Q2 2025 Nisource Inc Earnings Call
25, Nisource earnings conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press Star then the number one your telephone keypad to withdraw your question Press Star one again.
I'd now like to turn the conference over to Mr. Juergen Chopra head of Investor Relations you may begin.
Thank you Bella good morning, and welcome to the nice sources second quarter 2025 Investor call.
Joining me today are president and Chief Executive Officer, Lloyd Yates Executive Vice President and Chief Financial Officer, Shawn Anderson Executive Vice President of technology customers, and Chief Commercial Officer, Michael doors, and Executive Vice President and group President of Nisource utilities melody Birmingham.
Today, We will review <unk> financial performance for the second quarter update.
Abates on operations strategy and growth drivers will open the call for your questions. After our prepared remarks.
Hello and thank you for standing by. My name is Bella and I will be your conference operator. Today at this time, I would like to welcome everyone to Q2 to 259 Source earnings conference call.
Slides for today's call are available in the Investor Relations section of our website.
Some statements made during this presentation will be forward looking.
These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements.
Formation concerning such risks and uncertainties is included in the risk factors and MDA sections of our periodic SEC filings. Additionally, some statements made on this call relate to non-GAAP earnings measures. Please refer to supplemental slides segment information and full financial schedules for information on the.
Alliance have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 in your telephone keypad to draw your question, press star 1. Again, I would now like to turn the conference over to Mr. Durgesh Chopra head of investor relations you may begin
Thank you, Bella. Good morning, and Welcome to Night sources, second quarter, 2025 investor call.
Most directly comparable GAAP measure and a reconciliation of these measures with that I'll turn the call over to Lloyd.
Good morning, everyone.
Joining me today are president and chief executive officer Lloyd Yates Executive, Vice, President, and Chief Financial Officer, Sean Anderson Executive, Vice President, of Technology, customers and chief commercial officer. Michael lures and Executive Vice President and group president of nice horse utilities, Melody, Birmingham,
Let's begin on slide three.
And Nisource, our mission remains clear and consistent.
Deliver safe.
Today, we'll review night sources financial performance. For the second quarter, and share updates on operations, strategy, and growth drivers.
Reliable energy that drives value to our customers.
We'll open the call for your questions after our prepared to marks.
We do this through disciplined capital deployment operational excellence and fostering constructive regulatory relationships.
Slides, for today's call are available in the investor relations section of our website.
Some statements made during this presentation will be forward-looking.
We believe these fundamentals will continue to drive strong results balance sheet strength and a dependable dividend.
These principles form the cornerstone of nice sources business strategy.
Constantly providing excellent value to shareholders.
By focusing on our regulated utility operations and high quality regions maintain a diversity across areas in energy types and disciplined capital investment Nisource continues to excel.
Turning to our key priorities on slide four our constructive regulatory foundation is further evidenced haven't received final orders in Virginia, and Indiana This quarter.
These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in a statements information concerning such risks and uncertainties is included in the risk factors and MDA sections of our periodic SEC filings. Additionally, some statements may meet on this call related to non-gaap earnings measures. Please refer to supplemental, slides segment information and full Financial schedules for information on the most directly comparable, gaap measure, and a Reconciliation of these measures with that. I'll turn the call over to Lloyd.
Good morning, everyone.
Let's begin on slide 3.
Our ongoing focus to refine our operations through AI efficiency and continuous improvement initiatives is transforming the way we work.
At night Source, our mission remains clear and consistent.
Deliver safe.
Reliable energy. That drives value to our customers.
We're pleased to report second quarter adjusted EPS of <unk> 22.
Bringing our year to date total to $1 19.
We do this through discipline, Capital, deployment, operational excellence and fostering constructive regulatory relationships.
This performance keeps us firmly on track to deliver on our full year commitment.
As a result, we are narrowing our 2025 adjusted EPS guidance to the upper half of the previously stated range of $1 85 to $1 89.
We believe these fundamentals will continue to drive strong results, balance sheet strength and a Dependable dividend.
These principles form, the Cornerstone of nice sources, business strategy, consistently providing, excellent value to shareholders.
Let's move to slide five.
Our operational excellence differentiates us we are rapidly advancing our internal AI capabilities to transform how we operate and create a sustainable competitive edge nice source.
By focusing on regular utility operations and high quality regions. Maintain a diversity of across areas and energy types, and discipline capital investment, nice, first continues to excel.
Our work management intelligence solution is now fully deployed across all the NIPSCO and Columbia operating companies delivering up to 24% improvement still productivity equivalent to more than 83000 incremental work hours.
Turn into our key priorities on slide 4. Our constructive regulatory Foundation is further Evidence, having received final orders in Virginia and Indiana this quarter.
Our ongoing Focus to refine our operations through AI efficiency and continuous Improvement. Initiatives is transforming the way we work.
Two smarter analytics, driven scheduling and greater efficiency and dispatch time.
We're pleased to report second quarter adjusted EPS of $0.22.
Building on this success, we are expanding AI into other critical areas of the business.
Bringing our year-to-date total to 119.
In supply chain, we have launched a generative AI powered analytics initiative to transform procurement processes.
This performance keeps us firmly on track to deliver on our four-year commitment.
Unlocking greater efficiency and deeper insights by leveraging the full scale of the <unk> platform.
As a result, we are narrowing. Our 2025 adjusted EPS, guidance to the upper half of the previously stated range of 1.85 to 1.89.
We are also exploring how AI can support system reliability and improved storm response during severe weather events.
Let's move to slide 5.
Our operational excellence differentiates us.
AI and analytics are becoming foundational to how we deliver value.
We remain committed to scaling these capabilities to optimize performance.
We are rapidly advancing our internal AI capabilities to transform how we operate and create a sustainable Competitive Edge, NY source.
Elevate service and support our long term strategic goals.
Using our advanced mobile leak detection capabilities to address large volume leaks across our territory.
