a very rich good morning.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question will come from Carly Davenport from Goldman Sachs. Your line is open.
Carly Davenport: Hey, Jeff Thanks, so much for taking the questions maybe.
Speaker Change: Maybe to start on on the LNG front just to follow up on some of the comments in the prepared remarks, you talked about some of the macro uncertainty potentially impacting project development on port Arthur to could you just help us frame that potential impact is that more just a potential kind of slippage or is that anything we should think of.
Speaker Change: From a structural shift and views on that project.
Speaker Change: I would just clarify currently I think we're in great shape on Port Arthur Phase II suggested maybe you could walk through how youre thinking about that project moving forward. This year, yeah. Thanks, Jeff Icarly.
As Karen said in the prepared remarks, we are continuing to target in 2025.
Speaker Change: We're very pleased with the strong commercial interest in that project and the progress we're making on the development front.
Speaker Change: Include commercial negotiations.
Speaker Change: <unk>, our final permits and financing the projects.
Speaker Change: <unk> mentioned some of the recent macroeconomic uncertainties.
Speaker Change: For us it's important to emphasize we are committed to managing costs risks and maintaining discipline to achieve our targeted returns and that currently will take precedent over the timing of any announcements.
Speaker Change: Also just want to remind folks of the point, Karen and Jeff made the priority is reflected in <unk> capital program are focused on growing.
Speaker Change: Regulated utilities and that means we will only take on a project like port Arthur Phase II, when we're comfortable it will deliver strong shareholder value.
Speaker Change: Thank you Justin.
Speaker Change: Great. Thanks, so much for that that was that was really helpful. And then maybe just a clarification on some of the comments.
Speaker Change: Around the tariff exposure I recognize there is still a degree of kind of movement there, but could you just help us frame out the potential earnings exposure on a sempra consolidated basis as well as just as you think about the broader capital plan over the next five years, how you think about the exposure there.
Speaker Change: Yes, I would say right from the top I think remains a fluid environment for all industries, but I think we're in good shape here in any type of impact from tariffs I think Paul is well within our established guidance. Let me give you got to a couple of things that might be helpful. At our utilities. Currently we remain focused on minimum minimizing tax tariff exposure for our customers.
Speaker Change: The majority of our equipment is sourced domestically and that limits the direct impact on planned capital expenditures to around two or 3%.
To reduce that impact even further our utilities have taken steps to diversify supplier pool and are exploring new supply sources with reduced exposure.
Speaker Change: Second they are adding higher levels of domestically produced equipment and materials and finally, they're continuing to stock higher levels of inventory for critical materials, I think Karen talked about that in our prepared remarks.
Speaker Change: Turning to separate infrastructure I think it's also a very positive story there at <unk> LNG procurement is complete and not impacted by tariffs at.
Speaker Change: At Port Arthur LNG, approximately 90% of our spend is with U S suppliers and contractors.
Karen: Karen noted this but we're also currently using foreign trade zone to mitigate tariff impacts.
Speaker Change: Train one steel was fully sourced domestically.
Speaker Change: And I would just mentioned that the remaining tariff exposure for phase one is estimated to be about 1% of capex.
Speaker Change: Our other development projects, we would only take outside the after securing firm pricing and also mitigating any cost risk to achieve our target returns it will be very disciplined about that so as we've looked at this.
Speaker Change: Back in March and April and May we feel like we're in very good shape relative to tariffs.
Speaker Change: Great I appreciate all that detail. Thanks, so much for the time.
Carla: Thank you Carla.
Speaker Change: Thank you. Our next question comes from Steve Fleishman from Wolfe Your line is open.
Carla: Hi, Steve.
Carla: Alright, excuse me, Jeff Sharon Allen.
Carla: So.
Carla: I wanted to maybe focus for a minute on Texas and just.
Carla: The.
Carla: Pending unified tracker Bill.
Speaker Change: And maybe you could talk a little bit about how that would interact.
Speaker Change: If at all with your rate case filing and kind of what what.
Speaker Change: Benefits of the bill would be relative.
Speaker Change: Relative to status quo.
Speaker Change: Sure.
