Q3 2025 Xcel Energy Inc Earnings Call
Note that this conference is being recorded after the deterioration that call your lines will be in a listen only mode.
That's a session will follow the prepared remarks and questions that will be.
Questions will only be taken from institutional investors and analysts reporters can contact media relations with inquiries and NV.
Yeah.
I called you over now to <unk> Agarwal, Vice President Investor Relations to begin today's conference. Please go ahead Sir.
Thank you George and good morning, welcome to Excel Energy's third quarter 2025 earnings call. Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer, and Brian Van Abel Executive Vice President and Chief Financial Officer.
In addition, we have other members of the management team in the room to answer your questions if needed.
This morning, we will review, our third quarter 2025 results and highlights.
Share recent business and regulatory updates.
Update our five year capital and financing plan and provide updated 2025 assumptions and 2026 guidance.
Slides that accompany today's call are available on our website.
Some commentary in today's call may contain forward looking information.
Nick and factors that could cause results to differ from those anticipated are described in our earnings release and SEC filings.
Today, we will discuss certain metrics that are non-GAAP measures information on the comparable GAAP measures and reconciliations are included in our earnings release.
Speaker #3: Hello and welcome to Xcel Energy's third quarter 2025 earnings conference call. My name is George and I'll be your coordinator for today's event.
In the third quarter of 2025, XL energy recorded a charge of $290 million or <unk> 36 per share, reflecting the settlement in principle reached with plaintiffs in the martial wildfire.
Speaker #3: Please note this conference is being recorded and for the duration of the call , your lines will be in the listen only mode .
Speaker #3: A question and answer session will follow the prepared remarks and questions . I will be asked . Questions will only be taken from institutional investors and analysts .
Given the nonrecurring nature of this item it has been excluded from third quarter and year to date ongoing earnings.
Speaker #3: Reporters can contact media relations with inquiries and . I called you over now to Roopesh Aggarwal Vice President , Investor Relations , to begin today's conference .
As a result, our GAAP earnings for the third quarter of 2025 were 88 per share while our ongoing earnings which exclude this nonrecurring charge were $1 24 per share.
All further references to earnings drivers and variances in our discussion today will refer to ongoing earnings.
For more information on this please see the disclosure in our earnings release.
Speaker #3: Please go ahead , sir .
Speaker #4: Thank you , George , and good morning . Welcome to Excel Energy's third quarter 2020 earnings call . Joining me today are Bob Frenzel , chairman , President and Chief Executive Officer .
I will now turn the call over to Bob.
Thank you and good morning, everybody.
In the third quarter of 2025 ex sell energy continued our commitment to our customers our investors and our communities to make energy work better.
Speaker #4: And Brian Van Abel , executive vice president and chief financial officer . In addition , we have other members of the management team in the room to answer your questions if needed .
During the quarter, we delivered solid earnings of $1 24 per share.
We invested over $3 billion and $8 billion year to date, and resilient and reliable energy infrastructure for our customers.
Speaker #4: This morning , we will review our third quarter 2020 results and highlights , share recent business and regulatory updates , update our five year capital and financing plan , and provide updated 2025 assumptions and 2026 guidance slides that accompany today's call are available on our website .
Sure.
We reached a comprehensive and constructive settlement with plaintiffs and the Marshal wildfire that helped our customers and our communities to move forward.
And we accelerated our wildfire risk reduction efforts to protect our communities from volatile weather.
Speaker #4: comments during today's call may contain forward looking information , significant factors that could cause results to differ from those anticipated are described in our earnings release and SEC filings .
Based on our results through the third quarter, we are reaffirming our earnings guidance for 2025 and remain confident in our ability to deliver on earnings guidance for the 21 year in a row one of the best track records in the industry.
As per our usual Q3 rhythm today, we are introducing our updated five year infrastructure investment plan design.
Designed to serve increased energy demand make needed investments to strengthen our transmission and distribution systems.
Provide a cleaner and more sustainable energy portfolio.
And to keep energy safe reliable and affordable for all of our customers.
In total we expect this plan to deliver 7500 megawatts of zero carbon renewable generation.
3000 megawatts of natural gas fired generation and almost 2000 megawatts of energy storage to ensure system reliability.
500, new high voltage transmission line miles to support demand growth in regional delivery.
And approximately $5 billion of investment in our distribution and transmission systems to improve resiliency and reduce future risk from wildfires.
We're able to accomplish this plan because we have one of the best utility development and supply chain teams in the industry.
And in combination with our strong balance sheet, we can deliver infrastructure timely and affordably for our customers.
In connection with this forecast, we have safe harbored, all renewable and storage projects in our base capital plan.
The same for the projects that are incremental plan to ensure that we can capture available tax credits and help keep customers' bills low.
We also have 19 natural gas <unk> on order, which will provide over four gigawatts of natural gas generation to help ensure reliability and affordability.
Our ability to deliver infrastructure with excellence and our strategic geographic advantage allows our customers to benefit from some of the lowest energy bills in the country.
Over the past five years, our residential electric and natural gas bills have been <unk> 28, and 12% below the national average respectively.
Our residential electric customers in Colorado have the lowest share of wallet out of all 50 states.
And the average residential bills in our other states occupy five over the next 11 spots.
Since 2014, our residential electric and natural gas Bill growth has been well under the rate of inflation in fact.
Typical residential ex LNG electric and natural gas bill with 14% and 20% lower than it was in 2014 when adjusted for inflation.
Our steel for fuel program save customers nearly $6 billion through 2025.
And our Onex LNG way continuous improvement program has realized over $1 billion in cumulative savings since 2020, while improving customer and operating outcomes.
Our industry, leading demand side management programs have saved enough energy to avoid building 30 average sized power plants.
And as customers continue to electrify transportation and other parts of their lives. They can further reduce their overall monthly energy costs with lower electric rates.
We also continue to support critical programs to help our customers who may need assistance with their energy bills as 2020 for XL energy has connected over 200000 customers.
With almost $300 million and financial resources.
We're also exploring new opportunities to help even more customers across our jurisdictions, including proposals and our current Minnesota, Wisconsin and upcoming Colorado rate cases.
Moving to the topic of artificial intelligent artificial intelligence opportunities for XL energy go well beyond our ability to power data centers.
And of course, our load interconnection continues to grow even as we moved some of our backlog into the contracted category.
But across accelerates and we are in early stages of using AI in the business to bend, the cost curve and to provide improvements in both customer satisfaction and operational outcomes.
For harnessing AI to empower our people accelerate innovation and build a smarter more resilient energy future for our customers and communities.
Automated analysis across our diverse enterprise data sources is delivering actionable insights that strength and security.
Improve operations and planning and drive process improvement.
We're bridging knowledge gaps and empowering faster more informed decision making across the organization.
A typical residential Xcel Energy, electric and natural gas, bill is 14 and 20% lower than it was in 2014 when adjusted for inflation.
And we're leveraging AI built by others to advance our business, including high resolution imagery to transform how we inspect and maintain our distribution infrastructure.
Our steel for fuel program is saved customers nearly 6 billion dollars through 2025.
Through drone based data collection and automated image analysis AI enabled processes can identify defects and assess risks and enable our teams to prioritize maintenance with greater speed and accuracy.
And our 1 XL Energy, Way continues to Improvement program has realized over a billion dollars in cumulative savings since 2020, while improving customer and operating outcomes.
Our industry-leading, demand side management programs have saved enough energy to avoid building 30 average-sized power plants.
And with wildfire mitigation AI is transforming our risk models by leveraging internal models and tools like techno silver, we significantly improved our model coverage and accuracy as.
And as customers continue to Electrify transportation and other parts of their lives, they can further reduce their overall monthly energy costs with lower electric rates.
As well as reduced analytical times to a fraction.
This means faster more reliable risk assessments protecting communities and infrastructure in real time.
AI is truly an engine, that's driving enterprise wide innovation and transformation and XL energy, making energy work better for our employees, our customers and our communities.
With almost million dollars in financial resources.
We're also exploring new opportunities to help even more customers across our jurisdictions, including proposals, and our current Minnesota, Wisconsin and upcoming Colorado rate cases
Moving to Marshall on September 23rd XL Energy Quest Corporation.
<unk> Communications America reached settlement agreements in principle that resolve all claims asserted by the subrogation insurers.
Moving to the topic of artificial intelligence. Artificial intelligence opportunities for Xcel Energy go well beyond our ability to power data centers.
The public entity plaintiffs.
And individual plaintiffs and while <unk> does not admit any fault of wrongdoing and disputes that are equipment caused the second ignition. We believe this provides a positive outcome for our communities and our investors.
Of course, our load interconnection queue continues to grow, even as we move some of our backlog into the contracted category.
But a Xcel Energy, we are an early stages of using AI in the business to bend the cost curve and to provide improvements in both customer satisfaction and operational outcomes.
Looking forward <unk> continues to make significant progress to mitigate risks from wildfires and extreme weather.