We completed 9966 miles of leak survey in the second quarter, bringing.
Our Work Management intelligence solution is now fully deployed across all NIPSCO and Columbia operating companies delivering up to 24% improvements and still productivity equivalent to more than 83,000 incremental work hours.
Bringing our total miles driven to 18665 year to date.
To smarter analytics, driven scheduling and greater efficiency and dispatch time.
Feeding our goal.
We also launched the final phase of our work and asset management are wham.
Building on this success, we are expanding AI into other critical areas of the business.
This marks a major milestone in our digital transformation.
Supply chain, we have launched a generative AI powered analytics initiative to transform procurement processes.
The Wham program delivers enterprise impact, reaching nearly 5000 end users.
Our lacking greater efficiency and deeper insights by leveraging, the full scale of the nisource platform.
Is converted over 500 million records and integrated data from 'twenty three whole systems, thus underscoring the scale and complexity of this initiative.
We are also exploring how AI can support system reliability and improve storm response during severe weather events.
We have now successfully standardized how we manage field work in assets across the enterprise <unk>.
Ai and analytics are becoming foundational to how we deliver value.
Improving asset visibility streamlining scheduling and enabling real time decision, making.
We remain committed to scaling these capabilities to optimize performance.
Elevate service and support our long-term strategic goals.
On slide six we continue to make strong progress on our regulatory agenda.
Using our Advanced Mobile Leak, Detection, capabilities to address, large volume leaks across our territory.
Since our last call, our Virginia rate case was approved.
Final order authorized a $47 million revenue increase.
We can complete it 9,966 miles of leak, survey in the second quarter.
<unk> 975, ROE with rates already in effect.
Bringing, our total miles driven to 18,665 year to date.
Exceeding, our goal.
This outcome supports $442 million in investments from 2023 through 2025, including critical safety compliance and reliability capital additions.
We also launched the Final Phase of our work and asset management for Wham.
This marks a major milestone in our digital transformation.
It also reflects our continued ability to work constructively with stakeholders to deliver timely and balanced outcomes.
The Wham program delivers Enterprise impact, reaching nearly 5,000 end users.
In Indiana, our NIPSCO electric rate case are approved in June.
Is converted over 500 million records and integrated data from 23, host systems. Best underscoring, the scale and complexity of this initiative
Regarding $257 million in revenue uplift.
This marks our seventh settlement in the last 10 years across both electric and gas businesses in the state.
We have now successfully standardized, how we manage field work and assets across the Enterprise.
Improving asset, visibility, streamlining, scheduling and enabling real-time decision-making.
These outcomes reinforced the strength of our stakeholder relationships and the predictability of our regulatory environment.
On slide 6.
We can continue to make strong progress on our regulatory agenda.
Our consensus or any continues to demonstrate the value of our risk reduction strategy and alignment with stakeholders.
Since our last call, our Virginia rate case was approved.
We continue our track record of constructive regulation working through a rate case.
Expecting a final order in the fourth quarter.
The final order authorized a 40.7 million Revenue. Increase May 9.75 roe with rates already in effect.
Building on our regulatory and momentum we are also advancing initiatives that support broader economic development.
These efforts strengthen strengthen our existing communities by expanding the customer base and helping to distribute fixed costs more efficiently.
This outcome supports 442 million dollars in investments from 2023 through 2025 including critical safety compliance and reliability Capital additions.
For example, our team strategically revitalized a dormant point of delivery station Skippers, Virginia.
It also reflects our continued ability to work constructively with stakeholders to deliver timely and balanced outcomes.
in Indiana, our NIPSCO, electric rate case was approved in June,
Unlocking the capacity to support two new industrial customers.
Providing 257 million in Revenue uplift.
Both companies are leaders in sustainable innovation.
One transforming municipal waste and to renewable energy.
This marks our seventh settlement in the last ten years across both electric and gas businesses in the state.
And the other repurposing coal ash through advanced recycling processes.
This initiative not only reactivate to critical infrastructure, but also drives forward environmentally responsible industrial growth.
These outcomes reinforce the strength of our stakeholder relationships, and the predictability of our regulatory environment.
NIPSCO continues to drive strategic growth across the service territory supporting a diverse range of new development and advanced manufacturing logistics and technology.
Our work in Pennsylvania continues to demonstrate the value of our risk reduction strategy and alignment with stakeholders.
We continue our track record of constructive regulation, working through our rate case,
expecting a final order in the fourth quarter.
Notable projects include GI Techs first U S manufacturing facility in Maryville.
building on our regulatory momentum, we are also advancing initiatives that support broader Economic Development
Slate automotive, one 4 million square foot electric truck plant in Warsaw.
And Fedex is $60 million investment in new distribution center in Gary.
These efforts strength, strengthen our existing communities, by expanding the customer base and helping to distribute fixed costs more efficiently.
For example.
Collectively projected to generate over 2600 jobs.
Our team strategically revitalized a dormant point of delivery station and Skippers Virginia.
These investments underscore the state's emergence as a hub for innovation sustainability and workforce development.
Unlocking, the capacity to support 2, new industrial customers.
Both companies are leaders in sustainable innovation.
Now before I hand, it off to Sean I want to give you an update on our strategy to support data Center development in Northern Indiana.
1 transforming municipal waste into renewable energy and the other repurposing. Coal ash through advanced recycling processes.
Our application to the <unk> to support the Genco operating model remains under review and a settlement modification on July 18th was further evidence of our ongoing efforts to address stakeholder concerns.
This initiative, not only reactivates critical infrastructure but also drives forward, environmentally responsible industrial growth.
We continue to believe Genco offers a compelling option to meet data center needs, while also driving differentiated value to the region, including our existing customers.
Nipco continues to drive. Strategic growth across the service territory supporting a diverse range of new developments and advanced manufacturing Logistics and Technology.
Notable projects include GI Tech's. First US manufacturing facility in Merrillville.