Speaker Change: Let me provide a couple of broader comments and then we'll come back and talk about the legislative session specifically Etfs.
Speaker Change: I would think about the rate case separately I mean, the way to think about it if they've got an authorized ROE today, Steve of nine 7% and Theres two things that can impact lower earned ROE is one is when you've got a higher cost structure that can be resolved in the base rate review and secondly, just ordinary regulatory.
Speaker Change: Lag based on how the capital tracker mechanisms work, so I think what Alan and team will try to focus on is <unk>.
Speaker Change: And to strengthen their balance sheet by addressing both sides of that but I'll make a quick comment and I'll pass it over to al which is.
Speaker Change: I talked about early on our value creation initiatives and the first one Steve is this idea of invested about $13 billion. This year. The second component of that is we're committed to actually improve our financial returns and that means whether it's legislative sessions in Texas, or California or base rate reviews, our regulatory.
Speaker Change: Filings were very.
Speaker Change: Very focused on improving our regulatory compact.
Allen Nye: That's kind of the framing as you think about what we might be able to accomplish in Texas legislative session as well as the base rate review, but Alan if you could maybe provide some additional color on the legislative session typically eto.
Alan: Sure Yes. Thanks for the question, Steve Theres number of bills that continue to make progress through the legislature and we're obviously tracking everything from <unk> to interim rates to wildfire and capital structures.
Allen Nye: There's still a lot of time left even though it's only a month.
Allen Nye: And there is still a lot of time for material changes can be made to all of these bills.
Allen Nye: But we will continue monitoring closely working with all the constituents and will have a better update on what actually gets through on the Q2 call specifically.
Allen Nye: With regards to $52 47, or the U T M Bill.
Allen Nye: It's the most impactful potential bill for us given our large and growing capital plan.
Allen Nye: It gives us a way to moderate the impacts of regulatory lag and improve our credit quality we have.
Allen Nye: Had broad support from stakeholders and we really are appreciative of those parties, who have worked with us on this bill.
Allen Nye: And while there are other bills that are out there that will continue to monitor and work on this one is potentially the most important to us.
Allen Nye: Generally what it would do is it will provide a one stop kind of streamline mechanism in lieu of the existing trackers your tea coffee costs and Tc RF trackers.
Allen Nye: The adjustment that we make our adjustments with today.
Allen Nye: So there is benefits to it.
Allen Nye: We still need approval by the Senate and it still needs to be assigned and signed by the Governor.
Allen Nye: But we will keep working on it and hopefully it also would decrease the workload the PUC staff.
Allen Nye: So there is benefits to this bill the rate cases, Jeff said, we're still we're still planning on.
Allen Nye: Filing something in the second quarter, So think of those two separately right now for the reasons that Jeff described.
Allen Nye: And Thats kind of where we are in <unk> in the rate case. Thank you al.
Allen Nye: Yes.
Allen Nye: If you don't mind on the same.
Allen Nye: Kind of thematic Jeff.
Speaker Change: One other question.
Speaker Change: California, and I think on the last call you were pretty.
Speaker Change: Optimistic.
Speaker Change: If you want to share on the wildfire.
Speaker Change: Fund changes could you maybe give us your latest thoughts on.
Speaker Change: Any potential changes on $52 54.
Speaker Change: Yes, and I think.
Speaker Change: This is a good follow on question because very similar to Texas, you know they've got a house Bill 145 in Texas, which we also think is important.
Speaker Change: We're truly attempts to move the standard there from a simple negligence standard gross negligence standard. So as you think about opportunities whether through legislation or regulation.
Speaker Change: The thing we can do to take risk out of the operating environment. We're shored up our balance sheet is obviously very very positive for the growth story that we have underway in Texas to your pointing in California, It's a very similar obviously.
Speaker Change: All streets, following the developments up and down the state relative to wildfire risk I remain quite constructive there here in California. The leadership is focused on the right things and let me highlight a couple of points that you might find helpful.
Speaker Change: First off I've long said that wildfire to state of California is a societal issue people tend to think of it narrowly as a utility issue, but it's much more important to the state from from a statewide standpoint in terms of how folks.