With public facing wildfire mitigation plans in each of our states.
We're harnessing AI to empower our people. Accelerate Innovation and build a smarter more resilient Energy Future for our customers and communities.
This includes investments in situational awareness tools like weather stations in panel AI cameras.
Automated analysis across our diverse Enterprise data sources is delivering actionable insights that strengthen security.
Advanced Meteorology fire science, and Abe and AI enabled risk modeling tools.
Improve operations and planning, and drive process improvement.
Hardening our systems in deploying advanced wildfire safety operations and PSP as capabilities.
We're bridging knowledge, gaps and empowering faster more informed decision-making across the organization.
And operational actions, including daily stand ups to address the threat from extreme weather across every part of our system and taking proactive actions as appropriate.
And we're leveraging AI built by others to advance our business, including high resolution, imagery to transform, how we inspect and maintain our distribution infrastructure.
Finally.
Each September XL energy employees and community members have come together to honor the spirit of service.
Through drone-based data collection and automated image analysis, AI enabled, processes can identify defects.
This year marked the 15th annual day of service for XL energy with nearly 3000 volunteers from across the company and the communities, we serve coming together to support local nonprofit organizations.
Assess risks and enable our teams to prioritize maintenance with greater speed and accuracy.
Together volunteers dedicated almost 9000 hours of service across more than 100 projects.
And with Wildfire mitigation AI is Transforming Our risk models by leveraging internal models and tools like techno Silva. We significantly improved our model coverage and accuracy.
As well as reduced analytical times to a fraction.
This is one of my favorite days of the year and exemplifies the spirit and dedication of our employees and partners who show up every day.
This means faster, more reliable risk, assessments protecting communities and infrastructure in real time.
To provide safe clean reliable and affordable energy to our customers and our communities.
With that I'll turn it over to Brian.
Thanks, Bob and good morning, everyone.
AI is truly an engine that's driving Enterprise wide, Innovation and transformation in Excel Energy making energy. Work better for our employees, our customers, and our communities.
Starting with our financial results.
Energy delivered earnings of $1 24 per share for the third quarter of 2025.
Compared to earnings of $1 25 per share in the third quarter of 2024.
Moving to Marshall on September 23rd, Xcel Energy, Qwest Corporation and teleport Communications, America reached settlement agreements and principle that resolve all claims asserted by the subrogation insurers.
The public entity plaintiffs.
The most significant earnings drivers for the quarter include the following.
Regulatory outcomes and electric and natural gas sales growth increased earnings by <unk> 18.
And individual plaintiffs and while Xcel Energy, does not admit any fault or wrongdoing in disputes that our equipment caused. The second ignition, we believe this provides a positive outcome for our communities and our investors.
And higher <unk> increased earnings by <unk>.
Offsetting these positive drivers.
Looking forward Xcel Energy, continues to make significant progress to mitigate risk from wildfires in extreme weather.
Higher financing costs decreased earnings by <unk> 15.
With public facing Wildfire mitigation plans in each of our states.
Reflecting the funding of our infrastructure investments and our financial discipline of maintaining a strong balance sheet.
This includes investments in situational awareness, tools like weather stations and Pano AI cameras.
Higher depreciation and amortization decreased earnings by <unk> <unk> driven by increased system investments.
Advanced meteorology fire science enable, and AI enabled risk modeling tools.
Higher O&M expenses increased earnings by <unk>.
Turning to sales weather normalized and leap year adjusted electric sales increased two 5% through the third quarter of 2025.
Hardening our systems and deploying Advanced Wildfire, safety operations, and PSPs capabilities.
Driven by strong residential sales growth across all off goes and increase C&I load in Sps NPS score.
And operational actions including daily stand-ups to address. The threat from extreme weather across every part of our system and taking proactive actions as appropriate.
Finally.
During the third quarter.
We also energized <unk> as new data center in Minnesota, They will continue to scale in the coming years.
Each September, Xcel Energy employees and community members come together to honor the spirit of service.
In turn.
For full year 2025.
We continue to forecast, 3% weather normalized electric sales growth.
This year marked, the 15th annual day of service for Xcel Energy with nearly 3,000 volunteers from across the company and the communities, we serve coming together to support local nonprofit organizations.
Yes.
In the third quarter, O&M expenses increased $37 million relative to 2024.
Together volunteers dedicated almost 9,000 hours of service across more than 100 projects.
This increase was largely driven by a $25 million increase in health and benefit costs for the quarter.
it's 1 of my favorite days of the year and it exemplifies, the spirit and dedication of our employees, and partners who show up every day,
For full year 2025, we now forecast that O&M expenses will increase 5%.
To provide safe, clean, reliable, and affordable energy to our customers and our communities.
With that. I'll turn it over to Brian.
Thanks Bob and good morning everyone.
Shifting to RFP and rate case activity.
In Colorado and partnership with Colorado Energy Office, UCA and Commission staff, we issued a near term procurement for 4000 megawatts of renewable resources and 500 megawatts of thermal and firm the special resources.
starting with our financial results, Xcel Energy delivered earnings of $1.24 per share for the third quarter of 2025
compared to earnings of $1.25 per share in the third quarter of 2024.
This RFP is intended to accelerate the deployment of a portion of our Colorado IOP to capture production tax credits before they sunset.
The most significant earnings drivers for the quarter include the following.
Regulatory outcomes in electric and natural gas sales growth increased earnings by 18 cents.
Bids were received this month and we expect to file a recommendation December 20 to 25 with a commission decision by February of 2026.
And higher a refugee increased earning by 8 cents.
All setting these positive drivers.
Hi.
In Sps, we issued an all source RFP to meet an 870 megawatt accredited capacity need.
Higher financing costs, decreased earnings by 15 cents.
This represents 1500, the 3000 megawatts of nameplate capacity that will be online by 2032.
Reflecting the funding of our infrastructure investments, in our financial discipline of maintaining a strong balance sheet.
Higher depreciation and amortization decreased earnings by 9 cents, driven by increased system Investments.
Bids are due in January 2026, with an expected portfolio announcement by June 2026.
In the higher onm, expenses decreased earnings by 5 cents.
In October the Wisconsin Commission verbally approved <unk> $725 million acquisition of the 375 megawatt Elk Creek solar plus storage project.
Turning to sales.
whether normalized and leap year adjusted electric sales increased 2 and 1.5% through the third quarter of 2025
Tomorrow, we expect to file a natural gas rate case in Minnesota requesting a $63 million total revenue increase based on the 10, 6% ROE and a 52, 5% equity ratio.
Driven by strong residential sales growth across all op goes and increased cni load in SPS and pcso during the third quarter. We also energized meta's, new data center in Minnesota, that will continue to scale in the coming years.
Interim rates of $51 million will also be requested effective January one 2026.
In turn for, for full year 2025.
Regarding future cases, we expect to file a Colorado electric and natural gas and new Mexico Electric rate case later this year.
We continue to forecast, 3%, weather normalized, electric sales growth.
Moving to data centers.
In the third quarter, ONM expenses increased $37 million relative to 2024.
We remain on track to contract the remainder of our original two gigawatt based planned by the end of the year.
This increase is largely driven by 25 million increase in health and benefit costs for the quarter.
In addition, we have updated our total base planned to include approximately three gigawatts of data center capacity additional.
For full year 2025. We now forecasts that onm expenses will increase 5%
Projects included in the base case, we consider high probability and respective contracted by 2026.
This will drive 3% of the 5% assumed annual sales growth in our 2026 to 2030 capital plan.
We also continue to make strong progress on the small cross Creek wildfire claims process.
Shifting to RFP and rate case activity in Colorado. In partnership with Colorado, Energy Office, UCA and commission staff. We issued a near-term procurement for 4,000 megawatts of renewable resources and 500 megawatts of thermal and firm dispatchable resources.
We've resolved 212 of 254 submitted claims and we have settled or dismissed 21 of 34 lawsuits.
This RFP is intended to accelerate the deployment of a portion of our Colorado IRP to capture production tax credits before they sunset.
We've updated the low end of our estimated liability to $410 million.
Bids were received this month and we expect to file a recommendation in December 2025 with the commission decision by February of 2026.
We've made significant progress in the third quarter with the resolution of the three largest claims by acreage.
We have committed $360 million settlement agreements.
In SPS, we issued an all-source RFP to meet an 870 megawatt accredited capacity need.
So considering the low end estimated liability of $410 million.
This represents 1500 to 3,000 megawatts of name, plate capacity, that will be online by 2032.
We are estimating approximately $50 million more on the top on top of a $306 million that has been committed based on our current information.
We are due in January 2026 with an expected portfolio. Announcement by June 2026.
As a reminder, we have approximately $500 million of insurance coverage.
Sure.
Shifting to our investment plan.
Today, we are providing an updated 60 billion five year capital expenditure forecast.
In October, it was Wisconsin commission. Verbally approved npw 725 million, acquisition of the 3755 megawatt Elk Creek solar plus storage project.