We still expect an order in the third quarter.
Regarding our data center engagement, we continue to have constructive dialogue with a range of counterparties interested in the compelling fundamentals, which our service territory.
Slate Automotive, 1.4 million square foot, electric truck plant in Warsaw.
In FedEx is $60 million investment in new Distribution Center in Gary.
Collectively projected to generate over 2,600 jobs.
Territory can provide for a data center investment.
We know where the state of Indiana is great for energy development.
We're excited about the prospects of our strategy can provide the new customers and the growth that could bring to the state and our local communities.
These Investments underscore the state's emergence. As a hub for Innovation sustainability and Workforce Development.
Our team is very focused on maximizing this opportunity for the many stakeholders involved our existing customers our communities, our policymakers and of course our shareholders.
Now, before I hand it off to shun, I want to give you an update on our strategy to support data center development in northern Indiana.
Our application to the iurc to support the Gen cooperating model remains under review.
We remain hard at work to convert this opportunity into a reality and continue to believe we are on track.
And the settlement modification on July 18th, was further evidence of our ongoing efforts to address stakeholder concerns.
Sean I'll now turn it over to you.
Thanks, Lloyd I'd like to start on slide seven.
Our generation transition began in 2019 with the launch of our multi year strategy to enhance energy capacity and improve our energy footprint in Indiana.
The Genco offers a compelling option to meet data center needs while also driving differentiated value to the region.
Including our existing customers.
We still expect an order in the third quarter.
As part of this initiative, we executed a series of strategic projects that have significantly expanded our renewable energy portfolio.
Regarding our data center engagement, we can continue to have constructive dialogue with a range of counterparties interested in the compelling fundamentals which are service territory can provide for data center investment.
This includes short term contracted capacity resources.
Spanned demands.
Syed management programs solar facilities battery storage and new natural gas, peaking resources.
We know, well, the state of Indiana is great for energy development. We are excited about the prospects. Our strategy can provide to new customers and the growth that could bring to the state and our local communities.
Today, the portfolio is nearly complete with Gibson approaching Finalization and Templeton wind progressing according to schedule.
Our team is very focused on maximizing this opportunity for the many stakeholders involved. Our existing customers our communities, our policy makers, and of course, our shareholders,
On track for commercial operation in 2027.
We are proud to report we have been able to deliver these investments on time and within budget, a testament to our disciplined planning and execution.
We remain hard at work to convert this opportunity into a reality and continue to believe. We are on track.
Sean, I'll now turn it over to you.
Thanks, Lloyd. I'd like to start on slide 7.
Our ability to successfully execute this large scale multi phase initiative not only demonstrates our operational excellence, but also reinforces our confidence in tackling complex endeavors, particularly when called upon to enhance the safe and reliable energy deliveries to our communities.
Our Generation transition began in 2019 with a launch of a multi-year strategy to enhance energy capacity and improve our energy footprint in Indiana.
As part of this initiative, we executed a series of strategic projects that have significantly expanded our renewable energy portfolio.
With the same strategic rigor and commitment to execution, we are well positioned to deliver resilient infrastructure, which supports increasing energy demands while managing stakeholder needs.
This includes short-term, contracted capacity, resources expanded demand.
Side management programs, solar facilities, battery storage and new natural gas peaking resources.
With this in mind I'd like to briefly address two policy related items, which related to our financial strategy and our infrastructure development plans.
First the recently enacted one big beautiful Bill does not impact our renewable development project plans. The remaining project scheduled to come online after 2025 as Templeton with a commercial operation date in 2027, and importantly, it still qualifies for tax credits under.
Today, the portfolio is nearly complete with Gibson, approaching finalization and Templeton wind progressing, according to schedule on track for commercial operation in 2027.
IRC section 45.
Second as we discussed in our Q1 earnings call. We remain on track to retire Schafer by the end of 2025, and Michigan City by the end of 2028.
We are proud to report.
We are continuing to work with policymakers to evaluate alternatives to this plan, including the potential to utilize these facilities on an extended timeline.
He will work closely with federal and state regulators to ensure we make decisions that are in the best interest of our customers and all stakeholders.
Our capital investment outlook shown on slide eight emphasizes the flexibility across our portfolio as we assess the best fit plans for our stakeholders.
Our $19 4 billion five year capital plan remains diversified and executable.
We are not reliant on any single project or technology.
Our growth across six states demonstrates the strength and diversification of investment driving our best in class development plans.
In addition to the substantial electric generation investments I highlighted a moment ago.
48% of our base plan is attributed to gas system hardening supporting the modernization of our gas infrastructure.
Our ability to allocate capital across states and between gas and electric enables <unk> to optimize recovery and respond dynamically to evolving needs.
Additionally, we continue active engagement to advance the commercial development of over $2 billion of identified upside projects and look forward to sharing a more comprehensive update during our third quarter planned refresh.
Beyond these plans.
Slide nine highlights our incremental investment opportunities datacenter generation in T&D facilities, MISO transmission FEMSA compliance and more.
These are not included in our base are upside plans, but represent meaningful long term value creation opportunities.
We are working to commercialize these initiatives while building the investment thesis with stakeholders to optimize the value of these opportunities can create.
Turning to slides 10, and 11, our second quarter adjusted earnings per share was <unk> 22.
And one penny above the same period last year.
Year to date adjusted EPS is $1 19 up 13 cents for.
From the same period last year. This growth is driven by strong performance in both our NIPSCO in Colombia segments, which continue to outperform expectations.
Our commitment to operational excellence through initiatives like project Apollo and Wham has.
Has enabled our businesses to deliver consistent and high quality results.
We are reaffirming all long term financial commitments on slide 12, 6% to 8% annual adjusted EPS growth.
8% to 10% rate base growth and.
In 2014% to 16% <unk> to debt through 2029.
Additionally, we are narrowing our 2025 adjusted EPS guidance to the upper half of the range. We've seen growth in our economy is driving tailwind into year to date results from increased customer count and usage as well as constructive financing success and regulatory execution.