Speaker Change: Go about their day to day last year, and I would applaud the Governor's work. He has his team Steve focused on three key areas. The first of which is the size and durability of the wildfire fund under AB 254.
Speaker Change: As opportunities to continue to improve the insurance environment, particularly for residential homeowners and finally, there is a continued interest in looking for opportunities for regulatory reform I would mentioned when we talk about wildfire I think it's always important to differentiate us see G&A Steve.
Speaker Change: We think that they have demonstratively lower wildfire risk for three reasons, obviously is a significantly smaller service territory.
Speaker Change: It's a semi arid desert topography, so theres not that much fuel content relative to other parts of the state and obviously since 2007, there had been significant amount of funding in the neighborhood of 6% to $7 billion or around our leadership position in wildfire science of mitigation, but if I could see if ive got Caroline Winn here.
Speaker Change: As the CEO of <unk> and <unk>.
Caroline Winn: Caroline perhaps you could also share your perspective from your company sure Hi, Steve Yeah. We're proud of the significant strides that we've made in mitigating wildfire risk and our strong track record, which includes 17 years without a utility related cat.
Speaker Change: Catastrophic wildfire.
Speaker Change: Each of our recent org was facilitated in part by the passage of AB <unk> 54, and the stability that the wildfire fund has provided to the market. So it seems clear to us that we need to build on the successful foundation of APB $10 54 to extend its framework and durability as Jeff said.
Speaker Change: The conversations that we've had open devastate leaves us confident that stakeholders understand the criticality of addressing the issue and the important role that investor owned utilities play in supporting California's growth economic development and the safety of the communities. We serve so yes, absolutely agree with Jeff I feel constructive about getting something done.
Speaker Change: This year.
Speaker Change: Thank you.
Speaker Change: Thanks, Steve.
Speaker Change: Thank you. Our next question comes from Nicholas Campanella from Barclays. Your line is open.
Nicholas Campanella: Hi, Nick Hey, Hey, How's everything How's everyone doing thanks for taking my questions.
Speaker Change: Got it.
Speaker Change: So hey, just really quick on the EPS CAGR commentary.
Speaker Change: Kind of talked about in the prepared remarks is not being linear.
Speaker Change: Understand that oncor is working through a rate case, you are working through these asset sales, but I guess just what.
Speaker Change: What year do you think that you'd be above that 7% to 9% range.
Speaker Change: Okay, I think we haven't given that level of guidance I think one of the things we realized that we got a lot of feedback from our Q4 call is there's probably an opportunity to be more clear and less ambiguous about our expectations.
Speaker Change: It was a very challenging call for us, it's something that we take very seriously and I think what we wanted to do is make sure. We were very clear eyed about what the opportunity was through 2029.
Nicholas Campanella: We took the opportunity to clarify for everyone that we expect to be at the high end or above that range I think some of the things Nick on today's call.
Nicholas Campanella: It's a little bit more visibility and our confidence there you'll recall that we had a $36 billion capital plan that we discussed in February for Encore and now that you see the 765 decision.
Nicholas Campanella: Now that you've seen not just the import Pat not just the local paths, but the important paths at the Permian being moved back to 2030, obviously, we feel quite confident that a lot of that 12 billion will come into the plan and that's currently not in our forecast of 7% to 9%. So I hope that's helpful.
Nicholas Campanella: That is thanks, so much Jeff and then.
Speaker Change: Just a follow up on SAP.
Speaker Change: The transaction you're pursuing here is there any scenario in which you think you can kind of go beyond the 30% and then.
Speaker Change: You mentioned, it's accretive which is great. So clearly the multiple should still be robust, but maybe you can kind of talk about your confidence level and just the current outlook for interest rates and tariffs and economic uncertainty potentially impacting this valuation versus where you've successfully transacted on it in the past.
Speaker Change: Yes.
Speaker Change: Start.
Speaker Change: Nick some conversations you and I have had before but I think over long periods of time Sempra has an established track record.
Speaker Change: Both.
Speaker Change: And acquiring assets and also in divesting assets.