Which reflects annualized rate based growth of approximately 11%.
These investments are critical to serving growing electric demand.
Meet clean energy goals, and ensure safety and reliability of our system.
Tomorrow, we expect to file a natural gas rate case in Minnesota requesting a 63 million, total revenue, increase based on the 10.65% equity ratio.
We also have an additional pipeline of investments to $60 billion plan.
interim rates of 51 million will also be requested effective Jan, January 1st 2026,
Specifically from our recent rfps across jurisdictions.
Regarding future cases, we expect to file a Colorado, electric and natural gas, and New Mexico, electric rate case later this year.
Incremental data center load and transmission projects from future MISO and SPP tranches.
Moving to data centers.
We're excited about our growth opportunities and we'll continue to finance accretive growth in a balanced manner.
We remain on track to contract the remainder of our original 2, gigawatt base plan by the end of the year.
This year, we've issued or contracted approximately $3 billion of equity and equity like content between our ATM program and our 2025 hybrid financing.
In addition, we have updated our total base plan to include approximately 3, gigawatts of Data Center capacity additional projects, including the base case we consider high probability and effective contracted by 2026.
Our updated 2006 through 2030 capital plan reflects an additional $23 billion of debt and $7 billion of equity content, we anticipate that any incremental capital investments would be funded by approximately 40% equity equity content and 60% debt.
This will drive, 3% of the 5% assumed annual sales growth in our 2026 to 2030 Capital plan.
We also continue to make strong progress on the Smokehouse Creek Wildfire claims process.
We continue to maintain a balanced financing strategy, which includes a mix of debt and equity to fund accretive growth, while maintaining a strong balance sheet and credit metrics.
We've resolved 212 of the 254 submitted claims and we have settled or dismissed 21 of 34 lawsuits.
We've updated the low end of our estimated liability to 410 million.
Moving to earnings we are reaffirming our 2025 ongoing earnings guidance range of $3 75 to $3 85 per share.
We have made significant progress in the third quarter with the resolution of the 3 largest claims by acreage.
We're also initiating our 2026 earnings guidance range of $4 <unk> to $4 16 per share.
We have committed 36060 million in settlement agreements.
Which reflects approximately a midpoint of 8% growth from the midpoint of our 2025 guidance.
Key assumptions are detailed in our earnings release.
So considering the low-end estimated liability of 410 million, we are estimating approximately 50 million more on the top. On top of the 3060 million that has been committed based on our current information.
We are updating our long term EPS growth objective to six to eight plus percent with expectations to deliver 9% growth on average through 2030.
As a reminder, we have approximately 500 million of insurance coverage.
Shifting to our investment plan.
Today, we are providing an updated 60 billion, 5-year, capital expenditure forecast.
This update reflects our significant investment needs to serve our customers and drive state policies, along with confidence in our financial outlook.
These Investments are critical to serving growing electric demand.
We are maintaining our dividend growth objective of 4% to 6% with the expectation to be at the low end of the range.
Meet clean energy goals and ensure the safety and reliability of our system.
We also have an additional pipeline of Investments to our 60 billion plan.
Over our 26 to <unk> 30 forecast period, we expect our dividend payout ratio will trend toward the bottom end of our updated payout ratio range of 45% to 55%.
Specifically from our recent rfps across jurisdictions.
Which allow us greater financial flexibility and dry powder powder for the future.
Incremental data center load, and transmission projects from future, MSO and spp tanches.
With that I'll wrap up with a quick summary.
We continue to lead the clean energy transition, ensuring safe clean and reliable service and keeping customer bills as low as possible.
We announced an updated five year capital investment program that provides strong transparent rate base growth and significant customer value.
Calls of debt in 7 billion dollars of equity content.
We reached a constructive settlement in the martial wildfire and continue to make investments to reduce risk to our system and communities from extreme weather.
We anticipate that any incremental, Capital Investments would be funded by approximately 4%, Equity, Equity, content, and 60% debt.
Yes.
Our customers have and will continue to enjoy some of the lowest bills in the country with our investment plan.
We maintain a strong balance sheet and credit metrics using a balance of debt and equity to fund accretive growth.
We continue to maintain a balanced financing strategy, which includes a mix of debt and Equity to fund accredited growth while maintaining a strong balance sheet, and credit metrics.
We reaffirm our 2025 EPS guidance of $3 75 to $3 85.
Moving to earnings will reaffirming our 2025 ongoing earnings guidance. Range of 3,075 to 3,085 cents per share.
And have initiated 2026 EPS guidance of $4 <unk> to.
We're also initiating our 2026 earnings guidance range of 4 dollars and 44 cents to $4.16 per share.
The $4 16.
Which reflects a midpoint of 8% growth from the midpoint of our 2025 guidance.
Which reflects approximately a midpoint of 8% growth from the midpoint of our 2025 guidance?
And finally, we expect to deliver 9% EPS growth on average through 2030.
This concludes our prepared remarks, operator, we will now take questions.
Thank you.
Once again I wish to register for questions. Please press star one on your key pads.
We are updating our long-term EPS growth objective to 6 to 8 percent, with expectations to deliver 9% growth on average through 2030.
And our first question is coming from Nicholas Campanella from Barclays. Please go ahead. Your line is open.
This update reflects our significant investment needs to serve our customers and drive state policies, along with confidence in our financial outlook.
Okay.
Hey, good morning, Thanks for all the updates.
Good morning, Nick.
Good morning, just wanted to be clear 26 at the midpoint you did about eight and I hear you on the 9% through 2030 does that start beyond 2006 or is that is that how you're kind of viewing.
We are maintaining our dividend growth objective of 4 to 6% with the expectation to be at the low end of the range.
Hey, Nick I'll take that no that's.
Which allows greater Financial flexibility and dry power powder for the future.
That includes 2026, 9% over the next five years inclusive of 2006 guidance, so that 9% would be based off the midpoint of this year. So 380.
With that, I'll wrap up with a quick summary.
Yes.
We continue to lead the clean energy transition, ensuring safe, clean and reliable service and keeping customer bills as low as possible.
Okay great.
I appreciate that and then just one one other clarification $7 billion of equity in the plan I know you talked about $1 $3 billion already priced.
Forward is that kind of net against that 7 billion or is it still $7 billion from here on out. Thank you.
No I think of it as we do is kind of $7 billion from here on out with our new 2006 to 2030 plan. So if you kind of look what we did this year relative to last year's plan, which at $4 $5 billion in it and kind of take those those two pieces.
We announced an updated 5year capital investment program that provides strong transparent rate based growth and significant customer value. We reached a constructive settlement in the Marshall wildfire and continue to make investments, to reduce risk to our system and communities from extreme weather.
Our customers have and will continue to enjoy some of the lowest bills in the country with our investment plan.
Right online with kind of what we've been messaging around incremental capital drives about 40 incremental equity content, so and feel really good about kind of our equity content plans and where and where we are in terms of managing our credit metrics and executing on a $60 billion investment plan.
We maintain a strong balance sheet and credit metrics, using a balance of debt and equity to fund degrees of growth.
Great well, thanks, so much.
Which reflects a midpoint of 8% growth from the midpoint of our 2025 guidance.
Absolutely.
Thank you.
Our next question is coming from Steven Fleishman, calling from Wolfe Research. Please go ahead.
And finally, we expect to deliver 9% EPS growth on average through 2030.
Yes, hi, good morning.
This concludes our prepared remarks, operator. We will now take questions.
Thanks for the updates so I guess.
Thank you, much sir.
First on just.
The profile of the growth rate or growth when you look at the Capex plan and the rate base growth.
Once again for analysis, register for questions. Please. Press star 1 on your telephone keypad,
It is very very heavily front end loaded and then Capex actually falls right now 29, 30, a decent amount.
And our first question is coming from Nicholas Campanella from bar. Please go ahead. The line is open.
What are the other companies are kind of the opposite where it's lower now and it's ramping up.
Maybe just kind of talk to that and Theres a lot of that just.
We just don't know some of that some of these rfps and other factors out in 29 30.
Hey, good morning. Thanks for all the updates morning, Nick morning, just just wanted to be clear at 26. At the midpoint you did about 8 and you know, I hear you on the uh the 9% through 2030. Does that start Beyond 26? Or is that is that how you're kind of viewing this year? Thank you.
Yes, Steve I can take that one I think you're exactly right in terms of you know we're always conservative of what we.
Hey, hey, Nick, I'll take that. No, that's that's
Capital plan.
Anthony.
Portfolio.
Includes 2026. So 9% over the next 5 years, inclusive of 26 guidance, so that 9% would be based off of the midpoint of this year. So 380
The process in there.
Projects that were approved by our Minnesota Commission in Q1 this year, but.
Yes, you are in that 29, and 30 were launched Rfps with Colorado Sps.
We're pretty early in the process and that sits in kind of our additional pipeline.
That is as we say as we move through that process kind of into next year and even beyond that we expect there'll be opportunities to fill it full fill in there both generation to serve load growth for our customers, but also transmission that we expect to see out of SPP in the near term here.