Our plan is built on a realistic foundation and modest demographic growth assumptions, we are seeing strong tailwind across our jurisdictions for example metro growth in Columbus, Ohio was 38% higher than the National average last year and we are observing similar trends in other parts of.
Through initiatives like project, Apollo and Wham.
Of our service territory.
Over the trailing 12 months period ending in June.
Has enabled our businesses to deliver consistent and high-quality results.
We observed customer growth at nearly 1% in our electric business and 0.6% in our gas business, both surpassing our forecast.
We are performing all long-term Financial commitments on slide, 12 6 to 8% annual adjusted EPS growth
Let's turn to slide 13.
8 to 10% rate-based growth.
In the second quarter, we advanced our financing plans with the issuance of $1 $65 billion of senior notes.
And 14 to 16% ffo, to debt through 2029.
This builds on our first quarter activity and positions us well to meet our 2025 funding needs, while maintaining our 14% to 16% <unk> to debt target.
Additionally, we are narrowing our 2025 adjusted EPS, guidance to the upper half of the range.
Over the summer S&P, Moody's and Fitch each completed their annual credit reviews, and reported no changes to ratings and maintaining stable outlooks, which reflect the strong credit profile of nice source.
We've seen growth in our economies, driving Tailwind into your day-to-day results from increased customer count and usage, as well as constructive financing success and regulatory execution.
Our plan is built on our realistic foundation and modest demographic growth assumptions.
We are seeing strong Tailwind across our jurisdictions.
We believe the successful refinancing of.
Of our $1 $5 billion August maturity.
<unk> eliminates any near term refinancing risk.
For example, Metro growth in Columbus, Ohio was 38% higher than the national average last year. And we're observing similar Trends in other parts of our service territory.
This proactive step not only secures our capital structure, but also reinforces our financial flexibility and stability.
With this transaction behind us.
Our forward looking debt profile is significantly de risked.
And we now face minimal refinancing exposure in the foreseeable future.
This positions us to focus on strategic growth initiatives with confidence backed by a strong and resilient balance sheet.
In the second quarter, we Advanced our financing plans with the issuance of 1.65 billion dollars of senior notes.
We use practical interest rate assumptions in our plan, despite a persistent high rate environment and the economic growth across our service territories continues to advance.
This Builds on our first quarter activity and positions us well to meet our 2025 funding needs. While maintaining our 14 to 16% ffo to debt Target.
These fundamentals give us confidence in our 2025 earnings outlook and leaves <unk> well positioned to deliver strong financial results as we narrow to the upper half of our 2025 adjusted EPS guidance range.
Over the summer, S&P Moody's and Fitch each completed, their annual credit reviews and reported, no changes to ratings and maintaining stable outlooks, which reflect the strong credit profile of NY source.
We continue building a track record of execution and growth on slide 14, our commitment to investors employees customers and all our stakeholders is central to everything we do.
We believe the successful refinancing of our 1.25 billion, August maturity effectively eliminates any near-term refinancing risk.
Our regulatory execution year to date financing activity and thoughtful investment plans position us well for 2025, and we expect will continue across the plan horizon.
This proactive step, not only secures, our capital structure, but also reinforces our financial flexibility and stability.
With this transaction behind us. Our forward-looking debt profile is significantly de-risked.
And we now face minimal refinancing exposure to foreseeable future.
Even with this upward trajectory in guidance for 2025, we continue to project, an annual 6% to 8% growth rate.
This positions us to focus on strategic growth initiatives with confidence, backed by a strong and resilient balance sheet.
The value of which compounds through our plan horizon with continued outperformance.
<unk> offers investors, a diversified and fully regulated utility with the opportunity to invest in programmatic gas infrastructure and long term energy transition for a fully integrated electric business.
We use practical interest rate assumptions in our plan despite a persistent High rate environment, and the economic growth across our service territories continues to advance.
The emerging opportunity to support unprecedented energy development empower demand, resulting from robust economic development onshoring as well as new data center developments truly differentiates the value proposition relative to many alternatives in the marketplace today.
These fundamentals, give us confidence in our 2025, earnings Outlook and leaves nsor well positioned to deliver strong financial results as we narrow to the upper half of our 2025 adjusted EPS, guidance range.
We continue building a track record of execution and growth on slide 14, our commitment to investors employees customers and all our stakeholders is Central to everything we do.
And with that we'll open the line for questions.
At this time I would like to remind everyone in order to ask a question press the.
Our regulatory execution year to date financing activity and thoughtful investment plans position us. Well for 2025
Sorry, Dan the number one your telephone keypad.
and we expect we'll continue across the plan Horizon.
We will pause for just a moment to compile the Q&A roster.
Our first question comes from the line of Julien Dumoulin Smith with Jefferies. Your line is now open. Please go ahead.
Even with this upward trajectory and guidance for 2025, we continue to project an annual 6% to 8% growth rate.
The value of which compounds through our plan Horizon with continued outperformance.
Hey, good morning team. Thank you guys are most of the time I appreciate it nicely done.
You hear me, Okay morning, Julien.
NISOURCE INC. offers investors a diversified and fully regulated utility.
We hear you fine excellent wonderful thanks, Mike Hey, look if I can I'm just trying to marry up some of the comments in your call here.
With the opportunity to invest in programmatic, gas infrastructure, and long-term energy transition for a fully integrated electric business.
Given how fast the data center market is evolving and given the comments you just made about the Columbus Metro area for instance.
Amongst other service territories here, how are you thinking about that opportunity, especially in the NIPSCO territory.
The emerging opportunity to support unprecedented energy development and power demand resulting from robust Economic Development ensuring, as well as new data center developments.
Your load forecast Youre 24, our ERP could you potentially do that has scale at this point and how do you think about the scale and scope of the opportunity, especially since it hasn't fully come together yet is it.