Speaker Change: Something we've been very thoughtful about what that board of directors. We tend to look at these types of opportunities to unlock value almost at every board meeting. So we're always open to new ideas I think what we've tried to do is be very thoughtful about picking a scope of transaction a transaction boundary between 15% and 30% it meets that need.
Speaker Change: <unk> of our capital program, but really a comment that's true of our entire portfolio is we're always open to new ideas right. So I think we've got this thing sized correctly, but if we happen to take both a conforming bid in a nonconforming bid we would always look at that through the lens of what creates the most value for our owners.
Speaker Change: Alright, Thanks for taking my questions I appreciate it.
Speaker Change: Thank you very much.
Speaker Change: Thank you. Our next question will come from Shar <unk> from Guggenheim Partners. Your line is open.
Hi, good morning, it's actually compensate actually.
Jeff: Hey, Jeff how are you good.
Jeff: Maybe coming back to Texas for a second the oncor TPC and applications are already being filed for the seven projects that you highlighted it also enabled the visibility on any of the upside where they're actually larger pull forward in the plan.
Jeff: With the 765 kv standard how does that flow versus a $12 billion of upside capex.
Speaker Change: Yes, So let me make a couple of comments and I'll pass it to Don or Alan to answer some follow on questions, but remember I think that.
Speaker Change: Encore in its discussions with its board of directors had really circled about a $48 billion opportunity between 2025, and 2029 and what we had said Purdue is remember we're always trying to be very disciplined about capital. The encore team shares that same view and what we elected to do was divide that planned capital.
Speaker Change: Spending into two categories the category, where there was high confidence of the capital spin and they were reasonably far along in securing all the required permits a CCN for those projects should be built that $12 billion category, which we've always referred to as incremental was where we saw some additional work needed to be done.
Speaker Change: To make sure we firmed up our ability to commence construction permits would be an example, <unk> would be an example, so they made a lot of progress in Q1 on <unk> and the two big things that have changed was originally the Permian plan, which is going to cost 15% to $17 billion had two components there was a low.
Speaker Change: <unk> component that the regulator asked to be completed by 2030, and then there was this import component, which was expected to stretch into the next decade. The two things have happened as the regulator has determined that relative to that important opportunity, they're going to use a 765 kv level of infrastructure and.
Number two they now move that timeline forward. So both the local projects and the important projects have to be done by 2030, so that really firms up the need for oncor to move forward with much of that $12 billion incremental plan and Allen if you could provide a little bit more color I know your team has been very busy in terms of file.
Speaker Change: Permits in <unk>, but if you could offer some that'd be helpful.
Speaker Change: Yes, Jeff I think you really covered it and as you mentioned with regards to <unk> I think we've already filed the <unk>.
Speaker Change: I think we're planning on filing in the mid Twenty's this year.
Speaker Change: To give a little color I did this work is outside counsel for 17 years and I think it had 40 or 50 total in 17 years and we're following 24 this year.
Speaker Change: The indication of how busy we are on the regulatory front otherwise I think you addressed it. So I mean I think the key takeaway there is.
Speaker Change: The 24, so <unk> have been filed we filed roughly one third of them. There is more work to be done.
Speaker Change: And as you mentioned I think this would be accretive to the 12 million that you highlighted it's a $12 billion was based on a longer timeframe.
Speaker Change: Yes, I would mentioned two things here one is in that $12 billion. What we've talked about is that the import piece now is going to have some acceleration into the 2030 timeframe. So I think if anything it validates the need for the $12 billion and it may in fact, and this is a non cores press release require them to go beyond that.
Speaker Change: <unk> billion in the five year planning period through 2029.
Speaker Change: Excellent thanks for the clarity there.
Speaker Change: Maybe shifting to California started some of the filings around the incremental approval versus the DRC decision correctly.
Speaker Change: Some others right upside to the base plan.
Speaker Change: Around the 2026 timeframe and how does the cost of capital.
Speaker Change: Layered into plan and just to clarify the moving pieces on the.
Speaker Change: Respective upside for California.