Okay, great. I uh, I appreciate that and then just 1 1 other clarification, 7 billion of equity in the plan. I know you talked about 1.3 billion already priced, uh, forward. Is that kind of net against that 7 billion or is it still 7 billion from here on out? Thank you know think of it as we do as kind of 7 billion from here on out with our new 26 to 2030 plan. So if you kind of look what we did this year relative to last year's plan which had 4 and a half billion dollars in it and kind of take those those 2 pieces uh we're right online with kind of
The next tranche of SPP should be a Q4 event that we get visibility, but then also longer term on MISO tranche two.
Okay and I know.
What we've been messaging around incremental, um, Capital drives about 40% incremental, Equity content, so, um, and feel really good about kind of our Equity content plans and where, and where we are in terms of Manning, our credit metrics and executing on a $60 billion investment plan.
Just may be related to.
Times, you've given kind of.
Great. Well, thanks so much. We'll see you at the
absolutely.
Some rough idea of the range of spending on the upside cases, and those different things that you mentioned there is there any thing you can share on the potential capital on the upside case things not in New York.
Thank you, Mr.
Our next question is coming from Stephen fleshman. Calling from Wolfe research, please go ahead.
Yeah. Hi. Good morning. Um,
Yes, I would say the slide we have in our our deck here for today.
Can be a range of six to 9000 total megawatts. We think are those rfps plus transmission, we've always guided people to.
Competitive in our generation processes, and winning about half of that plus that transmission. So I see $10 billion plus sitting in that pipeline now not all will be in 2030. Some of those generation processes run through 31, 32, but really good opportunity as we look at the low growth and then transmission needs in our system yes.
It's it's very, very heavily front end loaded and then capex actually falls right now, 2930 a decent amount.
A lot of the other companies are kind of the opposite where it's lower now, and it's like ramping up.
Yes, Steve I think this is Bob I think youre right in terms of shape. The earnings generally will follow the capital investment plan with some amount of lag and financing costs and then we look to fill in the back part of our plan with some of the incremental opportunities that Brian had.
Could you maybe just kind of talk to that? And there's a lot of that. Just we just don't know, some of the, some of these rfps and other factors out in 2930. Yeah, it's Steve, I I can take that out that 1. I think you're exactly right in terms of, you know, we're always concerned about what we
uh, and
portfolio. Um,
Okay.
in their,
Great. Thanks for the update.
project that were approved by our Minnesota Commission in q1 of
Thanks.
Thank you.
Next question will be coming from Jeremy Tonet of JP Morgan. Please go ahead.
Hi, good morning.
Good morning, Jeremy.
It appears that he has just moved Jeremy Please press star one again.
Put you back in the queue, we'll go to Carly Davenport. Please go ahead.
Year. But it it really gets you in that 29 and 30. It's, you know, we're launched rfps with Colorado SPS RP, that were pretty early in the process and that sits in kind of our additional pipeline. Um, bucket that is, you know, as we as we move through that process, kind of into next year and even Beyond, uh, that we expect, it'll be opportunities to fill it full.
Okay Cardio same thing will go to Julien Dumoulin.
Of Jefferies. Please.
Ask your question Okay.
Fill in their both generation to serve load growth for our customers. Um but also transmission that we expect to see out of SP in the near term here. Uh the the next tranche of spp should be a Q4 event that we get visibility and but then also longer term on Mysore too.
Can you guys hear me, yes, Sir good morning, Julien There. We go third Time's, a charm I say, alright, awesome guys well done seriously look if I can just going back to where you left off with Steve.
Okay. And I know.
It's one of those different points that you raised here what are the more substantive pieces I mean, it seems like the SPT element could be more substantive that seems more front loaded a and then b. The acceleration of some of these renewable procurements in light of tax for the exploration could be more subsidy that lumpy and don't seem to be in there, but again you tell me what are the bigger pieces that are.
Uh, just maybe related to the times, you've given kind of a rough idea of the range of spending on the upside cases and those different things that you mentioned. Is there anything you can share on the potential capital and the upside case things not in here?
Not yet in that 60 again, you've laid out a whole bunch of them I'm, just curious which moves the needle more as best you see it initially.
Hey, Julien I'll start and Brian can chime in so a large piece of the STP RFP is embedded into our base capital plan.
There's a second RFP for SPP capacity and energy that is not included in the plan and then when I think about Colorado generation.
We have really two RFP sitting in front of the commission out there of a near term procurement portfolio, that's designed to accelerate and take advantage of renewable credits.
Yeah, I would say there's a slide, we have in our our um, our deck here for today. You know, that's going to be a range of 6 to 9,000 total magazines. We think out of those rfps plus some transmission and we've always guided people to, you know, be in, you know, competitive in our generation processes and winning about half of that plus that transmission. So I, I see, you know, 10 Billion Dollar Plus sitting in that pipeline. Now, not all will be in 2030 some of those generation processes run through 3132 but really good opportunity as we look at the low growth and then transmission needs in our system. Yeah, Steve, I think this is Bob, I think you're right in terms of shape, you know the earnings. Generally will follow the capital investment plan with some amount of lag and financing costs. And then we look to fill in the back part of our plan with some of the incremental opportunities that that Brian had
And that looks like a $4 5 billion sorry, four five gigawatt plan.
Okay, uh, great. Thanks for the update.
Thanks.
Thank you, much sir.
And then there is the.
The just transition solicitation thats been in progress with the commission for a while which we expect some amount of Judy adjudication that either later this year early next which had somewhere between 4% and 15 gigs of generation needs in it.
Next question, will be coming from Jeremy tonette of JP Morgan, please go ahead.
Hi. Good. Morning morning Jeremy.
There's a bit of overlap between the NTP in the GTS in terms of what's needed and timing so I wouldn't count those as additive, but there is a big piece of Colorado generation, that's likely to come in the 2829 30 timeframe Thats not included in our base capital plan.
It appears that he is uh just moved Jeremy. Please press star 1 again and uh we'll put you back in the queue. We'll go to Carly Davenport. Please go ahead.
And then there's a handful of smaller rfps in the upper Midwest for generation.
Okay, Carly, same thing. We'll go to Julian, Doula, please of Jeffrey's, please. Uh, ask your question. Okay.
Can you guys hear me?
That are not included in our base plan as well.
Lee with regard to transmission.
We have it.
And two in MISO to one embedded in there those are longer dated capital plans and longer dated in service.
Spends that will result in stuff drifting through this time period. It into later into the early 2000 <unk> and then there are subsequent itt's in MISO.
<unk> that are coming that are not also embedded in this plan. So I would think about.
Colorado, Jan being probably the biggest driver of backend.
Yes, sir. Good morning, Julian. All right, there we go. Third, time's a charm. I say all right. Awesome, guys. Well done. Seriously, look if I can just going back to where you left off with Steve. I'll just, let's see it up this way of those different points that you raised here, what are the more substantive pieces? I mean, it seems like the spp element could be more substantive that seems more front-loaded a and then B, um, the acceleration of some of these renewable procurements, get in light of tax credit, expirations could be more substantive than lumpy and don't seem to be in there. But again, you tell me, what are the bigger pieces that are not yet in that 60. Again, you've laid out a whole bunch of them. I'm just curious, which 1 moves the needle more as best, you see it initially.
Investment in this five year plan.
Transmission Thats not announced out of the SPP ITT processes the second biggest.
Hey Julian I'll start and Brian can chime in. So, uh, a large piece of the spp RFP is into our base Capital plan. Um,
Brian you got anything to add to that yes, no and I think just absolutely the Colorado side and we're working through the process is a really good.
Engaging with our stakeholders to accelerate procurement for these renewable resources given that we have the tax credit cliff in 2030, so we should get visibility into that portfolio.
December was a commission decision in Q1, we've got the bids in robust bid pool working through that.
And so that's that's one of the big drivers, but also as we worked through as we think about longer term as incremental data center opportunities and working with our stakeholders interstates in terms of driving I cannot economic development and low growth that can drive longer term generation and transmission.
Uh, there's a second RFP for spp capacity and energy that is. That is not included in the plan. And then when I think about Colorado, Generation, Um, we have really 2 RP, sitting in front of the commission out there, we have a near-term procurement portfolio that's designed to accelerate and take advantage of renewable credits. Um and that looks like a 4 and a half billion dollar or Sorry 4 and a half gigawatt plan. Uh and then there's the um
Transmission needs, which wouldn't be incorporated but thats, just a longer term opportunity that I know the industry is seeing.
Excellent guys. Thank you very much.
Don't mean.
Let me ask you this way the 6% to 8% plus versus the 9% that you guys have out there is the idea that the 9% is sort of at the at this point in time in the six to eight.
Additive but there's a big piece of Colorado generation. That's likely to come in the 2829, 30 time frame, that's not included in our base Capital plan,
Present, plus is designed to be for any eventual roll forwards with a larger block.