Truly differentiates. The value proposition relative to many alternatives in the marketplace today.
And with that, we'll open the line for questions.
Is there an upward bias on the numbers there of the two six for instance.
I would like to remind everyone.
So let me go ahead.
To ask a question, press star, then the number 1, your telephone keypad.
There was a lot of questions in that one question, let me start there.
We will pause for just a moment to compile the Q&A roster.
I wouldn't characterize it as an upward bias in the numbers first so I think I.
I think the way to think about this is there's a huge demand for data centers and northern Indiana.
Your first question comes from the line of Julianne deal and Smith with Jeffrey's. Your line is now open. Please go ahead.
That hasn't backed off at all.
Hey, good morning team. Thank you guys very much for the time I appreciate it. Nicely done.
Can you hear me? Okay? Good morning, Julian.
What I will tell you is that we're taking the time to.
Execute this opportunity in a thoughtful and disciplined manner.
And.
And we guided by four principles not talked about these before right protect the existing customer base.
Serve new customers with speed and agility.
Earning an appropriate adjusted return for our shareholders and the main pain nice sources financial integrity.
Maximum wonderful. Thanks bud. Hey, look. If I can, I I'm just trying to marry up some of the comments from your call here, you know, given how fast the data center Market is evolving and given the comments. You just made about the Columbus Metro area, for instance, you know, amongst other service, territories here, how are you thinking about that opportunity? Especially in the NIPSCO territory? Um,
Now I've talked about this being a 2025 of that I've talked about that in the fourth quarter of last year.
And as I said in my script, we're very focused on that and I believe we're right on track, where we need to be with respect to this opportunity.
your load forecast, your 24 P, could you potentially view that as stale at this point? And how do you think about the scale scale and scope of the opportunity especially since it hasn't fully come together yet? Is it, you know, is is there an upward bias to the numbers there of the 2.6, for instance,
And when we have something to tell you it'll be comprehensive.
So let Let Me Wait, that's still a lot of questions. In that 1 question, let me start there.
Um,
And we will get that to the market as soon as possible, we'll be very transparent with that so.
I wouldn't characterize this as an upward bias in the numbers first, so I think,
That's where we are right now Julian maybe I'll, just add one bit which as we have seen demand across the gas footprint in Ohio, and Virginia, specifically for pipeline expansion to serve onsite generation four data centers.
I think the way to think about this is there's a huge demand for data centers in northern Indiana.
Inquiries continue to come in and we continue to work collaboratively with our states and with our communities as Theres a lot of excitement to expand the infrastructure development across all of our states.
And I haven't at all, what I'll tell you is that we're taking the time to, uh, really execute this opportunity and a thoughtful and disciplined manner.
And, uh, we got it by four principles, and I've talked about these before, right? Protect the existing customer base.
Got it and then if I can marry that up a little bit with the conversation on timing right. Because I think you guys just set a second ago in the prepared comments about your <unk>.
Serve new customers with Speed and Agility.
current and appropriate adjusted return for our shareholders, in the main pane night, sources, Financial integrity,
Confidence in the final order here I suppose on the Genco by the end of the September how do you think about potential to provide any kind of example transaction or something that there's a little bit more tangible for the stakeholders to look at and understand what you are proposing here as well as just maybe commentary about the timeline itself.
You know, I've talked about this being a 2025 and I talked about that in the fourth quarter of last year.
And as I said in my script, we're very focused on that and I believe we're right on track, where where we need to be with respect to this opportunity.
And when we have something to tell you, it'll be comprehensive.
On the larger.
Larger loads.
So you just kind of married to process together, which we looked at as separate and distinct.
One is the genco declination process that process is moving down a path. We're confident that we'll get an order by a third quarter of this year.
Independent of that but related is the process with the counterparties and as I said those.
Conversations are ongoing I think they're complex. If you go back to the four pillars that I just talked about we're really focused on meeting.
And we'll get that to the market as soon as possible. We'll be very transparent with that. So uh, that that's where we are right now. Yeah, and Julie maybe I'll just add 1 1 bit, which is we have seen demand across the gas footprint in Ohio and Virginia, specifically, for pipeline, expansions to serve on-site, generation for data centers. Uh, those enquiries continue to come in and we can continue to work collaboratively with our states and with our communities, as there's a lot of excitement to expand the infrastructure development across all of our states.
Those four pillars and when we have something to announce with that process. We will let you know, but two separate processes.
Okay, all right no fair enough, Hey, Lloyd I definitely I didn't mean to open that can of worms on marrying those two together right.
I'm glad you're keeping that keeping a keen eye on OPEC.
[laughter].
All of our skies.
Got it. And then if I can marry that up a little bit with the conversation on timing. Right? Because I think you guys just said a second ago and the prepared comments about your confidence in the final order here. I suppose on the Genco, by the end of the September, how do you think about, um, potential of the provide? Any kind of example, transaction or something that is a little bit more tangible for the stakeholders to, to look at and understand what. You're
Hum.
Okay.
Yeah.
Pausing here, as well as just maybe commentary about the timeline itself on these larger, um, larger loads.
Question comes from the line of Nicholas Campanella with Barclays. Please go ahead.
Hey, thanks for taking the time.
I'll just ask I'll, just ask one more follow up if I could.
So you just kind of married two processes together, which we look at as separate and distinct. One is the Genco declination process; that process is moving down the path.
Two separate processes.
You have the counterparty contract process. You also have a third quarter update where I think youre going to be refreshing the long term plan it sounds like.
We're confident that we'll get an order by a third quarter of this year.
Independent of that. But related is the process with the counterparties. And as I said those
How do those two just opposed against each other.
Let me punt that to Sean on the third quarter financial yes.
I appreciate the question.
Conversations are ongoing, I think they're complex. If you go back to the 4 that I just talked about, we're really focused on meeting.