Speaker Change: I had mentioned a couple of things here. One is we certainly think there's opportunities outside the JRC in terms of cost of capital. We have a really good appendix slide that you can refer to there in terms of what our filing is but let's stick to the first topic, which is opportunities outside the JRC theres. Some of these are in our plan and some of these are outside the plan, but it might be good just to go through.
Caroline Winn: Kind of a listing of some of the things or categories that Caroline and her team are focused on in Carolina, perhaps you could walk us through those sure Jeff, Yes, and some of those items include modernization of some of our really important compressor station.
Caroline Winn: We have those electric vacation investments that are supported by Senate Bill 410 that you mentioned, we also have GSE track two and track three which includes costs related to our pipeline system enhancement programs and wildfire investments, but we're also looking at increasing modernization of our systems, we're looking at high voltage <unk>.
Caroline Winn: <unk> mission in our northern and eastern portions of our service territory as well as additional battery storage resources supporting not only overall grid reliability, but also increasing linked clean energy. So I think the takeaway here is we are.
Caroline Winn: We're closely working with parties on outcomes beneficial to our customers that will continue and will continue to make investments for safety and reliability.
Caroline Winn: Continue to raise the cost of capital and I think we have a good.
Caroline Winn: Slide on slide 11 in the appendix it outlines what we're currently operating under versus what we've requested.
Caroline Winn: Backlog and just a quick clarification on the next question.
Caroline Winn: Obviously, there are some sequencing for the FMC transaction, but.
Caroline Winn: The ROFO indication potentially shorten that 12 to 18 month process.
Caroline Winn: Yes, yes, it would.
Caroline Winn: We just mentioned that if you go back and look at the.
Caroline Winn: The transactions that we completed in 2021 and 2020 to each of those transactions. Following the date of announcement of a definitive agreement took approximately six months.
Caroline Winn: Excellent I appreciate that thank you and thanks for taking the question.
Caroline Winn: Yes.
Speaker Change: Thank you. Our next question comes from Julien Dumoulin Smith from Jefferies. Your line is open hi.
Caroline Winn: Julian.
Speaker Change: Hey, good afternoon. Thanks, Thanks, Jeff Thanks, Steve I appreciate it and then maybe to follow up on that last question a little bit further and talk about the potential transaction here can you guys elaborate a little bit on how you would set expectations have been.
Caroline Winn: Whether it's the KKR variety of team or someone else to what extent would you say that.
Caroline Winn: On the valuation front at least the level that was implied from the last transactions that kind of a fair baseline here that you're thinking about the extent to which they may or may not want to participate so, albeit they'll indicate but just in a sense to establish like a baseline on value that you'd be willing to transact that it means there is that a fair statement.
Speaker Change: No what I would approach it a little bit differently, you'll recall that on our March 31 press release, we outlined the implied equity transaction values, both for KKR and for audio and the way to think about it Julian is since that time period. Several things have happened we've been able to successfully grow our EBITDA number one.
Speaker Change: Number two the amount of construction, we have in progress or in flight leads to an increase in near term EBITDA and then I think theres been a significant change in the overall breadth and scope of our long term pipeline. So we have a fair amount of confidence that the business is of more value today than it has been in the past.
Speaker Change: That's why you've seen us use language EBIT in our value creation initiatives that we see this as an opportunity to highlight value and the implication being there is value thats not currently in our stock price.
Speaker Change: Got it from a multiple perspective hard to say given both the prospects improvement off the significant uptick in EBITDA, but nonetheless feel confident about it says, yes, I think thats a good point I would say obviously this is a slightly higher interest rate environment, which goes into that but I think one of the things that sometimes people Miss Julien is on the.
Speaker Change: <unk> itself a lot of times, you get to that higher multiple based upon how the acquiring party values the depth and scope of the pipeline of development projects are out there. So you can start off with some type of market multiple but I think the big issue is this is a significant franchise. So this is not a development company, it's not an <unk>.
Speaker Change: These are projects. This is a franchise that has been built over the last 25 years is one that cannot be replicated.
Speaker Change: The construction that's in flight and the scale and scope of the development pipeline is significant.
Speaker Change: Excellent and if I.