Law of large numbers kind of drive some deviation.
From the 9% that you roll forward a couple of years.
Yeah, Julian we think about it this way is that 6% to 8% plus six 8% is what do you think about our long term view.
On EPS growth when you balance of investment needs of our system. The low growth, we're seeing opportunities and also affordability, but when we look at our current five year plan and the $60 billion of infrastructure projects for our customers, serving the low growth and the needs of our system derisking or communities that that plus really rough.
And then there's a handful of smaller rfps in the Upper Midwest for Generation uh that are not included in our base plan as well. Uh secondly uh with regard to transmission. Um you know we have ITP and and 2 in my so 2.1 embedded in there. Although those they're longer dated Capital plans and longer dated and Service, uh, spends that will result in stuff drifting through this time period. And into, you know, later into the early 2030s and then there are subsequent itps and and miso
Uh, lrts that are coming that are not also embedded in this plan. So I think about
Presented a 9% that we see over the next five years, if that helps us differentiate in terms of how we're thinking about it.
Uh, Colorado Jen. Being probably the biggest driver of back-end investment in this 5-year plan and transmission. That's not announced out of the SPP ITP process is sort of the second biggest.
Excellent alright, guys I'll leave it there thank you.
Thank you very much sir.
Next question will be coming Carly Davenport of Goldman Sachs. Please go ahead.
Hey, good morning, Thanks for taking the questions. Welcome back. Thank you glad to Vivek, maybe just on the load growth outlook looks like continued strengthen STS which is great to see and then a couple of the other op codes shifting a bit lower from the prior plan. So could you just talk a little bit what's driving those moving pieces on low growth across the region.
Brian. You got anything to add to that? Yeah, no. And I, I think just absolutely in the Colorado side. You know, we're working through the process is a really good um, engagement with our stakeholders to accelerate um procurement for for these uh renewable resources. Given that we have the tax credit cliff in 2030 so we should get visibility into that portfolio. Uh, in in December with a commission decision in q1, we've got the bids in robust bid pool, working through that. Um, and so that's, that's
<unk>.
Yes, I think when we look at it really Sps continues to be strength in our oil and gas sector. We've seen that for years. This year out of new Mexico, we're going to see teens type of growth that those large C&I sector. We continue to see that with electrification out of that industry in new Mexico. So strong.
From the big drivers. But also as we work through, you know, as we think about longer term, as incremental data center opportunities and and working with our stakeholders, in our state, in terms of driving econ, Economic Development, low growth that can drive longer term, generation and transmission.
Needs um, which would be incorporated but that's just a longer term opportunity. Um, that I know the industry is seeing
There also.
No.
Fermi America is down in Texas, New Mexico, Theres, certainly opportunities there that we've talked about and so we're seeing that the other one is more just kind of shifting around potentially and timing of data centers as we think about it when they are coming in but when you look at our sales growth across all op goes all or in the call it 4%.
Roughly 4% to 5% with Sps at 8% when we looked at it. So we're pretty excited when we see our data center opportunities really mixed across our service territory strong opportunities in Minnesota are working through some really good opportunities in Colorado.
Excellent, guys. Thank you very much and I don't mean to, but I I let me ask you this way, the 6 to 8% Plus versus the 9% that you guys have out. There is the idea that the 9% is sort of at the at this point in time in the 6 to 8, plus the 68% plus is designed to be for any eventual, roll forwards, or the larger block, the sort of Love, large numbers, kind of Drive some deviation, um, from the 9% if you roll forward a couple years.
Colorado, and then we've talked about some opportunities in Texas, and new Mexico. The one other.
I would like to say that we.
Net 5% sales growth that we talk about having the diversification is not all data centers only three of that 5% is data centers. So we also have one 5% of that 5% is driven by the Sps oil and gas electrification and we're just.
Yeah, Julie, and we think about it this way is that 6 to 8% plus 6 to 8% is what we think about our long term view, uh, on EPS growth, when you balance, the investment needs are system. The low growth, we're seeing on opportunities and also affordability. But when we look at our current 5-year plan and the 60 billion dollars of infrastructure projects for our customers are serving the low growth and the needs of our system, do you risking our communities that that plus really represents the 9% that we see over the next 5 years. Um if that helps us differentiate in terms of how we're thinking about it,
Have customer growth residential customer growth, we're starting to see some electrification on the residential side. So that's about half a percent so really kind of diversify growth, which I think is important as we look forward.
Excellent. All right guys, I'll leave it there. Thank you.
Thank you very much, sir.
Next question, I'll be calling Carly Davenport of Goldman Sachs. Please go ahead.
Yes.
Great. That's really clear. Thank you for that and then maybe just a follow up on kind of the financing and the balance sheet. It.
It seems like you're targeting kind of now 16% to 17% <unk> to debt targets. I guess can you just talk about sort of comfort level, there with the cushion versus downgrade threshold levels and how confident you are in the path to kind of squarely getting back to that 17% level on a longer term basis.
Hey, good morning, thanks for taking the questions, welcome back, thank you glad to be back. Um, maybe just on the the load growth. Uh Outlook. Um, looks like continued strength in SPS, which is great to see and then a couple of the other op codes shifting a bit lower from the prior plan. So could you just talk a little bit? What's driving? Those moving pieces on low? Growth across the regions.
Currently the way I think about it is we have not changed our long term view on our credit metrics in that 17% level that has not changed as we it's important to maintain a strong balance sheet and healthy credit metrics. Just when you look at our spending over the next few years.
We kind of <unk>.
<unk> into that 17% and so it's really just we designed our equity plan or equity content plan to get back to that 17% in the latter part of this forecast, which now that is our long term view. So that has not fundamentally changed from a credit perspective, maintaining our balance sheet protecting our metrics and just when you have this type of elevate.
<unk> Capex over the next few years that there is some pressure there.
Ladies and gentlemen, thank you so much for the time.
Thank you for your question Sam.
Next question will be coming from Jeremy Tonet of Jpmorgan. Please go ahead.
Yeah, I think you know when we look at it, really SPS continues to be strengthened our oil and gas sector we've seen that for years. Um, this year out in New Mexico, we're going to see teens type of growth at this large scene. I sector and we can continue to see that with electrification out of that industry in New Mexico. So strong growth there. Also you know we've you know uh fur me America is down in in Texas, New Mexico. There's certainly opportunities there that we've talked about, um, and so we're seeing that the other ones more just to kind of just shifting around and potentially in timing of data centers as we think about it when they're coming in. But when you look at our sales growth across all op goes all are in the call. It 4%, um, roughly 4 to 5% with SPS at 88%. Uh, when we look at it, so, we're pretty excited. When we see our data center opportunities, really mixed across our service territory, strong opportunities in Minnesota, working through some really good opportunities in uh, Colorado.
Hi, good morning.
Second Time's a charm Jeremy.
Yeah.
Hi, Thank you for the color today I, just wanted to step into equipment availability, a little bit more if I could you know such as Transformers transmission <unk> components.
Just wondering if you could frame for us how long the Qs are there and I guess.
How you see.
Aligning that with the new data center interest or contract.
Yeah, Great question, and very timely and very strategic in what I said in my prepared remarks, I'm really proud of the team here at <unk> energy I think we have the best team working on this we have been very very.
So that's about half a percent, so really kind of diversify growth, which I think is important as we look forward.
Progressive in terms of securing the assets that we need to build the infrastructure that sits in front of us Youre absolutely right lead times have elongated and I'll, let Brian comment on any particular components, but.
We think that given our scale, our scope and our approach to our major vendors that we have access to inventory and supplies maybe that others don't have we've we've taken a very progressive shift in how we work with our vendors, making sure that they see that our entirety of our capital plan. They can plan for the work that they.
Great. That's really clear. Thank you for that. And then maybe just to follow up on kind of the financing and the balance sheet. It seems like you're targeting kind of now 16% to 17% FFO to debt targets. I guess, can you just talk about sort of the comfort level there with the cushion versus downgrade threshold levels? And how confident you are in the path to kind of get back to that 17% level on a longer-term basis?
Do with US we find out who's.
Best able to serve us both on the services side as well as the equipment side and we backward integrate them into our capital plan in a way that is both.
We protect ourselves from pricing side as well as we get certainty of equipment and certainty of labor in a pretty tight market. That's been a strategic focus for the team for a year or two as we saw the market start to tighten, particularly with data center build.
Yeah, Carly the way I think about it is, you know, we have not changed our long-term view on our credit metrics in that 17% level um that has not changed. Its we it's important to maintain the strong balance sheet and healthy credit metrics. Just when you look at our spending over the next few years, um we kind of grow into that 17% and and so it's really just, you know, we we designed our Equity plan and our Equity content plan to get back to that 17% in in the latter, part of this forecast, um, which you know that that is our long-term view. So that has not fundamentally changed from a credit perspective, maintaining our balance sheet protecting our metrics. Um, just when you have this type of elevated um capex over the next few years that there is some pressure there.