We've been pretty sure to update the plans whenever we have the information credibly in front of you whether thats quarter by quarter or if we do a full blown refresh. So on the first instance, what we know about our regulated utility business is that it continues to need infrastructure investments and we're going through the process of refreshing of $19 four base plan to better understand.
Uh, those four pillars. And when we have something to announce with that process, we'll let you know. But two separate processes.
Oh okay. All right. No fair enough. Hey Lloyd. I definitely didn't mean to open that can of worms on marrying those 2 together. All right, I'm I'm I'm glad you're keeping keeping the kid out open.
The timing of cash flows and how those would sequence forward whats driving that is increased need for generation transmission distribution and system maintenance across the gas and the electric side of the business same fundamental drivers that we're seeing those in place. We're also seeing more economic development and strategic growth initiatives. So we're focused on <unk>.
All of us, guys.
Question comes from the line of Nicholas Company, Yellow, with Barclays. Please go ahead.
<unk> that plan and plan to have an update on the third quarter call that said, we've got $2 2 billion of identified upside Capex and we will see some of that upside capex flow whenever we see those projects become commercially viable and socialized with stakeholders. We don't have any of those to change change place right now, but we do.
Hey, thanks for taking the time. Um, I'll just I'll just ask 1 more follow-up. If I could uh, just 2 separate processes, uh, you have the counterparty contract process
You also have a third-quarter update, where I think you're going to be refreshing the long-term plan. It sounds like.
How do those 2 just deposed against each other?
let me point that to Sean on the third quarter plan, Sean
Do you expect those to come to fruition here before the beginning before the end of this year. So the $2 $2 billion of upside Capex plan will be another piece that we're trying to refresh and flow into the base plan as identified over the next five years and then beyond that we've got the incremental investment opportunities and specific to the data center opportunity itself.
Once we have those concrete answers will start to flow that information through our plans and once we reach the same standard credibility with counterparties stakeholders and surety of the cash inflow and outflow will also roll those through our plan and make sure that we understand what the forward looking guidance would be around our financial commitments. So all three of those could work.
And any time, we're not going to wait just for the third quarter call to do that per se, but obviously, we see that as an opportunity to refresh thoughts on all three of those elements and plan to do so in Q3.
Alright, that's very helpful. And then just a quick one if I could you are at the high end or above the midpoint I guess of 25 and you have an annual EPS growth target. So are we now kind of when we think about where you could be in that target on the base plan today 26, and 27 should.
We be basing that off of 188 today that the way to think about it.
Yes, the base would be how we achieve results at the end of this year, and then 6% to 8% annual growth rate beyond those those actual results that's exactly right Nick.
Need for Generation transmission distribution and system maintenance across the gas and the electric side of the business. Uh, same fundamental drivers that were that we're seeing those in place. We're also seeing more Economic Development and strategic growth initiatives. So we're focused on refreshing that plan and plan to plan to have an update on the third quarter call, um, that said we've got 2.2 billion dollars of ident identified upside capex and we'll see some of that upside capex flow whenever we see those projects become commercially viable and socialize with stakeholders. Uh, we don't have any of those to change change place right now. But we do expect those to come to fruition here before the beginning before the end of this year. Uh, so the 2.2 billion dollar of upside capex plan will be another piece that we're trying to refresh and flow into the base plan as identified over the next 5 years. And then beyond that, we've got uh, the incremental investment opportunities and specific to the data center opportunity itself. Uh, once we have those uh, concrete answers, we'll start to flow that
You very much.
Thanks, Nick.
Your next question comes from the line of Richard Sunderland with Jpmorgan. Please go ahead.
Hi, Good morning, Thank you for the time today.
Good morning Rich.
Thinking about the supply picture overall could you speak to the turbine queue positions and just your confidence and ability to deliver new supply to meet any large load growth and then I'm curious kind of related to that you made some comments around the planned coal retirements and potential longer life to those.
That information through our plans. And once we reach the same standard of credibility with counterparties, stakeholders, and charity of the cash inflow and outflow, we'll also roll those through our plan and make sure that we understand what the guidance would be around our financial commitments. Uh, so all three of those could work at any time. We're not going to wait just for the third quarter call to do that per se. Uh, but obviously, we see that as an opportunity to refresh thoughts on all three of those elements and plan to do so in Q3.
Assets, how does that fit into the supply picture as your AD load.
So I'm going throw this over to Michael <unk>.
So I appreciate the question and I would just say Lloyds highlighted and Sean have highlighted our disciplined approach associated with us.
All right. That's, uh, that's very helpful. And then just a quick 1. If I could, uh, you're at the high end or you're above the the midpoint, I guess of 25, and you have an annual EPS growth Target. So are we now? Kind of? When we think about where you could be in that Target on the base plan today, 26 and 27, should we be basing that off of 188 today that the way to think about it,
What I'll say and what we've provided is that we have put ourselves in a beneficial position associated with Qs in order to be able to have the equipment necessary to deliver on the opportunities. So we feel like we're in a good place in a strong position to deliver on the fundamentals, including being able to serve new customers with the speed and flexibility.
Yeah, the base would be how we achieve results at the end of this year and then 6 to 8% annual growth rate Beyond those those actual results. That's exactly right, Nick.
Thank you very much.
Thanks Nick.
Your next question comes from the line of Richard Sunderland with J.P. Morgan. Please go ahead.
Yeah.
Hi, good morning, thank you for the time today.
He talked about extension of the coal plants. Mel if you want you talk about where we are with respect co plant extensions sure and good morning. So as you all know the president past executive order earlier this year in April.
Morning rich.
And that order was shortly followed up by an executive order that was issued by the Governor Brawn and Indiana.
And the order did call for the continued operation of our plants old generation to me.
Thinking about the supply picture, overall, could you speak to turbine Q positions and your confidence and ability to deliver new supply to meet any large load growth? And then I'm curious, kind of related to that, you made some comments around the planned coal retirements and potential longer life to those assets. How does that fit into the supply picture as you add load?