Speaker Change: I can just follow up real quickly on that I mean, where do you stand on I don't know if a photo that I mean, where do we end the quarter or what have you on it kind of it.
Speaker Change: Our trailing basis, but and also where do you stand with respect the Moody's today I mean, obviously they made their <unk>.
Speaker Change: Actions in the last couple of months here, but how do you think about the conversation in the 15% to 30% reconciling against the needs that they have laid out for you to get back to.
Speaker Change: Table outlook.
Speaker Change: Yes, I think Julian as you would imagine I think we feel like we're in pretty good shape on our credit ratings and we continue to be very committed to maintaining our credit ratings. I would also note that we have a lot of confidence in the plan that we've put in front of the agencies.
Speaker Change: And they understand that we expect to complete the transactions that you and I have been discussing over the next 12 to 18 months as part of that plan. Our use of proceeds is expected to fund our capital plan in a much more efficient way than we had originally proposed.
Speaker Change: It's a benefit to our shareholders is that we'll be able to reduce future common equity needs and also help to improve our credit profile and with respect to our current credit metrics. The roll forward 12 months deal and that is very consistent with where it was at the end of the year.
Speaker Change: Okay.
Speaker Change: Alright excellent guys. Thank you very much alright, well chat soon.
Speaker Change: Alright, Thanks, a lot Julien.
Speaker Change: Thank you. Our next question will come from <unk> Chopra from Evercore ISI. Your line is open.
Jeff: Hey, Jeff Good morning, Thank you for giving me time, Hey, just wanted to quickly follow up on.
Speaker Change: Question on lead the Moody's is.
Speaker Change: Is it your understanding or at least in your conversations with the team both Moody's and S&P, who have you on negative outlook that you'll be patient here I'm just double checking usually their process is 12 to 18 months.
But just in your conversation with there'll be patient here and see through your asset sale.
Speaker Change: So if it goes the full distance in 18 months. The reason why I'm asking that question is obviously, if they're not you may decide to issue equity sooner.
Speaker Change: This process plays out so maybe just your thoughts thoughts on that.
Speaker Change: Yes, I'd be very clear, we think we are engaged shape here and maybe Kevin you can provide additional color, yes, I'll take that Greg.
Speaker Change: Conversations with rating agencies, we have laid out a plan and I think they understand that 12 to 18 month timeframe. We've talked about so we're committed to our ratings and we've had good conversations with him on this front. So we think we have the time to come.
Speaker Change: These transactions and as Jeff mentioned, our timeframe this could be shorter than that.
Speaker Change: Got it yeah I just wanted to be Crystal clear. Okay. That's very helpful. And then just really quickly hopefully this is a quick one at least the way. We are modeling the transaction has very little to no tax leakage is that a fair way to think about transaction proceeds.
Speaker Change: No I think the way that we've focused on this is making sure that we focus on key three variables. Our first obligation is to either work with our partners are running a process or guess that solves for the highest possible equity value.
We've had a team of folks working on the tax side and our goal is to minimize leakage, obviously, you're going to pay taxes as part of the transaction like this for our goal is to minimize that that certainly has a big impact on your after tax usable proceeds and then it is very important when you look at all the different possibilities of how you can use those proceeds.
To maximize your accretion and Thats work that we spent a lot of time on its been well brief with the credit rating agencies and we're comfortable through a range of outcomes that we can deliver a set of transactions that are accretive to our EPS forecast and it's accretive to credit.
Speaker Change: Got it thank.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Anthony <unk> from Mizuho. Your line is open.
Speaker Change: Hi, Good afternoon team, Jeff just one quick one I think it may follow up on Nick Campanella as train of thought when you look out towards the end of your forecast period for five years, we have the oncor capex spending.
Speaker Change: You have result, you've sold down the pace of Sip.
Speaker Change: You keep talking about like the growth is going to be mainly focus on the regulated utility side of sempra, what's the mix of regulated utility earnings to say your infrastructure earnings towards the end of your plan.
Speaker Change: I really appreciate the opportunity to clarify this look I think we have been very clear over a long period of time that we're continuing to build this business with a view toward taken risk away from the portfolio and allocating capital disproportionately to our regulated investments what we've done with our board of directors is target a mix where our regulated earnings.