And maybe I'll, let Brian comment on what we're seeing in turbines and in Transformers and things like that yeah. I mean, I think it's absolutely no no secret in terms of where the turbine market is call. It four years out as Bob mentioned, we've gotten ahead of it in terms of having those 19 turbines on order.
Makes a ton of sense. Thank you so much for the time.
Thank you for your questions. Ma'am, next question. I'll be coming from Jeremy tonette of JP Morgan. Please go ahead. Hi good morning second. Time's a charm Jeremy.
And Thats one of the benefits of scale as we can order a significant amount of equipment, knowing that we will use it somewhere in our system.
And being able to deploy it through our system with the low growth. We're seeing main power Transformers is another one thats taken.
Uh, thank you, uh, for the color today. Just wanted to step into equipment, availability a little bit more if I could, you know, such as Transformers transmission, you know, CC GTS and components there.
These large scale Transformers 345 kv your <unk>.
A few years.
It's really how do you get ahead of it and make sure that you have the right supplier relationships.
Just wondering if you could frame for us how long the q's are there and I guess, um, you know how you see, um, you know, aligning that with, uh, new data center, uh, interest or contracts.
Working through all of the potential tariffs and supply chain challenges that currently exist there, but we feel really good about where we are.
And also I think about that also within the context of our safe Harbor strategy.
In terms of having all the equipment.
For both our base plan and any incremental projects that are coming out of our incremental plan and ensuring that not only are the safe harbor, but where Fiat compliant. So we feel really good about our overall place from a supply chain perspective thats on the equipment side. There is also a labor side of it too from an EPC perspective, and ensuring that we have top tier.
<unk> EPC firms lined up not only for this year next year, but for our five year plan and beyond and having those key partnerships is really really important and I think a differentiator as we go to market here in terms of executing on our plan.
Yeah, great question. Very timely um and and very strategic, you know, I said my prepared remarks, I'm really proud of the team here at Xcel Energy. I think we have the best team working on this. We have been very very um um Progressive in terms of securing the assets that we need to build the infrastructure that sits in front of us. You're absolutely right lead times have elongated and I'll let Brian comment on any particular components. But, um, you know, we think that given our scale, our scope and our approach to our major vendors that we have access to inventory and supplies, you know, maybe that others don't have. We've we've taken a very, um, Progressive shift in how we work with our vendors, making sure that they see that our entirety of our, our Capital plan, they can plan for the work that they do with us. We find out who's, you know, best able to serve us both on the services side as well as the equipment side and we backward integrate
Got it a very thoughtful process, there and I was just wondering might be able to align that a little bit more with it.
Demand growth it seems like the data center pipeline as he described in slides stepped up quite nicely.
Before and just wondering what you see on the type of discussions and the speed to market World and how this all fits together.
Yes, obviously very strict.
Strategic and timely as we watch our industry work very progressively to bring speed to power here and making sure that we we energized as very critical national asset in terms of artificial intelligence and data Center development.
Not surprising we've got great interest in our pipeline continues to build and we continue to move stuff from.
Highly probable into the contracted categories.
We have some of the most affordable.
Energy in the country as I mentioned in my prepared remarks, we have an incredibly good strong development team, we're working through either Esa or large low tariffs and all of our states and making sure that we protect our existing customers from the addition of new large loads and we've laid out in the past our principles around this in terms of cost caused.
Them into our Capital plan in a way that is both, um, uh, we protect ourselves from pricing side as well as we get certainty of equipment and certainty of Labor in a pretty tight Market. That's been the Strategic Focus for the team for a year or 2. As we saw the market start to tighten particularly with data center build. Uh and maybe I'll let Brian just comment on what we're seeing in in turbines and and and Transformers and things like that. Yeah. I mean I think it's it's absolutely no no secret in terms of where the turbine Market is call it 4 years out. As Bob mentioned though we we've gotten ahead of it in terms of having those 19 turbines on order. Um and that's 1 of the benefits of scale is we can order a significant amount of equipment knowing that we will use it somewhere in our system, uh, and being able to deploy it throughout our system with the low growth, we're seeing main power Transformers is another 1 that that's taken. You know, that that's these large scale, Transformers, 345 KV, you're out, um, a few years. So it's really, how do you get ahead of it? Make sure that you have the right.
<unk> and who is funding and if they if we trigger a transmission investment new generation investments, making sure that we protect our customers along the way there is net benefit for the entirety of the system. When you bring on some of these new large loads.
I think that.
It should also be noted that I mentioned sort of strategic geographic advantage and.
Supplier relationships. Um, working through all the potential tariffs and supply chain challenges, that that currently exists there. Uh, but we feel really good about where we are. Um, and also, I think of all that also, within the context of our Safe Harbor strategy, um, in terms of having all the equipments, um, for both our base plan and then the incremental projects that come out of our, our um, incremental plan and ensuring that not only are the Safe Harbor, but we're Fiat compliant. So we feel really
In addition to low energy bills, we have enormous high.
Hi, clean energy content in our systems already Thats, a very attractive component to these data center developers as well as their end use customers. So I think that between our sustainability.
Portfolio, and where we're trending as a company across all of our states and making sure that we can deliver a cleaner energy product as well as a highly reliable and highly affordable product is very strategic as we approach economic development with data center developers.
Really good about our overall place from the supply chain perspective, that's on the equipment side. There's also a labor side of it too, from an EPC perspective and ensuring that we have top tier EPC firms lined up, not only for this year and next year. But for our 5-year plan and Beyond. And having those key Partnerships is really, really important. Um, and I think a differentiator, as we go to market here in terms of executing on our plan.
Got it helpful. Thank you.
Thank you Sir.
Next question will be coming from Anthony Coldwell of Mizuho. Please go ahead. Your line is open.
Hey, good morning team I, just have I guess, two super quick clean ups I think to Steve's question. I think you mentioned about $10 billion of incremental Capex that isn't an additional would be on top of the current 9% EPS growth is that accurate.
Versus before and just wondering what you see on, you know, the the type of discussions and the speed to Market world and, and how this all fits together. Yeah. Obviously very
That is accurate.
And then this one and I, probably should wait for <unk>, but just.
The time is ripe.
Sure.
Currently talking 9% growth, but you've kept the guidance at 6% to 8% plus just curious on what why not readjusting to the messaging that shows all the potential upside that you have.
It doesn't even seem likely that you hit six or even seven I'm just curious on the thought process of keeping it 6% to 8% plus.
Yeah Anthony.
Balance of auto perspective, as we think through this.
In terms of what is the right long term and when I say long term six to eight as beyond the five years about balancing affordability and everything else that goes into that.
Strategic and timely, you know, as we watch our industry work very progressively to bring speed to power here and make sure that we energize this very critical national asset in terms of artificial intelligence and data center development. Not surprisingly, we've got great interest in our pipeline, which continues to build, and we continue to move projects from, you know, highly probable into the contracted categories. We have some of the most affordable energy in the country. As I mentioned in my prepared remarks, we have an incredibly strong development team. We’re working through either ESAs or large load tariffs in all of our states and making sure that we protect our existing customers from the addition of new large loads. We've laid out in the past our principles around this in terms of cost causation and whose funding is responsible. If we trigger a transmission investment or new generation investments, we are committed to protecting our customers along the way, and there's a net benefit for the entirety of the system when you bring on some of these new large loads.
Loads.
So we thought the pluses as a way to message that we do have a lot of infrastructure needs on behalf of our customers here in the next five years, but longer term.
Can you just start to roll beyond 2030.
We will continue to evaluate that.
And then just just quick on your first question, we said $10 billion plus but some of that could fall outside of this five year. When you think about some of the generation procurement and some of the particularly the MISO transmission will be longer dated but really excited about our overall five year opportunity in beyond that.
Great. Thanks for taking the question C in Hollywood.
I think that um it should also be noted that you know, like I mentioned sort of strategic Geographic Advantage. Um, in addition to low energy bills, we have enormous, uh hi uh clean energy content in our systems already. That's a very attractive component to these data center developers, as well as their end use customers. So, I think that between our sustainability, uh, portfolio and where we're trending as a, as a as a company across all of our states and making sure that we can deliver a, a cleaner energy product, as well as a highly reliable and highly affordable product is, is very strategic as we approach Economic Development with data center Developers.
Thank you Sir.
Next question will be coming from Sophie Karp colleagues from Keybanc. Please go ahead.
Got it helpful. Thank you.
Thank you very much, sir.
Hi, good morning.
Congrats on the strong.
I guess guidance revision.
Okay.
Couple of question Sidney.
Maybe if you could talk a little bit about the trends in SBS I know you all continue to flag the electrification of Permian as one of the drivers since the volume growth there.
Next question, will be coming from Anthony Codwell of mizuho. Please go ahead. Your line is open. Hey good morning team. I just have I guess 2 super quick cleanups. I think to Steve's question, I think you mentioned about 10 billion dollars of incremental cat-backs that is an additional would be on top of the current 9% EPS growth is that accurate?