I'm gonna throw this over to Michael lures.
Capacity needs.
We've been working very closely with the state of Indiana.
Precedent as Tracy our team in Indiana has worked closely with the Governor's office to understand what that will look like in Indiana. Our plan is still the same to retire a shaker plant by the end of this year. However, we will make sure that we work closely with the states that we're in.
And so no changes have been made as of this point, but we will ensure that we understand what the governor's direction is and that we support that direction, but nonetheless.
So appreciate the question and I would just say uh Lloyd's highlighted and Sean of highlighted are disciplined approach associated with this. Uh what I'll say and what we provided is that we have put ourselves in a beneficial position associated with cues in order to be able to have the equipment necessary to deliver on the opportunities. So we feel like we are in a good place and in a strong position to deliver on the fundamentals, including being able to serve new customers with that speed and flexibility.
Our plan is and remains the same I appreciate there.
Understood. Thanks for the commentary there and then turning to the financing strategy. How do you see the genco playing into this in terms of potential impact to near term or medium term earnings with the genco structure before assets are in service or <unk>.
He talked about extension of the coal plants, Melody. Why don't you talk about where we are with respect? Coal, plant extensions sure. Um, good, good morning. So as you all know, the president, um, passed an executive order earlier this year in April, and that order was shortly followed up by an executive order that was issued um by Governor Braun in Indiana.
The abilities to structure around that and avoid any financing impacts until assets are in service do you see a path forward there without any earnings impacts how are you thinking about that overall thank you.
Thanks, Rich I'll take that I think we see a lot of flexibility in the structure as well as in the negotiations with customers and then on top of that the flexibility that we've built by strengthening the balance sheet over time being thoughtful around raising equity as needed and delivering on the commitments that we've committed in front of in front of us that includes the.
Um, the order did call for the continued operation of both plants, all generation, to meet the, um, capacity needs. Um, we've been working very closely with the state of Indiana. Um, our President and CEO, our team in Indiana, has worked closely with the governor and his office to understand what that will look like in Indiana. Our plan is still the same: to retire our Shaer plant by the end of this year. However, we will...
The outperformance of the base business, which continues to strengthen funds from operation and cash flow quality derived just from the work that we do each and every day. That's a critical element that continues to strengthen our financial flexibility and we believe that that can help support the operations that we need to as we move forward into the future flexibility needed.
Uh, make sure that we work closely with the state so that we're aligned. Um, and so no changes have been made as of this point. But we will uh, ensure that we understand what the governor's direction is and that we support that direction. But nonetheless, um, our plan is and Remains the Same appreciate her.
We've not disclosed exactly how we will finance genco will retain the flexibility to evaluate that once we have the use of cash in the customer contracts that we will be delivering upon in front of us.
That'll be something we'll evaluate to optimize the overall value and minimize the financing cost and friction involved with bringing on the infrastructure that we've talked about so we retain a lot of the flexibility and the outperformance both in terms of the strengthening of the balance sheet. The base business producing incremental cash flows has put us in a great position to capitalize on this opportunity.
The disabilities to structure around that and um you know avoid any financing impacts until assets are in service. Do you do you see a path forward there without any earnings impacts? How are you thinking about that overall? Thank you.
<unk> fairly efficiently.
Okay.
Great I'll leave it there thank you.
Your next question comes from the line of Ryan Levine with Citigroup. Please go ahead.
Good morning, everybody.
Good morning my questions.
In terms of the.
The practical dynamics, so if the genco applications approved in September.
And at that point is there a lot of the contract terms that have already been pre negotiated or would that cascade a series of negotiations.
And we have legal discussions to be able to hit your targeted.
The goal of achieving sales by the end of the year.
Yeah. So thanks for the question of as I said earlier those are two separate processes. We continue to our discussions with the Counterparties and there'll be a set of terms associated with that.
Thanks Rich. Yeah, I'll take that. I, I think we see a lot of flexibility in the structure as well as in the negotiations with customers. And then on top of that, the flexibility that we've built by strengthening the balance sheet over time, being thoughtful around raising Equity as needed, and delivering on the commitments that we've, we've, uh, committed in front of, in front of us. That includes the outperformance of the base business, which continues to strengthen funds from operation and cash flow quality. Derived just from the work that we do each and every day. That's a critical element that continues to strengthen our financial flexibility. And we believe that, that can help support the operations that we need to, as we move forward into, uh, the future flexibility needed. We've not disclosed. Exactly how we'll Finance. Genco will retain the flexibility to evaluate that once we have the use of cash and the customer contracts that we will be delivering upon in front of us. Uh, that'll be something. We'll evaluate to optimize the overall value and minimize the, the financing costs and friction involved to bring on the infrastructure that we
Jen Codeclination process, we expect to get an order in the third quarter of this year.
Those are two separate processes.
Talked about. So, we retain a lot of the flexibility and the outperformance both in terms of the strengthening the balance sheet. And the, the base business producing incremental. Cash flows, has put us in a great position to capitalize on this opportunity fairly efficiently.
So with that we.
Great. I'll leave it there. Thank you.
We would not go back and renegotiate the another way to think about it yes.
I mean, if you don't get the declination filing I mean that.
Your next question comes from the line of Ryan LaVine with Citigroup. Please go ahead.
Presumably stops that process in that.
Good morning everybody. Um, any questions?
And so youre, saying that Youre, just working ahead, regardless of the outcome.
in terms of the
Well remember the declination following the order as a tool for us to it gives us the opportunity for when I talk about our second pillar speed and flexibility for our new customers. This is just a tool that facilitate that speed and flexibility. If there's a negative order there are other tools, including <unk>.
The, the Practical Dynamics. So if the Genco applications approved in September, and yeah, at that point, is there a lot of the contract terms that have already been pre-negotiated, or would that Cascade a series of negotiations, um, and and legal discussions to be able to hit your targeted?