Speaker Change: And cash flows will be at the level of 90% or greater and that you'll see us have a lower ownership inside of ESI accordingly.
Speaker Change: This transaction really just accelerates our movement to that so at some point in our in our five year plan and we're quite confident that we will be at 90% or better in terms of an earnings mix from our regulated utilities.
Speaker Change: Great. That's all I had thanks again.
Speaker Change: Thank you.
Speaker Change: Thank you and we do have time for one last question today.
Speaker Change: And our last question will come from David Arcaro from Morgan Stanley. Your line is open.
David Arcaro: Hi, David.
David Arcaro: Hey, Thanks, so much for sneaking me in.
Speaker Change: Apologies, if I didn't quite catch it but I was wondering in encore just what are the gigawatts of the L. C&I pipeline currently and how much of that is data centers.
Speaker Change: Just be curious your current view on what you would consider advanced stage.
Speaker Change: Or like realistic.
Speaker Change: To hit the market, we've just heard skepticism around how much load it might actually show up yet.
Look I think this is a great question, obviously you've seen.
Speaker Change: ERCOT forecasts have increased.
Speaker Change: A year ago, they were forecasting something closer to 152 gigawatts by the end of the decade. That's now gone up and I think that's led to a lot of questions and concerns about how much of that might be real.
Speaker Change: From.
Speaker Change: I think from Oncor standpoint, they've had historically a peak load in their territory of around 31% 32, Gigawatts and that had significant interconnection request and Alan perhaps you or Don could just kind of highlight for us what the changes in that has been an important part that you feel very confident that you bet. Thanks, David the <unk>.
Speaker Change: To answer your question as we presently have 156 gigawatts of data centers in the queue and another 22 gigawatts of load from kind of more traditional diverse industrial sectors. So that is whatever $1 78 total of large C&I in the queue of which $1 56.
Speaker Change: As data centers.
Speaker Change: Did you want to comment on how you think about the more certainty of that and once you are holding share.
Jeff: Paul This is Jeff.
Jeff: Absolutely I mean, so what we what we submitted to ERCOT was about 29, five gigawatts in our office or letter.
Jeff: That we think we have high confidence high confidence come from.
Jeff: A number of things, including two or more of the following <unk>.
Jeff: Houston and securitization.
Jeff: Agreement for things like engineering or procurement deliver.
Jeff: Delivery of technical information proof of site control completed site related studies, a test station of non duplicative load request verification of financial capabilities and a payment of study fees. So things like that is how we get to the high confidence level, So 29, and a half gigawatts of that and then we have.
Jeff: Another nine gigawatts or so of signed interconnection agreements.
Jeff: And the 29 and a half Gigawatts I Should've said this is by 2031.
Jeff Martin: So thats as you said Jeff.
Speaker Change: That's additional gigawatts on top of what is presently at 31 gigawatt, Pts So think about that David just to kind of put that in context is there high confidence level of interconnections more than doubles their existing peak load and they've got actually a backlog that five ex of their current peak load. So I think the goal here really.
Speaker Change: Is to make sure that we are building the critical infrastructure that continues to support the economic growth in the state I feel quite confident that the growth around the Oncor service territory will lead the state in terms of what needs to be done from an infrastructure standpoint.
Speaker Change: Excellent perfect Yeah huge numbers really appreciate the day to day I'll leave it there. Thanks.
Speaker Change: Thank you David.
Speaker Change: Thank you that concludes today's question and answer session. At this time I'd like to turn the conference back to Jeff Martin for any additional closing remarks.
Speaker Change: I want to take a moment to thank everyone for joining us today I know there are a lot of competing calls certainly appreciate everyone. Taking the time to join US. If there are any follow up items. Please reach out to our IR team with your questions. I would also mentioned that Glenn and I are heading up to Los Angeles to meet with investors today, and Karen and the team will be looking forward to see many of you in Florida.
Speaker Change: The upcoming <unk> event later this month this concludes our call.
Speaker Change: Thank you for your participation you may now disconnect.
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