Uh, that is accurate.
Well, Brian as they've been.
Where they are.
Is there any reason to be concerned about that trend at all at this point.
Great. And then this 1 and I probably should wait for eei but just you know, the time is right. Um
Hey, Sophie it's Bob.
The growth you see in the Permian is probably a function of two things. One is continued strength in mining in the Permian basin. So just more wells more infrastructure.
More fields being opened the second is the trend towards electrification of those fields and of existing field. So I think there's two big drivers out there when I talk to our largest customers down in the Permian.
Currently talking 9% growth but you've kept the guidance at 6 to 8% plus just curious on why, why not readjusting the 6, the messaging that shows all the potential upside that you have. Like, it doesn't even seem likely that you hit 6 or even 7. Like, I'm just curious on the thought process of keeping it 6 to 8% Plus.
In the Delaware Basin.
This continues to be their lowest cost resource around the globe and so I think even when you start to see oil and gas prices fluctuate I think these properties in the southwest are still very in the money for them and they'll continue to see mining and mining growth down to southwest I don't have a lot of concern about that load growth profile and then as we talked.
The data centers.
That load growth profit profile, we feel very confident in and see opportunity to add to it.
Got it. Thank you that's pretty clear and then.
On the.
Eddie.
Yeah. That's right you guys are clearly stepping into.
More.
Renewables to harvest the tax credits at.
Yeah, Anthony. Look, you know, we balance a lot of perspectives as we think through this. Um, in terms of, you know, what is the right long-term. And when I say long-term 6 to 8, it's beyond the 5 years about bouncing affordability and everything else that goes into that. And so we thought the plus was a way to message that we do have a lot of infrastructure needs on behalf of our customers here in the next 5 years. Um, but longer term, um, you know, we need to start to roll Beyond 2030. Um, you know, we'll continue to evaluate that. Um, and then just just quick on your first question. Uh, we said 10 billion plus, but some of that could fall outside of this 5 year. When you think about some of the generation, uh, procurement in some of the, particularly, the MSO transmission would be longer dated. Um, but really excited about our overall 5 year opportunity and beyond that.
At the same time, a lot of your peers are actually going more towards gas in there.
Great. Thanks for taking the question. See you in Hollywood.
Flagging that then you will need to build more gas to firm up.
Thank you much sir. Next question will be coming from Sophie karp calling from KeyBank. Please go ahead.
And for data center demand.
Hi, good morning.
So I guess my question is will we see the same trend play out in your service territory at some point or is it just renewables are so attractive that you feel good bye.
Um, congrats on the strong or I guess, guidance revision. Um, guys, um, couple of questions for me.
Full speed in renewables as opposed to more dispatch of coal generation.
Yes, a couple a couple of themes in there for sure one.
As I said in my prepared remarks, we sit in one of the most.
Geographically attractive areas for both wind and solar assets and so we see real customer benefits from continuing down a trend of investing and taking advantage of those natural resources, particularly while tax credits helped them make them affordable for our customers.
But you also see us, adding we've got $4 five gigs of natural gas capability coming into the plan in the next five years.
As well as I think probably north of five gigs of energy storage as well. So we are affirming the system backing the wind and the solar with.
So, maybe if you could talk a little bit about the trends in SPS, I know you continue to flag the electrification of Parian as 1 of the drivers of the volume growth there. Um, with the oil prices, I've been kind of where they are. Uh, is there any reason to be concerned about that Trend at all at this point? Hey Sophie. It's Bob, um, I I think the growth you see in the Parian is probably a function of 2 things 1 is you know, continued strength in in mining in the puran Basin. So just more Wells, more infrastructure, uh, more Fields being open. The second is the trend towards electrification of those fields and of existing Fields. So I think if there's 2 big drivers out there, you know, when I talked to our largest customers down in the puran, um, in the Delaware basins,
Attractively priced backup energy and making sure that we are both reliable affordable and sustainable for our customers, which is sort of the.
The Holy tree.
Trinity of our business.
Alright, thank you so much.
Thank you two questions as it will be next question will be coming from Steven <unk> from RBC capital markets. Please go ahead.
Hi, Bob and Brian Thanks, very much for taking my question.
Fluctuate. I think these these properties in the southwest are still very in the money for them, and they'll continue to see Mining and Mining growth down the Southwest. So I don't have a lot of concern about that load growth profile. And then, as we talked about the data centers, you know, that that load growth profile profile. We feel very confident in and, and, and see opportunity to add to it.
I just had a quick one thanks very much it's good to be back.
Got it, thank you. That's pretty clear. And then um,
Just had a quick one.
I appreciate the color on the 9% because one of the things I guess.
I was scratching my head about and I was hoping to get a little color on was clearly 29 rate base moves up something on the order of 20 plus percent and so if you run the midpoint of your EPS guidance out now at 9% versus where you were previously in the plan it implies a pretty significant compression in earned ROE.
<unk> and pattern or you know obviously you are spending a lot more capital and spending a quicker so that kind of makes sense to me, but you do have pretty good mechanisms. So can you talk about any.
Embedded conservatism that's in the plan around.
Let me uh, Renewables versus gas, right? Uh, you guys are clearly uh, stepping into uh, more like accelerating Renewables to harvest the tax credits. At the same time, a lot of your peers are actually are going more towards gas and they're, you know, flagging that they need. We will need to build more gas to firm up the system for data center to demand. So I guess my question is like, will we see this same same Trend play out in your service territories? At some point? Or is it just Renewables are so attractive that you feel good by uh I guess still going full speed and Renewables as opposed to more dispatchable generation.
<unk> earned ROE.
You would get given the significant increase in rate base.
Hey, Steve Yeah, I can answer that question for you.
we, as I said, in my prepared remarks, we sit in 1 of the most
I think thats really why we wanted to provide some color with 11% rate base growth that we expect a 9% rate base growth or 9% earnings growth over the next five years to really highlight that we don't expect significant compression.
In row is by any means that we see.
If you think where we've talked about some of the rate cases that we have coming up in terms of driving some margin improvement because we've delayed some some rate cases for some reasons and so when I think about it. It's really we've always talked about when you get to this kind of high growth. We're at 11% rate base growth significant capex comes with financing needs that you would see.
About a 200 basis points Delta between your Arabias worth it and your earnings growth over a five year period.
Geographically attractive, areas for both wind and solar assets. And so we see real customer benefits from continuing down a trend of investing and taking advantage of those natural resources. Uh, particularly while tax credits help them make them affordable for our customers. Uh, but you also see us adding, you know, we've got 4 and a half gigs of natural gas. Uh, capability coming into the plan in the next 5 years. Uh, as well as I think probably north of 5 gigs of of energy storage as well. So we are firming the system backing the the wind and the solar with you know, attractively priced backup energy and making sure that we are both reliable affordable and sustainable for our customers which is sort of the the the holy, you know, Trinity of our business.
We wanted to just highlight that it's now as we move through the next few years, our financing is lined up with kind of our capex spend and we're working through some regulatory proceedings over the next couple of years you start to catch up on that rate base was EPS growth, but.
All right, thank you so much.
Over the five year period, we feel really good about where we are that in the long term EPS growth, coupled with our financing plan and maintaining a strong balance sheet as we feel good about that and don't see ROE compression at all you know, we certainly have conservative rois in our plants, but don't see ROE compression as we sit here today and look at where we are today.
Okay. That's all I had really appreciate it great. Great result, guys. Thanks very much.
Thank you. What's your question? So Sophie next question I'll be coming from Stephen the Breezy calling from RBC Capital markets, please go ahead. Hi. Bob and Brian, thanks very much for taking my question. Um I just had a quick 1. Thanks very much. Uh, it's good to be back. Um, just had a quick 1. Uh, you know, and I I appreciate the color on the 9% because 1 of the things, I guess, um, I was scratching my head about and I was hoping to get a little color on was clearly 29 rate based moves up, something on the order of 20 plus percent. And so if you run, you know, the midpoint of your EPS guidance out,
Thank you Sir.
Next question will be coming from Travis Miller from Morningstar. Please go ahead Sir.
Good morning, Thank you.
Good morning Travis.
Quick question on your on the transmission spend obviously, there's been a big thing for you for many years, but.
As you ramp that up and you think about these large customers.
<unk> or difficult is it.
To identify specific customers, who might pay for some of those transmission spend I guess.
Let's see.
<unk> between generation and data centers.
Can you take some of those trends in Michigan has been essentially off of.
Central costs, the commercial customer bills.
Identify specific customers to pay for it yes, great question first thanks for recognizing leadership in transmission I'd like to say that we are in the.
Leading builder of new transmission line miles over the last 15 years when you come from the state of hockey skate to where the puck is and we feel like we've built a grid and an infrastructure system that is enabling us to energize. This new data class when I think about incremental people willing to spend incremental money on transmission.