Bill 107 out of Indiana that allows us to implement these these large low customer. So it is not the only tool to utilize this Michael you want to add anything to that the only thing I would add to it as saying as we're working this we're working multiple unparallel screens on many items as we've mentioned earlier there's.
Items equipment, we're working those streams, we're working the regulatory streams as well contractual screens as well as many other parts of the processes and doing that.
The goal of achieving skills by the end of the year, I. Yeah. So thanks for the question. As I said earlier, those are 2 separate processes. I know we continue to our discussions with the counterparties and there'll be a set of terms associated with that. The Gen code. Declination process, we expect to get an order in the third quarter of this year. Those are 2. Those are 2 separate processes
So that we wouldn't have not, we would not go back and renegotiate another way to think about it. Yeah.
Yeah. But I mean if, if you don't get the declination filing, I mean that
And as mentioned before we would like to ensure that we consider all the alternatives that occur within those different processes. So that in the end we can deliver on the opportunities both for our customers and for our stakeholders. So it's not one or the other or one and in spite.
Presumably stops that process and that.
I mean, you're saying that you're just working ahead regardless of the outcome.
We are working multiple components to be able to ensure that those paths can come to fruition.
Okay, and then an unrelated question on Shafer.
Even HB seven and some of the recent state policies can you speak to some of the cost recovery attributes of the recent <unk>.
<unk> in the state.
Our in place now to ensure timely recovery of any ongoing costs associated with keeping schaper on longer and how that could impact.
Every review that's underway regarding potential life extension.
So I think there's some things that got mashed in there.
<unk> seven has nothing to do with keeping Schafer operating I think melon had mentioned earlier were in conversations with the state and at the federal level to understand that if we keep schafer operating what those cost recovery mechanisms book like so those conversations are still ongoing.
Well, remember the declination filed in the order is a a tool for us to it gives us the opportunity. For remember I talked about our second pillar of speed and flexibility for our new customers. This is just a tool that facilitates that speed and flexibility if there's a negative order, there are other tools including house bill 10007 out of Indiana. That allows us to implement, you know, these these large low customers. So this is it is not the only tool to utilize this. Michael, you want to add anything to that. The only thing I would add to it is saying, as we're working this, we're working multiple and parallel streams on many items. As was mentioned earlier, there's items or equipment, we're working those streams, we're working the regulatory streams as well, contractual streams, as well as many other parts of the processes in doing that. And as mentioned before, we we'd like to ensure that we consider all the Alternatives that occur within
Yeah.
Okay. Thank you.
Yeah.
Those different processes, so that in the end, we can deliver on the opportunities both for our customers and for our stakeholders. So it's not one or the other, or one in spite of the other; we are working on multiple components to ensure that those paths can come to fruition.
Your last question comes from the line of Steve Fleishman with Wolfe Research. Your line is now open. Please go ahead.
Great. Thanks, good morning.
Good morning.
So just one on the Genco declination case.
Could you just.
Remind us what process is left from here I think theres filings.
Okay. And then an unrelated question on Schaefer given HB 107 and some of the recent State policies can you speak to some of the cost recovery attributes of the recent initiatives in the state to that are in place. Now to ensure primary recovery of any ongoing costs associated with keeping shaper on longer and how that could impact the
From the parties the non signing parties to Friday and is that.
the review that's underway regarding potential Life Extensions.
The last event until we get an order pretty.
Pretty much right right.
Right. Yeah. So that is that is the last step of the process. Obviously all of the final filings are due and then we continue to expect an order from the commission by the end of the by the third quarter.
Bearing conversations.
Okay.
And then lastly, Laurie sorry, I'm going to ask you to repeat this but.
With the state and at the federal level to understand that if we keep Schaefer operating, what those costs recovery mechanisms look like. So those conversations are still ongoing.
Just <unk>.
Okay, thank you.
In your prepared remarks that you're.
Very focused on converting this into reality and on track.
I didn't hear 2025, and then I heard enough question.
Earlier that you're you're.
Your last question comes from the line of Steve fman with wolf freezers, your line is now open. Please go ahead.
Committed and expect them to get this done during 2025 could you just clarify that you think you can grow this into a reality in 2025.
Great, thanks. Uh, good morning.
Morning. Um,
So, uh, just uh, 1 on the Genco declination case.
Absolutely I said this is a 2025 event.
could you just, uh,
And we are on track to execute that and I think were two and a half quarters into the year and we are on track to execute this opportunity, we're right where we need to be.
Remind us what process is left from here. I think there are filings.
From the parties, the non-s signing parties do Friday. And is that
The last event till we get an order.
Okay. That's super helpful. Thank you.
That concludes our Q&A session I will now turn the call back over to Mr. Lloyd Yates CEO for closing remarks.
Pretty much Friday the 8th, right? Yeah. So, that is, that is the last step of the process. Obviously, all the final filings are due. And then we we continue to inspect and order from the commission by the end of the, by the third quarter.
Yeah again, we continue to thank you for the questions and your interest in <unk> and hope you have a great rest of the day.
That concludes today's call. Thank you all for joining you may now disconnect everyone have a great day.
and then, uh, lastly, uh, Lloyd, sorry, I'm going to ask you to repeat this, but just I, I heard in your preparer marks that you're, you know, very focused on converting this into reality and on track
Are you in here 2025? And then I heard a question.
Earlier that you're you're committed and expecting to get this done during 2025, could you just clarify that you think you can convert this into reality in 2025?
Absolutely. I said this is a 2025 event and we are on track to execute that and I said, we're 2 and a half quarters of the year and we are on track to execute this opportunity where right where we need to be.
Okay, that's super helpful. Thank you.
That concludes our Q&A session. I will now turn the call back over to Mr. Lloyd Gates CEO for closing remarks.
Yeah, again we continue to thank you for the questions and your interest in my source and hope you have a great rest of the day.
That concludes today's call.
For joining you. My name is
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