Now at 9% versus where you were previously in the plan, it implies a pretty significant compression in earned Roes implied ears. Now obviously you're spending a lot more capital and spending a quicker. So that kind of makes sense to me, but you do have pretty good mechanisms. So can you talk about any embedded conservatism that's in the plan around, you know, assumed earned Roes that you would get given the significant uh, increase in rate base? Hey, Steve, I, I, I can answer that question for you. And and I think that's really why I wanted to try some caller with 11% rate based growth that we expect 9%, uh, rate based growth or 9% earnings growth over the next 5 years, to really highlight that, you know, we don't expect significant compression, um, in Aries, by any means, we actually, um, if you think where we are, we've talked about some of the rate cases that we have coming up, um, in terms of, of driving some re Improvement, um, because we've delayed some, some rate cases for for some reasons. And and so when I think about it it's really we've always talked about what
Our first principle with regard to hooking up data centers, if they require a new transmission line, particularly a lateral usually theyre paying for that 100% and we've put that into sort of a kayak bucket as opposed to net rate base spend and its going to be attributable directly to that customer and when you talk about can you identify those customers.
When you get to this kind of high growth, you know, we're at 11% rate based growth significant capex, comes with financing needs that you would see about a 200 basis points, Delta between Europeans profit and your earnings growth over a, a 5 year period. And so I think we want to just highlight that that it's you know, as we move through the next few years, our our financing is is lined up with kind of our our capex spend and we're working through some regulatory proceedings over the next couple of years. You start to to catch up on that rate, based versus EPS growth. But, um, over the
Those customers are knocking on our door freely and willingly to spend the money, particularly on the transmission interconnection to make sure that they can get serviced as quickly as possible. So this is really a management of the inbounds as opposed to us having to go find people that are willing to do and I think thats a pretty common approach that the data center developers and the hyper scaler.
5 year period. We feel really good about where we are. That the long-term EPS growth coupled with our financing plan and maintaining a strong balance sheet is, is we feel good about that and don't see Roe compression at all, you know, we certainly have conservative Roes in our plan but don't see. Roe compression as we sit here today and look at where we are today.
Okay, that's all I had really appreciate it. Great. Uh, great result guys. Thanks very much. Yeah, thank you. Thank you.
Thank you, sir.
Are willing and able to do.
So we're protecting our customers.
Next question, will be coming from Travis Miller, clay from Morning Star, please go ahead, sir.
From the transmission build and then when you think about the net benefit if you taken the entirety of our system costs and adding more megawatts to it that's a net benefit on a.
Good morning. Thank you.
Morning Travis.
<unk> per kilowatt hour rate on the transmission system in totality and a benefit for all customers.
Okay. Okay. So not all of that transmission spend then.
Yes.
We'll go on commercial residential.
Or was that the transmission spend that we highlight in our plan is regional Super regional we have stuck with connecting MISO and SPP markets, we have big regional transmission.
to identify specific customers, who might pay for some of this transmission spend I you know, we see contracts between generation and data centers can
Can you take some of those transmission spend essentially off of?
Coming out of the long range transmission planning out of the MISO process that is regionally allocated not necessarily coming directly onto our customers same with our STP build out a lot of that is regional cost allocated not coming into the directly 100% into retail rates.
Okay, Great and then how much are you talking about that lateral just to follow up on that.
Our scale or kind of share of how much that specific collateral type of demand youre getting.
Relative to what you just talk about the regional type of.
Travis was a really customer specific <unk> system system impact studies.
Wherever their customers locating on the transmission system the size of that customer the ramp of that customer and so those are really specific hard to put a number on it.
In general in a general sense.
Okay. That's fair enough I appreciate all the thoughts.
Residential c commercial customer bills and identify specific comp customers to pay for it. Yeah, great question first thanks for recognizing leadership and transmission. I like to say that we have been the you know leading builder of new transmission line miles over the last 15 years. You know when you come from the state of hockey you got to skate to where the puck is and we feel like we've built a grid in an infrastructure system that is enabling us to energize this this new data class um when I think about incremental people willing to spend incremental money on transmission, I think our first principle with regard to hooking up data centers is if they require a new transmission line, particularly a lateral usually they're paying for that 100%. And we put that into sort of a, a kayak bucket as opposed to net rate based spend. And it's going to be attributable directly to that customer. And when you talk about, can you identify those customers? Those customers are knocking on our door freely and willingly will to spend the money, particularly on the transmission interconnection.
Thank you.
Well, thank you very much sir.
Next question will be coming from Alex Kania, calling from <unk>. Please go ahead, Alex Kenny.
<unk>.
Good morning. Thanks, Thanks for taking my question maybe.
Maybe just a question on the regulatory side, obviously, it's great to see all of this capex.
To make sure that they can get service as quickly as possible. So this is really a management of the inbounds as opposed to us having to go find people that are willing to do it. I think that's a pretty common approach that the data center developers and the hyperscalers are willing and able to do.
Also the transmission as well, but I'm just kind of thinking about also your comments about relative share of wallet in rates, but I'm just wondering because of that.
Atria communications that Youre, having with regulators just on kind of expectations are.
For for where rate trends may be going over the next five years within this.
So we're protecting our customers, uh, from the transmission build. And then when you think about the net benefit, if you're taking the entirety of our system costs and adding more megawatts to it, that's a net benefit on a per kilowatt hour, you know, rate on the transmission system in totality and a benefit for all customers.
Okay. Okay. Okay, so, not all of that. Transmission's been then.
With this within this window, maybe there's kind of a balance between revenue requirements in volume growth or whatnot, but I'm just kind of curious about what the reception is to those types of conversations.
Is would go on Commercial residential.
Yes, great.
It's really fundamental and foundational for our team here to make sure that we keep our bills for our product as affordable as possible for our customers. So we wake up everyday thinking about that we have to balance that with other desires for liability sustainability resiliency and safety across our system and.
To make sure that we can meet those needs of our customers as well I mean, you don't have to look any further than to make our Cuba to realize the devastating effect that communities have when our system and our product isn't available. So we are spending time and energy as you say with with our regulators with our legislators, making sure that we recognized all of the thing.
Bills. So that the transmission spend that we highlight in our plan is regional, Super Regional. You know, we have stuff that's connecting myso and STP markets, we have big Regional transmission. Um uh coming out of the long range transmission planning out of the MSO process that is regionally allocated. It's not necessarily coming directly onto our customers, uh, same with our spp build out. A lot of that is, is regional cost. Allocated not coming into the directly, 100% into retail rates,
Okay, great. And then, how much are you— you talked about that lateral. Just to follow up on that, do you have a scale or kind of share of how much that specific lateral type of demand you're getting?
That we're bringing to the system and that while affordability is a hugely important piece. We think we start from a very good spot. We think we've been a very good steward of our customers' money over the last decade, we will continue to be very prudent very focused on making sure that we can deliver the system that they need and want with the policy objectives that they need and want.
At a price that is as affordable as possible. So we work through that with each state and each class of customer and making sure that we keep our product very affordable and attractive.
Relative to like, what? You just talked about the regional type of transmission. Yeah, Travis, those are really customer specific. You do system system impact studies, um, to just, you know, wherever that customer is locating on the transmission system, the size of that customer, the ramp of that customer. And so, those are really specific hard to put a number on it, in, in general, in a general, with General sense. Okay, that's fair. No, appreciate all the thoughts.
Thank you very much, sir.
Great. Thanks very much.
Next question will be coming from Alexia Canya, calling from BTIG. Please go ahead, Alex. Thank you.
And thank you very much for your questions Alex.
As we have no further questions for closing remarks, I will turn the call back over to CFO, Brian Van Abel for closing remarks. Thank you.
Thank you all for participating in our earnings call. This morning, please contact our Investor relations team with any follow up questions.
Thank you, Sir ladies and gentlemen that concludes today's conference. We wish you a very good day you may now disconnect have a good day.
Uh, good morning, thanks. Thanks for taking my question. Uh, maybe just, uh, a question on the regulatory side, um, you know, obviously, it's great to see all this capex. Um, you know, and also the transmission as well. But I'm just, I'm thinking about, um, also your comments about relative share of wallet and rates, but I'm just wondering, you know, kind of the nature of communications that you're having with Regulators just on, on, kind of expectations or or, you know, um, for for where, you know, rate trends may be going over the next 5 years within this. Um, with this within this window, maybe there's kind of a balance between revenue requirements and, you know, volume growth or whatnot. But I'm just kind of curious about what the reception is um to those types of conversations.
They need and want the policy objectives that they need and want at a price that is as affordable as possible. So we work through that with each state and each class of customer, making sure that we keep our product very affordable and attractive.
Great. Thanks very much.
Thank you very much for your questions, Alex.
As we have no further questions for closure marks, I'll turn the call back over to CF O'Brien. Van April, foreclosure remarks. Thank you.
Thank you all for participating in our earnings call this morning. Please contact our investor relations team with any follow-up questions.
Thank you, much sir.
Ladies and gentlemen, that concludes today's conference. We wish you a very good day. You may now disconnect have a good day.